Key Positives From The 2Q Results
Consolidated EBITDA+S was JPY 590,801M (+49.7% YoY). EBITDA+S margin reached 27.6%, up 5.6pt YoY (our estimate). US hiring demand remains stagnant. However, more sophisticated pricing at Indeed (monetization) lifted US average revenue per job (US ARPJ) by 37%, making HR Technology the main earnings driver. The company raised its full-year outlook for the segment. We view this positively because management itself is signaling that high profit levels will persist into 2H.
- Reportable-segment EBITDA+S rose by JPY 197,087M. HR Technology contributed JPY 194,949M of this, or 98.9% (our estimate). HR Technology margin rose to 47.5% (+11.1pt) on tighter personnel cost control
- HR Technology full-year outlook raised from the August figures. Revenue goes from USD 11,485M to USD 11,922M, and EBITDA+S from JPY 834.0B to JPY 874.4B (46.5% margin)
- Standalone 2Q (Jul-Sep) revenue was JPY 1,094,648M, +19.7% YoY, accelerating from 1Q (+18.9%) (our estimate). The YoY depreciation of the yen against the USD narrowed from +10.3% in 1Q to +7.9% in 2Q, underscoring strong underlying growth excluding FX
- Share buybacks reduced the average share count during the period by 3.1%. As a result, basic EPS of JPY 296.01 (+71.0%) outpaced net income growth (+65.7%)
Key Concerns From The 2Q Results
Earnings concentration in HR Technology has increased. The segment accounted for 75.4% of reportable-segment EBITDA+S, up from 63.8% a year earlier (our estimate). Staffing EBITDA+S was flat despite higher revenue. Meanwhile, the impact of a Japan Fair Trade Commission (JFTC) on-site inspection of Japanese staffing subsidiaries over suspected Antimonopoly Act violations cannot yet be estimated. Profit growth outside HR Technology remains a challenge.
- Staffing revenue rose +10.6%, but EBITDA+S grew only +0.9%. Margin fell to 6.0% (-0.6pt), as top-line growth failed to translate into profit
- On June 2, 2026, the JFTC conducted on-site inspections of two Japanese staffing subsidiaries (Recruit Staffing and Staff Service). The company states it is difficult to reasonably estimate the outcome or financial impact
- US growth depends on unit price increases rather than job posting volume. Growth could slow in 2H as pricing benefits annualize, depending also on US hiring demand
- The 2H FX assumption of JPY 156/USD implies a stronger yen than the 1H actual of roughly JPY 159. HR Technology's 2H outlook calls for +22.3% growth in USD terms and a 45.5% margin, both lower than in 1H
- The maximum funding commitment to a certain associate is approximately JPY 54,059M. No provision has been recognized because performance is not considered likely; however, the company discloses that a loss is likely to arise if the commitment is performed.
Focus Areas / Items To Monitor Going Forward
- Whether US ARPJ continues to rise is the most important issue. With hiring demand stagnant, we need to verify whether the 2H US revenue outlook (+29.1% in USD terms) can be achieved through pricing alone
- Consolidated guidance was maintained. Subtracting HR Technology's 2H outlook from the 2H consolidated EBITDA+S plan leaves approx. JPY 89.0B for Staffing, Marketing Matching Technologies (MM&T) and corporate adjustments combined. This is below the 1H figure of JPY 141,551M (our estimate). We want to assess how conservative the plan is and the 2H outlook for non-HR Technology businesses
- The remaining buyback capacity under the program (cap of JPY 350,000M) is JPY 171,865M (our estimate). Following the extension of the buyback period to end-March 2027, the pace of execution is a key capital allocation focus
- Breakdown of drivers behind the +37% US ARPJ increase, and the outlook for its sustainability into 2H and beyond
- Rationale for not reflecting the raised HR Technology outlook (EBITDA+S +JPY 40.4B) in consolidated guidance, and the 2H outlook for other segments
- Scope of conduct covered by the JFTC on-site inspection, and the impact on sales activities in the domestic staffing business
- Level of gross cash and the investment policy for standby funds (investments held within other financial assets), as well as the reasons behind the slower buyback pace
- Breakdown of factors behind Staffing margin contraction, and improvement measures in Japan and overseas
- Businesses covered by the funding commitment to the associate (up to approx. JPY 54,059M), and the current status of trigger conditions
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 2,139,998M | +19.3% |
| Gross Profit | JPY 1,323,836M | +24.4% |
| SG&A | JPY 810,676M | +9.6% |
| EBITDA+S | JPY 590,801M | +49.7% |
| └ HR Technology | JPY 449,250M | +76.7% |
| └ Staffing | JPY 55,110M | +0.9% |
| └ MM&T | JPY 91,471M | +1.9% |
| └ Adjustments | -JPY 5,030M | Prior Year: -JPY 4,176M |
| EBITDA+S Margin | 27.6% | +5.6pt |
| Share-Based Compensation Expense | JPY 42,790M | +19.5% |
| Other Operating Expenses | JPY 5,457M | -73.9% |
| Operating Income | JPY 513,739M | +63.9% |
| Interim Profit Before Tax | JPY 528,017M | +63.5% |
| Interim Profit Attributable to Owners of the Parent | JPY 411,633M | +65.7% |
| Basic Interim EPS | JPY 296.01 | +71.0% |
※ Gross profit margin was 61.9% (+2.5pt YoY). SG&A grew more slowly than revenue, improving cost efficiency as the business scaled (both our estimates) ※ Operating income growth (+63.9%) outpaced EBITDA+S growth (+49.7%), helped by a JPY 15,424M decline in other operating expenses from JPY 20,881M a year earlier. EBITDA+S is the more appropriate measure of underlying earnings power ※ Finance income was JPY 20,613M (prior year: JPY 16,462M). Interest and dividend income increased on a larger cash balance
Performance By Business Segment
HR Technology delivered revenue growth of +35.6% and EBITDA+S growth of +76.7%, driven by higher US unit pricing and a weaker yen. The segment accounted for almost all of the company's profit growth. Staffing and MM&T both grew revenue, but their EBITDA+S margins fell YoY.
