RareJob, Inc.

In the individual consumer market, polarization is progressing between low-priced AI/app-based services and high-priced coaching, blurring the positioning of online English conversation services. In the corporate market as well, budget allocation focused on ROI is accelerating, and if the competitive advantage of the Company's services is impaired, this could affect business performance. The Group's policy is to work toward gaining recognition through appealing to service value and delivering results.

The revision of the Immigration Control and Refugee Recognition Act, enacted in May 2026, will substantially raise residency procedure fees for foreign nationals, causing a sharp increase in the cost for ALT instructors to come to Japan. Changes in budget policies or staffing policies by local governments and boards of education could also disrupt business operations. The Group intends to continue efforts to secure instructors, but recognizes the risk that rising costs could make recruitment difficult.

The vast majority of instructors for the online English conversation business reside in the Philippines, and all three overseas subsidiaries are located there. Accelerating inflation in the Philippines has been pushing up instructor compensation levels, putting pressure on profits. Should political instability, civil unrest, terrorism, or legal/regulatory changes occur, this could affect overall business operations.

In the online English conversation, ALT Dispatch Service, and offline English school businesses alike, securing high-quality instructors is a prerequisite for business continuity. In addition to the sharp rise in the cost of coming to Japan due to the revised Immigration Control Act, rising wages in the Philippines are also compounding the difficulty of securing instructors under appropriate contract terms. The Group's policy is to continue efforts to secure instructors, but failure to do so would directly affect business operations and performance.

The online English conversation business is highly dependent on computers and the internet, and if a communication network failure or unauthorized external access causes a service outage or data leak, this could lead to damages claims and loss of social credibility. In recent years, the risk of downtime in AI utilization infrastructure has also emerged, which could affect service delivery and cause a marked decline in development productivity, thereby affecting business performance. The Group plans continuous updates and investment in its systems and infrastructure.

The Group holds and manages the personal information of a large number of users, and if unauthorized external access or intentional or negligent acts by employees result in the leakage, loss, or falsification of information, this could result in loss of credibility and losses from damages claims. Although the Group has obtained ISMS certification and strives to properly manage information assets, threats in the information security field are becoming increasingly complex and severe, and this risk remains ongoing.

In the online English conversation business, instructor compensation is paid mainly in Philippine peso, while lesson fee revenue is settled in yen; if the yen depreciates against the peso, procurement costs will rise and price competitiveness will decline. Although the Group implements foreign exchange risk hedging, sharp exchange rate fluctuations could affect business performance and financial condition.

As part of its growth strategy, the Group actively pursues M&A and has recorded a substantial amount of goodwill. If expected results are not achieved due to changes in the business environment or competitive landscape, an impairment loss could occur, materially affecting business performance and financial condition. The Group believes the goodwill appropriately reflects the future earning power and synergies of each business, but inherent uncertainty remains.

Gaku Nakamura, Representative Director and President, plays a central role across the full range of business activities, from management policy and strategy decisions to new service development, and the Group's degree of dependence on him is high. Should he become unable to continue performing his duties for any reason, this could affect business performance. The Group is working to reduce this dependence through information sharing and organizational strengthening at Board of Directors and Group management meetings, but at present the level of dependence remains high.

In the online English conversation business, revenue consists of fixed monthly fees, while instructor compensation is linked to the number of lessons conducted; therefore, when the attendance rate rises, cost of sales increases and gross profit margin deteriorates. Conversely, when the attendance rate falls, the profit margin improves in the short term, but since there is a correlation between lesson volume and retention rate, this could lead to a decline in revenue due to lower retention. The Group continuously monitors this structural risk, which is inherent to the business model.