Recruit Holdings Co Ltd

TSE:6098

Earnings Call Transcript 2021-Q2

[Mizuho Shen, executive]

Welcome to Recruit Holdings Fiscal 2020 Second Quarter Earnings Conference Call. I am Shen from IR, and I will serve as the moderator.

Today, we have Junichi Arai, Executive Officer of Capital Market Strategies; and Yasushi Hashimoto, Executive Manager of Disclosure and Individual Investor Relations Department. Arai-san will go through the second quarter of fiscal 2020 results we announced at 3:00 p.m. and then proceed to the Q&A session.

This call is a simultaneous translation of the original call in Japanese and translation is provided for the convenience and investors only.

[Junichi Arai, executive]

Thank you for your participation today. I am Arai, Executive Officer of Capital Market Strategy of Recruit Holdings. The global spread of COVID-19 and measures to help prevent the spread has the broad impact on our group's business performance, but our main priority is still ensuring the safety of our employees and their families as well as individual users, enterprise clients and business partners while preventing the spread of COVID-19.

Even in such an uncertain business environment, we are executing our mid- to long-term business strategies without hesitation. We aim to become the global leader in HR Matching, which spans the large online job advertising, placement and search and temporary staffing markets with the HR Technology segment at the core and improved productivity of clients' businesses through SaaS solutions with a focus on Air BusinessTools and Marketing Solutions in Japan.

To that end, we will continue to aggressively invest for growth while always considering timing and scale. In order to make hiring simpler and faster for employers, HR Technology, which leads our HR Matching business, has focused its investment in product development and accelerated its innovation, leveraging its data, technology and insights to automate today's manual recruiting processes.

In the first quarter, Indeed launched a product, which allows job seekers and employers to complete most of the hiring process online, such as searching for jobs, applying and scheduling interviews called virtual hiring events. HR Technology also accelerated the development of a proprietary virtual interview platform built specifically for hiring and during the second quarter, fully integrated into the virtual hiring event products.

In addition, with employment -- unemployment at the record high levels in the U.S., in order to help job seekers get back to work quickly and to support employers' recruitment activities, HR Technology broadly introduced those solutions through a national virtual hiring tour, which consisted of series of events over 6 weeks across the U.S., resulting in over 100,000 interviews.

As business -- Air BusinessTools and Media & Solutions offers cloud-based solutions, which are designed to help reduce workload and improve productivity for small and medium-sized enterprises, we are continuing to develop these solutions and believe they can play a significant role, while the business environment in Japan is changing significantly due to the spread of COVID-19. The inquiries have been especially high for AirPAY, a solution for accepting contactless payments; Air Weight, which helps shorten waiting time; and Air Reserve, which is a reservation management solution that helps avoid crowds.

We continue to invest aggressively in Air BusinessTools, even in such difficult environment. Regarding this Air BusinessTool (sic) [ Air BusinessTools ], it is on our IR site of our website. Air BusinessTool is being introduced through a 5-minute video. So if you have time, please take a look.

As we announced our second quarter fiscal year 2020 results today, we also assess the current global business environment surrounding us. Despite the recent strength in recruiting demand in some industries and increased consumer spending, we expect the global HR Matching market's recovery and stabilization will be gradual.

Some countries and regions have already started to reimplement lockdowns and the business environment continues to evolve rapidly, and therefore, the company's outlook remains cautious. However, assuming that the spread of COVID-19 will not worsen to the extent it causes severe and prolonged lockdowns of major cities and assuming the business environment will not deteriorate significantly throughout the second half, we decided we can make a reasonable estimate of the outlook for the second half and fiscal year ending March 2021. Today, we have provided the consolidated financial guidance for the fiscal year ending March 2021.

We have already disclosed our financial guidance in the financial statements and FAQ but I will explain it together with the second quarter and first half results. All comparisons to historical results, such as revenue growth rate and revenue decline rates will be reported on a year-on-year basis and also adjusted EBITDA, which is a target management key performance indicator, may be abbreviated to EBITDA. Please refer to the detailed guidance in questions 3 and 4 in the FAQs on the IR website while listening to my presentation.