Segment Performance Table
| Segment | Revenue | YoY | EBITDA+S | YoY | Margin |
|---|---|---|---|---|---|
| HR Technology | JPY 945,521M | +35.6% | JPY 449,250M | +76.7% | 47.5% |
| Staffing | JPY 917,525M | +10.6% | JPY 55,110M | +0.9% | 6.0% |
| MM&T | JPY 291,407M | +3.6% | JPY 91,471M | +1.9% | 31.4% |
| Adjustments | -JPY 14,455M | - | -JPY 5,030M | - | - |
| Consolidated | JPY 2,139,998M | +19.3% | JPY 590,801M | +49.7% | 27.6% |
※ Segment revenue includes inter-segment sales
- HR Technology US: Revenue of JPY 551.8B (+45.5%), +33.4% in USD terms. Despite stagnant hiring demand, more sophisticated monetization lifted US ARPJ by 37%
- HR Technology Europe and Other: Revenue of JPY 202.2B (+40.5%), +28.8% in USD terms. The 2H outlook assumes continued growth of +19.8% in USD terms
- HR Technology Japan: Revenue of JPY 191.4B (+9.8%) in JPY terms. Full-year outlook raised from JPY 367.0B to JPY 380.0B
- MM&T Lifestyle: Revenue of JPY 161.5B (+9.8%)
- Staffing: Revenue was JPY 437.1B (+3.5%) in Japan and JPY 480.4B (+18.0%) in Europe, the US and Australia. Despite higher revenue, EBITDA+S rose only +0.9%, with margin falling from 6.6% to 6.0% (our estimate)
- MM&T Housing and Other: Housing was flat at JPY 76.0B (-0.1%), while Other declined to JPY 53.7B (-7.3%). MM&T margin fell from 31.9% to 31.4% (our estimate)
Progress Versus Full-Year Guidance
1H progress against the full-year plan was 53.5% for EBITDA+S and 54.4% for operating income. This exceeds last year's 1H progress (operating income 49.7%, net income 50.0%). The implied 2H EBITDA+S derived from the full-year plan is JPY 514,199M, 13.0% below 1H (our estimate). Unless non-HR Technology businesses deteriorate sharply, the plan looks highly achievable.
| Item | Value (2Q Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 2,139,998M | JPY 4,230,000M | 50.6% |
| Gross Profit | JPY 1,323,836M | JPY 2,595,000M | 51.0% |
| EBITDA+S | JPY 590,801M | JPY 1,105,000M | 53.5% |
| Operating Income | JPY 513,739M | JPY 945,000M | 54.4% |
| Profit Attributable to Owners of the Parent | JPY 411,633M | JPY 755,000M | 54.5% |
| Basic EPS | JPY 296.01 | JPY 543.00 | 54.5% |
| HR Technology Revenue | JPY 945,521M | JPY 1,879.9B | 50.3% |
| HR Technology EBITDA+S | JPY 449,250M | JPY 874.4B | 51.4% |
※ HR Technology full-year figures reflect the company outlook as of November 2026
- Last year's 1H progress was 48.5% for revenue and 49.7% for operating income, indicating a roughly even split between 1H and 2H (our estimate)
- HR Technology's 2H outlook assumes revenue of JPY 934.3B, below 1H's JPY 945.5B, with EBITDA+S margin declining to 45.5% from 47.5% in 1H (company disclosure)
Changes To Guidance
Consolidated guidance was maintained at the figures announced on August 7, 2026. HR Technology's 1H results beat expectations, and the company raised the segment's full-year outlook on the assumption that the trend continues into 2H. However, the company states the impact on consolidated guidance is limited. The 2H FX assumption is JPY 156/USD, and the HR Technology share-based compensation assumption is unchanged from August.
