Thank you for joining the Recruit Holdings FY 2025 Q1 earnings conference call. This call is a simultaneous translation of the original call held in Japanese, provided solely for the convenience of investors. I'm Mizuho Shen, Manager of Investor Relations and Public Relations. Today we will begin with a presentation by Junichi Arai, Executive Vice President and Chief Financial Officer, followed by a Q&A session. Please note that today's session, including the Q&A, will be posted on our IR website after the event. With that, we will now begin the presentation. I am Junichi Arai and today I will be presenting the Recruit Holdings FY 2025 Q1 financial results. As previously mentioned, starting this fiscal year we have integrated HR Technology and HR Solutions, which includes the job advertising business and the Placement business from Matching & Solutions. As a result, Matching & Solutions now consists of Marketing Solutions including SaaS, and accordingly the segment name has been changed to Marketing Matching Technologies or MMT. To facilitate a comparison with our FY 2025 segment outlook and results, we are presenting FY 2024 pro forma segment financial data, which assumes the integration of these businesses had been in effect from April 1, 2024. Unless otherwise noted, all comparisons are made against the same period of the previous year on a pro forma basis. Comparisons with the previous quarter will be noted appropriately. Additionally, starting this fiscal year, we have renamed our key financial metric previously referred to as Adjusted EBITDA to EBITDA S, and we will clearly distinguish between the two metrics by referring to the figure before adding back share-based payment expenses to EBITDA S as EBITDA. Let me begin with key highlights from the FY 2025 Q1 financial results. First, regarding the consolidated results, we will not be changing the consolidated business forecast for this fiscal year from the disclosure on May 9 at this time. Taking into account the results of the first quarter, the workforce reduction in the HR Technology business announced on July 10 U.S. time, and the current business environment as already communicated in the Tokyo Stock Exchange voluntary disclosure on July 11, the financial impact of HR Technology's workforce reduction has already been largely incorporated into the EBITDA S outlook for HR Technology, which serves as an important component of the consolidated guidance. The consolidated FY 2025 Q1 results were broadly in line with our expectations. While signs of recovery in U.S. job postings have yet to emerge and consolidated revenue declined by 2.5%, each segment, particularly MMT, focused on further improving productivity, resulting in the highest ever quarterly EBITDA S margin of 21.3%. As for HR Technology, supported by continued improvements in monetization on a U.S. dollar basis, revenue in the U.S. increased 0.9% year-over-year and, reflecting seasonal trends, increased 6.3% quarter-over-quarter. Revenue in Japan decreased 4.4% year-over-year on a Japanese yen basis and 4.3% quarter-over-quarter. This was primarily due to the impact of Indeed PLUS revenue on a net basis. As previously explained in May, segment EBITDA S margin increased from the same period last year, reaching 35.0%. In staffing, Japan showed steady performance, whereas in Europe, the U.S., and Australia, revenue declined by 12.2%. As a result, segment revenue decreased by 3.4% with segment EBITDA S margin of 6.6%. In Marketing Matching Technologies, revenue increased by 7.1% amid a stable business environment in Japan, while cost controls resulted in significant expansion of EBITDA S margin to 31.6%. Regarding the capital allocation measures, the share repurchase program with an upper limit of JPY 450 billion initiated in March 2025 reached its maximum purchase limit significantly earlier than initially planned and was fully completed on June 18. This was driven by ToSTNeT-3 transactions executed in March and April totaling JPY 98.5 billion, as well as effective progress in repurchases through an appointed securities dealer with transaction discretion. Largely due to the stock price downturn in April, net cash and cash equivalents as of the end of June decreased to JPY 563.5 billion, primarily due to the early completion of this share buyback program. At this time, there is no change in our policy of reducing net cash to a level of approximately JPY 600 billion by the end of March 2026. Now I will provide further details on these points. As I mentioned earlier, we are not changing the full year consolidated earnings forecast disclosed on May 9 at this time, considering the first quarter results, the reduction of approximately 1,300 employees in HR Technology announced on July 10 U.S. time, and the current business environment. While we do not expect a significant increase in revenue given the ongoing uncertainty in the labor market, particularly in the U.S., we aim to increase EBITDA S by pursuing operational efficiency and ultimately seek to increase basic EPS by also factoring in the effects of share buybacks as already communicated in the Tokyo Stock Exchange voluntary disclosure on July 11. The financial impact of HR Technology's workforce reduction has already been substantially factored