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Recruit Holdings Co., Ltd.

Tokio/Japan

Annual Report FY2022

This document has been translated from the original document in Japanese ("Yukashouken Houkokusho"), which is legally required for Recruit Holdings as a listed company in Japan to support investment decisions by providing certain information about the Company for the fiscal year ended March 31, 2023 ("FY2022"), under Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan.

The Japanese original document was filed to the Director-General of the Kanto Local Finance Bureau in Japan on June 27, 2023. Please refer to "Note Regarding Reference Translation" below as a general warning for this translation document.

Document Name	Annual Report translated from Yukashouken Houkokusho
Filing Date	June 27, 2023
Fiscal Year	FY2022 (From April 1, 2022 to March 31, 2023)
Company Name in English	Recruit Holdings Co., Ltd.
Title and Name of	Hisayuki Idekoba
Representative	Representative Director, President and CEO
Address of Head Office	1-9-2 Marunouchi, Chiyoda-ku, Tokyo, Japan
Telephone Number	+81-3-3511-6383
	Junichi Arai
Contact Person	Senior Vice President
Contact Location	1-9-2 Marunouchi, Chiyoda-ku, Tokyo, Japan

Business

The Company started in 1960 as a business providing job information to students by placing job advertisements for its clients in university newspapers in Japan. Since then, the Company has consistently created and operated matching platform businesses connecting individual users and business clients.

Currently, the Company provides individual users around the world the best possible choices and supports business clients in improving their operational efficiency by utilizing technology and data, all enabling simpler and faster matching.

In the course of connecting individual users and business clients, the Company positions data security and privacy, including the protection of individual users' privacy, as a material foundation for its corporate activities, and has established appropriate structures and measures to support that position.

The Company operates its businesses through each of its three Strategic Business Units ("SBU"s): HR Technology, Matching & Solutions and Staffing and has established respective SBU Headquarters in order to further reinforce global, swift decision making. This organizational structure enhances the management capabilities of each SBU Headquarters and enables each SBU Headquarters to execute its own strategy. At the same time, each SBU collaborates closely to achieve the Company's three strategic pillars: Simplify Hiring, Help Businesses Work Smarter, and Prosper Together. The SBU structure also enables the Holding Company to focus on and strengthen its holding company functions, including strategic planning and execution as well as group governance and monitoring. Through these positive aspects of the SBU structure, the Company aims to increase its enterprise value.

As of March 31, 2023, the Company had 257 subsidiaries and 8 associates.

Business Overview by Segment

HR Technology

HR Technology consists of Indeed, Glassdoor, and other related businesses.

Indeed and Glassdoor are online matching and hiring platforms where people can find jobs and learn about companies. Both Indeed and Glassdoor have missions that are aligned towards achieving success for job seekers - Indeed's mission is to help people get jobs and Glassdoor's mission is to help people everywhere find a job and company they love.

Indeed created the job aggregation and search model that transformed the job search process for job seekers, and in doing so has become the leading job site in the world ¹ , attracting 330 million unique visitors per month ² and 3 million employers that come to Indeed to hire each year ³. Glassdoor has reshaped the way people search for and evaluate jobs and companies, by increasing workplace transparency for job seekers by bringing together jobs with user-generated employer reviews, salaries and insights. As a result, Glassdoor has become the recognized leader in company reviews and insights attracting 55 million unique visitors per month ⁴.

Indeed and Glassdoor offer a suite of tools to help job seekers find available job opportunities, post resumes and create profiles, research company information and reviews, and schedule and conduct video and phone interviews. For employers, Indeed and Glassdoor offer solutions to recruit and hire qualified talent in an easier and more efficient way. Employers can post and advertise jobs and build their company's employment brand across both platforms, reaching a broad and diverse job seeker audience. Together, they provide an efficient source of candidates through a pay-for-performance job advertising pricing model and provide a range of products for employers to source, screen, interact with, and interview candidates. As a result, Indeed and Glassdoor partner to create a global talent marketplace where job seekers find jobs and employers find great talent.

¹ Source: comScore, Total Visits, March 2023
² Internal data, an average of each month's total of distinct cookie IDs visiting Indeed's site between October 2022 - March 2023
³ Internal data based on the last 12 months of activity as of March 2023

⁴ Internal data based on Google Analytics, an average of each month's total of distinct cookie IDs visiting Glassdoor's site between October 2022 - March 2023

Matching & Solutions

Matching & Solutions consists of two businesses mainly in Japan, Marketing Solutions and HR Solutions. Marketing Solutions provides solutions which support business clients' operations such as customer acquisition, customer relationship management, and payments in a variety of industries, such as Housing & Real Estate, Beauty, Travel, Bridal, Dining, and others. HR Solutions helps individual users find jobs and helps business clients' hiring activities across a variety of industries.

Both Marketing Solutions and HR Solutions offer matching platforms which connect individual users and business clients, and cloud-based Software as a Service ("SaaS") solutions that utilize technology and data to improve the efficiency of the day-to-day management and operations of clients' businesses. Through these matching platforms and SaaS solutions, Matching & Solutions aims to create an "ecosystem" of solutions that support the operations of businesses in Japan to help improve their productivity and profitability.

Matching & Solutions respects the privacy of individual users and complies with data utilization in accordance with the "Personal Data Policy," while providing optimal choices through online platforms and print media that individual users can trust and use with peace of mind.

Marketing Solutions

The matching platforms for each industry include: SUUMO for Housing & Real Estate, Hot Pepper Beauty for Beauty, Jalan for Travel, Zexy for Bridal, Hot Pepper Gourmet for Dining, and others. The matching platforms generate revenue primarily from advertising while Travel and other services generate revenue from transactions.

HR Solutions

HR Solutions supports business clients' recruiting and hiring activities and individual users' job search activities through its job advertising services and placement services. The services include online matching platforms (Rikunabi for new graduates, Rikunabi NEXT, and TOWNWORK for part-time job seekers) and the placement service, Recruit Agent and RECRUIT DIRECT SCOUT.

SaaS Solutions

Matching & Solutions provides more than 15 Air BusinessTools, such as AirPAY, a cloud-based payment service, AirREGI, a point of sale (POS) system, and AirWORK ATS, a centralized application management service as well as other SaaS solutions specialized for industries where Matching & Solutions operates online matching platforms. The current priority is to increase the number of SaaS accounts.

Staffing

Staffing consists of two major operations: Japan and Europe, US, and Australia. Staffing offers temporary staffing and other related services primarily for clerical, manufacturing, light industry and various professional positions across a multitude of industries. The Company selects appropriate temporary staff, based on the skills needed by clients, from a large pool of workers registered with the Company, and then provides those temporary staff to business clients.

Both Japan and Europe, US, and Australia operations implement the Unit Management System, which divides an organization into smaller units based on differences in the markets they serve. Each unit is regarded as a distinct company, and the Unit Manager is given authority to make decisions to maximize each unit's profitability.

In Japan, the Company has been licensed by the Minister of Health, Labour and Welfare in accordance with the provisions of the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Protection of Dispatched Workers, and operates temporary staffing services primarily through Recruit Staffing Co., Ltd. and STAFF SERVICE HOLDINGS CO., LTD.

In Europe, US, and Australia, the Company offers services through RGF Staffing France SAS, RGF Staffing Germany GmbH, RGF Staffing the Netherlands B.V., RGF Staffing UK Limited, Unique NV as well as other companies in Europe, Staffmark Group, LLC and The CSI Companies, Inc. in the US, Chandler Macleod Group Limited mainly in Australia.

Main Companies, Brands and Services for Each Reportable Segment

(As of March 31, 2023)

SEGMENT / SBU HEADQUARTERS	BUSINESS DESCRIPTION
HR Technology / RGF OHR USA, INC.	Global matching and hiring platform that offers advertising and other human resources matching solutions
	SUBSIDIARIES	BRANDS AND SERVICES
	Indeed, Inc.	Indeed
	Glassdoor, Inc.	Online matching and hiring platform
		Glassdoor
		Online matching and hiring platform
SEGMENT / SBU HEADQUARTERS	OPERATION
Matching &	Marketing Solutions
Solutions / Recruit Co., Ltd.	BUSINESS DESCRIPTION	BRANDS AND SERVICES
	Provides matching platforms in a variety of	SUUMO
	industries, such as Housing & Real Estate, Beauty, Travel, Bridal, Dining and others, to connect individual users and business clients. Offers cloud-based SaaS solutions	Online platform, print media, and in-person consultation service for housing and real estate
	to improve business clients' efficiency of	Hot Pepper Beauty
	operations.	Online platform and print media for beauty treatment
		Jalan
		Online platform and print media for travel in Japan
		Study Sapuri
		Online learning service for students and adults
		Air BusinessTools
		Cloud-based operational and management support solutions for business clients across an expanding variety of businesses
	OPERATION
	HR Solutions
	BUSINESS DESCRIPTION	BRANDS AND SERVICES
	A variety of HR services mainly in Japan	Rikunabi
	through online platforms and print media for job seekers and business clients.	Online matching platform for new graduates
		Rikunabi NEXT
		Online matching platform for professionals
		RECRUIT AGENT
		Employment placement service for professionals
		RECRUIT DIRECT SCOUT
		Talent sourcing service for professionals
		TOWNWORK
		Online matching platform and print media for part-time and full-time job seekers
SEGMENT / SBU HEADQUARTERS	OPERATION
Staffing /	Japan
RGF Staffing B.V.	BUSINESS DESCRIPTION
	Staffing services in Japan
	SUBSIDIARIES
	Recruit Staffing Co., Ltd. STAFF SERVICE HOLDINGS CO., LTD.
	OPERATION
	Europe, US, and Australia
	BUSINESS DESCRIPTION
	Staffing services mainly in Europe, US, and Australia
	SUBSIDIARIES
	RGF Staffing France SAS
	RGF Staffing Germany GmbH
	RGF Staffing the Netherlands B.V.
	RGF Staffing UK Limited
	Unique NV
	Staffmark Group, LLC
	The CSI Companies, Inc.
	Chandler Macleod Group Limited

Since Recruit Holdings falls under the category of Specified Listed Company under the insider trading regulations, the criteria for determining the insignificance of material facts relative to the size of the Company with respect to insider trading regulations are decided based on the figures on a consolidated basis.

Major Subsidiaries and Associates

Consolidated subsidiaries

Name	Address	Capital stock on capital	Description of major operations ¹	Ratio of voting rights held (%)	Relationship
RGF OHR USA, INC.	Delaware, United States	10 US dollar	HR Technology	100.0	Concurrent directorships Receipt of dividends
Indeed, Inc. ⁶	Delaware, United States	10 US dollar	HR Technology	100.0	Concurrent directorships Obligation guarantee
				(100.0)
Glassdoor, Inc.	Delaware, United States	10 US dollar	HR	100.0	Concurrent directorships
			Technology	(100.0)
Recruit Co., Ltd.3, 6	Chiyoda-ku, Tokyo, Japan	350 million yen	Matching & Solutions	100.0	Concurrent directorships Borrowing of funds Receipt of royalties
RGF Staffing B.V.	Flevoland, Netherlands	1.5 euro	Staffing	100.0	Concurrent directorships
	Chuo-ku, Tokyo, Japan	300 million yen	Staffing	100.0	Concurrent directorships Borrowing of funds Receipt of royalties
				(100.0)
STAFF SERVICE HOLDINGS CO., LTD.	Chiyoda-ku, Tokyo, Japan	500 million yen	Staffing	100.0	Concurrent directorships Borrowing of funds
				(100.0)
RGF Staffing France SAS	Moselle, France	26,395 thousand euro	Staffing	100.0	Concurrent directorships
				(100.0)
RGF Staffing Germany GmbH	Bayern, Germany	500 thousand euro	Staffing	100.0	Concurrent directorships
				(100.0)
RGF Staffing the Netherlands B.V.	Flevoland, Netherlands	1 thousand euro	Staffing	100.0	Concurrent directorships
				(100.0)
RGF Staffing UK Limited	London, United Kingdom	11,172 thousand GBP	Staffing	100.0	Concurrent directorships
				(100.0)
Unique NV ³	Antwerp, Belgium	50,082 thousand euro	Staffing	100.0	Concurrent directorships
				(100.0)
Staffmark Group, LLC ³	Ohio, United States	117,514 thousand US dollar	Staffing	100.0	Concurrent directorships
				(100.0)
The CSI Companies, Inc.	Florida, United States	2.0 US dollar	Staffing	70.0	Concurrent directorships
				(70.0)
Chandler Macleod Group Limited ³	New South Wales, Australia	191,490 thousand Australian dollar	Staffing	100.0	Concurrent directorships
				(100.0)
HR Tech Funding Service Limited ³	Dublin, Ireland	2.2 US dollar	HR Technology	100.0	Concurrent directorships
RGF International Recruitment Holdings Limited ³	Hong Kong, China	836,224 thousand HKD	Matching & Solutions	100.0	-
				(100.0)
RYK Capital Partners Limited ³	Hong Kong, China	278,756 thousand HKD	Matching & Solutions	90.0	-
				(90.0)
Start Holding B.V. ³	Flevoland, Netherlands	92,653 thousand euro	Staffing	100.0	-
				(100.0)
Start People B.V. ³	Flevoland, Netherlands	34,050 thousand euro	Staffing	100.0	-
				(100.0)
Staffmark Investment, LLC ³	Ohio, United States	117,514 thousand US dollar	Staffing	100.0	-
				(100.0)
Peoplebank Australia Ltd ³	New South Wales, Australia	68,160 thousand Australian dollar	Staffing	100.0	-
				(100.0)
RGF STAFFING APEJ PTY LTD ³	New South Wales, Australia	440,756 thousand Australian dollar	Staffing	100.0	Concurrent directorships
				(100.0)
RGF STAFFING MELBOURNE TWO PTY LTD3	New South Wales, Australia	294,892 thousand Australian dollar	Staffing	100.0	Concurrent directorships
				(100.0)
SPHN (ACT) Pty Limited ³	New South Wales, Australia	248,879 thousand Australian dollar	Staffing	100.0	-
				(100.0)
SPHN Australia Pty Limited ³	New South Wales, Australia	248,879 thousand Australian dollar	Staffing	100.0	-
				(100.0)
231 other companies ⁵

Equity-method Associates

Name	Address	Capital stock or capital	Description of major operations ¹	Ratio of voting rights held (%)	Relationship
51job, Inc.	Cayman Islands, British Overseas Territory	34 thousand RMB	Company-wide	39.9	Concurrent directorships
kaonavi, inc. ⁴	Minato-ku, Tokyo, Japan	1,143 million yen	Matching & Solutions	21.3	-
				(21.3)

6 other companies

¹ Segment names are shown in the "Description of major operations" section.
² The percentages in parentheses in the "Ratio of voting rights held" section are indirect ownership of voting rights.
³ Specified subsidiary as defined by the Companies Act of Japan
⁴ A securities registration statement and Yukashouken Houkokusho has been submitted.
⁵ At the end of FY2022, the excess debt of Indeed Hire, Inc. amounted to 10.0 billion yen or more, and the exact amount is 15,334 million yen.
⁶ Revenue (excluding intercompany revenues among consolidated companies) from Recruit Co., Ltd. and Indeed, Inc. each accounts for over 10% of the consolidated revenue. Because all of the following values are non-consolidated financial results, these do not include goodwill, intangible assets, and amortization of intangible assets related to the Company's acquisition of each entity.

	Company name
Major Profit (loss) items	Recruit Co., Ltd.	Indeed, Inc.
	(In million yen)	(In million US dollar)
Revenue	705,567	5,826
Profit for the year	14,152	874
Total equity	134,773	564
Total assets	711,217	2,255

Ordinary income is not stated since the information above is based on IFRS as in "Consolidated Financial Statements" of the "Financial Information" section.

Employees

The Company including Its Consolidated Subsidiaries

As of March 31, 2023

Segment	Number of employees	Number of contract employees
HR Technology	15,606	83
Matching & Solutions	23,446	591
Staffing	19,313	1,236
Holding Company corporate function	128	5
Total	58,493	1,915

¹ The employees include employees that have been assigned to the Company from companies outside the Company and excludes employees that have been assigned to companies outside the Company. It also excludes that of contract employees.
² Contract employees represent the average number of contract employees during FY2022.
³ Contract employees include part-time employees and exclude temporary staff.
⁴ "Holding Company corporate function" represents employees in corporate functions of the Holding Company such as finance and risk management.
⁵ The number of employees increased by 6,736 compared to the previous fiscal year. This is mainly due to the increase of manpower for the expansion of the HR Technology business and the Matching & Solutions business, as well as the addition of part-time overseas employees to the total Staffing business headcounts, along with an increase in permanent dispatched employees in Japan. In addition, the headcount reduction announced in March 2023 by a subsidiary under the HR Technology business will be reflected in FY2023.

The Holding Company excluding Its Consolidated Subsidiaries

As of March 31, 2023

Number of employees	Number of contract employees	Average age	Average length of service	Average annual salary
			(years)	(yen)
128	5	39.3	7.40	11,389,672

Segment	Number of employees	Number of contract employees
HR Technology	-	-
Matching & Solutions	-	-
Staffing	1	-
Holding Company corporate function	127	5
Total	128	5

¹ The employees include employees that have been assigned to the Holding Company and excludes employees from its subsidiaries. These employees are excluded from the original subsidiary's count and the count for the number of contract employees.
² Contract employees represent the average number of contract employees during FY2022.
³ Contract employees include part-time employees and exclude temporary staff.
⁴ Average annual salary includes overtime and bonuses. The average annual salary increase is due to a transition to a revised compensation structure as well as an increase linked to company performance.
⁵ "Holding Company corporate function" represents employees in corporate functions of the Holding Company such as finance and risk management.

Labor Unions

Employees are not members of labor unions. Management and employees have built a strong relationship and no special labor matters are noted.

Diversity, Equity and Inclusion

Recruit Group's diverse workforce has been at the source of our value creation since its very foundation. We recognize and value the differences between our employees, betting on the passion and ideas fueled by their curiosity to generate new businesses and services. Moreover, we have established a human rights policy to ensure that no discrimination or human rights violations are committed in our corporate activities. We are committed to providing fair opportunities for all individuals and respect their diverse life and workstyles. Please refer to "Sustainability Policy and Actions" in "Business Overview" for more information on our approach and efforts towards human capital and human rights.

Under these policies, we strive to create a work environment that is supportive, accommodating and fulfilling for all employees, regardless of their diversity dimensions or employment barriers. In May 2021, we have made Diversity, Equity and Inclusion (DEI) as a part of our corporate strategy, aiming to achieve full gender parity by FY2030, i.e. reach approximately 50% representation of women across all levels. To achieve this, we have formulated a three-year plan and are accelerating our efforts. We are also incentivizing our Executive Directors and Executive Vice Presidents in charge of promoting ESG initiatives, by linking part of their long-term incentive compensation ¹ to the achievement of these targets. Please refer to "Prosper Together - Seek sustainable growth shared by all stakeholders" in "Management Philosophy and Strategies" for more information on the progress on our DEI efforts.

As of April 1, 2023, the percentage of women across all levels, including in permanent employees, managerial and senior executive positions for Recruit Group ² is as follows:

Company	Permanent Employees ³	Managers ⁴	Senior Executives ⁵
Recruit Group ²	49.8	39.1	22.0

¹ Compensation linked to ESG target achievement is set as part of the BIP Trust (Equity) compensation. Eligibility to receive this award will depend on whether or not the three-year target is achieved.
² For Recruit Group, we have aggregated data from the Holding Company, the SBU Headquarters and major consolidated subsidiaries under each SBU, including overseas subsidiaries. The definition of "Permanent Employees" is based on the Group's proprietary classification for managing employment status. The definition of "Managers" and "Senior Executives" is as outlined in table footnotes 5 and 6 respectively, and differs from that of "Managers" (total of workers in managerial positions such as section manager or higher, excluding executives) in the Ministerial Order on the Plan of Action for General Employers under the Act on the Promotion of Women's Active Engagement in Professional Life (hereinafter referred to as "Women's Active Engagement Act").

³ "Permanent employees" refers to those on indefinite contracts. It includes seconded employees that have been assigned to Recruit Group and excludes employees that have been assigned to companies outside Recruit Group.
⁴ Managerial positions refer to all positions that have subordinate employees. It includes senior executives under service agreements.
⁵ Senior executive positions are defined as Senior Vice Presidents and Corporate Professional Officers of Recruit Holdings and Matching & Solutions Strategic Business Unit (SBU), and CEOs of the Company's major subsidiaries and heads of key functions in the HR Technology and Staffing SBUs.

The ratio of women in managerial positions, percentage of men taking childcare leave and gender pay gap in the Holding Company ¹ are as follows:

				Gender Pay Gap ^3,5
Name	Ratio of women in managerial positions ²	Percentage of men taking childcare leave ^3,4	All Employees	Permanent Employees ⁶	Part-time and Fixed-term Employees, etc. ⁷
Recruit Holdings	50.0	50.0	81.0	83.3	190.4

¹ While the Company bears no legal disclosure obligation under the Women's Active Engagement Act and the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (hereinafter referred to as "Childcare and Caregiver Leave Act"), we have voluntarily disclosed to provide such information for reference purposes.
² Managerial positions refer to all employees who have subordinates, excluding senior executives under service agreements, as of Apr 1, 2023. It has been calculated in accordance with the Women's Active Engagement Act, including seconded employees that have been assigned to the Holding Company and excluding employees that have been assigned to companies outside the Holding Company.
³ The majority of the Holding Company's workforce consists of seconded employees from Recruit Co., Ltd., whose remuneration is determined based on our established mission grades and criteria. Given these employment and compensation determination circumstances, the calculation provided includes incoming seconded employees assigned to the Holding Company and excludes outgoing seconded employees assigned to other companies. It, therefore, includes incoming seconded employees among those registered in Recruit Co., Ltd.'s roster of workers (hereinafter referred to as "original employees") for which its calculation is later provided. If calculated for the Company's original employees, the resulting values would differ.
⁴ We have calculated the percentage of men taking childcare leave, etc. as referred to in Article 71-4, item (ii) of the Ordinance for Enforcement of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (hereinafter referred to as "Ordinance for Enforcement of the Childcare and Caregiver Leave Act"), pursuant to the provisions of the Childcare and Caregiver Leave Act in the current consolidated fiscal year. Childcare leave, etc. includes both taking childcare leave prescribed by law and benefiting from leave systems, etc. for childbirth and childcare purposes.
⁵ Pursuant to the provisions of the Women's Active Engagement Act, calculations are based on the current consolidated fiscal year.
⁶ "Permanent employees" refers to those on indefinite contracts.
⁷ We estimate the number of part-time and fixed-term employees, etc. based on their working hours as a proportion of the prescribed working hours of permanent employees (8 hours a day).

Additionally, the ratio of women in managerial positions, percentage of men taking childcare leave and gender pay gap in our major domestic consolidated subsidiaries, disclosed under the Women's Active Engagement Act, and the Childcare and Caregiver Leave Act, are as follows:


Name	Main Business ¹	Ratio of women in managerial positions ²	Percentage of men taking childcare leave ³
Recruit Co., Ltd.	Matching & Solutions	30.4	64.2
Recruit Staffing Co.,Ltd.	Staffing	39.3	25.3
Staff Service Holdings CO., LTD.	Staffing	36.4	50.0
(24 other companies) ⁷

		Gender Pay Gap ⁴
Name	All Employees	Permanent Employees ⁵	Part-time and Fixed-term Employees, etc. ⁶
Recruit Co., Ltd.	76.4	80.5	101.0
Recruit Staffing Co.,Ltd.	74.4	60.3	79.9
Staff Service Holdings CO., LTD.	77.6	81.8	83.0
(24 other companies) ⁷

¹ Under "Main Business" is the name of the Segment each company belongs to.
² Managerial positions refer to all employees who have subordinates, excluding senior executives under service agreements, as of Apr 1, 2023. It has been calculated in accordance with the Women's Active Engagement Act, including incoming seconded employees that have been assigned to the respective company and excluding outgoing seconded employees that have been assigned to companies outside the respective company.
³ Calculations are based on each company's original workers. We have calculated the percentage of men taking childcare leave, etc. as referred to in Article 71-4, item (ii) of the Ordinance for Enforcement of the Childcare and Caregiver Leave Act, pursuant to the provisions of the Childcare and Caregiver Leave Act in the current consolidated fiscal year. Childcare leave, etc. includes both taking childcare leave stipulated by law and benefiting from leave systems, etc. for childbirth and childcare purposes.
⁴ Calculations are based on each company's original employees, including agency temps dispatched through the respective company to other companies and excluding agency temps dispatched to the respective company in the current fiscal year. Accordingly, for the Staffing segment, figures include each consolidated subsidiary company's agency temps, i.e. our clients' temporary workforce (who we payroll on their behalf).
⁵ "Permanent employees" refers to those on indefinite contracts.
⁶ We estimate the number of part-time and fixed-term employees, etc. based on their working hours as a proportion of the prescribed working hours of permanent employees (8 hours a day).
⁷ The respective metrics of consolidated subsidiaries other than those of the major consolidated subsidiaries have been listed in "Other Reference Information."

Recruit Holdings and its main domestic consolidated subsidiaries adhere to the principle of "Pay for Performance." For permanent employees, regardless of age, year of entry, or any other factor, we determine their compensation based on their expected role and the extent of their contributions using a unique compensation structure we call "Mission Grade System," which ensures that there is no pay gap between male and female employees at the same Mission Grade and evaluation level.

Therefore, we have identified that the main challenge in reducing the pay gap between men and women lies in the low percentage of women in higher Mission Grades and managerial positions. To address this issue, we are accelerating our efforts towards our group's goal of 50% female representation in management and aim to increase the proportion of women in higher Mission Grades, including highly professional personnel.

