Link and Motivation Inc.

The Group places the highest priority on human capital, and securing and developing project managers and engineers in the Organization Development Division, which is expected to grow significantly, is a particularly important challenge. If the Group is unable to secure excellent talent, it could impact operating results and other outcomes. As countermeasures, the Group conducts recruitment activities leveraging its own recruitment consulting know-how, works to improve employee engagement and branding, and aims to minimize required headcount by utilizing technology through the cloud-based delivery of services.

The outlook for the Japanese economy remains uncertain due to price increases associated with yen depreciation, US political developments, geopolitical risks, and other factors. In the event of an economic downturn, the Organization Development Division's consulting projects for small and medium-sized venture companies may be suspended, and the Matching Division's recruitment placement business may be affected through deterioration in companies' employment environments, potentially impacting operating results. As countermeasures, the Group is expanding its ALT staffing business and career school business, which are less susceptible to economic fluctuations, and working to increase the proportion of stock-type revenue through Motivation Cloud.

The emergence of competitors imitating Motivation Engineering, the Group's core technology, could make it difficult to assert competitive advantages to customers, potentially leading to a decline in sales. In addition, the spread of telework and the rapid development of generative AI technology have increased the risk of leakage of intellectual property such as consulting know-how and customer case studies, raising the risk of brand damage and reputational harm. As countermeasures, the R&D department continuously advances its technology, and the Group implements multifaceted intellectual property protection combining trademark rights, patent rights, and copyrights.

The Group holds large volumes of personal and confidential information, including organizational personnel data, personal information, and job seeker/job listing information, creating a risk of information leakage due to external unauthorized access such as cyberattacks or internal accidents. The increasing frequency of generative AI use in recent years has further heightened this leakage risk, and if an information leak were to occur, it could impact business performance and financial condition through damages claims or loss of social credibility. As countermeasures, the Group has established and complies with information management regulations aligned with the Privacy Mark standard, implements technical security measures, and has established governance and employee awareness initiatives regarding the use of generative AI.

As a result of active business expansion through M&A and other means, the Group has recorded a substantial amount of goodwill on its consolidated financial statements related to stock acquisitions through M&A. If the profitability of businesses related to acquired shares were to significantly decline due to changes in the management environment or business conditions, impairment accounting could be applied, resulting in a loss, and in the worst case, could lead to a state of negative net worth. As countermeasures, the Group is strengthening follow-up efforts to realize synergies after M&A, enhancing regular monitoring of operating results, and working to improve profitability by applying its consulting know-how.