into the EBITDA S outlook for HR Technology, which was announced on May 9 and serves as an important component of the full year consolidated guidance for this fiscal year. Therefore, we are not revising our consolidated guidance at this time. Additionally, there are no changes from the May 9 forecast regarding profit attributable to owners of the parent and basic EPS. To explain a bit further, the workforce reduction of HR Technology will positively impact our consolidated EBITDA and margin due to reduced employee benefit expenses. However, as I just noted, this was already factored into our May 9 full year outlook for HR Technology as part of operating expenses. Additionally, while we expect share-based payment expenses to be lower than initially projected, the resulting impact on our consolidated EBITDA S and its margin is limited as these two effects largely balance each other out. As a result, we have determined not to revise the current full year consolidated EBITDA S guidance of JPY 697 billion, up 2.7% year-over-year, with a margin of 19.8%. Regarding the Q1 consolidated results, they were broadly in line with our expectations at the beginning of the fiscal year. While revenue in Marketing Matching Technologies increased, revenue in HR Technology grew on a U.S. dollar basis but declined on a Japanese yen basis, and Staffing also saw a revenue decrease. As a result, total consolidated revenue decreased by 2.5% to JPY 878.8 billion. Gross profit decreased by 1.7% to JPY 521.8 billion, with a gross margin of 59.4%, flat compared to the same period last year as a result of continued efforts to improve productivity. EBITDA S was JPY 187.1 billion, which is equal to an increase of 4.5%, resulting in the highest ever quarterly EBITDA S margin of 21.3%, supported by margin expansion in MMT. EBITDA increased 1.3% to JPY 163.5 billion, and the EBITDA margin increased compared to the same period last year, reaching 18.6%. Profit attributable to owners of the parent increased by 13.6% to JPY 120.9 billion. Basic EPS increased by 21.5% to JPY 83.97. Now I will explain the first quarter results for each SBU. First, I will talk about HR Technology. Segment revenue for Q1 FY 2025 increased by 3.6% to $2.36 billion compared to Q4 FY 2024. Revenue increased by 5.9% on a Japanese yen basis. Segment revenue decreased by 3.8% to JPY 341.7 billion and increased by 0.4% compared to Q4 FY 2024. Indeed's real-time Hiring Lab data continued to show a gradual cooling in the U.S. labor market, with relative resilience seen in sectors like healthcare, construction, and other in-person occupations. During Q1 FY 2025, the number of job advertisements on Indeed in the U.S., including both paid and unpaid job ads, continued to decline in line with our initial assumptions even amid such conditions. While hiring demand from small and medium-sized businesses had shown particular weakness in March and April, we saw the trend in hiring demand among these employers improve late in Q1 as the U.S. economic outlook improved. Amid this environment, revenue in the U.S. increased by 0.9% year-over-year to $1.26 billion, driven by ongoing development in monetization. As the rate of increase in revenue per paid job ad more than offset the rate of decrease in the number of paid job ads quarter-over-quarter, U.S. revenue increased by 6.3% on a U.S. dollar basis, supported in part by typical Q1 seasonality. Revenue in Europe and others grew by 12.6% to $476 million, which is an 11.8% increase compared to Q4 FY 2024. In addition to a weaker U.S. dollar, the region benefited from strong performance in the U.K., partially driven by a favorable comparison with the prior year. For Japan, this was the first quarter following the integration of HR Solutions from Matching & Solutions. Revenue in Japan was JPY 90.2 billion, a 4.4% decrease, broadly in line with our initial expectations, including the impact of Indeed PLUS revenue on a net basis compared to Q4 FY 2024. This represented a decrease of 4.3%. Segment EBITDA S for Q1 was JPY 119.4 billion, an increase of 1.4%, and segment EBITDA S margin increased to 35.0%. Segment EBITDA was JPY 96.3 billion and segment EBITDA margin was 28.2%. As Deko has previously communicated, our assumption remains unchanged that hiring demand in the U.S. will continue to decline by approximately an additional 10% from the level at the beginning of this fiscal year and is likely to bottom out in the second half of the year. We are operating under the expectation that it will still take some time before job demand fully bottoms out. As for staffing, segment revenue in Q1 decreased by 3.4% to JPY 408.1 billion. In Japan, revenue increased by 6.3% to JPY 212.8 billion, driven by continued growth in demand for temporary staffing services and an increase in the number of temporary staff on assignment. However, in Europe, U.S., and Australia, revenue declined by 12.2% to JPY 195.3 billion, reflecting ongoing weakness in demand for temporary staffing services amid uncertain economic conditions. Segment EBITDA S decreased by 6.2% to JPY 26.8 billion, resulting in a segment EBITDA S margin of 6.6%. Next, I will discuss the results of Marketing Matching Technologies. The business environment in Japan remained stable with revenue growth