Japanese staffing giant Recruit Holdings (6098: JP) reported revenue today for the second quarter ended 30 September 2020. Revenue stood at JPY 569.1 billion (USD 5.43 billion), a decrease of 6.2% when compared to the previous year.

The global spread of Covid-19 had a broad impact on business performance, resulting in year-on-year revenue decreases, however, revenue growth rates improved quarter-on-quarter in all three of the group’s segments.

Revenue by segment

The revenue decline in HR Technology was primarily driven by decreased demand year-on-year for sponsored job advertising, candidate sourcing and screening solutions, and employer branding products. HR Technology increased marketing investments compared to Q1 FY2020 and resumed limited hiring in the latter half of the second quarter.

In Media & Solutions, revenue continued to slowly recover since June through the second quarter following the lifting of the state of emergency at the end of May, however it remains below prior year levels.

Within the Staffing segment, revenue for Japan operations decreased by 0.7% and decreased for Overseas operations by 10.2%.  Revenue in Japan fell mainly due to one less business day in the quarter compared to the previous year, and lower demand for new orders since Q1 amid the economic uncertainty caused by the spread of Covid-19 and a decreased number of temporary staff in Q2, partially offset by an increase in billing prices following the implementation of the “equal pay for equal work” regulations beginning 1 April 2020.

Revenue declined for overseas operations primarily due to continued restrictions on enterprise clients' business operations in order to mitigate the spread of Covid-19, partially offset by the positive impact of foreign exchange rate movements. These conditions, as well as uncertainty about the future, led to a significant decline in demand from enterprise clients for temporary staff.

The group also reported revenue for the six-month period ended 30 September 2020 of JPY 1.04 trillion (USD 9.9 billion), down 13% compared to the same period last year. Revenue for the six-month period includes JPY 29.5 billion (USD 281.8 million) from the Rent Assistance Program by The Small and Medium Enterprise Agency of the Ministry of Economy in Japan. Revenue excluding the Rent Assistance Program was JPY 1.01 billion (USD 9.6 million), down 15.5% on the year.

 “The global economic outlook remains uncertain as some countries are experiencing a second wave of Covid-19 and new restrictions which may impact the company’s business are being implemented,” the company stated. “The company’s consolidated financial guidance for FY2020 is based on the assumption that the spread of Covid-19 will not worsen to the extent it causes severe and prolonged lockdowns of major cities, and the business environment will not deteriorate significantly during the remainder of the fiscal year.”

“The company expects the global HR Matching market’s recovery and stabilisation will be gradual, despite the recent strength in recruiting demand in some industries and increased consumer spending. Some countries and regions have already started to re-implement lockdowns and the company’s business environment continues to evolve rapidly. Therefore, the company’s outlook remains cautious,” Recruit stated.

Consolidated revenue for the six months ending 31 March 2021 is expected to be in the range of JPY 1.10 trillion to JPY 1.20 trillion (USD 10.5 billion to 11.4 billion), and, for the full year is expected to be in the range of JPY 2.14 trillion to JPY 2.24 trillion for FY 2020 (USD 20.4 billion to 21.4 billion)

Shares in Recruit Holdings closed at JPY 4,690.00 (USD 44.82), up 2.74% on the day and 4.40% below its 52-week high of JPY 4,906.00 (USD 46.88), set on 10 November 2020. The company has a market cap of JPY 8.23 trillion (USD 78.6 billion).