Recruit Holdings Stock

Hello, everyone, and welcome to the Recruit Holdings fireside chat at the Goldman Sachs Communacopia Technology Conference. It's a great pleasure to have Hisayuki Idekoba, CEO of Recruit Holdings here today. My name is Minami Munakata. I cover Recruit Holdings and Internet entertainment here at Goldman Sachs. We have about 35 minutes for today's session, inclusive of audience Q&A at the end. So with that, Deko-san, thank you very much for being here.

Thank you for having me.

Thank you. So let's get started. So Deko-san, Indeed began as a job advertisement business, but pay more, get more suggest what employees pay for today is much closer to an actual hiring outcome. So could you walk us through that evolution and how you personally define what Indeed is exactly selling?

What Indeed is exactly selling. So we're selling basically hires. We're selling hires, that's a very important part. And basically, AI technology helped us to make sure that we're delivering qualified candidate, that is the most important part. I'm going to give you a good example. In the past, Indeed was more like a search engine, meaning like we were charging $1 for this click, $1 for this click, $1 for this click. It doesn't matter who is clicking it, right? Meaning, like if this click was done by the person who just graduated high school, just graduated university, whatever, or 3 years of experience, 20 years of experience, we were charging $1, $1, $1. So as a result, sometimes employers said, "Oh, we allocate a bunch of budget, we got 200 applications, but quality was not great."

But now with AI, we have a great AI technology to detect, okay, how qualified this candidate is, who is clicking this? Who is clicking that? Who is clicking this? And we are charging, let's say, the same $3, we're charging $2.7 for 20 years of experience person and probably $0.1, $0.1 from these two clicks. As a result, when employers are out getting more budget, they can get qualified candidates sooner. So what's happening is there are so many positions, employers are struggling to fill, when they increase the budget, they can get qualified candidates, not just the quantity of the candidate. That's the big evolution we've been doing for the last 18 months. Is it answering your question?

Yes, you are selling better experience. And I think you started to disclose U.S. ARPJ KPI. So U.S. ARPJ grew 35%, while Indeed job posting declined 4%. I get a constant question whether that is sustainable at this level. Should we expect the U.S. ARPJ to slow down from Q2 onwards?

I'm so focused on the long-term innovation, so what I believe is right now, it doesn't matter inside recruiters, which employers have 50 people, 100 people in their talent acquisition team. Or outsourced, which is staffing agencies or recruiting agencies, employers paying a lot to them. What they're doing is human being is checking thousands of resumes if they're qualified or not, and also even if they're qualified, most of the time, what they're doing is they're sometimes reaching out to them, like, "Oh, do you really have driver's license?" That's the manual repetitive tasks human being recruiters are doing every day. And 5 years later, 10 years later, I really, really want to automate these manual repetitive tasks, and that's our goal.

And if we can do it, so what we're doing is literally almost like an AI company, right? We have a lot of two-sided marketplace data. And we are training our model to detect which candidate is a great, qualified candidate for this job, this specific employer. And so if we can do it, I think it doesn't matter. We should be able to monetize our value because that's the work which is -- there's a cost associated with it, right? $350 billion market, 65%, 70% of this $350 billion HR market is the manual cost, human labor cost.

And I think people are worried about AIs changing people job or whatever, like but I think we should automate these things to boost actual productivity of all employers, that's our goal. And so short term, what I've been focusing on is more like -- I've been very careful about employer satisfaction, client satisfaction and the speed of the change. Because this AI changes so fast, the speed of the change is so quick, so we're delivering value. I've been very careful getting a good feedback from employers, but I've been very careful, okay, is this too fast or not, too quick or not, so that's the balance. I'm very careful, but that's more like my short-term focus.

Great. So let me ask something about your comment about user satisfaction. So take rate is still under 1%, [ implies really headroom ]. But you also said you will stall monetization if the value is not there. How do you get whether Indeed is expensive or cheap? So how much of the value created should Indeed capture?

Of course, compared to other like recruiting agencies, which are usually charging 15%, 20% of first year salary, which is very expensive. So most of the time, employers, what they're doing is, okay, this position has been open for 90 days, 120 days, that's the -- most of the time they reach out to recruiting agencies, staffing agencies, can you help to fill this position. And so what's happening right now is what we are -- I think most of the time -- I haven't seen the situation is one at a time to fill, meaning like cost per hire is, of course, one measurement, most of the time, like large enterprise customers, like monthly budget clients are thinking, okay, what's the cost per hire. But think about it, the cheapest cost per hire, meaning if you can wait 180 days, it has the cheapest cost per hire. You can, of course, wait, the position to be open and no budget allocated. And if you can wait 180 days, you might get some candidates. You might be able to fill this position. That's the cheaper cost of higher.

What's happening right now is if we can deliver qualified candidate in a day or in 3 days, they're happier. That's why they prefer to pay 50% more, 100% more to get the qualified candidate faster. And that's why we're asking them, "Hey, you should try it, you should try it." And it's not only premium sponsored jobs, so when we think about AI innovation, which is like happening everywhere, for example, AI sourcing, recruiters, human being recruiters are checking resumes, online, LinkedIn, Indeed, whatever, reaching out to job seekers. But 90% of time or 95% of the time what they're hearing back from job seekers are, "Oh, thank you for reaching out to me, but I'm not actually looking for job right now." But our AI sourcing knows, okay, which job seekers are active, checking jobs within 30 days, which jobs seekers are opening e-mails, which jobs seekers are checking the notifications, so that's why it's so productive.

And so as a result, employers can feel that they can get the qualified candidate faster. I think most of the time, okay, I'm going to pay this much, but I can get qualified candidate much, much faster. That's why so far -- last week, we had a client event we call Indeed FutureWorks. I literally had more than 100 conversations with the employers, but I got so many good feedback so far. So I'm a little bit worried that we are charging too much, but actually, what's happening is we're delivering good value and they're happier. That's what we're seeing right now.

So you've got a positive feedback from both small, mid-sized enterprise and large enterprises as well?

That's a good question. Big large enterprise have very complex tech stack most of the time, so -- and also it's depending on what level of people we're talking to, like Head of HR or CFO, or COO, or CEO, because this time, this is more like an AI change. So that's why we're having more meetings with CFO, COO, CEO because most of the time, CHRO is thinking more like HR way. But CFO or CEO is thinking, okay, how to use AI to improve productivity dramatically. So sometimes this top-down is happening, so we're trying to have more and more meetings directly with CEOs.

You also mentioned for large enterprise, it takes some time to make some final decision, right? They needed to test something first, right?

Yes. Actually, at the very beginning of this year, we couldn't have a good growth from the enterprise clients. But finally, we're getting good growth from enterprise clients. It took time, but I think -- of course, these are AI products. Most of the time, we need to go through their legal and compliance processes. It took time, but we're getting it.

That's great. So let me switch gear a little bit. So Indeed Hiring Lab view is that demographic, not AI will be the bigger force of the size of the labor market leading to structural shortage through 2040, but likely not the consensus in this room. What informs it? And what does that do to your monetization model?

A bunch of people ask me like, hey, do you think AI will have like 20% unemployment rate. AI is replacing human being jobs. Our research showed that for the next 5 years, the impact, especially I'm talking about U.S. market, but the impact of aging workforce is much bigger than AI impact. We are losing experienced, skilled baby boomers every day. And these people -- but that's why -- the impact is not the same for all industries. Think about a percentage of engineers, which are like 60 years old or like a plumber that's 60 years old is different. So what's happening is, for example, like electricians, you can find electrician jobs, which is paying more than $200,000. It's so important everybody who build a data center to hire electricians. And that's why also like the construction workers, if you want to hire skilled workers, it's very -- I think it's happening even today.

So we're going to lose 6 million workers in the next 5 years, 6 million workers. That's almost 4% of the U.S. labor force. And our current employment rate is 4%. So I would say, it sounds weird, but the AI change, AI replacement is too slow to catch up this -- the aging workforce change. Aging workforce is for sure happening. That's why employers are struggling to fill positions. And I think the competition is getting worse every day, and that's why they're struggling to fill skilled worker positions. That's why they're happier to pay more. I think actually, the vacancy cost, everybody is underestimating vacancy cost. Actually, I've been talking with some trucking companies. Some CEO told me like they have more trucks than drivers, that's the challenge. So that's why most of the big trucking companies are running GDL drivers license school. They're trying to have their new drivers.

So anyway, so I think I understand that people are worried about AI and job relationships. But the reality is -- okay, I'm going to give you one more example, software engineering job. Everybody said software engineering jobs will be automated by AI, and everybody will lose jobs. But what we're seeing is last 12 months, increase of hiring demand for software engineering jobs. Why? When we dig deeper into the details, you can see a lot of new job titles, which is AI ethics managers, AI conversation designer, AI prompt designers. So what I'm saying is the AI change is not like one-to-one change, meaning like, okay, this AI can replace this person's job. No, it's not happening. Human being is doing many tasks. And one of the tasks or some of the tasks were automated by AI, so it requires a lot of change or a lot of lead designing for the leadership team or CEOs. That's what's happening. That's why I'm very positive that AI is not a job killer, it's more like a job lead designer. That's how I'm thinking. Maybe I'm totally wrong, but from our data point of view, I think that's our view.

Interesting. So if we face more severe shortage of the labor force, the monetization will be accelerated or you will change the monetization model of Indeed?

It's going to be definitely a tailwind for us, yes. But I feel bad. You said that, in a competition, you can make more money, I feel bad. But that's the market and competition, what's happening today.

Great. And also a growing number of companies are reporting rising AI talking cost cutting into margins. So how are you managing your overall cost to keep investing AI? And how does that factor into the midterm ambition you said last quarter of greater than 50% of margins?

Yes. We're managing the AI cost separated into two parts, which is external AI cost, meaning like external AI cost is job seeker is using AI, employers are using AI. And internal costs, which our employees are using AI. And external AI costs we're lucky, ,we're investing a lot into AI, but we are able to monetize these AI costs. It's -- we can leverage the AI cost to monetize it. So I don't -- I'm not so worried about this part.

Internal AI cost, we need -- I need to make sure all the AI investment costs into our employees has to be justified really well. So I need to keep checking almost like every month as the productivity is getting better. The typical numbers that are revenue per one employee, is it going up. So that's how we're checking. And as you guys know that the open-weight model is getting really good. And I feel like we're -- of course, we're spending a lot of money for AI, but most of them are more like electricity and the computing power, not the model, I think. And we're very fixable to have -- based on the latency, we can have open-weight model or old model, and I'm not so worried about AI investment cost.

That's great. So we covered a lot of interesting topics, so I'd like to open it up to the audience. If you have any questions, please feel free to raise your hand. Please go ahead.

I hate to be the first question. It's never very interesting. I know it's going to be let down. But let me ask you, can you talk to us a little bit about AI in Japan? And to the extent that I feel like maybe this will be a little bit different than some of the cloud and some of the other technologies that business there has embraced. It feels they're more -- I'd just love to hear your thoughts about that, and as you think about the Japanese businesses, how you think about bringing AI domestically.

Thank you. Great question. I think I'll talk about two parts. One, in general, in Japan, people are welcoming AI a lot, including even human robots, I think the demographic change is so big. Aging workforce is -- they're losing labor every year, 1%. They're losing 1%, so that's a huge thing. So all the employers are struggling to hire people, so they're welcoming AI. Compared to U.S., I still feel like a little bit hostile and some clients or person is saying like, I'm not going to have any AI, okay? And I saw that situation. I think Japan is different. That's one thing.

And one more thing is regulation. AI regulation is -- there are two things, which is typical old-school, HR-related regulations in the U.S., which is Fair Credit Reporting Act. In Japan, you need a license to recommend a job. And in European countries, there are many different old non-discrimination or like you have to be fair, type of typical HR-related regulations. There are so many. And that's one thing. And one more thing is AI-specific regulation, right, EU AI Act and Japan has an AI regulation. So for us, we have to be very careful to clear these two regulations because most of the time, old-school HR regulations, they don't care about the automation. That's why you have to be sure that you're very compliant for the old regulation, and also we need to very take care of that AI-specific regulations, EU AI Act, whatever.

So U.S. is relatively open for the new regulation. And Japan is actually open for the new AI regulation. As you know, like EU is more gray. But what we're doing is like we're trying to be very compliant for both. But relatively speaking, Japan is relatively open, so we're testing a lot of new things. But you need to have licenses to do the job recommendation with these type of things, so that's -- is that answering your question?

When we look at the average revenue per job performance, curious if there's any difference between customer cohort sizes. Does the growth look similar with large enterprises, medium-sized businesses and small businesses? And maybe could you talk about the price elasticity of each, if it exists? Because I would think if you're adding the requisite value, there should be no elasticity. But sometimes small businesses don't fully appreciate things rationally and large businesses sometimes expect discounts just as the large. So maybe just talk about the customer reception and elasticity.

Yes. Great question. I think what I'm seeing is very clear gradation of the change of the speed. I mean like the small, small businesses started to use these new AI products much, much faster. And it's when it's getting bigger, bigger, bigger, slower, slower, slower. That's pretty much it. That's what I'm seeing.

And a good example is there are so many enterprise, big, big, big brand companies which have a headquarter and the regional managers and store managers. And most of the time, probably I should not say it, but the store managers are so frustrated against the headquarter HR team. And headquarter HR team is saying like, "Oh, every month, this is our budget. We allocated it for the next 5, 6 months." But the store managers say, "Hey, I need to hire logistics managers today. He left today. So I need to do the business with the company." Like that's why, to be honest, majority of enterprise customers are actually posting jobs directly to Indeed, not using their tech stack because they're frustrated. This is typical frontline folks and headquarter type of situation. And so they're trying to reimburse the cost.

And so that's why -- again, like the enterprise clients, from my point of view, there are two different types of enterprise. Like it's more like enterprise/enterprise, which didn't have any -- it doesn't have any decision or like stores type of companies, just one headquarter, it can manage everything. But most of the time, like if it's -- it has let's say, 1,000 stores, they have a different decision-making process. They're acting more like small businesses. So from my point of view, it's just that -- that's why I do really care about the product is it working or not. But it's the good test is when we deliver these products for small businesses, if they're okay, it's just a matter of time because if it's working, they will realize, oh, it's working.

But big enterprise customers it takes time to talk to the Head of HR or headquarter people, like they don't want to increase the monthly budget. But the frontline folks are different. So it takes time to convince people. And as I said, also, like this time, it's more like an AI change. Sometimes we need to include CFO or CEO type of C-level people. And that's why we're having like a World Cup sponsor and Formula One, we're going to have a sponsor and we're going to invite and we're going to have a party, typical in enterprise sales, which we haven't done before. But I know how to do it. My background is more like enterprise sales, but I know. We have just started this year and we're seeing a good uptick, so I'm very -- I'm positive about it. It's just a matter of time. And as you said, probably from the number of jobs point of view, of course, big enterprise customers are -- we still have probably lower much, much lower penetration compared to small businesses. There should be upside. It's a good sign. We are seeing the good uptick of the revenue growth. I think it's going to be better next year.

So when you're looking at the revenue per job growth, do you have some underlying sort of metrics, whether it's cost per hire or some sort of metric that you're ensuring it's sort of within certain bands so the enterprise are seeing good results? This is a sort of a way of asking the potential pricing upside.

Again, like probably one tricky thing about the pricing increase, which -- how can I going to explain it? When we were talking about cost per hire all the time, we need to talk about the, okay, you have 100 people in your talent acquisition team you need to -- it's happening -- like AI sourcing is a good example. Okay, think about it, you have this much recruiters and your recruiters are spending this much time to reach out to each resumes, and AI recruiters can do this. So right now, our result is showing that we can save 11 hours per week. So we need to discuss like this is more like enterprise type of talk, like hey, you need -- you can save 11 hours per week, per person and blah, blah, okay, how much you can pay. This is typical.

And also screening is like the big enterprise employers are having like thousands of applications, and your team is spending, let's say, 5 minutes for each application to check resume, that's like hours, hours. And you can automate it, maybe then you can reduce 100 people to 80 people, and then you can replace these like automation with this investment, whatever. So that's like the cost per hire type of argument. But what's happening today is more like a time to fill, which is -- I don't know if it's a good example, but I love Uber Eats. I don't want to spend time to buy ingredients and cook something, but I just want to get a nice food very quickly. So what's happening is, like it's more like a time to fill, I want to fill this position as soon as possible. Are you okay to pay more money? Employers are paying.

That's why, again, as I said, it's happening from the small businesses or like a store manager level, regional manager level, it's going up now. So that's why I know it's very tricky. Is it really cost per hire? But I know when we think about the value, it's actually not. The time to fill seems to be a great value for employers, that's why we can charge a lot better than last year. Is it answering your question or maybe not?

[indiscernible]

Yes, we're taking -- our internal product KPI is number of qualified applications because the hire is ultimately accumulated success possibility of qualified candidates. So again, like now we have kind of score for each application. If it's good, it should be like accumulated qualified applications is hitting like certain level, they should be hiring somebody. But that's the metrics we're trying to have. And we need to train everybody that not a quantity, quality is the real value for you.

I have three, if it's not too many. First of all, like the company has the partnership with Claude previously. I was wondering what is your experience in terms of protecting your data mode, at the same time, trying to, I guess, using Claude as maybe your distribution channel or any other strategic thinking on that? The second is your premium ads basically launched in Canada and the U.S. very successfully. What is the near-term plan to launch in the other markets? The third one is, previously, you sort of cut off your free ads, majority in the U.S. market. What is the next step in terms of the free ads?

Okay. What was the first question?

The first one is like how is your experience when you partnered with Claude?

Claude. We're using everything, Claude and Gemini. Gemini is good at extracting PDF file, whatever, and ChatGPT is good for this and that, and Claude is good at this. And also, we have Salesforce and Salesforce Claude. We're using it. And the second question is?

When you plan to launch the premium ads outside of the North American market?

Okay. Yes. We're expanding it. As I said, the EU have different regulation where we have to be compliant, 100%. And each countries have different regulations. Again, like it's more like old HR regulations. So we have to be very prepared really well to expand -- expansion. But we've been doing it. It's going to be better next year and probably even today.

Would ANZ be falling into next year plan as well?

We're starting to test new countries. That's happening.

Let me ask you, going back. We were actually your investors at the IPO many, many years ago, and it was very different -- it was great, right? It was great. And it was a very different company before Indeed. It was just as good but very, very different. And what it was, it was a -- it was the place where great Japanese entrepreneurs could express themselves and could build a great business. I wonder, as you think about Recruit ex Indeed, whether with AI, there is a new opportunity to be a leading technology company in Japan again, and whether you care to think about old Recruit, kind of Tokyo Recruit rather than just Indeed, global Indeed.

Great question. I think, me personally, I really believe that all the Internet technology change is just a bedrock for the AI change. And AI innovation is such a great opportunity for all IT companies, and I just want to all-in. And HR is relatively easy to monetize because it's crystal clear. There are so many manual tasks. And we have any other like two-sided marketplace models, and we're trying to copy what Indeed is doing. And so if we can find the manual tasks, okay, can we have AI to automate it? That's what we're trying to do. We'll see.

So I know you have a lot of questions but it's about time. So thank you very much for your time today, Deko-san. And also thank you all for joining us today. Have a great day. Thank you so much.

Thank you for joining the Recruit Holdings FY 2026 Q1 Earnings Call. This call is a simultaneous translation of the original call in Japanese and translation is provided for the convenience of investors only. Earlier at 3:30 p.m., we disclosed the earnings release, earnings summary and the presentation slides of this results on our IR page. The video and transcript of this results call will be posted on our website after the session. As announced in our website 2 days ago, Envolus, an independent research firm will publish a flash report on this earnings call. Please refer to it as well.

Today's presenters are Hisayuki Idekoba, Representative Director, President and CEO; and Junichi Arai, Executive Vice President and Chief Financial Officer. In the further 30 minutes, Deko and Jun will provide a presentation followed by a Q&A session. Now I'll turn the call over to Deko.

I am Deko of Recruit Holdings. Today, I am pleased to share our Q1 FY 2026 results and to raise our full year consolidated guidance. HR Technology delivered a strong Q1 performance with U.S. revenue increasing 30% year-over-year. Based on this momentum, as of today, we are raising our full year HR technology revenue outlook to up 18.7% year-over-year globally and up 25.1% year-over-year for the U.S. As you all know, truly AI is evolving at such an incredible pace almost every single week and many of you are probably noticing how AI agents are rapidly taking off as automation tools across so many industries. We, ourselves, genuinely feel it that we've finally entered a whole new phase where our AI automated tools are boosting productivity for HR teams worldwide teams that have historically been bogged down by time-consuming manual work.

First, let me walk you through why our Q1 performance came in stronger than expected, even in a market environment where U.S. hiring demand remains down year-over-year. Continuing the previous trends. Our revenue from small and medium businesses was very strong in Q1 for lean SMBs having an open role stay on field for too long can literally be a matter of life or death for their businesses. By adopting our AI products, their time-consuming manual tasks get automated, dramatically shortening their time to hire. In this environment, many of these clients prioritize hiring speed over cost. And as a result, growth in both the number of SMB clients and spend per client drove our overall top line expansion.

