Indeed's AI matching, powered by two-sided data, is monetizing the value of hiring speed. HR Technology FY guidance has been raised again, and large-enterprise penetration is the next focus.

Summary

In HR Technology, improving AI matching accuracy continued to drive migration to higher-tier products and higher unit prices. SMB clients again led growth in 2Q. The segment's FY revenue outlook was raised for the second time following August's upgrade. Consolidated guidance was left unchanged, however, as the uplift to group results is limited. CEO Idekoba stressed that the company's hiring marketplace holds data on both job seekers and employers, giving it an edge over general-purpose AI agents. He framed the evolution of the pricing model as a medium- to long-term opportunity. Key items to monitor are how the company handles clients' need to validate ROI and the pace of large-enterprise penetration.

Key Points (Earnings Takeaways and Growth Actions)

• Management Strategy and Market View
  • The CEO defined what Indeed sells as "hiring itself." He positioned job ads and AI tools as means of monetizing that value.
  • Hiring is a transaction that closes only when job seekers and employers meet in the middle, so a one-sided AI agent has inherent limits. He emphasized that holding two-sided data is a strength general-purpose AI will struggle to replicate.
  • Building trust with clients takes priority over short-term shifts in conditions. The stated goal is to automate manual work with AI and raise hiring productivity globally.
  • US staffing demand is strong at roughly +10%. The CEO noted that, as a leading economic indicator, this could spill over into full-time hiring. For 2H US hiring demand, the company assumes total job postings will be roughly flat, based on an Indeed Hiring Lab consensus of 100+ economists.
• Current Business Progress and Drivers
  • SMB clients led growth, with both the number of clients posting paid jobs and unit prices rising. Clients value shorter Time to Hire even more than cost savings.
  • Beyond migration to higher-tier products, average unit prices rose even within the same price tier. Both price per job and client count increased.
  • The 1H margin expansion in HR Technology was driven mainly by holding broadly defined personnel costs, including stock-based compensation, flat YoY despite revenue growth. Personnel costs as a share of revenue fell from approx. 46% to approx. 36%.
  • Large enterprises take longer to adopt new products. Even so, progress is being made on annual contracts, a sales-organization overhaul, and making PSJ (Premium Sponsored Jobs) easier to use. The typical pattern is a trial in one department that then spreads to others.
• Key Strategic Initiatives and Inflection Points
  • Users of Career Scout, the AI agent for job seekers, rose +65% vs. 1Q. Clients using Talent Scout, the employer-facing tool, rose +40%.
  • AI has improved the productivity of Indeed's engineering team by over 65% vs. 2024, accelerating product development.
  • As part of the pricing model evolution, the company is testing cost-per-interview and cost-per-qualified-application billing. It aims to expand performance-based pricing by linking it with AI screening.
  • The acquisition period for the share buyback program (up to 64M shares, JPY 350B) was extended to end-March 2027.

Outlook and Strategy

• Consolidated FY guidance is unchanged: revenue of JPY 4.23T, EBITDA+S of JPY 1,105.0B (26.1% margin), and basic EPS of JPY 543.00. Management said the HR Technology upside would lift EBITDA by only about 4% and EPS by about 5%. A landing estimate will be provided with 3Q results in February.
• HR Technology FY revenue is now guided at USD 11.92B (+23.2%) with an EBITDA+S margin of 46.5%, up again from USD 11.48B in August. The 2H outlook factors in 3Q holiday seasonality and assumes 4Q runs at the current base. 2H revenue is expected at +0.8% vs. 1H.
• The 2H HR Technology EBITDA+S margin is guided at 45.5%. This reflects higher AI-related infrastructure costs and stepped-up advertising spend in Japan to support next year's revenue growth.
• US FY revenue is guided at USD 6.97B (+31.2%), raised by USD 320M from the prior forecast. Assumptions include FY US total job postings of -1% (flat in 2H) and FY US ARPJ growth of +33%.
• Management views the medium-term 50% EBITDA margin not as a ceiling but as a level AI could help surpass.
• ROE is expected to reach its highest level since listing, well above last year's 31%. Absent a large acquisition, management sees it as extremely difficult to hold year-end gross cash to around JPY 750B. The FY dividend is projected at JPY 26.