- HR Technology Revenue: Previous JPY 1,822.0B → New JPY 1,879.9B
- HR Technology EBITDA+S: Previous JPY 834.0B → New JPY 874.4B
- HR Technology EBITDA+S Margin: Previous 45.8% → New 46.5%
- Reason for Revision: The US revenue outlook in USD terms was raised from +25.1% to +31.2%, and Japan from 0.0% to +4.2%. This assumes the 1H outperformance continues into 2H
Commentary On Shareholder Returns
- Dividend: Interim dividend of JPY 13.00 (prior year: JPY 12.50). The full-year forecast of JPY 26.00 (previous fiscal year: JPY 25.00) is unchanged
- Share Buyback: For the program capped at 64,000,000 shares and JPY 350,000M, the acquisition period was extended from November 30, 2026 to March 31, 2027, in light of stock market conditions
- Cumulative purchases under the program totaled 16,384,200 shares and JPY 178,135M as of October 31, 2026. Progress on a value basis is 50.9% (our estimate)
- 1H cash outflow for share buybacks was JPY 182,087M, down from JPY 428,304M a year earlier. October purchases amounted to only JPY 465M
Financial Position
Outstanding borrowings under credit facilities are zero, and the company maintains a net cash position. The ratio of equity attributable to owners of the parent rose to 61.6%. Its overdraft facility of JPY 113.0B, committed lines of JPY 200.0B and uncommitted lines of JPY 300.0B all remain undrawn.
Key Figures
| Item | Value | Additional Information |
|---|---|---|
| Cash and Cash Equivalents | JPY 872,842M | +20.3% vs. prior FY-end |
| Other Financial Assets (Current) | JPY 110,442M | +45.9% vs. prior FY-end |
| Other Financial Assets (Non-Current) | JPY 165,958M | +22.6% vs. prior FY-end |
| Total Assets | JPY 2,970,668M | +6.5% vs. prior FY-end |
| Goodwill | JPY 546,364M | -1.3% vs. prior FY-end |
| Equity Attributable to Owners of the Parent | JPY 1,828,771M | +15.5% vs. prior FY-end |
| Interest-Bearing Debt | JPY 165,066M | Includes lease liabilities. -11.4% vs. prior FY-end |
| └ Borrowings | JPY 636M | Non-current |
| └ Lease Liabilities | JPY 164,430M | Current JPY 42,285M + Non-current JPY 122,145M |
| EBITDA+S | JPY 590,801M | Operating income + depreciation and amortization (our estimate) |
※ Gross cash (company definition: cash and cash equivalents plus investments held within other financial assets as standby funds for business operations) is a separate concept from cash and cash equivalents. The balance sheet in the earnings release does not separately disclose the standby-fund portion of other financial assets, so cash and cash equivalents represents the floor for gross cash ※ Payments for acquisition of investments were JPY 101,423M (+83.9% YoY). Other financial assets (current and non-current combined) rose by JPY 65,380M from the prior FY-end
Leverage Metrics
| Metric | Value | Notes |
|---|---|---|
| Net Debt/EBITDA | Net Cash | Net cash of JPY 707,776M (cash and cash equivalents minus interest-bearing debt). Prior FY-end: JPY 539,303M (our estimate) |
| Debt/Equity | 0.09x | Includes lease liabilities. Prior FY-end: 0.12x (our estimate) |
| Interest Coverage Ratio | 181.3x | Operating income ÷ interest paid (our estimate) |
| Equity Ratio | 61.6% | Ratio of equity attributable to owners of the parent. Prior FY-end: 56.8% (company disclosure) |
Disclosures Released Alongside The Earnings Announcement
Major Announcements During The Quarter
- 2026/09/01Announced August progress on the share buyback capped at JPY 350,000M
- 2026/09/02Announced receipt of dividends from a consolidated subsidiary
- 2026/10/01Announced September progress on the share buyback
- 2026/10/14Extended the share buyback period to March 31, 2027 in light of stock market conditions. The caps on share count and value are unchanged
- 2026/11/02October purchases totaled 28,200 shares and JPY 465M. Cumulative purchases as of end-October reached 16,384,200 shares and JPY 178,135M
Large-Shareholding Filings / Material Proposals Over The Past Year
- Capital Research and Management Company: New → 5.3% (2026/06/15) - Pure investment on behalf of client investment trusts and institutional investors outside Japan
- Nomura Asset Management: 5.2% → 6.1% (2026/03/31) - Held as inventory for securities business, for operation of cumulative investment business, and for management of trust assets
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