Now I will talk about the consolidated results of operations for second quarter fiscal year 2020. In the second quarter, with declines in all 3 business segments, consolidated revenues decreased by 6.2% year-on-year. However, revenue decline rates improved quarter-on-quarter in each segment. Excluding the revenue from the Rent Assistance Program by the Small and Medium-sized Enterprise Agency, SME Agency, of the Ministry of Economy in Japan, consolidated revenue for second quarter decreased by 11.1% year-on-year. Consolidated adjusted EBITDA decreased by 22.6% year-on-year, and adjusted EPS decreased by 29.8%, which are our target management KPI.

Also, in the face of significant uncertainty, we continue to control costs in the second quarter. SG&A expenses decreased by JPY 21.8 billion year-on-year, mainly due to a reduction in marketing expenses such as advertising and sales promotion expenses and a decrease in sales commissions. During the first half of fiscal year 2020, even in a challenging environment, we acted quickly and decisively to reduce marketing expenses, and we've demonstrated our ability to flexibly manage costs.

Next, I will talk about the details of the consolidated financial guidance for fiscal year 2020. We disclosed the financial guidance in ranges which are based on the following exchange rate assumptions, JPY 107 per U.S. dollar, JPY 121 per euro and JPY 74 per Australian dollar. Consolidated revenue for fiscal year 2020 is expected to decrease in the range of 6.5% to 10.4% year-on-year. This is based on a first half year-on-year revenue decline of 13% and an expected second half year-on-year revenue range between a decrease of 7.8% and flat compared to the previous year.

Consolidated adjusted EBITDA is expected to be in the range of JPY 210 billion to JPY 245 billion for fiscal year 2020. Consolidated adjusted EBITDA for the first half was JPY 123.4 billion, a decrease of 30.6% year-on-year, and adjusted EBITDA margin was 11.8%. For the second half, adjusted EBITDA is expected to be in the range of JPY 86.6 billion to JPY 121.6 billion, a decrease in the range of 17.5% to 41.2% year-on-year.

Adjusted EPS for fiscal year 2020 is expected to be in the range of JPY 62.83 to JPY 77.83. Adjusted EPS for the first half was JPY 41.83, a decrease of 38.4% year-on-year. For the second half, it is expected to be in the range of JPY 21 to JPY 36, assuming the amount of depreciation and amortization and other adjustment items will be similar to the first half.

Regarding dividends for fiscal year 2020, the Board of Directors has resolved today on the payment of interim dividends of JPY 9.5 per share. The dividend is expected to be JPY 9.5 per share for the second half as well and JPY 19 per share for the full year.

Next, I will talk about the results of operations and financial guidance for the second half by segment. First is HR Technology. Revenue in HR Technology in the second quarter declined by 2.3% year-on-year on a U.S. dollar basis. During the second quarter, many businesses resumed operations as several of the restrictions and measures put in place to limit the spread of COVID-19 were eased in each country. This supported a continued rebound of recruiting and hiring activity and improving revenue trends that began in the latter half of first quarter particularly in the U.S., with strong demand from SME and additional hiring demand from several very large companies.

Additionally, during the second quarter, job seeker activity of Indeed and Glassdoor rebounded to near pre-COVID-19 levels. Recently, cities and countries, especially in the U.S. and Europe, have announced new lockdowns and businesses are being forced to close again, so we are cautious about the pace and trajectory of continued improvement and how those conditions may affect recruiting and hiring activities.

Segment adjusted EBITDA declined by 39.5% year-on-year, primarily driven by a decrease in revenue and increased investments in product and technology initiatives to dramatically simplify hiring processes. Adjusted EBITDA margin was 14.3%. Despite continued economic uncertainty and reaction to the second quarter revenue trends, HR Technology increased marketing investments compared to the first quarter and resumed limited hiring in the latter half of the second quarter.

Revenue on a U.S. dollar basis for the first half decreased 13.7% year-on-year, and adjusted EBITDA declined by 48.3% year-on-year. HR Technology's revenue on a U.S. dollar basis for the second half is expected to be in the range of a decrease of 5% to an increase of 9% year-on-year.

Adjusted EBITDA margin for the first half was 12.7%. For the second half, in order to improve its revenue trend globally in the short-term and to accelerate revenue growth in the midterm, HR Technology will continue to invest in sales and marketing activities and in product enhancements. As a result, adjusted EBITDA margin for the second half is expected to be mid-teens.

