DIP : QA Summary of Financial Results for the Fiscal Year Ended February 2024（27KB）

Q&A Session on the Financial Results

for the Fourth Quarter of the Fiscal Year Ended February 29, 2024

The following 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 Personnel Recruiting Services Business (Media Service)

Q1. The new active jobs-to-applicants ratio for the part-time market appears to have bottomed out in December, but what is the current situation? You mentioned that you expect the market to grow starting around April, but have you already started to see this trend?

A1. We believe that the overall ratio bottomed out around December, however the dynamics in each sector vary. For example, the demand for workers in the restaurant and hospitality sector has been picking up since January. In the staffing agency sector (temporary staffing, BPO), the market has remained sluggish since December, but there was demand from some companies in February and March, albeit due to company-specific factors.

In saying that "growth will start around April" we mean that even if current momentum were to continue, when viewed from a year-on-year perspective, the market growth rate was quite low from April FY'24/2, so the current year will appear slightly higher.

Q2. In my view, the launch of Indeed PLUS will be a headwind for the pay-to-post job ad business in the medium to long term. On the other hand, I think there is a possibility that some of the business from Recruit's sales agency network could flow into dip in the short term, but what are your views?

A2. The agency model and the performance-based model are the mainstream in the career change space, and we believe that the performance-based model is likely to become the mainstream in the part-time space as well. dip hopes to apply its recruiting business model to the part-time domain through AI-Agent.

Since most of Recruit's agents were exclusive agents, we have not been able to do business with those agents. However, we have heard that some of Recruit's agents will no longer be under exclusive contracts, and we hope to begin doing business with those agents.

• Regarding the Medium-term Management Plan

Q3. I believe that the profit level for FY'25/2 deviates significantly from the profit targets of the medium-term management plan. Please tell us if there have been any changes to the assumptions you held when formulating the medium-term management plan.

A3. There are no significant differences since the current medium-term management plan was formulated in November 2023, and based on the latest situation of the 27th term. Our current earnings forecast is conservative.

Therefore, if sales exceed the plan, it will directly result in an increase in profits since our business structure has high marginal profit rate. With this in mind, we are holding internal targets that are even higher than our earnings forecasts. The sales contribution of Baitoru Free and AI-Agent has not been included in the current plan. We also expect that if the launch of AI-Agent creates a flow in which we are able to offer companies more sophisticated job ads than before, resulting in the retention of Baitoru users, it will contribute to a significant reduction in the advertising cost ratio in the medium term. This is also not included in the current plan.

We will make steady efforts to achieve the FY'27/2 operating income target of ¥20-25 billion set out in our medium-term management plan.

Q4. When should we expect operating income to accelerate toward the achievement of the medium-term management plan?

A4. We are considering initiatives to improve sales productivity this fiscal year. Specifically, we have established system to improve productivity to improve productivity, which we expect to be effective in the next fiscal year and the year after that. Acceleration of operating income will proceed in the next fiscal year and beyond.

• Regarding the new service

Q5. Is there a scenario in which the growth rate of the part-time job ad market turns negative due to the impact of the growth in the spot work job information service market?

A5. Companies' budgets for the part-time job ad market and the spot work job information service market are completely different. Therefore, the growth rate will not become negative.

Q6. Is it correct to think that sales can be expanded at a low cost since Baitoru Free's client companies overlap almost completely with the client companies of existing products and services?

A6. As you have correctly surmised, we will confirm whether our existing client companies have a need in spot work and sell services where appropriate. For reference, we are not thinking of appointing or increasing the number of sales reps dedicated to Baitoru Free at this moment.

Q7. With more products to propose to clients, such as AI-Agent and Baitoru Free, it may take more time for your sales staff to acquire sales skills.

A7. We will develop the AI-Agent business in three phases. This year, as Phase 1, we plan to install the service as a feature of our existing website (Baitoru). Our aim is to increase the number of users by using the AI-Agent feature rather than selling it as a new product. This will also create synergies with sales through existing media, such as

Baitoru, so we see it as supporting rather than burdening our sales staff.

On the other hand, Baitoru Free will be sold in addition to our existing product lineup. However, our media sales staff have the experience and knowledge to cross-sell Baitoru and other existing media with DX products, so we believe we will be able to promote the product without stress, although it may take some time for the sales staff to acquire the sales skills for Baitoru Free.