Japanese staffing firm Recruit Holdings (6098: JP) reported revenue for the third quarter ended 31 December 2020 with revenue increasing slightly by 0.5% compared to the same quarter during the previous year.

Group revenue below included the benefit of a rent relief program (the ‘Rent Assistance Program’) introduced by the Japanese government in May 2020 as part of a fiscal stimulus package in response to Covid-19. Revenue excluding the Rent Assistance Program was JPY 1.59 billion, down 11.8% when compared to the previous year.

Revenue was up in the group’s HR Technology and Media & Solutions segments but was down in the Staffing segment.

The group said its business environment gradually improved sequentially from Q2. It also reported reduced selling, general and administrative expenses driven mainly by reduced advertising expenses and promotion expenses, as well as lower sales commissions which were directly correlated to revenue.

Revenue by segment

Revenue for the Staffing segment decreased by 1.2% (-1.7% excluding the impact of foreign exchange). Revenue for Japanese operations decreased by 2.6% to $142.7 million and for Overseas operations increased marginally by 0.1% to $173.9 million (-1.0% excluding foreign exchange impact).

In the Media & Solutions segment, revenue increased by 1.1%. Excluding revenue from the Rent Assistance Program, this was down 15.5%. Revenue continued to slowly recover in Q3 extending the gradual recovery experienced in Q2 and revenue growth rates improved quarter-on-quarter. Revenue for both Marketing Solutions (housing and real estate, beauty, bridal, travel, dining and others) and HR Solutions decreased year-on-year excluding revenue from the Rent Assistance Program.

The revenue increase in the HR Technology segment was primarily driven by increased year-on-year demand for sponsored job advertising. The company reported that jobseeker activity in Q3 on Indeed and Glassdoor compared to the prior year was dampened by new Covid-19 related restrictions in certain countries and the continued uncertain economic environment.

The company also reported revenue for the nine-month period of JPY 1.65 trillion (USD 15.65 billion), down 8.5% when compared the same period in the year prior.

Despite the gradual recovery in Q3 2020, the company expects a challenging business environment in Q4 2020, mainly due to the state of (Covid-19) emergency in Japan which has been applied to Tokyo and 10 other prefectures in January 2021, as well as certain restrictions and lockdowns in the US and Europe being reinforced from the latter half of Q3 2020.

Consolidated revenue for the six months ending 31 March 2021 is expected to be approximately JPY 1.18 trillion (USD 11.19 billion), and is expected to be approximately JPY 2.22 trillion (USD 21.06 billion) for FY 2020.

Recruit Holdings ranks as the largest staffing firm in Japan by revenue, according to SIA’s Largest Staffing Firms in Japan and Market Overview report.

Recruit Holdings shares closed today at JPY 5,142.00 (USD 48.79), up 0.27% on the day and 0.92% below its 52-week high of JPY 5,190.00 (USD 49.25), set on 12 February 2021. The company has a market cap of JPY 8.70 trillion (USD 82.55 billion).