And next, I will talk about the results of Media & Solutions. Revenue for the second quarter declined by 9.3% year-on-year. Excluding the impacts of the Rent Assistance Program, revenue decreased by 24.8% year-on-year. Mainly due to a decline in HR Solutions, adjusted EBITDA declined 28.4% year-on-year and adjusted EBITDA margin was 19.8%. For the first half, revenue decreased 19.1% year-on-year, adjusted EBITDA decreased 37.1% year-on-year and adjusted EBITDA margin was 20.2%.

For our businesses in Japan, we are applying the same assumptions as our consolidated guidance discussed earlier. Media & Solutions expects to continue reducing overall operating expenses such as advertising, while resuming investments in businesses which have started to show recovery in the revenue trends. Therefore, adjusted EBITDA margin for the second half for Media & Solutions is expected to be approximately 12%.

I will discuss Marketing Solutions and HR Solutions separately. Revenue in Marketing Solutions in the second quarter increased 11.9% year-on-year. Excluding the Rent Assistance Program, which is included in others, revenue declined 14.8% year-on-year. In Housing & Real Estate and in Beauty, the spread of COVID-19 had a minor impact on individual consumption behavior compared to the other Marketing Solutions subsegments and as a result, revenue returned to year-on-year growth. However, Bridal, Travel and Dining continued to experience COVID-19 related headwinds and year-on-year revenue declines continued in the second quarter.

Adjusted EBITDA in Marketing Solutions decreased 1.7% year-on-year and adjusted EBITDA margin was 24.9%. Marketing Solutions continued to manage its operating expenses strategically and flexibly, mainly by reducing marketing expenses due to a decrease in revenue. Excluding the Rent Assistance Program, adjusted EBITDA margin from Marketing Solutions improved year-on-year.

Despite the challenging business environment, we continue to see strong demand for Air BusinessTools. Individual user's preference for contactless payments supported further AirPAY accounts, which continued to grow steadily to approximately 171,000, an increase of 68.8% year-on-year at the end of September 2020.

For the first half, revenue for Marketing Solutions decreased 7.2% year-on-year. For the second half, Housing & Real Estate and Beauty are expected to continue to improve. Travel is expected to recover compared to the first half, supported by the Japanese government's Go To Travel campaign, however, the challenging business environment is expected to continue for Bridal and Dining.

As a result of the Go To Eat campaign, the number of bookings on our dining online reservation platform has been rapidly increasing, however, this campaign ended on November 15. And due to Hot Pepper Gourmet's advertising-based revenue model, the increased number of bookings will have a limited positive impact on revenue in dining.

Excluding the Rent Assistance Program, revenue for the second half is expected to be in the range of a decrease of 9% to an increase of 6% year-on-year. This is assuming the impact of changing conditions in size and duration of the Go To Travel campaign in Travel business.

In HR Solutions, revenue decreased 38.7% year-on-year. This was due to reduced hiring demand from enterprise clients in response to the spread of COVID-19 that began in the first quarter 2020 and continued in the second quarter. In particular, revenue for -- from the part-time job boards declined most significantly year-on-year due to a concentration of enterprise clients in the hospitality sector, which were especially impacted by the spread of COVID-19 and whose demand for hiring sharply decreased and remained low throughout the second quarter.

The placement business operates on a pay-per-hire model in which revenue is recognized when a candidate is hired by an enterprise client. As a result, revenue from the placement business in the second quarter declined year-on-year due to reduced hiring demand in the midst of the pandemic during the first quarter.

Adjusted EBITDA in HR Solutions decreased 58.5% year-on-year due to decreased revenue and adjusted EBITDA margin was 18.3%. This was mainly due to strategically reduced operating costs and the weak performance in the placement business, although its sales commissions lowered as a result of the decline in revenue.

For the first half, revenue in HR Solutions declined by 35.3% year-on-year. For the second half, while there have been recent signs of recovery in the part-time job board services, revenue is expected to decrease approximately 25% year-on-year, mainly due to the expectation for continued weak demand for placement services.

Next, I will talk about the results of Staffing. Revenue in the second quarter decreased 6.0% year-on-year. Adjusted EBITDA increased 6.3% year-on-year and adjusted EBITDA margin was 7.5%. For the first half, revenue decreased 9.1% year-on-year. Adjusted EBITDA increased 3.4% year-on-year. Adjusted EBITDA margin was 7.4%. For the second half, both revenue in Japan and overseas operations are expected to decline year-on-year. While continuing cost control measures, adjusted EBITDA margin is expected to be approximately 5%. This is mainly due to a decline in adjusted EBITDA margin in Japan operations caused by a decline in revenue and an increase in advertising expenses.

