Welcome to the Recruit Holdings Q2 FY 2024 earnings conference call. This call is a simultaneous translation of the original call in Japanese, and translation is provided for the convenience of investors only. I'm Mizuho from IR and PR, and joining me today is Junichi Arai, Senior Vice President, Corporate Strategy and Investor Relations of Recruit Holdings. The Q2 financial results presentation video and transcript were uploaded to the IR website at 3:30 P.M. today. Today we will start with Jun's opening remarks, followed by Q&A session. Now I pass the call to Jun. Please go ahead. Hello everyone. I have a cold. I am sorry if my voice is a bit inaudible to you. Before I take your questions, as I do every quarter, I would like to make a few additions to the presentation we disclosed at 3:30 P.M. In the presentation with regards to the results for the second quarter and the first half of FY 2024, I explained in HR Technology U.S. revenue exceeded our initial expectations, which was due to the fact that despite the continuing trend of a decrease in the number of job postings, The rate of increase in revenue per paid job ad exceeded the rate of decrease in the number of paid job ads. Thanks to a combination of small-scale tests and innovations, and in Japan, the transition to Indeed Plus is progressing, although it is slightly slower than our initial expectations. Regarding the outlook for the second half of FY 2024, we are not changing our view that the number of job openings in the U.S. will hit the bottom after decreasing for another 18 or 24 months that Deko said in May, and we assume that the number of paid job postings will continue to decline until the end of the current fiscal year. Regarding HR Solutions in Japan, it has been decided to discontinue the PPP pay-per-post advertising model by the end of FY 2024, with the exception of the new graduate recruitment platform, and it has been confirmed that HR Solutions will be integrated into Indeed Plus. The outlook for Marketing Solutions and SaaS Solutions has not changed significantly. And regarding staffing, it is assumed that the growth in revenue in Japan will be offset by that in Europe, U.S., and Australia, as there is no improvement in the business environment. We have prepared the outlook for each segment, assuming exchange rates of 142 yen per U.S. dollar and 157 yen per euro. And based on this, we have prepared our outlook for the second half of FY 2024 on a consolidated basis, and we have disclosed today the revised full-year guidance, which is the sum of the results for the first half and the outlook for the second half. For those of you who already have looked at this information, you will notice that the lower limits of the ranges have been significantly raised compared to the guidance ranges we disclosed in May. Thirdly, the share buybacks currently underway, as informed previously, have been progressing much faster than our initial expectations with the two ToSTNeT-3 transactions executed so far. Approximately 80% of the maximum total purchase price of JPY 600 billion has been utilized over four months through the end of October. If the remaining 20% is also utilized similarly, even though it depends on the share price, we expect that the buybacks may be completed earlier than the originally anticipated end date. Now, as of September 30th, 2024, net cash and deposits were JPY 756.6 billion, which is a decrease of approximately JPY 378.7 billion from JPY 1 trillion 135.4 billion as of March 31st, 2024. And fourthly, regarding the transfer of businesses between disclosed segments, this will be the first change since the significant change made to the disclosed segments in 2017. From next fiscal year, the HR Solutions business in Matching & Solutions will be transferred to HR Technology, and as a result, Matching & Solutions will consist of the current Marketing Solutions and SaaS Solutions. We understand this may cause a significant inconvenience to capital market participants, but we would greatly appreciate it if you could consider revising your financial model and valuation model according to this change. With this in your mind, I would like to open up the floor now for questions. Thank you for your attention. Thank you. We will now take your questions. If you have a question, 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, Nomura Securities, Ono-san. Thank you very much. This is Ono from Nomura. I also have a cold. I have two questions. First. So Indeed, U.S. business, the impact from the increase. So the job posting, how is the immigration important? Do you have any past data to see how much impact it will have on Indeed, on job posting and others? Please ask the second question too. Also on Indeed U.S. So the establishment of new plans or the bring-back jobs, the increase in the production sites has been pursued to increase the employment in the U.S., so subsidy and the tax reduction and customs. Has these past factors been an increase that has been pushed up the revenue of Indeed? So the increase in immigration and bring-back job factor, how much impact do these two factors have on Indeed business? Thank you very much. So I think the question is based on the result of the U.S. presidential election. As you know, our business, we have a two-sided business model. So first is the job seeker side of the story, supplier side, and the demand side. How we match efficiently is the key in our Indeed and U.S. business, the key to increasing the revenue in our business. So when a large number of people look for jobs or unemployment, employment promotion, increase of the employers who want to hire people will be a factor. And in some cases, there is a mismatch or a balance, and that impacts our pricing. From the business structure of Indeed Plus, it's paid-for performance and for pricing. It goes down depending on supply and demand. So that is