Daily News

View All News

Japan – Recruit Holdings Q2 revenue bolstered by growth in HR Technology

13 November 2018

Japanese staffing firm Recruit Holdings (6098: JP) reported revenue for the second quarter ended 30 September 2018. Revenue increased 7.3% compared to the same quarter in the prior year to JPY 577.8 billion (USD 5.06 billion). EBITDA grew by 13.6% to JPY 76.5 billion (USD 670.5 million) and the EBITDA margin was 13.2%.

Revenue was boosted by strong growth in the group’s HR Technology segment.

Recruit Holdings said the negative impact of foreign exchange rate movements on the consolidated revenue for Q2 2018 was JPY 2.9 billion (USD 25.4 million).

(JPY billions) Q2 2018 Q2 2017 Change Q2 2018 (USD millions)
Revenue 577.8 538.6 7.3% 5,064.4
EBITDA 76.5 67.3 13.6% 670.5
EBITDA Margin 13.2% 12.5% N/A N/A
Operating Profit 58.7 52.0 12.8% 514.4

In June, Recruit Holdings completed the acquisition of Glassdoor, Inc. Recruit operates Glassdoor as a distinct and separate part of its HR Technology business segment, aligning Glassdoor and Indeed as sister companies and bringing changes to the job board landscape.

Profits and losses from Glassdoor’s operations were included in the HR Technology segment's results during the period. The group added that the inclusion of Glassdoor in the consolidated results from July 2018 positively impacted the revenue growth rate.

Due to the adoption of new accounting policy IFRS 15, Recruit Holdings revised revenue of the HR Technology segment for Q1 2018 retrospectively, resulting in a reduction of each of Indeed's revenue and cost of sales by the same amount of JPY 1.8 billion (USD 15.7 million).

According to Recruit, after the change in accounting policy, “it was concluded that sales agents for some transactions should be defined as the customer, then requiring that the transaction net amount (equal to the gross amount less agency commissions earned) be recognised as revenue.”

Revenue by segment was as follows.

(JPY billions) Q2 2018 Q2 2017 Change Q2 2017 (USD millions)
HR Technology 82.4 52.7 56.4% 722.1
Media & Solutions 175.8 166.7 5.5% 1,540.8
Staffing 325.8 324.6 0.4% 2,855.6
Eliminations and Adjustments -6.2 -5.4 N/A -54.3

To support future revenue growth, the HR Technology segment continued to make substantial investments in sales and marketing to drive user and customer acquisition, and in products and engineering to build enhanced functionality for job seekers and employers. These investments are expected to continue to fluctuate throughout the year.

During the second quarter, Indeed gained scale in its sales, marketing and customer support functions, while continuing to invest aggressively in product and engineering to build enhanced functionality for job seekers and employers.

EBITDA in the HR Technology segment grew by 69.9% and the quarterly EBITDA margin was 17.4%, an increase of 1.4 points year on year. 

In the Media & Solutions segment, revenue increased 5.5% year on year, EBITDA grew 12.9% and EBITDA margin was 25.0%. Revenue in the Beauty business, the fastest growing sub-segment in Marketing Solutions, increased 13.3% year on year.

In HR Solutions, the Recruiting in Japan sub-segment, particularly the professional recruiting businesses, saw strong performance supported by the continued favorable business environment in the Japanese labour market. As a result, revenue increased 8.2% year on year, quarterly EBITDA increased 4.0%, and EBITDA margin was 24.4%. The Others sub-segment in HR Solutions increased 23.0% due to the transfer of the recruiting assessment business to this sub-segment.

Staffing revenue in the second quarter was up marginally at 0.4% compared to the same quarter in the prior year.

“The Japanese staffing market continued to expand as evidenced by the ongoing strong demand for agency workers while the number of active agency workers remained elevated,” the group stated. “In this environment, the Japanese operations invested in advertisement to attract new potential agency workers and also focused on extending existing staffing contracts.”

Revenue for Japanese operations within Staffing increased 7.0% year on year. Meanwhile, in overseas operations, revenue decreased 3.7% year on-year. The company attributed this to the negative effect of foreign exchange rate movements and the application of new international accounting standards IFRS 15.

Recruit Holdings also posted revenue of JPY 1.14 trillion (USD 9.99 billion) for the first half ended 30 September 2018.

Looking ahead, the group forecasted revenue of JPY 2.30 trillion (USD 20.15 billion) for the full year.

In trading today Recruit Holdings shares closed at JPY 2,957.50 (USD 25.92), down 2.33% on the day and 24.79% above the 52 week low of 2,370.00 (USD 20.77) set on 14 February 2018. Based on its current share price the company has a market value of JPY 5.14 trillion (USD 45.04 billion).


Add New Comment

Post comment

NOTE: Links will not be clickable.