On top of that, what we are seeing now is revenue growth from large enterprise clients becoming more pronounced. Enterprise clients typically take longer to onboard decision-making for budget adjustments takes time. and legal reviews, especially when it comes to AI products can be quite time-consuming. Even so in Q1, many larger customers were willing to trial our AI products. For instance, one healthcare client tested how much AI automation could boost their recruiters productivity. And they concluded that our AI products help them significantly reduce time spent screening candidates delivering output equivalent to several full-time recruiters. Hearing feedback like that is very rewarding. The reality is that many large enterprises employed dozens, sometimes even hundreds of recruiters incurring massive costs from manual processes.

By enabling clients to dramatically boost their productivity by adopting our AI products, we believe we have a major source of growth ahead of us. So when you look at our recent revenue growth, it's really the result of 2 key drivers working in and higher spend per client, driven by the added value our AI delivers and a growing number of clients using our products. using AI automation tools to boost the productivity of HR teams around the world burdened with manual work isn't just a win for employers. It is a huge plus for job seekers too.

By automating processes that previously required time-consuming manual work job seekers are now experiencing firsthand that using indeed means faster responses from employers, earlier access of first interviews and ultimately finding a job sooner. And that is precisely why more people than ever are engaging our platform. At the end of the day, getting people hired faster through AI automation creates a win for everyone, and we believe that's what matters most. At the same time, it's also true that average spend per client has risen rapidly over a short period to protect our sustainable long-term growth we'll continue to monitor clean satisfaction very closely.

The excretable pace of AI evolution is amazing. But rapid change, natural drinks wider implications. As such, we intend to carefully gauge the pace at which our customers and society are adapting and navigate this with both caution and flexibility. Our ability to leverage AI to raise customer productivity is advancing faster than anticipated, which is welcoming but to be honest, precise forecasting genuinely challenging.

Today's updated guidance represents our estimate based on what we can see as of today. As the picture becomes clearer over time, we will share our latest progress with you every quarter. That concludes my remarks for today.

I will now turn it over to our CFO, Arai, to walk you through the detailed numbers. Aria, I hand over to you.

This is Arai speaking. Today, I will be using the slides to focus on our upward revision to the FY 2026 full year consolidated guidance. First, our consolidated results for Q1 FY 2026 revenue, EBITDA plus and basic EPS each substantially exceeded our initial expectations and reached record highs revenue increased 18.9% year-over-year to JPY 1.04 trillion, EBITDA plus increased 56.5% year-over-year to JPY 292.8 billion and EBITDA plus margin was 28.0%. Basic EPS was JPY 145.48, up 73.2% year-over-year. As of the end of July, we have repurchased 12.5 million shares for JPY 120 billion under the ongoing JPY 350.0 billion share repurchase program representing 34.3% of the total program. Gross cash and cash equivalents were JPY 908.5 billion at the end of June.

Based on these Q1 results and the latest outlook for each segment, we have revised upward the FY 2026 full year consolidated guidance disclosed in May. This revision is mainly driven by HR technology where Q1 results significantly exceeded our initial expectations, and we expect this trend to continue from Q2 onward. We assume an exchange rate of JPY 159.0 per U.S. dollar for FY 2026. We now expect consolidated revenue to increase 14.4% year-over-year to JPY 4.23 trillion compared with our initial guidance of JPY 4.03 trillion.

We expect EBITDA plus S to increase 39.1% year-over-year to JPY 1.105 trillion, surpassing the JPY 1 trillion mark for the first time compared with our initial guidance of JPY 949 billion. We have revised the EBITDA plus S margin from 23.5% to 26.1%, and we have also revised the basic EPS upward from JPY 447 to JPY 543, an increase of 55.2% year-over-year reflects the upward revision to net income from our initial guidance of JPY 623.0 billion to JPY 755.0 billion, an increase of 51.9% year-over-year as well as the number of shares repurchased from through the end of July 2026.

Staffing in Japan was subject to an on-site inspection by the Japan Fair Trade Commission in June 2026 in connection with suspected violations of the anti-monopoly app. As we are currently cooperating with the inspection, it is difficult to reasonably estimate the financial impact at this time. Accordingly, this guidance does not reflect any such impact. Of our 3 business segments, HR technology continues to drive our growth and remains the core of our consolidated financial performance. The segment will account for approximately 43% of revenue in approximately 75% of EBITDA plus S.

I will now discuss the full year outlook for HR technology. We now expect segment revenue on a U.S. dollar basis increased 18.7% year-over-year to $11.4 billion above our initial outlook of 11% growth. On a Japanese yen basis, we have revised our outlook from growth of 13.4% year-over-year to growth of 24.9% year-over-year or JPY 1.82 trillion. By continuing to focus on revenue growth and disciplined business management, we have revised the segment EBITDA plus margin outlook from 41.0% to 45%.

Looking at the segment revenue outlook by region. The USD 615 million increase in the U.S. was a key factor behind the substantial upward revisions to both the segment outlook and consolidated guidance. for the U.S., which is expected to account for 58% of segment revenue. We have upwardly revised our year-over-year revenue growth outlook from 13.6% to 25.1%, reaching USD 6.6 billion. For Europe and others, we have revised our year-over-year revenue growth outlook from 17.1% to 23.2%, reaching USD 2.5 billion. For Japan, we have revised our initial outlook up by JPY 11.5 billion from growth of 2.1% year-over-year to growth of 5.4% year-over-year or JPY 367.0 billion. On a U.S. dollar basis, we expect revenue to be virtually flat year-over-year at USD 2.3 billion. I will provide further details later.

Now on to Q1 segment results. As stated at the outset, Q1 results substantially exceeded our initial outlook revenue on a U.S. dollar basis increased 20.9% year-over-year to USD 2.8 billion. On a Japanese yen basis, revenue increased 33.2% year-over-year to JPY 455.4 billion. Segment EBITDA plus margin increased significantly to 47.4%, driven by strong revenue growth and continued discipline in cost management. Employee benefit expenses, including share-based payment expenses, together with outsourcing expenses, which represent broadly defined personnel expenses were approximately 37% of revenue, down significantly from approximately 48% in Q1 FY 2025.

While AI rated compute and infrastructure expenses are growing and reflect our expanded capabilities, they remain a small portion of our cost base and are not yet a material factor in our margin profile. We will continue managing them with a clear focus on return on investment.

I will next discuss the results by region, starting with the U.S. followed by Europe and others in Japan. Before discussing the U.S. results and outlook, I will again explain the definition of the U.S. ARPJ growth rate, which we began disclosing with our Q2 FY 2025 results. The U.S. ARPJ growth rate is the year-over-year rate of change in average revenue per job posting on indeed which we disclose each quarterly earnings announcement to demonstrate how our monetization progress is on track, driven by the expansion of higher-value features and packages even as business clients higher in demand and activity fluctuate due to macroeconomic and other factors.

U.S. ARPJ as average revenue per job posting on Indeed is calculated by dividing HR technology revenue in the U.S. by the total number of U.S. job postings on Indeed. The numerator total HR Technology U.S. revenue comprises revenue from sponsored jobs which consists of paid job ads like standard and premium sponsored jobs as well as other products and services, including smart sourcing and smart screening, employer branding and Indeed, Flex the denominator, the total number of U.S. job postings is measured by the Indeed hiring Lab U.S. Job Postings index. Indeed hiring lab U.S. job postings index tracks hiring demand in the U.S. labor market and includes hosted jobs, which are jobs employers post directly on Indeed and index jobs, which are jobs indeed received from employers career sites applicant tracking systems or ADSs and other sources across the web.

The total number of U.S. job postings includes all job posting on Indeed in the U.S., whether or not they are job ads. In other words, U.S. ARPJ is the average revenue per job posting on indeed, not the average unit price per sponsored job ad. The premium sponsored jobs is the primary driver of U.S. revenue growth in HR Technology in fiscal year 2026. This slide shows the features currently included in the premium package that support employees throughout the hiring process compared to standard sponsored jobs and free listings, premium sponsor goes well beyond the basic features, offering a broader range of advanced features to deliver greater value for business clients looking to make their hiring process faster and more efficient.

The U.S. ARPJ growth rate reached 35% in the first quarter substantially about the quarterly levels recorded in fiscal year 2025. So the total number of used post and declined approximately year-over-year, our revenue increase of 30.0% year-over-year a quarterly record of USD 1.6 billion. This was driven by freezer monetization development led by premium sponsor job package. The previous record was USD 1.61 billion in first quarter 2022, when revenue grew significantly, up 24.9% year-over-year. However, the total number of U.S. job posting was approximately 57% higher than in first quarter 2026 and also increase approximately 24% year-over-year leverage in the U.S. ARPJ growth rate at just 1%. These results demonstrate that extend and pace of our current monetization development, as you see in the difference in the U.S. ARPJ growth rates.

Our model has evolved from 1 centered on search engine and the paper click or PPC job as to an AI-powered faster and more price than the high-value machine platform in a 2-sided decision-making marketplace. Our full year outlook is based on the first quarter results together with our later performance outlook for second quarter through for quarter, which assumes an approximately 4% year-over-year decline in the total number of U.S. job posting consistent with some assumption at the beginning of the fiscal year.

We have a substantial revise our year-over-year U.S. revenue growth outlook from 13.6% to 25.1%, reaching USD 6.6 billion which would be a record high for full year revenue on a U.S. dollar basis. We expect the U.S. ARPJ growth rate to be approximately 30% of our fiscal year 2026. For context, the previous revenue record was USD 6.0 billion in fiscal 2022. In fiscal year, the total number of U.S. job posting increase approximately 3% year-over-year. Revenue increased by 4.9% year-over-year and the U.S. ARPJ growth rate was 2%.

Next, Europe and others. First quarter revenue increased 28.5% year-over-year to USD 0.6 billion. On a local currency basis, revenue increased approximately 34% year-over-year in the U.K. and approximately 46% year-over-year in Canada. This growth was mainly driven by continued monetization development through the expanded adoption of premium sponsor jobs for fiscal year 2026, we have revised our full year revenue growth on local from 17.1% to 23.2% year-over-year, reaching USD 2.5 billion. As in previous years, approximately 2/3 of this revenue is expected to come from the U.K., Canada and Germany.

In Japan, our first quarter revenue increased 67% year-over-year to JPY 93.3 billion. In German advertising services, indeed France performed above our initial expectations, driven by an increase in the number of paid jobs and the growing price per job while placement services have recovered faster than elected. For fiscal year 2026, we expect diesel trend to continue more than setting certain headwinds specific to this fiscal year, namely changes in revenue recognition from gross to net and withdraw from or downsizing of unprofitable businesses.

Therefore, we have revised the full year revenue outlook upward on the Japanese yen basis from growth of 2.1% year-over-year to growth of 5.4% year-over-year or JPY 367 billion. On a U.S. dollar basis, we expect revenue to be flat [indiscernible] year-over-year at USD 2.3 billion. So in the [indiscernible] revision of revenue and the EBITDA process margin, we believe some of you might be concerned that the HR technology has already peaked and has limited upside. However, we firmly believe the business has a significant long-term expansion ahead as we leverage AI to build out a comprehensible suite of hiring product and the services.

As Deko has been explaining since I made HR Technology is not simply aiming to expand within the 34 billion job advertising market, we believe we can achieve greater growth over the mid to long term by converting business clients or hiring expenditure as the market of approximately USD 200 billion, that includes placement services as well as an estimated USD 68 billion for hiring automation into our revenue. Many companies worldwide are actively using AI to improve efficiency across areas of G&A and the hiring processes with its many manual task of HR teams is no exception.

By further improving matching accuracy and speed for job seekers and business clients in 2-sided decision-making marketplace and by using AI automation tools to help improve the productive productivity and efficiency of the hiring process from candidate traction as reserve sequence stages we can achieve sustainable growth. The segment revenue outlook for fiscal year 20266 is only USD 11.4 billion. There remains a substantial white space in the long runway for growth.

Next, staffing. First quarter segment revenue increased 11.5% year-over-year to JPY 455.2 billion. In Japan, revenue increased 3.5% year-over-year to JPY 2 billion, reflecting continued stable performance. In Europe and the U.S. and Australia, revenue increased 20.3% year-over-year to JPY 25.0 billion, including a positive impact from foreign currency falling exchange rate fluctuations and reflecting strong performance in the U.S. capturing solid demand as well as signs of a recovery in staffing demand in Europe and Australia despite market condition in both the region remaining challenging.

EBITDA process margin was 6.2%. We are making only minor a revision to our initial full year look. We now expect segment revenue of JPY 1.83 trillion and the Sigma EBITDA plus S margin of 5.6%. Finally, marketing margin technology or MMT. MMT operates One of the largest margin platform in Japan connecting the individual user account base of approximately 99 million recruit IDs with 980,000 business plan across multiple verticals. Our individual user base on our point program maintain and increase the number of action taken on our platform by providing fulfillment functions or efficient income please sequence a process from customer acquisition through a payment, we accumulate the unique data on our platform. leveraging this unique data, MLT uses AI to propose optimal services and pricing tailored to each business client, most of whom are small and mid-sized businesses are driving growth in their GMV.

By shifting multiple platform including beauty and the customer home building and renovation consulting, which we discussed in February and May as well as automotive, which I will discuss today from fixed monthly listing fees to GMV linked model, we believe we can achieve sustainable revenue growth even as the AI technology becomes a more wider spread and continues to evolve. MMD consists of lifestyle, including beauty, travel, dining and the son solutions, housing and real estate and others.

Before discussing the results and the outlook, I will explain the evolution of automobile within others, where we introduced a GMV linked model starting this fiscal year. Since 1984, automobile has operated an automobile inventory advertising service in Japan under the car sensor brand, the primarily covering used vehicles listed by business clients such as used car dealers. Today, it is 1 of the largest margin platform in Japan the used car market. Individual users can search business clients vehicle inventories and make inquiries and reserve dealership visits through the mobile application of our website. So it is a business model transition from print media to online services in remain based on the fixed monthly distinct fiscal year 2025.

Revenue in fiscal year 2025 was JPY 33.4 billion. Starting in fiscal year 2026. In addition to the existing fixed monthly listing fees, we induced a GMV linked model under which business clients under business clients based on purchasing intent action taken by individual users such as inquiries on the dealership renovations business alliance vehicle inventory data and the data such as the number we inquired from individual users synchronized within -- with our platform through vertical source solutions.

In addition, the use of AI to substantially reduce the workload required for business clients to upload the vehicle images, these capability have increased the volume of vehicle inventory images on the platform as well as the strategic allocation of sales and promotion expenses by driving growth in individual user action and the number of these deliveries through this contributed to increasing business clients pleased the transaction revenue leading that increasingly recognize the value provided by the platform, which is the driver behind this model.

The introduction are first quarter revenue increased to 15.8% year-over-year the introduction of GMV linked the model led to an increase in the number of vehicles listed resulting in a year-over-year increase of 12.5% in individual user actions, which was the main driver of the revenue increase.

I will now discuss the results and the outlook for MMT. In the first quarter, revenue in lifestyle increased 9.6% year-over-year, driven largely by revenue growth in beauty resulting from the addition of GMV linked model. revenue in housing and real estate increased 2.8% year-over-year, reflecting stronger user action growth both in custom homebuilding and the renovation coming where the GMV linked model was introduced as well as in residential resale. As a result, segment revenue increased 3.7% year-over-year to JPY 141.8 billion. Segment EBITDA process margin was as a result of revenue growth as well as our cost optimization efforts, including reducing service outsourcing expenses.

As discussed in May, starting in fiscal year 2026, the MMT is smoothing out the quality seasonality of the sales promotion and advertising expenses, the following strategic promotion and advertising spending in the core quarter in areas where we expect return on investment on the GMV linked model, including beauty, travel, housing and real estate, we expect the first half EBITDA process margin to be approximately 31% in line with our initial outlook. Full year outlook is unchanged for May. We segment revenue increased 7.1% year-over-year to JPY 605 billion with a segment EBITDA plus margin of 30%.

Now we would like to go on Q&A.

[Operator Instructions] First Minami Munakata from Goldman Sachs Securities.

This is Minami Munakata of Goldman Sachs. Can you hear me?

Yes, please.

Regarding U.S. ARPJ, it increased 35% year-over-year in the fourth it was already high at 25%, but you have further accelerated, which is quite amazing. And in Deko's presentation, HR manual works are automated, and you are now entering a new phase as per your comment. And Arizon also talks about the expansion of the TAM. So the areas where you compete have changed. I believe the TAM is expanding. Do you actually feel that? Do you feel that where you play have changed? For example, compared to the existing online job at a domain to from automating manual processes, you are seeing the expansion of TAM going ahead of the recruiting automation domain. Is that true? In other words, the wallet share that you will be able to go after is expanding. Do you feel that Deko, what do you think?

Well, currently, I am in conversation with various clients. And looking at the logs of those conversations that we've had with clients, it is particularly true for small and medium businesses. How should I say -- this may not be a good example. If you think, for example, food delivery service, -- when I use food delivery service, and I shared this with my wife, she said, how wasteful, it's much cheaper to buy at a nearby supermarket. But for me, I have the urge to eat quicker. So I was ready -- I was prepared to pay a certain delivery fees that was an unacceptable fee. But for small and medium-sized businesses, what's happening today is that they have certain roles that remain vacant for 2 months, and they are pay additional $1,000 or $2,000, that's the kind of conversation that we are hearing more from SMBs.

And by having these business clients using for HR teams in SMBs, they usually have other responsibilities besides HR. And by using our services, they can now free up some of their time to spend on other tasks and starting from SMBs to more larger clients, clients with 1 million or 2 million of budget, as I heard an example earlier, sometimes clients have the needs to check the ROI. So for instance, AI sourcing, AI screening, these type of services. that are introduced in order to compare with human recruiters that they have internally.

And ultimately, the kind of rules or tasks assigned to internal agents have reduced. After trial of 1 month, they see the ROI and then make a decision to introduce the service. So that's what's happening in some cases. So for us, it's more than just selling tools rather than simple sales of course, simply put the back-end process is ultimately, you don't want to hire 20 or 30 people, and you don't want to screen these candidates. You check their resumes, make sure they have their licenses, they contact them to confirm. So that's what's happening in the backend processes. So sending high-quality candidates by targeting, we have been successfully emanating all these back-end processes. Maybe my explanation is poor. But for SMBs, ultimately, they are able to hire faster. They have more time to spend on other tasks from medium to larger enterprises, they are realizing that their manual work has been reduced significantly after a trial of our products for maybe a month or so, they realize that they are able to reduce manual tasks.

Maybe they started with 1 task in mind. But by looking at the results, they are now expanding to cover other tasks. I apologize for the poor explanation, but that's what's happening.

No, that's very clear.

I believe for SMBs and larger enterprises, there are pains and issues that differ, I surmise. So the points that they emphasize to understand the needs, their demands and by matching solutions to address their issues, automation will further proceed.

Well, actually, they are the same. The issues are the same, but the way and how they realize the pains are different. So as I said before, why is there such steps as screening and sourcing afterward? Let's say, 20 people apply, and you did not find qualified candidates, you want to see more qualified candidates, and that's what leads to sourcing. Companies do their own sourcing, they search for resumes, they contact the candidates, but it's not producing results. So maybe they will use an agent. So what is happening in most cases. So it's not that they are looking at the ROI from the very beginning and trying to reduce costs.

But rather looking at the conversations we've had with these companies, they've decided to hire and in some larger enterprises as well because the hiring is already decided, they now have the budget. So ultimately, this ends up in more payments to us. But I don't feel that we are competing with automation to our providers. I think value propositions are slightly different.

I have 1 follow-up question. The annual U.S. ARJP outlook is what I would like to ask about. You've mentioned that it has become more difficult to have a precise forecasting. But as of today, after second quarter, and later, what do you think will happen? What are your expectations? For instance, as the example you've shared growth from large enterprises remains firm. So do you consider that a growth driver. How are you building your guidance right now? What factors do you consider?

That is a wonderful question. for me as well, I am working hard to better understand what will be the drivers going ahead. I have looked at various factors. But at present, SMBs you spend per client increase. is going to contribute. For ARPJ, it's not simply the unit price increase. But if you look at the breakdown increase in the number of paying clients also contributes as well as the number of paid job postings and unit price per job increase. The 3 factors that I've just mentioned contribute to ARPJ growth. So for SMBs, I think each factor contributes 1/3. So that's roughly the combination of a contribution that we are seeing from those factors.

So as I've just mentioned before, clients are starting to realize that our services do help them reduce the manual work, and they are now applying the services in other areas. So we are seeing customers returning and also increasing the number of new clients all driving of the growth as well as the unit price per job. For larger enterprises, they have introduced automating automation tools and some are like SMBs they see rules vacant for 2 months or so, and they see that people on the ground are struggling. So that's why they want to trial our products and services.