I will now explain Japan operations and Overseas operations separately, starting with Japan operations. Revenue in second quarter decreased 0.7% year-on-year. Although billing prices increased following the implementation of the equal pay for equal work regulations beginning April 1, 2020, the decline was mainly due to 1 less business day in the quarter compared to the previous year and lower demand for new orders since the first quarter, which resulted in a decreased number of temporary staff in the second quarter.

Adjusted EBITDA for Japan operations increased 20.7% year-on-year. While continuing to monitor the costs in relation to labor market supply and demand, this improvement was mainly due to ongoing cost control measures which included reducing travel costs, as EBITDA margin was 9.9%. Revenue in Japan operations for the first half increased 2.6% year-on-year for the second half. As we expect weak demand for temporary staffing service, revenue is expected to decline in the range of approximately 5% to 10% year-on-year.

Next is Overseas operations. Revenue in Overseas operations in the second quarter decreased 10.2% year-on-year. This was primarily due to restrictions on enterprise clients' business operations in order to mitigate the spread of COVID-19 and uncertainty about the future, which led to a significant decline in demand from enterprise clients for temporary staff. Although the operating environment and results differed by country within Overseas operations, the year-on-year decline in monthly revenue gradually improved throughout the quarter.

Adjusted EBITDA declined 10.6% year-on-year and adjusted EBITDA margin was 5.4%. Even in an uncertain global economic environment, Overseas operations maintained a positive adjusted EBITDA margin by taking prompt and appropriate actions in response to labor market trends and government programs in each Overseas market and by strengthening ongoing cost control initiatives. Revenue in overseas operations for the first half decreased 18.3% year-on-year. For the second half, revenue is expected to decline in the range of approximately 8% to 12%.

That concludes my explanation of the financial performance by segment. We are focused on executing our business strategy with a mid- to long-term perspective, not short-term, closely monitoring current business trends in Japan and overseas and how they will impact our business. We are grateful for the understanding and support of our shareholders, other capital market participants and all of our stakeholders. And please refer to the earnings release and the materials on our website as appropriate, which includes the contents of today's presentation.

Now we will take your questions.

[Mizuho Shen, executive]

[Operator Instructions] SMBC Nikko Securities, Mr. Maeda, please?

[Eiji Maeda, analyst]

Yes. I have 2 questions. Could I ask those questions together?

[Unknown Executive]

Please.

[Eiji Maeda, analyst]

First question is the point that you mentioned earlier, virtual interview platform. These new products, how much of a differentiator is this? Other companies have similar technologies or not? You mentioned more than 100,000 interviews were held as a result of this. So clients and the job seekers, users, how are they responding to this? That's my first question.

And the second question, towards the second half, in the temporary staffing, you are anticipating cost increase like we saw a few years ago. Rather than appealing to the enterprise client side, this is more of a marketing to capture more staff, temporary staff? The promotion cost in the second half and if there are any other segments that you anticipate cost increase, please share them with us.

[Junichi Arai, executive]

Thank you very much. Your first question, these new initiatives, new customers and the existing customers, new demand are being catered to. We are trying to take slow, steady steps, persistent steps under this very difficult situation so that it can boost our revenue and profit post-COVID.

So our marketing activity -- it's part of our marketing activity and marketing costs, Indeed and Glassdoor has the data accumulation, massive amount of data and the relationship with our client -- customers. So we need to reinforce that and capture new customers and raise revenue from new customers. We think our efforts will lead to that. So we think we are the only one who can deploy and roll out such service.

How we can support our job seekers more and how we can solve problems or headaches of the enterprise clients will determine our future for us to become the largest player or the leadership player in the HR Matching globally.

Now your second question about the temporary staffing business in the second half. As you correctly mentioned, the economic recovery and the recovery in the temporary staffing business, we are standing by. We are preparing ourselves so that we can meet the customers' demand when the economy recovers. So towards the end of the second half, we will spend sufficient amount of cost to prepare ourselves, especially in Japan. So we will post such costs and, therefore, margin will be that much lower.

And likewise, in Media & Solutions, especially in the Marketing Solutions, the business is stabilizing and recovering in some areas. So we are now becoming more aggressive in spending costs, especially towards the fourth quarter. So we will do such investments.

