Recruit Holdings Co Adr

Welcome to the Recruit Holdings Q3 FY2024 Earnings Conference Call. This call is a simultaneous translation of the original call in Japanese and translation is provided for the convenience of capital markets participants only. I am Mizuho from IR and PR and joining me today is Junichi Arai, Senior Vice President, Corporate Strategy and Investor Relations of Recruit Holdings. The Q3 financial results presentation video and transcript were uploaded to the IR website at 3.30pm today. Today, we will start with Jun's opening remarks, followed by a Q&A session. Now I pass the call to Jun. Please go ahead. Hello, everyone. Thank you very much for your time today. Before I take your questions, I would like to summarize the financial results presentation that we released today. Among the four highlights discussed in the presentation, the first one is the consolidated results for Q3. As you're aware, starting next fiscal year, HR solutions in matching and solutions is scheduled to be shifted to HR technology. In advance of that, we have been moving the job advertising service within HR Solutions to Indeed Plus since the end of January last year. As a result, revenue in matching and solutions overall decreased. However, revenue in HR technology and in Japan staffing increased, and consolidated revenue increased 3.5% to 896.9 billion yen. We would greatly appreciate it if you could revise your financial and valuation models in preparation for the segment changes taking effect next fiscal year. The second highlight is the revised full year guidance for the fiscal year. Based on the results for Q3, we have now revised it to a single figure. at the upper end of the range of the revised guidance from November. Third is regarding the results of HR technology. U.S. revenue for Q3 on a U.S. dollar basis increased year on year in line with our expectations, even though the number of open jobs continued to decline year over year. The rate of increase in revenue per paid job ad exceeded the rate of decrease in the number of paid job ads due to continued monetization progress. Quarter over quarter, Q3 revenue decreased as hiring activities moderated due to the expected typical holiday seasonality. our outlook for q4 is based on the assumption that the trend of job postings in the u.s labor market in q4 remains unchanged while the outlook for japan and the rest of the world has been revised lower compared to the november outlook Most of this revision is due to our assumption that US dollar would be stronger than expected in our Q4 assumptions. We will provide our market outlook for the next fiscal year in May when we announce full year financial results and guidance. Fourth, update on share repurchases. The largest share repurchase program to date, which began in July last year, was completed on February 7th. we will appropriately consider a new program taking into account our investment capacity, the stock price level, market conditions, and the forecast of our financial position. I will now take your questions.

We will now take your questions. If you have a question, as always, please click on the Zoom raise hand button. Please unmute before asking your question. We will accept up to two questions at a time. First of all, Goldman Sachs Securities, Munakata-san, please go ahead. This is Munakata from Goldman Sachs. Thank you for this opportunity. Can you hear me all right? Yes, we can. Thank you. I have two questions. And I'm going to ask questions altogether. First is about the HR tech business. In the U.S. market, monetization-related efforts have made progress, and unit price growth rate increased the volume growth rate. And I believe the trend continues to be the same from Q2, but I would like you to give us some more color on it. For example, as you talked about in the previous conference call, urgent hiring matching candidates, are those functions functioning or are there other factors? If possible, can you please talk about the change in how the volume and the unit price movements differ from that in the Q2? And my second question is your management structure from April. I have taken a look at your release. So Araizan is going to become a CFO and a senior executive officer. Congratulations. So Araizan is going to become the CFO of the company. When it comes to strategy, decision-making, the speed and relationship with the capital market, will there be any changes in that regard? I would appreciate any information available at the moment. Thank you. Thank you for your questions. To your first question, as you said, your understanding is correct. We have been continuing our existing initiatives. From this third quarter, there is nothing new. But as you said, urgent hiring, candidate targeting, matched candidates, are the efforts that we've been making steadily in order to appeal to customers and as i mentioned in the beginning third quarter seasonally tends to have weaker activities especially i am referring to the u.s market situation but i believe we were able to make good efforts despite those circumstances. A lot of people are already wondering what is going to happen next year. And the market condition would change. But that's that. We will continue to think about what we can do, what kind of good services we can offer with added value. That's what we will be steadily thinking through. we will be building on what we've already worked on so far. I wish I could tell you what percentage for which item, but the situation continues to evolve, and the change from the second quarter are closely interrelated. The number of clients, the number of jobs continue to change, so it is difficult to give you a concrete number. but the volume is declining overall. However, the increase in the unit price is more than offsetting that trend. And also to your second question, my title is going to change but that is not really going to affect what i do as my duty in record our stances that our title does not affect what we do in 2016 i joined the company and our mission has been consistent which is how we can continue to enhance the value of recruit holdings I will continue to focus on enhancing the value of the company so that you can better evaluate and appreciate the value of the company. And that's what I'm going to pursue. So my job is going to be largely the same and I will be doing them at the same speed, but I'm hoping to accelerate some of them. And also, I would like to contribute to the company, not only for the company, but like yourselves, I was long working for a financial institution. So I am hoping to become a role model for those of you who may start working in the business world after working in the financial institutions. That's the performance I like to present going forward. Thank you very much. Yes, I will learn from you and I will look forward to it. Thank you.