Additionally, we believe that becoming aware of our unconscious biases, reducing preconceptions about workplace and working hours, and continuing our efforts to create an even more supportive, accommodating and fulfilling work environment for our diverse workforce will be instrumental to further evolve our organization into one where a broad range of talent can thrive. As a company group operating in the realm of "work" related industries, we are committed to promoting diversity, equity and inclusion in society at large through our corporate activities, including our services and operations.

Business Overview

Management Philosophy and Strategies

Management Philosophy

Recruit Group Management Philosophy is defined by its Basic Principle, Vision, Mission and Values as follows:

Basic Principle	We are focused on creating new value for our society to contribute to a brighter world where all individuals can live life to the fullest.
Vision	Follow Your Heart
	We envision a world where individuals and businesses can focus on what really matters. The more people are free to pursue their passions, the better our future becomes.
Mission	Opportunities for Life. Faster, Simpler and closer to you.
	Since our foundation, we have connected individuals and businesses offering both a multitude of choices.
	In this era of search, where information has become available anytime anywhere, we need to focus more on proposing the optimal choice. We seek to provide "Opportunities for Life" much faster, surprisingly simpler and closer than ever before.

Values

Wow the World

What we do isn't a job. We enjoy exploring what is possible for our future. We question the status quo, fail well and overcome with resilience. We are a force for change.

Bet on Passion

We are a team of people fueled by curiosity. We respect and capitalize on each other's differences. We know that one person's crazy idea, when backed by data and research, can become the best bet.

Prioritize Social Value

We, as global citizens, strive to contribute to a sustainable society through all of our corporate activities. Each one of us is committed to seeking out the needs of society and taking action for a better future.

The Company has developed a two-sided marketplace business model to align with its management philosophy. Through its platforms, the Company facilitates the best possible matches for the mutual benefit of both individual users and business clients.

In recent years, technological advancement has enabled the Company to improve matching efficiency, providing better matching outcomes for individual users and improving operational efficiencies for business clients.

Target Management Key Performance Indicators (KPIs)

The Company aims to invest in new businesses, research and development, and mergers and acquisitions (M&A) in order to achieve profitable growth over the long-term, and maximize enterprise value as well as shareholder value. Therefore, the Company has set adjusted EBITDA and adjusted EPS as target management KPIs.

Business Strategies

The Company strives to maximize enterprise value and shareholder value by responding to the rapidly transforming technology and internet landscape and by identifying business opportunities globally.

Through HR Technology, HR Solutions in Matching & Solutions and Staffing for the global HR Matching market as well as through Marketing Solutions in Matching & Solutions for Japan, the Company aims not only to provide online advertising business but also to be a solution provider to improve the business performance and productivity of clients' businesses by utilizing technology.

In an environment of high uncertainty, the Company believes that making a positive impact on society and this shared planet is key to achieving sustainable growth, and prospering together with all stakeholders through all corporate activities with a sound governance foundation is important. Therefore, the Company has set specific targets for environmental, social and governance (ESG) matters as a corporate strategy which will be monitored by the Board of Directors, and will take initiatives through dialogue with stakeholders.

The Company's business strategies are as follows:

Business Strategies of the Company

Simplify Hiring - Aim to simplify hiring by connecting people with jobs, faster and easier

The HR Matching market includes job advertising & talent sourcing tools, direct hire, retained search, internal recruitment automation, and temporary staffing. The Company is committed to making it easier and faster for people to get jobs, while reducing the cost and time to hire for employers across the HR Matching market.

The Recruit group is dedicated to automating many of the steps in the hiring process and to enhancing the quality and speed of matching in all HR matching markets it operates in. We aim to leverage the vast amount of data available in each service combined with Al and machine learning technology to simplify the hiring process and deliver greater value to job seekers and employers. The Company's long term vision is to more quickly, effectively and fairly connect job seekers and employers at the push of a button ¹.

At the center of this strategy, HR Technology SBU operates a global two-sided talent marketplace that includes the world's leading online matching and hiring platforms ² Indeed and Glassdoor. Every day, millions of job seekers connect with millions of employers of all sizes, from small businesses to large enterprises and staffing agencies, directly on Indeed and Glassdoor.

Job seekers can access more than 30 million jobs ³ that have been aggregated from public sources or posted directly by employers to HR Technology's platforms and can access hundreds of millions of company ratings, company reviews and salaries ⁴ to help them make informed job and career decisions. Job seekers are provided with a suite of tools and resources that make getting a job simple, fast and more human, including job search and recommendations, resume posting, career advice, and scheduling and conducting video and phone interviews.

For employers, both Indeed and Glassdoor offer solutions to recruit and hire qualified talent in an easier and more efficient way. Employers can post and advertise jobs and build their company's employment brand across both platforms, reaching a broad and diverse job seeker audience. Indeed and Glassdoor offer a range of products for employers to source, screen, interact with, and interview candidates and together they provide an efficient source of candidates through pay-for-performance and subscription pricing models.

The scale of the two-sided talent marketplace created by Indeed and Glassdoor is evidenced by the 3 million employers ⁵ that use Indeed each year to hire, the 330 million Unique Visitors ⁶ that visit Indeed, and 55 million Unique Visitors ⁷ that visit Glassdoor each month to search for jobs, create resumes, research companies and participate in the hiring process.

Improving the matching process between job seekers and employers is vital to enhance the efficiency and effectiveness of the two-sided talent marketplace. This involves continuously refining the accuracy and timeliness of the information we use, in conjunction with Al and machine learning technology, to provide the most suitable job recommendations and the most qualified candidate pool available. Additionally, an essential element of this effort is to increase engagement with job seekers in our talent marketplace. By logging in and creating a profile, job seekers provide us with a better understanding of their skills and preferences, enabling us to offer more personalized job recommendations that are highly relevant to them. This not only provides a superior user experience but also helps job seekers find suitable opportunities more efficiently.

Furthermore, we also believe that it is crucial to understand the factors that drive successful and unsuccessful outcomes for job seekers and employers. Our talent marketplace facilitates interactions between job seekers and employers, such as messaging, calls, application submissions, interview requests and RSVPs, offers, and more. By tracking these interactions in our marketplace throughout the hiring process, we gain valuable insights into why job seekers and employers progress from one step to the next.

The Company considers the measured average number of hires per minute ⁸ to be a Key Performance Indicator (KPI) that demonstrates our success in simplifying the hiring process. We believe this KPI indicates a successful engagement between job seekers and employers, which represents improvements in matching and automation, as well as improvements in employer engagement that help us measure more hires. In calendar 2022, based on internal measurement, an average of 23 job seekers were hired on Indeed and Glassdoor every minute.

The Company believes that by fully utilizing the Recruit group's business client relationships, offline and online data, combined with machine learning and Al technologies, the Recruit group's matching engine can be improved significantly, helping to simplify the process for job seekers and make recruiting more efficient.

RECRUIT AGENT and RECRUIT DIRECT SCOUT, the placement services in Matching & Solutions SBU, use the Recruit group's matching engine to streamline processes like screening resumes, which used to be done manually. By combining the matching engine with the data and knowledge from more than 60 years of operating HR businesses in the Japanese market, we will accelerate our Simplify Hiring strategy in Japan.

The Staffing SBU is working to improve the job seeker experience for temporary workers by applying data and automation to the traditional temporary staffing business, collaborating with HR Technology's app-based solution, Indeed Flex, to provide access to available jobs, salary choice and schedule flexibility.

The Company estimates the global HR Matching market was roughly 327 billion US dollars ⁹ in 2022.

The Company believes that the size of the global HR Matching market increased significantly again in 2022, after initially rebounding in 2021 from the contraction caused by the COVID-19 pandemic in 2020.

The Company believes that the past two years of significant growth are reflective of a historically unique period in the global labor market brought upon by the economic recovery from the initial impact of the COVID-19 pandemic and how employers and job seekers reacted to the pandemic. While the Company expects that the HR Matching market will grow over the long term, the Company expects that the HR Matching market will contract in 2023 as labor markets, including employer and job seeker activities and expectations, adjust and normalize, and are likely to be negatively impacted by overall economic conditions.

The size of of the market in 2021 has been updated from the Company's initial estimate in the Q4 FY2021 Earnings Release as of May 16, 2022 based on information that became available after the publication of such initial estimate pertaining to each market listed below as well as revisions to the definition and scope of the Internal Recruitment Automation and Temporary Staffing markets. As described in more detail below, we revised the definitions of these two markets by adding the estimated annual revenue of the Applicant Tracking Systems ¹⁰ ("ATS") and the estimated annual internal spending by employers on Background Checks ¹¹ that can be reasonably automated and monetized by third parties to the Internal Recruitment Automation market, and adding an estimated annual revenue for each of the Talent Platforms ¹² , Staffing Platforms ¹³ , Vendor/Freelancer Management Systems ¹⁴ ("VMS/FMS"), and the estimated annual spending by employers on Managed Service Providers ¹⁵ ("MSP") and Recruitment Process Outsourcing ¹⁶ ("RPO") that can be reasonably automated and monetized by third parties to the Temporary Staffing market. In addition, other markets in 2021 have also been updated from the Company's initial estimate in the Q4 FY2021 Earnings Release as of May 16, 2022 based on information that became available after the publication.

HR Matching addressable markets

	2021		2022
(in billions of dollars)	as of May 16, 2022	Updated
Job Advertising and Talent Sourcing ^17,18	26	27	32
Direct Hire ^19,20,21	45	55	61
Retained Search ^19,20,21	31	36	42
Temporary Staffing ^22,23,24	88	108	128
Internal Recruitment Automation ^25,26,27	43	61	64
Total Addressable Market ("TAM") ²⁸	236	288	327

Job Advertising and Talent Sourcing: The global online job advertising and talent sourcing market is estimated by the Company to have been roughly 30 billion US dollars ¹⁷ in terms of annual revenue in 2022. The global offline job advertising market, which the Company estimates was roughly 2 billion US dollars18 in terms of annual revenue, is expected to continue to contract as a portion of the total job advertising and talent sourcing market as demand in this market flows into online channels.

Direct Hire: The direct hire market, where companies are paid fees for placing permanent workers at employers, is estimated by the Company to have been roughly 61 billion US dollars ²¹ in terms of annual revenue globally in 2022 and has historically been dominated by traditional relationship-based business models.

Retained Search: The retained search market, where companies are paid to search for employees to fill specific roles, commonly executive roles, is estimated by the Company to have been roughly 42 billion US dollars ²¹ in terms of annual revenue globally in 2022 and is similarly dominated by traditional relationship-based models.

Temporary Staffing: The temporary staffing market, where companies are paid to find and employ, or facilitate employment of, workers for a temporary period, is estimated by the Company to have been roughly 585 billion US dollars ²⁴ in annual revenue globally in 2022. The total gross profit for all staffing companies, which is calculated by subtracting the amount of salary for temporary staff and related costs from the total revenue, is estimated by the Company to have been roughly 116 billion US dollars ²⁴ in 2022. Additionally, we have revised our definition of this market to include the estimated annual revenue globally in 2022 for each of the Talent Platforms, Staffing Platforms and VMS/FMS markets, and an estimated annual spending by employers on MSP and RPO that can be reasonably automated and monetized by third parties (including an estimated reduction from historical spending due to cost savings achieved through automation). Given the related nature of these markets and the frequency with which service providers offer some or all of these services, the Company believes that it is appropriate to combine these markets as part of the temporary staffing market. Including these new markets, the Company estimates that the temporary staffing market was roughly 128 billion US dollars globally in 2022. The Company sees near-term opportunities to introduce technology-driven solutions that create efficiencies by automating human-driven processes involved in traditional temporary staffing services and over the long-term seeks to transform the market through these solutions. The Company intends to explore the development of new and innovative solutions in temporary staffing and apply them to new and existing businesses to capture future opportunities by leveraging data and technology.

Internal Recruitment Automation: The potential internal recruitment automation market, which the Company has begun to address, is estimated by the Company to have been roughly 64 billion US dollars ²⁷ in 2022. The size of this market is estimated based on the historical estimated spending by employers on internal talent acquisition resources, and then estimating how much of this spending can be reasonably automated and monetized by third parties (including an estimated reduction from historical spending due to cost savings achieved through automation). Additionally, in order to more comprehensively capture the automation tools that are currently used by employers in the recruitment process, we have revised our definition of this market to include the estimated annual revenue globally in 2022 for ATS and an estimated annual internal spending by employees on Background Checks that can be reasonably automated and monetized by third parties.

The Direct Hire, Retained Search, and Internal Recruitment Automation markets have historically been characterized as business processes and methods that are highly dependent on manual processes in order to source and screen candidates, schedule interviews, and disposition candidates. The Company is currently aiming to develop highly efficient solutions for recruiters, hiring managers, and business owners at lower prices compared to the industry average, using data and automation to make getting a job and hiring an employee simpler and faster. As a result, the Company aims to further grow the number of employers it serves and increase the share of employers' recruiting budgets that it can capture.

¹ The Company is aware there may be legal restrictions in this area and so will endeavor that the Company's work meets those requirements.
² Source: comScore, Total Visits, March 2023
³ Daily average number of jobs searchable on Indeed, worldwide, March 2023
⁴ Cumulative number of company ratings, company reviews and salaries submitted on Indeed (approximately 850 million) , worldwide, as of March 31, 2023
⁵ Internal data based on the last 12 months of activity as of March 2023
⁶ Internal data, an average of each month's total of distinct cookie IDs visiting Indeed's site between October 2022 - March 2023
⁷ Internal data based on Google Analytics, an average of each month's total of distinct cookie IDs visiting Glassdoor's site between October 2022 - March 2023
⁸ Hires per minute is a calculation of hired signals per year on Indeed and Glassdoor, divided by minutes per year. A hired signal refers to the event when a specific job seeker is hired for a specific job on a specific date. Hired signals are counted either when an employer or job seeker explicitly communicates a hire occurred (e.g., via survey or web form) or when there is other clear evidence from Indeed and Glassdoor data that a hire occurred (e.g., from a resume or an Indeed message) and may not represent all hires facilitated by Indeed and Glassdoor.
⁹ Sum of the estimated size of addressable markets for the job advertising & talent sourcing tools market, the direct hire market and the retained search market in terms of annual revenue, the estimated size of the addressable market for the internal recruitment automation market in terms of the amount of current expenses of employers for internal talent acquisition resources that could be reasonably automated and monetized plus the estimated size of the addressable market for the ATS market and the Background Checks market, and the addressable markets for the temporary staffing market in terms of annual gross profit plus the estimated size of the addressable markets for the Talent Platforms, Staffing Platforms, VMS/FMS, MSP, and RPO markets, in each case based on the Company's estimates and third party market data as described in the notes below.

²¹ Source for 2022: SIA, Global Staffing Market Estimates and Forecast: November 2022 Update. Placement & Search market is derived by applying 15%, which was Placement & Search's share of 2022 Global Staffing Revenue to 688 billion US dollars, which was estimated 2022 Global Staffing Revenue, derived by applying the estimated 2022 11% growth rate to the estimated 2021 market of 620 billion US dollars. Direct Hire Market is defined as a segment of Placement & Search Market, which in turn is a segment of Global Staffing Industry Market. Direct Hire Market segment was derived by applying SIA's Global Staffing Industry Market figure to country-by-country ratios of the relative proportion attributable to this segment within the total market based on proprietary third party market data. Retained Search Market is defined as the portion of Placement & Search Market not attributable to the Direct Hire Market and derived as the difference between these two segments.
²² Source for 2021 as of May 16, 2022: derived by applying a gross profit margin of 18.68%, which was calculated based on the weighted average of the top 3 publicly traded global staffing companies in terms of revenue in 2021 to 473 billion US dollars, which was the revenue of the temporary staffing market in 2021 from SIA, Global Staffing Market Estimates and Forecast: November 2021 Update by applying the estimated 2021 14% growth rate to the estimated 2020 market of 415 billion US dollars.
²³ Source for 2021: derived by applying a gross profit margin of 18.68%, which was calculated based on the weighted average of the top 3 publicly traded global staffing companies in terms of revenue in 2021 to 527 billion US dollars, upwardly revised from 473 billion US dollars, which was the revenue of the temporary staffing market in 2021 from SIA, Global Staffing Market Estimates and Forecast: November 2022 Update. Additionally, this revised market estimate includes the estimated markets for each of the Talent Platforms, Staffing Platforms, VMS/FMS, MSP and RPO.
²⁴ Source for 2022: derived by applying a gross profit margin of 19.85% which was calculated based on the weighted average of the top 3 publicly traded global staffing companies in terms of revenue in 2022 to 585 billion US dollars, which was the revenue of the temporary staffing market in 2021 from SIA, Global Staffing Market Estimates and Forecast: November 2022 Update by applying the estimated 2022 11% growth rate to the restated estimated 2021 market of 527 billion US dollars. Additionally, this revised market estimate includes the estimated markets for each of the Talent Platforms, Staffing Platforms, VMS/FMS, MSP and RPO.
²⁵ Source for 2021 as of May 16, 2022: Amount derived by applying an approximately 5% growth rate estimated by the Company to the estimated 2020 market of roughly 42 billion US dollars based on SIA, The Evolution of Recruiting: Estimating the Addressable Market for Recruitment Automation (custom research commissioned by Indeed): March 2022. SIA's estimates are based on the assumption that 35% of historical spending on internal talent acquisition resources could be reasonably captured by current technology and that technology would result in 35% cost savings from historical spending. In the report, SIA notes given the challenges in making global estimates with incomplete information, and in estimating potential automation and savings, SIA advises readers to think of the estimated market size as a midpoint in a range with a 20% spread.
²⁶ Source for 2021: Amount derived by applying an approximately 11% growth rate estimate by the Company to the estimated 2020 market of roughly 55 billion US dollars based on SIA, The Evolution of Recruiting: Estimating the Addressable Market for Recruitment Automation (custom research commissioned by Indeed): March 2022 and the updated assumptions as described below in SIA, The Evolution of Recruiting: Estimating the Addressable Market for Recruitment Automation (custom research commissioned by Indeed): January 2023 Update. SIA's estimates are based on the assumption that 40%, upwardly revised from 35%, of historical spending on internal talent acquisition resources could be reasonably captured by current technology and that technology would result in 28%, downwardly revised from 35%, cost savings from historical spending. In the report, SIA notes given the challenges in making global estimates with incomplete information, and in estimating potential automation and savings, SIA advises readers to think of the estimated market size as a midpoint in a range with a 20% spread. Additionally, this revised market estimate includes the addition of the ATS market and the Background Checks market.
²⁷ Source for 2022: SIA, The Evolution of Recruiting: Estimating the Addressable Market for Recruitment Automation (custom research commissioned by Indeed): January 2023 Update. SIA's estimates are based on the assumption that 40% of historical spending on internal talent acquisition resources could be reasonably captured by current technology and that technology would result in 28% cost savings from historical spending. In the report, SIA notes given the challenges in making global estimates with incomplete information, and in estimating potential automation and savings, SIA advises readers to think of the estimated market size as a midpoint in a range with a 20% spread. This market estimate includes the addition of the ATS market and the Background Checks market.
²⁸ As described above, the estimates of the job advertising & talent sourcing tools market, the direct hire market, the retained search market, the internal recruitment automation market and the temporary staffing market are based on internal estimates and independent market research in addition to third party market data. Accordingly, the estimates described above may differ materially from the actual size of such markets.

Help Businesses Work Smarter - Aim to improve the productivity and performance of clients' businesses through SaaS solutions in Japan

Help Businesses Work Smarter aims to contribute to improving productivity and profitability of our business clients in Japan, mainly led by Marketing Solutions, which provides vertical matching platforms and associated vertical-specific business support SaaS solutions, as well as business support SaaS solutions which work across all verticals, called Air BusinessTools.

The Help Businesses Work Smarter strategy will be achieved by consolidating business clients' operations within a single ecosystem, consisting of vertical matching platforms, SaaS solutions, and the HR matching services.

While building the ecosystem, the Company believes "the number of actions by individual users ¹ ," "the number of registered SaaS accounts ² ," and "the gross payment volume, GPV ³ ," are important KPIs.

The number of actions by individual users in FY2022 was approximately 420 million, an increase of 34% year over year. Actions by individual users includes the number of online reservations on our salon, restaurant, and lodging matching platforms and the total number of applications in our HR matching services. An increase in the number of actions in Marketing Solutions may translate into revenue growth for business clients, while in HR Solutions, it leads to an increase in matching opportunities between job seekers and business clients.

As of March 31, 2023 the number of registered SaaS accounts was approximately 3.18 million, an increase of 30% year over year. AirPAY, a cashless payment service, and AirWORK ATS, a recruitment management system, were primary drivers of the increase in the number of accounts, as these and other Air BusinessTools extend our services to new businesses outside our existing verticals, such as retailers.

The Company estimates that roughly 4.53 million ⁴ business locations and stores in Japan are potential users of Air BusinessTools. Assuming each business location uses multiple SaaS solutions, we believe there is still significant opportunity to expand. An increase in the number of registered accounts represents the expansion of our customer base.

For FY2022, GPV reached approximately 1.3 trillion yen, an increase of 69% year over year. Apart from the increase in the number of AirPAY registered accounts, the growth in payment volumes is also due to the new online payment service offered through AirPAY. The newly launched online payment service is now available for both Hot Pepper Beauty and Hot Pepper Gourmet, following its introduction on Jalan net. This service enables individual users to make online payments for their salon bookings and restaurant reservations, which translated to GPV that we had not previously captured. GPV is important for the future expansion of fintech services, which, when linked with Marketing Solutions, we believe will become a new potential source of revenue in the long term.

During FY2022, new fintech services were developed and launched including AirCASH, a service allowing business clients to receive cash in advance based on their future revenue and AirINVOICE, an invoice management service, allowing business clients to complete payments with smartphones.

By integrating vertical matching platforms in Marketing Solutions with Air BusinessTools SaaS solutions, the Company creates opportunities to engage with business clients across many business operation services. Additionally, incorporating HR matching services into our offering will complete all business operations within our ecosystem, increasing the recurring use of our various products for business clients and ultimately resulting in greater lifetime value.

For example, Hot Pepper Beauty WORK, launched in February 2023, automatically links job advertisements by business clients to their pages on Hot Pepper Beauty. By providing realistic and reliable information to job seekers, such as salon staff profiles, clientele, and client reviews, Hot Pepper Beauty enables job seekers to have a concrete understanding of the work environment prior to joining a company. For business clients, the automatic integration with Hot Pepper Beauty eliminates the need to enter additional information other than the job information, allowing them to always have the most up-to-date job information available. This initiative combines a vertical matching platform in Marketing Solutions with an HR matching service to provide greater convenience for both job seekers and business clients.

¹ The total of the number of applications on Rikunabi NEXT, TOWNWORK, and RECRUIT AGENT, the number of individual users who were referred to our business clients at SUUMO Counter, the number of online reservation on Hot Pepper Beauty, the number of hotel bookings on Jalan, the number of seats reserved on Hot Pepper Gourmet, and the number of payments through AirPAY during the period from April 1, 2022 to March 31, 2023.
² Cumulative number of registered accounts of paid and unpaid SaaS solutions provided by Matching & Solutions SBU in Japan as of March 31, 2023. Registered accounts refer to the number of stores and business locations that have registered for each relevant service including both active and non-active accounts.
³ Total gross payment volume of offline payments through AirPAY terminals, including QR code payments through AirPAY QR, and online payments through AirPAY ONLINE (Since the revenue generated from the payment processing fee we collect is based on a very small percentage of total gross payment volume, changes in total gross payment volume are not necessarily proportional to changes in our total revenue).
⁴ The Company estimated the number of business locations and stores that can be potential users of SaaS solutions provided by Matching & Solutions SBU as of June 30, 2022 in Japan by identifying the total number of business locations and stores of small and medium-sized enterprises in Japan (using the definition used by Small and Medium Enterprise Agency) based on the 2016 Economic Census for Business Activity conducted by the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry. Considering the solutions (including AirWORK ATS) provided by Matching & Solutions SBU in Japan as of June 30, 2022, the Company now believes it is possible to provide its SaaS solutions to all business locations and stores of small and medium-sized businesses regardless of the industry. Accordingly, the Company decided to count all such business locations and stores as potential users of its SaaS solutions. Matching & Solutions SBU continues to target potential users among small and medium-sized businesses as defined by Small and Medium Enterprise Agency based on the current major target for potential users of SaaS solutions.

Prosper Together - Seek sustainable growth shared by all stakeholders

The Company believes that it can make a positive impact on society and the global environment through its corporate activities. And by doing so, we can prosper together with all our stakeholders and take an essential step toward achieving sustainable growth. As we announced in May 2021, our environmental, social, and governance (ESG) goals have become one of the strategic pillars of our corporate strategy. The progress we have made toward these goals is outlined below.

Environmental (E)

We anticipate achieving our short-term goal of reaching carbon neutrality throughout our business activities in FY2022 - just as in FY2021. 1,2 Our long-term goal is to achieve carbon neutrality across our entire value chain by FY2030. ^1,2 In order to accelerate our efforts toward this long-term goal, we set a three-year reduction target ³ and signed on to the Science Based Targets initiative's (SBTi) "Near-term targets to 1.5°C." ⁴ In recognition of our environmental actions, following 2021, we were selected in 2022 as a Supplier Engagement Leader, CDP's highest supplier engagement rating. ⁵

Furthermore, we have also started contributing to the environment through our products. With Indeed Interview Platform, which allows users to complete job interviews online, we are avoiding Greenhouse Gas (GHG) emissions. ⁶

Social (S)

As a leader in the global two-sided talent marketplace, the Company has made two commitments to create a significant social impact through its business in the area of work, which is an indispensable foundation for people's lives, and to contribute to reducing the duration of unemployment for all job seekers.