Positive Factors

• Thanks to evolving US monetization, HR Technology revenue has decoupled from hiring demand over the past two to three years. The CEO noted that a recovery in hiring demand now would be an unprecedented scenario, and he wants to see how revenue responds.
• Many new clients are choosing premium products from the outset. This is helped by AI on the job-posting screen proposing budget allocation tailored to each client's situation.
• In Europe and Other, the UK grew approx. +40% and Canada approx. +59% in local currency terms. Monetization through wider PSJ adoption is spreading to other regions.
• In Japan HR Technology, Indeed PLUS performed well. The turnaround in placement has restored revenue to the level of two years ago. The FY revenue outlook was raised by JPY 13B to JPY 380B.
• The Direct Hire market is worth USD 71B. The pricing model evolution could allow the company to enter the space of traditional recruitment agencies at lower cost.
• 1H share buybacks totaled JPY 177.6B (approx. 16.35M shares), sustaining a high level of shareholder returns.

Concerns and Risks

• Some annual-contract clients are consuming their budgets at over 100% of the planned pace. At companies where HR values "faster hiring" but business units focus on ROI, the company is asked to justify ROI at renewal.
• The company launched a concentrated wave of new AI products from December through March last fiscal year. The CEO said future guidance will be shaped by closely monitoring the tough YoY comparisons.
• The spread of general-purpose AI agents such as Meta's "Muse" is generating mass applications, adding to employers' burden.
• The Japan Fair Trade Commission's on-site inspection of the Japan Staffing business in June is not reflected in guidance, as its financial impact cannot be reasonably estimated.
• In MMT, Housing and Other saw revenue declines, and margins fell due to higher promotional and advertising spend. The unauthorized access incident at Carsensor is expected to reduce 2H revenue by several hundred million JPY.
• The 2H FX assumption for HR Technology is USD 1 = JPY 156. Further yen appreciation would weigh on yen-denominated results.

Performance Highlights

Consolidated revenue, EBITDA+S, and basic EPS all hit quarterly records in 2Q. 1H consolidated revenue was JPY 2,139.9B (+19.3%) and EBITDA+S was JPY 590.8B (+49.7%). The EBITDA+S margin expanded from 22.0% a year earlier to 27.6%. 2Q profit attributable to owners of the parent was JPY 209.0B (+64.0%), and basic EPS was JPY 150.54 (+68.8%).

Segment Results (2Q, Three Months)

• HR Technology 2Q Revenue (USD): USD 3.07B (+27.5% YoY)
• HR Technology 1H EBITDA+S: JPY 449.2B, 47.5% margin (+76.7% YoY)
• HR Technology US 2Q Revenue: USD 1.82B (+36.6% YoY)
• US ARPJ Growth (2Q): +39% (US total job postings -2% YoY)
• HR Technology Europe and Other 2Q Revenue: USD 657M (+29.1% YoY)
• HR Technology Japan 2Q Revenue: JPY 95.1B (+13.2% YoY)
• Staffing Japan: JPY 216.8B (+3.5% YoY)
• Staffing Europe, US, and Australia: JPY 245.4B (+15.8% YoY)
• MMT Lifestyle: JPY 84.7B (+10.1% YoY)
• MMT Housing and Real Estate: JPY 37.4B (-2.9% YoY)
• MMT Other: JPY 27.2B (-5.4% YoY)
• Gross Cash (End-September): JPY 988.2B (end-March 2026: JPY 767.9B)
• Gross Cash Breakdown: Cash and Cash Equivalents of JPY 872.8B; investments held as standby funds for business operations of JPY 115.4B

Q&A List

• Q

  It was striking that your share price fell when Meta announced Muse in early October. I believe I understand your strengths as a two-sided marketplace with granular visibility into the situation and data of both job seekers and employers. But if a world where personal AI agents like Muse search for jobs becomes the norm, do you think the premise of pay-per-click monetization will fundamentally change? Would that be an opportunity for earnings growth?

