6098.T

• AI-Driven Business Transformation

  • The company has entered a new phase where AI automation tools reduce manual work for global HR teams, boosting recruiter productivity and shortening time-to-hire for clients.
  • HR Technology has evolved from a pay-per-click job search engine to an AI-powered, high-value 2-sided matching marketplace for hiring.
  • MMT is shifting core verticals (beauty, custom home building, automobiles) from fixed monthly listing fees to a GMV-linked revenue model, leveraging AI to improve matching and drive growth.

• Q1 Growth Drivers

  • Small and medium business (SMB) demand was particularly strong: lean SMBs prioritize hiring speed over cost to avoid business disruption from unfilled roles, leading to growth in both client count and spend per client.
  • Large enterprise revenue growth is accelerating: more enterprise clients are trialing AI hiring products after seeing proven productivity gains (e.g., a healthcare client found AI screening delivered output equivalent to several full-time recruiters).
  • Faster hiring improves job seeker experience, leading to higher platform engagement, creating a virtuous cycle for the 2-sided marketplace.
  • MMT's new GMV-linked model for used automobiles drove a 12.5% YoY increase in user actions, leading to 15.8% YoY Q1 revenue growth for the vertical.

• Financial Discipline

  • Broadly defined personnel expenses for HR Technology fell to ~37% of revenue in Q1 from ~48% YoY, driving margin expansion.
  • AI-related compute and infrastructure costs remain a small, non-material portion of the overall cost base, and are managed with a strict focus on return on investment.

• Full-year FY 2026 consolidated guidance was revised upward substantially, driven by better-than-expected Q1 performance in HR Technology:

  • Consolidated revenue: Expected to grow 14.4% YoY to JPY 4.23 trillion, up from the prior guidance of JPY 4.03 trillion.
  • Consolidated EBITDA+S: Expected to grow 39.1% YoY to JPY 1.105 trillion (crossing JPY 1 trillion for the first time), up from prior guidance of JPY 949 billion; EBITDA+S margin revised up from 23.5% to 26.1%.
  • Basic EPS: Revised upward from JPY 447 to JPY 543, representing 55.2% YoY growth.

• HR Technology full-year guidance was revised upward significantly:

  • Global revenue: Expected to grow 18.7% YoY to USD 11.4 billion (24.9% YoY to JPY 1.82 trillion), up from prior guidance of 11% YoY growth.
  • U.S. revenue: Expected to grow 25.1% YoY to a record USD 6.6 billion (58% of total HR Technology revenue), up from prior guidance of 13.6% YoY growth; full-year U.S. ARPJ growth is expected to hit ~30% YoY, assuming a 4% YoY decline in total U.S. job postings (in line with the start-of-year assumption).
  • Segment EBITDA+S margin: Revised up from 41.0% to 45.8%.

• Staffing guidance saw a minor upward revision: Full-year revenue expected at JPY 1.83 trillion, with segment EBITDA+S margin of 5.6%.

• MMT full-year guidance is unchanged from May: Revenue expected to grow 7.1% YoY to JPY 605 billion, with segment EBITDA+S margin of 30%.

• Management notes that rapid AI evolution makes precise long-term forecasting challenging, and will update guidance quarterly as visibility improves.

1. HR Technology (core growth driver):

• Q1 FY 2026: Revenue of JPY 455.4 billion (+33.2% YoY), accounting for ~43% of consolidated revenue and ~75% of consolidated EBITDA+S. U.S. revenue grew 30% YoY to USD 1.64 billion; U.S. ARPJ grew 35% YoY amid a 4% YoY decline in total U.S. job postings. Europe and others Q1 revenue grew 28.5% YoY to USD 0.6 billion; local currency revenue grew ~34% YoY in the U.K. and ~46% YoY in Canada. Japan Q1 revenue grew 6.7% YoY to JPY 93.3 billion. Segment EBITDA+S margin was 47.4% in Q1.

1. Staffing:

• Q1 FY 2026: Revenue of JPY 455.2 billion (+11.5% YoY). Japan domestic revenue grew 3.5% YoY to JPY 220.2 billion; international revenue (Europe, U.S., Australia) grew 20.3% YoY to JPY 235.0 billion, with foreign exchange tailwinds. Segment EBITDA+S margin was 6.2% in Q1.

1. Marketing Matching Technologies (MMT):

• Q1 FY 2026: Revenue of JPY 141.8 billion (+3.7% YoY). Lifestyle vertical revenue grew 9.6% YoY (driven by GMV-linked model adoption in beauty); housing and real estate revenue grew 2.8% YoY. Segment EBITDA+S margin was 36.0% in Q1, supported by cost optimization.

• In June 2026, Recruit's Japan Staffing segment received an on-site inspection from the Japan Fair Trade Commission related to suspected violations of the Antimonopoly Act. The company is cooperating with the inspection, and cannot reasonably estimate potential financial impacts at this time; no impact is reflected in the current full-year guidance.
• Rapid growth in average spend per client creates a need for close monitoring of client satisfaction to protect long-term sustainable growth; management notes the need to carefully gauge the pace of customer and societal adaptation to rapid AI change, and will navigate this shift with caution and flexibility.
• Fast AI evolution increases forecasting uncertainty, making precise projection of future growth rates challenging.

Q: Has the company's total addressable market expanded as it moves beyond online job ads into HR automation, increasing the wallet share Recruit can capture?

A: SMBs are willing to pay more for faster hiring to fill long-unfilled roles, and our AI automation frees up time for SMB HR teams that have other non-HR responsibilities. For larger enterprises, clients trial AI tools for sourcing and screening, see proven ROI from reduced manual work, and expand adoption to more tasks after successful trials. This is not just selling standalone tools — we eliminate entire backend hiring processes, expanding the scope of work Recruit handles beyond traditional job ads, and management does not see direct competition with other automation providers due to its differentiated value proposition.

Q: What factors underpin the updated U.S. ARPJ growth guidance, given the faster-than-expected acceleration in Q1?

A: ARPJ growth comes from three contributing factors: more paying clients, more paid job postings, and higher unit price per posting. For SMBs, each factor contributes roughly one-third of current growth. For larger enterprises, unit price increases offset potential declines in total job postings, as clients pay more for higher-value AI-enabled services. Rapid AI adoption creates forecasting uncertainty, so management updates guidance based on current trends each quarter, and is confident long-term manual hiring processes will inevitably be automated.

Q: Will HR teams resist AI automation that eliminates manual roles, and how does Recruit overcome this resistance to penetrate enterprise accounts?

A: Recruit does not enter enterprise accounts with a primary focus on headcount cost cutting — instead, it focuses on substantial reduction of burdensome backend hiring processes, starting with low-risk product trials. Management notes that many large enterprises already have company-wide AI automation initiatives led by C-suite executives, so Recruit now increasingly engages CFOs, COOs, and CIOs rather than only HR leadership, a shift from past practice. No meaningful opposition from internal HR teams has been observed, as HR staff are relieved to eliminate tedious manual work.

Q: What is the long-term upside for U.S. ARPJ and customer growth, and what additional value can AI deliver beyond current speed and productivity gains?

A: Drawing on past experience launching new convenience-focused platforms (Hot Pepper beauty reservations, Jalan travel, Uber), management notes that making hiring faster and more convenient creates new, unanticipated demand and expands the overall market, rather than just capturing share from existing players. Recruit can tap into the much larger total hiring expenditure market (estimated at ~USD 200 billion, including placement services and hiring automation) far beyond the existing USD 34 billion job ad market. Management is confident that continued AI-powered matching and process automation will unlock substantial untapped market potential over time.