So as I mentioned earlier -- the EBITDA margin for Media & Solutions, I mentioned earlier. That is why we are projecting the level this way.

[Mizuho Shen, executive]

Mr. Takeuchi from Jefferies.

[竹内 進之介, analyst]

This is Takeuchi speaking.

[Unknown Executive]

Yes. Please go ahead.

[竹内 進之介, analyst]

I have a question about SG&A expenses. As you said before, Staffing, Media & Solutions as well as Marketing Solutions, in those areas in the second half, promotion and marketing costs will be increased in the second half. I believe they will be increased to a level -- or actually, margin for the second half is expected to be lower than before. Should I understand that these investments to be onetime investments? And am I understanding correctly that the margin levels will recover to the March 2020 level as a result of that?

[Junichi Arai, executive]

We are not in a position to make any comments about the figures that we are expecting for the next year. We've just started the second half, and there's still much uncertainty. So for the next year, as we approach the timing, perhaps then we'll be able to talk more about it. But the margins will be lower for the second half, this is due to, of course, the revenue and the profit that I mentioned. They will not recover all across the board. However, at the same time, we will consider doing promotion and marketing activities and investments for that. And therefore, while the revenue remains at the same level, the margin will be lower.

Before revenue recovers to the level previously seen, we are not making those marketing investments. But for those areas where we see signs of recovery, where we see some level of certainty, we are making those investments in a strategic manner. And in the second half, that will be our approach to those specific areas.

Any other questions?

[Mizuho Shen, executive]

Merrill Lynch Securities, Mr. Kinoshita, please.

[Yoshiyuki Kinoshita, analyst]

BOAF Securities (sic) [ BofA Securities ] is the new company name, but I'm still same -- same Kinoshita speaking. So I have 1 question. The marketing in the second half is just starting to see silver lining. In Staffing, you will spend marketing costs, and that is the underlying basis, I hear. Are you starting to see a silver lining or you think it will structurally recover? So you are trying to preemptively take steps or you think this is a good timing to capture market share, so you want to enhance the business? What is the background to this domestic temporary staffing costs in the second half? What is the background to your plan? That's my first question.

[Junichi Arai, executive]

So the timing is still being scrutinized in the second half. Towards the fourth quarter, we will be spending promotional costs. And to do that, we have a projection that the business will recover. That's why the pace of recovery, the trajectory of recovery is still unknown, but when there's customer demand, we have to meet them. And for the -- in terms of work style, we want to introduce good jobs as soon as possible. So that's why we want to be fully prepared.

If the market environment declines further, then the timing may be pushed out. But our current estimate is that the recovery will come towards next year in Japan. So based on such assumption, we are making this plan. But it's not going to be a radical or a rapid recovery. It will be a gradual recovery. And for that, we want to be fully prepared. So please understand that this is our will.

[Yoshiyuki Kinoshita, analyst]

Understood. So you think the market -- the entire market will recover?

[Junichi Arai, executive]

We will not recklessly spend cost to capture share -- market share. We will not do that.

[Yoshiyuki Kinoshita, analyst]

Another question. Do you have the same thinking for the other businesses? Other companies may have a strategy to capture market share while they have the financial strength. This may be a valid strategy.

[Junichi Arai, executive]

So we don't know who we think of as competition but while the market has the demand, we want to do the investment and develop products and services that are available. This may not lead to the revenue right away next year, but it will be a foundation for our future business. And if we think it is important, then whether or not revenue is there, we will make upfront investment, and that stance remains unchanged.

[Yoshiyuki Kinoshita, analyst]

Understood. So especially in marketing, what do you mean there's not much -- so in the marketing cost, you will not be too aggressive in going after market share? Do you have a longer-term perspective?

[Junichi Arai, executive]

Yes. So other players may be weaker and maybe the business will come to us as a result, but that is not our sole purpose.

[Mizuho Shen, executive]

Mr. Tsusaka from Morgan Stanley Securities.

[Tetsuro Tsusaka, analyst]

Yes, this is Tsusaka speaking. I have 2 questions. First is about HR Technology, the other about Staffing services. For Staffing services, for Japanese operations, you mentioned 5% to 10% decrease year-on-year. So the billing price overall for the market has increased by 5%. So utilization, are you expecting to decrease by 10% to 15%? I believe that's what you're assessing, but this sounds a bit off. There's no new offers being made, but I think you're still being too conservative, and accounting too much risk into this estimate. So this is the figure that caught me by surprise in a way because they seemed off. What are your thoughts on this?

