DIP : Q&A Summary of Financial Results for FY'24/2 Q2（30KB）

Q&A Session on the Financial Results

for the Second Quarter of the Fiscal Year Ending February 29, 2024

This question-and-answer booklet is a compilation of the main questions received from those who attended the financial results briefing. Some of the content has been added or revised to facilitate understanding.

• Regarding the Overall Business

Q1. What factor do you think contributed to the weakness of the new active job openings-to-applicants ratio for part-time jobs in July and August? Also, do you consider this to be a short-term trend?

A: Since those months are seasonally slow, we view this as a yearly trend rather than a short-term one.

Q2. What is your outlook regarding the sluggishness of the market? How do you view the possibility that revenues might fail to increase according to plan despite an increase in market share if the market is weak in the second half of the fiscal year when new graduate employees hired in April this year start to contribute to sales?

1. We expect the market to gradually recover after bottoming out in July and August. We have steadily gained the ability to capture market share even as market growth slows. We will work to gain more market share as the market recovers.
   Regarding the 'possibility that revenues might fail to increase according to plan despite an increase in market share if the market is weak', we think it will depend on the 'degree of market weakness'. Market conditions aside, we believe we will be able to generate revenue by increasing our sales through market share growth. Furthermore, since we have managed to control our costs even when the market is weak, we have not changed our full-year operating income plan.

Q3. You have succeeded in efficient advertising spending compared to the first quarter. Please tell us your plans

for the third quarter onward.

1. We plan to continue efficient spending in the third quarter and onward. Our promotional measures have been successful and resulted in robust numbers of app downloads and MAUs (monthly active users). We will continue to ensure efficient spending by integrating the management of web advertising for the four media of Baitoru, Baitoru NEXT, Hatarako, and Baitoru PRO.
   For reference, we expect advertising expenses for Baitoru PRO to be around 1.2 billion yen this year as compared to approx. 2.5 billion yen in the previous fiscal year (FY ended February 2023).

Q4. This year, you have been strengthening your sales capabilities through efforts such as increasing the hiring of new graduates. Please tell us your outlook for these initiatives, such as when they are likely to result in numerical performance.

1. The hiring of 612 new graduates this year is an upfront investment. We believe productivity will rise significantly after next year, laying the foundation for sales of 10 billion yen in FY'26/2.
   We should be able to show our full potential after next year.

• Regarding the Personnel Recruiting Services Business

Q5. The drop in sales for the Personnel Recruiting Services Business from the first quarter to the second quarter seems to have been greater than in the past. Please provide some context for this and discuss any new developments that may not have been present in the first quarter.

1. Seasonally, sales for the second quarter are usually lower than those in the first quarter. However, the drop has been slightly greater this time compared to before the pandemic. Demand has been recovering in August and September, and we hope to capture market share going forward.

Q6. The segment profit ratio for the Personnel Recruiting Services Business has declined from the first quarter. Was this because sales fell short of the plan and failed to absorb fixed costs, or was this profit margin level as planned?

1. Progress is being made as planned. Seasonally, sales tend to drop from the first quarter to the second quarter. Since our business has a high marginal profit ratio, the profit margin tends to fall in the second quarter. The level is as expected.

Q7. The growth rate in the number of client companies has dropped slightly compared to the first quarter. Please explain the factor behind this. Is it because the recovery in demand by restaurants, etc., due to a resumption in economic activities has run its course?

1. The growth rate of client companies has not dropped much in terms of seasonality and is within our expectations. Orders and demand from clients in the restaurant industry have recovered, and we expect a further increase in orders.

Q8. While SME clients pay the same level of unit prices as before the pandemic, I believe the unit prices for large companies have not fully recovered. Some job ad media have revised their prices as a countermeasure, but how do you view this situation? Please tell us if you plan to revise your prices during the period encompassing the medium-term management plan you are currently formulating or if such an increase is not being considered at this time.

1. We are currently working to raise customer unit prices. Specifically, we are revising our promotional campaigns in consideration of our clients' circumstances.

Q9. Is there a cause-and-effect relationship between your average hourly wages for listed jobs being No.1 and

your market share?

1. We believe so. We can retain users as more and more users realize that our listings have higher wages than the listings on any other media. We believe this leads to increased satisfaction among our client companies and an increase in our market share.

• Regarding the DX Business

Q10. When will we see the full potential of the DX Business's new products, which will be the drivers for next

year's earnings?

1. The "MEO KOBOT," a new product of the DX Business's marketing support domain, and the "Social Media Booster KOBOT," which was launched in October, both meet the current needs of the market and are doing well.
   We plan to explain further details, such as future sales plans, in our medium-term management strategy to be announced in November.

• Regarding the Medium-term Management Strategy (dip 30th) Q11. How long will the medium-term management strategy cover?

A: We are planning a strategy covering a period through FY'27/2, the 30th anniversary of our founding.

Q12. When will you explain the details of the medium-term management strategy?

1. We plan to announce the details in November this year. We also plan to hold a presentation, the timing of which will be communicated at a later date.

Q13. Is there anything about the medium-term management strategy you can explain to us at this moment?

1. We intend to explain our growth strategies and target values for the media service, the permanent placement service, and the DX Business. We also plan to explain the AI Agent Business that is expected to launch by the end of this year.

• Regarding the share price

Q14. How do you view the sluggish share price against robust earnings?

1. We did a share buyback in April this year, but we believe our current share price is still low. We will aim for a higher share price level going forward.