And if you think about it, it makes sense, if you think of a good targeting advertisement, it basically uses AI sourcing and from among resumes, comparing to human recruiter reaching out to candidates versus AI sourcing. I think over a few years' time, I think the results will be the same. So advertising targeting is also being enhanced and this is going into the sourcing domain. So maybe companies will focus on several different roles, so the number of jobs may decrease, but on the other hand, unit price may increase. So it's a combination of all these different factors. So what I'm trying to say is that we are seeing such an amazing pace of AI introduction and AI growth.

So of course, we are making an effort every day. The market is huge. But what accuracy is it percent, 25% or 30% growth rate is very difficult to calculate and forecast. That's the situation.

Again, another very clear answer. I admit. No, not at all. One thing that got my attention is in Deko's comments. You said an increase in unit price, other factors are robust and client satisfaction is to be closely monitored. I believe that was part of the comments. And at present, do you consider this any risk, rather, things are performing well. And it's difficult to predict 9 months from now, what will the levels be figures be? But you are looking at the U.S. OP outlook based on various perspectives, do I understand that correctly?

Right. So rather than 2 or 3 quarters ahead, it's easier to think longer term. no matter how you think about it, manually going through 20 or 30 resumes, making sure these candidates have licenses, calling them to make sure and scheduling meetings and such communication take place, and that's still not enough, you need to go into the resume database, you need to contact the candidates, and they say they're not thinking about switching jobs right now. That's an enormous task. And I don't think this will continue. So that manual process will be automated.

And this is certain, I'm sure it -- so we need to ascertain changes in customers' demand as well as changes happening in the market, and we need to keep pace with that change. That's the background to my comment earlier.

I see. That's very clear. My apologies.

No, no, no. The insightful comments she said, Well, that's the only way we can describe this. Maybe in September with Munakata-san we will have a face-to-face meeting. So we will come back to this topic.

[Operator Instructions] From Normura Securities, Jiyong Oum, please?

I'm [indiscernible] from Nomura Securities. Well, you explained the example of a health care client using this as a hint -- so other value from indeed to the customer, what will be the can be provided? Recruiter again, the productivity and it is appreciated by customers, is like you said, Well, what kind of productivity have increased as a result of the utilization of indeed sourcing or the checking of the driver's license or not. So -- do you have any into your mind from that perspective?

Well, at this particular customer, well, looking at the majority of the health care-related customers, especially, there are in many cases, of which will require the drivelines. In those cases, they are struggling. So looking at the resume database and then approaching to the candidates, how about this job? So to that end, they have many lineups of liquids. In this particular customer, what do we compare? Well, how many job interview have you established and they are divided by the cost -- so a resume database search contract fee on top of that recruiters of personnel expenses.

And based on that, how many job interviews have been set up and also AI automated recruiters make suggestions about the people and the reaching out the possible candidates and then the I set up a job interview. So comparing these 2 cases? And then how much does this IAI account for in terms of the number of personnel. So that is why I bring up this example? Does this answer to your question? Well, does it mean this is for general purpose rather than this product is suit for a particular customer or not necessary for health care, but this can be versatile or this as long as this is customized and this can be applicable to other industry and other customers.

Yes, this is a general purpose to some extent. But as you may be aware, in the U.S., the health care is the toughest market in terms of demand and supply the skills or qualification or drivers license are required. So to put it simply, out of candidates who submitted their resume, how many percentage of those candidates are they are desirable candidates that the businesses are fueled like having an interview. Is it better to do the screening or by AI or the sourcing by AI, which is a better value for money.

Well, screening can be done during the line. So screening is more universal. It can be easily expanded. -- be it the construction workers will if 1,200 candidates apply, this can be introduced. Basically speaking, what will be the cost of which how many joint view can be set up that is a perspective of customers?

Well, I have a follow-up question. For this area, you said this will be a major driver of growth for indeed. So what will be the picture in 3 years? Currently, majority of your market cap, well, 90% of Indeed and the majority of the customer is SME. So if the non advertisement is increasing and if the -- the major enterprises portion is increasing, that would be interesting. What will be your landscape in 3 years from now.

Well, my vision, simplify hiring is accomplished. What it means is that they make the manual work easier with technology. This is what I have been saying since acquiring indeed. Well, the landscape would change in 3 years? Well, it depends on how much I will evolve. Well, what I really want to accomplish is now achieved with the evolution of rather than introducing AI as a tool. However, we have to make an improvement for the matching as a result. So we can reduce the undesirable candidate, and that we will eliminate the back-end process. That is where the automation occurs and that is quite interesting and SaaS company or AI company before they are entering into this market because we have eliminated a back-end process.

I think this is quite an efficient way of operation and also it is difficult for other company to emulate. So if we can expand this kind of operation and then we can expand. But Well, if we can increase by 1 order that will be most interesting.

Next Nagao-san of BofA Securities.

Yes, this is Nagao of BofA. President Idekoba gave us a health care client example. I think that was a very well laid out example. The reason I say that is because with hiring automation tools, the people who will tools and people who will be eliminated as a result of the introduction of tools are the same. So there is a contradiction in this structure. So how are you going to further penetrate I think it's a battle against the speed. It's a raised against at the same time. So what I would like to ask is that how are you going to enter the automation tool industry implementing these tools, won't there be some opposition or resistance from the HR teams of companies, how are you going to overcome such resistance?

Yes. So I briefly touched upon this, especially for enterprise clients. Cost reduction is not the entry point for us. Other we focus on the reduction of the back-end processes, the substantial reduction. So maybe for the premium jobs we can ask clients to trial our services. So that's more of the case -- so in terms of speed, that's where we're seeing much of entry or adoption among enterprise clients. And besides that, I think besides our company, companies that sell AI tools are abound. And I think they are following similar patterns in that not just approaching the HR top person, but going after CFOs or COOs or CIOs. So companies that have already launched AI automation projects can be found in low numbers.

So we approached the top tier, the management layer and we introduced our tools. This is not something we have done much of in the past. In the past, we didn't really have conversations with CFOs or COOs in many cases. But over the past 6 months or so, we are seeing more cases in which we approach those officers. So we do go to events targeting COOs or we also appear and join various events, including the World Cup this time. We sponsor those events invite our clients host dinners and such. So that's something we have started doing.

So how should I say for clients as well, HR teams and their clients. They are satisfied that their manual process have been reduced and many clients have outsourced these processes. So we have not seen such opposition of resistance as expected. So rather than approaching the HR, you are approaching the management layer, I see.

Two quick questions. So you have a pool of employers and you screen them. And of course, there are various stages in which paid services that could be introduced. And then beyond that, you negotiate terms for the employment and then further down the process, there will be the onboarding process. Are you thinking of automating all these different steps in the process and monetizing in the future? Of course, we want to try a variety of things. And there is a need to, of course, connect various systems, which could slow us down.

So as I said, before. First, we want to introduce candidates to clients, and we want to strengthen monetization and speed there first. And I believe that will be fastest because we're introducing various FTEs and having conversations with customers on those projects, that will be an enormous project. So we need to look at the right balance. I hope that answered your question.

JPMorgan Security, Yamamura, please.

I am Yamamura. I would like to ask you 1 question. Well, this might be a difficult question to answer. So listening to you so far at disappointing time. The the speed and the productivity and the qualities. These are the areas that you are a value. So these are the area of a value addition, and I understand this is the most important thing. But looking into the further future, with these 2 horizons to how much extent can you increase the U.S. ARPJ to how much extent can you increase the number of customers?

Well, from the outsiders, I cannot synchronize your vision with this horizon. So I feel that there is a limit. Well, the media is entering into the market on top of speed and the productivity, but with AI, what kind of additional value do you think you can add potentially? Or otherwise, as you mentioned, Spain, which only those factors for the several years, still, they are on top to market that you can explore. So this might be a difficult question, but what is your take on this point?

Well, the paper beauty reservation system was developed. That was a typical question, I received from future market, Fitbit do you secure? Are there any such kind of market available, the beauty alone do not have such a budget. Therefore, you will not be able to tap into such kind of a market when we are working on a -- so if you lead to that level of revenue, unless the other travel agencies background, I don't think you can achieve that kind of revenue in case of Uber in Sanfranisco. Well, 500 million is the size of the taxi market. And unless the market size, is it growing furthermore, they wouldn't be successful. However, after 8 months, they are very successful. You can call the much easily, there are more demand.

So the price and the convenience resulted in the expansion of the market quite easily. So what I'm trying to say here is that the beauty salon resubs travel reservation, if we provide the convenience, there will be more demand. There will be more users. We are a product-oriented people therefore. This is our way of thinking. And if we can use the services quite easily, as I mentioned earlier, in case of hood delivery, rather than capturing the market from other areas, if we provide the convenience, there will be more demand or more users. And well, cautiously, the market has expanded to that extent, based on those past experiences, when we acquired Indeed.

Vojo market is JPY 100 billion at the maximum. If you purchase a such a purchase device, what are you going to do? Or you will go nowhere. That was the criticism I received. However, if we provide the ease-of-use of a convenience to how much extent they can we expand the market Well, such a Internet technology, there was such an expensive market available. Thinking about the AI potential. If you post a job, then we do not get a good effectiveness. However, you ask a question with AI, how about this methodology, in this methodology, unless you increase our rate, you cannot get attractive candidates.

And based on those experiences, some customers place the job advertisement looking at this example of a customer, I think there are other potential that we can tap into. Well, finance people may think I am stupid. However, from a viewpoint of person with the product innovation, this is where I would like to bet on. Well, this answer is not a profit. It would be scolded.

Well, that's okay. As I mentioned earlier, with a good margin and -- are you already a candidate, if 1 person is provided cost per higher or the intermediary services, I think we can a little by little capture these market. So Idecopasan, looking based on your experiences, M&M and they also indeed, beyond that, you have sense of excitement and that is the sentiment of learning the company so 30% growth of JPY 1.5 trillion size businesses. So how to put it.

So it will be difficult to make a precise calculation as to which market we are capturing. Well, I look forward to your business.

We see many more hands up, but in the interest of time, we would like to wrap up our apologies.

No, my explanations were poor. My apologies. Thank you very much.

We would like to conclude the earnings call at the time. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Welcome to the Recruit Holdings FY 2025 Earnings 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 Ms. Mizuho Shen, Manager of Investor Relations and Public Relations. Earlier at 3:30 p.m., we disclosed the earnings release, earnings summary and the presentation slides of this results call on our IR page. The video and transcript of this results call and the transcript of follow-up meeting and follow-up meeting with sell-side analysts, which will be conducted followed by this results call will be posted promptly on our IR website after the session. Today's presenters are Hisayuki Idekoba, Representative Director, President and CEO; and Junichi Arai, Executive Vice President and Chief Financial Officer.

Hello, everyone.

In the first 25 minutes, Deko and Jun will provide a presentation followed by a Q&A session. Now I'll turn the call over to Deko.

Hello, everyone. My name is Idekoba of Recruit Holdings. [indiscernible] to start with this page regarding revenues and EBITDA+S. I spoke to you around this time last year. I mentioned that we are going to be engaged in various activities utilizing AI. You did not seem convinced yet, but I think numbers are very important to validate at this point. We have been utilizing AI in various areas, and we are now showing results and numbers.

For the period that ended, we have achieved a record high profits for the fiscal year 2026. In terms of revenues as well as profits, we are now poised to further accelerate growth. We are adopting AI across many parts of our businesses. And today, I would like to address [indiscernible] because this is an area we are receiving many questions. I would like to elaborate to you how we are utilizing AI to accelerate revenue growth.

Now recently, the other day, I recently bought a new tablet because I travel a lot for work, I often download movies onto my tablet. That means that plenty of storage will be required. At the same time, screen size is very important. It has to be reasonably large and easy to watch, not too small. And I found that there was a big price gap between the expensive models and the cheap ones. And it took about one hour just going through the different offerings. And I found that it's very difficult to select a piece of electronics. And then it occurred to me what if everything were offered for free. Now if it were all free, deciding will be incredibly easy. It wouldn't take one hour, just one click will suffice to find the best choice for oneself. And I put this in the context of looking to changing jobs as well. And I found that in a way, it's akin to a completely free e-commerce site. There might be various factors taken into consideration, but you can also apply for a job that pays 2 or 3x your current summary or maybe 2x or 1 day a week of working could [ be your ] condition. For Japanese people, we are very straightforward. Therefore, if it was conditions like this, there will be many applicants overseas.

Now please think about this. In the past, in a competitive site when they started jobs. People said that Indeed and Recruit will be overwhelmed because if you ask AI, they can make recommendations in terms of jobs and people were concerned about the future of Indeed. How algorithm is developed, it must be taken into condition, whether it is AI or machine learning, there is not much difference. The best jump for one person want a job that one likes, what is popular is data that is not so relevant because company employers might actually want to hire the person regardless of your intention, HR matching may take significant data from the user side, but that is not significant. It depends on whether the employee will be impressed. So it is two sides of matching that is required company or the employee as many solutions as well, there is data showing the tendency of hiring, but appropriate matching cannot be made. So this is a very unique matching model that we have between [ a job seeker and employee ]. And for -- in the past several years, the employer side, AI development has been areas where we have made investment. Of course, on the user side, the preferenced jobs is also very important. But the employer side have to identify the tendency of hiring for certain positions for certain companies. It's also data that is required in order to have effective matching. That is the reason why we have been making investors on the employer side. This might be difficult to understand. So let me give you an example to illustrate my point.

Let's imagine you're running a restaurant with 2 chefs and 10 servers. You are managers of this restaurant. At that time, if one of your servers quit of course, there will be a concern on part of the owner, but it isn't as if the restaurant will remain close for this purpose. There might be some instances where customers have to wait on certain weekdays. But what happened if 1 chef of the 2 chefs quits, situation changes dramatically. In such cases, the owner doesn't care as much about cost. Their priority is to hire someone with solid experience and skills as quickly as possible. Otherwise, the restaurant cannot be operating. A truck company in the United States have more trucks than the drivers. And construction workers are hard to find because of construction of many AI centers. So hiring, which is directly related to value increase is very important. And here, what we are proposing responsive jobs. If it's -- key word there as such is very important. A french chef could be the key word. And the result is where the job is posted. You might understand that matching may not be impacted. But in fact, with AI matching can become very effective. A key word search is made and the result will be [ 32 jobs ]. And if -- however, only 30% are responding to that. But if AI sourcing, AI screening is utilized for certain companies, the [indiscernible] will be made sending e-mail that company is looking for a person like you as a pop-up. And this is accounting for 70% recommendation and AI tools. This is a reflection of the fact that AI is evolving. Furthermore, from last year, we are promoting at the premium product. This is a sponsored job and the better version of the product is [ offices ] premium. Higher quality people can be hired can apply with the utilization of this product. In the past, the chef might have to be hired expeditiously then budget can be increased for this purpose. And for one position, there could be 200 or 300 or 400 applicants. However, on the part of the restaurant, even if 500 people applied, it would be difficult to make the selection, it would be difficult to increase budget for this purpose. But now if the budget can be earmarked and payment can be made, AI matching can be enabled so that high-quality applicants can be identified. This is how evolution is being made. And the hiring period as a result, has been reduced by 50%. This is becoming more effective with AI matching.

Now what about the job seeker side? What are the issues facing them? They apply to many ads but receive no replies. So they have a concern that whether the employees are actually seeking for applicants. In order to resolve this problem, the premium ad as well as AI matching can be very effective. The chef could be needed immediately. And the relevant person can be matched. That means that for the sponsored job, if utilized, can receive a response -- the response will be provided 40% earlier. So the motivation of the companies to hire is also very important. And [indiscernible] can be utilized from other sites to obtain data. But the motivation to hire is very important to be identified. This is important for the user and for the job seekers as well. As a result, the March monthly active users was 18% higher than previous year. This is a record high for us. So by utilizing AI, user experience can be enhanced in this way. If there is intention to hire then employers will be willing to pay more. Matching is enabled. That means that the -- [indiscernible] the U.S. for fourth quarter, there has been growth significantly in the United States. Now in this way, I would say that the 25% increase could be subject in price increase, could be subject to criticism but we have to look at the content in more detail. The -- we have to look at the job market overall, globally. Online advertising as well as the job seeking is very small. It's only several percentage points, even though we have 60% to 70%. But the placement and recruitment offline matching is more significant in terms of market size. When we ask companies, they tell us that Indeed free service is utilized and if hiring cannot be made, even though the fee is expensive, the retained search could be utilized by -- to a placement or recruitment agency. With Indeed, low-cost hiring can be enabled. Off-line is more expensive, but because they are pressed for the need to hire, they have to resort to placement and recruitment agency. But if you are able to provide AI matching in the appropriate way. And if we can provide applicants that companies would want to hire, then we would be able to capture more of this market.

Now I -- whenever -- when I became CEO, I've been emphasizing the simplified hiring. And when a button is pushed to the next job it should be -- I realized as quickly as possible, this has been enabled by the evolution of technology. This is our mission. Utilizing AI, various [ menu ] money work can be automated, which is a wonderful opportunity for all of us. This is also shown in the performance as well as the actual numbers. Now in this way, utilizing AI significant changes are being made, and it is reflected in our numbers as well. And I feel more confident as management as well. And I believe that the growth rate can be achieved, that is of 10%. 20% -- 10% is [ receivable ]. And when the hiring demand recovers, I believe that 20% of revenue growth can also be achieved. And we expect to exceed margins above 50%. Currently, over the global platform, we are seeing 31 hires per minute, meaning that we are helping someone get hired roughly every 2 seconds. We would like to expand this globally so that we can do more to support people around the world finding the next job. We will continue to make our utmost efforts.

Good afternoon, I'm Arai. How was Deko's presentation? Since he became CEO, about 3 pages before, there was a big circle, and he's been sharing that with you. He's been promoting simply hiring. And I think that the times have caught up with the idea that Deko has been sharing with you. On Indeed, we have seen accumulation of unique data. We are seeing enrichment of this unique data. And with the power of AI, I think we have taken another step closer to realizing the world that Deko has envisaged. And this is an exciting time for us.

And since 2024, we have been talking about year zero, making preparations during year zero gaining strength. So that's what we've been saying over the past two years. And I am very pleased to be able to report significant results as our efforts have been reflected in the numbers, and this makes me very happy as well.

As you can see from the table of contents for my presentation, like last year, I will present the executive summary at the very top from here on stage. And there will be a meeting with equity research analysts scheduled for later today. And in that meeting, I will cover the remaining items in more detail.

First, for FY 2025, I will cover the consolidated results. Revenue, EBITDA+S and basic EPS, each exceeded the revised guidance announced with our Q3 results in February and reached record highs on a full year basis. And for fiscal 2026, we will see further acceleration of this growth based on the assumption of the exchange rate of JPY 154 per U.S. dollar. And although various changes happening in the economy, but we assume no major changes to take place, and we expect revenue and profit growth across all 3 segments particularly driven by progress in business evolution and enhanced efficiency in HR technology, our assumption for consolidated revenue is to increase by 9.0% year-over-year to JPY 4.03 trillion. [ EBITDA+3 ] is expected to increased by 19.5% year-over-year to JPY 949 billion with margin expanding to 23.5%. Basic EPS is expected to increase by 27.8% year-over-year to JPY 447.0. The number of employees decreased from approximately 50,000 at the end of fiscal year 2024 to approximately 45,000 at the end of FY 2025. And we do not currently plan any large-scale hiring in FY 2026 so the number of employees will stay almost flat.

Next, I will talk about capital allocation. In FY 2025, we returned a total of JPY 713.1 billion to shareholders. And this resulted in a total payout ratio of 143.5%. We have maintained a high payout ratio. And net cash at the end of March 2026 was JPY 765.9 billion. In May 2024, this was two years ago, I said that we would reduce the net cash from [ JPY 1.1354 trillion ] at the end of March 2024 to JPY 600 billion over the 2-year period ending March 2026. Actually, we had already reached that level in the first half of FY 2025. However, second half results exceeded our assumptions and we ended the year above the JPY 600 billion level. ROE was 22.6% in FY 2024. Last year, it was 31.0%, which is a significant increase. As for our capital allocation policy for the next 3 fiscal years, starting this fiscal year, we are making no changes to the current order of priorities. We intend to maintain year-end gross cash and cash equivalents at around JPY 750 billion. And if we execute a strategic acquisition, we intend to fund most of the required amount with debt while taking our credit ratings into account.

Based on our policy of stable and continuous dividends, our dividend outlook for this fiscal year is JPY 13 per share in the first half, JPY 13 in the second half totaling JPY 26 for the full year. Regarding share repurchases, already a share repurchase program for a total of JPY 350 billion has started from April 1 this year. And the current plan is to complete this program by the end of November. And we will make appropriate decisions and act accordingly while monitoring second half cash flow generation, capital market conditions and our share price level for the second round of share repurchases. Going forward, we believe that growth in net income and the continued shareholder returns will, of course, result in higher ROE than 31%. We believe that such higher levels of ROE will be possible.

And as you are aware, we operate through 3 segments. Among them, HR Technologies, our revenue growth, profit growth and also margin expansion are substantially higher than those of the other segments. In FY 2026, HR Technologies revenue is expected to reach a new record high of over $10 billion or JPY 1.5 trillion. And this represents about 40% of consolidated revenue. However, staffing, which accounts for 45% records approximately JPY 1.8 trillion in accounting revenue. The margin, excluding wages paid to temporary staff in other words, margin substantially for our company is around JPY 300 billion annually. Accordingly, HR technology accounts for approximately 65% of consolidated gross profit, which we believe better reflects its substantive contribution to consolidated revenue.