the type of business model we have. So of course, that is an impact, but it's hard to quantify. Cannot say what percentage, and we do not disclose that. Of course, if supply goes down and demand goes up, the mismatch increases like post-COVID, then pricing goes up, volume goes up. So pricing volume pushes the revenue and vice versa. So I think you're asking about higher demand, and our supply will differ depending on that, and the speed is another factor. So when qualified employers want to hire, how quickly can they take action is important. So job opening will decline, but will hit a bottom and will rise up again at one point in the future. And the curve of increase cannot be predicted easily. It will not be a surge like post-COVID. Unless it's in extraordinary circumstances, it will be a mild increase. So it's not that it will be the only factor that impacts our revenue. But employers who want good talents will give us assignment for advertisement to us early on. So supply and demand side, both sides fluctuate. So the number of job seekers will be one factor, and the demand is also a factor. But when that will be, what percentage will that be? How much this will activate the company's activity? We have parameters we look at, but it's difficult to say what percentage and explain very clearly at this point. But as I mentioned earlier, the market volume will decline. So we are preparing for the next peak out, and so our stance remains unchanged. So thank you. I hope this answers your question. Thank you very much, Arai-san. Thank you. Next is SMBC Nikko Securities, Maida-san, please go ahead. This is Maida of Nikko. I have two questions also. First of all, in the presentation earlier, you referred to the situation of Indeed revenue in the U.S. The growth of revenue per opportunity and growth of job posting were alluded to. So can you please mention how much they increased or decreased? And you also alluded to trials. On the second page of FAQ, you introduced some examples. But what kind of functions are they? What kind of factors are there? If there were any significant factors that affected the situation, I would like to know. And secondly, this is a more straightforward question about the decrease of HR cost, employee benefits decrease, and housing allowance. Can you quantify the impact, especially in HR tech? Can you please explain what was the specific impact? Thank you. Thank you. Percentage of unit price growth and decrease. I apologize. At least today, we decided not to disclose that information. I hope you will understand. And regarding functions, I talked about three functions: urgent hiring, label, candidate targeting, matched candidate. So this is, for example, a label to show that this is an urgent hiring or employers who are doing paid job ads. We can pre-screen conditions and available candidates. And we will utilize the employer's budget only when there is a good match. Also, on Indeed platform, job seekers sign up with their CVs and profiles. And based on such personal information for employers, we use our machine learning to identify suitable candidates. So without having to wait for applications, employers can directly reach out to job seekers who would satisfy their needs. If they really meet the demand of the employer, compared to when we don't use that function, we will be able to improve the benefit for clients, and we will be able to charge a higher price, which will result in a higher unit price. We aim to develop a better environment so that we can introduce better job postings to job seekers so that they can find better jobs. We have been making these efforts little by little to develop a better environment, and I think that is going to lead to higher unit price. Of course, we try, and clients may not be satisfied, or it may create some disadvantage that could happen. Even if we fail, or even if we didn't perform as expected, we can also learn from such experience, and we can repeat that process. So hopefully, we would like to continue to increase the unit price as well as the volume. When that is achieved, we can make better contribution to the revenue growth. That is our idea in evolving our business day by day. I apologize. I cannot quantify the impact, but that is the idea as we explained previously. And in terms of the labor cost decrease, in the Q1 announcement, I think I explained that due to the reduction of headcount, their payroll has been discontinued as of the end of May. So in Q1, there is a one-month worth of impact. In the second quarter, there is a full impact. That is the impact we are experiencing. So on a quarterly basis, we are not giving cost reduction for each segment. For the first half, we are providing such information, but we don't provide that information on a quarterly basis. So I hope you can refer to the number for the first half. That's it. Thank you. Thank you. Thank you. Next, BofA Securities. Nagao San, please. Yes. Thank you very much. Nagao of BofA Securities speaking. Two questions. First is Indeed second half margin, the way you think of margin. So in the FAQ, it's written that in the second half, U.S., so the biggest volume force, U.S. dollar-based, 4.5% plus minus revenue is expected, but the HLC dividend in the first half, second half is down from the first half. So revenue and profitability or the profit balance between first and second half, how should I look at that? Thank you very much. That's my first question. Second question is, I have many, but I think one key question is around JPY 600 billion share repurchase and 80%, around JPY 500 billion has already been used. This is much faster than your original schedule. So do you plan on additional share repurchase? And not just that, in your balance with your growth investment. Once again, if you could share with us your capital allocation policy. Thank you. Thank you very much. So which one should