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Recruit Holdings Q3 Financial Report: Navigating Challenges with Strategic Precision
Feb 12, 2024
Recruit Holdings Co. Ltd., a leading global staffing firm, faced a slight revenue decline in Q3 FY2023, with total revenue at approximately USD 5.8 billion, a 1.5% decrease year-over-year. This dip, adjusted to 4.5% excluding currency benefits, was mainly due to a 13.4% drop in HR Technology. However, growth in the Matching & Solutions and Staffing segments, alongside increases in operational income and net profit, showcased the company's diversified strength. Despite challenges in HR Technology, strategic initiatives like the launch of Indeed PLUS in Japan underscore Recruit Holdings' adaptability and focus on future growth, projecting a 7.3% rise in Adjusted EBITDA for FY2023.

Tokyo, February 9, 2024 ― Recruit Holdings Co., Ltd. announced today its consolidated financial results for the nine months ended December 31, 2023 (April 1, 2023 to December 31, 2023)

Recruit Holdings Co. Ltd., the world's fifth-largest staffing firm, has unveiled its financial performance for the third quarter of the fiscal year 2023. Despite facing market headwinds, the company reported a total revenue of JPY 866.7 billion (approximately USD 5.8 billion), marking a modest decline of 1.5% year-over-year. A deeper analysis reveals that, excluding the positive impact of currency fluctuations amounting to JPY 26.2 billion (USD 175.3 million), the adjusted revenue decline was actually 4.5%. This contraction was primarily driven by a downturn in the HR Technology segment, which saw a 13.4% reduction in revenue, descending from JPY 280.5 billion in the previous fiscal year to JPY 243.0 billion (about USD 1.6 billion).

Despite the downturn in HR Technology, Recruit Holdings' other two main business segments, Matching & Solutions and Staffing, experienced revenue growth. The Matching & Solutions segment's revenue increased by 3.9% from JPY 191.9 billion to JPY 199.5 billion (approximately USD 1.3 billion), and the Staffing segment grew by 4.3% from JPY 415.6 billion to JPY 433.6 billion (about USD 2.9 billion). These figures indicate that despite the challenges faced by the HR Technology sector, the company's diverse business portfolio continues to exhibit growth momentum.

The company's operational income and net profit attributable to the parent's owners also saw significant increases. Operational income rose by 12.5% from JPY 96.8 billion to JPY 108.9 billion (approximately USD 0.7 billion), and net profit attributable to the parent's owners surged by 36.6% from JPY 77.8 billion to JPY 106.3 billion (about USD 0.7 billion). This profit growth is partly due to internal legal entity restructuring within the HR Technology segment, leading to a reduced income tax rate, and sustained cost-control measures, despite a JPY 7.5 billion (USD 50.2 million) impairment loss on goodwill in the Staffing segment.

Moreover, Recruit Holdings launched Indeed PLUS in Japan as part of its "Simplify Hiring" strategy. This job distribution platform connects various job boards and Applicant Tracking Systems, automating job postings to the most suitable job boards based on job content and other criteria. Despite a decrease in overall job postings in the HR Technology segment across the US and other operational countries, traffic to, and applications on, Indeed and Glassdoor have increased year-over-year.

Facing the uncertainties of the global economic outlook, Recruit Holdings remains optimistic about its overall performance for the fiscal year 2023. The company anticipates that despite ongoing challenges in the HR Technology sector, growth in the Matching & Solutions and Staffing segments, along with strategic investments for future growth, will drive a 7.3% annual increase in Adjusted EBITDA, reaching a historic high.

Recruit Holdings' latest financial report not only highlights the challenges within the HR Technology sector but also demonstrates how the company's diversified business strategy and effective cost-control measures have maintained its resilience in an unstable market environment. The strategic adjustments and investments towards future growth signal the company's continued leadership and commitment to innovation in the global human resources industry.



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