And profits are even higher. HR Technologies' EBITDA+S accounts for about 70% of consolidated EBITDA+S and it is expected to continue to grow as the core driver of our earnings and value creation. As was mentioned before, as for staffing, we do not expect significant organic growth in staffing under the current business model. However, we will continue to focus on efficiency in our operation and strive to generate stable EBITDA+S margins.

Marketing Matching Technologies or MMT will continue refining and evolving its business model to further strengthen its competitive advantages and uniqueness in Japan. And by increasing revenue and improving operating efficiency, we expect EBITDA+S margin of 30% this fiscal year and aim to increase this to 35% by FY 2028.

Now I will discuss each segment in more detail. First, HR Technology. Q4 results substantially exceeded the outlook disclosed in February in all regions, including the U.S., Europe and others, which covers Canada and Japan. And as a result, full year revenue in FY 2025 increased by 7.6% year-over-year to $9.67 billion. EBITDA+S margin reflects a progress in efficiency improvements, including lower personnel expenses and significantly exceeding the FY 2024 pro forma margin of 33% and the margin recorded was 37.7% despite FY 2025 being the first year of integration of HR Solutions, of Matching & Solutions. For FY 2026, while U.S. revenue showed strong year-over-year growth of 26% in March and 27% in April. Our full year outlook however, reflects the potential risk from the uncertain economic environment, including geopolitical tensions and commodity price volatility. In the U.S. and in Europe, Canada and other markets, we anticipate continued monetization development including further growth of premium sponsored jobs. In Japan, we expect steady performance of Indeed PLUS and the recovery of the placement business to FY 2024 levels. As a result, we expect revenue to increase by 11% year-over-year on a dollar basis to more than $10 billion, while EBITDA+S margin is expected to increase to 41%. As Deko mentioned earlier, over the medium term, it is well within our reach to not only maintain double-digit annual revenue growth, but to achieve 20% or greater when hiring demand recovers. I also believe it is well within our reach. And at that time, we expect our EBITDA+S margin to exceed 50%. In the U.S. in fiscal year 2025, amid stagnant hiring demand and while the total number of U.S. job postings on Indeed declined by approximately 7% year-over-year, monetization development resulted in revenue of $5.31 billion, an 8.8% year-over-year increase on a dollar basis with a U.S. ARPJ growth rate of 17%. And in fiscal year 2026 based on our assumption for the job market that hiring demand will remain flat after bottoming out in Q4 of FY 2025 assuming the total number of U.S. job postings on Indeed declined by approximately 4% year-over-year. Our outlook is for revenue to increase by 13.6% year-over-year to $6.03 billion or JPY 929.3 billion and for U.S. ARPJ to increase by 18%. We position this fiscal year as a year to steadily lay the groundwork and pave the way for further U.S. revenue growth from FY 2027 onwards. Keeping in mind the Japanese proverb, haste makes waste. We intend to carefully consider the timing and pricing of new plans and product launches before executing them while maintaining close communication with our business clients. As for staffing, revenue in FY 2025 increased by 2.2% year-over-year to [ JPY 1.734 billion ]. By region, revenue in Japan was JPY 846.8 billion, and revenue in Europe, U.S. and Australia was JPY 856.5 billion. EBITDA+S plus margin was 5.9% maintaining the FY 2024 level. In FY 2026, while we do not expect major revenue growth in Japan, our outlook for Europe, U.S. and Australia is for revenue to increase by 5.8% year-over-year in yen terms, supported by performance bottoming out in key markets and a gradual recovery trend. Our outlook is for EBITDA+S this margin of 5.6%, broadly in line with FY 2025 and EBITDA+S of JPY 100.5 billion.

Finally, MMT. In FY 2025, Lifestyle led by Beauty drove revenue growth, which increased by 4.7% year-over-year to JPY 564.6 billion while EBITDA+S margin was 27.4%. In fiscal 2026, our outlook assumes continued growth in Lifestyle, and we expect revenue to increase by 7.1% year-over-year to JPY 605 billion. By smoothing out quarterly seasonality in sales promotion and advertising expenses, our outlook is for EBITDA+S margin of 31% in the first half, 29% in the second half and 30% for the full year.

Recruit Holdings will continue to pursue its growth strategy as a global technology company consistently amid major changes in the business environment while also working to continue to improve operational efficiency. We respectfully ask for the continued understanding and support of all stakeholders, including shareholders and capital market participants. That concludes my remarks.

Now we would like to proceed to the Q&A session. [Operator Instructions]

Goldman Sachs. My name is Munakata. I thank you very much for this opportunity to ask a question. I would like to ask a question regarding the labor market, the macroeconomic conditions. In -- and you said that there is uncertainty, but strong growth is shown in your performance. In terms of labor shortage as well as the disruption caused by AI, what is the outlook of the labor market going forward? This has been subject to discussion in the equity market, the U.S. labor market outlook is what I would like to ask Mr. Idekoba.

Thank you for the outstanding question. It just so happens that today this morning at the Indeed hiring lab, the U.S. labor market outlook reporter is being published up to 2040. I am participating in [indiscernible]. I'm participating in meetings in the U.S., I have opportunity to speak at various conferences. And some people say that the AI will cause unemployment reach 20% or 30%. As headlines, it will attract more clicks and this is the stronger views. And what I am saying is considered to be positioned to talk and not so interesting. But if you look at the actual data, I'd like to emphasize that by each segment. With AI changes will be different from segment to segment. For example, restaurant is a good case in point. People within the restaurant with the utilization of AI, how is this going to have an impact on the labor as well as construction as for electricians, plumbers. There are different professions that we have to consider. But apart of that, people who are working in the area of IT or working in financial services, the impact will be different from industry to industry. So currently, how many people are working in this sector? We have such data. Therefore, it means that 20% unemployment. We have to look at how it is calculated. There is no validating data. It's just being -- become the narrative of the AI experts. But if you look at the IT industry, AI replacement case is presented in the IT industry. If you look in this area, specifically, 20% job reduction or unemployment impact of 20% could occur. But what is the ratio of people working in the IT industry within the total labor force? The percentage is very small. In the United States, even there is aging of the labor force, more serious than Japan. Having said that, amongst the developed nations, U.S. is a young country, relatively speaking about up until 2030 or 2031, even in the United States, the labor force is subject to decline, baby boomers will be retiring at that point in time and people 65 and above. Labor participation is much lower in the United States compared to Japan, it's around 18%. And in the area of health care as well as -- [ electricians ] will be poised to retire. This impact is going to be more significant than the changes brought about by AI. This is proven by data demonstrated in numbers, which is clear to see. For example, I believe there is tailwind.

Thank you. I understand Deko, if I can present a follow-up question. Regarding simplifying hiring, I would like to ask the following question. To simply by hiring means that AI technological solution could become more cumbersome. For example, you will be overwhelmed with the applications. From your point of view, what is the progress made in simplify hiring? In order to simply further, what is lacking, what areas can further be improved and where it lies the business opportunity in this regard?

Thank you for the outstanding question. For example, in U.S. startups, in many start-ups, if a payment is made on a monthly basis, AI can make application 1,000 times or 2,000 times [indiscernible] of AI instead that person, it's automatic application that is made available in the United States. But companies do not like this which is easy to understand from the point of view of the employees [ assigned ] if applications come in the thousands or 2,000, this will mean incremental cost. Therefore, on the employer side, recapture -- I am not a robot. Both measures against AI have increasingly come to the [ fore ]. Furthermore, even if you like someone, some candidate, they may not come to the interview. Therefore, automatic application made by AI is not enhancing the efficiency. This is a good case in point. On our part, automatic applications are being tested. But we are conscious about [ both sides ], not just in paying for an increase in number of applications. We have identified what is good for the employees. What is good for the users and providing appropriate matching. We are testing this presence. But if it's just utilizing AI for automation, it will just make the process more cumbersome.

Thank you. We will take the next question. Third row from the front.

I am Oum from Nomura Securities. I have two questions. When hiring demand normalizes, you just mentioned that top line further accelerates. When will that happen? This year, you're expecting minus 4% in terms of volumes. So what about next year and the year after that? So that's my first question.

We are looking at various labor data. But when it comes to economic data, I think you are the experts. But as I said before, supply and demand determines this basically. So as you know, when it comes to hiring demand, it's not as strong. And that situation that we are seeing today and perhaps will continue. But looking at the past economic patterns, maybe it's time that demand should start rebounding. More recently, the interesting data that we are looking at is over the past 5 years or so, we have seen continuous decline in hiring of software engineers. But in the U.S., compared to pre-COVID, it has declined to about 50% and many people say AI is taking jobs away from people. But actually, it's increasing in the past 6 months. And if you look at the substance of this, AI is actually creating new job titles, the new job types that we have not seen before. So in that sense, it's not so much AI or the change brought on by AI, but post-COVID. Because of the pandemic, many people were fired and afterwards, the company started hiring em masse and now they've hired too much. So that kind of dynamism has somewhat stabilized. And over the next one to two years, I think the situation will further stabilize. In terms of labor situations, that's what we see. But as for the economy, I will leave that up to the experts.

My second question is regarding U.S. ARPJ increased by 18% is what you mentioned. So next year and beyond, how sustainable is this? As was mentioned before, hiring directly relates to revenue. So if that's the case, you want to hire as soon as possible. I think this kind of story will be valid for next year and beyond. And given the demographic change and population aging, but should we expect the same level of increase, but with the premium sponsored jobs that has contributed to higher results this year?

Thank you for the wonderful question. Personally, that's certainly an area that I would like to specifically address as well. Of course, if possible, we want to aim for 30%, 40%. But at the same time, we don't want to be caught speeding because this directly drives costs up for our employer hiring clients, particularly if they're already paying so much, if the budget has increased by 30%, that's something to be considered and be cautious about. But as I said before, there are certain costs being spent elsewhere and clients are diverting this cost to this JPY 20 million, JPY 30 million being spent. And if this amount is to be increased by 20%. That means JPY 600 million, JPY 700 million increase. So I don't think that will be possible as it is. So in conversations with our customers today, especially in the U.S., the talent acquisition teams, the teams that have to receive the applications go through the resumes and decide who to contact and set up interviews. But for example, in countries like India and the Philippines, they are increasing and the outsourcing these tasks to these countries, and we are seeing an increase in the number of companies that are doing this, and they are diverting budgets from this task to the new area. So structurally, ultimately, employers are able to hire appropriate candidates, and this is reducing their hiring costs. And then we will be able to have nice growth. So as I said, we are not pursuing or prioritizing our revenue first. So we want to make sure that our customers are also being successful. So in that sense, the employers that are currently using premium sponsored jobs and their repeat ratio is higher than regular customers by about 20%. And this is an encouraging fact because they're paying more, they are getting better results. So of course, we have to look at the overall balance as we go along, but we are seeing good results.

Next question, please.

[indiscernible], my name is [ Mariama ]. In the United States, AI is become the reason for restructuring and losing jobs. But [indiscernible] U.S. As mentioned, the in-person hiring is high. So on the part of Indeed, do you think this is a trend of Indeed that you're not impacted by AI restructuring?

Now it's -- you have to [ decide ] whether it's an impression or is it backed up by data as actual facts? The Magnificent Seven is often talked about and they are said to be invoking AI restructuring, it is in the news. Several tens of thousands of people have been laid off. But actually, the number of employees is not really decreasing. What we are often seeing is that AI is not a job killer. It is more of a job reorganizer. I'm sure this is also the case in your companies as well. Someone's job to be replaced by AI, and this person being laid off is quite rare. This certain process of a certain person can be automated. I think this is more prevalent [indiscernible] especially for IT companies inclusive of your company, AI is now part of our workforce. And in this overall context, job allocation must be revisited. This is what is occurring today. For example, a dashboard to view data for looking at charts as well as weekly revenues. We needed dashboards because it is viewed by people, humans. But if it can be done by AI, it is no longer necessary. It doesn't have to be displayed. From the beginning to end, the overall process is where value has to be identifying whether it is contributing to increase in revenues. We shouldn't just focus on one certain area for restructuring purpose. Magnificent Seven, their employees have not decreased in numbers so they are restructuring in certain areas, but they are also incorporating additional people, redesigning the whole process overall. I think this is more closer to the truth. I hope I'm making sense.

But for AI era, as such, that there will be changes in operation with the current Indeed structure. Do I believe you have unique strength. And what is resilient against AI? Do you think that you want to increase jobs that is resilient to AI?

It is not so much for us, but Japan is a very good example. There is population decline in Japan. And some people are seeing that hiring companies will not increase. It all depends on supply and demand because we have been able to increase revenues. And as I mentioned earlier, for auto mechanics, as an example. And they were working on combustion engines, they were working on gasoline-powered cars. And they continue to retire, then there will be no one left to repair these cars. So supply and demand, between the two, there is a disparage. That is the reason why we are being requested on the part of Indeed. And it isn't as if we are focused in terms of marketing specifically to that area.

Next question, second row from the front.

I am Nagao from BofA. I have two questions. First regarding margins, 40% to 50% is possible, as you said, what is the source of your confidence? Where is it coming from? Do you think you can further increase unit price? Or do you think you can improve retention? Are you able to acquire large enterprise customers? What is the background?

Thank you for the Wonderful question. First of all, I've briefly talked about this, but the sale of AI tools is something we've started over the past year or so. Not maybe particularly because the AI tools that we've introduced. But in case of large companies, the legal departments have to check everything and through master agreements, everything is determined. U.S., this is a common practice, and it does take time. But conversely, as I gave an example earlier in case of restaurants, for instance, a restaurant may employ 10 some people. The accounting person is also doing the hiring or the manager, the owner is doing the hiring in many cases. So for those people, if the prices increased by JPY 20,000, JPY 30,000, if they can free up the time and do something else, then they are more likely to introduce this service, and they will like the service and become repeat customers. And this is something we've seen over the years. For SMEs, we provide service. And if we see a very nice repeat ratio. Of course, they recognize that the product is excellent and they are -- they have quite [ stringent ] budgets. In case of large companies, it does take time. And of course, when it comes to AI, different states have different laws and regulations. So it is time-consuming process, but we are seeing more acceptance by our clients. As you know, SMEs when things go south, of course, they may no longer continue with the services. But for large companies, usually they sign annual contracts, and this will certainly contribute to our revenue. And as you know, sales efficiency is affected in terms of having one sales rep going to customers and signing contracts. The fact that we have a higher ratio of large companies, of course, adds to higher efficiency. And internally, there are many areas where AI could be used if we introduce an AI agent in certain tasks and things could improve. So this is something I think about every day from morning to night. So this is certainly enhancing our confidence.

So from a client's perspective, if the ROI exceeds what they're currently paying for, then they will continue with the service, and that's certainly adding to your confidence?

Certainly, perhaps I should not mention this.

Please, please, by all means.

Well, actually, for example, let's say a sales manager has sales reps and the manager checks what kind of sales pitches were made or go to customers together with the sales reps and give us advice. Nowadays, everything can be recorded. AI can score and to give you advice as to what pitches should be made. And if a sales person, sales reps with good results, good performance, gather and bring back their data. Everything can be checked and extracted. And of course, self-service customers can use this in the future. And if that is possible, then maybe we can reach 50%. Maybe I'm wrong, but that's what I'm thinking right now.

Quickly, last question. Looking at your M&A history, when the economy is down, Indeed also was acquired right after the financial crisis. The software valuations are coming down nowadays. And perhaps this is the opportune timing for investing. So what's your plan for M&As?

I think investors say whatever they want, in some cases, up to several years ago, some of the investors have told us to go ahead and buy. But now they praise us. They commend us for not making any acquisitions. And that is because the sauce is coming down, and they commend us for discipline. But over 1,000 unicorns exists. And of course, there are many companies that are struggling. And that is why we are seeing the issue of the private credit. So we are in conversation with many companies. But AI is bringing such a significant dramatic change. A company that's been around for 7, 10 years. The premium is nice and there are many excellent companies if we can share the vision. And if we are aligned, then certainly, we are keen to pursue such opportunities perhaps even more so than before.

Next question, please.

[indiscernible] Group Securities. My name is [indiscernible] I have just one large question regarding ARPJ and price as well as the take rate. And for ARPJ, premium service is strong. AI tool is increasing. When you try to grow this business, how can the price be enhanced for premium services higher by 50%? But will it stop there?

Beyond that, what are ways to increase price? Is there a pricing rate? Or does it depend on supply and demand where you can continue to increase? And what about the take rate? After you started the Indeed service, 1% and below has continued for more than 10 years, in fact, so how much progress has been made. Do you think it is possible to exceed 1%? It's very low. Is it not going to be exceeded in the 10 years or 20 years down the road? I don't really understand what is going to happen. Please clarify.

Thank you. Now I talked about the premium sponsored jobs previously. Now in terms of increasing price, I mentioned something similar. On the part of customers, if they can hire in 2 or 3 weeks, let's say. And we see a number of clients increased in this area. I think that there is more room to increase the price. It all boils down to supply and demand, the number of hiring is not changing. In the past, they could have been hiring and taking two months with a certain cost. If we have market share of 80%, 90%, then there is not room for growth. But in many of the customers, they're utilizing other off-line tools or requesting support. Therefore, we are able to capture this pie. I think that is very important for SMEs. They often have teams involved in the work process. For example, recently, a major company globally or in the United States was sitting next to me at dinner. And I found out using AI, how many applications sent, 3.5 billion have been sent to this company. And I asked the President, 3.5 million applications made. If it takes 3 minutes to check the resume, then it's tremendous time. There are screening tools that can be utilized. For example, reducing that to 1/2 or 1/3 would you want such a service? And he was interested, he was eager to discuss immediately. So it isn't as if it's a matter of raising price or not. That is the reason why I have more confidence going forward.

And in terms of progress regarding 1%, the number of people hired this increase [indiscernible]. So denominator is also becoming large. So it's very difficult to respond, but I can see that it is increasing. Do we capture the overall -- do we also take [indiscernible] the free job or the sponsored job only? That will have an impact on the calculation. We have to look at that in detail. As I mentioned earlier, for the customers that are willing to have a serious intensive hiring and willing to pay, and this is where we want to provide more support. This is the structure of the matching service. So is the take rate of that platform? Or is it the take rate for the customers that are eager to hire. This will also have a bearing as well. So we will try to disclose better information going forward.

Next question will be the last question. The person sitting in the front row, please.

I'm Yamamura of JPMorgan Securities. We already passed the allotted time, but I would like to ask two questions. The first one is something that's repeatedly been mentioned, the potential of large business clients. If it's simply the number times unit price, there will be a ceiling some time in the future. Maybe that's being discussed. So including the possibilities of monetization in new forms. And in any case then we do have expectations for more large clients. But on the other hand, your sales style has been very much supporting the SMEs and the quality of sales necessary to go after large companies may be different. So where you excel where you have strength larger clients are matched with the strength that you currently have.

Thank you for the wonderful question. It seems like I'm asked questions by internal persons. So that's an excellent question, particularly when it comes to Indeed. Well, I know Recruit. So compared to the Japanese Recruit sales to large clients is where we are somewhat weak. So that's an understanding we have. And when I became Indeed CEO last June, I started to work on rebuilding and to position us as a strategic partner to our business clients rather than being a transactional in the partnership. We wanted to be a strategic partner, and we've made significant investments, and we've introduced change to the teams. So we've implemented various measures. But looking at the current state, the newly developed AI tools are being quite effective.

What I'm trying to say is that how are we going to present to clients, the ROI. That's where we were weak in the past. I think we will be able to present this soon. We've already developed the various parts. But when we bring this to clients, how should the sales purchase go and when you ask the AI, everything will be given as advice from the AI. So that's the kind of AI tool that we are developing. And that's where we see further potential for growth. I hope that answers your question.

Yes. And this is my second question. You mentioned earlier the job posting's market condition, it is true that the IT professionals account for a small percentage. And the shortage of labor basically exceeds that. So the impact is small, as you said. And certainly, market participants are gaining this medium to long-term perspective. So if the negative becomes even bigger than, of course, they start to have this concern for Recruit.

So hypothetically speaking, if in the future, IT-related professionals are laid off. I think personally, this will happen. Even after they are laid off, they will not become homeless and live on the street rather I think optimization will take place in the overall market. So there will be more mobility of people, then for people switching jobs, pursuing different careers. This is not all negative. And I think in companies, they have a variety of talents, and they want to focus more on the quality. So I think both of these will be effective when it comes to Recruit's business, and that's reflected in the results that you've just presented. That's my view. What's your take?

