DIP : QA Summary of Financial Results for the Fiscal Year Ended February（31KB）

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

Fiscal Year Ended 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. What is the reason behind FY'23/2 net sales falling below the lower end of the full-year forecast range? Were there any unexpected circumstances in the Personnel Recruiting Services Business despite the favorable macro environment?

A1. Net sales ended about 0.1% short of the lower end of our forecast (¥49,400 million), but we believe ¥49,355 million to be within our expectations. As the business is recovering, please look forward to the segment's performance this year.

Q2. I believe Baitoru's sales growth for the fourth quarter was roughly flat on a year-on-year basis. While the economy is beginning to fully re-open, is it difficult to see large growth in sales as clients suffer from a rise in costs?

A2. Baitoru's sales grew around 8% year on year and have been showing steady growth in line with the economic recovery. Some industries are doing well, and some industries are not, but my impression is that the restaurant and service industries are seeing a recovery in recruiting demand. Despite somewhat difficult market conditions, recruiting demand is also picking up in the manufacturing industry and the temp industry for certain sectors. Therefore, we expect Baitoru sales to recover after the Golden Week next month (in May).

Q3. Please describe Baitoru's current market conditions and future outlook. I don't think the part-time and temporary job information media market has recovered at the same pace as the lifting of COVID restrictions and the resumption of people's activities. What do you think are the factors for this? Also, what is your outlook for after March?

A3. As in my reply to Q2, I believe the part-time and temporary job information media market is on a gradual recovery

trend, although the situation varies between regions and job types.

Q4. Please describe your future strategy for Baitoru PRO. Judging from your plans for this year and the personnel situation, it seems you will employ personnel and focus more on Nurse de Hatarako, the job agency service, than investing in advertising to grow Baitoru PRO. Can we view this as a change in strategy?

A4. We hope to grow both Baitoru PRO and the job agency service instead of focusing on one of the two. Previously, we concentrated only on increasing the number of users of Baitoru, Baitoru NEXT, and Hatarako.net, but our aim for

Baitoru PRO is to provide job agency services* to Baitoru PRO's users in the healthcare and nursing care professions with their permission.

*Services that involve Career Advisors (CAs) assisting job seekers in finding employment.

Thus, we intend to invest in advertising efficiently to acquire users of Baitoru PRO while at the same time developing the agency business by strengthening the hiring of CAs.

• Regarding the DX Business

Q5. It seems that the sales growth of the DX Business will slow down in your plan for FY'24/2. Please explain the assumptions incorporated in the plan regarding the current situation of your core DX products, such as Interview KOBOT, and the future sales of new products.

A5. Our plan for FY'24/2 does not incorporate the sales of new products launched between the end of FY'23/2 and FY'24/2 or the impact of changes to the management system in FY'24/2. It is, therefore, a conservative plan.

The manager of the business has changed this year, and Corporate Officer Shoji Fujiwara was appointed DX Business Service Officer. As the new manager, Fujiwara has already embarked on various initiatives from a new perspective, and there are signs that the current plan will be outstripped.

Going forward, we will make swift efforts to exceed the current plan, which I described earlier as conservative.

• Regarding the AI Agent Business

Q6. What kind of time frame are you thinking for the launch of the AI Agent Business? Companies running a technology business tend to hire many engineers, but will there be a phase in your AI Agent Business when the personnel costs for hiring engineers exceed revenues? In terms of technology, will it be possible to utilize external resources?

A6. The AI Agent Business will first be about how we can create usable products. We believe that we will only be able to develop a business model once we have successfully created a product that can be put to practical use.

What technology-driven companies, such as the parent companies of Yahoo, Google, and Facebook, have in common is that they first had an excellent product and then worked out a business model from it. Their business developed in this order. For our business, we have also embarked on developing a product with the aspiration of putting it to practical use. We will think of what we can use the product for in a year's time and develop the business accordingly. Our time frame will be like this.

Regarding your question about engineers, we are internalizing external resources to achieve a team of 200 engineers, which is one of the goals of our medium-term strategy, dip2025. More than 100 engineers currently work at dip, which is why we have been able to take on a new challenge like this business.

We plan to choose the most appropriate method regarding the issue of whether to use internal resources or tap into external resources for this business. This time we will collaborate with the Matsuo Lab, led by Professor Matsuo of Tokyo University, and Professor Ataka of Keio University, both renowned in AI research. We hope to create great products while simultaneously placing emphasis on speed.

• Regarding the overall results

Q7. I understand that operating income exceeded the forecast in FY'23/2, but is it right to think that efficient

advertising spending contributed to this result?

A7. Yes, you are right.

As I explained in the Q3 results presentation, operating income exceeded our forecast due to efficient investment in

advertising.

Q8. My impression is that advertising costs are reduced considerably in your FY'24/2 plan. There has been a surge in hiring costs in the recruitment market for regular employees, but what are your thoughts on advertising costs?

Also, you made aggressive investments in Baitoru PRO in FY'23/2, but what are your intentions for FY'24/2?

A8. As I have been explaining, efficient advertising spending is becoming very advanced. Therefore, our FY'24/2 plan assumes a continuation of aggressive investment to acquire market share further, not a reduction in spending. Regarding cost per acquisition (CPA), there has not been a rise in CPA in the part-time and temporary job information media market.

For Baitoru PRO, we plan to make investments based on the strategy described earlier (in A4).

Specifically, we plan to invest in the area of 'job ads for specialized jobs such as healthcare and nursing care' in coordination with the Personnel Recruiting Services Business. In the area of 'job ads for specialized jobs such as restaurant, light work, and distribution', we plan to optimize advertising along with the existing Baitoru, Baitoru NEXT, and Hatarako.net.