ARBEIT-TIMES CO.,LTD.

Since the Group's core business is the provision of job information, changes in the external environment such as economic trends and legal amendments may directly impact business performance or financial condition. In an economic downturn, demand for recruitment advertising could decline sharply, posing a risk of significant deterioration in earnings. While the Group has adopted a policy of striving to avoid the occurrence of such risks and to respond when they occur, specific details of countermeasures have not been disclosed.

In the job information market, there is a substantial gap in corporate strength between the Group and major competitors, and the success or failure of responding to competitors' strategies may affect business performance or financial condition. The Group is working to improve its responsiveness through enhanced internal reserves, maintaining a sound financial structure via an "asset-light management" approach, and organizational structures that enable agile management decisions; however, the difference in capital scale remains a structural risk.

In FY2025 (ended February 2025), the job information media business—combining print job information media (¥649 million, 15.6% of sales) and job information sites (¥2,252 million, 54.1% of sales)—accounted for approximately 70% of consolidated net sales of ¥4,160 million, indicating a high dependence on this revenue source. This business has a high ratio of selling, general and administrative expenses to sales, and in a phase of declining advertising revenue, fixed costs such as personnel expenses cannot be fully absorbed, resulting in a characteristic sharp decline in profit. While the Group aims to expand its revenue base over the medium to long term by strengthening the free job information media business and developing new businesses, high dependence is expected to continue for the time being.

Sales of the print job information media ("DOMO") declined for three consecutive fiscal years, from ¥1,011 million in FY2023 (ended February 2023) to ¥896 million in FY2024 (ended February 2024) and ¥649 million in FY2025 (ended February 2025), with its share of sales falling from 25.0% to 15.6%. The ongoing shift from print to digital media is a structural decline in demand that poses a risk to earnings. The Group is seeking to offset this through expansion of the job information site business (from ¥1,937 million in FY2023 (ended February 2023) to ¥2,252 million in FY2025 (ended February 2025)), but the large decline in print media sales remains a factor depressing overall consolidated net sales.

The Group operates businesses utilizing internet media, and if a system failure occurs due to a large-scale natural disaster, computer virus, terrorism, power outage, or employee operational error, business activities may be partially suspended. With the job information site business accounting for 54.1% (¥2,252 million) of consolidated net sales, a system outage poses a risk of directly damaging the operation of the core business. While the Group has adopted a policy of striving to avoid such risks and respond to them, it is difficult to fully guard against unpredictable events.

The Group holds a wide range of personal information, including that of registered users of job information sites, survey respondents, advertiser customers, shareholders, and employees, and if an information leak occurs, it could affect business performance or financial condition. The Group is working to strengthen information security through the establishment of a privacy policy, system checks and improvements, and employee awareness activities. However, given the increasing sophistication of cyberattacks, the success or failure of these efforts is directly linked to management risk.

If a large-scale natural disaster or infectious disease outbreak disrupts the publication of free paper or the operation of internet media, the Group's services may become unable to operate as usual. The Free Paper Distribution and Direct Promotion (FP Distribution) business accounted for ¥533 million (12.8% of sales) in FY2025 (ended February 2025), and dependence on physical distribution networks is a risk factor. While the Group has adopted a policy of striving to avoid such risks and respond to them, specific details of a business continuity plan (BCP) have not been disclosed.

While the job information media business has a high gross profit margin, it has a revenue structure characterized by a high ratio of selling, general and administrative expenses to sales and a heavy fixed cost burden such as personnel expenses. In a phase of declining advertising revenue, fixed costs cannot be fully absorbed, resulting in a characteristic sharp decline in profit; consolidated net sales in FY2025 (ended February 2025) decreased by ¥158 million to ¥4,160 million from ¥4,318 million in the previous fiscal year. If advertising revenue declines due to an economic downturn or intensified competition, the impact on profit could exceed the decline in sales.

The Group's core business, the provision of job information, may face operational constraints due to amendments to labor-related laws and regulations such as the Employment Security Act. Legal amendments could affect the standards for posting recruitment advertisements and information disclosure requirements, and may impact business performance or financial condition through increased response costs and changes in advertisers' recruitment activities. While the Group has adopted a policy of striving to avoid such risks and respond to them, the content and timing of legal amendments are external factors that are difficult to predict.

The Group has set as a medium- to long-term policy the reduction of dependence on the job information media business by strengthening the free job information media business and expanding its revenue base through the development of new businesses. While sales in the "Other" segment increased from ¥493 million in FY2023 (ended February 2023) to ¥723 million in FY2025 (ended February 2025), its share of consolidated net sales remains at only 17.5%, indicating limited progress in revenue diversification. If new businesses fail to grow as expected, there is a risk that the state of high dependence on the job information media business will continue for a prolonged period.