Well, I would like to talk not based on impression, but on data. So certainly, Indeed hiring lab, the research data that we've published today, looking at this data, you will see which sector has -- which age group of professionals are working and as you can imagine, it's not that we have more of 60s and above working in the IT sector. So where are they working? Maybe as mechanics, in auto repair shops and in the health care sector as well, we have more of 60s and above. So what if they leave, what if they quit? So if we start thinking about this, the story is not as you described. It's not simply AI replacing people as a whole. I think we need to look in more depth. And also, this is not something that is obvious today. But over the past several months, labor participation rate in the U.S. is declining. And this is a rare situation. One thing, and this is only a hypothesis. I'm not sure whether this is true or not, but one thing is that people with not so high salaries, if they are laid off and they cannot find a job, they will be in trouble. But if it's an IT professional or other professionals, even when they are laid off, they can spend the next one year until they find the next job. So I don't know where exactly this labor participation rate is declining, but the overall rate is declining, and this is also contributing to a lower unemployment. But the denominator, in other words, job seekers are decreasing in number. So the economy is not doing so great, and we should not be seeing this kind of trend. This is a very strange trend we are seeing. I'm sure the U.S. government needs to look into this more. But if we specifically talk about the past 5 years, this morning, the data published by the hiring lab I think, is more accurate. In other words, realistically, truck drivers, construction workers and also this -- the immigration policy that's at play here, the policy becoming more stringent, that's affecting the overall numbers. There are certain sectors with many immigrants working and then they include health care, for example. So looking at these factors, unless that is the case, we should not seeing the strong results or there isn't really a relationship, but I hope I answered your question. I will try to put that in the report. Let me think some more about this.

I apologize for going over the scheduled time, but we would like to conclude the earnings call.

Thank you for joining the Recruit Holdings FY 2025 Q3 Earnings Call. I'm Mizuho Shen. Today, Junichi Arai, Executive Vice President and Chief Financial Officer, will give a presentation on results and guidance. Then Keiichi Ushida, who is in charge of Marketing Matching Technologies, will give a presentation on the business, followed by a discussion between Arai and Ushida. After the session, Jun will take questions.

Please note that today's session, including the Q&A, will be posted on our IR website after the event. The English transcript we release is an adjusted version for clarity and readability, not the live simultaneous interpretation. It will be available within a few hours after the call, and you can access the file directly via this QR code.

Starting this fiscal year, we have integrated HR Solutions from Matching & Solutions into HR Technology. Accordingly, the year-on-year comparison of segment results in this fiscal year's financial presentation is based on FY 2024 pro forma figures, which assume that this integration had been effective as of April 1, 2024. Unless otherwise stated, comparisons will be made year-over-year. Lastly, please note that all references to dollars in this presentation refer to U.S. dollars.

I will discuss the highlights. In HR Technology, revenue for the second half, particularly in the U.S., has exceeded the outlook we announced last November with both Q3 actuals and the latest Q4 outlook coming in stronger than expected. In addition, due to the Japanese yen's continued depreciation beyond our prior assumptions, we have decided to upwardly revise the full year consolidated financial guidance again. While the adjustment is minor following the previous revision, we are increasing the revenue outlook by JPY 66.1 billion to JPY 3,664.7 billion and EBITDA+S by JPY 30.2 billion to JPY 763.8 billion. We have revised our basic EPS guidance upward by JPY 22 to JPY 335. We expect the full year consolidated revenue, EBITDA, EBITDA+S, profit attributable to owners of the parent and basic EPS to all reach new record highs.

Net cash as of December 31, 2025, was JPY 648.2 billion.

Let me discuss U.S. revenue in HR Technology in more detail. This is an update to the slide we presented last November. The green line represents the Indeed Hiring Lab U.S. Job Postings Index. The index trend in the total number of U.S. job postings on Indeed from February 2020 to the present. The blue bars show the quarterly U.S. revenue trend for HR Technology.

In HR Technology, U.S. revenue for Q3 was $1.3 billion, exceeding the outlook of $1.27 billion we disclosed in November, up 10.1% year-over-year. The primary driver was the U.S. ARPJ growth rate of plus 18%, supported by the continued growth of premium sponsored jobs even as total job postings on Indeed in the U.S. declined approximately 7% year-over-year. For Q4, we expect revenue to be $1.33 billion, above our November outlook of $1.29 billion. We anticipate a year-over-year increase of 12.4% with a U.S. ARPJ growth rate of plus 19%, exceeding our November outlook.

We are currently in the process of formulating our earnings outlook for the next fiscal year. For the U.S. market, our baseline assumption is that hiring demand will remain relatively stable throughout the year, maintaining consistency with trends expected exiting March. Under this scenario, we aim to maintain the U.S. ARPJ growth rate in the 10% range on a full year basis, though we expect quarterly variability. However, we recognize that the broader business environment could change over the next quarter, and we will update our projections as needed. We will explain this in more detail in May, together with our financial guidance for the next fiscal year.

Driven by HR Technology outperforming our November outlook, not just in the U.S., but in the segment. Consolidated EBITDA+S for both Q3 results and our latest Q4 outlook are ahead of our November assumptions. We are raising our second half EBITDA+S outlook from the JPY 339.0 billion projected in the November 6 revision to JPY 369.2 billion. Accordingly, we are once again upgrading our full year guidance to revenue of JPY 3,664.7 billion, EBITDA+S of JPY 763.8 billion, with a margin of 20.8% and basic EPS of JPY 335, up 23.4% year-over-year. The JPY 250 billion share buyback program launched last October was completed on February 4, 2026. The total payout ratio is expected to be 148.1%, a high level following the 210.3% recorded last year. We expect net cash to be around JPY 700.0 billion at the end of the fiscal year.

Before I dive into the Q3 results and Q4 outlook for each segment, I'd like to revisit our TAM to illustrate the scale of the global HR matching market and also share the breakdown of Indeed's paid job advertising revenue by occupation in the U.S. At our full year earnings announcement in May, Deko plans to discuss our upcoming initiatives for the global market, particularly the U.S. Ahead of that, I believe it is important for you to understand the current market size and our position within it.

HR Technology operates in over 60 countries. To give you a sense of scale regarding the labor force population in our major markets, the U.S. has 170 million; Japan, 70 million; Germany, 44 million; the U.K., 36 million; and Canada, 22 million. We estimate the global HR matching market, which connects job seekers and employers to be approximately $310 billion as of 2024. This figure represents the total amount business clients spend on recruitment activities. Of this total, approximately $200 billion is attributed to fees for job advertising and talent sourcing, direct hire, retained search and internal recruitment automation, while the remaining approximately $110 billion represents temporary staffing. Internal recruitment automation represents internal hiring costs that could potentially be automated and monetized by third parties.

In HR Technology, we are continuously delivering higher value-added services to develop our monetization and drive revenue growth. We are expanding our reach into this broader addressable market by automating the hiring process, targeting not only job advertising, but also the spend associated with placement and internal recruitment functions. To address the placement market specifically, we are pursuing a hybrid evolution that effectively integrates our technology with high-touch human support.

We also believe we can realize simplify hiring in temporary staffing, a massive TAM with numerous players by evolving to better match the demands of our business clients. The U.S. market remains the largest globally. We estimate it reached approximately $89 billion in 2024, representing roughly 30% of the global market. Within this, the U.S. job advertising and talent sourcing market, Indeed's largest by revenue, is estimated to be approximately $13 billion, which accounts for roughly 40% of the $33 billion global market.

Centered on Indeed, our long-term strategy is simplify hiring. We have built a 2-sided talent marketplace that aggregates practically every job available online. By leveraging data, technology and automation, we are constantly evolving to connect job seekers and business clients faster and more easily. We host over 645 million job seeker profiles on Indeed and over 235 million on Glassdoor globally. Additionally, approximately 3.3 million business clients utilize Indeed annually for their hiring.

Given the growing interest in how AI will impact our business, I'd like to provide some context on Indeed's U.S. paid job advertising revenue. It is important to note that while Indeed aggregates practically all jobs online and serves job seekers of every kind, we see strong demand for our services from employers hiring for roles in the in-person economy. These are roles that are not easily disrupted by AI because they rely on physical presence, skills or specific certifications.

Breaking down U.S. revenue from paid job ads by occupation for Q1 through Q3 of FY 2025, healthcare is our single largest source of revenue. When combined with other essential on-site and field-based roles, these job categories collectively represent over 2/3 of our total U.S. paid job advertising revenue. This encompasses a broad spectrum of occupations, including repair, maintenance and installation, transportation and food and beverage, among many others. Conversely, the occupations regarded as being exposed to generative AI, such as technology, marketing, finance and accounting, legal and administrative and customer support, each represent only a small fraction of our revenue, typically in the low single digits. And even when combined, these occupations represent approximately 15% of the total.

At the World Economic Forum in Davos last month, our CEO, Deko and the Chief Economist of Indeed Hiring Lab, Svenja Gudell, participated as speakers in panel discussions hosted by the Wall Street Journal. During the sessions, they received many questions about how AI will impact the labor market. Deko discussed how job seekers can now easily generate hundreds of AI-optimized job applications, which has become a challenge for employers. As a result, Indeed's value proposition, simplifying the hiring process for employers, has become more important than ever.

Svenja noted that AI will certainly change jobs, but according to analysis by Indeed Hiring Lab, out of approximately 3,000 job-related skills in the U.S., only about 30 could potentially be fully replaced by current generative AI technology. For further details, please scan the QR codes on the slide to watch the videos.

Now I will discuss the Q3 results and Q4 outlook for each segment. Regarding HR Technology revenue by region. In the U.S., revenue on a U.S. dollar basis for both Q3 actuals and our Q4 outlook is exceeding the outlook we disclosed in November. Q3 revenue was $1.3 billion, up 10.1% year-over-year. The primary driver was the U.S. ARPJ growth rate of plus 18%, supported by the continued growth of premium sponsored jobs, even as total job postings on Indeed in the U.S. declined approximately 7% year-over-year.

For Q4, driven by monetization development, including continued growth of premium sponsored jobs, we expect revenue of $1.33 billion, up 12.4% year-over-year, while total job postings on Indeed are expected to decline approximately 6% year-over-year. The U.S. ARPJ growth rate is expected to be 19%. In Europe and others, including Canada, revenue on a U.S. dollar basis remains largely in line with our outlook assumptions from November based on Q3 results and current Q4 trends. Q3 revenue was $507 million, up 19.6% year-over-year, including a positive impact from foreign exchange rate fluctuations.

The U.K., Canada and Germany together accounted for about 2/3 of Indeed revenue for Europe and others on a U.S. dollar basis. Specifically, driven by monetization developments, including the continued adoption of premium sponsored jobs, revenue in the U.K. grew approximately 16% and in Canada, approximately 12% on a local currency basis. For Q4, we expect revenue in Europe and others of $518 million, up 21.7% year-over-year, reflecting ongoing developments in monetization.

In Japan, revenue on a Japanese yen basis remains largely in line with our outlook assumptions from November based on Q3 results and current Q4 trends. Q3 revenue was JPY 81.6 billion, down 4.6% year-over-year. On a U.S. dollar basis, revenue was $531 million, down 5.4%. For Q4, we expect revenue of JPY 87.0 billion, down 7.8% year-over-year. On a U.S. dollar basis, we expect $568 million, down 8.1%. Consistent with the outlook we shared in November, we continue to expect the recovery in placement services to materialize in the first half of the next fiscal year.

Q3 segment revenue on a U.S. dollar basis was $2.3 billion, up 7.9% year-over-year. For Q4, we expect revenue of $2.4 billion, up 8.5% year-over-year. Q3 EBITDA margin was 35.4% and EBITDA+S margin was 39.1%. EBITDA and EBITDA+S increased mainly due to revenue growth and reduced employee benefit expenses. Regarding Q4 segment EBITDA margin, while we continue to drive efficiency in the U.S. and Europe and others, we are increasing marketing expenses in Japan to prepare for the upcoming fiscal year and beyond. As a result, we expect segment EBITDA margin to decrease sequentially from Q3 to 30.8% and EBITDA+S to be 34.6%.

In Japan, as we have shared, we launched a new organizational structure this fiscal year. Amidst the transition and resulting uncertainties, we had been controlling investments, particularly marketing expenses. However, entering Q4, we are making progress in correcting earlier misjudgments in our placement services. Therefore, we are now deploying marketing spend, specifically for placement services to drive revenue recovery and growth starting next fiscal year. We view this as an investment that will contribute to further margin expansion in the full fiscal year ahead. As a result, we expect full year segment revenue of $9.5 billion, up 6.1% year-over-year and JPY 1,428.3 billion on a Japanese yen basis, up 4.1% year-over-year. We expect the full year segment EBITDA margin of 32.3% and EBITDA+S margin of 36.6%.

As for Staffing and MMT, performance is tracking largely in line with the outlook revised on November 6, so we are making only minor adjustments to the outlook.

Our capital allocation measures, I would like to cover this topic last. We completed the share buyback program announced in October on February 4, 2026, repurchasing the maximum authorized amount of JPY 250.0 billion. From the beginning of this fiscal year through the completion date, we have acquired shares for JPY 677.9 billion. Shareholder returns over the past 2 years will amount to a total of JPY 1.571 billion. Based on our latest consolidated guidance, this corresponds to a total payout ratio of 176.7%.

Consolidated net cash and cash equivalents as of the end of December was JPY 648.2 billion. In May 2024, we announced our plan to adjust net cash from JPY 1,135.4 billion as of March 2024 to a level of around JPY 600 billion over the 2-year period ending March 2026. We already reached this level in the first half. However, reflecting the upward revision to our second half guidance, we now expect net cash to be around JPY 700 billion at the end of this fiscal year. We plan to share our thoughts and specific measures regarding capital allocation for the next fiscal year in May.

That is all from me. Next, Ushida will present an update on the MMT SBU, followed by a discussion with me and Ushida.

I'm Ushida, Head of Marketing Matching Technologies, or MMT, since April of last year. Today, I'd like to share an update on the evolution of our business model in MMT. Building on our Help Businesses Work Smarter strategy in Japan, we are focused on driving growth alongside our business clients. By integrating this strategic evolution with AI, we aim to deliver revenue growth and expand EBITDA+S margins across MMT. Later in the presentation, I will dive into the specifics of our recent initiatives in Beauty and discuss how we plan to extend this approach to other subsegments and verticals.

Recruit Holdings was founded in 1960, starting with a new graduate recruitment advertising business in Japan. As we expanded our HR businesses, we entered housing and real estate in 1976, which marked the beginning of our Marketing Solutions business, now known as Marketing Matching Technologies, MMT. We subsequently expanded our print media business into Travel, Automobile and Bridal. In each vertical, we established unique brands aimed at enriching the lives of individual users while driving growth for our business clients. Recognizing the unique characteristics of each vertical, we have always focused on building and refining business models designed to address mismatches found in each market. Starting in the early 1990s, we transitioned from print to online advertising media eventually evolving into matching platforms that today are integrated with SaaS solutions to support business operations.

Regarding our business model, aside from travel, which adopted a transaction fee model upon shifting online, our other subsegments and verticals initially operated with a traditional advertising-based model. We later shifted many of these to expected action-tiered plans, which offer pricing options structured around the number of expected user actions and customer acquisition costs. Looking toward FY 2025 and beyond, we are taking the next step by introducing a gross merchandise value, GMV, linked model. Our business model constantly evolves and grows to adapt to changes in the business environment, user needs and the value we deliver to our business clients.

MMT operates matching platforms under unique brands across a diverse range of verticals. These are organized into the Lifestyle subsegment, comprising Beauty, Travel, Dining and SaaS Solutions along with Housing & Real Estate and others, which covers Automobile, Bridal, Education and Others. In each of these verticals, we hold one of the largest individual user bases in the industry and have maintained a leading market position in Japan for many years. In terms of revenue, Housing & Real Estate is our largest subsegment followed by Beauty. These are also the businesses that generate the highest EBITDA+S margins.

The Lifestyle subsegment, which includes Beauty, accounts for approximately 52% of the revenue of MMT. Until last fiscal year, this was Marketing Solutions of the former Matching & Solutions. Starting this fiscal year, however, we are reporting results and disclosing guidance for MMT as one of Recruit Holdings' 3 core business segments.

For the full year outlook, revenue in MMT is expected to be JPY 566.8 billion, an increase of 5.1% year-over-year. EBITDA+S margin is expected to be 27.1%, reflecting our progress in improving efficiency. Our strategy is to concentrate resources on high-growth areas while driving efficiency across the entire segment. This will enable us to expand both revenue and EBITDA+S margins. Looking ahead, we aim to raise the EBITDA+S margin to 30% next fiscal year, and we are targeting 35% by FY 2028.

Now I would like to further explain our matching platforms and their evolution. Thanks to the dedication and ingenuity of our team have facilitated mass and matching between approximately 6 million individual users and 970,000 Business clients annually. Business clients sync real-time booking availability, service and product information through our SaaS solutions and individual users with a Recruit ID take actions like booking reservations, sending inquiries or requesting information.

Currently, we offer expected action-tiered plans in many verticals. Moving forward, we plan to introduce a GMV-linked model. By combining this with new AI initiatives to further drive business client revenue, we aim to increase revenue in MMT as well. Under the GMV-linked model, we receive fees based on the business clients' GMV, or gross merchandise value, which is the total value of transactions resulting from matches on our platform.

For individual users, Recruit ID drives synergies across our verticals and support integration and operational efficiency across MMT. It serves as one of the foundations supporting our mid- to long-term growth. Individual users register for a Recruit ID and earn recruit points based on their actions. They can then use these points across multiple vertical platforms, which encourages cross use of our services. We believe these users will continue to utilize our platforms over the mid- to long term using Lifestyle subsegment services for their daily lives and services such as Housing & Real Estate and Automobile as they progress through different life stages.

For business clients, Air Business Tools is the suite of SaaS solutions for business and management support. We offer cross vertical services such as AirREGI, a point-of-sale, POS, system for sales management and AirPAY for payments. We also offer vertical SaaS solutions such as SALON BOARD in Beauty, which is integrated with AirREGI and RESTAURANT BOARD in Dining. These solutions enable business clients to centralize data management, consolidating information that previously had to be handled across multiple disparate tools and to visualize key management metrics. By improving operational efficiency and reducing operating expenses, business clients can create an environment where they can focus on planning and executing strategies to drive their own revenue growth.

Crucially, this unique data regarding reservations, payments and sales is securely synchronized with our systems, enabling us to leverage it to deliver targeted business improvements and management support to our business clients. Backed by the broader increase in online activity in Japan, we have seen a continued virtuous cycle of growth in both the number of business clients and individual users. As a result, the total number of annual actions on MMT platforms increased from approximately 190 million in FY 2017 to approximately 370 million in FY 2024.

Building on this, we will promote cross-use across multiple vertical platforms by individual users with Recruit IDs. In addition, we will leverage the reservation, payment and sales data accumulated on our platforms by using AI to propose improvements in services and pricing to business clients. We believe we can increase the number of user actions and matches, thereby driving the growth of our business clients' GMV in each vertical. We plan to progressively implement the GMV-linked model in verticals where our contributions have successfully driven revenue growth for our business clients. Through this approach, we will share in the value we help to create and aim to achieve revenue growth for MMT.

I would like to explain in more detail using our recent initiatives in Beauty as an example. In Beauty, we operate Hot Pepper Beauty, the leading search and booking matching platform. The number of bookings has grown from approximately 2.9 million in FY 2011 to approximately 160 million in FY 2024. Several factors have driven this growth.

First, we adopted a strategy to sequentially expand our coverage nationwide through local sales activities. We provided hands-on support accompanying salons through the initial operational setup and launch. This led to an increase in the number of business clients, which in turn enhanced choices and convenience for individual users, creating a virtuous cycle of user growth. Furthermore, our specialized vertical SaaS solution, SALON BOARD, serves as the foundation supporting this virtuous cycle by enabling real-time online reservations. We believe that our uniqueness and strength lie in our integrated offering of customer attraction platforms for individual users and operational support SaaS solutions for business clients.

Hot Pepper Beauty is our comprehensive beauty matching platform for search and booking covering hair, nail, eyelash, aesthetics and relaxation salons as well as aesthetic medical clinics. On this platform, individual users can seamlessly manage their entire journey, search for salons and specific styles, make real-time online reservations and complete payments via our mobile app or website. Currently, it serves more than 12 million monthly average active users. SALON BOARD is our dedicated SaaS Solution for beauty industry business support that allows business clients to centrally manage everything from reservation availability to accounting and sales. It is equipped with the functions of AirREGI, enabling wide-ranging support for business clients' back-office operations, from sales management to analysis.

Through SALON BOARD, business clients can also manage their availability and set prices on Hot Pepper Beauty. The image you see now is the SALON BOARD interface that business clients use in their daily operations. On the sales management page, business clients can understand daily sales figures and customer numbers at a glance. By simply switching tabs, they can easily check various business related items such as reservation status and marketing content posted on Hot Pepper Beauty. This data is securely shared with us via our systems and is utilized to propose actionable operational improvements and management support to business clients. The estimated market size of the beauty industry in Japan is approximately JPY 2.7 trillion in terms of total business revenue.