I go first? Let me start with the second question. So TOSNET-3. So we started as a one-year program, but we were not. There was supply that we did not anticipate in the beginning, and therefore the usage was faster than we thought. As I mentioned earlier, this two years cash and equivalent, we want to use the two years to adjust our cash and equivalents. And the way to do that is share repurchase and/or acquire good business if we have some options outside. And use the cash for our future business and for our shareholders and reduce the cash and cash equivalents to a certain level. And we will continue that effort. So this time, the program may end earlier than we thought, but we will think of what we will do, at which size we will decide, discuss and decide going forward. But for the two years, two years is the period to adjust our cash and cash equivalents. So next fiscal year, we will continue studying this plan. And the margin in the second half. As we mentioned earlier, indeed, HR Technology. The cost is not entirely necessary for our revenue at this moment. We are conducting various tests and various developments and launch them in the market to improve the promising ones and make them bigger. So we are doing all this cycle. The other large cost spending is our advertisement and promotion. If we have good opportunities, if it leads to higher revenue, we may use cost expense in an upfront fashion. Headcount, we do not plan to increase the headcount radically at this moment. This will be flat. If revenue remains flat and margin drops by 1%, it means we are using marketing costs for our customers and users. That's what I would like you to think like. As we said, if there's a demand, if there's needs, we will try to invest as efficiently as possible. If there is a light for recovery, we will be willing to invest, but we are not there yet. This time, we revised the full year forecast and the margin was not a significant revision from May. That is where we stand. Thank you very much. Just one follow-up question. HR tech, marketing cost, second half. SBU is now being realigned and Japan, Japan domestic business is in the scope. This year, the segment is still different this year. So that is that. This is this. Next year onward, it will be unified, integrated. So from efficiency purpose, we may revisit, we may. But for this fiscal year, it will be separate. The cost will be incurred separately. Thank you very much. Thank you. Nomura Securities, Ono-san, please go ahead. Thank you. About Indeed Apply in 2024, the Big Four ATS, you talked about wanting to integrate with it. So if there is any progress that you can share with us, I would appreciate it. The other thing is about Indeed Plus. There is more outside media going forward. What kind of growth is anticipated? What is the roadmap? Is there anything that you've learned from the current experience? Thank you. Thank you. About ATS. Large-scale business clients. With them, we want to increase the volume of business. We want them to use us more efficiently, and we want to offer higher added value by linking and synchronizing. That is essential. It's not only the Big Four, but also with other clients, we have been implementing various measures. It may be possible technologically, however, we still have to gain agreement from clients. So we have to make it technologically possible, and we have to gain support from the client. The number of clients connected through ATS is not disclosed, but that number is continuing to grow steadily. And that needs to come with higher volume for us to grow further. So this is what we have been working on. About Indeed Plus, I believe you are referring to non-recurrent media job boards when you say outside media. I think it was in January when we launched the service. I think we explained that this is what we welcome, and we would want to encourage those media to join. But of course, there is a revenue split and other terms and conditions that we need them to agree on. So it is not something we are pushing for, but if they are interested, they can join us. But this is not what we were assuming for when we started the service. Within Recruit Group, we have Japan media job board business that we want to integrate, and this will make it even stronger. We use Recruit Job Board to shift from PPP to PPC. That is the strategy for Indeed Plus. So we are not requiring a certain number of outside media to join us to achieve our goal. We are not depending on such outside factors, but rather we are focusing on designing better operation internally. Again, if outside media is interested, we welcome them, and we want them to join us. But that is not the only factor. We want to make ourselves stronger and more powerful. That is what we are determined to focus on so that we can evolve the service even further. That was very clear. Thank you. Thank you very much. Next, SBI Securities. Hosei-san, please. Hosei from SBI Securities. Thank you very much. I have one question. So it's about Indeed Japan. Last time, existing Indeed and Indeed Plus, you said it is difficult to divide, but of the overall revenue of the unit price, which one is contributing to revenue, and how far along are you in transferring from PPP to PPC? That's my first question. Next, Indeed Plus transfer speed. You said the speed is rather mild. What are the factors, and what are the hurdles? Thank you very much. Thank you. So your two questions were on Indeed Plus in Japan. So last time or the one before last, we said that it's difficult to say which of the two factors are the bigger factor. And this has become deeper because the job board that we originally did as Recruit is now being switched or transferred to Indeed Plus. And in Recruit, we count on a gross basis, but Indeed Plus will be net accounting. So 100 will not be 100. It's difficult to numerically explain, so it cannot be