Recruit Holdings Co., Ltd.

All SBUs acquire, manage, and utilize large volumes of personal information, and if information leakage or unauthorized access occurs, it could cause significant damage to operating results through disadvantages to individual users, as well as business suspension orders, fines, and lawsuits, in addition to disadvantages to individual users. This is recognized as a top risk for the Group, and measures such as unauthorized access detection, vulnerability testing, establishment of Recruit-CSIRT, and compliance with laws and regulations in various countries such as GDPR are being implemented, but there is a possibility that these measures may not be effective due to human error or new attack methods.

The HR Technology Segment, Staffing Segment, and Marketing, Matching & Technology Segment are all heavily dependent on economic conditions in each country, and the entrenchment of "low hiring, low turnover" in the US, declining staffing demand in Europe, the US, and Australia, and geopolitical risks such as US-China conflict, the Russia-Ukraine conflict, and the situation in the Middle East may affect business performance. If service demand stagnates due to a stagnation or deterioration of economic conditions or the spread of new infectious diseases, this may lead to a decrease in revenue.

There are businesses in the markets in which the Group operates where entry barriers are not necessarily high, and competitors, including global technology giants, may have an advantage in terms of technology, financial strength, and user base. In particular, in Japan's Marketing, Matching & Technology Segment, which already has a high market share, further growth is difficult, and profitability may decline due to price reductions and the introduction of new services to maintain competitiveness.

As new technologies such as AI and machine learning rapidly evolve, there are risks such as failure to predict technology trends, obsolescence, substitution of services by general-purpose AI, and brand damage caused by inappropriate content generated by AI. In addition, external providers of AI tools may become competitors, and significant system investment and talent acquisition costs may arise from the introduction of new technologies; failure to respond could lead to the departure of individual users and corporate clients.

Various laws and regulations, including personal information protection, competition law, labor law, AI regulations (such as the EU AI Act and US state laws), and digital services acts, tend to be strengthened or newly established in various countries, and violations may result in revocation of licenses, business suspension orders, fines, and other sanctions. In particular, in the HR Technology Segment, regulatory uncertainty regarding AI tools for recruitment is increasing, and additional regulations by the EEOC and various state regulatory authorities may impose constraints on business operations. In addition, domestic staffing subsidiaries (Recruit Staffing and Staff Service) received an on-site inspection by the Japan Fair Trade Commission in June 2026 on suspicion of violating the Antimonopoly Act, and depending on the outcome of the sanctions, this may affect operating results.

The Group actively pursues acquisitions, investments, and partnerships toward long-term profit growth, but recovery of investment may become difficult due to errors in the target company's business plan forecasts, unrealized expected synergies, integration difficulties, or the discovery of unexpected liabilities or compliance issues. In particular, in the HR Technology Segment, an increase in acquisitions of unprofitable companies with short operating histories is expected, which may increase the risk of impairment losses on goodwill and intangible assets.

The Group relies heavily on information networks and computer systems in its business operations, and if a system failure occurs due to a cyberattack, hardware defect, natural disaster, or other cause, this may affect social trust and operating results through the suspension of service provision and the loss or leakage of personal information. Since SaaS solutions (such as Air Business Tools) support clients' core business functions, the risk of damages claims in the event of a failure is particularly high, and it is also becoming increasingly difficult to handle issues in-house due to the increasing outsourcing of system operations to third parties.

In the HR Technology Segment and the Marketing, Matching & Technology Segment, securing and developing excellent IT engineers, including in the AI field, is becoming increasingly important, but the loss of talent to competitors and rising recruitment costs and compensation levels may affect operating results. In addition, in the Staffing Segment, inadequate safety and hygiene environments at client worksites may harm the health and safety of temporary staff, which may affect the brand and social credibility.

Transactions in overseas businesses are mainly conducted in foreign currencies such as US dollars, euros, and Australian dollars, and as the proportion of foreign currency-denominated transactions has increased in recent years, fluctuations in exchange rates directly affect the financial position and business performance in the consolidated financial statements. While a certain degree of risk hedging is conducted through derivative contracts such as currency swaps and forward exchange contracts, there is no guarantee that foreign exchange risk can be completely avoided, and deterioration of the macroeconomic environment due to exchange rate fluctuations and increased costs of overseas acquisitions may also affect operating results.

The HR Technology Segment and the Marketing, Matching & Technology Segment depend on external service providers such as search engines like Google, large language models, data centers, and payment processing services, and if algorithm changes, service interruptions, or fee increases occur, this may lead to reduced efficiency in user acquisition or business contraction. In addition, external providers of AI tools may become competitors to the Group, and insufficient monitoring of outsourcing partners may delay responses to labor issues and legal violations, which could damage social credibility.