Recruit Holdings Co. Ltd.

05/14/2019 | Press release | Distributed by Public on 05/14/2019 00:14

Financial Results for FY2018

Governance & Financials

TOKYO, JAPAN (May 14, 2019) - Recruit Holdings Co., Ltd. ('Recruit Holdings' or the 'Company') today announced financial results for the year ended March 31, 2019 (unaudited).

* Additional contents for FY2018 such as a presentation material will be uploaded around 18 o'clock on May 14.

FY2018 Consolidated Financial Highlights

Consolidated revenue +6.3%, EBITDA +13.5%, Adjusted EPS +23.5%
・Record-high revenue, EBITDA and Adjusted EPS

HR Technology segment continued its strong growth
・Revenue increased +54.0% in US dollar terms, assuming accounting policy change was applied in FY2017 (1)

Q4 FY2018 and FY2018 Segment Highlights

HR Technology Segment:

  • Revenue for FY2018 increased by 49.6% yoy ( year on year) and by 54.0% yoy in US dollar terms, assuming application of an accounting policy change to the previous year on a pro forma basis(1); the increase was mainly due to increased sponsored job advertising revenue from new and existing enterprise clients at Indeed and the contribution from Glassdoor, which was acquired during Q1 FY2018. Quarterly revenue increased by 45.4% yoy and by 46.3% yoy in US dollar terms, assuming the same accounting policy change to the previous year's quarter on a pro forma basis(1).
  • EBITDA for FY2018 increased by 55.0% yoy, and quarterly EBITDA increased by 44.1% yoy.
  • Indeed attracts approximately 250 million monthly unique visitors(2) and job seeker traffic continued to grow year on year during the quarter.
    Indeed had approximately 8,900 employees located in 29 cities in 14 countries as of March 31, 2019.
  • Glassdoor attracts approximately 67 million monthly unique visitors(2) and traffic grew double digits year on year during the quarter. Glassdoor had approximately 900 employees as of March 31, 2019.

Media & Solutions Segment:

  • Revenue for FY2018 increased by 6.1% yoy, primarily driven by increased revenue in the Housing and Real Estate and Beauty subsegments in Marketing Solutions and in the Recruiting in Japan subsegment in HR Solutions. Quarterly revenue increased by 6.9% yoy.
  • EBITDA for FY2018 increased by 10.4% yoy driven by higher profit in HR Solutions, particularly in Marketing Solutions. Quarterly EBITDA increased by 16.2% yoy.
  • Housing and Real Estate revenue for Q4 increased, primarily by improving the user experience on its online platform, attracting more individual users to the platform by various marketing efforts, and strengthening the relationship with enterprise clients by providing operational and management services.
  • Beauty revenue for Q4 continued to grow mainly by extending its reach to enterprise clients in non-urban areas and the outskirts of metropolitan areas.
  • Recruiting in Japan revenue for Q4 increased. The extremely tight labor market continued in Japan, and the subsegment focused on enhancing brand value, strengthening user attractiveness, and reinforcing its sales structure.

Staffing Segment:

  • Revenue for FY2018 and quarterly revenue decreased by 0.7% (Japan +6.5%, Overseas -5.3% (ex FX and IFRS15 impact: -1.6%)), and 4.9% (Japan +3.5%, Overseas -10.6% (ex FX and IFRS15 impact: -4.2%)) yoy respectively.
  • EBITDA for FY2018 and quarterly EBITDA for Q4 increased by 14.1% and 39.2% yoy respectively. EBITDA for Q4 FY2017 was impacted by the increased advertisement to grow the number of registered staff in Japan operations.
  • Japan operations revenue for Q4 increased as demand for agency workers continued to be strong, and placement revenue continued to increase as a result of revisions to Japanese laws, effective October 1, 2018, which encouraged enterprise clients to hire agency workers directly.
  • Overseas operations revenue for Q4 decreased mainly due to an uncertain outlook for the European economy, while it continued to focus on profitability improvement and simplifying the operational governance model in Europe.

(1) The Group adopted IFRS 15 in the beginning FY2018, and changed its accounting policy. Revenues from certain customers which were previously presented on a gross basis with agent commissions classified in cost of sales are now presented on a net basis. FY2017 numbers assume the same accounting policy change was applied on a pro forma basis. The US dollar based revenue reporting represents the financial results of operating companies in this segment on a US dollar basis, which differ from the consolidated financial results of the Company.
(2) Internal data based on Google Analytics service, January 2019
(3) The treatment of cost allocations in intra-group transactions was changed at the beginning of FY2018, resulting in a positive impact to segment EBITDA. Please refer to Appendix of Financial Results Summary FY2018.

Consolidated Financial Guidance for FY2019

The Company is changing its prior guidance practices for FY2019 to reflect its rapidly changing technology business environment. The Company will no longer provide specific full year consolidated forecasts for revenue, EBITDA, operating income, profit attributable to owners of the parent, adjusted profit and adjusted EPS.

Below are consolidated financial guidance for FY2019:
- Revenue and adjusted EBITDA* for all three segments to increase
- Adjusted EBITDA* to be in the range of 310 billion yen to 330 billion yen
- Adjusted EPS to grow high single digits

The HR Technology segment revenue on a US dollar basis is expected to grow approximately 35% plus or minus a few percent. Adjusted EBITDA margin for the segment is expected to be approximately the same level as FY2018 plus or minus a few percent mainly due to continued investment in sales and marketing activities to acquire new individual users and enterprise clients and in product enhancements to increase user and client engagement.

The Media & Solutions segment revenue is expected to continue stable growth. Revenue for Marketing Solutions is expected to grow mid single digits, and revenue for HR Solutions is expected to grow low single digits. Adjusted EBITDA margin for the segment is expected to remain at a level similar to that of FY2018.

The Staffing segment revenue is expected to grow low single digits, comprised of an increase in both Japan and Overseas operations, and adjusted EBITDA margin is expected to improve slightly from FY2018 by improving operational productivity.

*Adjusted EBITDA = operating income + depreciation and amortization (excluding depreciation of right-of-use assets) ± other operating income/expenses

Results Materials

In preparing these materials, Recruit Holdings Co., Ltd. relies upon and assumes the accuracy and completeness of all available information. However, we make no representations or warranties of any kind, express or implied, about the completeness and accuracy. This presentation also contains forward-looking statements. Actual results, performance and achievements are subject to various risks and uncertainties. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements. Readers are cautioned against placing undue reliance on forward-looking statements. Reported results should not be considered as an indication of future performance. Forward-looking statements in this press release are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.