across all three sub-segments. Segment revenue increased by 7.1% to JPY 136.8 billion. Revenue in Lifestyle, which consists of Beauty, Travel, Dining, and SaaS solutions, increased by 9.7% to JPY 70.1 billion. In Beauty, revenue increased due to continued growth in new business clients. Revenue in Travel increased as the trend of high unit prices for lodging continued due to domestic travel demand during the Golden Week holidays and increased inbound tourism. Revenue in Housing and Real Estate increased 3.7% to JPY 37.5 billion, primarily due to higher advertising demand driven by an increase in the supply of existing condominiums. Revenue in Others, which includes Car and Bridal, was JPY 29.1 billion, an increase of 5.4%. Segment EBITDA S margin expanded 4.9 percentage points to 31.6%, driven by appropriate cost control principally related to service outsourcing expenses. Regarding our capital allocation measures, the JPY 450 billion share buyback program, which the Board of Directors resolved on February 28, 2025, was fully completed on June 18, reaching the maximum authorized amount. The total number of shares repurchased was 55.6 million shares. 11.7 million shares were repurchased through ToSTNeT-3 transactions for a total of JPY 98.5 billion and 43.8 million shares via market purchases through an appointed securities dealer with transaction discretion for JPY 351.4 billion. On March 24, 2025, we retired 85.9 million shares, equivalent to the number of shares repurchased over approximately the preceding year. As of June 30, 2025, total issued shares were 1,563.9 million shares, of which approximately 4.9% were shares directly held by Recruit Holdings and 3.7% represented trust holdings allocated for share-based payment expenses. Based on our consolidated earnings guidance disclosed on May 9, 2025, shares repurchased as of June 30 this year and the total share dividend amount expected in FY 2025, the total payout ratio of this fiscal year is projected to be 84.5%. Consolidated net cash as of June 30, 2025, decreased to JPY 563.5 billion, less than half of the amount as of March 31, 2024. We have not changed our target announced in May 2024 to reduce net cash to approximately JPY 600 billion over the two years ending March 2026. While considering options for strategic M&A, we will closely monitor changes in the economic and capital market environments. Based on our company's financial outlook, we will assess whether or not to proceed with share repurchases. This concludes my presentation. Now we would like to proceed to the Q and A session. If anybody has a question, please click on the Zoom raised hand button. Please unmute before asking your question. We will take one question. Goldman Sachs Munakata San, please. Thank you for this opportunity. I'm Munakata from Goldman Sachs. One question on HR Technology, please. In your presentation you mentioned that you did the workforce reduction. What was the background to this? Including macroeconomic factors or the internal resource allocation? Is changing your policies changing with the AI? If macroeconomic situation improves, the drastic workforce increase will not happen. Can we expect that? If you could elaborate, please. Thank you very much. In May, Deko explained this point, how we become more efficient and more productive in our operation, including the environment. After that, Deko returned as CEO of Indeed. HR Technology, especially in the U.S., is, to repeat myself, regardless of the environment, we will take new initiatives one by one. In other words, new services, great contents that will please our customers who will use our service more so that we can monetize further. We are in that process, and how we leverage the opportunity is the key, as we mentioned in May. Back in May. We had the coding for new service development. I think we said 30%. 30% is already digitalized and this is making progress. Of course, we use external technologies and we pay in some cases. How we reduce our cost, how we maintain our efficiency is the baseline. Under that circumstance, we will try to optimize the number of headcount and decide whether we should increase or reduce the number of people engaging in R&D. That was the thought process. Of course, we will increase the headcount if we need more to increase our revenue. In the HR Technology framework, how we digitalize, introduce more automation, and produce more effectively and efficiently is the key. The sales side is usually the people we need more when we want more revenue. How we make our development more efficient is not necessarily directly related to revenue increase. As we already mentioned, this year U.S. HR Technology revenue increase is not expected to increase much. If there is some big change and revenue increases rapidly, will we recruit, regain all the people that we let go? No, that is not likely. Not a high possibility. Thank you very much. When you develop new services, you will continue pursuing higher efficiency. I understand. One follow-up question if I may. You are now improving your monetization steadily in Q1 HR Technology. U.S. revenue on a dollar basis is solid, I think, given the external environment. In your monetization measures, the unit price increase offsets the volume decline. Monetization