explained in a clear-cut fashion. And this is to your second question too, but the original job board business was PPP, and the clients like it. And we received revenue from that, but now it will be from PPC. We need to explain the benefits directly, and if it's through agency, the agencies will explain to the clients to win their understanding. So we will use various routes, channels to realize this shift in this 100 to 20, 40, 60, 80, and eventually 100. So what we mean by mild is the agency part. They're promoting Indeed Plus. Agencies need to get used to it or be convincing to the clients. Or when their clients like PPP, they need to convince and persuade the clients. It's not just about the logic or efficiency or just pure theory. Clients' mindset change, so we thought this transition will be rather quick, but by the end of March, PPP business will be discontinued, but the transition speed is mild, and there are other factors too, so the progress is slightly delayed, so the HR tech revenue, Indeed Plus related revenue, the second quarter, third quarter revenue is slightly lower than what we thought in May, and so matching and solutions, HR solutions, revenue is not declining as much as we thought. We will come to the same level, the originally planned level by the end of March, but as of second and third quarter, the speed is still mild, and so this side revenue is lower, and that side revenue is not declining as much. At the end of third quarter, Q3, we will update you, but this is where we stand. Thank you. Thank you. Thank you. Mizuho Securities, Kishimoto-san, please go ahead. This is Kishimoto of Mizuho. Thank you for this opportunity. I have two questions. Firstly, about Indeed U.S., about the current headcount situation. Will you have revisited the headcount this year, and top-line improvement is expected, so in accordance with the top-line growth, are you planning to increase the number of headcounts once again? Or is that not necessary if there is a certain level of revenue growth, and as a result, do you anticipate margin to grow, so what is the expectation for the personnel expenses? That is my first question, and my second question is about the Spot Work, Townwork Sukima. You announced that you are planning to release this in fall. It is still in fall, so I think we should wait for further announcement, but I was expecting some news to come out by now. Recently, I have seen some difficulties related to spot work. So are you kind of waiting for the right timing, or is it going to be released sometime after without any issue? Is there anything that you can share with us at the moment? Thank you. Thank you. Top line is growing. That's what you said, but it is not a rapid significant growth, and in this presentation, I didn't use the word recovery or improvement, so we are not thinking of this as recovery. Of course, we need to have volume recovery in order to be able to regard the situation as recovering. So once again, as Idekoba-san said in May, in 18 to 24 months, volume will decline, and we are right in the middle of that decline, or we're at the beginning or in the middle of this decline. That is our view of our business. And regarding headcounts, in May, we made that decision, or in March, April, and May, we made that decision and executed. For the time being, in this environment, with the reduced headcount, we will continue to operate, and that is as planned. And there is no necessity or meaning to increase the headcount immediately. So as I responded to Nagao-san earlier regarding personnel expenses, in a simple model, it will remain flat. In such market, how efficiently are we going to spend personnel or marketing expenses? I think that is the question. There was a headcount reduction recently, and it is not that we are in need of more headcount immediately. The second question was regarding the spot work business in Japan. As Kishimoto-san said, I did mention that given the recent social circumstances, we have been carefully discussing our plan. As I mentioned today, there is a transfer of business between segments, so we have to be mindful about that as well. There are two factors: segment transfer and social circumstances. It is not that we are in a hurry, but rather we want to take time to prepare. We initially announced this will be released in fall, but at least for now, it is not going to be released in this fall. That is the current status. Did I answer your question? Thank you. Thank you very much. BofA Securities, Nagao-san, please. This is Nagao from BofA Securities. Thank you very much. Thank you for giving me the second round. So on the strategic side, so in MS, Matching & Solutions, there's the traditional job board type, which is now shifting to HR Tech. So in the traditional business, there's Recruit Agent, middle, the placement, or Recruit Executive Agent, the high-class headhunting business. These businesses will also shift to HR Tech. Could you elaborate on the progress there? And my second question is the HR, the Marketing Solutions growth strategy. So in each segment, performance guidance lower side, the floor is now risen. But Marketing Solutions is not improving that much. So the original forecast has not changed much. So my question is, the growth strategy of Marketing Solutions, once again, it's becoming invisible. Air Business Tools and new initiatives exist, but they are not clearly reflected in the financial performance. So how are you sorting this out? Thank you very much. Thank you very much for the question. So to your first question, so Japan's HR business will come under HR Technology in April. So the placement, this will come under HR tech. This business is run only in Japan. So this will come under Japan's revenue. So in the presentation, it says that on April 1st next year, this leads into your second question, but matching and solutions will be Marketing