  A

  Not just Muse; there are many ways to search for jobs using AI agents. Job search itself has become fairly commoditized, with Google for Jobs and others already out there. The real issue is applications. Large companies in particular are getting 100 or even 1,000 applications per person through AI agents, and many are struggling badly. Several companies have asked us to handle their entire application intake as a careers page on Indeed, and we are running a few initiatives to filter out AI bots. On pay-per-click, we believe we are steadily shifting toward performance-based pricing. As we have long said, we increasingly serve recommendations close to candidates who are nearer to being hired, the kind employers want to hire immediately, at the point they click and apply. We are well ahead in reading supply and demand on both sides to optimize matching. Building an agent that only pleases job seekers is, for now, a difficult path. In terms of evolving pay-per-click, cost-per-hire takes time to measure, so we see room to test things like cost-per-interview or cost-per-qualified-application, where an employer pays a set amount when, say, a candidate holding specific licenses applies. Indeed already offers AI screening. We expect to evolve toward employers using AI screening to receive only candidates who clear their criteria. Indeed has always operated on a cost-per-performance basis, so greater system visibility through AI makes the model fairer for clients as well. As you suggest, we see this as an opportunity. Traditional offline recruitment agencies run exactly that kind of business, so we may be able to enter that space directly and more cheaply. In that sense, we see it as a medium- to long-term opportunity.

• Q

  Apologies for the short-term focus. With growth already high, I had assumed some risk of deceleration, but you mentioned more clients are focused on Time to Hire. US ARPJ is growing strongly. Just to confirm, are clients satisfied with the added value, with no hesitation or unease about the evolving monetization?

  A

  Recently we often hear that AI costs are rising at many companies and CFOs want to manage them properly; this is a similar dynamic. It is less about unease. We want to move at our clients' pace because we see a gap between HR and the core business. By quickly sending candidates employers want to hire right away, HR is happy because hiring gets done, and our revenue grows as clients spend more with us. The question, though, is whether hiring actually lifts the client's own revenue. As I mentioned, as hiring workflows become automated, people working there get redeployed to other roles. AI is moving so fast for employers that we think it is wise to carefully judge how much time they need to catch up and when to check ROI. For example, even some annual-contract clients are using well beyond their annual commitment because results are good. Over the long term, we want to confirm together with clients that their revenue is genuinely growing, not just their costs, creating a virtuous cycle. Also, the second half of last fiscal year, especially December through March, was when we rolled out a series of new AI-enabled products and approaches. We want to forecast results while carefully checking YoY comparisons for that period. Some things are admittedly hard to read, and these two points shape our outlook.

• Q

  Are new clients skewed toward any particular industry or region, or is acquisition broad-based?

  A

  We don't see much skew. Overall, demand in the US remains strong for skilled blue-collar trades, as baby boomers continue to retire. We are often asked about data centers, but they still account for less than 1% of the total, so they are not a major revenue driver.

• Q

  I always ask about US ARPJ, so this time I'd like to ask about the change in the volume outlook. External data suggest ad volumes are recovering, though still negative YoY, and your own assumption was revised up from -4% to -1%. Is this purely macro, or does it also reflect a strategy to broaden the base, including the new-client expansion you mentioned? One approach would be to start clients on cheaper trials rather than high-priced products and deepen the relationship over time. Is this deliberate broadening or simply external factors? Any hints on how to read this number would be helpful. By ad volume, I mean something close to Hiring Lab's US total job postings, including unpaid ones.

  A

  US hiring demand is getting somewhat stronger. Staffing is often cited as a leading indicator. Looking at roughly 30 years of data, staffing demand rises first when the economy improves. Companies hire through staffing first because it is easier, and demand then shifts to full-time. US staffing demand is currently very strong at around +10% market-wide, and this could spill over into full-time. For now, though, we have only moved from negative to roughly flat. As for whether it breaks through, the median of more than 100 US economists points to roughly flat as the prevailing consensus, so we use that data and assume roughly flat. Historically, Indeed's revenue tracked overall US hiring demand almost 100% in both directions. Over the past two to three years, however, monetization has evolved, pricing based on supply and demand and charging more for higher-quality candidates. As a result, we have moved away from a model where revenue rises and falls with hiring demand alone. This upturn in hiring demand is the first since our monetization model changed, so we are testing and watching how things shift as demand rises. On whether new clients are using cheaper products and thereby broadening the base, in fact, far more new clients are using premium. I think many clients come to us because they are struggling and urgently need to hire. Rather than broadening the base, there are cases among large clients with, say, 1,000 or 5,000 jobs. A client spreading a JPY 1M monthly budget evenly across 1,000 jobs finds Premium Sponsored Jobs very effective for hiring and wants to use them. To keep the budget at JPY 1M, they reduce the number of jobs. So some clients are cutting advertised job counts, but overall we don't see new clients choosing cheaper plans just because they are new.

• Q

  So quite a few new clients sign up going all in on Premium Sponsored Jobs from the start?