measures, are they on the extension of what you mentioned in Q4 results or are there any updates you could share with us? Basically, we are doing things on the extension of what we said in May, maybe in September. In Indeed Future Works, we may be able to say something new or say that we are enriching what we are working on. Basically, we are doing things on the extension of what we've already shared with you. Thank you very much. Thank you. Next. Ono-san from Nomura Securities, please. Thank you. This is Ono from Nomura Securities. For Indeed and Indeed PLUS, the management structure currently, basically people who are already on will stay or will there be succession? I would like to understand better about the management structure going forward. I think you are talking about Deko. If that is the case, then currently we are not calling it interim. He himself considers the current period to be a crucial period, and therefore whether things go successfully or not at this timing will create a huge difference for the company. He is putting himself close to the field every day, listening to people and making decisions every day. I don't know what will happen five years, ten years from now, but for the time being, it's not a temporary structure until we have someone new. Rather, we are focused on what we can do today to be successful in the future. I think that's a better understanding of the structure today. What about Glassdoor? As for Glassdoor, in July we talked about this. It's been some time since the acquisition and fundamentally they will be integrated more fully with Indeed. Along the process we will have opportunities to showcase Glassdoor capabilities and characteristics and make contributions. Thank you. If I may quickly, regarding MMT. For c ost management, I have a question. What are some cost items where you see huge room for improvement? Are they mostly outsourcing costs or are there other items? Generally, overall we will cut cost where we can, and of course at the same time we hope to increase revenues. That's our approach. For certain focus areas, that's been the policy and our approach. What structure should we have for these specific areas that have been identified? We will have the best structure for each respective field. Looking at the past spending, we will eliminate waste. We will no longer have unnecessary costs. Of course, this is a given, but we will have more full control over the costs. We will invest where it is necessary and control investments where it is not as crucial. By taking these measures, as we've been saying since before, we believe that this leads to margin improvement together with sales and revenue increases. This is achievable. I see. Thank you. Thank you. We will wait for the next hand to come up. If you have any questions, please show us your hand. No more questions. Oh, we can end early today. We are trying to be clear and maybe that is bearing fruit. Yes. Ono san from Nomura Securities, your second time please. Oh, yes. Great opportunity. Thank you for giving me the second opportunity. Earlier you talked about workforce reduction. You mentioned that your automation is progressing. In coding, part of your workflow is automated. Aside from that, do you have any other areas that you are making progress? Anything you could share with us? Of course, the internal efficiency I mentioned earlier when I answered the previous question, by utilizing that, we are trying to develop new services. We are not trying to reduce people everywhere we can. That's not what we are doing. At one point after the rebound from COVID, we increased our headcount and then we had two rounds of reduction. This is the third headcount reduction. Thinking of many factors and trying many things, we thought how we can become a more lean structure and automate and digitalize ourselves. We are making progress. We will continue exploring what the best format is for us. In some areas we may hire. In other areas we may pursue further automation and digitalization. I cannot specifically mention what we are doing this and that, but we will continue thinking of our best format, optimal format. I cannot mention any particular areas, but our policy remains unchanged. Thank you very much. In the U.S. AI related service deployment, what are the necessary pieces, parts for you to do that? Do you just need time for R&D? Is it just a matter of time or do you need partnership, collaboration and including that you will develop your own resources? How can you come up with a breakthrough AI services? If you are discussing this internally, could you share that with us? We have a two-sided marketplace. We are located in a two-sided marketplace. How the job seekers' convenience can be enhanced and how the corporate clients' convenience can be enhanced and enhance the mandate matching, enhance the quality of matching and pursue and improve our monetization. I hope all three parties can enjoy the benefit. That is what we are trying to do. If one piece is missing, this will not materialize. How we automate where and where we should not automate, what we can do, to what extent we are trying and doing trial and error to move forward. Of course, if we can do everything in house, that's the best. On the other hand, we may