Solutions and SaaS business segment from April next year. From next fiscal year, this business will be a standalone segment. So the current status and the future growth strategy and the strategy to improve the business efficiency can hopefully be explained more clearly. We are preparing this internally. HR business, which consists of HR technology and staffing, simplified hiring block of business, and business works smarter, help businesses work smarter. This is Marketing Solutions and SaaS, making Matching & Solutions business. We showed you a pie chart in the past. Right half will do this, and left half will do housing and real estate. In May, we hope to be able to explain more clearly, and we're discussing that internally. I hope you could give us a little more time. Nagao-san, I understand your preference, so please look forward to it. Thank you very much. SBU realignment, my first question, a follow-up on that. Agent, referral, this will be HR tech business, but Recruit Agent, Recruit Executive Agent. These are labor-intensive, traditional type of referral business. If you can multiply tech to that, what can be leveraged? Is this a big realignment, or are you trying to change the business model as well? If you could elaborate on the strategy, please. A while ago, I think I said this. So the placement in Japan, by bringing Indeed engine, the matching efficiency can be enhanced, and we're seeing improvement. I think we've been saying this for two years now. And of course, candidates, we have our salespeople in charge, and our business clients have our salespeople taking care of in the back office. So we've been doing this for two, three years. So the front end is handled by our people, but the back end, there is a machine used already. How we move this forward is the challenge we need to address. And furthermore, this HR tech's simplified hiring strategy, how can we shift from agency ad model to transaction model, from ad to transaction? This business in Japan can be used as a basis to do more business globally. We're thinking of that possibility. So this placement is now working well. How we can develop this further in Japan and globalize this going forward is something we are still thinking. So we don't have any concrete plans. We are just starting now. But this Japan's placement business that we've been cultivating over the years can leverage, harness the power of technology, and may become global. So we're discussing that internally. Thank you very much for your insightful comment. Thank you. Nomura Securities, Ono-san, please. About the two new subsidiaries, I would like to ask a question. First is about the name. Both have Indeed, both starts with Indeed. So what is the aim? And about the chain of command, using Indeed technology and integrating the placement business, as you explained earlier, I understand that, but will you continue to have the same person at the head of business in the new subsidiary, or are you going to reshuffle the structure as well? What is going to be the reporting line? Is there anything that you can share with us about what you are discussing internally? Thank you. Well, that is what I also would like to know, but it is not decided yet. When we have a big reshuffling or reorganization in our company, in most cases, when we make announcement in February for the third quarter, we make a disclosure for the TSE about the change. So at this point in time, I believe that is going to be the timing to share the details. It's not really about which is which, but we just want to make something better. So if we already have something good, we will use it to full extent. It's not really about using something from Recruit and something else from Indeed. It's not really about which organization is going to take the initiative. That will be very narrowly viewed. We are trying to be united, and I think we now have a foundation to develop something better by integrating our capabilities. So we will just focus on who is capable of doing what rather than paying attention to the current structure. Thank you. And also about the naming of these two subsidiaries. Well, we thought about including Indeed and Recruit both. If the name starts with R, and when we try to make an acronym, it doesn't look good. That's just one example of our thought process. Do you get me? No, not really. If the name starts with an R? Well, if it is Recruit Indeed Partners, it is RIP. It is not really good as an acronym. We have discussed with native English speakers. So it was a hard work, actually, to come up with a good name. So there is no hidden meaning, but we also thought about integrating into HR tech. So we could give it a brand new name, but rather than creating a new logo for the brand new name, we thought it is better to build on what we already have. That is the background of why we decided on these names. So there aren't really specific meanings or thoughts, but rather we paid attention to if the acronym is good, and we excluded the bad acronyms. Understood. Thank you. I have a specific follow-up question, Maida, about advertising and promotion expenses. In the second quarter, how much did you use? If it is difficult to quantify the amount, can you please share with us the year-on-year change? I believe I responded to Maida-san's question that we do disclose that number for the first half, but we don't disclose this on a quarterly basis. So I hope you can refer to that information. Understood. Thank you. Thank you very much. We answered all the questions we received, and we were able to share with you some back-of-the-scenes story too. As Arai-san said, once we decide on something, we will disclose and continue close communications with you. Thank you very much. So we will bring this session to a close today. Thank you very much for joining us today. Thank you as always, and I ask you for your continuous support.