Recruit Holdings Co. Ltd., the fifth-largest global staffing firm, reported a decrease in revenue of 1.5% for its fiscal third quarter ended 31 December 2023. Excluding the positive impact of exchange rate fluctuations of JPY 26.2 billion (USD 175.3 million), revenue decreased 4.5%.

Revenue in HR Technology decreased while revenue in Matching & Solutions and Staffing increased.

Operating income for Q3 increased by 12.5% due to continued cost control despite an impairment loss on goodwill of JPY 7.5 billion (USD 50.2 million) in Staffing.

Consolidated profit attributable to owners of the parent for Q3 2023 was JPY 106.3 billion (USD 711.6 million), an increase of 36.6% due to an increase of operating income and the impact of an internal legal entity restructuring in HR Technology which resulted in a decrease in income tax rate.

Consolidated adjusted EBITDA increased 14.4% resulting in an improved consolidated adjusted EBITDA margin of 18.3%,.

Revenue by segment

Within the HR Technology segment, the supply and demand mismatch between job seekers and employers continued to ease, particularly in the US. Total job postings on Indeed, composed of free and paid postings, declined year over year in the US and many other countries where HR Technology operates, while job seeker activity as measured by traffic to, and applies on, Indeed and Glassdoor increased year over year.

As part of the group’s “Simplify Hiring” strategy in Japan, Indeed PLUS was launched on 30 January 2024. Indeed PLUS is a job distribution platform which connects multiple job boards, used by various job seekers, and Applicant Tracking Systems linked to Indeed PLUS, used by employers, and automatically distributes jobs to the job boards that are judged to be the most appropriate based on the job content and other factors.

Revenue in HR Solutions decreased 0.8% as revenue in the job advertising service decreased, while revenue in the placement service increased. Revenue in Marketing Solutions increased 7.1%. Housing & Real Estate and Beauty continued to account for more than 50% of revenue in Marketing Solutions.

Within the Staffing business, revenue for Q3 2023 increased 4.3% primarily due to an increase in revenue in Japan, despite a decrease in revenue in Europe, US, and Australia. Excluding the positive impact of exchange rate fluctuations of JPY 15.6 billion (USD 104.44 million), revenue increased 0.6%. Revenue in Japan increased 10.9% due to an increase in the number of temporary staff on assignment as demand for staffing services continued to grow. Revenue in Europe, US, and Australia decreased 0.4% as demand for staffing services continued to slow down against a backdrop of an uncertain economic outlook. Excluding the positive impact of exchange rate fluctuations of JPY 15.6 billion (USD 104.44 million), revenue decreased 6.9%.

For the nine-month period, the group posted revenue of JPY 2.52 trillion (USD 16.87 billion), down 1.1% over the prior year period.

For Q4 2023, the company expects revenue to be JPY 830.0 billion (USD 5.55 billion), an increase of 0.3% year over year and adjusted EBITDA to be JPY 99.0 billion (USD 662.80 million), a decrease of 9.3%.

For FY2023, the company expects consolidated revenue to decrease 0.9% year over year. Revenue is expected to decrease in HR Technology as hiring activities and the HR Matching market overall contract in US and Europe, while revenue in Matching & Solutions and Staffing is expected to increase.

Meanwhile, Adjusted EBITDA is expected to increase 7.3% year over the year to JPY 585 billion, a record high, due to cost control measures mainly related to personnel cost and advertising expenses while continuing strategic investments for future growth. Operating income and profit before tax are expected to increase 18.2% and 16.6% year over year, respectively, while a one-time loss is expected to be recorded in Q4 2023. FY 2023 net income and profit attributable to owners of the parent are expected to increase to record highs, by 30.7% and 31.2% year over year.

Recruit Holdings shares closed at JPY 5,887.00 (USD 39.41), up 0.51% on the day and 7.34% below its 52-week high of JPY 6,353.00 (USD 42.53), set on 15 January 2024. The company has a market cap of JPY 9.81 trillion (USD 65.67 billion).