As part of our commitment to reduce the time it takes to get hired by half by FY2030, we are focused on expanding the collection and analysis of user data on Indeed. We made progress on this in FY2022, and in doing so, we discovered that there are large differences in job search duration based on the type of occupation as well as the salary range.

We made advancement in product development to shorten the time to get hired. For example, we observed that job search duration was 17% shorter when job seekers applied to open roles that were sponsored, and when those hiring employers used a Pay Per Application pricing model instead of a Pay Per Click model. ⁷ In addition, the time to hire for employers decreased 16% when they used Indeed Assessments which enables skill-based matching. ⁸

We set a goal of helping 30 million job seekers facing barriers get jobs by FY2030 by reducing bias and barriers in hiring that can make it harder for many job seekers to find, get and keep a job. We worked to reduce common barriers that affect people globally such as education, disabilities, criminal records, ⁹ experience in military services ¹⁰ and lack of work essentials ¹¹ such as access to technology and transportation. We are proud to have been able to help approximately 3.9 million job seekers facing barriers get hired ¹² through making advancements in products and partnerships. ¹³

The diversity of Recruit Group's employees has been the source of our value creation from the very beginning. Betting on the passion and ideas of our employees has long been our competitive advantage. This is why our corporate agenda continues to prioritize a diverse, equitable and inclusive (DEI) workforce that empowers individuals and fosters innovation.

We are addressing our overall gender gap by working towards a group-wide commitment to increase the representation of women across the group companies to achieve approximately 50% in senior executive positions, managerial positions, and total employees within the Company by FY2030. ¹⁴ To accelerate our efforts, we have also set a three-year target.

One such example is underway within the Matching & Solutions Business which operates mainly in Japan, where the gender gap is particularly significant. To increase representation of women, we worked to identify and reduce gender bias by clarifying the requirements for managerial positions and reevaluating what had previously been considered as must-have skills or necessary work styles. These efforts not only increased representation of women in managerial candidates, but also opened up opportunities for employees regardless of gender, and enhanced the overall pool of managerial candidates.

Governance (G)

Diversity in the boardroom is also critical for high quality decision-making, transparency and soundness in a company's governance structure. Recruit Holdings continues to enhance the diversity of skills, experience, and backgrounds of the board members and is committed to achieving approximately 50% women's representation among the Board of Directors members 15 by FY2030.

Recruit Holdings received approval on its proposal for the Board of Directors members including Katrina Lake as a new addition at its Annual General Meeting of Shareholders in June 2023. After the approval, the representation of women increased from approximately 27% to approximately 33%. ¹⁵ This appointment broadened the diversity of the Board of Directors members from a gender perspective, as well as in terms of nationality, age, skills and experience.

The Board of Directors has resolved to set mid-term targets over a three-year period for both GHG emissions reduction and gender parity, and beginning in FY2022 Recruit Holdings has linked the achievement of these targets to a percentage of the long-term incentive compensation ¹⁶ for the executive directors and corporate officers in charge of driving and realizing these ESG goals. Please refer to "Sustainability Policy and Actions" for more details.

¹ GHG emissions throughout our business activities are the sum of direct emissions from the use of fuels in owned or controlled sources and are referred to as Scope 1. Indirect emissions from the use of purchased electricity, heat, or steam in owned or controlled sources are referred to as Scope 2 GHG emissions from the value chain are referred to as Scope 3, and comprise indirect emissions other than Scope 1 and 2. The entire value chain represents the sum of Scopes 1, 2 and 3 GHG emissions. The Company aims to achieve carbon neutrality upon completion of the following steps: measurement of GHG emissions, obtaining an accredited third-party assurance on the amount of GHG emissions, and offsetting of those emissions.
² All GHG emission figures are approximate numbers calculated based on the GHG Protocol. Additionally, independent third-party assurances have been obtained from SOCOTEC Certification Japan and SCS Global Services for GHG emissions and avoided GHG emissions.
³ The GHG emission reduction target is based on the results from FY2022 to FY2024. The women's representation target for employees is based on the results from April 1,2022 to April 1,2025. The women's representation target for members of the Board of Directors is based on the results from July 1, 2022 to July 1, 2025.
⁴ Near-term targets to 1.5°C is a short-term target defined by the Science Based Targets initiative (SBTi) and established in line with the science-based level of reduction in GHG emissions required to limit the global temperature rise to below 1.5°C compared to the temperatures before the Industrial Revolution.
⁵ CDP is a British charity-controlled non-governmental organization (NGO) established in 2000. It owns one of the world's largest environmental databases, working with large global financial institutions to disclose the environmental impact of companies.
⁶ The amount of GHG emissions avoided through the Indeed Interview is more than approximately 13,000t-CO ₂ , a contribution beyond the Group's value chain mitigation, so it is not included in the calculation of the Group's Scope 1, Scope 2 or Scope 3 GHG emissions.
⁷ Difference calculated using time from a job seeker's application on Indeed to the job for which they ultimately were hired to the time of the hire for hires made on Indeed in the United States between January 2022 and January 2023. The data set analyzed included sponsored jobs only hosted on Indeed using one of these two pricing models: Pay Per Application and Pay Per Click. Pay Per Application is a newer pricing model where employers only pay for job applicants that meet their criteria. Pay Per Click is Indeed's standard sponsored job pricing model, where employers pay when a job seeker clicks on their sponsored job listing.
⁸ For jobs on Indeed that (a) were less than 14 days old and (b) had applications between November 1, 2022 through December 31, 2022, an analysis revealed a statistically significant difference in the number of days for an employer to make a hire on Indeed between jobs that used Assessments and those that did not. Time to hire was defined as the period from the day the job was posted on Indeed to the day that the job was closed by the employer with the reason that the employer hired a candidate on Indeed.
⁹ In the United States, approximately 70 million people have a criminal record (source: The Sentencing Project), and the unemployment rate of job seekers with a criminal record is approximately five times higher than the US average (source: Prison Policy Initiative).
¹⁰ A U.S. Chamber of Commerce Foundation study from 2016 found that 53% of veterans are unemployed for four months or longer after leaving the military. We recognize veterans who are looking for a new opportunity or transitioning from military service to civilian life may have difficulty matching their skills and experience to the job market.

¹¹ This indicates barriers that hinder job hunting, such as being unable to connect to the Internet and a resultant lack of access to a job platform, and/or lack of transportation to interviews and work.
¹² Represents number of hires made on Indeed reported from both job seeker and employer sources through our Hired Signal measurement, from May 1, 2021 - March 31, 2023, globally for job seekers, who faced at least one of the following barriers: education, criminal record, military experience, disability or lack of essentials such as a computer or internet access.
¹³ The initiatives as of today include providing assistance through the Company's online job platform, and through partnerships with NPOs and other organizations with whom the Company collaborates. The Company may also aim to reduce other various barriers, including newly emerging issues in the labor market by FY2030.
¹⁴ Senior executive positions are defined as Senior Vice Presidents and Corporate Professional Officers of Recruit Holdings and Matching & Solutions Strategic Business Unit (SBU), and CEOs of the Company's major subsidiaries and heads of key functions in the HR Technology and Staffing SBUs. The respective percentages of women in managerial positions and total employees are calculated from Recruit Holdings, SBU Headquarters and the primary operating companies of each SBU. Managerial positions mean those that have subordinate employees, including delegated contracting officers.
¹⁵ The Board of Directors members are defined as Directors and Audit and Supervisory Board members.
¹⁶ Compensation based on ESG target achievements is set as a part of board incentive plan (BIP) trust (stock) compensation. Eligibility to receive this compensation and the payout amount will depend on whether or not the three-year target is achieved.

Business Strategies of Each SBU

In support of the Company's strategies, each SBU's business strategies are as follows:

HR Technology

HR Technology aims to further grow HR Matching revenue globally through Indeed and Glassdoor while the demand for an efficient job seeking experience and hiring process empowered by technology continues to rise.

Matching & Solutions

In the future, Matching & Solutions will further expand its SaaS solutions, which are business support tools, to create an ecosystem that supports all economic activities related to the operations of our business clients, including fintech services.

Staffing

Staffing aims to achieve steady financial performance by providing job seekers with flexible working opportunities, and by offering employers a flexible workforce across a wide range of industries. Japan aims to maintain a stable adjusted EBITDA margin while Europe, US, and Australia focus on continuous improvement of adjusted EBITDA margin.

Capital Allocation Policy

The Company's capital allocation policy has the following priorities:

•	Product development and marketing expense for existing businesses for future growth
•	Continuous payment of stable per-share dividends
•	Strategic M&A mainly focused on HR Technology in the HR Matching Market
•	Share repurchase program, depending on the capital markets environment and the outlook of the Company's financial position

The Company focuses on achieving capital efficiency and applies a hurdle rate exceeding the cost of capital when evaluating each investment opportunity. The Company's ROE target is approximately 15%.

Risk Factors

Risk Management Structure

Internal Regulations for Risk Management

We consider risk management to be a key priority to ensure the continuity and stable development of our businesses and endeavor to take an active approach to risk management across our operations. We have established the Recruit Group Risk Management Regulations, which provide a comprehensive risk management structure and reporting system for the entire group, and the Recruit Group Escalation Bylaws, which aim to achieve prompt reporting and information sharing related to major issues within the Company.

Risk Management Committee

The Holding Company established the Risk Management Committee, which serves as an advisory body to the Board of Directors, with Senior Vice Presidents as members. The Committee monitors the status of each of the SBU risk management functions, and engages in comprehensive discussions concerning the risks affecting the Company based on a group-wide risk map addressing the risk items of the Company including each SBU. The Risk Management Committee then selects the high-priority risks of the Company and implements appropriate countermeasures including monitoring policies.

Risk Management Structure in the Holding Company and Each SBU

We have established the position of Director in charge of the Risk Management Division, and this Director also serves as our Executive Vice President. Because we believe that the viewpoints and perspectives appropriate for responding to such risks differ between Japan and overseas markets, we have assigned separate Senior Vice Presidents in charge of Japan (Risk Management Japan) and overseas (Risk Management International) matters to serve under the Risk Management Division of Recruit Holdings with the aim of responding to the high-priority risks applicable to each relevant region in a manner that is appropriate to the characteristics of such region.

The department in charge of risk management shares information and collaborates with our Internal Audit Department in a timely manner so that our Internal Audit Department can efficiently conduct operational audits of the status of responses to high-priority risks of the Company.

Risk management structure of each SBU is as follows.

a.

Subsidiaries of each SBU are required to carry out risk management functions by identifying relevant risks, assessing materiality of such risks, and implementing countermeasures in response to such risks. The SBU Headquarters of each SBU appoints personnel responsible for risk management within the SBU with the task of overseeing the risk management function of the SBU and monitoring the risk management status related to the business of the SBU including its subsidiaries.

b.

The SBU Risk Management Committee convenes on a semi-annual basis in order to assess and discuss the risks concerning the businesses operated under the SBU, determine high-priority risks relevant to the SBU and implement countermeasures, and monitor the risk management status of such risks. The Executive Vice President and Director in charge of the Risk Management Division of Recruit Holdings also participates in the SBU Risk Management Committee meetings to oversee the status of risk management functions in each SBU.

The Risk Management Division of the Holding Company, which oversees the secretariat of the Risk Management Committee, regularly reports on risk management activities to our Board of Directors, and has established a structure and reporting system that enables the Board of Directors to properly monitor the status of risks affecting the Company and the countermeasures in response to such risks.

High-Priority Risks and Key Countermeasures

Among the risks that may affect the Company's financial condition, results of operations and cash flows, the high-priority risks that the Directors and Senior Vice Presidents perceive to be of particular importance and require countermeasures are as follows.

For a detailed explanation of risks associated with Data Security and Data Privacy, which is identified as one of the high-priority risks below, please refer to "The Company may be subject to liability and regulatory action or suffer reputational damage if the Company is unable to maintain the security and the privacy of its data or maintain effective policies and procedures for the storage, management, usage and protection of personal, confidential or sensitive information." under the caption "Risks Related to the Company's Business" below.

Risks associated with Data Security and Data Privacy

Risk Awareness

The Company acquires, manages, and utilizes personal information, including the information of a large number of individual users, in each of our SBUs. We believe it is our obligation not only to comply with the laws of each area and country, but also to respect and protect the privacy of individual users in conformity with the expectations of society.

In the unlikely event of an incident involving personal information, this may not only cause great inconvenience to individual users, but we may suffer from a loss in the value and reputation of our brand and confidence in our services from our individual users. We are also aware that we may be subject to business suspension orders, fines and other sanctions by the authorities, as well as lawsuits filed by individual users or business clients, which could seriously harm the Company's operating results.

For this reason, the Risk Management Committee of Recruit Holdings and the Risk Management Committee of each SBU recognize that data security and data privacy are high-priority risks and continue to implement appropriate measures.

Key Countermeasures ¹

Depending on the importance of the data or information in our possession, as well as the characteristics of the data or information to be protected, we have established structures and reporting systems, and measures necessary for each country and area's laws and regulations. For example, we monitor for unauthorized access, detect and block computer viruses, preserve communications and access records that may be used for investigations, and conduct periodic vulnerability tests.

Countermeasures relevant to International

In order to meet industry requirements with regard to data privacy, we have established standards for responding to the laws and regulations in each jurisdiction, such as the GDPR in Europe, CCPA in the State of California, United States, and others. With regard to data security, we have established reference standards such as NIST, ISOs, and CIS20, according to the business and risk characteristics of each SBU.

Countermeasures relevant to Japan

With regard to data privacy, we have established a "Personal Data Policy" and established a privacy center. With regard to data security, we have established dedicated security departments, such as Recruit-CSIRT, to detect damage at an early stage, implement measures to minimize such damage and prevent data breaches.

The Company is proceeding with the implementation of the above measures upon consideration of the necessity of such measures as well as the order of priority of implementing various measures with respect to each subsidiary within the Company.

¹ Here, we describe the key countermeasures that we believe to be effective, as of the date of this document, in mitigating the anticipated impact of our high-priority risks on the performance of our businesses. However, it is possible that such countermeasures may not be effective due to a number of reasons, including information leakage caused by human error or voluntary acts by our personnel or other parties. In addition, even if such countermeasures are appropriately implemented, there is no guarantee that the risks affecting our businesses will be eliminated. Furthermore, it is possible that the significance or nature of the risks we face may change or that the effectiveness of our measures to address such risks may decrease due to amendments to existing laws and regulations or the introduction of new laws and regulations concerning the handling of personal information in the future, the development of new methods of unauthorized access or computer viruses or other factors.

Risks That May Affect the Company's Financial Condition, Results of Operations and Cash Flows

The Company is subject to a number of risks and uncertainties, including but not limited to those described below. Our business, results of operations, financial condition and cash flows could be materially and adversely affected by any such risks and uncertainties.

The following contains forward-looking statements, which reflect the Company's assumptions, estimates and outlook for the future based on the Company's plans and expectations as of March 31, 2022 unless the context otherwise indicates.

Summary

Risks Related to the Company's Business

1.	The Company's results of operations could be adversely affected by negative economic, social and geopolitical conditions in the Company's main operating markets and globally.
2.	Competition in the various industries in which the Company operates could reduce its profitability or result in a decrease in its market share.
3.	The Company may be unable to innovate and adapt with sufficient speed to meet the rapidly changing needs and preferences of its individual users and business clients.
4.	The Company must rapidly advance its technological capabilities.
5.	The Company may not succeed in executing its business strategies, and its estimate of the scope and size of its total addressable market may not be correct.
6.	The Company's past and future acquisitions, joint ventures and strategic alliances could fail to deliver the anticipated benefits or otherwise have an adverse effect on the Company's businesses and results of operations.
7.	The Company's expansive global operations expose it to various risks and challenges.
8.	The Company's inability to attract and retain qualified employees and maintain a positive work environment for its employees could harm its business and inhibit its ability to operate, grow and achieve innovation successfully.
9.	The Company may be subject to liability and regulatory action or suffer reputational damage if the Company is unable to maintain the security and the privacy of its data or maintain effective policies and procedures for the storage, management, usage and protection of personal, confidential or sensitive information.
10.	Information technology systems are a critical part of the Company's operations and any cyberattacks, systems failures or other disruptions affecting these systems could have an adverse effect on its business.
11.	The Company's software applications may contain defects.
12.	The Company's businesses are subject to various laws and regulations.
13.	The Company may be subject to legal and arbitration proceedings and litigation, which could be costly and could materially and adversely affect its brands, reputation, business and results of operations.
14.	Our reputation and those of our brands are important to our success, and any damage to them could materially and adversely affect our business, financial condition and results of operations.
15.	The Company relies on third-party service providers, such as search engine platforms, data center providers, payment providers, sales agents and Internet service providers in various areas of its business.
16.	The Company's advertising, sales and marketing efforts may be ineffective, may lead to increased costs and may negatively affect its revenue and margins.
17.	The Company's business operations are exposed to natural disasters, terrorism, pandemics, calamities or other factors.
18.	Any impairment of the Company's non-current assets, including goodwill and intangible assets, or fluctuations in the value of its securities holdings, could adversely affect its results of operations or financial condition.
19.	The Company may have additional tax liabilities.
20.	Fluctuations in currency exchange rates could materially and adversely affect the Company's business, financial condition and results of operations.
21.	The Company relies on borrowings to finance its operations, and factors such as increases in interest rates for its borrowings could materially and adversely affect us.
22.	The Company's operating results may fluctuate, which makes its results difficult to predict and could cause its results to fall short of expectations.
23.	The Company's stock price may be volatile or difficult to predict due to fluctuations in its operating results or other factors.

Detailed Description

1. The Company's results of operations could be adversely affected by negative economic, social and geopolitical conditions in the Company's main operating markets and globally.

The performance of the Company's businesses is generally sensitive to economic, social and geopolitical conditions in its main operating markets, including Japan, the United States, Europe and Australia, as well as global economic conditions more generally.

The Company operates its businesses through each of its three SBUs: HR Technology, Matching & Solutions and Staffing. In the Company's HR Matching business, the results of its operations are sensitive to negative developments in the labor and employment market resulting from economic downturns or uncertainty. In times of negative economic conditions, employers may reduce spending on job advertising and other job placement and staffing services or reduce hiring employees or temporary staff due to cost cutting initiatives or increased access to qualified job seekers without the use of advertising or other third-party services. Any such reduction in spending or hiring by employers would in turn reduce demand for the Company's HR Matching business.

In addition, in the Company's Marketing Solutions in its Matching & Solutions segment, adverse economic conditions may affect its business clients' demand for its services due to reduction in advertising expenditures and other cost reduction initiatives or changes in consumer spending activity that negatively affect their businesses. Negative economic trends also typically result in lower sales and downward competitive pressure on the pricing of the Company's services across its businesses, and the Company may be unable to reduce selling and administrative expenses without negatively impacting its market presence, quality of service, infrastructure or capacity to respond to future increases in demand for its services. As a result, the Company's results of operations have historically been negatively impacted by economic downturns.

The outlook for the economy in the Company's main operating markets remains highly uncertain and could be adversely affected by a range of economic, social and geopolitical developments.

For example, the COVID-19 pandemic and various government countermeasures have negatively affected economic activity globally, including consumer and business activity. Although economic conditions in some countries have shown signs of improvement, there is no assurance that this trend will continue.

In addition, with respect to Japan, the economic environment continues to be challenging due to a number of other factors, including rapid inflation in recent periods and longer-term challenges surrounding the impact of unfavorable demographic trends in Japan such as the declining birthrate and the decline and aging of the overall population. Additionally, political and economic tension between the United States and China poses challenges. Any of these regional factors as well as factors outside of the Company's main operating markets, including the impact and potential escalation or prolonging of the military conflict between Russia and Ukraine and related international sanctions imposed on Russia, which have caused significant increases in energy prices, volatility in financial markets and other disruptions, as well as a slowdown of economic growth in China and the potential escalation of geopolitical risks associated with the Middle East, Taiwan and North Korea, could impact the regional economy and the global economy more generally.

While restrictive measures intended to control the spread of COVID-19 have been relaxed in many countries, it is possible that such measures or additional measures could be reimposed in the event that infections increase due to the emergence of new variants or other reasons. Accordingly, the future economic impact of the COVID-19 pandemic and any countermeasures adopted in response thereto remains uncertain and may vary significantly in terms of severity and duration depending on the country, and it is possible that economic conditions could be affected in some or all of the Company's main operating markets for an extended period.

The Company's SBUs suffered from varying impact of COVID-19. For HR Technology, strong hiring demand of business clients continued as restrictive measures have been relaxed and economic activities have recovered in many countries, but more recently, as a result of increasing interest rates in the United States and widespread layoffs in the technology sector, there are concerns among business clients of an economic downturn, which has resulted in a decrease in hiring activities and a return to more normal balance between supply and demand. Despite these trends, because the balance between supply and demand in the Japanese and European labor markets has not yet returned to normal levels to the same degree as in the United States, revenue of HR Technology has continued to show an increasing trend. However, there is no assurance that this trend will continue and job advertising revenue on HR Technology could be adversely impacted if and when the labor market normalizes and competition for talent between companies eases.

The Matching & Solutions segment comprises Marketing Solutions and HR Solutions which mainly operate in Japan. While economic activities such as travel, dining and weddings are on a recovery trend, the outlook is uncertain as those businesses are susceptible to changes in the business environment including the imposition of COVID-19 related preventative measures. Also, this segment may be impacted by more lasting changes in demand for these services in Japan in response to COVID-19 such as fundamental societal shifts in attitudes towards travel, dining or wedding ceremonies. Revenue will continue to decline to the extent business clients temporarily suspend spending on advertising or choose lower priced advertising packages as a result of the weak business environment.

In HR Solutions, while hiring demand is on a recovery trend as business clients' operations gradually recover, the outlook is uncertain as hiring demand is expected to fluctuate depending on the business environment.

The Staffing segment comprises Japan and Europe, US, and Australia. For Japan, although demand for temporary staff showed a recovery trend in the fiscal year ended March 31, 2023, it is uncertain how sustainable the recovery trend will be. For Europe, US, and Australia, although revenue showed a growth trend in the fiscal year ended March 31, 2023 as economic activities recovered, it is uncertain how sustainable the recovery trend will be.

2. Competition in the various industries in which the Company operates could reduce its profitability or result in a decrease in its market share.

The markets in which the Company operates are highly competitive, and competition has generally intensified in recent years across its businesses. In particular, certain of the Company's operating markets have relatively low barriers to entry, which enables new competitors, including those operating in different industries, to enter these markets relatively easily.

In addition, the Company's ability to keep pace with increasingly rapid advances in technology is also a key competitive factor in many of its businesses. If the Company fails to adapt to changes in technology or if its competitors develop more advanced technologies than those of the Company, its competitive position and market share could be materially and adversely impacted. The Company may be unable to maintain its competitive position in its operating markets by relying on the strength of its brands, its ability to navigate current laws and regulations, financial resources and individual user and business client bases or other competitive advantages.

The Company's current and potential competitors include large global technology companies, including platform businesses, and a variety of global and regional companies operating in one or more of its target markets. These companies may have more advanced technological resources, more compelling business models, greater financial resources, more competitive pricing or ability to provide such pricing, greater global or regional brand awareness, larger user bases, stronger relationships with business clients, greater access to potential employees, temporary staff and other personnel or superior service, sales, marketing and other resources than the Company has.

Market shares, particularly in Internet-based services in the Company's HR Technology and Matching & Solutions segments, have in the past been subject to significant shifts from time to time due to the relative ease for individual users to switch to other services. As a result, the Company's ability to compete effectively depends on its ability to achieve continued innovation and to improve the functionality of existing services and introduce compelling new services in order to effectively respond to the evolving needs and preferences of individual users and business clients.

If the Company fails to keep providing services that gain market acceptance among individual users and business clients and are differentiated from services provided by its competitors, the Company's competitive position and market share could be materially harmed.

The Company's Matching & Solutions segment has a strong market position and has achieved the top market share in terms of revenue for many of its core businesses in Japan, which may make future growth for these businesses more challenging relative to other businesses. If the Company is unable to convince its business clients to maintain or increase their spending with it or if the Company is unable to expand its client base, the Company may not be able to continue to grow these businesses. Even if the Company is able to maintain and further increase its market share, the Company's margins may decrease if the Company is forced to undertake additional advertising and marketing expenditures, lower its pricing for existing services or introduce new services with lower profitability to do so.

3. The Company may be unable to innovate and adapt with sufficient speed to meet the rapidly changing needs and preferences of its individual users and business clients.

The Company's business model depends on its ability to offer individual users and business clients services that meet their respective needs and preferences. Accordingly, maintaining the Company's competitive position and market share requires that the Company adapt quickly to changes in such needs and preferences.

For example, increased use of the Internet, social network platforms, mobile devices and other new technologies, such as video conferencing and voice activated speakers, has resulted in information being available more rapidly in real time while new technologies have made it relatively easy for new entrants to build user bases relatively quickly without significant investment. In particular, the Company's ability to offer effective mobile applications that provide individual users with an appealing, easy-to-use mobile experience is an increasingly important factor in maintaining and growing its individual user base and direct user traffic for many of its online services. These and other changes in technology and user behavior have in turn resulted in changes in the needs of the Company's business clients.

The Company must invest significant resources to continually enhance and improve its existing services and to introduce new and innovative features and services that are compelling to individual users and business clients and respond effectively to rapidly evolving technology and the way it is used or implemented by individual users or business clients. If the Company is unable to accurately identify and understand the changes in the needs of its individual users and business clients, including the appropriate balance between such changes in the needs and interests of its individual users and business clients, or if the Company fails to improve or develop its products and services to meet the needs of its individual users or business clients and predict or respond to technological changes in a timely and cost effective manner before its competitors, the Company's individual users and business clients may discontinue use of its products and services.

The Company's businesses are also affected by changes in business client preferences and how and to what extent business clients choose to use its services.