in some cases leverage what other companies have developed. If that is the best, maybe it will be quicker than doing everything by ourselves. We do not have the initiative of renewing the AI. What we're trying to do is how our service can be utilized more. I think the seeds and drivers will come from many areas. We will not do everything, may not do everything by ourselves, but we will not be over reliant on other parties and will come up with the best format. Thank you. Thank you very much. Thank you. Thank you. Next, Minami Munakata from Goldman Sachs, please. This is my second time. Thank you. I want to come back to HR Technology again. In your presentation in the beginning of this session, perhaps you touched upon this a little bit. Europe and other regions in terms of top line appear strong to me. I would like to better understand the background and sustainability of this strong performance. At the beginning of the year, you said regions besides the U.S. in terms of improvements of monetization, they would be catching up, they would lag behind. That presents a bigger room for improvements. Is that the contribution we are seeing? What is the background? Yes, you're right. There is a time lag to some extent in our approach. If you consider the U.S. situation last year, I think it gives you a better image. Also, in Europe, countries like the U.K., the last year's situation was not so favorable. This year we have been making a recovery and we are seeing good performance. In terms of improvement or growth, that appears higher. It's not that the situation is outstandingly great, it's just that last year things were unfavorable. The launch pad was placed at a lower ground. Also, the exchange rates in relation to the dollar, this is another factor all contributing to the performance. As for the business trends, volume, even if it does not recover substantially, we can still compensate through improvements in monetization. If volume is at the expected level, then we can go for an upside for this year. I see. Thank you. As for Japan, for HR Technology, still for Japan, I understand this is in line with the expectation. Lately, recently investors have said that perhaps competitors are gaining share or maybe it is taking longer for the Indeed PLUS to penetrate. I have received such questions from investors recently. Honestly, should we be concerned about these matters? What are your views? Any comment on this, please? Yes. In May, what we said was that this year we are not expecting anything drastic. We will not have any drastic change. Rather, we want to stabilize the new operations. For next year and the year after that, this is us making preparations for the leap to come in the next year and beyond. In the meantime, if our competitors are increasing their performance, if they are doing better, of course these are expected. It's possible, but we are not swayed by that. We had separate operations. We are focused on integrating them, facing in the same direction among different teams. Those are our focus areas. Of course, we have to do more to become number one. This year we are not expecting any outstanding performance. Rather, our focus is to establish stable operations. That is our priority for this year. We will steadily make efforts to make sure that is realized. Of course, we will make sure we respond to our customers and clients from the initial year. Of course, it would be nice if we have a very robust performance. These are operations and there are people behind them. We have new people coming in in the field. It is not easy to have established stable operations from day one. We are steering the ship. After three months, after six months and at the turn of the year, we expect things to be more stabilized and fully ready to launch. Personally, I am very excited in terms of the operations. I see. It's very clear. After next fiscal year and beyond, you are making preparations for the future growth and things are according to plan. I see. Thank you very much. Yes, thank you. Thank you very much. We will wait for other questioners. Oiwa san from Jefferies, please. Thank you very much. This is Ken Oiwa from Jefferies. In SaaS AirPay, the profit contribution is my question. In our case, we have sub segments, the business profit and margin. We have not shown the breakdown from the past. This time we have the new MMT. This is one new segment, and here we have no plan of sharing the profit margin of each business. In SaaS, in our strategic positioning, the area with frequent transactions, for example, lifestyle. Lifestyle business. We are in that area. As we have mentioned from the past, how the PSA business products and services can, in travel for example in our lifestyle business or beauty, how it can contribute to these lifestyle business, we hope to provide service that can increase their revenue. So. This may be viewed as a cost. How to grow the lifestyle business as a whole is the highest priority. That is the positioning, of course, backed by the economic circumstances. This business showed stronger growth in Q1 than others, and MMT growth was strong. We hope to keep the momentum so that more business clients can use our products and services. We're not talking about margin going up or down, rather than