[Junichi Arai, executive]

As we already announced, the number of workers already on the job is decreasing day by day. So we are not expecting any sudden recovery or drastic recovery. That is our assessment for the second half. I understand what you're saying. But for the time being, I understand that you consider this to be a very conservative view.

[Tetsuro Tsusaka, analyst]

I see. And for the HR Technology, on a dollar, U.S. dollar basis, minus 5% to flat is your estimate. So let's say, this will be flat. Let's assume that this will be flat, putting aside whether it will be correct or true. But in the second half, you said it will be mid-teens. So EBITDA margin, hypothetically, let's say, will be 15%, taking the middle. This is just me taking hypothesis from rough estimates. But in any case, the revenue remains unchanged and EBITDA margin will be increased slightly from the 13% from the previous year. So that gives us an image that HR Tech isn't really being invested in. So the HR revenue, HR Technology revenue, remains the same.

So it seems that there haven't been much investments made. So the revenue and the EBITDA margin for the HR Technology segment, how should I see this? For the second quarter, I believe investments were made and that resulted in the margin level that we are seeing. So please explain about this.

[Junichi Arai, executive]

So we are presenting a range. So the margin, we are saying 15%, but there's going to be variance, we'd say mid-teens. So please take that into consideration that there will be variance.

As for investments, there are 2 things to consider. First is advertising. And also PTE, product, technology and engineering and investments into those things. So these are 2 large investments. The first is commercials and advertising expenses. The second is our investments in human resources. And investment should be seen by a combination of the 2.

If the revenue recovers greatly, then, of course, we will invest more in advertisement. On the other hand, for future products and services to be considered, we need to also invest in PTE. So it's always going to be a combination of the 2.

So on the Internet, there will be much advertisement on the Internet. So obviously, decision-making will be more quick. The advertising expense, we've started resuming from the second quarter, but it's not a full throttle investment like we did in the previous year. So while we are controlling that, we are aiming to increase the margin or there may be a case that we see a decrease in the margin. But in any case, we will continue to carefully assess the situation in the second half of the year.

[Mizuho Shen, executive]

Nomura Securities, Mr. Nagao, please.

[Yoshitaka Nagao, analyst]

This is Nagao from Nomura Securities. I have 2 questions. First, maybe I could not understand fully, but in the second half, HR Technology EBITDA projection is mid-teens. So along with that, in HR Technology, the equity-based incentive system is introduced. So the impact to the EBITDA margin starting the second half, there may be a few percentage points decline from this mid-teens? Could you explain the correlation there?

[Junichi Arai, executive]

So our second half projection is mid-teens, as we said. As I will explain later, the HR Technology business, equity-based incentive for the employees, it's including that. We're mentioning the teams including the factor. HR Tech employees will have this equity-based incentive. Currently, it's cash-based, long-term incentive plan, and there's still some remaining. And on top of that, there will be this new equity-based incentive from early next year.

So to elaborate on this, this new structure will not be the uniform payment, it will be in a stepwise manner. Accelerated vesting is being planned. And therefore, for the next 1 or 2 years, we will shift from the old to new system. It will be a transitional period where 2 overlap.

So as we mentioned in the FAQ, HR Technology, EBITDA, a few percentage, 2 or 3 percentage points impact will be seen for a short period of time. But revenue is flat and the number of employees is flat, that's the assumption. And we are introducing this plan to increase the revenue. So as the revenue increases, the payment to employees will be increasing accordingly.

So we don't know if it will actually be that percentage, but the current projection is that we will see this impact in a short period of time. For the second half, it is a timing where we will see this or not. Maybe this will come into play in the fourth quarter. So this impact on the mid-teens for this fiscal year from the equity-based incentive system is small.

[Yoshitaka Nagao, analyst]

Very clear. My second question is, in the second half, in the Marketing Solutions, excluding the Rent Assistance Program, is a revenue decline of 6% to plus 6%. This increase and decrease comes from mainly where? So this is just a variant fluctuation purely from COVID-19? And where do you think you will mainly see this? So could you enlighten us on the background of this range?