A substantial portion of the Company's revenue is generated from business clients advertising on the Company's online platforms in its HR Technology and Matching & Solutions segments. For certain services, the Company provides more flexible arrangements to meet the needs of business clients including SMEs, and contracts with such business clients are sometimes in the form of relatively short-term advertising arrangements. These short-term arrangements may expose the Company to the risk that its business clients may switch their advertising to competing platforms or reduce the amount of their spending on the Company's platforms, or may not continue to do business with the Company entirely.

In addition, the Company's business clients could decide to reduce or eliminate the budgets they are willing to commit to it if the Company does not provide effective advertising solutions, or if they do not believe that their investment in advertising with it will generate a competitive return relative to other alternatives.

Individual user preferences may change in a manner that increases the Company's costs, such as expenditures required for development of new features or services or increased expectations for user perks or other programs that result in additional costs.

In addition, initiatives taken to respond to rapid changes in individual user needs or preferences can reduce the profitability of the Company's existing services and business models, and there is no assurance that the Company will be able to adjust its business models, including maintaining the appropriate balance between the needs and interests of its individual users and business clients, or develop new business models that allow it to maintain profitability.

4. The Company must rapidly advance its technological capabilities.

The markets in which the Company competes are characterized by rapidly changing technologies, which in turn impact individual user and business client demands and the competitive environment more generally. The Company accordingly believes it is critical to continuously invest in and improve its technological capabilities, the functionality of its system infrastructure and the reliability of its products and systems in response to technological innovation.

In addition, because many of the Company's services are provided over the Internet, the Company needs to continuously modify and enhance its platform to keep pace with changes in Internet-related hardware, software, communications and database technologies and standards. If the Company is unable to respond in a timely and cost-effective manner to these rapid technological developments and changes in standards, the Company's platform may become less marketable, less competitive, or obsolete, and its operating results will be harmed. In addition, the Company may be required to make significant investments in order to advance its technological capabilities, which could in turn impact its profitability.

Developing new technology presents significant technical and business challenges and risks, including the following:

―	the Company may invest in technologies or uses of technology that ultimately fail to deliver the benefits the Company anticipates or become obsolete by the time they are launched or fully implemented;
―	the Company must attract, train and retain highly skilled engineers and managers in order to build, maintain and expand its information technology services and achieve innovation, and these engineers and managers may be difficult to recruit and expensive to retain;
―	the number of different types of mobile devices in use, or the applicable technical standards, could further diversify including as the result of the adoption of 5G mobile technology across the Company's operating markets, substantially increasing its product development and modification costs, and the Company may be unsuccessful in developing appealing products for these devices;
―	the Company may fail to maintain or update its technological infrastructure, products and systems to rapidly changing industry or technical standards;
―	the cost of upgrading the Company's technology or implementing and operating new technology may be substantial and such upgrades or implementations may not be cost effective;
―	any upgrades to the Company's technology and infrastructure may not achieve the desired results or may otherwise prove ineffective;
―	the Company may face competition from businesses that have implemented new technology faster than it or make better use of such technology than the Company does;
―	products and services incorporating new technology may contain bugs, defects or other design flaws; and
―	the continuous development of new devices and technologies makes it difficult to predict future trends in the areas in which the Company operates.

5. The Company may not succeed in executing its business strategies, and its estimate of the scope and size of its total addressable market may not be correct.

In order to achieve further growth of the Company's business, the Company has adopted a number of business strategies as well as its long-term strategic objectives for each of its operating segments. The Company's business strategies entail achieving sustainable growth through the development of a broad, geographically diverse portfolio of businesses and calls for the expansion of existing businesses along with entry into and development of new businesses, in part through prudent use of strategic alliances and acquisitions. Furthermore, the Company's strategies may not be effective, or the Company may be forced to change its strategies in the future due to any number of factors.

The Company has established a number of strategies for each of its operating segments that the Company believes will allow it to achieve long-term revenue and profit growth. However, each of these strategies is subject to a number of risks and uncertainties, including the following:

HR Technology

In the Company's HR Technology segment, the Company intends to pursue continued growth in its online job advertising business including through the Indeed and Glassdoor hiring platforms, while expanding its capabilities through continued growth investments including acquisitions. However, the Company's ability to achieve growth may be largely impacted by developments in overall economic and labor market conditions.

In addition to these external factors, revenue growth may also depend on the Company's ability to grow its user and customer base, increase the number of sponsored jobs as well as prices for its hiring services as it automates more of the recruiting process for its customers. Revenue growth of the HR Technology segment will also depend on its ability to capture a larger share of the HR matching market.

In addition, the Company's recruitment automation solutions may not grow at the pace the Company currently anticipates due to a variety of factors, such as business clients' being less willing to adopt recruitment automation than the Company expects.

Also, the Company may fail to capitalize on anticipated market opportunities for a variety of reasons, such as its failure to adapt to new technologies, changes in the needs of individual users and business clients in the employment market and the constantly evolving regulatory and competitive landscape. As a result, there is no assurance that the Company will be able to achieve growth to the extent the Company expects or at all, or that its investments will achieve the expected benefits.

Matching & Solutions

In the Company's Matching & Solutions segment, the Company operates its online platforms as well as SaaS solutions targeting SMEs for its Marketing Solutions and HR Solutions businesses. The Company may be unable to grow its business in this segment if SMEs do not adopt its SaaS solutions including Air BusinessTools or its online platforms to the extent or within the timeframe the Company expects, or if the Company is required to incur significant costs to acquire new clients, whether due to the Company's failure in effectively acquiring new individual users or SMEs as business clients or the Company's services being less attractive or innovative than those offered by its competitors.

Staffing

In the Company's Staffing segment, the Company intends to focus on improving profitability across its global operations. However, the Company may experience decreases in profitability, or be unable to achieve improvements in profitability to the extent the Company expects due to the tightening of regulations in any of its major operating environments, or other factors.

The Company also intends to invest in expanding its presence in the market for its HR Matching business. While the Company's HR Matching business currently operates in the online job advertising market through its HR Technology and Matching & Solutions segments, the Company also intends to continue expanding technology-driven solutions from its HR Technology segment that offer different pricing models and create cost efficiencies through automation of traditional human-driven processes in the direct hire, retained search, internal recruitment automation, and temporary staffing markets. For example, the Company has introduced Indeed Hiring Platform, a product that allows employers to manage the hiring process - from posting through interview - directly on Indeed with no additional software.

However, there can be no assurance that the Company will be able to successfully develop and introduce such solutions or that its solutions will gain market acceptance, and the Company may be unable to achieve a return on its investments in these new solutions. Moreover, although the Company has a long-term vision of offering cloud-based recruitment automation solutions that connect job seekers and employers without traditional human-driven processes, there is no assurance that the Company will be able to realize this vision due to a number of factors, including its failure to develop effective solutions or the lack of demand for such solutions materializing or regulatory restrictions. In addition, even if the Company is successful, such development may also result in a reduction in the profitability of its existing traditional businesses.

In assessing its market opportunities, the Company estimates the total addressable market for its businesses based in part on third-party data and in part on its own market research and assumptions. However, there can be no assurance that any estimates of the Company's total addressable market are accurate indications of its actual growth opportunities. In particular, certain of the Company's targeted markets, such as the internal recruitment automation market, are in the early stages of development, which makes the opportunities in these markets inherently difficult to estimate. As a result, the growth opportunities of the Company's businesses may be less than expected, and the Company may misallocate resources in pursuing such growth opportunities.

As the Company expands its existing services or launches new ones, the Company may face intense competition, greater than expected costs in establishing or expanding services and hiring and training the necessary personnel, difficulties predicting market and individual user and business client trends and the performance of its new businesses, returns from new initiatives that are smaller than expected or slower to materialize, unanticipated costs and difficulties, or other challenges that prevent it from successfully realizing its business goals.

On the other hand, it is also possible that the Company may need to exit from existing businesses or withdraw from planned investments or expansions if the Company determines that such business would not yield the desired impact or the growth potential of such business could not justify the required investment outlay. In these cases, such an exit or withdrawal may cause the Company to incur substantial costs and its business, financial condition and results of operations could be materially and adversely affected.

6. The Company's past and future acquisitions, joint ventures and strategic alliances could fail to deliver the anticipated benefits or otherwise have an adverse effect on the Company's businesses and results of operations.

As part of the Company's business strategy, the Company has actively engaged in acquisitions, minority investments, joint ventures and other strategic alliances with third parties primarily to expand its businesses globally, acquiring new users, to expand its product and service offerings and acquiring related technologies. For example, the Company acquired Glassdoor, Inc. in June 2018 in order to expand and strengthen its HR Technology segment. The Company intends to continue to pursue acquisitions and other strategic investments or alliances in the future as attractive opportunities emerge.

Acquisitions, strategic investments and alliances entail a number of risks, including, among others:

―	expenses incurred and difficulties in integrating or assimilating the operations, technology, personnel and culture of acquired businesses;
―	the inability to realize the synergy effects, such as technological development, expansion of individual user traffic and business client base or cost reductions, that were anticipated in connection with the transaction;
―	the difficulty in ensuring that an acquisition reaches its required regulatory compliance standards;
―	the potential disruption of, and the distraction of management from, the Company's regular business operations;
―	difficulties and substantial costs in connection with retaining the individual users, business clients, key management or employees of an acquired company;
―	the possibility that strategic alliance partners could later become competitors and utilize the know-how and business relationships they developed or acquired while in partnership with the Company;
―	the failure to ensure that the companies acquired operate in accordance with the Company's regulatory compliance standards;
―	with respect to foreign acquisitions and global expansion, uncertainty regarding, and changes in, foreign laws and regulations, local restrictions on foreign investments and challenges with respect to different employee/employer relationships, labor conditions, existence of workers' councils and labor unions, cultural, linguistic or operational differences and additional risks arising from the local and regional social, political, regulatory and economic environment;
―	the possibility of overestimating the value of an acquired company, underestimating its legal or contingent liabilities or receiving insufficient indemnification of liabilities or insufficient escrowed amounts or insurance to secure such indemnities from the seller;
―	recording significant goodwill and intangible assets that could be subject to future impairment, as described elsewhere in this section; and
―	incurrence of additional debt in connection with financing acquisitions and investments.

As a result of such risks, the Company may not be able to fully realize the benefits that the Company anticipates from any given transaction, including increased revenue and profits and other expected strategic benefits, within the expected timeframe or at all.

Furthermore, for strategic reasons, the Company has in the past acquired and may in the future acquire target companies that are unprofitable, and the consolidation of such target companies into its overall results may materially and adversely affect its consolidated financial condition and results of operations.

Although the Company conducts due diligence reviews of acquisition targets, there can be no assurance that its due diligence process will disclose all relevant risks, legal, compliance or regulatory issues, losses and other liabilities or that its assessment of the target's risks and liabilities will be accurate. In particular, with respect to acquisitions and investments in the technology sector, the Company may have difficulty accurately assessing the future viability and growth trajectory of target companies or technologies, especially where the relevant technologies are in the early stages of development and still relatively untested or are rapidly evolving in ways that are difficult to predict. As a result of these uncertainties, technology companies that the Company acquires may not attain profitability in the timeframe the Company expects or at all, and the Company may be unable to achieve the expected benefits from its investment.

The Company may also face uncertainties when the Company acquires companies with a limited operating history or a management system that requires improvement, which is often the case for early stage companies the Company targets in the technology sector, including potential compliance issues or liabilities that were not identified in due diligence. Accordingly, such risks, losses or other liabilities could have an adverse impact on the Company's business, financial condition and results of operations.

In addition, in cases where the Company acquires non-controlling interests in entities, the Company may not have the capability to effectively monitor or exercise control over the management of the entities in which the Company invests or the direction that the entity will take. As a result, the Company may not be able to cause any companies in which the Company holds non-controlling interests to implement what the Company views as optimal management policies or strategies that would enable it to achieve the expected benefits from strategic investments. This could have an adverse effect on the Company's business, financial condition and results of operations. In addition, joint ventures and other strategic alliances could limit the Company's future flexibility to work with other potential partners.

While the Company intends to continue to explore future opportunities for acquisitions, business alliances and other strategic investments, there is no assurance that the Company will be able to correctly identify attractive opportunities. Even if the Company does correctly identify potential acquisitions, alliances and investments that the Company believes would further its growth strategy, the Company may be unable to negotiate favorable terms with the target company or otherwise be unable to pursue the opportunity due to its inability to secure the necessary financing or obtain necessary regulatory approvals or other reasons.

7. The Company's expansive global operations expose it to various risks and challenges.

The Company has operations in a number of countries and regions including Japan, the United States, Europe and Australia, and the Company is working to further expand its businesses globally. However, the performance of its operations in any particular country or region could suffer or might otherwise fail to meet its expectations due to the following factors, among others:

―	adverse economic conditions in the global economy or in its main operating markets as a result of the COVID-19 pandemic;
―	poor regional or national economic and political conditions that could adversely impact, among other things, the advertising spend of its business clients;
―	difficulties complying with legal or regulatory requirements and oversight by local regulators;
―	changes in legal or regulatory requirements that could impact its operating strategies, access to global markets, hiring, and profitability;
―	differing individual user and business client expectations and preferences;
―	lower availability of Internet access and adoption of mobile devices;
―	taxation issues;
―	difficulties adapting to local market practice or local culture and customs;
―	labor disputes or strikes;
―	adverse political developments or general political uncertainty;
―	linguistic and communication difficulties;
―	a worsening of international relations involving any of the countries in which the Company operates;
―	seasonal reductions in business activity;
―	a higher risk of litigation in certain regions;
―	restrictions on share ownership by foreign entities;
―	difficulties hiring and retaining highly skilled management personnel, engineers and other staff;
―	lower brand name recognition; and
―	difficulties in monitoring business the Company conducts across a diverse range of countries and regions.

Unfavorable performance of the Company's global operations for the above reasons or any other factors would have an adverse effect on its businesses and results of operations. In addition, the Company's exposure to the risks discussed above will increase as its global operations continue to expand.

8. The Company's inability to attract and retain qualified employees and maintain a positive work environment for its employees could harm its business and inhibit its ability to operate, grow and achieve innovation successfully.

For the Company's businesses to be successful, many of its employees must have high levels of technical skill and know-how, strong client relationships and client management skills, a thorough understanding of relevant markets and other specialized knowledge, and have a strong drive to innovate, all of which are in high demand in the Company's industries.

In order for it to remain competitive, grow its businesses and adapt its business models to changing markets, the Company needs to attract, develop and retain talented personnel in a number of areas including management, engineering, sales, and other fields and develop a diverse workforce that brings a wide range of unique backgrounds and perspectives to its businesses. The Company must also continually train its employees to respond to changes in the market for its products and services and evolving technology.

In addition, the Company must also maintain a positive and safe work environment that provides the necessary support and flexibility for its employees and temporary staff in its temporary staffing business, including allowing for remote working arrangements where necessary. Any failure to maintain a positive working environment could result in the infringement of the civil rights of such employees or temporary staff, which could harm the Company's reputation and brands or materially and adversely affect its business, financial condition and results of operations.

Any failure to hire, train, retain, motivate and manage the required workforce may limit the Company's growth, damage its reputation, negatively affect its financial performance, impede its ability to achieve innovation and otherwise harm its business.

In particular, talented and experienced IT engineers have become increasingly important in the Company's HR Technology and Matching & Solutions segments. Due to the Company's increasing dependence on and the scarcity of such engineers, the Company's success going forward depends in part on its ability to continue to recruit, train, develop and retain such personnel, which could have a negative impact on its profitability if the Company is required to pay higher compensation to secure or retain qualified personnel.

If the Company loses key personnel, including key members of its management team and engineers, to competitors or at a rate greater than the Company anticipates, or if the Company has difficulty attracting new, highly talented employees, the Company's reputation and its business, financial condition and results of operations could be materially and adversely affected. There is also a risk that a former employee could utilize knowledge and business relationships developed while employed with it in a competing business.

9. The Company may be subject to liability and regulatory action or suffer reputational damage if the Company is unable to maintain the security and the privacy of its data or maintain effective policies and procedures for the storage, management, usage and protection of personal, confidential or sensitive information.

Due to the nature of the Company's business operations, and the large number of individual users who utilize its services and transmit and store personal information through its systems, the Company possesses a substantial amount of personal, confidential or otherwise sensitive information with respect to current, past or prospective individual users, business clients, and business partners.

The requirements under the Act on Protection of Personal Information of Japan (Act No. 57 of 2003, as amended), or the Act on Protection of Personal Information that apply to the Company's handling and use of personal information in its Japanese operations have become more stringent. The Company is also subject to laws and regulations regarding personal information in the other countries in which the Company operates, such as the General Data Protection Regulation, or the GDPR, in the EU. Furthermore, many individual US states, such as California, which enacted the California Consumer Privacy Act of 2018, or the CCPA, as amended by the California Privacy Rights Act of 2020, or the CPRA, which will go into effect in 2023, are also increasing regulatory compliance standards regarding the handling and use of personal information.

Certain of these regulations impose fines or direct liability on businesses for data breaches where data security systems are found to be inadequate, in some cases regardless of harm to the affected users, and the potential amount of fines or liability can be substantial. For example, certain violations of the GDPR and the CCPA can result in significant fines or liability, even in some cases where individual users experienced no harm. Compliance with these laws and regulations, the requirements and interpretations of which may differ significantly from country to country, has become more complex in recent years due to the increasing awareness of management of personal, confidential and sensitive information.

Accordingly, the cost of complying with these laws and regulations is substantial and has been increasing. In addition, such laws and regulations related to the handling and use of personal, confidential and sensitive information have become stricter in recent years and may become even more stringent in the future, or the Company may change its policies concerning handling and usage voluntarily or in response to violations of applicable laws and regulations, perceived wrongdoing or for other reasons. As a result, it may become difficult for it to utilize certain information that is critical to the Company's existing products and services or to develop new products and services, which in turn may harm its ability to maintain or grow the number of the Company's individual users or business clients.

Authorities in various countries are considering a number of legislative and regulatory proposals concerning data protection, including measures to ensure that encryption of users' data does not hinder law enforcement agencies' access to that data. In addition, as many consumer and data protection laws and regulations have been in force for a relatively short period, the interpretation and application of consumer and data protection laws and regulations are often uncertain and in flux, and it is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with the Company's current data practices.

If the Company fails to comply with any such laws and regulations, the Company could suffer damage to its reputation and its brands, including loss of confidence in its platforms by individual users, business clients or other third parties or in its ability to manage its businesses by current or potential individual users, business clients and business partners. The Company could also be subject to liability or regulatory investigations or legal or other actions from regulators, users or other third parties relating to actual or alleged violations of laws and regulations surrounding data protection and privacy or otherwise. Any new restrictions or limitations relating to data protection and security may result in the deterioration of the quality of the Company's products and services that rely on data and its overall competitive advantage, and possibly result in a loss of individual users or business clients or necessitate a revision or overhaul of its business models and strategies.

The personal and other data the Company collects in connection with its business as well as the technologies the Company uses to manage this data have become increasingly important parts of its business, and the Company relies on the integrity of its systems and security procedures to ensure adequate protection of its data.

However, there can be no assurance that the Company's efforts to ensure the security and proper management of such information will be fully effective. In particular, the Company has in the past experienced cyberattacks of varying degrees targeting its services, and there can be no assurance that such attacks will not occur in the future or that the Company will be able to successfully protect its data from unauthorized access in the event of any future attacks.

In such an event, the number of individual users affected, due to the size of the Company's user base, could be extremely large, potentially resulting in a correspondingly large liability. In addition to cyberattacks, information could be leaked or improperly accessed, used or handled as a result of a range of factors including third-party security breaches, system failures or errors, software bugs, inadequate policies or procedures, employee error, malfeasance, hacking, theft, faulty password management or other irregularity.

Any unauthorized disclosure or use of, or other failures to properly store, manage or protect, personal, confidential or sensitive information, including any failure to obtain valid consent from affected individual users or business clients, could adversely affect the Company's businesses in a number of ways, including legal liability stemming from claims from individual users, business clients, temporary staff or other third parties, or government investigations, actions or sanctions.

The Company may also incur additional expenses associated with updating or strengthening its systems, policies and procedures, either voluntarily or in response to administrative guidance or other regulatory initiatives. In addition, such incidents could create a negative public perception of the Company's operations or harm its reputation and brand, which could in turn decrease its individual users' and its business clients' confidence in it and damage its relationships with them, causing current or potential individual users or business clients to decline to use its services.

10. Information technology systems are a critical part of the Company's operations and any cyberattacks, systems failures or other disruptions affecting these systems could have an adverse effect on its business.

The analysis, storage, retrieval, management and security of large amounts of data is an important part of the Company's business. Any impairment in the reliability or availability of, or any security breach in, the Company's information systems due to cyberattacks, systems failures or other factors could:

―	have an adverse effect on its products and services and their continued availability;
―	result in negative publicity about it or its brands or harm its brand strength, reputation and relationships with individual users and business clients;
―	harm the continued adoption of its services by individual users and business clients or negatively impact accessibility, performance and load times of its services, which could cause a loss of individual user or business client traffic on its services;
―	subject it to legal and regulatory risk including litigation, government investigations or other legal actions;
―	result in large monetary judgments or a duty to remediate against it, or result in it voluntarily offering monetary or other compensation to affected parties; and
―	materially and adversely affect its business, results of operations and financial condition.

Although the Company has implemented policies and procedures to address these risks, no system can be designed to be completely immune to breaches or outages. The Company's systems are not fully redundant and its disaster recovery planning may not be sufficient. System interruptions and malfunctions can occur for a number of reasons, including cyberattacks, hacking, computer viruses, sabotage, human error, natural disasters, power failures, software errors, hardware problems, network failures, terrorism, geopolitical conflict, difficulties with the Company's service providers, overwhelming online traffic and similar factors.

In particular, cybersecurity-related attacks, intrusions and disruptions, including through spyware, viruses, phishing, denial of service and similar attacks by criminal organizations, hackers, foreign governments and terrorists, have become increasingly prevalent in the Company's industry. The Company has in the past experienced cyberattacks of varying degrees targeting its services, and there can be no assurance that such attacks will not occur in the future or that the Company will be able to successfully defend its systems from any future attacks. In addition, the Company has seen, and expects to continue to see, industry-wide vulnerabilities, such as the Log4j vulnerability reported in December 2021, which could affect the Company's and other parties' systems.

Certain of its services have also experienced downtime due to systems disruptions or other outages. As the Company expands its information technology-based offerings to support business clients' workflows, the Company may be more likely to experience malfunctions of this kind despite any preventative measures the Company may take, which may result in legal liability for damages or voluntary compensation or other costs or in damage to its reputation.

For example, as part of its efforts to expand operational and management support services for its business clients including SMEs, the Company launched Air BusinessTools, which includes such cloud-based services as point-of-sale (POS) and payment systems. If the Company experiences systems failures in connection with such services, the Company may be held responsible by its individual users and business clients for losses, and the perception of the reliability of its services and its overall reputation could be negatively impacted.

In addition, the Company depends on third parties to provide and maintain certain of its information systems, and accordingly some system problems and failures may be outside of its control. For example, the Company relies on third-party cloud infrastructure providers to host all of its cloud-based services, and its reliance on cloud infrastructure providers will increase as the Company intends to migrate more of its services and data storage to cloud infrastructure in the future. Potential security breaches to the systems of these third-parties, whether resulting from internal or external sources, could significantly harm its business. Furthermore, the cost of developing, maintaining and expanding its information technology infrastructure could also increase substantially in the future.

11. The Company's software applications may contain defects.

The Company provides certain of its services to individual users and business clients through software applications and in some cases, such as AirPAY, a payment system service offered through Marketing Solutions in its Matching & Solutions segment, hardware devices, including mobile and online applications that are highly technical and complex.

The Company's software applications or hardware devices may contain bugs and other defects that interfere with their intended operation that the Company is unable to detect prior to introducing the relevant service. Any defects the Company does not detect and fix may prevent it from providing its services in a responsive and reliable manner and could cause degradations or interruptions of service, negative experiences for individual users and business clients, repair or remediation costs, delays in the release of new products or versions, difficulties in adequately protecting the data of its individual users and business clients or legal liability from various issues such as loss or leakage of confidential or personal information or under applicable regulatory regimes. In particular, as many of its online services have significant user bases, any defects in the Company's software applications could potentially affect a significant user population.

As a result of any such defects, the Company may suffer damage to its reputation, loss of individual users or business clients, loss of revenue or liability for damages, any of which could adversely affect its business and financial results.

In addition, in certain of its businesses, the Company provides its business clients with platforms through which they operate key business functions, such as online reservations, POS, cash registers, payments, and attracting and connecting with individual users.

If there is any defect in the software used to provide these platform services, the Company's business clients may experience disruptions in their business operations or losses or leakage of sensitive or personal data relating to their business or their users, and the Company expects its exposure to these risks will increase as the Company expands its SaaS business through Air BusinessTools, a comprehensive suite of tools aimed at enhancing the efficiency and productivity of business clients including SMEs, in its Matching & Solutions segment.

12. The Company's businesses are subject to various laws and regulations.

The businesses that the Company currently operates, as well as those that the Company may operate in the future, span many fields and countries and consequently are subject to a variety of laws and government regulations such as personal information and data protection, electronic communications, consumer reporting, labor, civil rights and social welfare, anti-bribery, taxation and antitrust laws.

Furthermore, the Company is required to obtain government permission or approval or to register for licenses in order to conduct certain of its businesses, and certain of its businesses are subject to supervision and monitoring by regulatory authorities.

Being subject to these laws and regulations exposes its businesses to certain risks. As a general matter, the legal and regulatory structures that apply to the Company's various businesses are complex and even an inadvertent failure to comply with them could result in fines, penalties, losing permission to operate some of its businesses, being ordered to suspend operations, litigation and other legal proceedings and have an adverse effect on its reputation.