Meanwhile, the GMV generated through Hot Pepper Beauty expanded to approximately JPY 1.1 trillion last fiscal year. This growth was driven by an increase in reservation volume and higher unit prices resulting from users opting for high value-added services. The 5-year CAGR from FY 2019 to FY 2024 was 14.2%. We define our TAM for Beauty as the total online and offline promotion and advertising expenses in the Japanese beauty market. While policies vary by salon, these expenses are generally estimated to range from 5% to 10% of their revenue.

Based on our revenue outlook of JPY 126.6 billion for this fiscal year, we believe we have already established a leading position in the online market. We recognize that some in the capital markets may be concerned that the future upside for beauty is limited. However, I believe that by contributing to the revenue growth of our business clients, their budgets for promotion and advertising, our TAM will effectively expand. This, in turn, will enable further revenue growth in Beauty.

Under the expected action-tiered plan, revenue in Beauty grew at a 5-year CAGR of 7.4% from FY 2019 to FY 2024. This growth was driven by the expansion of user reservations, which led business clients to upgrade to higher-priced plans. However, because our revenue was not linked to GMV, this growth lagged behind the GMV CAGR of 14.2% over the same period.

Consequently, the ratio of revenue to GMV dropped from nearly 20% in FY 2016 to just over 10% today. Our approach is not to simply raise fees unilaterally. Instead, we aim to contribute to the growth of GMV by continuing to provide high value-added solutions and in return, receive a portion of that created value as fees. Based on this philosophy, in Beauty, we launched the GMV-linked model in January this year in addition to the existing tiered plans. The rate is set at 1% of GMV.

We expect the introduction of the GMV-linked model to deliver an incremental revenue impact for Beauty of approximately JPY 12 billion in the next fiscal year. From FY 2027 onwards, we aim to accelerate the growth of Beauty by continuing to contribute to the sales growth of our business clients. I would also like to highlight specific measures that we expect will significantly contribute to GMV growth.

As announced during the Q2 earnings call, we explained that in addition to our typical concentrated investment in the second half, we would increase promotion expenses exceeding initial projections. We allocated approximately JPY 5 billion, which represents the majority of this additional budget to a major campaign in Beauty this month. This event offers 50% points back for the first 1 million reservations. February is typically a slow season for the Japan beauty market. By injecting additional marketing resources during this specific period, we aim to stimulate significant latent demand among individual users. Moving forward, we plan to continue deploying promotion expenses at strategic moments to drive growth in user actions.

Another key initiative is the integration of AI capabilities into SALON BOARD. Some of our business clients are already leveraging this feature to optimize pricing and design targeted promotional campaigns. As shown here, business clients access the AI Business Adviser within SALON BOARD. With a single click, they sync the sales and reservation data they register daily. For example, if a business client asks, "How can I increase the average unit price?" The AI analyzes the salon's actual data and immediately provides specific actionable proposals to achieve that goal. Currently, this is offered as a beta version with limited availability. However, we plan to roll this out to the majority of our business clients as soon as possible.

We believe that introducing the GMV-linked model in Beauty aligns with our MMT strategy, Help Businesses Work Smarter, and will lead to enhancing the earning power of business clients all across Japan. This business model enables us to boost profitability and productivity for our business clients, and we receive fees for our contribution. As we thoroughly validate this model in beauty, we plan to expand it to other subsegments and verticals. In fact, in Travel, we have utilized a transaction fee model since the launch of our online platform. In Dining and Housing & Real Estate, we have already begun introducing the GMV-linked model in select services.

Moving forward, as the GMV-linked model expands across MMT business, combined with leveraging internal use of AI to advance operational efficiency, we believe we can achieve higher EBITDA+S margins. Even with the declining population in Japan, the introduction of the GMV-linked model unlocks significant growth potential for both our business clients and MMT. We look forward to demonstrating this continued growth through our performance and results.

I have a few questions. First of all, regarding the GMV-linked model introduced in Beauty, is our understanding correct that a 1% transaction fee based on GMV has been added to the existing expected action-tiered plan? Furthermore, why was it not possible to introduce this model in Beauty until now? And what is the rationale for not transitioning fully to a transaction fee model?

Yes, that is correct. We are not simply replacing our existing models with a GMV-linked model. Instead, we are introducing a transaction fee of 1% of GMV as an add-on to our current plans. This evolution has been well received by our business clients. Historically, MMT has focused on driving revenue for our business clients by increasing mainly the number of bookings. Recently, however, as the adoption of our AI solutions accelerates and unit prices increase in an inflationary environment, we have seen more opportunities to directly contribute to improving unit prices as well.

This is precisely why we believe now is the right time to begin incorporating a model linked to our business clients' revenue or GMV. At the same time, you may wonder why we aren't moving fully to a transaction fee model. In beauty, for instance, repeat bookings depend not only on the power of our platform, but also significantly on the stylist skill and hospitality. We believe that charging for the entire outcome would not align with our business clients' sense of fairness.

Therefore, we have now intentionally chosen a hybrid model that combines fixed and variable components. Ushida-san regarding our new initiatives and future outlook for beauty, please share your perspective on 2 areas. First, what exactly should our business clients expect in terms of value? And second, what kind of changes or benefits will individual users experience on their end? First, for our business clients, we believe we can significantly expand the scope of support we can offer. By incorporating GMV linked variable fees, we will be able to sharpen our focus on maximizing revenue for our business clients. Specifically, we will drive revenue growth through optimization utilizing AI and strategic demand generation initiatives such as our the BB Festival, which aims to stimulate demand by investing in promotion expenses.

For example, business clients can leverage AI to analyze daily salon data to design service menus tailored to a stylist specific strengths, including expertise in shortcuts or Korean style looks. This approach helps increase both unit prices and the number of customers, which leads to higher overall revenue and improved compensation for the stylists. Furthermore, we aim to drive revenue growth for salons by providing strategic recommendations to level out occupancy across the week. We are also designing pricing models optimized for repeat bookings based on the concept of LTV or lifetime value. From the perspective of individual users, while we will continue to provide a platform where it is easy to make bookings, we believe the primary benefit lies in the ability to discover their ideal salon or stylist. Our goal is to ensure they can enjoy these services at the optimal timing and price, and we strive to deliver this enhanced personalized experience moving forward.

You deliver a good result for both sides. In today's presentation, it was mentioned that the average promotion and advertising expenses ratio for businesses in the Japanese beauty market is generally said to be around 5% to 10% of revenue. On the other hand, as you noted, our revenue in this vertical historically accounted for nearly 20% of GMV. And even with recent declines, it remained slightly above 10%. How should we interpret these figures? Furthermore, are you considering any future changes to the 1% fee rate for the newly introduced GMV-linked model in beauty?

The market average typically includes a wide range of salons, including those that do not actively invest in advertising. In contrast, our platform is primarily utilized by actively investing business clients, such as newly opened salons focused on building their initial customer base or those who proactively allocate promotion and advertising expenses as a strategic investment for expansion. Consequently, their promotion and advertising as a share of revenue typically exceeds the market average.

Ultimately, we believe our current revenue level has been sustained because our business clients are satisfied with the tangible customer acquisition results and the overall ROI provided by our plans. Regarding your question about future changes to the GMV-linked fee rate, our primary focus is to ensure the continued satisfaction of our business clients. Our objective is not to unilaterally increase the fee rate. The true strategic intent behind introducing the GMV-linked model is to create a framework where we grow together with our business clients. Our priority is not simply raising the rate, but rather demonstrating how much we can expand our business clients' revenue GMV through our AI and strategic demand generation initiatives. We will continue to seek the optimal balance by evaluating the value we provide alongside the evolving needs of our business clients.

That's interesting. Could you share your blueprint for evolution in other subsegments and verticals? Are dining and housing and real estate the specific areas where you expect significant progress moving forward?

Rather than preselecting specific verticals to target, we are prioritizing tests in areas where data synchronization is most advanced and where we can clearly contribute to increasing revenue for our business clients through actionable improvement proposals. In fact, we are already in the testing phase across multiple verticals, including dining, housing and real estate and automobile while sharing the knowledge and insights gained in beauty. Naturally, the pace of digitalization varies across verticals, resulting in different time lines for growth in each area.

However, our blueprint is to deploy our winning playbook across all verticals. This involves leveraging our unique strength of combining promotion capabilities with data captured through our SaaS solutions to drive more matches. By further integrating AI, we aim to maximize GMV as part of this cross vertical expansion strategy. The members of our MMT team are all highly ambitious and talented, and I look forward to seeing new possibilities unfold across various verticals.

It sounds very exciting. Next, this is relatively a general question. Individual user behavior online is shifting toward using AI applications as the primary entry point. How do you view the potential impact of this shift on MMT?

As you pointed out, we see a growing trend of users utilizing conversational AI as an entry point for gathering information and making decisions, a shift that is particularly prominent among younger generations. While this has not yet resulted in a full-scale replacement of traditional search, we recognize this as a critical structural change that could transform user touch points. However, regardless of how the entry point evolves, the core of our value proposition remains the same as we continue to focus on refining the experience for individual users and increasing the accuracy of matching with our business clients. Therefore, to provide a seamless experience from discovery to booking and final conversion, we are prioritizing the optimization of the user journey in the AI era.

Thank you. In Japan, is there any collaboration or synergy between MMT and HR technology?

Yes, we do see significant synergies. In Japan, the ability to utilize the Recruit ID across both MMT and HR technology generates powerful synergies. In fact, we are seeing clear examples of cross use. For instance, younger users who first register for a Recruit ID through Hot Pepper Beauty expand their usage to our HR technology services, such as creating resumes or using our part-time job platforms. Moving forward, we will continue to enhance the user experience by optimizing our services through this unified ID infrastructure.

Lastly, I have a question regarding the overall MMT. The plan is to continue evolving with a target EBITDA plus S margin of 30% for next fiscal year and 35% by FY 2028. Based on our discussion today, can we look forward to the margin potentially exceeding these figures by a significant amount as revenue continues to grow? Considering your comments on AI integration, if you can increase revenue through higher GMV for business clients while improving operational efficiency, would that expectation be realistic?

First, we are focused on steadily achieving our EBITDA plus S margin targets of 30% for the next fiscal year and 35% by FY 2028. As we discussed today, the expansion of our GMV-linked model and the integration of AI do create room to simultaneously drive revenue growth and operational efficiency. In the mid- to long term, we believe these factors will act as a tailwind for margin improvement. At the same time, we will not simply let all efficiency gains drop to the bottom line. If we identify opportunities to expand the GMV of our business clients, such as through demand generation or product enhancements, we will invest flexibly and decisively.

Therefore, depending on the timing of these investments, there may be periods where the EBITDA plus S margin fluctuates in the short term. Our priority is to execute our strategy toward our targets and demonstrate our progress through results. To all our capital market participants, we invite you to look forward not only to our HR technology, which already carries high expectations, but also to the future growth and potential of MMT.

Thank you very much. I am certain that today's presentation by Ushida-san has significantly increased the interest of all capital market participants in MMT. I expect we will see a sudden surge in requests for meetings with him.

[Operator Instructions]. First, JPMorgan. Yamamura, please.

JPMorgan Yamamura speaking. Can you hear me?

So one question. I want to check some figures and the background to the numbers. HR Tech, North America status. Last time, you gave us the second half, 16% increase in unit price. This time, it is 19%, you revised upward, 7% down, now 6% down, smaller decline. So in the past 3 months, what was the upside premium service, price increase, which worked well or after CEO changed in June, there has been upward push for the service. It's not the price per se. More users are using the services. So higher penetration is the driver.

So we're not changing the price. There are more clients that are using this service. And we think the momentum will continue in Q4 and next fiscal year. And aside from this, we are thinking of other initiatives. So we hope they will flourish next year and the year after that. So as we've been mentioning so far, US ARPJ growth is when the environment is seen neutral, this is an index of how much our business is growing, and we started using this from last time, and we think we are making steady progress.

A follow-up question. So you talked about the North America projection next year, you said full year 10%. Is that revenue or number of cases? So number stops declining and if unit price goes up, then maybe revenue will grow further. So this 10% is US ARPJ growth.

I see. Understood. So top line, if you multiply, I don't know if it will be higher or lower, but you have more room for growth. So hypothetically, US ARPJ growth on a full year basis is 0 hypothetically -- sorry, the market -- if market is flat, if our revenue grows 10%, US ARPJ growth is 10%, right?

Yes. So market may be declining and our revenue is increasing, it will be an addition. But when market is growing and plus 5% and our revenue is plus 5%, then US ARPJ growth is 0. So it's not our own effort. It is that we are going with the market growth.

Next, Nagao-san of BofA. Nagao-san, I believe you will be asking questions about MMT.

Yes, this is Nagao of BofA. I have a question for Ushida-san, if I may. So in your presentation this time, for housing and real estate, you didn't really mention this on purpose, not because it's weak, but it needed no explanation. It's a solid business. So looking at housing and real estate or Sumo specifically, what is the role of this segment in MMT in your view? And as a competitive area, this is quite competitive. But what is the reason why Sumo has been able to sustain its competitiveness over long term? And how will you plan to further grow this business going forward?

Since I'm the only person responding to questions in Q&A today, I apologize. But regarding your question, in May, when we gave earnings announcement, we hope to revisit this topic. But as we showed in the pie charts of the segments, housing and real estate is the largest. And as we mentioned before, housing and real estate business and the beauty business, Ushida explained today, these are the 2 segments that are most profitable of all the segments that we operate in. So these are the 2 pillars driving overall business. And on top of that, we are implementing various transformation measures. So in particular, the Lifestyle business is launching new services.

It is rolling out new initiatives. So that is the overall picture. To the capital market participants, we have not really provided a detailed picture of what this housing and real estate business is since the listing, it has taken this long. But even in the housing and real estate, there are subsegments and they are all moving at different paces depending on the business environment. We have different movements shown by business clients and also individuals showing different behaviors. And all of this makes up the entire housing and real estate business.

So today, Ushida focused on beauty as part of our overall transformational efforts because beauty is ahead of the segments. That is why he focused on beauty. But for housing and real estate as well, there have been a number of new initiatives being implemented. And for future growth and development, of course, we have some other initiatives that are currently being considered. So to answer your question, Sumo, in MMT, it is considered one of the most important businesses in terms of size and profitability. It is an important business, and this fact remains unchanged.

Of course, the competitive landscape exists, but it is positioned in a very good place, and we will continue to drive this business forward. We will come back to this topic in the May earnings call.

I have a follow-up question from your position as CFO, the air business tools, is it a strategic tool? Or is it something for profitability and you have the salon board and other wide offering of menus? How do you consider this to be a driver for profitability? For consolidated revenues, the air business tools, how are they positioned?

So we have a group of air business tools now available, and they are currently recorded as part of the Lifestyle business. Its revenue is increasing. But compared to the existing verticals, its size is not comparable. It's not as significant. At the same time, many of these tools are provided to our business clients as freemiums to help them equip themselves with more earning capabilities.

As Ushida mentioned before, business clients can utilize these tools to do cumbersome operations. Instead, they can spend time coming up with new menus or how to serve their customers better. That is the slogan under which we are operating this business. So many -- much of the revenues comes from AirPAY. This is related to payment service. Much of the revenue comes from the accumulation of various tools under AirPAY, and it's not as significant. But as Ushida mentioned, AirREGI or AirPAY among those are quite powerful tools. And because we have these tools, we have been able to introduce this GMV-linked model. So they are to become the pillars of our business.

And for us to implement new initiatives to transform into something new, I believe these tools will serve as a backbone. And of course, with more payments handled with AirPAY or prepaid with AirPAY, GMV grows. And of course, this translates to more fees for us. And this is desirable, but that is not our main aim. Rather, for beauty, we want to see more revenues of business clients in Beauty segment increase. And we can, of course, benefit from their revenue growth. So they are essential tools, but it is not our intention to position this as the main area of our business to be profitable just from these tools.

Goldman Sachs Securities, Munakata-san please.

Goldman Sachs Securities, Munakata speaking. One question. HR Tech is my question. So top line is strong and margin is high. It's very prominent in Q3. From Q2 to Q3, you're seeing a rise. And what is the background to that? What's the driver? And along with that, margin next year, US ARPJ will be over 10%, somewhere in the teens. And if this leverage can be enjoyed and margin can expand further?

So to your second question first, we are now building up numbers. As you rightly said, if revenue grows, -- and if we can continue our disciplined operation and hone our operation further, we have room for higher margin. In other words, EBITDA can be higher than last year. So we cannot give you numbers yet. We're working on that now. But with the growing revenue, margin can also grow, we think. Now to your first question, we are continuing to improve efficiency. As I mentioned last time, that includes cost reduction and the rightsizing of our headcount, including smaller size, many are ongoing now. So we think overall, they're showing results. And for Japan business, we will see those fruits later. So back to your second question, in next year and the year after that, HR Tech will become even more efficient overall.

One follow-up question, if I may. This may have been asked earlier, but US ARPJ, 10% or above this over 10% growth. What's the assumption? So you're calculating various numbers to come with this over 10%. I'm sure there are various scenarios. US ARPJ growth driver is now premium sponsored job, number of companies using premium sponsored job is increasing. So one driver is that this momentum continues or you are having better traction in developing larger companies, capturing larger companies or new services or a mixture of all these? If you could give us a hint, I'd appreciate it.

So from what I said earlier, so thank you, Munakata-san, for that question. So let me broaden my comment and come back to your question. Originally, we have been working on SME companies job on our platform and improve user access and application. And with that, we have grown our profit, -- revenue and profit. We've been saying this since COVID-19.

On the other hand, the environment that you are in, your working environment is you work in large building and one floor is for HR department. And a part of your HR department has a recruitment team, maybe 100 or 200 recruitment team members. You may -- many may imagine that, that is the kind of customers we have, the clients, -- the clients we have. But -- and when we talk with investors, that is the image they have. Our original business was matching.

So user did not know that there was a job there. So now I can apply. We created that environment, and that is our uniqueness. That was the driver of our business. But now a large building, a big team of HR recruitment team, those are the well-known companies. So job ad, they do not need to place job ads indeed. They can receive applicants without doing much. They don't have to spend money to place job ads. People come to get hired.

So the matching -- the original matching to allow users to know where the jobs are. Indeed has the product to offer, but that was the only tool, the matching. But now using this tool, more candidates can apply and have a good resume made. Like [indiscernible] said in Davos, more application comes. Now you don't know where -- what to do with it with the large application. So now our premium service is one, new products.

These new products in our traditional business model, we did not have much connection with some part of users, but now the recruiting automation, internal recruiting automation, we are helping and business opportunity in these business clients. And premium service, as I mentioned earlier, is the index clients.

It can be used by more clients. And so we are growing this further. And at the same time, we are trying to do what we've not done in the past to make it available to large clients as well. Once we do that, US ARPJ growth will accelerate. But it's not that we want a short-term profit. We're thinking of mid- to long-term growth. So we don't know if it will prosper next year or we will still prepare and flourish the year after. So like [ Deko ] said, we are now thinking of this business seriously. That's -- when that is realized, US ARPJ will grow. We don't know if it will be next year.

However, we are now racking our brain to come up with the best scenario, best steps to take. We will -- I will then talk with [ Deko ] in May and talk about the aspirations for next year. So today was just an introduction to that.

So it's been over an hour. I see still many hands up. So we would like to extend this Q&A session by a little bit.

From Nomura Securities, [ Ono-san ], please.

This is [ Oum ] from Nomura Securities. So for paid advertisement, thank you for disclosing the numbers by job type. And 2/3 you mentioned in-person, which is encouraging. So my question is this, have you seen any change in the mix over time? For example, what would be the ratio before, however, many years ago and how it has changed? And because certain segments are performing strongly, this 2/3 being in-person trend will continue? And as a follow-up question, within the in-person economy, what is the penetration of premium service? I believe many medium-sized clients in the in-person segment, are they subscribing to the premium service? What will be the percentage?

Thank you. If I were able to give you a matrix showing this quadrant is how many percent and this section is how many percent I think that would be quite comprehensible. But of course, there have been changes as to which job types are popular in a given time. So the content changes. But in May, I think we will be able to show you some figures perhaps using a pie chart with a review of the 1 year over the 2025 period.

At least that's what we would like to show you at the May timing. I don't have any specific figure that I can share with you what the mix looked like 5 years ago. But the largest share is health care. And this health care is constantly in need of people. In other words, the turnaround is quite rapid. So people leave and people are hired immediately. So regardless of where people are, they are able to find job in the health care segment. So in that sense, the turnover of people is quite rapid.

And of course, the business clients need to retain people. So they look for talent. They want to nurture them. And of course, indeed, as part of that picture indeed is used to make sure they hire and retain people. So that has been a constant over the past 4 to 5 years. So we are seeing a strong demand from health care or a strong demand for truck drivers. So these are the kind of job types that we continue to see at the top of the list. And of course, for other job categories, economy plays a part in seeing ups and downs, but I think the trends tend to remain the same. And this is something I've been speaking about since before.

Looking at Indeed's business model, the HR tech is to address job seekers, and we are not paid according to what the salaries job seekers receive. So for categories where people's turnover is quite high or people leave and hired quite rapidly, we tend to see our revenue grow. And also where there is a rapid turnover across industries, people who tend to move across different verticals or industries, that's where we see a significant portion of our revenues coming from. So whether that's 2/3 or 75% or 66% or 40%, of course, this goes up and down. But generally, within our platform, the kind of job categories that we take care of tend to be in these categories that was mentioned today.