Thank you very much. So next in the world securities on the sun, please. Can you hear me? Yes, please go ahead. Thank you very much for this opportunity. I'm Nomura from Nomura Securities. Oh, no. So first is the guidance for the HR tech. So your accuracy of the revenue is very high, I think, at the beginning of the year and the mid-year revision. And this time, $73, $74 million remains pretty much unchanged. But what is the reason? So macroeconomy and your internal measures, your forecasting is becoming more accurate or so the revenue linked expenses are adjusted and that is why you have this number or why is your forecast so accurate now? If you could give us your line of thinking. That is my first question. My second question is about buyback. So you consider various factors. You mentioned various factors of which, which one are you watching the most or not deciding because one factor has not materialized any particular element? Thank you very much. to your first question. Thank you for taking it as a praise. Thank you so much. Our May guidance, it was range, and in November, it was still a range. Our floor was raised in the November range. This time, we came down to a single number to the higher end of the range. So we are trying to meet this number in the range. The foreign exchange goes up and down, which is uncontrollable. But our guidance, our forecast in the US and Japan and in other areas, we are capturing and monitoring the latest information very frequently. So that is what we do internally. And if something happens, we try to communicate to you as soon as possible. For this fiscal year, Mr. Idekoba talked about this in the very beginning, the environment and the number of jobs we said is expected to decline. which is correct, which turned out to be the case. So our guidance was developed based on that forecast, especially on the US, and this remained unchanged. That is why we came to this point. And Japan, there's a shift to Indeed+. So this was something we can control to a certain extent. The shift may have been a bit slower than the initial anticipation, but it is in line with our plan, basically. And in Europe and other areas of the world, like the US, the initial forecast has been the case till the end of the year. our view on the market did not change or waver. And that is why I think we were able to do this. Second question. It's not that any particular factor has not materialized. We're thinking of what will happen next year. And as I mentioned in the past, What kind of investment or ways of spending money will enhance our value the most? We think from that perspective. So strategically significant M&A may not happen in the short term, but if there is something that can enhance our value in the medium to long term, we will consider them. And if we do not have such deals in a timely fashion, we will consider share buyback. And the percentage is quite low now, but our share is partially still held by Japanese business companies, although the proportion is declining. Those companies may decide to sell our shareholdings. At those timings, we will consider what will allow us to use money in the most effective and flexible fashion. So we said we will do buyback until July, but two deals, two big deals were materialized with Tosnet. And so at the end of last week, we were able to complete this earlier than originally anticipated. And so... the amount and the length may change accordingly so what will be the best for us going forward in the next two years we need to want to bring the cash and cash equivalents to the optimal level we said that in may so we will think what we need to do to make that happen We are looking very meticulously in a fine-grained fashion. Thank you very much. I hope this answers your question. Thank you, Arai-san.