Furthermore, future changes in such laws or regulations or entry into new regulated businesses could necessitate costly compliance expenditures and increase the risk that the Company could fail to comply with applicable requirements or miss business opportunities as a result of restrictions imposed or delays caused by responding to such changes in laws or regulations.

Any new or amended laws and regulations may require it to change its business models or practices, or may prevent it from conducting existing businesses or entering into new businesses, which could adversely impact its business and results of operations and impede it from executing its growth strategy as planned.

For example, there have recently been active discussions among companies globally regarding civil rights and social welfare issues, and if the Company is unable to appropriately respond to changes in the laws and regulations concerning such issues, the Company's brand and reputation may be adversely affected. In addition, taxes imposed on the use of social media, digital services or other mobile applications in certain countries, or other actions by governments that may affect the accessibility of its products or users' technology usage patterns in their countries, may cause a decline in its individual users' engagement with its products.

HR Technology

The Company's HR Technology segment is subject to various laws and regulations. For example, in the United States, the Company's activities may be subject to the Communications Decency Act, the CCPA (as amended by the CPRA), the Telephone Consumer Protection Act, the Wiretap Act, the Stored Communications Act and the Fair Credit Reporting Act as well as various state legislation covering the same or similar topics. In addition, the Company's HR Technology segment is, or is expected to be, subject to other regulations including the GDPR, the Digital Services Act and the Digital Markets Act in the EU and the Act on Protection of Personal Information and the Employment Security Act in Japan. Moreover, legislation regulating the use of Al has been proposed in the EU, and a blueprint for an Al Bill of Rights has been announced in the United States.

If any new laws and regulations are introduced or enforced, or if existing laws and regulations are amended or interpreted in a manner that is unfavorable to us, the Company's HR Technology segment operations may become subject to additional restrictions and costs, and it may require significant time and resources to respond to any new or amended laws or regulations.

Additionally, Indeed is considered an "online platform" under the Digital Services Act. This places certain obligations on the Company, such as transparency obligations for advertisements. Moreover, if the number of users increases and exceeds a certain level in the EU region in the future, further requirements on recommendation systems, etc. would be imposed, and compliance with these obligations may impact the Company's business and results of operations.

There are currently legislative proposals to amend the Communications Decency Act in the United States to significantly increase the Company's potential liability by eliminating or reducing immunities currently available to its platforms which publish material posted by third parties, such as reviews and job solicitations. As another example, the proposed Algorithmic Accountability Act in the United States, similar proposed laws regarding Artificial Intelligence, and interpretations of existing U.S. civil rights laws, may require it to undertake additional compliance costs in implementing its search algorithms and may reduce the effectiveness and confidentiality of its algorithms depending on the extent of government intervention.

Other laws may restrict the use of algorithms or background checks regarding potential employee candidates or even the ability to make recommendations regarding candidates, all of which could have a negative impact on its business. In addition, there are a variety of new laws and proposals in the United States on the federal, state and even local levels placing new security and privacy obligations on companies that handle personal data which could place burdens on the Company that may negatively affect its business.

Additionally, legislators are examining companies that maintain digital marketplaces, such as the Indeed search engine, and may place restrictions on companies placing their own products on such marketplaces. The applicable laws and regulations in the technology sector are still evolving, particularly in Europe and the United States, and more stringent laws and regulations concerning the technology sector may be implemented in the future.

For example, if new requirements or restrictions are imposed on the collection, use and analysis of information regarding user behavior in connection with its services, the Company may be restricted from using such information as planned and be forced to change its strategy and business practices.

As a result of any of the foregoing, the business, financial condition and results of operations of its HR Technology segment may be adversely affected.

Matching & Solutions

In the Company's Matching & Solutions segment, the Company's various services are subject to a number of laws and regulations. For example, the Company is subject to personal information and data protection laws relating to individual user and business client data stored on its systems. With respect to the Company's payment business of its Marketing Solutions, which is offered through AirPAY, which is a cloud-based payment service, the Company is also subject to regulations under the Installment Sales Act of Japan (Act No. 159 of 1961, as amended), or the Installment Sales Act, and are operating with the registration from and under the supervision of the Minister of Economy, Trading and Industry.

In addition, the Company's placement service of its HR Solutions operates on a fee basis with the permission of the Minister of Health, Labour and Welfare in compliance with the Employment Security Act. Changes to the applicable regulations could affect the pricing of the Company's fees. Noncompliance with applicable laws, rules and regulations could lead to the loss of permission to operate or being directly ordered to suspend operations.

Staffing

The Company's Staffing segment is also subject to a number of laws and regulations relating to temporary staffing and employment.

The Company's Staffing segment in Japan operates with a license from and under the supervision of the Minister of Health, Labour and Welfare and is also subject to the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Protection of Dispatched Workers of Japan (Act No. 88 of 1985, as amended), or the Staffing Labor Act and related rules and regulations.

Any business that provides staffing services in Japan but does not comply with applicable laws, rules and regulations, including the Staffing Labor Act, is subject to the risk of being issued a business improvement order, losing its permission to operate as a staffing business or being directly ordered to cease its operations. If temporary workers suffer a work-related accident, the Company may be obligated to make compensation payments as the dispatching agency.

The Company's Overseas operations in the Company's Staffing segment are concentrated in the United States, Europe and Australia. Laws and regulations regarding temporary staffing in these regions may be implemented on a state-by-state (or, in the case of the European Union, member state-by-member state) basis, as well as on a federal, nationwide or region-wide basis. It is also possible that any failure to comply with local laws, rules or regulations in the Company's Overseas operations in its Staffing segment, whether in the United States, Europe, Australia or elsewhere, could result in it losing permission to operate its businesses in the relevant jurisdiction.

Further reforms may be proposed in the future that would introduce additional restrictions on permitted staffing in certain industries and provide additional protections for temporary staff, which could negatively impact the Company's business and results of operations.

As a general matter, future changes in employment-related laws and regulations in Japan and overseas could necessitate costly compliance expenditures and increase the risk that the Company could fail to comply with the applicable requirements.

Changes related to any of the above could materially and adversely affect the Company's business, financial condition and results of operations.

13. The Company may be subject to legal and arbitration proceedings and litigation, which could be costly and could materially and adversely affect its brands, reputation, business and results of operations.

The Company is subject to litigation and other legal and arbitration proceedings in the ordinary course of its business.

The Company may in the future be subject to claims, allegations, lawsuits, including class action lawsuits, minimum statutory penalties and regulatory investigations regarding antitrust or competition law violations, patents and other intellectual property, the protection of personal information, data privacy and security, consumer protection, tax, labor and employment, commercial disputes, content generated by its individual users, goods and services offered by advertisers or publishers using its platforms, false or deceptive advertising, delivery of services and alleged actions or other issues relating to the monitoring of its temporary staff, among other matters, from individual users, business clients, competitors, regulators and others, including proceedings originally commenced against third parties such as its individual users and business clients. These proceedings can be expensive and disruptive to its normal business operations.

In addition, the Company cannot be certain that its services, products and features do not infringe on the intellectual property rights of others, and the Company may be subject to infringement claims from third parties. In certain countries non-practicing entities have purchased patents for the sole purpose of filing lawsuits based on these patents or obtaining license fees on them. These proceedings are often protracted and costly, regardless of the merit of the claims involved, and the results may be difficult to predict. The Company cannot be certain that it will succeed in defending future claims, that judgments will not be rendered against it or that any reserves the Company set aside or insurance policies will be adequate to cover any such judgments.

A determination adverse to it in any of these legal proceedings could result in significant costs, penalties or fines or require the Company to pay royalty fees and modify its services and products in order to provide non-infringing substitutes or cease the use of certain services, products or features altogether, which could materially and adversely affect its brands, reputation, business and results of operations.

14. The Company's reputation and those of its brands are important to its success, and any damage to them could materially and adversely affect the Company's business, financial condition and results of operations.

The Company believes that the brand identity the Company has developed has significantly contributed to the success of its business and will continue to be a significant competitive factor going forwards. The Company depends on its brands and reputation to maintain and expand its user base, which in most businesses comprises mainly general consumers who tend to have a relatively high level of sensitivity to and awareness of brand and reputation. The Company's business clients, which include a large number of SMEs, are also highly sensitive to our brand and reputation.

The Company's brand and reputation could be harmed due to a number of factors, including defects or errors in its services, cyberattacks and other cybersecurity breaches, failure to adequately protect individual user and business client data, inadequate investments to maintain and enhance its brand and reputation, its competitors' achieving greater brand recognition, adverse media coverage or rumors including on the Internet or social network platforms about it or its business, regardless of whether such content is true or not, misconduct by its employees or its temporary staff, claims against it by its temporary staff or employees relating to its employment practices, unpermitted use of its brands by a third-party, unfavorable litigation or other factors, regardless of whether such damage was caused by its fault or the fault of others.

Furthermore, as the use of technology and data in its business has become increasingly important, the use of algorithms such as artificial intelligence in its services and its use and management of data on its platforms could lead to negative outcomes or be viewed negatively by some individual users and business clients and adversely affect its reputation and brands.

In addition, in the event that the Company, or one of its individual users or business clients in any of its businesses, engage in misconduct or inappropriate behavior or acts through its platforms or engage in illegal activity such as infringement of third-party intellectual property, violation of personal privacy rights, libel or any other illegal act or malfeasance, its reputation and that of its brands could be materially damaged directly or by association due to its relationship with such individual user or business client.

For example, for certain of the Company's platforms such as its job search engines that provide content or host advertisements that come from or can be influenced by third parties, its reputation or brands may be negatively affected if its individual users or business clients engage in misconduct, illegal activity or other inappropriate behavior such as web spam, phishing, impersonating other people or organizations or posting false, misleading or inappropriate job information or user generated content (UGC) such as employer information or other information. The Company has limited ability to affect the behavior of individual users and business clients, and even in the event that it is able to do so its proposed solution may not be satisfactory to all affected parties. In such cases the Company could be subject to claims or legal proceedings, face harm to the Company's and its brands' reputation, business and results of operations.

The Company is also subject to the risk that third parties could imitate its products or services or use its brands, trademarks, logos or other intellectual property without permission.

Although the Company believes it has in place robust protections for its intellectual property, there can be no assurance that these measures will be successful in preventing others from infringing its intellectual property rights and damaging its and its brands' reputation. Effective intellectual property protection may not be available in every country in which our products and services are made available. In addition, the Company may not be able to discover or determine the extent of any unauthorized use of our proprietary rights, particularly as policing the Internet for improper use of our brands, trademarks and logos increases in difficulty as the Internet expands. Other parties could also initiate claims or legal proceedings alleging that the Company infringes their proprietary rights, which may result in the loss of its ability to use certain brands, trademarks or logos, which could damage our market presence and reputation.

15. The Company relies on third-party service providers, such as search engine platforms, data center providers, payment providers, sales agents and Internet service providers in various areas of its business.

The Company relies on third-party service providers in a number of critical areas of its business. The occurrence of any of the below, including the termination or deterioration of its relationships with such third-party service providers, could materially and adversely affect its competitiveness and its business, financial condition and results of operations.

Certain of the Company's services in its HR Technology and Matching & Solutions segments rely on Internet search engines provided by global technology companies primarily for the purposes of ensuring its individual users access to its online platforms. User traffic on the Company's online platforms can be significantly impacted by changes in the search algorithm of the search engine operators or as a result of actions by its competitors that render online search results through its third-party search providers less favorable to us, which would in turn impact its business and presence among users.

The Company's HR Technology segment also relies on third-party publisher networks to drive traffic to its platforms by adding its content to their websites. Any failure of such publisher networks to effectively promote its services could result in reduced user traffic and harm to its business and competitive position.

The Company also offers mobile applications through the platforms of third-party global technology companies to enhance the accessibility of its services and expand its individual user traffic. If the Company becomes unable to provide its applications through these platforms, either due to vendor policies, platform updates or otherwise, the Company's ability to expand its mobile user base and increase user traffic on its services would be adversely affected.

Furthermore, the Company relies on third-party data center providers in its operations, and any disruption or interruption to the data center service or deterioration of the network performance of such service, as well as any increase in server usage fees or other additional costs, could materially and adversely affect the Company's competitiveness and its business, financial condition and results of operations.

The Company also relies on third parties to provide certain payment methods and payment processing services, including the processing of credit card transactions. As a general matter, any third party that has access to data on its systems is a potential entry point for unauthorized access, which exposes it to the risk of security breaches of such third-party systems.

The Company also makes use of third-party sales agents or media agencies to manage sales to, and other relationships with, the Company's business clients to enhance its sales ability and maintain a cost structure that allows it to respond more flexibly to economic volatility. However, the Company's reliance on such sales agents involves certain risks. In particular, because the Company generally works closely with these sales agents over long periods of time, the loss of a sales agent reduces the strength of its sales network and could result in the loss of business clients and transfer of know-how to a competitor.

Additionally, the Company exerts less direct control over third-party sales agents compared to its own employees, and the agents' actions in the course of their work for it or otherwise may harm its reputation or expose it to litigation.

The Company's online services also more generally depend on the ability of the Company's individual users and business clients to access its services through the Internet. Currently, this access is provided by companies that have significant market power in the broadband and Internet access marketplace, and these providers may take measures that could degrade, disrupt, or increase the cost of user access to certain of its products by restricting or prohibiting the use of their infrastructure to support or facilitate its offerings, or by charging increased fees to the Company or its users to provide its offerings.

The Company's services may also be subject to government-initiated restrictions or blockages in some jurisdictions. Any such interference or disruption of access to its online services through the Internet could result in a loss of existing individual users and business clients and increased costs, and could impair its ability to attract, maintain or increase the number of users, customers and advertisers, thereby harming its revenues and growth.

Furthermore, any limitation from the Company's third-party Internet access providers on the use of third-party cookies could reduce its ability to provide targeted information to its individual users and negatively impact various areas of its business.

16. The Company's advertising, sales and marketing efforts may be ineffective, may lead to increased costs and may negatively affect its revenue and margins.

As part of its strategy to expand its business, the Company engages in advertising, sales and marketing activities in order to increase recognition of new or existing services and expand its individual user and business client bases. The Company is substantially dependent on its advertising, sales and marketing operations to maintain brand recognition and user traffic on its services and to acquire new business clients and enhance client satisfaction with its services.

In particular, as many Internet users rely on search engines to refer them to products and services, the Company's HR Technology segment and Matching & Solutions segment depend in part on various such search engines to generate user traffic on its websites, particularly when the Company expands into new markets or business areas where the Company does not have an established presence. Thus, maintaining a strong search engine ranking is an important factor in the Company's success in those businesses, and the Company may be required to incur expenses to enhance its search engine rankings as the Company seeks to maintain and expand the market presence of certain businesses. However, there is no guarantee that such efforts to enhance its search engine rankings would yield the outcome the Company desires.

The Company may also engage in other advertising including online, television and radio advertising to increase awareness of its services on the Internet and more generally among potential individual users and business clients. In the Company's Staffing segment, the Company may also rely on advertising to increase registered temporary staff, particularly in markets where there are labor shortages.

Although the Company may undertake significant additional advertising, marketing and sales costs in order to expand certain businesses, the Company's efforts may not be effective in building its brand recognition or expanding its business to the extent the Company expects or at all.

17. The Company's business operations are exposed to natural disasters, terrorism, pandemics, calamities or other factors.

Despite any preparatory measures the Company takes, the Company's business operations, technology infrastructure, employees and physical assets will remain subject to the risk of fire, earthquakes, tsunamis, typhoons, hurricanes and other natural disasters, blackouts and other power losses, acts of terrorism, criminal cyberattacks, power loss, pandemics and other catastrophic events. Any of these events could impact the Company's ability to provide its services or otherwise operate its business, including due to disruptions affecting the workforce the Company needs to operate its business including its employees, employees of its service providers and its temporary staff, business restrictions under stay-at-home orders and other government measures or damage to its properties.

In particular, any of these catastrophic events could result in disruptions to its operations, including failure of its information systems or data servers that have not been backed up, and in such circumstances its ability to successfully implement its business continuity plan will be crucial to its recovery. In the event that the Company experiences a system failure or systems delays, particularly if these issues are widespread within its infrastructure, or are unable to fully implement its business continuity plan, the Company may be unable to offer certain products and services, and even if they are available, the Company's Internet-based products and services may experience increased load times or other disruptions.

In such an event, the Company's individual users may become dissatisfied and reduce their usage of its products and services or switch to those of its competitors. In addition, disruptions to the business or information systems of its individual users and business clients could damage its brand and reputation and lead to reduced revenues, errors in the transactions that the Company is involved in, or other problems.

In addition, large-scale natural disasters could have secondary adverse effects, such as the destruction or incapacitation of or other harm to its business clients' business operations or deterioration in economic conditions generally or causing its individual users to refrain from engaging in lifestyle activities.

Any of these outcomes could impair the Company's business operations and materially and adversely affect its business, results of operations and financial condition.

18. Any impairment of the Company's non-current assets, including goodwill and intangible assets, or fluctuations in the value of its securities holdings, could adversely affect its results of operations or financial condition.

The Company may be required to record a significant charge on its consolidated financial statements during the period in which any impairment of its non-current assets is determined. Impairment may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services the Company provides, challenges to the validity of certain registered intellectual property, disposals of group assets, changes in its strategies, increases in interest rates and a variety of other factors.

Accordingly, any determination of impairment of asset value, including goodwill and other intangible assets, could have a material adverse effect on the Company's results of operations.

Moreover, to the extent that the Company acquires early stage companies that have not achieved profitability, the Company may be subject to impairment risk relating to any goodwill and intangible assets recorded in connection with the acquisition.

In addition to goodwill and intangible assets, the Company's other non-current assets, including property and equipment and investments in associates and joint ventures, are also subject to the risk of impairment.

Furthermore, the Company also holds equity securities of certain companies it considers to be necessary business partners in order to maintain and strengthen business relationships with these companies to support its long-term growth. The Company generally recognizes changes in the fair value of these securities as part of other comprehensive income, which has the effect of increasing or decreasing its retained earnings. Declines in the value of such securities could thus have an adverse effect on its financial condition.

19. The Company may have additional tax liabilities.

The Company is subject to income taxes in Japan and many foreign jurisdictions. Significant judgment is required in determining its worldwide provision for income taxes. In the ordinary course of the Company's business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company regularly is under audit by tax authorities in different jurisdictions.

Economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes favorably more difficult. Although the Company believes its tax calculations are reasonable, the final determination of tax audits, and any related litigation in the jurisdictions where the Company is subject to taxation could be materially different from its historical tax calculations. The results of an audit or litigation could have a material effect on its consolidated financial statements in the period or periods in which that determination is made.

The Company earns a portion of its operating income from outside Japan, and any repatriation of funds currently held in foreign jurisdictions to Japan may result in higher effective tax rates for the Company. In addition, there is risk that the Company's tax exposure could be adversely affected if, for example, tax related laws and regulations, including the interpretation thereof, change due to political or economic conditions in the jurisdiction in which the Company operates.

Further, because the Company is subject to tax examinations by relevant tax authorities on a regular or irregular basis, it is difficult to accurately predict their timing and results. The Company's exposure to the above tax risks could materially and adversely affect its business, results of operations and financial condition.

The Company may also become subject to new taxes applicable to online businesses based on changes in tax laws and regulations and enforcement of such laws and regulations by tax authorities. For example, the Organization for Economic Cooperation and Development (OECD) has been working on a Base Erosion and Profit Shifting Project that, if implemented, would change various aspects of the existing framework under which tax obligations are determined in many of the countries in which the Company operates. Currently, there are ongoing discussions to implement multinational tax systems that would impose a minimum common tax rate across multiple countries as well as tax systems that would redistribute a fixed percentage of profits in excess of a certain amount earned by multinational corporations to market countries in which the corporations operate. As any such frameworks would be subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on the Company's tax obligations are uncertain.

However, there are a number of uncertainties surrounding the actual procedures for applying any of these taxes, and the financial impact of any such taxes on the Company's business and results of operations is unclear.

In addition, in the United States, the Company may become subject to increased state sales taxes in connection with possible changes to its service offerings. In addition, state tax authorities may assert additional state taxes are owed based on interpretations of the current law.

Any changes to international tax laws could impact the tax treatment of the Company's foreign earnings and adversely impact its effective tax rate. Further, changes to tax laws and additional reporting requirements could increase the complexity, burden and cost of compliance.

Due to the large and expanding scale of the Company's international business activities, any changes in taxation of its activities or the combined effect of tax laws in multiple jurisdictions may increase its worldwide effective tax rate, increase the complexity and costs associated with tax compliance (especially if changes are implemented or interpreted inconsistently across tax jurisdictions), and adversely affect its results of operations and financial condition.

20. Fluctuations in currency exchange rates could materially and adversely affect the Company's business, financial condition and results of operations.

The Company has substantial operations outside Japan and have significantly expanded its global businesses in recent years. The Company principally conducts its global business transactions in foreign currencies, in particular the US dollar, the Euro and the Australian dollar.

Foreign currency-denominated assets and liabilities are reported in the relevant local currencies and then translated to Japanese yen at the period-end applicable exchange rate, while foreign currency-denominated results of operations are reported in local currencies and then translated to Japanese yen using the spot exchange rate at the date of the transaction or a rate that approximates such rate.

As a result of these factors, fluctuations in foreign currencies against the Japanese yen may adversely affect the impact of favorable results or amplify the impact of unfavorable results at the Company's overseas subsidiaries.

Although the Company may enter into derivatives transactions to hedge a portion of its foreign currency exchange rate risk, there is no assurance that its hedging efforts will be effective in protecting the Company against exchange rate fluctuations. Depending on the size of the exposures and the relative movements of currency exchange rates, if the Company chooses not to hedge or fail to hedge its exposures effectively, the Company could experience a material adverse effect on its results of operations and financial condition.

Furthermore, volatility in foreign exchange rates could negatively affect economic conditions in the Company's operating markets, potentially leading to decreased advertising spending by its business clients or harm its ability to execute acquisitions or other strategic transactions abroad, which is an important piece of its strategy for growth globally, at an acceptable price.

21. The Company relies on borrowings to finance its operations, and factors such as increases in interest rates for its borrowings could materially and adversely affect it.

Although the Company finances its operations and investment activities primarily through operating cash flows, the Company also obtains financing through loans from banks and other financial institutions and issuing bonds in the capital markets. The Company may incur additional indebtedness in the future depending on the overall funding environment including interest rate trends. Increases in interest rates could substantially increase its financing costs and may impair its ability to borrow necessary funds on a timely basis.

In addition, the Company's creditworthiness may decline in the future due to adverse changes in the Company's financial condition or business, which would negatively affect its ability to obtain additional borrowings in the future on terms that are acceptable to the Company or at all.

The Company may enter into additional borrowings in the future that may subject it to covenants or other restrictions that can impede its ability to manage its operations.

If the Company fails to comply with such covenants, the repayment of the principal of, or accrued interest on, the Company's loans could be accelerated or the Company could be required to post collateral to secure its borrowings. The Company may also have difficulties in obtaining additional financing on acceptable terms to the extent that its credit ratings decline.

In addition, as a holding company with no business operations of its own, the Company relies on cash flows from subsidiaries to meet its obligations, including to service any debt obligations. The Company's subsidiaries may be restricted in their ability to pay cash dividends or to make other distributions to it and therefore, the Company's ability to meet its obligations may be adversely affected by such restrictions.

22. The Company's operating results may fluctuate, which makes its results difficult to predict and could cause its results to fall short of expectations.

The Company's operating results may fluctuate as a result of a number of factors, many of which are outside of its control.

As a result, comparing its operating results on a period-to-period basis may not be meaningful, and you should not rely on its past results as an indication of its future performance. The Company's operating results in future periods may fall below market expectations as well as its internal business objectives or financial targets. For example, although its HR Technology segment has been a key growth driver in recent years, it is uncertain whether its HR Technology segment will continue to achieve revenue growth at the expected pace or at all. Any of these events could cause its stock price to fall. Each of the risk factors listed in this section in addition to the following factors may affect the Company's operating results:

―	its ability to continue to attract and retain individual users and business clients to its services, including by successfully responding to changes in individual user preferences and business client needs;
―	its ability to keep pace with rapid changes in technology;
―	the amount of revenues and expenses generated and incurred in currencies other than Japanese yen, and its ability to manage the resulting foreign exchange risk;
―	the amount and timing of advertising expenses, other operating expenses and capital expenditures related to the maintenance and expansion of its businesses;
―	its focus on long-term goals over short-term results;
―	acquisitions and other strategic investments;
―	introduction of new businesses, products, services and technologies; and
―	changes in economic conditions or the business environment, including due to the impact of the COVID-19 pandemic.

Because its businesses are changing and evolving, the Company's historical operating results may not be useful to you in predicting its future operating results.

23. The Company's stock price may be volatile or difficult to predict due to fluctuations in its operating results or other factors.

The trading price of its common stock has been, and is likely to continue to be, volatile. In particular, the Company's operating results may fluctuate significantly due to a number of factors, including the various risk factors discussed in this section, which could negatively affect its stock price.

In addition, the trading price of the Company's common stock may fluctuate significantly in response to numerous other factors, many of which are beyond its control, including:

―	the financial projections the Company may provide to the public, any changes in these projections or its failure to meet these projections;
―	actions of securities analysts who initiate or maintain coverage of the Company, changes in financial estimates by any securities analysts who follow it, or its failure to meet these estimates or the expectations of investors;
―	additional shares of its common stock being sold into the market by the Company, its existing stockholders, or in connection with acquisitions, or the anticipation of such sales;
―	changes in the Company's dividend policy or planned share repurchases;
―	investor sentiment with respect to the Company's competitors, its business partners, and its industry in general;
―	announcements by the Company or its competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;
―	changes in operating performance and stock market valuations of technology companies in the Company's industry, including its competitors;
―	price and volume fluctuations in the overall stock market, including as a result of trends in global political or economic conditions;
―	the inclusion, exclusion, or deletion of the Company's stock from any trading indices;
―	media reports regarding the Company's business and financial performance;
―	lawsuits threatened or filed against the Company, or developments in pending lawsuits;
―	developments in anticipated or new legislation or regulatory actions; and
―	other events or factors, including those resulting from pandemics, war or incidents of terrorism, or responses to these events.

