A strong recovery beginning in July led Recruit Holdings to resume its tech development and marketing investments in the second quarter of FY2020.
Recruit Holdings saw quarterly revenue fall 6.2% year-on-year to Y569.1 billion. While the company managed to bring operating expenses down, falling revenue caused operating income to plummet 32.7% to Y48 billion.
“The company focused on reducing selling, general and administrative expenses centered on advertising expenses. However, falling revenue led to decrease in operating income,” Recruit Holdings said in an earnings announcement.
However, both revenue and operating income showed growth in all three segments compared to the preceding quarter.
Adjusted earnings per share (EPS) dropped 30% year-on-year to Y24.35. However, the adjusted EPS was better than the Y17.49 in Q1.
Despite a drop in demand, Indeed continued to bring new customers onboard thanks to investments in marketing and tech development.
The marketplace resumed hiring in Q2 after a complete halt in the first quarter.
In Q2, the segment’s revenue fell 3.1% and 2.3% year-on-year in U.S. dollar terms due to decline in sponsored job ads and decreased sales of employer branding, candidate sourcing and screening products.
Adjusted EBITDA margin of 14.3% raced ahead of the group’s 12.3%. However, the segment’s adjusted EBITDA margin was 22.9% in Q2 FY2019.
“Adjusted EBITDA decreased 39.5% year-on-year, primarily driven by the decline in revenue and increased investments in product and technology initiatives to develop solutions that serve the changing needs of enterprise clients and individual users,” said the company.
Recruiting in Japan
Quarterly revenue from the group’s jobs sites in Japan — including Indeed Japan, Rikunabi Next and TownWork.net — decreased 38.7% to Y48.5 billion. The poor performance followed a trend set in motion last quarter.
Part-time job boards, which are popular in the hospitality industry, were particularly hard-hit during the pandemic.
In Q2, Japanese real estate marketplace Suumo.jp witnessed recovery in revenue from Q1 as stay-at-home orders aroused interest in purpose-built home living. Revenue for Recruit’s housing and real estate segment, which mainly covers Suumo.jp, improved 6.1% year-on-year to Y29.2 billion.
The company expected revenue for FY2020 to decline between 6.5% and 10.4% year-on-year, “based on the assumption that the spread of Covid-19 will not worsen to the extent it causes severe and prolonged lockdowns of major cities, and the business environment will not deteriorate significantly during the remainder of the fiscal year.”