So maybe sometime in the future, we can come back to this topic and show you the past trends and more specific views of how the mix has shifted over time. But today, with the introduction of machines or AIs, we've seen different impact coming from AI, and we shared some categories that may or may not be impacted today. So I think this should see a higher adoption of premium. In other words, business clients are having difficulty hiring in-person economy. So adoption of premium service should be higher. Well, since I don't have the data readily available, so I cannot say which is high, which is low, but the clients have the need to hire people with solid skills, appropriate skills. If demand is high, then yes, I think adoption should be higher, as you said.

So we will take one last question, Citigroup, Yoneshima-san, please.

Citigroup Securities, Yoneshima speaking. I have a question on MMT. GMV model will be introduced in beauty. But as time goes by, what is the time line for Lifestyle and for Sumo, will you introduce this GMV based model, GMV model? And Arai-san, in your -- you talked about margin. 35% in 2028 will be the target. But as CFO, Arai-san, are you expecting for a higher level?

So MMT's limit. So [ HRT ] had 40% in the past. So MMT has that potential to attain that level or even higher or not that much? What is your take? Thank you.

So to your first question, in Ushida-san's presentation and in our fireside chat, I think we partially answered your question. We will find the right timing, beauty clients' response will be watched so that we will not make a mistake.

If we have a good opportunity, we will touch on that in May. But restaurant or housing and real estate have already partially introduced this model, not all, but partially. So that progress and the uniqueness may be introduced when we announce our results in May. And if there are new initiatives, we will have Ushida-san come and talk again at the right opportunity.

And to your second question, of course, from my position, I want to hire businesses, domains, they have different features and upsides and challenges. And so it's difficult to generalize MMT as a whole. But Ushida-san and the current management are focusing on what we need to focus. So that's their policy, laser focus on the priority. So this will grow or this will be addressed. I think we can give you more details in May and increase your excitement. So I hope you could look forward to it.

One follow-up question. MMT revenue growth, what is your expected revenue growth for the next few years?

What I want you to do is not the MMT overall revenue growth, but beauty or housing and real estate. I want you to look at them one by one and add them up to get the entire revenue growth. So MMT, not certain percentage for MMT. We want the good verticals to grow, good segment to grow.

This concludes this session. Thank you for your participation. Thank you very much.

This call is a simultaneous translation of the original call held in Japanese, provided solely for the convenience of investors. Thank you for joining the Recruit Holdings FY 2025 Q2 Earnings Call. I'm Mizuho Shen, Manager of Investor Relations and Public Relations. Today, I will give a brief talk about our business, then Junichi Arai, Executive Vice President and Chief Financial Officer, will give a presentation on results and guidance, 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.

Starting this fiscal year, we have integrated HR Solutions from Matching & Solutions into HR Technology. Accordingly, the year-on-year comparison of segment results in this fiscal year's financial presentation is based on FY 2024 pro forma figures, which assume that this integration had been effective as of April 1, 2024. Unless otherwise stated, comparisons will be made year-over-year. Lastly, please note that all references to dollars in this presentation refer to U.S. dollars.

We have 3 business segments. HR Technology features Indeed and Glassdoor, which together create a global 2-sided talent marketplace across more than 60 countries with a focus on the U.S. As the core of our simplifying strategy, Indeed uses its broad reach, AI-powered matching and tools for faster connections to make the hiring process more efficient for employers and help job seekers find jobs faster and more easily. This strategy is enhanced in Japan through the Indeed Plus job distribution platform and the integration of placement services, including recruit agent.

Staffing consists of 2 major operations: Japan and Europe, U.S. and Australia. Between 2010 and 2016, we expanded to our current scale and structure through multiple global acquisitions of staffing companies. Marketing Matching Technologies, or MMT, consists of marketing solutions of the former Matching & Solutions. In Japan, MMT provides vertical matching platforms that connect individual users and business clients in areas like the lifestyle subsegment, which includes beauty, travel, dining and SaaS solutions as well as the housing and real estate subsegment and others. These platforms offer services, including information and online reserving and booking services.

Now over to Arai-san.

Thank you very much. We have a slightly longer presentation than usual, so I hope you could bear with me. I will discuss the following 4 highlights of the FY 2025 Q2 earnings presentation. One, in HR Technology, revenue in the U.S. for Q2 increased by 5.8% year-over-year to $1.33 billion. Two, we have upwardly revised the full year U.S. revenue outlook in HR Technology from 0.3% year-over-year increase, basically flat announced in May to a 5.6% increase. Three, the full year consolidated financial guidance has been revised upward.

Consolidated EBITDA+S for this fiscal year has been revised upward from JPY 697 billion to JPY 733.5 billion. Four, net cash at the end of September 2025 was JPY 590.5 billion. We commenced a new share repurchase program of JPY 250 billion on October 17 (sic) October 16. This is in line with the policy we announced in May 2024 to reduce net cash to around JPY 600 billion by the end of FY 2025. After reviewing our consolidated results for Q2 and the first half, I will discuss the performance and outlook by segment, followed by our full year consolidated guidance and finally, our capital allocation policy.

Regarding FY 2025 Q2 consolidated results. In HR Technology, our focused monetization efforts were the primary driver of revenue growth, successfully counteracting the impact of a softer job market in the U.S. Revenue in Marketing Matching Technologies or MMT increased and revenue in staffing remained flat. As a result, total consolidated revenue increased by 2% to JPY 914.7 billion. As a result of continued efforts across all segments to further enhance productivity, EBITDA+S margin was 22.7%, exceeding Q1 of this fiscal year, driven by margin expansion in HR Technology and MMT.

EBITDA+S margin over gross profit was 38.2%, reflecting our underlying cash flow generating capability. Before adding back stock-based compensation expenses, EBITDA margin improved compared to the same period last year, reaching 21.3%. For the first half of FY 2025, revenue decreased 0.3% to JPY 1,793.5 billion. EBITDA+S margin continued to expand, reaching 22%.

Now I will move on to the results and outlook by segment. I will start by the results for HR Technology. For Q2, segment revenue on a U.S. dollar basis increased by 4.5% year-on-year and the 2.1% quarter-over-quarter to $2.41 billion. On a Japanese yen basis, segment revenue increased by 2.9% year-over-year to JPY 355.7 billion. As for revenue by region, turning to our U.S. performance, despite an approximately 8% decline in job postings, U.S. revenue increased by 5.8% year-over-year and by 5.6% quarter-over-quarter to $1.33 billion, exceeding our initial expectations. This was driven by successful monetization development of paid job ads with a notable contribution from premium sponsored jobs.

This solution enhances our paid job ads by incorporating key features and leverages Indeed advanced matching and targeting technology. Revenue in Europe and others increased by 14.7% year-over-year to $509 million. The U.K., Canada and Germany together accounted for about 2/3 of Indeed revenue for Europe and others on a U.S. dollar basis. The revenue growth was primarily driven by the U.K. and Canada, where monetization development led to revenue growth of approximately 8% year-over-year, respectively, on a local currency basis as well as by foreign exchange impacts.

Starting this fiscal year, HR Technology Japan consists of job advertising services, placement services and other hiring-related services after integrating HR solutions of the former Matching & Solutions. Revenue in Japan decreased by 7.2% year-over-year to JPY 84 billion or declined by 5.7% year-over-year on a U.S. dollar basis. Our job advertising service, Indeed Plus, which launched in January 2024, is performing above initial expectations. However, our placement services fell short of the initial assumption. This shortfall occurred because we underestimated the business impact of the system migration processes that followed our recent organizational integration.

Even excluding the impact of the difference between gross to net revenue recognition related to the transition to Indeed Plus, overall, Japanese revenue came in below our initial expectations. Segment EBITDA+S margin expanded to 37.9%, driven by improved productivity and enhanced operational efficiency in the U.S. and in Europe and others. Even in a business environment where the total number of U.S. job postings continued to decline, the successful combination of a monetization development and improvements in operational efficiency and productivity was clearly reflected in segment EBITDA margin, which increased by 6.6 percentage points from the same quarter last year to 34.7%.

As a result, for the first half, on a U.S. dollar basis, segment revenue increased by 4.1% year-over-year to $4.77 billion and on a Japanese yen basis, decreased by 0.5% year-over-year to JPY 697.5 billion. As for revenue by region, in the U.S., revenue increased by 3.4% year-over-year to $2.59 billion. In Europe and others, revenue increased by 13.7% year-over-year to $985 million. In Japan, revenue decreased by 5.8% year-over-year to JPY 174.3 billion or decreased by 1.3% year-over-year to USD 1.19 billion. Although placement services revenue fell slightly short of our initial expectations, job advertising services revenue performed above expectations, resulting in total revenue in Japan coming in slightly above our initial projections.

Segment EBITDA+S margin was 36.5%. For the first half, sales commission, promotion expenses and advertising expenses in total amounted to approximately 13% of segment revenue, while employee benefit expenses and service outsourcing expenses totaled approximately 46% of revenue, reflecting the impact of the workforce reduction announced in early July, which began to take effect in the latter half of the first half.

Now I will look -- discuss the second half outlook. But before diving into the outlook, today, I am introducing a new key performance indicator to track our monetization progress and serve as an important indicator of the future evolution of HR technology in the U.S. The U.S. average revenue per job posting on Indeed or U.S. ARPJ growth rate. Hereafter, we refer to the U.S. average revenue per job posting as U.S. ARPJ. For clarity, the U.S. ARPJ is calculated by dividing HR Technology U.S. revenue by the total number of free and paid jobs in the U.S., including those posted directly to Indeed and those aggregated from the Internet.

It represents the average revenue generated per job posting on Indeed in the U.S. The U.S. ARPJ is based not only on paid job ads, but the denominator includes all jobs listed on Indeed, regardless of whether they are paid or free. Its year-over-year growth rate is the U.S. ARPJ growth rate. The revenue increase of 5.8% in the U.S. during this Q2 was driven by the U.S. ARPJ growth rate coming in at approximately 15% increase year-over-year despite an approximately 8% decline in the total number of job postings.

For the first half, the U.S. ARPJ growth rate was around 13% increase year-over-year, clearly demonstrating the progress and success of our monetization strategy. This chart shows the index trend in total number of U.S. job postings on Indeed from February 2020 to the present, represented here by the Indeed Hiring Lab U.S. job posting Index. This index is based on the total number of U.S. job postings used in calculating the U.S. APJ growth rate.

It is important to understand that this index is based on both free and paid job postings on Indeed, which are sourced in 2 ways. Hosted jobs are posted directly on Indeed by business clients. Indexed jobs are aggregated by Indeed from employer websites and other sources across the Internet. Our CEO, Deko stated in May 2024 that we assume that hiring demand in the U.S. will hit the bottom after decreasing for another 18 or 24 months, i.e., this second half. and we will run our business based on that.

Given the current U.S. business environment, we still expect hiring demand in the U.S. to be broadly in line with our assumption at the beginning of this fiscal year, which is to continue a modest year-over-year decline throughout the second half with the trend bottoming out in Q4. Based on our assumption, we have revised our U.S. revenue outlook for Q3 and Q4. This chart shows the quarterly trend of U.S. revenue in HR Technology since Q4 FY 2019, together with the index chart that I mentioned earlier. On the far right, we have added the HR Technologies assumed trend for the IHL Index in the second half and the revenue outlook for Q3 and Q4.

Looking at these results through Q2, as you can see, through FY 2023, HR Technology U.S. quarterly revenue moved largely in line with this index. However, from the beginning of FY 2024 through the first half of the current fiscal year, meaning 6 quarters, HR Technology U.S. revenue has decoupled from the declining trend in job postings. This divergence is the direct result of ongoing developments in monetization, which we have been successfully executing since our CEO, Deko, announced the beginning of year 0 in May 2024, a period of strengthening our foundation and preparing for a recovery in the business environment following the downturn.

To provide clear insight into this divergence, we will report the U.S. ARPJ” growth rate as a new KPI. This metric represents our continued progress in evolving our business, capturing the success of our entire product and monetization strategy built on Indeed's foundation as a 2-sided talent marketplace that connects job seekers and employers. Currently, paid job ads remain just under 1/4 of the total number of U.S. job postings on Indeed. As we increase this penetration and as more business clients adopt our other value-added subscription services, including sourcing, branding and new AI products, the U.S. ARPJ will rise and its growth rate will accelerate, further widening the divergence from the IHL Index growth rate.

Now turning to our U.S. revenue outlook for Q3 and Q4 in U.S. dollars. Despite an anticipated year-over-year decline of around 7% in the total number of U.S. job postings in the second half, we expect the U.S. ARPJ” to continue growing year-over-year at around 16% for the second half. We expect revenue for Q3 to increase by 7.2% year-over-year and decrease by 4.8% quarter-over-quarter, reflecting the seasonality of the holiday period when both job seeking and hiring activities tend to slow down. For Q4, we expect revenue to increase by 8.6% year-over-year and by 1.6% Q-on-Q.

Our second half outlook is based on exchange rate assumptions of JPY 145 to the U.S. dollar and JPY 172 to the euro. We expect segment revenue to increase by 7.8% year-over-year to $4.74 billion and to increase by 2.5% year-over-year to JPY 687.9 billion. By region, in the U.S., based on the quarterly revenue assumptions I discussed earlier, we expect revenue to increase by 7.9% year-over-year to $2.56 billion and to decrease by 1.4% compared to the first half, reflecting normal seasonality.

In Europe and others, we expect revenue to increase by 21.5% year-over-year to $1.03 billion, reflecting ongoing developments and monetization. In Japan, revenue in placement services, as explained earlier, will continue to decline in the second half, and we expect revenue to decrease by 7.2% year-over-year to JPY 167 billion or by 2.4% year-over-year to $1.15 billion. As I stated in the earnings presentation in May, in Japan, we are prioritizing the stable operation of our newly reorganized structure following personnel reassignments to facilitate future growth in the coming years.

Since April, we have focused on maintaining stable operations for the integrated organization while launching a range of initiatives to drive business evolution and enhance efficiency, including actively leveraging AI to support future growth. Some of these initiatives are already yielding results, while others have required us to make adjustments. For those that did not meet our initial expectations, we have identified the underlying causes and are working to rectify and improve them. We remain committed to pursuing innovation boldly without fear of failure.

Although corrective measures have already been underway, placement services generally take more than 6 months from the time a job seeker is introduced to a position until a successful match is finalized and revenue is recognized. Therefore, we expect the impact of these corrective actions to begin contributing from the first half of next fiscal year. Segment EBITDA+S margin is expected to reach 35.1%, up 3.4 percentage points from 31.7% in the second half of last fiscal year as we aim to balance monetization developments with further improvements in operational efficiency and productivity even in a business environment where U.S. hiring demand continues to decline modestly year-over-year.

Margin expansion in the U.S. and in Europe and others is expected to continue, driven by upward revisions of revenue and progress in efficiency improvements, including the workforce reduction implemented in July. In Japan, we expect lower revenue due to the performance of placement services to contribute to a lower EBITDA+S margin. However, we also plan to control advertising and other promotional expenses carefully, which will partially offset the negative impact on margins.

Based on the results for the first half and the outlook for the second half, the full year outlook has been revised upward. We now expect segment revenue to increase by 5.9% year-over-year to $9.52 billion, up from the initial outlook of a 2.4% increase to $9.2 billion. On a Japanese yen basis, we have revised our outlook upward to JPY 1,385.5 billion, representing a 1.0% increase year-on-year from the initial outlook of a 2.8% decreased to JPY 1,334.4 billion. By region, in the U.S., we have revised our outlook upward from the initial assumption of a 0.3% year-on-year increase to an increase of 5.6%, reaching $5.15 billion.

In Europe and others, we have revised our outlook upward from the initial expectation of an 8.1% year-on-year increase to a 17.6% increase, reaching $2.01 billion. In Japan, we have revised our outlook downward from the initial expectation of a 2.7% year-on-year decrease to a 6.5% decrease to JPY 341.3 billion and on a U.S. dollar basis to $2.34 billion, representing a 1.9% decrease year-on-year. Segment EBITDA process margin has been revised upward from the initial outlook of 34.5% to 35.8%, representing an increase of 2.8 percentage points from 33% in the last fiscal year.

Segment EBITDA margin is expected to be 31.1%, representing an increase of 3.7 percentage points from 27.4% in the last fiscal year. As for Staffing, segment revenue in Q2 increased by 0.8% to JPY 421.3 billion. In Japan, revenue increased by 6.1% to JPY 209.4 billion, driven by stable demand for Staffing. In Europe, U.S. and Australia, revenue declined by 3.9% to JPY 211.8 billion. This represents an improvement from the first quarter, driven by increased orders from large business clients as well as the impact of the Japanese yen depreciation.

Segment EBITDA+S margin was 6.6%. For the first half of the fiscal year, segment revenue decreased 1.3% to JPY 829.4 billion. Segment EBITDA+S margin was 6.6%. For the second half outlook, segment revenue is expected to increase 2.3% to JPY 846 billion. Segment EBITDA margin is expected to be 4.8%. For the full year outlook, we have revised segment revenue to JPY 1,675.4 billion and segment EBITDA+S margin to 5.7% with only minor changes from the figures disclosed on May 9th.

Next, I will discuss Marketing Matching Technologies or MMT. Regarding Q2 results, segment revenue increased by 6.3% year-over-year to JPY 144.3 billion with revenue growth across all subsegments. Revenue in Lifestyle, which consists of beauty, travel, dining and SaaS solutions increased by 8.5% to JPY 76.9 billion, driven by the continued growth in new business clients in Beauty. Revenue in Housing and Real Estate increased by 4.3% to JPY 38.5 billion, driven by the growth in the number of contracts closed for custom homes through Sumo Counter, our face-to-face housing consultation service.

Revenue in others, which includes car and bridal, increased by 3.5% to JPY 28.8 billion. Segment EBITDA+S margin expanded to 32.3%, driven by appropriate cost control, principally related to service outsourcing expenses. For the first half, segment revenue increased by 6.7% year-on-year to JPY 281.2 billion, and segment EBITDA+S margin was 31.9%. For the second half outlook, segment revenue is expected to increase by 3.7% to JPY 286 billion, driven by continued strong performance in Lifestyle, including growth in new business clients in beauty and dining and continued increases in the number of room nights and unit price in travel. Segment EBITDA+S margin is expected to be 22.2%.

I will now explain the background behind the significant difference in EBITDA+S margins between the first half and the second half of MMT. The primary factor is the seasonality of advertising and sales promotion expenses in the Japanese market. When planning for the next fiscal year, MMT carefully prioritizes these expenses across its subsegments, consolidating proposals submitted by the respective business units. Based on the latest performance outlook during the fiscal year, MMT allocates funds intensively and effectively in line with these priorities when the number of actions by individual users on our matching platform increases.

Our Q4 coincides with the timing when the number of actions taken by individual users increases the most within the fiscal year due to the start of the new fiscal year in Japan in April, particularly in housing and real estate. By concentrating our spending on these expenses during this period every fiscal year, MMT aims to maintain and increase the revenue recognized in Q4 and in Q1 of the following fiscal year.

In the previous fiscal year, approximately 36% of total annual sales commission, promotion expenses and advertising expenses broadly defined as marketing-related expenses were recorded in Q4. And approximately 58% were recorded in the second half with an EBITDA+S plus margin of 28.6% for the first half and 22.4% for the second half. In this fiscal year, in addition to the concentration of usual seasonal expenses in the second half, we will increase sales promotion expenses exceeding initial projections to support new growth initiatives across multiple areas aimed at realizing increased revenue in fiscal year 2026 and beyond.

As a result, we expect approximately 60% of the annual marketing-related expenses to be recognized in the second half of this fiscal year. Moreover, we have a onetime impact from a planned update to MMT's accounting system at the end of the fiscal year. This upgrade will refine our revenue recognition policy, moving from a previous pro rata monthly allocation method to a daily basis recognition. This onetime transition means approximately JPY 5 billion in revenue and associated profit, which we had expected to book in March will not be recognized within the current fiscal year.

Taking this into account, we expect EBITDA+S margin for the second half to be 22.2% compared with 31.9% in the first half. The full year segment revenue outlook is largely unchanged with an expected increase of 5.1% year-over-year to JPY 567.2 billion compared to the initial outlook of plus 5.1% year-over-year to JPY 567 billion, even after reflecting the one-off impact from the revenue recognition refinement that I mentioned earlier. Due to the one-off profit impact, segment EBITDA+S margin has been revised downward from the initial outlook of 27.5% to 27.0%.

Regarding our segment EBITDA+S margin, our future targets remain unchanged. MMT aims to reach segment EBITDA+S margin of 30% in fiscal year 2026 and approximately 35% by FY 2028. We plan to share specific details about initiatives to drive revenue growth in the next fiscal year soon. Now based on the segment outlook, let me turn to our consolidated outlook for the second half. For the second half, we assume exchange rates of JPY 145 per U.S. dollar and JPY 172 per euro. As for the consolidated outlook for the second half of the fiscal year, revenue is expected to be JPY 1,805 billion. EBITDA+S is expected to be JPY 339 billion with the EBITDA+S margin to be 18.8%. We have revised the full year consolidated guidance, reflecting the first half results and the second half outlook of -- for each segment.