Broad market and industry fluctuations and general economic, political and market conditions, such as recessions, interest rate changes or foreign currency exchange fluctuations, may negatively impact the market price of the Company's common stock regardless of its actual operating performance.

Management's Discussion and Analysis of Financial Position, Results of Operations, and Cash Flows

The following contains forward-looking statements, which reflect the Company's assumptions, estimates and outlook for the future based on the Company's plans and expectations as of March 31, 2023 unless the context otherwise indicates.

Consolidated Results of Operations for FY2022

¹ The sum of the three segments does not correspond with consolidated figures due to Adjustments, such as intra-group transactions.

Consolidated revenue for FY2022 was 3.42 trillion yen, an increase of 19.4% year over year due to the revenue growth in all segments, HR Technology, Matching & Solutions, and Staffing. Excluding the positive impact of exchange rate fluctuations of 286.7 billion yen, consolidated revenue for FY2022 increased 9.4% year over year.

Consolidated operating income for FY2022 was 344.3 billion yen, a decrease of 9.1% year over year mainly due to restructuring charges of 17.6 billion yen related to a workforce reduction and a one time charge of 13.9 billion yen for impairment losses on right-of-use assets related to leased office space in HR Technology, an impairment loss mainly related to software of 9.3 billion yen in Matching & Solutions, and an impairment loss mainly related to software of 3.3 billion yen and an impairment loss on goodwill of 4.4 billion yen in Staffing.

Profit before tax for FY2022 was 367.7 billion yen, a decrease of 3.9% year over year.

Profit for FY2022 was 271.6 billion yen, a decrease of 8.8% year over year and profit attributable to owners of the parent for FY2022 was 269.7 billion yen, a decrease of 9.1% year over year.

Consolidated adjusted EBITDA margin for FY2022 was 15.9%, a decrease from 17.8% for the previous fiscal year, as a result of investments to achieve long-term strategies in the HR Technology and Matching & Solutions businesses. Adjusted EBITDA for FY2022 was 545.0 billion yen, an increase of 6.5% year over year, and adjusted EPS for FY2022 was 199.35 yen, an increase of 5.5% year over year.

From 2022, the Company has changed the adjustment items for adjusted EBITDA and adjusted EPS. For adjusted EBITDA, the share-based payment expenses are included as an adjustment item, and for adjusted EPS, amortization of intangible assets arising due to business combinations is removed as an adjustment item. The new definition is applied retroactively to all of adjusted EBITDA and adjusted EPS in this business report.

Research and development expenses in FY2022 were 168.9 billion yen, consisting primarily of compensation expenses for engineering and other technical employees responsible for the development of new products and enhancement of existing products using new technologies. The majority of research and development expenses were related to HR Technology.

Significant accounting policies, estimates, and assumptions

The consolidated financial statements of the Company have been prepared in accordance with IFRS.

The significant accounting policies used for the preparation of the consolidated financial statements are mainly described in "Financial Information, Consolidated Financial Statements and Notes, 3 Significant Accounting Policies."

The significant accounting estimates and assumptions used for the preparation of the consolidated financial statements are mainly described in "Financial Information, Consolidated Financial Statements and Notes, 4. Significant Accounting Judgments, Accounting Estimates and Assumptions." Assumptions used for the impairment tests on goodwill are described in "Financial Information, Consolidated Financial Statements and Notes, 11. Goodwill and Intangible Assets."

These estimates and assumptions are based on management's best judgment based on historical experience and various factors deemed to be reasonable. By their nature, however, due to uncertainties in these estimates and assumptions, they may differ from the amounts recognized in the consolidated financial statements of future periods.

Results of Operations by Segment

HR Technology

•	Global online matching and hiring platform that offers advertising and other human resources matching solutions

Revenue for FY2022 was 1.11 trillion yen, an increase of 29.6% year over year, and on a US dollar basis, revenue increased 7.7%. In the first half of FY2022, demand for talent globally remained strong leading to increased demand for Indeed and Glassdoor's hiring products and services, but hiring demand continued to normalize globally and the imbalance between supply and demand continued to moderate in the second half of FY2022.

Adjusted EBITDA margin was 30.7%, a decrease from 37.5% for the previous fiscal year, and adjusted EBITDA for FY2022 was 342.3 billion yen, an increase of 5.9% year over year. In order to achieve the Company's business strategy to Simplify Hiring, HR Technology hired employees focused on product and technology initiatives in the first half of FY2022. Considering the change in the business environment we paused hiring and significantly reduced operational cost including the advertisement in the second half of this fiscal year.

Matching & Solutions

Marketing Solutions:

Provides matching platforms in a variety of industries, such as Housing & Real Estate, Beauty, Travel, Bridal, Dining and others, to connect individual users and business clients. Offers cloud-based SaaS solutions to improve business clients' efficiency of operations.

HR Solutions:

A variety of HR services mainly in Japan through online platforms and print media for job seekers and business clients.

¹ The sum of the segments does not correspond with consolidated figures due to Other and Elimination, such as intra-group transactions.

Revenue for FY2022 was 760.6 billion yen, an increase of 15.5% year over year.

Revenue in Marketing Solutions increased 13.9%. Revenue in Housing & Real Estate and Beauty, which together account for more than 50% of the revenue of Marketing Solutions, increased year over year and continued to be the primary drivers of revenue growth and revenue in Housing & Real Estate, Beauty, Travel, Bridal, and Dining all increased year over year.

Revenue for HR Solutions increased 19.3% as hiring demand recovered in Japan. Revenue in the part-time job advertising business which is concentrated in the hospitality sector, was impacted by the state of emergency and priority preventative measures in the first half of FY2022 but the hiring demand was even more aggressive compared to FY2021. As the measures were lifted at the end of September 2021, the hiring demand increased and resulted in revenue growth. Also, revenue in the placement service increased year over year, due to increased hiring demand in many industries which utilize placement services while some business clients began to act cautiously on hiring.

Adjusted EBITDA for FY2022 was 109.8 billion yen, an increase of 6.8% and adjusted EBITDA margin for FY2022 decreased to 14.4% as Matching & Solutions executed strategic marketing activities and investment for SaaS solutions.

In Air Business Tools, the number of AirPAY accounts as of March 31, 2023 increased 40.2% year over year. Of the approximately 394,000 AirPAY registered accounts as of March 31, 2023, approximately 226,000 accounts also subscribed to other Air BusinessTools solutions (cross-use).

Staffing

•	Japan: Staffing services in Japan
•	Europe, US, and Australia: Staffing services mainly in Europe, US, and Australia

¹ Sum of revenue from individual companies after consolidation adjustments for Europe, US, and Australia.

Revenue for FY2022 was 1.58 trillion yen, an increase of 15.0% year over year. Excluding the positive impact of foreign exchange rate fluctuations, revenue increased 7.8% year over year.

Revenue in Japan increased 13.1% due to an increase in the number of temporary staff on assignment as demand for staffing services continued to grow year over year.

Revenue in Europe, US, and Australia also increased 16.5%. Excluding the positive impact of exchange rate fluctuations, revenue increased 3.7% due to continued growth in demand for staffing services in each region, despite a slowdown in demand related to supporting COVID-19 mitigation efforts that existed in FY2021, while the uncertain economic outlook also led to slower growth in overall staffing demand.

Adjusted EBITDA margin for FY2022 was 6.5%, a decrease from 6.8% for FY2021, and adjusted EBITDA for FY2022 was 102.2 billion yen, an increase of 9.6% year over year.

In Japan, adjusted EBITDA margin for FY2022 in Japan decreased compared to the previous year to 8.2% due to increased advertising expenses to attract temporary staff. In Europe, US, and Australia, adjusted EBITDA margin was 5.2%.

The Outstanding Amount of Goodwill for each SBU as of March 31, 2023

The following table presents the outstanding amount of goodwill for each SBU as of March 31, 2023. Staffing recorded 4.4 billion yen of impairment loss of goodwill in Australia.

(In billions of yen)	Outstanding Goodwill
HR Technology	246.9
Matching & Solutions	-
Japan	-
Overseas	-
Staffing	216.0
Japan	27.7
US	17.0
Europe	168.1
Australia	3.0
Total	462.9

Capital Resources and Liquidity

Basic Policy

The Company's basic policy is to obtain funds from global financial markets through debt as necessary, while maintaining appropriate credit ratings and strong consolidated financial position, in order to secure liquidity required for smooth operations and to invest flexibly for its long-term business strategy that will lead to increasing its enterprise value.

The Company aims to maintain a sufficient level of shareholders' equity while achieving appropriate capital efficiency, in order to respond flexibly to investment opportunities for future growth while at the same time enhancing its ability to address possible risks relating to its business operations and assets.

Use of Capital

The Company allocates its capital mainly to working capital, corporate taxes, mergers and acquisitions, asset acquisitions and capital expenditures by its SBUs as well as repayments of borrowings, payment of interest, payment of dividends, and share repurchases.

Fundraising

The Company's primary source of liquidity for working capital and investments are cash flows from operating activities. However, the Company may consider and execute external financing when various conditions are deemed favorable, such as demand for funds, interest rate trends, repayment amount, redemption period of existing interest-bearing debt, amount to be raised, and financing structure.

For short-term working capital, the Company primarily utilizes borrowings from financial institutions and/or commercial paper. For mid- to long-term needs, the Company will raise funds mainly through borrowings from financial institutions and/or the corporate bond market. To maintain flexible financing capabilities, the Company has registered a maximum 200.0 billion yen worth of corporate bonds for potential issuances, the full amount of which is unused as of March 31, 2023.

Additionally, the Company has entered into overdraft agreements with four financial institutions to secure liquidity and raise working capital funds efficiently. The maximum amount of borrowings under these overdraft agreements is 113.0 billion yen as of March 31, 2023, and the entire amount remains unused. In addition, the Company entered into a committed credit facility agreement providing for a total commitment amount of 200.0 billion yen. The entire amount available under these credit facilities remains unused as of March 31, 2023. The Company maintains these overdraft agreements and credit facilities to ensure sufficient liquidity in the event of significant changes in the business environment.

The table below sets forth a breakdown of the book value of interest-bearing debt by payment due period as of March 31, 2023. Each amount shown is the required cash outflow by payment due period excluding discounts and including interest payments.

		Payment due period
(In billions of yen)	Book value	1 year or less	Over 1 year through 5 years	Over 5 - years
Bonds	19.9	20.0	-	-
Borrowings	15.2	14.3	0.0	1.5
Total	35.2	34.4	0.0	1.5

Credit Ratings

The Company has long-term credit ratings of A from S&P Global Rating Japan, A3 from Moody's Japan, AA from Rating and Investment Information, Inc. (R&I), and AA+ from Japan Credit Rating Agency, Ltd. (JCR) as of March 31, 2022. The Company has short-term credit ratings of a-1+ from R&I.

Cash Management

In order to maximize overall capital efficiency, the Company prioritizes internal lending and borrowing within the Company over external financing, mainly through a cash management system, when it is legally permissible and economically reasonable to do so.

The Company maintains internal liquidity of cash and cash equivalents by consolidating the cash management operations of all currencies to the Holding Company and its subsidiaries, which provide internal treasury management services.

Fund Management

The Company invests only in principal-guaranteed financial instruments that are deemed safe and efficient, and does not engage in such investments for speculative purposes.

Policy of Strategic Shareholdings

In principle, the Company's policy is to reduce strategic shareholdings. The decision on whether or not to hold each company's stock is made based on a comprehensive assessment of the economic value of its stock, cost of capital, strategic importance, environment, social and governance (ESG) aspects, and other factors. The Board of Directors scrutinizes these shareholdings once a year and deliberates the reduction of these holdings if they do not meet the above criteria.

As of March 31, 2023, the total amount of strategic shareholdings held by the Holding Company and Recruit Co., Ltd. was 86.4 billion yen, which is 5.3% of the consolidated total equity.

	The Holding Company		Recruit Co., Ltd.
(In millions of yen)	Unlisted	Listed	Unlisted	Listed
Number of issuers	3	12	4	4
Amount on the balance sheet	1,800	65,790	1,528	17,350

Analysis of Consolidated Financial Position

(In billions of yen)	As of March 31, 2022	As of March 31, 2023	Variance	% Change
Assets
Total current assets	1,182.0	1,465.3	283.2	24.0%
Total non-current assets	1,241.4	1,327.9	86.4	7.0%
Total assets	2,423.5	2,793.2	369.7	15.3%
Liabilities
Total current liabilities	695.5	782.7	87.1	12.5%
Total non-current liabilities	351.6	369.5	17.8	5.1%
Total liabilities	1,047.2	1,152.3	105.0	10.0%
Equity
Total equity attributable to owners of the parent	1,363.7	1,627.0	263.2	19.3%
Non-controlling interests	12.5	13.9	1.4	11.3%
Total equity	1,376.2	1,640.9	264.6	19.2%

Total current assets as of March 31, 2023 increased by 283.2 billion yen compared to the end of FY2021 mainly due to an increase in cash and cash equivalents from increased operating cash flows and from the sale of a portion of shares as part of the going private transaction of 51 job, Inc., despite the cash outflows for the Share Repurchases by resolution of the Board Directors on October 17, 2022.

The maximum amount of borrowings under overdraft agreements was 113.0 billion yen as of March 31, 2023, and the entire amount remained unused. In addition, committed credit facilities with a total maximum borrowing amount of 200.0 billion yen, for which the Company entered into an agreement on March 31, 2021, remained unused as of March 31, 2023.

Also, the Company has registered a maximum 200.0 billion yen worth of corporate bonds for potential issuances in Japan, the full amount of which is unissued as of March 31,2023.

The following table presents cash and cash equivalents, interest-bearing debt and net cash, the amount calculated by subtracting interest-bearing debt from cash and cash equivalents.

(In billions of yen)	FY2021	FY2022	Variance	% Change
Cash and cash equivalents	669.5	877.3	207.8	31.0%
Interest-bearing debt	60.6	35.2	(25.3)	-41.8%
Net cash	608.9	842.0	233.1	38.3%

As of March 31, 2023, cash and cash equivalents and interest-bearing debt which includes bonds and borrowings, excluding lease liabilities, on a consolidated basis were 877.3 billion yen and 35.2 billion yen, respectively. Net cash, the amount calculated by subtracting interest-bearing debt from cash and cash equivalents, was 842.0 billion yen, an increase of 233.1 billion yen compared to the end of FY2021.

Analysis of Consolidated Cash Flows

(In billions of yen)	FY2021	FY2022	Variance
Net cash flows from operating activities	439.6	438.1	(1.4)
Net cash flows from investing activities	(70.7)	(32.6)	38.0
Net cash flows from financing activities	(254.3)	(252.0)	2.3
Effect of exchange rate changes on cash and cash equivalents	54.0	54.3	0.3
Net increase (decrease) in cash and cash equivalents	168.5	207.8	39.3
Cash and cash equivalents at the beginning of the period	501.0	669.5	168.5
Cash and cash equivalents at the end of the period	669.5	877.3	207.8

As of March 31, 2023, cash and cash equivalents were 877.3 billion yen, an increase of 207.8 billion yen from the end of FY2021.

Production, Orders, and Sales

Production and Orders

This information is not disclosed as it does not fit with the nature of the Company's services.

Sales

This information is stated in "Consolidated Results of Operations for FY2022."

Material Contracts

As a result of a review in light of Recruit Holdings' standards prepared in accordance with applicable laws and regulations, there were no material contracts.

Research and Development

Research and development expenses in FY2022 were 168.9 billion yen, consisting primarily of compensation expenses for engineering and other technical employees responsible for the development of new products and enhancement of existing products using new technologies. The majority of research and development expenses were related to HR Technology.

Financial Information

Preparation of Consolidated Financial Statements and Non-consolidated Financial Statements

―

The consolidated financial statements of the Company have been prepared in accordance with IFRS, based on the provisions set forth in Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976, the "Ordinance on Consolidated Financial Statements").

―

The non-consolidated financial statements of the Company have been prepared based on the Ordinance on Terminology, Forms, and Preparation Methods of Financial Statements, etc. (Ordinance of the Ministry of Finance No. 59 of 1963, the "Ordinance on Financial Statements, etc."). Recruit Holdings falls under a Special Company Submitting Financial Statements and prepares the non-consolidated financial statements pursuant to Article 127 of the Ordinance on Financial Statements, etc.

Audit Certificate

Pursuant to the provisions set forth in Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, the Company's consolidated financial statements and non-consolidated financial statements for the year ended March 31, 2023 have been audited by Ernst & Young ShinNihon LLC.

Special Efforts to Ensure Appropriateness of Consolidated Financial Statements and Establishment of System for Preparing Consolidated Financial Statements Appropriately Based on IFRS

The Company has taken special efforts to ensure the appropriateness of consolidated financial statements and has worked to establish a system for appropriately preparing consolidated financial statements based on IFRS. The details are as follows:

―	In order to properly understand the content of accounting standards and establish a system that can respond appropriately to revisions to accounting standards, the Company has joined the Financial Accounting Standards Foundation and has participated in seminars held by organizations with expertise.
―	In order to prepare appropriate consolidated financial statements based on IFRS, the Company works to keep itself updated about the latest IFRS by obtaining press releases and standards disclosed by the International Accounting Standards Board. In addition, the Company develops internal rules and manuals to comply with IFRS and applies them in its accounting treatment.

Consolidated Financial Statements and Notes

Consolidated Statement of Financial Position

(In millions of yen)

	Notes	As of March 31, 2022	As of March 31, 2023
Assets
Current assets
Cash and cash equivalents	6	669,551	877,370
Trade and other receivables	7, 27	468,032	527,558
Other financial assets	8, 27	1,903	6,629
Other assets	9	42,558	53,784
Total current assets		1,182,045	1,465,342
Non-current assets
Property and equipment	10	73,559	70,990
Right-of-use assets	12	187,060	185,036
Goodwill	11	436,017	462,977
Intangible assets	11	194,129	187,634
Investments in associates and joint ventures		86,916	26,967
Other financial assets	8, 27	182,240	228,326
Deferred tax assets	13	76,685	161,301
Other assets	9	4,888	4,704
Total non-current assets		1,241,496	1,327,939
Total assets		2,423,542	2,793,281

(In millions of yen)

	Notes	As of March 31, 2022	As of March 31, 2023
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	14, 27	283,849	349,916
Bonds and borrowings	15, 27	26,236	33,845
Lease liabilities	12, 27	38,433	41,167
Other financial liabilities	27	111	408
Income tax payables		38,037	70,122
Provisions	17	13,147	9,876
Other liabilities	16	295,776	277,442
Total current liabilities		695,592	782,777
Non-current liabilities
Bonds and borrowings	15,27	34,400	1,429
Lease liabilities	12,27	172,355	178,513
Other financial liabilities	27	525	495
Provisions	17	11,334	12,068
Net liability for retirement benefits	18	59,994	61,244
Deferred tax liabilities	13	62,592	107,617
Other liabilities	16	10,452	8,185
Total non-current liabilities		351,654	369,554
Total liabilities		1,047,247	1,152,332
Equity
Equity attributable to owners of the parent
Common stock	19	40,000	40,000
Share premium	19	20,640	33,754
Retained earnings	19	1,464,947	1,711,350
Treasury stock	19	(298,457)	(432,612)
Other components of equity		136,644	274,517
Total equity attributable to owners of the parent		1,363,776	1,627,010
Non-controlling interests		12,518	13,939
Total equity		1,376,294	1,640,949
Total liabilities and equity		2,423,542	2,793,281

Consolidated Statement of Profit or Loss

(In millions of yen, unless otherwise indicated)

	Notes	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Revenue	21	2,871,705	3,429,519
Cost of sales		1,221,684	1,432,643
Gross profit		1,650,020	1,996,875
Selling, general and administrative expenses	22	1,250,305	1,603,242
Other operating income		2,257	4,559
Other operating expenses	23	23,043	53,888
Operating income		378,929	344,303
Share of profit (loss) of associates and joint ventures		5,349	3,013
Finance income		2,796	25,385
Finance costs		4,326	4,936
Profit before tax		382,749	367,767
Income tax expense	13	85,026	96,096
Profit for the year		297,722	271,671
Profit attributable to:
Owners of the parent		296,833	269,799
Non-controlling interests		889	1,872
Profit for the year		297,722	271,671
Earnings per share attributable to owners of the parent
Basic earnings per share (Yen)	25	181.68	168.59
Diluted earnings per share (Yen)	25	180.83	167.44

Consolidated Statement of Comprehensive Income

(In millions of yen)

	Notes	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Profit for the year		297,722	271,671
Other comprehensive income
Items that will not be reclassified to profit or loss:
Net change in financial assets measured at fair value through other comprehensive income	24,28	1,452	11,188
Remeasurements of defined retirement benefit plans	18,24	(380)	378
Share of other comprehensive income of associates and joint ventures	24	(255)	(37)
Subtotal		817	11,529
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations	24	98,838	97,415
Effective portion of changes in fair value of cash flow hedges	24	(134)	10
Subtotal		98,704	97,425
Other comprehensive income (loss) for the year, net of tax		99,521	108,955
Comprehensive income for the year		397,243	380,626
Comprehensive income attributable to:
Owners of the parent		395,869	377,977
Non-controlling interests		1,374	2,649
Total comprehensive income		397,243	380,626

Consolidated Statement of Changes in Equity

Statement of Changes in Equity for the Year Ended March 31, 2022

(In millions of yen)

		Equity attributable to owners of the parent

	Notes	Common stock	Share premium
Balance at April 1, 2021		40,000	17,422
Profit for the year
Other comprehensive income
Comprehensive income for the year		-	-
Transfer from other components of equity to retained earnings
Purchase of treasury stock	19		(64)
Disposal of treasury stock			3,282
Dividends	20
Share-based payments	26
Equity transactions with non-controlling interests
Other
Transactions with owners - total		-	3,218
Balance at March 31, 2022		40,000	20,640

	Equity attributable to owners of the parent
			Other components of equity
	Retained earnings	Treasury stock	Sharebased payments	Exchange differences on translation of foreign operations	Effective portion of changes in fair value of cash flow hedges
Balance at April 1, 2021	1,201,573	(180,148)	8,987	3,548	187
Profit for the year	296,833
Other comprehensive income				98,361	(134)
Comprehensive income for the year	296,833	-	-	98,361	(134)
Transfer from other components of equity to retained earnings	809
Purchase of treasury stock		(124,503)
Disposal of treasury stock		6,194	(9,072)
Dividends	(34,316)
Share-based payments			34,767
Equity transactions with non-controlling interests
Other	47
Transactions with owners - total	(33,459)	(118,308)	25,694	-	-
Balance at March 31, 2022	1,464,947	(298,457)	34,682	101,909	52

		Equity attributable to owners of the parent
		Other components of equity
	Notes	Net change in financial assets measured at fair value through other comprehensive income	Remeasurements of defined retirement benefit plans
Balance at April 1, 2021		-	-
Profit for the year
Other comprehensive income		1,189	(380)
Comprehensive income for the year		1,189	(380)
Transfer from other components of equity to retained earnings		(1,189)	380
Purchase of treasury stock	19
Disposal of treasury stock
Dividends	20
Share-based payments	26
Equity transactions with non-controlling interests
Other
Transactions with owners - total		(1,189)	380
Balance at March 31,2022		-	-

	Equity attributable to owners of the parent
	Other components of equity
	Total	Total	Noncontrolling interests	Total equity
Balance at April 1, 2021	12,723	1,091,571	9,717	1,101,289
Profit for the year	-	296,833	889	297,722
Other comprehensive income	99,036	99,036	484	99,521
Comprehensive income for the year	99,036	395,869	1,374	397,243
Transfer from other components of equity to retained earnings	(809)	-		-
Purchase of treasury stock	-	(124,568)		(124,568)
Disposal of treasury stock	(9,072)	404		404
Dividends	-	(34,316)	(501)	(34,817)
Share-based payments	34,767	34,767		34,767
Equity transactions with non-controlling interests	-	-	1,928	1,928
Other	-	47		47
Transactions with owners - total	24,885	(123,665)	1,427	(122,237)
Balance at March 31,2022	136,644	1,363,776	12,518	1,376,294

Statement of Changes in Equity for the Year Ended March 31, 2023

(In millions of yen)

		Equity attributable to owners of the parent

	Notes	Common stock	Share premium	Retained earnings
Balance at April 1, 2022		40,000	20,640	1,464,947
Profit for the year				269,799
Other comprehensive income
Comprehensive income for the year		-	-	269,799
Transfer from other components of equity to retained earnings				11,217
Purchase of treasury stock	19		(281)
Disposal of treasury stock			13,140
Dividends	20			(34,614)
Share-based payments	26
Equity transactions with non-controlling interests			255
Transactions with owners - total		-	13,114	(23,396)
Balance at March 31, 2023		40,000	33,754	1,711,350

	Equity attributable to owners of the parent
		Other components of equity of
	Treasury stock	Sharebased payments	Exchange differences on translation of foreign operations	Effective portion of changes in fair value of cash flow hedges
Balance at April 1, 2022	(298,457)	34,682	101,909	52
Profit for the year
Other comprehensive income			96,949	10
Comprehensive income for the year	-	-	96,949	10
Transfer from other components of equity to retained earnings
Purchase of treasury stock	(152,065)
Disposal of treasury stock	17,909	(31,458)
Dividends
Share-based payments		72,370
Equity transactions with non-controlling interests
Transactions with owners - total	(134,155)	40,912	-	-
Balance at March 31, 2023	(432,612)	75,595	198,859	63

		Equity attributable to owners of the parent
		Other components of equity
	Notes	Net change in financial assets measured at fair value through other comprehensive income	Remeasurements of defined retirement benefit plans	Total
Balance at April 1, 2022		-	-	136,644
Profit for the year				-
Other comprehensive income		10,839	378	108,177
Comprehensive income for the year		10,839	378	108,177
Transfer from other components of equity to retained earnings		(10,839)	(378)	(11,217)
Purchase of treasury stock	19			-
Disposal of treasury stock				(31,458)
Dividends	20			-
Share-based payments	26			72,370
Equity transactions with non-controlling interests				-
Transactions with owners - total		(10,839)	(378)	29,695
Balance at March 31, 2023		-	-	274,517

	Equity attributable to owners of the parent

	Total	Noncontrolling interests	Total equity
Balance at April 1, 2022	1,363,776	12,518	1,376,294
Profit for the year	269,799	1,872	271,671
Other comprehensive income	108,177	777	108,955
Comprehensive income for the year	377,977	2,649	380,626
Transfer from other components of equity to retained earnings	-		-
Purchase of treasury stock	(152,347)		(152,347)
Disposal of treasury stock	(407)		(407)
Dividends	(34,614)	(828)	(35,443)
Share-based payments	72,370		72,370
Equity transactions with non-controlling interests	255	(399)	(144)
Transactions with owners - total	(114,742)	(1,228)	(115,971)
Balance at March 31, 2023	1,627,010	13,939	1,640,949

Consolidated Statement of Cash Flows

(In millions of yen)

	Notes	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Cash flows from operating activities
Profit before tax		382,749	367,767
Depreciation and amortization		123,169	122,044
Share-based payment expenses	26	32,446	72,706
Decrease (Increase) in trade and other receivables		(75,034)	(43,117)
Increase (decrease) in trade and other payables		33,898	57,573
Other		67,175	(42,074)
Subtotal		564,404	534,901
Interest and dividends received		2,159	16,833
Interest paid		(3,732)	(4,091)
Income taxes paid		(123,221)	(109,450)
Net cash provided by operating activities		439,610	438,193
Cash flows from investing activities
Payment for purchase of property and equipment		(13,133)	(22,025)
Payment for purchase of intangible assets		(51,252)	(54,731)
Proceeds from sales of investments in associates and joint ventures	30	-	39,531
Other		(6,351)	4,548
Net cash used in investing activities		(70,738)	(32,676)
Cash flows from financing activities
Repayments of long-term borrowings	29	(24,957)	(24,959)
Redemption of bonds	15,29	(30,000)	-
Repayments of lease liabilities	29	(42,956)	(45,318)
Payment for purchase of treasury stock	19	(124,568)	(152,454)
Dividends paid	20	(34,317)	(34,638)
Other	29	2,428	5,311
Net cash used in financing activities		(254,371)	(252,060)
Effect of exchange rate changes on cash and cash equivalents		54,007	54,362
Net increase (decrease) in cash and cash equivalents		168,508	207,818
Cash and cash equivalents at the beginning of the year	6	501,043	669,551
Cash and cash equivalents at the end of the year	6	669,551	877,370

Notes to Consolidated Financial Statements

1 Reporting Entity

Recruit Holdings Co., Ltd. (the "Holding Company" or "Recruit Holdings") is a stock company incorporated under the Companies Act of Japan and domiciled in Japan. The addresses of its registered headquarters and principal business locations are disclosed on its website (https://recruit-holdings.com/). The details of businesses and principal activities of the Holding Company and its subsidiaries (the "Company") are described in "5 Operating Segments."