[Junichi Arai, executive]

So minus 9% to plus 6% is the range that we announced today, excluding -- plus 15% to plus 30% is in case -- including the Rent Assistance Program. This range is mainly because of our fluctuation in the Travel. If the Travel campaign becomes longer or the budget becomes larger or if it ends sooner than we thought things -- or the amount allocated to us may be bigger or smaller. So that's why we are taking all these into account and came up with this Media & Solutions, Marketing Solutions range. And that accounts -- this factor accounts for majority of this range.

[Yoshitaka Nagao, analyst]

One more follow-up question, if I may. Media & Solutions in the second half, EBITDA projection?

[Junichi Arai, executive]

Total EBITDA margin will be 12%, plus or minus.

[Yoshitaka Nagao, analyst]

So could you break this down to Marketing Solutions and HR Solutions? Are there differences between the 2? If you could give us some nuance.

[Junichi Arai, executive]

As I said earlier, the HR side, revenue in the second half will be minus 25%. So no upside or downside, 25% or so. So the impact of this business to margin is quite sizable. So to answer your question, Nagao-san, the impact is bigger on the HR Solutions side.

[Mizuho Shen, executive]

Mr. Kato of CLSA.

[Jun Kato, analyst]

This is Kato, CLSA. I just have 1 question.

[Unknown Executive]

Yes, please.

[Jun Kato, analyst]

As for Overseas staffing services, U.S., Europe and Australia, we see revenue and -- or what do you expect the revenue and EBITDA to be in those regions?

[Junichi Arai, executive]

For a quarter or for the second half? We do not give regional or geographical breakdown on a quarterly or half year basis. At the end of the fiscal year, we do give a breakdown of revenue, but not during the term. We do not disclose this information. I appreciate your understanding on this.

First quarter and the second quarter, it appears to have improved. On the other hand, we are seeing lockdowns in Europe and other measures. So of course, we need to remain cautious. So we are not seeing any recovery trend as of today. So especially Europe and also the U.S., we're starting to see impact come out from regions that are cold. So we need to carefully monitor the situation.

[Mizuho Shen, executive]

JPMorgan Securities, Mori-san, please?

[Haruka Mori, analyst]

I have 2 questions. HR Tech is my 2 questions. Indeed, higher, the placement service. What trends are you seeing under COVID? The placement of business in Japan is quite difficult. But in this new business, qualitative is fine. So could you share with us your trend, the trends you're seeing for Overseas?

[Junichi Arai, executive]

This is the HR-related business. So we are trying to accumulate for net market to ramp up. That's our strategy. So during COVID-19 period, it does not grow significantly. So we are trying to explore this to our clients steadily. Recruiting solutions that I talked about earlier, this is now on the existing platform. So it's fairly easy to provide this to the existing customers. So online, virtual and remote environment. This is easily accepted by our customers. So including these events, we are actively engaging ourselves in the event.

We have to wait for the market to recover. Because of the nature of the service, the -- it's difficult to expect big changes. It's not a product that is put on to the existing platform, it is being introduced to new customers. And so when we see opportunity, we promote. We have to do the promotion when we see the opportunity. So for now, under the current circumstances, it's easier to add something to the existing platform to see the outcome.

[Haruka Mori, analyst]

Understood. Now second question overlaps with your answer earlier. New functions and services are being launched. How big do you see it will contribute to the revenue recovery, the customers' recovery or the new exploration, new development of new customers with new services? Which factor will be a bigger contributor? New customer development, could you elaborate on that?

[Junichi Arai, executive]

New customer, difficult question. There are 2 slides capturing new customers for new revenue and have the existing customers use more of our services, which will lead to revenue increase. So there are 2.

I think, Mori-san, you know well, the SME clients, self-serve clients. Without our promotion or reach, they want -- when they want to hire people, they will come back to us. So we are hoping that, that will be the case. And if they could pay for the advertisement, our revenue will naturally increase. So once the market environment improves and companies, clients will want to hire people and use us first and pay to us for the service, then our market share will increase.

So no matter which method, if the clients can come back to our site, and place ads on our site and use it conveniently, then we can offer various menus. And the revenue from existing clients will also increase. That's the plan we have.

Are there any other questions?

[Mizuho Shen, executive]

It seems there are no more questions. It's a bit early, but I would like to conclude this call. Thank you very much, everyone. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]