Revenue guidance has been revised from JPY 3,520 billion, minus 1.1% year-over-year to JPY 3,598.5 billion, plus 1.2% year-over-year. EBITDA+S has been revised from JPY 697 billion, plus 2.7% year-over-year to JPY 733.5 billion, plus 8.1% year-over-year. EBITDA+S margin is expected to be 20.4% with EBITDA+S margin over gross profit assumed to be 34.5%. Profit attributable to owners of the parent has been revised to JPY 448.3 billion, representing an increase of 9.8% from the last fiscal year, and basic EPS is revised to JPY 313, up 15.3% year-over-year, reflecting the impact of share repurchases.

Consolidated full year results will be expected to reach new record highs. Our capital allocation measures, I would like to cover this topic last. During the first half, we repurchased approximately 53 million shares for JPY 423.7 billion. Consolidated net cash and cash equivalents as of the end of September was JPY 590.5 billion. A new share repurchase program with an upper limit of JPY 250 billion started on October 17, and the market repurchase is currently being conducted through an appointed securities dealer with transaction discretion. The repurchase period is scheduled to continue until April 30, 2026, at the latest.

We note that following the commencement of the share repurchase program, we may consider and execute strategic M&A transactions. The Board of Directors resolved today to pay an interim dividend of JPY 12.5 per share. The total per share dividend amount is expected to be JPY 25.0. We retired treasury stock in March of both fiscal year 2023 and fiscal year 2024 using shares acquired during the respective fiscal years. We will also consider retiring the treasury stock to be acquired through our share repurchase programs in fiscal year 2025 at the end of the fiscal year, taking into account market and business conditions.

Finally, regarding the total payout ratio for the fiscal year, if we assume the currently ongoing JPY 250 billion share repurchase program is completed within the current fiscal year, in addition to the share repurchase results up to September 30 of this year, the total amount of shares repurchased this fiscal year will be JPY 677.9 billion. Additionally, taking into account the expected dividend for this fiscal year, the total payout ratio is expected to be approximately 159% based on our full year consolidated earnings forecast announced today.

This concludes my presentation. Now we'd like to proceed to the Q&A session.

[Operator Instructions]

So first, Nomura Securities, Oum,san please.

This is Oum from Nomura Securities. So my first question. U.S. ARPJ” second half plan, 16% increase, you said. Majority of that is premium sponsored ad contribution. Is that correct? Are there non-premium factors?

Of course, premium contribution is expected. But it's not only that. There are various factors that will contribute to this number. We have incorporated other factors. As I mentioned earlier, subscription sales have partially started. And according to what we experienced now, it seems like we -- this is gaining traction. It is received positively. And as I mentioned earlier, market will continue mildly expanding. So we want to harvest and exert this monetization impact.

So whether you think this is questionable or aggressive or we can do more, I hope you could take a good guess. So there are existing ones and the newly developed ones, newly launched ones. So when we announced our Q3 results, we will share with you what contributed to the results.

And my follow-up question is the current status of premium, if you could elaborate on that. I know it is difficult to disclose, but the breakdown between standard and premium, for example, what is the percentage of premium? And the number of countries or regions that you have deployed this, where you stand. So if you could give us a hint on penetration, it would be helpful. So today, we focused on the U.S. So how impactful premium is in the U.S. market and how things look like in Europe.

I hope we can use different parameters to explain going forward. But today, we are focusing on the U.S. And when we disclose these numbers, then what is the revenue breakdown or hosted or indexed. All these breakdown will continue. So for today, we'd like to refrain from giving you the breakdown. But the number of users using this is increasing as we speak.

Thank you. Understood. I already use my right for one follow-up question. But in the premium, there are many functions. What is received well particularly?

So the biggest reason from migration from standard to premium merchant hiring or Deko says, what we newly add on premium is what we often discuss. And any new things we can launch in the nonpremium. So what we include in the package, what we exclude from the package and the combination thereof and how we deliver this, offer this to our users. And have received the payment. There are so many things, factors that we consider. So of course, we may add new functions to raise the price of premium package in some case or do something else.

So I think that the combination is diverse. So we may add some new functions to increase the unit price or take another option, and that all determines the final result. So we may share with you Q3, Q4 results on that. I hope you could look forward to it. So the candidate and the targeting function. There are industries that like that and not so well in other industries. So for the industries where this is popular, the numbers are showing. So I cannot say this across the board. It's difficult to make a general comment, market is large and the needs differ from client to client.

Next, Munakata-san from Goldman Sachs Securities.

Hello. I'm Munakata from Goldman Sachs. Regarding the second quarter, U.S. Indeed growth is quite strong, which is reassuring listening to your presentation. And in addition, the -- you've also disclosed the average revenue per job posting a growth rate, which is very helpful. And here's my question. Comparing -- you have the bar graph showing the index and the revenue overlapping. The divergence between the index and the revenue with more monetization developments, you mentioned that this would increase. But currently, the assumption for the growth rate is 16% for the second half, which is at a high level.

So from next fiscal year onwards, should we expect that this growth rate, the U.S. ARPJ growth rate will be maintained or even be higher -- is that realistic? And also more recently, Indeed, Talent Scout and other services have been announced and monetization of these new services, I don't think will come in, in this fiscal year, but more so for the next fiscal year, is that something we should expect?

For the second quarter, the results -- perhaps this is not something I should mention much to external parties, but I think the results have some of the Deko effects. Currently, Deko is on the ground leading various efforts, monetization developments and perhaps there will be questions about this later from someone else, but we are also working on increasing efficiency of the business at such high speed, we are working on both of these efforts in parallel.

Today, in my presentation, I talked about revenue outlook for the third and fourth quarters and also our interpretation of the index, our expectation of the index. This is the latest information, latest data that we are sharing at least for the third and the fourth quarters, we believe this is the level of impact of the monetization developments that we should expect. That is the pace that we are observing.

For the next fiscal year, we've said that there will be many different things that will be introduced on a subscription basis, there will be an AI tool to be offered, things that are new that we have not done before will be introduced in the next fiscal year. So for these new services to be translated into value and how we should monetize in tandem, these are some of the things that we are currently considering.

As for the market condition for fiscal year or calendar year 2026, we are making assumptions. And based on those assumptions, we are considering what should be the U.S. results that we can achieve for the next fiscal year. So it's not simply based on what we currently have. There will be new things that we will be stopping and by combination of these various different pieces, we are thinking about how we can increase our KPI and to reach the numbers that we've disclosed.

I consider these KPIs to be quite challenging, tough KPIs with the market recovery with an increase in the number of jobs, even if we achieve the same level of growth, the growth rate itself does not increase. Therefore, we have to always overachieve in order for the growth rate to increase. So irrespective of the market recovery, we have to consider, what are some of the pieces we need to introduce in order to increase and increase revenues that we receive from our clients.

So for next year, what will happen of course, will be something we will be talking about in February and May, but the fact that we've disclosed this time shows our unwavering resolve and determination for this.

Thank you. I think I personally felt that determination through your presentation. As a follow-up, in my recent conversation with investors on our side, generative AI services have become more common. And some investors have said that things like ChatGPT, these are generative AI services provided by others, perhaps Indeed services may be replaced by the services offered by other companies. So that's a concern voiced by some investors. Could you elaborate once again on the strength of Indeed?

For the past several months, when I met with investors, I myself have received the same questions from them. And what I said, how I responded to those questions at the time was that when a job seeker uses things like ChatGPT asking whether there is any good job out there. The ChatGPT says, what about this? And it also offers to write nice resume, I think that's a very plausible scenario. But then what would happen? So those are some of the questions that I actually received from the investors.

And at the time, what I said was that job seekers, if that were to happen, they would be able to apply to more jobs since it's now easier. I think that's something that we can expect to happen. And if that is the case, how can we provide high-quality matching service and to address both job seekers and business clients to help them reach high-quality jobs for high-reach candidates.

So I think that's one direction that will certainly be important. Job seekers may be sending in hundreds of applications, but they are not getting any reply because this puts a lot of burden on the business client side, the employer side. So Deko has said this from before, when matching becomes more difficult, how can we support the process is important.

It's not simply placing advertisement or rather, how can we help business clients discover high-quality candidates? How can we help them select a better competitive candidates? I think these are the kind of services that will be in demand. So in that sense, as I said, we have a 2-sided marketplace. The fact that we have such a talent marketplace helps us increase the efficiency of matching. So that's how I responded to the questions from investors whether it's Yahoo!, Google or Facebook, there are already excellent platforms for jobs and technologies available for jobs.

Other services have been in place and maybe if it was 10 years ago, people thought that they already had these platforms, and we would be no match. But if we look at the reality, the story is different. Maybe some companies started and they were not successful. For e-commerce, rather than booking or e-commerce, there are things out there that are mass produced as long as you pay for them, you can acquire. But jobs are different. There is only one job and selecting the right candidates, this is determined solely by the employers who are looking to hire people. So this is where we are different from EC and booking.

In other words, it's always 2-way, two-sided. And I believe the fact that we have the 2-sided talent marketplace, this will continue to be appreciated by the 2 parties and to continue to be used by both sides. I think that's the nature of our business. My answer might not have been concise, but I often talk about things like this whenever I receive those questions.

I understand the concept well now. Thank you. So how should I say what can we offer to business clients, simplifying hiring or helping clients determine whether a candidate is qualified or not, whether this candidate is these are real human person or not?

I think in the future, there will need to be various aspects that need to be addressed. So by strengthening these pieces, I believe we will be able to differentiate ourselves. That's what Deko said.

Next, SMBC Nikko Securities, Maeda-san, please.

SMBC Nikko Securities, Maeda is my name. Thank you. So you have this proprietary original investment improvement and generating results, it's great. So the market model does not need to be worried, but every time we see the statistics, like you said, the job, we think will hit the bottom in Q4, as the stock market is having a more difficult view. And maybe that is reflected in your share price. But once again, you think that the job trend will bottom out, will show signs of bottoming out in Q4. Any changes in your forecast? And are there any risks?

So when we say bottom, it is an image of ticking and turning upward. We tend to think of bottoming out that way. But even when there is a bottom, it does not necessarily mean a rapid recovery. And at the same time, it may not be overall trend. Industries may show different trends. We are starting to see many industries stopping their decline. So the U.S. labor market is impacted positively. So the decline in the labor supply in the U.S. is already impacting the market.

So we do not think it will continue declining sharply going forward. That said, it may not show a V-shaped recovery right away. So to repeat my message, how we show our KPI U.S. ARPJ, how we raise our U.S. ARPJ, our important KPI, this is our focus.

Thank you. My follow-up question. So if things go as expected. Top line is growing as expected. But at one point in the future, you may shift gears to M&A. You are reducing cost through efficiencies. So once the projection changes, your cost will start rising again from Q4 to next fiscal year, what is your basic thinking of investment in this business?

As we've been mentioning from the past, we do not think of doing M&A to increase our revenue. Even if we do that, it is for the future. As we received questions earlier, how we improve our U.S. ARPJ. In the future, will be the end goal. So for that purpose, we may do M&A. We will not do M&A for a short-term increase in the revenue or improve the margin by reducing the headcount. We are not thinking of that at all.

So M&A will not have an impact in the short term, but will be impactful in the long run. So it will not impact in the performance in the short term. We will continue thinking on how we improve U.S. ARPJ growth rate. The same thing in the U.S. and further improvement in Japan. Once we see that, revenue will rise and costs can go down. So I think that combination is to steadily pursue this organically.

Yamamura-san from JPMorgan Securities.

This is Yamamura from JPMorgan. Can you hear me?

Yes.

I just have 1 question. For me, regarding the outlook for the job postings, there may be 2 questions actually. I have a question around that. In the second half, you're expecting moderate recovery. There may not be a V-shaped recovery, but there should be a bottoming out in the Q4, which is, I think, a good thing.

As Maeda-san pointed out, it is true the common debate, common discussion, there are 2 aspects. One is in the North America there has been restrictions on immigration. And if there is continued shortage of labor, it would put a lot of stress on recruit. And with the introduction of AI, of course, this would also impact the recruits business. So these are the 2 points often raised whenever we discuss this. So I would like to hear your views on these with even more shortage of labor, perhaps business clients are more motivated to hire. With the introduction of AI, maybe some companies or some jobs will no longer require human labor, but for higher quality talent that companies are willing to pay for, I think there is a huge or even a bigger demand for such talent. So with the efforts that you are currently implementing the monetization developments, perhaps will positively mesh with these developments in the market. So what is your view on the future state of your business?

Well, this is what Deko says. The U.S. market is becoming closer and more similar to the Japanese market. So that's one thing. That's what he is saying over the past decades. Japan -- the Japanese market has experienced tightness, labor population declining, the population aging and others. So we are seeing similar things in the U.S. market, and he's saying the market in the U.S. is becoming more similar to the Japanese market. So as Yamamura-san said, things are happening in the market. What is happening today, what has happened? Perhaps if you trace them back to what has already happened in the Japanese market, you can certainly see a similar trend in the -- the number of job postings is actually increasing.

And Deko today said this in one meeting. He, of course, looks at various stats and he tries to explain them to us. He looked at past examples of the U.S. market and from the latter half of the 1990s to 2010s over a 15-year period, the number of workers in factories in the U.S. decreased from 17 million to 11 million. However, the production output actually increased over the same period. So the white collar in the U.S. is said to be 30 million.

So with AI introduction, I think this is a segment of labor that would be most impacted by AI. So we may see some decrease, but as I said, things that happened in the factory workers could happen. The unemployment rate as a result of these things did not actually increase rather workers were redistributed to other jobs -- other types of jobs. I say, oh, that's -- is that right? So the job market is huge. It's not specific to certain industries. It covers all industries. Therefore, the job market itself is enormous. I don't know what will be the analogies we would use as Japanese, maybe we would compare it to Lake Biwa, but if you consider a huge lake and a small pond, so just because AI is being introduced, it doesn't mean everyone will lose their job.

I don't think that would happen. I don't think that's realistic. Maybe it will be the reality in certain areas. But if you look at the entire pool, there may be more people working in other industries, people earning more in other industries. Perhaps those are the results that we can expect. So if you consider all these things, in the U.S., the labor industry or where we operate, are becoming more similar to Japan. If you look at what is in high demand in Japan, where business clients are paying to higher talent.

If you look at the Japanese market, I think we should reference that and consider them for what we are trying to do in the U.S. markets going forward. So with AI, I don't think there should be any immediate impact, but rather gradually, things will start to change with AI. So let's say, unemployment rate becoming 10%. If that were to happen, that's an extraordinary thing to happen, that's totally an extraordinary thing. And I don't think that will happen, at least that's what we are saying internally. We are not trying to make any excuses here, but let's say, the unemployment rate becomes 10%. And that is something beyond our control. That's not something we can address.

It's for the government for the State to address. Of course, having said that, we want to help with no inflow of immigrants with the AI and so on. Of course, there are various factors, but they are localized and you ask us questions about recruits business being affected by these different pieces. I fully understand what you're saying, but we need to look at the entire pie, the number of jobs, the number of industries that exist, then I become skeptical with just these factors, would they bring a super huge impact on our business. It's like reducing the water in Lake Biwa by 10% or changing the color of the lake, what would it take?

I think that's the kind of discussion that you are raising here. So there may be people who say that the business is quite challenging. It may be difficult. I fully respect their opinions. But I don't fully agree. I don't think that's the extent of the impact that we should expect. Going back to the question from earlier, should we expect a V-shaped recovery? No. And even without such a v-shaped recovery through efforts, I think we can go on. We want to go on. That's what I feel. Perhaps mobility will increase the type of talent. Business clients want to hire may change. They need to change.

People want to work where they are needed. And I think that's the happiest situation for any worker. And of course, this is clients who are looking to hire such people. I'm sure there are clients out there who are willing to hire people who want to work with them. And we want to help support these job seekers and business clients and what are the services that we need to offer to reach and realize those goals. You go to a restaurant in the U.S., you go some places, and they are experiencing shortage of worker -- labor shortage is a serious issue.

I see.

Whenever I have this -- I talk with you, Yamamura-san, we end up having conversations like this, very casual chat. Mizuho, are we already over the time?

It's already been 1 hour, but I see more hands up. So maybe we can stay on until quarter 2. So we'll go on to the next question.

Morgan Stanley Securities, Tsusakan-san please.

Tsusaka speaking. Can you hear me?

Yes.

So I have a simple or maybe a complex question. So Arai-san, you talked about Deko impact in one word. So for Indeed, as an organization, Deko's leadership is now incorporated and that resulted in a better growth than expected, better pricing increase than expected. So what is happening? So did the organization change or product change? I think all these factors are intertwined, but what -- in what way did things happen, if you could elaborate, please?

Well, I don't want to praise him so much so that he blushes, but -- and I did not hear directly from him, but when I talk with Indeed headquarter people or the key office people I understand that he is quick. When we work with Deko, it's quick. He knows what we want and when things need to be decided, he decides right away. So what we want to do is clearly communicated. So it's easy to work with him, people say. So from the perspective of people working with him, I don't know, for a lack of a better word, it is rewarding. It motivates you, gives you a sense of fulfillment. That's what I hear from people, especially the people in products and sales. They do very detailed meetings with Deko.

So if we make this kind of product, this is not good. This is what we want. Sales, please do this, very detailed requests come and concrete answers come for questions and consultations. So for sales increase and cost reduction, we can work on both sides in a very concrete terms. So the non-value-added products will not be focused. Focus is on where they are good results. Understand. So this is the recruit way.

I understand. Thank you very much.

Of course, job seekers are very important. So how we offer value to job seekers comes first and foremost. That is the priority. But at the same time, how we can be appreciated by our clients so that they use more money. Deko is the businessman. So how we can bring smile on client's faces. That is all he thinks about every day, day in and day out. Please ask him directly too.

If there's an opportunity, I will.

Next will be the last question. Nagao-san from BofA.

Nagao-san. I don't know if it's a question or comment. The ARPJ that you've disclosed, I have a question around that towards the second half. The ARPJ is going to increase, but looking at the formula, this is price-driven. If it is a price-driven increase, then that's good. Algorithm has been improved. Product unit prices increased and the profitability is enhanced. But if a number of job postings is decreasing or free advertising, free jobs are increasing. And still, we should see that this would contribute to the increase in the ARPJ as a residual effect. So how should we interpret this for the second half? Arai-san, are you intending for this to be price-driven increase?

So far, we've had the Indeed model and if you continue to have a very strong impression of the past Indeed model, then if you look at the results 6 months from now or 1 year from now, you may think that the things are quite different from the expectations. I talked about subscription audio. For Indeed, this is a fairly new thing. So we need to consider everything, including all these new things divided by the number of jobs. We should increase, we should see an increase in the ARPJ.

So as I said before, jobs that were not monetized in the past will bring in revenue and the paid jobs in the past should enjoy higher efficiency if clients are looking to reach better, more efficiently, then the clients can pay more. So the changes of how the jobs change irrespective of that, if we have more clients who value and are willing to pay for these things, then the ARPJ should increase. Just because the number of jobs decreased, it doesn't mean the growth rate increase is guaranteed. That is not the case. So as I said before, this KPI is a quite challenging, tough KPI for us.

The reason I say this is because we look at the revenue for all jobs. So it includes jobs that we are not currently involved in at all. It is included in the denominator. So it requires us to consider how we can start to monetize these jobs. So that KPI includes all these things. So that's why I say this is a very tough KPI. AI tools like screening clients that are quite famous, they don't need to advertise. They already get enough applications. They have too many candidates applying. So those are clients that did not pay for our services.

But going forward, this is something we can offer and sell to these clients. These are clients that we were not able to do business with in the past. But if we start to acquire these clients then, going back to Nagao-san's rather doubtful question, by doing things like this, we can increase -- we can see an increase in the ARPJ. Perhaps I did not answer that question.

No, I get it. With the economic downturn, the number of job postings decrease, but there are still clients who are struggling to hire clients, who are determined to hire people, they will use the company's services and the paid advertisements or ARPJ, I don't know if it's going to be through subscription. In any case, the ARPJ will increase. Even in the economic downturn, the more clients paying for your products and services, you can see a higher ARPJ. That's certainly a realistic scenario. So as a KPI, I understand that this is a very difficult, challenging KPI that you've increased the hurdle rate yourselves, you're trying to take on this challenge yourself. I certainly see your determination, your resolve. So it's not that I've been doubtful.

Sorry, because it's you Nagao-san, I was half joking when I said your question, I was doubting our intentions. Going after new clients as part of our recent initiatives. So we are starting to see positive results. That's what we are discussing with the business side. Deko also wants to maintain this momentum and do even more. Well, since Deko is saying that we can do this, I think we can. At least that's what I choose to believe.

Thank you very much for staying for a long time. So with that, we will close the Recruit Holdings FY 2025 Q2 Earnings Call. Thank you very much for late in the evening.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]