The Company's consolidated financial statements for the year ended March 31, 2023 were approved on June 26, 2023 by Hisayuki Idekoba, Representative Director, President and CEO, Ayano Senaha, Director, Executive Vice President in charge of Finance, and Akihiko Mori, Senior Vice President in charge of Finance, Accounting, and Tax.

2 Basis of Preparation

Compliance with IFRS

The Company's consolidated financial statements are prepared in accordance with IFRS. The Company applies the provisions of Article 93 of the Ordinance on Consolidated Financial Statements as it meets the requirements of the "Specified Company applying Designated IFRS" prescribed in Article 1-2 of the same ordinance.

Basis of Measurement

The consolidated financial statements are prepared on a historical cost basis except for certain assets and liabilities including financial instruments that are measured at fair value as described in "3 Significant Accounting Policies."

Functional Currency and Presentation Currency

The consolidated financial statements are presented in Japanese yen, which is the functional currency of the Holding Company, and figures less than one million yen are rounded down to the nearest million yen.

3 Significant Accounting Policies

Unless otherwise indicated, the following accounting policies have been applied to all periods stated in the consolidated financial statements.

Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and the Company's equity in its associates. In cases where the accounting policies applied by a subsidiary or an associate are different from those applied by the Company, adjustments are made to the subsidiary's or the associate's financial statements as necessary. Intragroup balances of receivables and payables, intragroup transactions, and unrealized gains and losses arising from intragroup transactions are eliminated in preparing the consolidated financial statements.

Subsidiaries

A subsidiary is an entity that is controlled by the Company. Control is achieved if the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Company obtains control of a subsidiary on its acquisition date, and the subsidiary is included in the consolidation from such date until the date on which the Company loses control. A subsidiary with a different closing date is consolidated based on its provisional financial statements as of the consolidated closing date. Changes in the ownership interest of a subsidiary without a loss of control are accounted for as equity transactions. Any difference between the adjustment of non-controlling interests and the fair value of the consideration received is recognized directly in equity as the equity attributable to owners of the parent. Any gain or loss arising from the loss of control is recognized in profit or loss. Comprehensive income of a subsidiary is allocated to the equity attributable to owners of the parent and the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

Associates

An associate is an entity over which the Company has significant influence but does not have control or joint control. An associate is accounted for using the equity method from the date on which the Company obtains significant influence until the date on which it loses such influence.

Business Combinations

The Company accounts for each business combination by applying the acquisition method. The consideration transferred in a business combination is measured as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the acquirer, including any contingent consideration, if applicable.

Identifiable assets acquired and liabilities assumed in a business combination are measured at fair value at the acquisition date.

Acquisition-related costs incurred in a business combination are expensed as incurred.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the Company's previously held equity interest in the acquiree, over the fair value of the net identifiable assets and liabilities assumed at the acquisition date.

If the initial accounting for a business combination is incomplete by the date of approval of this consolidated financial statements, the Company reports provisional amounts for the items for which the accounting is incomplete. The Company retrospectively adjusts the provisional amounts recognized at the acquisition date as an adjustment during the measurement period when new information about facts and circumstances that existed as of the acquisition date and, if known, would have affected the recognized amounts for the business combination. The measurement period shall not exceed one year from the acquisition date.

Effects of Changes in Foreign Exchange Rates

The Company's consolidated financial statements are presented in Japanese yen, which is the functional currency of the Holding Company. Each entity in the Company determines its own functional currency, and the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are translated into the functional currency of each of the subsidiaries and the associates at the spot exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the closing date. Non-monetary assets and liabilities measured at historical cost that are denominated in foreign currencies are translated into the functional currency using the exchange rates at the date of the initial transaction. Non-monetary assets and liabilities measured at fair value that are denominated in foreign currencies are translated into the functional currency using the spot exchange rates at the date when the fair value is determined. Differences arising from the translation and settlement are recognized as profit or loss. When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange difference is also recognized in other comprehensive income.

The assets and liabilities of foreign operations are translated using the spot exchange rate at the closing date, while income and expenses of foreign operations are translated using the spot exchange rate at the date of the transaction or a rate that approximates such rate. The resulting translation differences are recognized as other comprehensive income. In cases where a foreign operation is disposed of, the cumulative amount of translation differences related to the foreign operation is recognized in profit or loss on disposal.

Financial Instruments

Financial Assets

Recognition, Classification and Measurement of Financial Assets

Financial assets are recognized when the Company becomes a party to the contract of the financial instruments. The Company measures all financial assets at fair value at initial recognition and classifies them as financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income ("FVTOCI financial assets"), or financial assets measured at fair value through profit or loss ("FVTPL financial assets").

Financial Assets Measured at Amortized Cost

The Company classifies financial assets that satisfy the following conditions as financial assets measured at amortized cost:

―	the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
―	the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets measured at amortized cost are initially recognized as the sum of the fair value and transaction costs, and subsequently measured at amortized cost using the effective interest method less impairment losses. Interest income, gains or losses on derecognition, and impairment losses are recognized as finance income or costs in profit or loss.

FVTOCI Financial Assets

FVTOCI Debt Financial Assets

The Company classifies debt financial assets that satisfy the following conditions as FVTOCI debt financial assets measured at fair value through other comprehensive income:

―	the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
―	the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

FVTOCI debt financial assets are initially recognized as the sum of the fair value and transaction costs, and subsequent changes in fair value (other than impairment losses) are recognized in other comprehensive income. The cumulative amount in other comprehensive income is reclassified to profit or loss upon derecognition of the asset. Interest income, gains or losses on derecognition, and impairment losses are recognized as finance income or costs in profit or loss.

FVTOCI Equity Financial Assets

	Of financial assets measured at fair value, the Company classifies equity financial assets for which the Company has made an irrevocable election at initial recognition to present subsequent fair value changes in other comprehensive income as FVTOCI equity financial assets measured at fair value through other comprehensive income. The Company, in principle, designates all equity financial assets as FVTOCI equity financial assets.
	FVTOCI equity financial assets are initially recognized as the sum of the fair value and transaction costs. Subsequent changes in fair value as well as gains or losses on derecognition are recognized in other comprehensive income, and their cumulative amount is immediately reclassified to retained earnings after being recognized in other components of equity.
	Dividends received on FVTOCI equity financial assets are recognized as finance income when entitlement to the dividends is established, except for cases where the dividend clearly represents the recovery of part of the cost of the investment.

FVTPL Financial Assets

The Company classifies all financial assets including derivatives as FVTPL financial assets, unless these are measured at amortized cost or at fair value through other comprehensive income as stated above.

FVTPL financial assets are initially recognized at fair value, and any subsequent changes in fair value as well as any gains or losses on disposal are recognized as finance income or costs in profit or loss.

Impairment of Financial Assets

The Company recognizes a provision for expected credit losses on financial assets measured at amortized cost or FVTOCI debt financial assets.

The Company assesses at the end of each reporting period whether credit risk on a financial asset has increased significantly since initial recognition. If the credit risk on a financial asset has increased significantly since initial recognition, the provision for that financial asset is measured at an amount equal to lifetime expected credit losses. If credit risk has not increased significantly, the provision is measured at an amount equal to 12-month expected credit losses. Whether credit risk has increased significantly or not is determined based on changes in default risk.

For trade receivables that do not contain a significant financing component, the provision is measured at an amount equal to lifetime expected credit losses under a simplified approach, based on historical evidence of credit losses, regardless of changes in the credit risk.

Derecognition

The Company derecognizes a financial asset when the contractual rights to cash flows arising from the financial asset expire or substantially all the risks and rewards of ownership of the financial asset are transferred.

Interests in a transferred financial asset created or retained by the Company are recognized separately as assets or liabilities.

Financial Liabilities

Recognition, Classification and Measurement of Financial Liabilities

Financial liabilities are recognized when the Company becomes a party to the contract of the financial instruments. The Company measures all financial liabilities at fair value at initial recognition and classifies them as financial liabilities measured at amortized cost or financial liabilities measured at fair value through profit or loss ("FVTPL financial liabilities").

Financial Liabilities Measured at Amortized Cost

The Company classifies all financial liabilities as financial liabilities measured at amortized cost, except for:

•	FVTPL financial liabilities (including derivative liabilities)
•	financial guarantee contracts
•	contingent consideration recognized in a business combination

Financial liabilities measured at amortized cost are initially recognized as the fair value less transaction costs, and subsequently measured at amortized cost using the effective interest method.

FVTPL Financial Liabilities

FVTPL financial liabilities are initially recognized at fair value and any subsequent changes in fair value are recognized as finance income or costs in profit or loss, unless the hedge accounting criteria are met.

Derecognition

The Company derecognizes financial liabilities when the obligations are discharged, canceled, or expired.

Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statement of financial position only if there is a currently enforceable legal right to set off the recognized amounts, and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Derivatives and Hedge Accounting

Derivatives

To hedge foreign currency risks and risks of changes in interest rates, the Company enters into derivative contracts, including interest rate swaps, currency swaps and forward foreign exchange contracts. These derivatives are initially recognized as assets or liabilities at fair value at the date on which the contracts are entered into, and subsequently measured at fair value at the end of the reporting period. The changes in the fair value of derivatives (gains and losses on valuation of derivatives) are immediately recognized in profit or loss if hedge accounting is not applied. The changes in the fair value of derivatives which purpose is to hedge foreign currency risks are presented in the consolidated statement of profit or loss after being offset by exchange rate differences (foreign exchange gains and losses) that arise from changes in foreign exchange rates of monetary items denominated in foreign currencies.

Hedge Accounting

When the hedging relationship qualifies for hedge accounting, the Company accounts for a part of the derivatives as cash flow hedges. The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income, and the cumulative amount is recognized in other components of equity. The amount recognized in other components of equity is reclassified to profit or loss in order to offset the effects arising when the hedged item is recognized in profit or loss. The ineffective portion ofcash flow hedges is immediately recognized in profit or loss.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments due within three months from the date of acquisition that are readily convertible to cash and which are subject to an insignificant risk of changes in value.

Property and Equipment

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses by using the cost model.

The costs of property and equipment include those directly attributable to the acquisition of the asset and the estimate of the costs of dismantlement, removal and restoration.

Property and equipment are depreciated using the straight-line method over the useful life of each significant component of the asset. The depreciation method, useful lives and residual values are reviewed at the end of each fiscal year, and the effects of any changes in estimates, if any, are accounted for as changes in accounting estimates prospectively by including it in profit or loss in the period of the change and future periods.

Major useful lives of property and equipment are as follows:

―	Buildings and structures: 2 to 50 years
―	Tools, furniture and fixtures: 2 to 20 years

Intangible Assets

Intangible assets are measured at cost less accumulated amortization and accumulated impairment losses by using the cost model.

Intangible assets acquired separately are measured at cost at initial recognition. Identifiable intangible assets acquired through business combinations separately from goodwill are measured at fair value at the date on which the Company obtains control.

Expenditures on research activities are expensed as incurred. Expenditures on development activities are capitalized only if all of the following can be demonstrated:

―	the technical feasibility of completing the intangible asset so that it will be available for use or sale
―	the Company's intention to complete the intangible asset, and use or sell it
―	the Company's ability to use or sell the intangible asset
―	how the intangible asset will generate probable future economic benefits
―	the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
―	the Company's ability to measure reliably the expenditure attributable to the intangible asset during its development

Intangible assets with definite useful lives are amortized using the straight-line method over their useful lives. The amortization method and useful lives are reviewed at the end of each fiscal year, and the effects of any changes in the estimates are accounted for as changes in accounting estimates, if any, prospectively by including it in profit or loss in the period of the change and future periods. Intangible assets with indefinite useful lives are not amortized.

Major useful lives of intangible assets are as follows:

―	Software: 5 years
―	Customer-related assets: 2 to 15 years

Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease based on the substance of the contract.

A lease liability is recognized and measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the commencement date of the lease if the interest rate implicit in the lease is not readily determinable. After the commencement date, the lease liability is measured by increasing or reducing the carrying amount to reflect interest on the lease liability and the lease payments made, and remeasuring the carrying amount as necessary to reflect any lease modifications. The lease term is determined as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the option is reasonably certain to be exercised, and periods covered by an option to terminate the lease if the option is reasonably certain not to be exercised.

Right-of-use assets are measured at cost less accumulated depreciation and accumulated impairment losses by applying the cost model. The cost of a right-of-use asset includes the amount of the initial measurement of the lease liability at the commencement date, any lease payments made at or before the commencement date less lease incentives, and restoration costs required by the lease contract. Right-of-use assets are depreciated using the straight-line method over the lease term. The lease term is reassessed upon the occurrence of a significant event or a significant change in circumstances that affects whether the lessee is reasonably certain to exercise the extension option, or not to exercise the termination option. When the lease term is modified, the lease liability will be remeasured and, in principle, the amount of right-of-use assets will be adjusted.

The Company has elected not to recognize right-of-use assets and lease liabilities for leases which are of low value.

Impairment of Non-financial Assets

At the end of each reporting period, the Company assesses whether there is any indication that its assets may be impaired. If any such indication exists, impairment tests are performed to assess the recoverable amount of the asset or the cash-generating unit ("CGU") to which it belongs. Intangible assets with indefinite useful lives and those not yet available for use are not amortized, and tested for impairment annually irrespective of whether there is any indication of impairment, or whenever there is an indication of impairment.

The recoverable amount is measured at the higher of an asset or CGU's fair value less costs of disposal and its value in use. The value in use is calculated by discounting the estimated future cash flows to their present value with a pre-tax discount rate that reflects the time value of money and the risks specific to the asset or CGU. If the recoverable amount of an individual asset or a CGU is less than its carrying amount, the carrying amount is reduced to the recoverable amount, and an impairment loss is recognized as "Other operating expenses" in the consolidated statement of profit or loss.

For assets for which impairment losses were recognized in prior periods, the Company assesses at the closing date whether there is any indication of a reversal of an impairment loss. If there is an indication of a reversal of an impairment loss, and the recoverable amount of an individual asset or a CGU exceeds its carrying amount, the impairment loss is reversed to the lower of its recoverable amount and and the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior periods.

Goodwill

Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to a CGU or a group of CGUs that is expected to benefit from the synergies of the business combination. A CGU or a group of CGUs to which goodwill is allocated is determined based on the smallest level unit at which the goodwill is monitored for internal management purposes, and no larger than an operating segment.

The Company performs an impairment test for the CGU or the group of CGUs to which goodwill was allocated at a specified point of time in each fiscal year or whenever there is an indication of impairment. If the recoverable amount of a CGU or a group of CGUs is less than its carrying amount in an impairment test, the difference is recognized as an impairment loss, in principle. In recognizing the impairment loss, the carrying amount of goodwill allocated to the CGU or the group of CGUs is reduced, and then the carrying amounts of the other assets in the CGU or the group of CGUs are reduced pro rata on the basis of the carrying amount of each asset. An impairment loss for goodwill is recognized in profit or loss as "Other operating expenses" and is not reversed in subsequent periods.

Non-current Assets Held for Sale

An asset or asset group for which the value is expected to be recovered through a sale transaction rather than through continuing use is classified as a non-current asset or disposal group held for sale if (i) it is highly probable that the asset or disposal group will be sold within one year, (ii) the asset or disposal group is available for immediate sale in its present condition, and (iii) the Company's management has made a commitment to sell the asset or disposal group. Non-current assets held for sale are not depreciated or amortized and are measured at the lower of their carrying amount and fair value less costs to sell.

Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of the provision is measured at the present value of the expenditures expected to be required to settle the obligation. In calculating the present value, the Company uses a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability.

Post-employment Benefits

The Company operates defined contribution plans and defined benefit plans as retirement benefit plans for employees.

Defined Contribution Plans

Retirement benefit costs for defined contribution plans are recognized in profit or loss for the period over which the employees render the related services.

Defined Benefit Plans

For each defined benefit plan, the Company calculates the present value of defined benefit obligations and the related current service cost and past service cost using the projected unit credit method, and recognizes them as an expense. The discount rate is determined by reference to the closing-date market yields on high quality corporate bonds for the period corresponding to the discount period, which is set on the basis of the period until the expected date of benefit payment in each future fiscal year. Net interest on the net defined benefit liability is recorded as cost of sales or selling, general and administrative expenses. Remeasurements of the net defined benefit liability incurred in the current period are recognized as other comprehensive income, and the cumulative amount is immediately reclassified to retained earnings after being recognized in other components of equity.

Equity

Common Stock and Share Premium

For equity instruments issued by the Company, the issue prices are recorded in common stock and share premium, and the transaction cost (net of related tax effects) directly attributable to the issuance is deducted from common stock and share premium proportionally on the basis of the issue price.

Treasury Stock

When shares of treasury stock are acquired, the consideration paid including the transaction cost (net of related tax effects) directly attributable to the acquisition is recognized as a deduction from equity. When shares of treasury stock are sold, the consideration received is recognized as an increase in equity.

Share-based Payment

The Company has introduced the following equity-settled equity compensation plan.

Equity-settled Stock Options

The Company grants equity-settled stock options as an incentive plan for the Directors of the Board, Senior Vice Presidents and Corporate Professional Officers (Senior Vice Presidents and Corporate Professional Officers are collectively referred to as "Senior Management") and key management personnels of Recruit Holdings. The Company recognizes the services received as consideration for the stock options as an expense, and the corresponding amount is recognized as an increase in equity. The expense is estimated at the fair value of the stock options at the grant date. The fair value is calculated, taking into account the terms and conditions of the options, primarily by using the Black-Scholes model.

Equity-settled Board Incentive Plan ("BIP") Trust

The Company has introduced an equity-settled BIP Trust as an incentive plan for the Directors of the Board and Senior Management of Recruit Holdings and some of its subsidiaries. Consideration for the services received is measured with reference to the fair value of the shares of Recruit Holdings' common stock at the grant date and is recognized as an expense over its vesting period while the corresponding amount is recognized as an increase in equity.

Equity-settled Employee Stock Ownership Plan ("ESOP") Trust

The Company has introduced an equity-settled ESOP Trust as an incentive plan for the employees of its subsidiaries. Consideration for the services received is measured with reference to the fair value of shares of Recruit Holdings' common stock at the grant date and is recognized as an expense over its vesting period while the corresponding amount is recognized as an increase in equity. The fair value at the grant date is measured as the market price of the shares adjusted for expected dividends.

Revenue Recognition

The Company recognizes revenue based on the following five-step approach. The details of revenue recognition for each segment are described in "21 Revenue."

	Step 1: Identify the contract(s) with a customer
	Step 2: Identify the performance obligations in the contract
	Step 3: Determine the transaction price
	Step 4: Allocate the transaction price to the performance obligations in the contract
	Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The incremental costs of obtaining a contract are recognized as an asset ("asset recognized for costs of obtaining contracts") if those costs are expected to be recoverable. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained.

An asset recognized for costs of obtaining contracts is amortized on a systematic basis that is consistent with the transfer to the customer of the services to which the asset relates, unless the amortization period of the asset is one year or less. If the amortization period of the asset is one year or less, the incremental costs of obtaining a contract are expensed when incurred by using the practical expedient in IFRS 15.

Income Taxes

Income tax expense is the sum of current tax expense and deferred tax expense and recognized in profit or loss, except for taxes arising from items that are directly recognized in other comprehensive income or in equity and taxes arising from business combinations.

Current Tax Expense

Current tax expense is measured at the amount expected to be paid to or refunded from the taxation authorities using the tax rates (and tax laws) that have been enacted or substantively enacted by the closing date.

Deferred Tax Expense

Deferred tax expense is calculated based on the temporary differences between the tax base for assets and liabilities and their carrying amount for accounting purposes at the closing date. Deferred tax assets are recognized for deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that future taxable profit will be available against which they can be utilized. Deferred tax liabilities are recognized, in principle, for all taxable temporary differences.

Deferred tax assets are not recognized for the following temporary differences:

―	temporary differences arising from the initial recognition of assets or liabilities in transactions that are not business combinations and affect neither accounting profit nor taxable profit (tax loss) at the time of transaction, and
―	deductible temporary differences arising from investments in subsidiaries and associates where it is probable that the temporary difference will not reverse in the foreseeable future or it is not probable that future taxable profit will be available against which the temporary difference can be utilized.

Deferred tax liabilities are not recognized for the following temporary differences:

―	temporary differences arising from the initial recognition of goodwill,
―	temporary differences arising from the initial recognition of assets or liabilities in transactions that are not business combinations and affect neither accounting profit nor taxable profit (tax loss) at the time of transaction, and
―	taxable temporary differences arising from investments in subsidiaries and associates where the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

There are certain cases where assets and liabilities arising from a single transaction are recognized at the same amount. In such transactions, deferred tax liabilities are recognized for taxable temporary differences of the recognized assets, and deferred tax assets are recognized for deductible temporary differences of the recognized liabilities. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, using the tax rates (and tax laws) that have been enacted or substantively enacted by the closing date. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the assets and liabilities related to income taxes are levied by the same taxation authority on the same taxable entity or different taxable entities which intend to settle on a net basis.

Earnings per Share

Basic earnings per share is determined by dividing the profit (loss) attributable to the common shareholders of the parent by the weighted average number of shares of common stock outstanding, adjusted for shares of treasury stock, during the period. Diluted earnings per share is adjusted for the effect of all dilutive potential shares of common stock.

4 Significant Accounting Judgments, Accounting Estimates and Assumptions

In preparing the consolidated financial statements, management makes judgments, accounting estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses.

Estimates and assumptions are based on management's best judgments based on historical performance and various factors considered reasonable. By their nature, however, actual results may differ from the estimates and assumptions made. Estimates and their underlying assumptions are continuously reviewed. The effects of changes in accounting estimates are recognized prospectively by including it in profit or loss in the period of the change and future periods.

Estimates and assumptions that significantly affect the amounts recognized in the consolidated financial statements are as follows:

Method of Fair Value Measurement of Financial Instruments

When measuring the fair values of certain financial instruments, the Company uses a valuation technique that includes unobservable inputs. The unobservable inputs may be affected by changes in uncertain future economic conditions. As of March 31, 2023, such accounting estimates were recognized under "Other financial assets" in the consolidated statement of financial position.