  A

  Quite a few. If you look at the job-posting screen, AI now asks about the client's situation and suggests how best to use their budget. That is another factor driving premium adoption.

• Q

  If North American hiring demand enters a recovery, how do you currently see these trends evolving?

  A

  Ideally, revenue would keep rising along with it. But as I said, there will inevitably be a step where employers want to verify that faster hiring actually translates into revenue growth. We are very mindful that CFOs should not see costs simply ballooning one way. We are focused on using AI to develop analytics and tools that demonstrate ROI. Right now, we are careful not to lose clients' trust and to build strong medium- to long-term partnerships.

• Q

  I'd like to ask about Indeed's large-enterprise business. SMBs currently stand out for revenue growth, but I suspect large enterprises could also reach an inflection point in the medium term. As you refine the product, sales organization, and PSJ, are there any major initiatives, and when might results show up?

  A

  Growth among large enterprises is picking up steadily. As I mentioned earlier, large enterprises take longer to adopt new products, so the sales cycle is longer, but we are winning business steadily. We are also securing annual contracts with large enterprises that already commit meaningful budgets. Rather than a sudden inflection point, wins are coming gradually. A common pattern is a trial in one department that then spreads to others. Unlike SMBs, where growth jumps at an inflection point, we think large enterprises can deliver sustained growth over a long period, and we are working hard on this.

• Q

  You mentioned that PSJ works so well that HR is happy with the hiring flow, but business units face a time lag, including redeployment. Have you seen actual signals of concern among clients, or is this a hypothesis of what could happen?

  A

  Annual-contract clients in particular often plan a set monthly spend. Quite a few are running well above 100% utilization and using up their annual budget far ahead of schedule. When we discuss increasing next year's contract with them, ROI naturally comes up. Conversations along the lines of "we keep hiring, so we keep spending" are common, especially at mid-sized to large companies where there is a gap between HR and business units. At SMBs where the owner hires directly, the reaction is that they can interview good candidates quickly, and they understand why the price has risen, so little explanation is needed. It is true that the bigger the gap between HR and business units, the more explanation each side needs.

• Q

  To summarize from my side: SMBs generally post roles they must fill, so filling them quickly causes no disruption. What you describe concerns faster budget consumption at large enterprises, so I don't see this risk as having a major impact on the overall business. Is that the right understanding?

  A

  Yes. Take us, for example, or many tech companies today. When software engineers use AI tools, development speed rises, AI tool usage increases, and costs go up. If revenue grows as a result, that's great. But if development speeds up without revenue rising, you have to think about the cost. It is a very similar dynamic.

• Q

  Please talk about AI, headcount, and cost structure. In 1H, HR Technology margin rose to 47.5% while personnel costs were held flat YoY. AI-driven internal productivity gains seem to be contributing to profitability. How long can you sustain growing revenue without adding headcount? Relatedly, can you continue to grow revenue with the current personnel cost ratio, or essentially the current fixed-cost base?

  A

  There are moving parts within that; sales headcount, for example, is planned to rise slightly. But we believe there is still plenty of room to raise productivity with AI, and we are sharpening our focus. There are also several countries where our market share is still low. With this much headroom, we think it makes sense to invest some marketing spend to compete over the medium to long term, which is reflected in the 2H numbers. Personally, I think we can do much more with AI, and I want to push that.

• Q

  You have a medium-term EBITDA margin of 50% as a reference point, yet over the past two quarters about 70% of incremental revenue has dropped to profit. Is 50% a waypoint, or a level that balances growth investment, costs, and profit rather than a hard target? What does CEO Idekoba consider the ideal, or a comfortable, medium-term margin level?

  A

  50% is not a goal at all. I think we can go further by fully leveraging AI. In terms of overall balance, the initiatives I described will proceed in areas AI cannot replace, such as marketing and sales. Personally, I want my own job to be replaced by AI. When I ask why it can't be, several reasons emerge, and we work on those. Rather than cutting costs, raising the speed of management is what matters most to me. Productivity gains are the result of working toward that goal. That is why I often ask why my job can't be automated by AI. There needs to be a loop where a signal triggers an AI agent, the outcome is evaluated, and reinforcement learning follows. Where that loop doesn't run, some data isn't flowing in. If we build a foundation that connects those pieces properly, the company itself can move very fast with AI agents. I find it compelling to work toward the goal of replacing the CEO's job with an agent.