DIP : Q&A Summary of Financial Results for FY'23/2 Q3（28KB）

Q&A Session on the Financial Results for the Third Quarter of the

Fiscal Year Ending February 28, 2023

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 Personnel Recruiting Services Business

Q1. The number of inbound tourists is increasing. Do you think this will bolster the recovery of Baitoru's sales in the coming months?

A1. We are aware that hiring needs in the food, beverages, tourism-related, and other service industries are rising rapidly due to the sharp recovery in human flow owing to the increase in the number of foreign visitors to Japan and the National Travel Assistance Program. We will continue to make efforts to grow our earnings by taking advantage of this development.

Q2. Please describe your business confidence and operating status for the part-time and temporary job

information media market after October 2023.

A2. We believe the part-time and temporary job information media market to be on a mild recovery trend, although it has not returned to pre-pandemic (FY'20/2) levels. Amid this situation, we had relatively solid growth in the number of subscribing companies during the third quarter. We believe we have also managed to capture market share steadily.

Q3. What impact will the rising trend in hourly wages for part-time and temporary jobs have on Baitoru's sales?

A3. We believe it will have a positive impact on Baitoru sales.

We have been leading the call for wages increases for part-time and temporary jobs through the "dip Incentive Project." The project has been supported by job seekers, who are our users, which has led to an increase in the use of Baitoru and other services.

We believe that such an increase in the number of users will result in new and repeat customers, and have a positive impact on our sales.

Q4. While the unit price per contract, per (unique1) company for the entire Personnel Recruiting Services Business has been recovering, it seems that the recovery is weaker in the unit price per contract for Baitoru. What is the factors behind this difference?

A4. Due to the new revenue recognition standard that was introduced from the current fiscal period, when, for example, selling Baitoru at its full price and another product at a discount when the two products are sold alongside each other, the two products will be accounted for at the same discount rate. Therefore, Baitoru's unit price per contract will appear

lower than before the new revenue recognition standard was introduced. This is what we believe to be the main factor for the difference.

In terms of sales activities, we have been promoting measures to improve the unit price per contract, per company through cross-selling. As a result, the unit price per contract as of the end of December 2022 for the entire Personnel Recruiting Services Business was as the same level as before the pandemic (end of December 2019).

Q5. Have internal factors such as cross-selling contributed to the rise in the unit price per contract of the

Personnel Recruiting Services Business? Or are external factors involved?

A5. Sales efforts such as cross-selling, which I mentioned earlier, as well as quality improvements and promotion of the services have led to the result. We believe the mild recovery trend of the market has also contributed to the rise in the unit price per contract.

• Regarding the DX Business

Q6. Do you have any measures to accelerate the growth of the number of companies subject to monthly billing?

A6. We have measures for acquiring new customers and for retaining existing customers. In terms of acquiring new customers, we will strengthen sales through agencies, in addition to the existing customer channels of the Personnel Recruiting Services Business. In terms of retaining existing customers, we have been making efforts to ensure continued use of the products by enhancing customer success and improving the features of the products.

Going forward, we will also strengthen sales of new DX products outside of the recruiting and personnel area (e.g., Patronage KOBOT).

Q7. It seems that the number of companies subject to monthly billing in the DX Business is trending near the lower end of the initial forecast range. Is this due to the strengthening of cross-selling to existing customers? Also, how will efforts to increase the number of companies affect the profit margin?

A7. There is no correlation between "the number of companies subject to monthly billing trending near the lower end of the initial forecast range" and "cross-selling to existing customers." We also believe that an increase in the number of companies will have a positive impact on profit margins.

• Regarding the overall results

Q8. It seems that advertising investment in the third quarter was smaller than the initial plan. What was the reason for this? Also, what are your thoughts on advertising investment in the next quarter.

A8. As in the previous quarter, the efficiency of advertising spending during the third quarter improved due to the promotional effect of the dip Incentive Project and an increase in the number of applicants via the app.

In the next quarter, we plan to launch one of our largest ever2 promotional campaigns to capture the demand from

the recovery in inbound tourists and the peak season.

Footnotes:

1 Companies subscribing to multiple media (Baitoru, Baitoru NEXT, Baitoru PRO and Hatarako.net) are counted only once.

2 In terms of the amount of advertising and advertising expenses. (under the new revenue recognition standard)