talking about margin per se. We think by doing what we had just mentioned, we can aim for higher revenue. I think that is the right way, the right approach for SaaS business. Yes, understood. Thank you very much. Now, another topic if I may, or should I step down once? No, please go ahead. Yes. U.S. Indeed business, agency recruiters' wallet share. Are you taking wallet share of agency recruiters, agency recruiters, Robert Walters and other players? Yes, the placement from other companies, are you taking wallet share from others? Placement business model and Indeed's main area business model are slightly different. How we make money is different. It's not that we start the placement business and take the market share of the incumbents. Business clients, what percentage of their business they use for placement and advertisement, and how much they use for Indeed, their wallet is allocated. In the overall wallet, we have some share and other players, other services have other shares, and we are competing over the market share. The way we raise money is different. One is success-based, one is advertisement basis. So. Of course we compete to gain customers' wallet. That is secondary. If customers want to use more money for us, then yes, more money will come to us. That is the secondary benefit that we expect. Due to the difference in the business model, we are not directly competing with them head on. Understood. Thank you very much. Thank you. Thank you. Is there anyone else that would like to ask questions? Yes, Minami Munakata Goldman Sachs, please. Sorry, it's me again. Thank you. Regarding capital allocation, I have a question. The net cash level is below JPY 600 billion initially. By the end of March next year, you are targeting to reach JPY 600 billion. That was an ambitious target, but you are now much ahead of the schedule. Before, when I asked questions, there seemed to be certain M&A potential companies that you were considering based on the comments that we received. Again, going forward, what is your approach to share repurchases? M&A, what is the policy on capital allocation? If you could give us updates, I would appreciate that. Yes, as of the end of June, the level was below JPY 600 billion, somewhere in the range of JPY 560 billion. Luckily for us, we are not in an environment where revenue continues to increase steadily, but cash coming from the operations continues to be robust. The uses of cash, of course, going forward, we will have more cash and deposits to accumulate. Going back to my presentation earlier, by the end of March, we will be in the range close to JPY 600 billion. That's where we would like to land by that time. Of course, if there will be M&As, then of course there will be certain spending, but this is contingent on relationships as well as the business environment. If there are no M&As, if we leave this untouched, then cash and deposits would continue to accumulate towards the end of March, luckily for us. At any given time, if the business environment is not favorable, then perhaps it's better to have more cash and deposits on hand. That may be a decision to be reached. If that is not the case, then at some time, maybe it is better to implement share repurchase programs. Those are our views, but depending on the stock price, if the stock price surges, then do we want to implement share repurchases? That's another discussion. Given the economic situation, the stock price of the company, and also business situations, spending possibilities, where we would like to spend the next year, and also progress in M&A. There are four or five different factors, different uses of cash, and we will determine the best optimal spending. Hopefully that will be something that contributes to our future. That's where we would like to spend, so JPY 560 some billion. Just because we are now below the JPY 600 billion targeted level, it's not that we can immediately take action. We will continue to target the range around JPY 600 billion. That's very clear. Thank you. Thank you very much. Thank you very much. Any other questions? Thank you very much. As Junichi Arai mentioned earlier, we provide an announcement regarding Indeed's events scheduled for next month. Junichi, please go ahead. Yes. We are pleased to announce this year's Indeed Future Works, which is the largest event. This Future Works will be held in New Orleans on September 10th and 11th, U.S. local time, with a hybrid format combining both in-person and online participation. As in previous years, we will have the Indeed team talk about Indeed's latest products and existing hiring solutions through detailed product demonstrations, highlighting their practical benefits for corporate recruiters and their recruitment activities. Presentations, demonstrations, and exchange of views will be held. If you could come to the site, that's great. If you would like to listen in, that will also be possible. If you could register in advance and listen in, or listen in person, or listen to the recorded audio later on, you could experience our evolution and progress and the types of services we are planning to offer to our clients and customers. Thank you very much. Thank you very much. We would now like to close. Thank you for joining. Thank you very much.