Impairment of Property and Equipment, Right-of-use Assets, Goodwill and Intangible Assets

The Company tests property and equipment, right-of-use assets, goodwill and intangible assets for impairment in accordance with "3 Significant Accounting Policies." Recoverable amounts in impairment tests are measured based on assumptions such as growth rates and discount rates that are used in the estimates of future cash flow projections. These assumptions are determined by management's best estimates and judgments. However, they may be affected by changes in uncertain future economic conditions. As of March 31, 2023, such accounting estimates were recognized under "Property and equipment," "Right-of-use assets," "Goodwill," and "Intangible assets" in the consolidated statement of financial position. The details of goodwill and intangible assets are described in "11 Goodwill and Intangible Assets."

Assessment of Defined Benefit Obligations

The Company operates defined benefit plans as retirement benefit plans. For each defined benefit plan, the present value of defined benefit obligations and the related costs including service cost are determined based on the actuarial assumptions such as discount rates, mortality rates and other factors. These assumptions are determined by management's best estimates and judgments. However, they may be affected by changes in uncertain future economic conditions. As of March 31, 2023, such accounting estimates were recognized under "Net liability for retirement benefits" in the consolidated statement of financial position.

Recoverability of Deferred Tax Assets

Deferred tax assets are recognized for deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that sufficient future taxable income will be available against which the deductible temporary differences can be utilized. The period in which it is probable that sufficient future taxable income will be available and the amount of the future taxable income are determined by management's best estimates and judgments. However, they may be affected by changes in uncertain future economic conditions. As of March 31, 2023, such accounting estimates were recognized under "Deferred tax assets" in the consolidated statement of financial position.

5 Operating Segments

Overview of Reportable Segments

The Company's operating segments are components of the Company for which discrete financial information is available and whose operating results are reviewed regularly by the Board of Directors to decide on the allocation of operating resources and assess business performance. The Company has three operating segments by type of business, HR Technology, Matching & Solutions, and Staffing, which are also the reportable segments. Beginning FY2022, the Media & Solutions segment has changed its name to Matching & Solutions.

HR Technology consists of two operations, US and non-US. Matching & Solutions consists of two operations, Marketing Solutions and HR Solutions. Staffing consists of two operations, Japan, and Europe, US and Australia.

The details of these segments are described in "21 Revenue."

Information about Reportable Segments

Previously, segment profit (loss) denoted adjusted EBITDA (operating income + depreciation and amortization (excluding depreciation of right-of-use assets) ± other operating income/expenses). However, beginning FY2022, the Company changed its calculation method of segment profit (loss) and added share-based payment expenses as an adjustment item to better reflect its cash flow generation and to enhance comparability with other companies globally. Accordingly, segment profit (loss) after the change denotes adjusted EBITDA (operating income + depreciation and amortization (excluding depreciation of right-of-use assets) + share-based payment expenses ± other operating income/expenses). Segment information for FY2021 has also been prepared using the calculation method after the change.

Revenue from external customers in Adjustments includes revenue that is not allocated to a specific reportable segment, and segment profit (loss) of Adjustments includes corporate expenses not allocated to any reportable segments. Corporate expenses consist primarily of general and administrative expenses that are not allocable to the segments. Intersegment revenues or transfers are calculated based on a price used in similar transactions with external customers. Segment assets and liabilities are not disclosed as they are not subject to review for deciding on the allocation of operating resources and assessing business performance.

For the Year Ended March 31, 2022

(In millions of yen)

	Reportable Segment
	HR Technology	Matching & Solutions	Staffing
Revenue
Revenue from external customers	855,688	654,163	1,361,853
Intersegment revenues or transfers	5,711	4,453	16,639
Total	861,400	658,616	1,378,492
Segment profit (loss)	323,345	102,810	93,295
Depreciation and amortization ¹
Share-based payment expenses
Other operating income
Other operating expenses
Operating income
Share of profit (loss) of associates and joint ventures
Finance income
Finance costs
Profit before tax

	Reportable Segment
	Total	Adjustments	Consolidated
Revenue
Revenue from external customers	2,871,705	-	2,871,705
Intersegment revenues or transfers	26,804	(26,804)	-
Total	2,898,510	(26,804)	2,871,705
Segment profit (loss)	519,452	(7,635)	511,816
Depreciation and amortization ¹			79,654
Share-based payment expenses			32,446
Other operating income			2,257
Other operating expenses			23,043
Operating income			378,929
Share of profit (loss) of associates and joint ventures			5,349
Finance income			2,796
Finance costs			4,326
Profit before tax			382,749

¹ Depreciation and amortization exclude depreciation of right-of-use assets.

For the Year Ended March 31, 2023

(In millions of yen)

	Reportable Segment
	HR Technology	Matching & Solutions	Staffing
Revenue
Revenue from external customers	1,112,237	753,012	1,562,492
Intersegment revenues or transfers	3,921	7,674	22,782
Total	1,116,159	760,687	1,585,274
Segment profit (loss)	342,309	109,809	102,258
Depreciation and amortization ¹
Share-based payment expenses
Other operating income
Other operating expenses
Operating income
Share of profit (loss) of associates and joint ventures
Finance income
Finance costs
Profit before tax

	Reportable Segment
	Total	Adjustments	Consolidated
Revenue
Revenue from external customers	3,427,742	1,776	3,429,519
Intersegment revenues or transfers	34,378	(34,378)	-
Total	3,462,121	(32,601)	3,429,519
Segment profit (loss)	554,377	(9,334)	545,043
Depreciation and amortization ¹			78,703
Share-based payment expenses			72,706
Other operating income			4,559
Other operating expenses			53,888
Operating income			344,303
Share of profit (loss) of associates and joint ventures			3,013
Finance income			25,385
Finance costs			4,936
Profit before tax			367,767

¹ Depreciation and amortization exclude depreciation of right-of-use assets.

Information about Products and Services

Details of the classification of products and services have been omitted as it is the same as the classification of the reportable segments. Please refer to Information about Reportable Segments above.

Information about Geographical Areas

Revenue from External Customers

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Japan	1,277,769	1,466,025
United States	846,748	1,081,707
Others	747,187	881,786
Total	2,871,705	3,429,519

¹ Revenue is classified based on the locations where the external customers reside.

Non-current Assets (excluding Financial Assets and Deferred Tax Assets)

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Japan	246,848	253,064
United States	365,222	374,871
Netherlands	188,199	196,853
Others	95,384	86,554
Total	895,654	911,343

Information about Major Customers

There are no revenues from transactions with a single external customer consisting 10% or more of revenues in the consolidated statement of profit or loss for the years ended March 31, 2022 and 2023.

6 Cash and Cash Equivalents

The breakdown of cash and cash equivalents is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Cash and deposits	669,551	877,370
Total	669,551	877,370

¹ Cash and cash equivalents are classified as financial assets measured at amortized cost.

7 Trade and Other Receivables

The breakdown of trade and other receivables is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Accounts receivable - trade2	433,850	466,524
Accounts receivable - other	44,887	72,014
Other	765	833
Loss allowance	(11,471)	(11,814)
Total	468,032	527,558

¹ Trade and other receivables are classified as financial assets measured at amortized cost.
² The balance of receivables arising from contracts with customers (accounts receivable - trade) as of April 1, 2021 was 351,112 million yen.

8 Other Financial Assets

The breakdown of other financial assets is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Equity financial assets ¹	153,639	171,434
Debt financial assets ²	-	30,426
Guarantee deposits for leases ³	23,217	22,238
Other	7,819	11,117
Loss allowance	(532)	(261)
Total	184,143	234,955
Current assets	1,903	6,629
Non-current assets	182,240	228,326
Total	184,143	234,955

¹ Equity financial assets are generally classified as financial assets measured at fair value through other comprehensive income.
² Debt financial assets are classified as financial assets measured at fair value through profit or loss.
³ Guarantee deposits for leases are classified as financial assets measured at amortized cost.

Financial Assets Measured at Fair Value through Other Comprehensive Income

Equity financial assets, such as shares, are held primarily for maintaining and strengthening relationships with business partners. These assets are designated as financial assets measured at fair value through other comprehensive income.

The breakdown of financial assets measured at fair value through other comprehensive income is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Financial assets with active markets	88,156	84,020
Financial assets without active markets	65,482	87,414
Total	153,639	171,434

The names of securities of financial assets with active markets and their fair values as of March 31, 2022 and 2023 are shown below. Financial assets without active markets consist primarily of investment in Internet-related industries.

As of March 31, 2022

(In millions of yen)

Name of security	Fair value
Dentsu Group Inc.	24,748
Yeahka Limited	14,719
freee K.K.	10,008
Nippon Television Holdings, Inc.	8,223
Oisix ra daichi Inc.	7,983
TBS HOLDINGS, INC.	4,765
Monex Group, Inc.	3,752

As of March 31, 2023

(In millions of yen)

Name of security	Fair value
Dentsu Group Inc.	22,924
Yeahka Limited	15,510
freee K.K.	7,674
Nippon Television Holdings, Inc.	7,364
Oisix ra daichi Inc.	6,085
TBS HOLDINGS, INC.	5,080
Dai Nippon Printing Co., Ltd.	4,566

9 Other Assets

The breakdown of other assets is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 20238
Prepaid expenses	22,803	29,837
Income taxes receivable	11,450	6,894
Consumption taxes receivable	1,340	540
Long-term prepaid expenses	4,293	4,197
Other	7,557	17,018
Total	47,446	58,489
Current assets	42,558	53,784
Non-current assets	4,888	4,704
Total	47,446	58,489

10 Property and Equipment

Changes in the carrying amount, acquisition cost, accumulated depreciation and accumulated impairment losses of property and equipment are as follows:

Carrying Amount

(In millions of yen)

	Buildings and structures	Tools, furniture and fixtures	Other	Total
As of April 1,2021	49,715	26,989	4,585	81,290
Additions	1,840	4,601	6,219	12,661
Depreciation1	(11,181)	(9,294)	(247)	(20,722)
Reclassification	3,617	754	(4,372)	-
Other	792	(1,023)	561	329
As of March 31, 2022	44,784	22,027	6,747	73,559
Additions	6,535	9,165	8,704	24,405
Depreciation1	(13,416)	(8,432)	(309)	(22,158)
Impairment losses	(5,627)	(1,851)	(1)	(7,479)
Reclassification	3,278	469	(3,748)	-
Other	2,638	(356)	382	2,664
As of March 31, 2023	38,192	21,022	11,774	70,990

Acquisition Cost

(In millions of yen)

	Buildings and structures	Tools, furniture and fixtures	Other	Total
As of April 1, 2021	95,120	75,641	6,364	177,126
As of March 31, 2022	102,207	76,004	8,828	187,040
As of March 31, 2023	112,050	77,349	13,523	202,923

Accumulated Depreciation and Accumulated Impairment Losses

(In millions of yen)

	Buildings and structures	Tools, furniture and fixtures	Other	Total
As of April 1, 2021	45,404	48,652	1,778	95,835
As of March 31, 2022	57,422	53,977	2,081	113,481
As of March 31, 2023	73,857	56,326	1,748	131,932

¹ Depreciation is mainly included within "Selling, general and administrative expenses" in the consolidated statement of profit or loss.

11 Goodwill and Intangible Assets

Changes in the carrying amount, acquisition cost, accumulated amortization and accumulated impairment losses of goodwill and intangible assets are as follows:

Carrying Amount

(In millions of yen)

	Goodwill	Customer-related assets	Software ¹	Other ²	Total
As of April 1, 2021	399,361	60,799	110,249	35,744	606,154
Additions	-	-	49,842	2,160	52,002
Acquisition through business combinations	5,659	1,101	-	1,071	7,832
Sale or disposal	-	-	(547)	(1)	(549)
Amortization 3	-	(8,809)	(41,468)	(8,653)	(58,931)
Impairment losses	-	(1,099)	(10,521)	(1,461)	(13,082)
Exchange differences on the translation of foreign operations	30,996	3,428	328	2,495	37,248
Other	-	-	(569)	42	(527)
As of March 31, 2022	436,017	55,420	107,311	31,396	630,146
Additions	-	-	53,942	1,137	55,079
Acquisition through business combinations	112	-	-	-	112
Sale or disposal	-	-	(283)	(185)	(468)
Amortization3	-	(9,271)	(39,244)	(8,029)	(56,545)
Impairment losses	(4,419)	-	(9,555)	(1,043)	(15,018)
Exchange differences on the translation of foreign operations	31,266	3,479	274	2,396	37,417
Other	-	-	(86)	(24)	(111)
As of March 31, 2023	462,977	49,628	112,358	25,647	650,611

Acquisition Cost

(In millions of yen)

	Goodwill	Customer related assets	Software ¹	Other ²	Total
As of April 1, 2021	460,082	142,720	365,685	101,920	1,070,408
As of March 31, 2022	500,458	154,747	412,622	111,686	1,179,515
As of March 31, 2023	534,433	164,746	452,895	124,655	1,276,730

Accumulated Amortization and Accumulated Impairment Losses

(In millions of yen)

	Goodwill	Customer-related assets	Software ¹	Other	Total
As of April 1, 2021	60,720	81,920	255,436	66,176	464,253
As of March 31, 2022	64,441	99,327	305,310	80,290	549,368
As of March 31, 2023	71,456	115,117	340,537	99,007	626,119

¹ Software mainly comprises internally generated software.
² Other mainly includes trademark rights.
³ Amortization is mainly included within "Selling, general and administrative expenses" in the consolidated statement of profit or loss.
⁴ Research and development expenses recognized as expenses for the years ended March 31, 2022 and 2023 are 85,013 million yen and 168,986 million yen, respectively.

Significant Intangible Assets

Significant items included in intangible assets are customer-related assets arising from the acquisition of shares in RGF Staffing B.V. (39,963 million yen and 37,383 million yen as of March 31, 2022 and 2023, respectively). The remaining amortization period as of March 31,2023 is 7 years.

Impairment Tests on Goodwill

The Company groups its assets by CGU, the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows generated from other assets or groups of assets, by considering managerial units of operations, in principle. Goodwill is allocated to each CGU or group of CGUs that is expected to benefit from the synergies of the business combinations at the acquisition date.

In HR Technology, the entire operation is tested for impairment as a single CGU as it is expected to benefit from the synergies among its entities, and goodwill is monitored for internal management purposes considering that fact. In Staffing, each of the composing entities is tested for impairment as a CGU or a group of CGUs, in principle, in light of their unique business environment.

The balance of goodwill of each CGU or group of CGUs are as follows:

(In millions of yen)

Reportable Segment	CGU or group of CGUs	As of March 31, 2022	As of March 31, 2023
HR Technology	HR Technology	227,099	246,959
Staffing	RGF Staffing B.V.	158,049	168,120
	Other entities	50,869	47,897
Total		436,017	462,977

The Company's significant goodwill is those relating to HR Technology and those arising from the acquisition of shares in RGF Staffing B.V.

The Company tests goodwill for impairment annually irrespective of whether there are any indications of impairment, or whenever there is an indication of impairment.

An impairment loss on goodwill is recognized when the recoverable amount of the CGU or the group of CGUs is lower than its carrying amount. The recoverable amount is based on the value in use, which is calculated using the present value of estimated pre-tax 5-year future cash flows based on a business plan approved by the management of each CGU.

The estimated 5-year future cash flows are determined based on internal and external sources including market growth rates as well as management's assessment of future trends in the industry and historical data. For the periods subsequent to the period covered by the estimated future cash flows, the Company calculates the terminal value based on indefinite life by discounting the future cash flows estimated by using a conservative growth rate determined by considering the environment of the country and the industry in which the CGU belongs. The pre-tax discount rate is determined based on the weighted average cost of capital considering the time value of money and the risks specific to the assets.

Key assumptions used in determining the recoverable amount of each CGU or group of CGUs are as follows:

(%)

		As of March 31. 2022		As of March 31. 2023
Reportable Segment	CGU or group of CGUs	Growth rate	Discount rate	Growth rate	Discount rate
HR Technology	HR Technology	2.2	7.8	2.1	12.6
Staffing	RGF Staffing B.V.	0.0	7.5	2.4	11.7
	Other entities	0.0-1.2	8.6-12.1	0.0-3.6	13.1-18.0

The Company considers that significant impairment is unlikely to occur in each CGU or group of CGUs to which goodwill is allocated, even if key assumptions used for the impairment tests change within a reasonably foreseeable range.

For goodwill relating to RGF Staffing B.V., as of March 31, 2023, a decrease of 2.0% in the growth rate or an increase of 1.4% in the discount rate could result in the recoverable amount being equal to the carrying amount.

Impairment of Goodwill and Intangible Assets

Impairment losses on goodwill and intangible assets are recorded within "Other operating expenses" in the consolidated statement of profit or loss.

There are no significant impairment losses on goodwill and intangible assets for the year ended March 31, 2022.

Major impairment losses on goodwill and intangible assets for the year ended March 31, 2023 are as described in "23 Other operating expenses."

12 Leases

Overview of Leases

The Company leases office buildings and other assets as a lessee. Some lease contracts have renewal options. There are no significant restrictions imposed by lease contracts (such as restrictions on additional borrowings and additional leases).

The breakdown of expenses related to leases is as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Depreciation of right-of-use assets
Buildings and structures	40,478	39,900
Other	3,036	3,440
Total	43,514	43,340
Interest expenses on lease liabilities	3,109	3,655
Expenses on leases of low-value assets ¹	2,319	3,560

¹ For leases for which the underlying asset is of low value, the lease payments are recognized as an expense on a straight-line basis over the lease term.

The breakdown of right-of-use assets is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Buildings and structures ¹	181,439	180,018
Other	5,620	5,017
Total	187,060	185,036

¹ The increase in right-of-use assets for the years ended March 31, 2022 and March 31, 2023 are 26,246 million yen and 50,734 million yen, respectively.

Future Cash Outflows to which the Company is potentially exposed that are not reflected in the Measurement of Lease Liabilities

There are no significant future cash outflows to which the Company is potentially exposed that are not reflected in the measurement of lease liabilities.

Cash Outflows related to Leases

Total cash outflows for leases for the years ended March 31, 2022 and 2023 are 48,385 million yen and 52,534 million yen, respectively.

13 Income Taxes

Deferred Tax Assets and Deferred Tax Liabilities

The breakdown by major component of deferred tax assets and deferred tax liabilities is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Deferred tax assets
Unused tax losses	7,790	4,001
Liabilities related to employee benefits	54,932	51,532
Share-based payment	8,507	16,559
Lease liabilities	57,034	59,177
Contract liabilities	8,596	12,144
Research and development expenses	24,665	49,047
Other	29,313	45,232
Total deferred tax assets	190,841	237,695
Deferred tax liabilities
Investments in subsidiaries and associates	82,853	84,204
Right-of-use assets	50,126	50,124
Property and equipment, goodwill and intangible assets	22,062	21,142
Other	21,705	28,538
Total deferred tax liabilities	176,748	184,011
Net deferred tax assets (liabilities)	14,092	53,684

¹ In recognizing deferred tax assets, the Company takes into account taxable temporary differences, future taxable profit and tax planning.

The breakdown of changes in deferred tax assets and deferred tax liabilities is as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Net deferred tax assets (liabilities)
Beginning balance	(33,488)	14,092
Recognized through profit or loss	44,811	48,194
Recognized in other comprehensive income	1,149	(9,029)
Other ¹	1,620	426
Ending balance	14,092	53,684

¹ Other includes exchange differences on the translation of foreign operations.

Deductible Temporary Differences and Unused Tax Losses for which Deferred Tax Assets are not recognized in the Consolidated Statement of Financial Position

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Deductible temporary differences	197,414	345,505
Unused tax losses	39,259	47,597

The breakdown by expiration of unused tax losses for which deferred tax assets are not recognized in the consolidated statement of financial position is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
1 year or less	183	38
Over 1 year through 5 years	1,833	2,193
Over 5 years and indefinite period	37,242	45,366
Total	39,259	47,597

Breakdown of Income Tax Expense

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Current tax expense	129,838	144,290
Deferred tax expense	(44,811)	(48,194)
Total	85,026	96,096

Reconciliation between Statutory Effective Tax Rates and Actual Effective Tax Rates

(%)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Statutory effective tax rate	30.6	30.6
(Adjustments)
Difference from applicable tax rates for subsidiaries	(6.3)	(7.1)
Share of profit (loss) of associates and joint ventures	(0.4)	(0.2)
Tax credits	(1.5)	(4.4)
Tax effects related to investments in subsidiaries and associates	0.8	3.6
Changes in the assessment for recoverability of deferred tax assets	(1.0)	0.8
Other	0.1	3.0
Actual effective tax rate	22.2	26.1

¹ The Company is mainly subject to income tax, inhabitant tax and enterprise tax (deductible for tax purposes), based on which the statutory effective tax rates have been calculated at 30.6% for the years ended March 31, 2022 and 2023. The overseas subsidiaries are subject to local income taxes.

14 Trade and Other Payables

The breakdown of trade and other payables is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Accounts payable - trade	67,306	74,162
Accrued expenses	188,599	230,009
Other	27,944	45,743
Total	283,849	349,916

¹ Trade and other payables are classified as financial liabilities measured at amortized cost.

15 Bonds and Borrowings

The breakdown of bonds and borrowings is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023	Average interest rate (%) ¹	Maturity (year)
Bonds ²	19,982	19,991	0.22	2024
Borrowings	40,654	15,283	(0.06)	2023 - 2033
Total	60,636	35,274	-	-
Current liabilities	26,236	33,845
Non-current liabilities	34,400	1,429
Total	60,636	35,274

¹ Average interest rate is the weighted average interest rate on the balance of borrowings and others at year-end, and the effective interest rates that reflect the effect of hedging through interest rate swaps and currency swaps are listed.
² The breakdown of bonds is as follows:

(In millions of yen)

Name of issuer	Name of bond	Date of issuance	As of March 31, 2022
The Holding Company	Second series unsecured bonds	March 9, 2017	19,982

Name of issuer	As of March 31, 2023	Interest rate (%)	Collateral	Maturity date
The Holding Company	19,991	0.22	Unsecured	March 8, 2024

16 Other Liabilities

The breakdown of other liabilities is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Contract liabilities ¹	75,204	78,113
Accrued consumption taxes	42,958	43,170
Accrued bonuses	81,948	56,305
Accrued paid holiday	53,743	56,160
Other	52,373	51,878
Total	306,229	285,628
Current liabilities	295,776	277,442
Non-current liabilities	10,452	8,185
Total	306,229	285,628

¹ Contract liabilities are unsatisfied performance obligations for which consideration has been received. When the Company satisfies the performance obligations under the contract, related revenues are recognized. Information on the Company's main performance obligations is provided in "21 Revenue." Most of the performance obligations related to contract liabilities outstanding as of April 1, 2022 were satisfied and related revenues were recognized in the year ended March 31, 2023. Revenue recognized in the year ended March 31, 2023 from performance obligations satisfied (or partially satisfied) in previous periods, due to changes in transaction prices or other reasons, is not material. The balance of contract liabilities as of April 1, 2021 was 58,300 million yen.

17 Provisions

The breakdown of and the changes in provisions are as follows:

For the Year Ended March 31, 2023

(In millions of yen)

	Provision for point program ¹	Asset retirement obligations ²	Other	Total
Beginning balance	10,171	10,331	3,979	24,482
Increase	6,819	1,146	1,926	9,892
Decrease due to utilization	(9,806)	(720)	(1,122)	(11,648)
Reversal	(322)	(4)	(1,096)	(1,423)
Other	5	446	190	642
Ending balance	6,867	11,200	3,878	21,945
Current	6,867	130	2,878	9,876
Non-current	-	11,069	999	12,068
Total	6,867	11,200	3,878	21,945

¹ The Company offers points to users to promote sales, and a provision for point program is recognized for estimated future expenses associated with the redemption of points by users based on historical performance. There is uncertainty about the amount or timing of the use of the points by users.
² Asset retirement obligations are recorded for the obligation to restore assets to their original condition, such as those associated with lease contracts for offices used by the Company, at the amount that is expected to be paid in the future primarily based on historical performance and third-party estimates. Expenditure for the restoration is expected to be incurred mainly after one year, but may be affected by future business plans and other factors.

18 Employee Benefits

Post-employment Benefits

The Company operates lump-sum retirement benefit plans, defined benefit corporate pension plans and defined contribution pension plans as retirement benefit plans.

Lump-sum retirement benefit plans are unfunded plans that are not externally funded but internally funded to pay lump-sum benefits. Lump-sum retirement benefits are paid based on compensation, service period, points earned in each service year and other conditions, pursuant to the provisions of retirement benefits, such as those under the employment rules of the Holding Company and each subsidiary.

Some of the Company's subsidiaries operate defined benefit corporate pension plans which pay lump-sum benefits or pension benefits based on points earned in each service year. Those subsidiaries bear the responsibility for executing operations faithfully to control and manage the funds in compliance with laws and regulations on behalf of the plan participants.

Amounts recognized relating to Defined Benefit Plans in the Consolidated Financial Statements

The amount of net defined benefit liability (asset) recognized in the consolidated statement of financial position is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023
Present value of defined benefit obligations (funded)	9,206	9,461
Fair value of plan assets	5,630	5,358
Subtotal	3,575	4,103
Present value of defined benefit obligations (unfunded)	56,419	57,141
Total	59,994	61,244
Amount recognized in the consolidated statement of financial position
Net liability for retirement benefits	59,994	61,244

The weighted average duration of defined benefit obligations is as follows:

(In years)

	As of March 31, 2022	As of March 31, 2023
Weighted average duration	9.9	10.8

Reconciliation of Defined Benefit Obligations

Changes in the present value of defined benefit obligations are as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Present value of defined benefit obligations at the beginning of the year	62,489	65,625
Current service cost	8,963	8,024
Interest expense	194	287
Benefits paid	(6,301)	(6,239)
Differences arising from the remeasurement of the present value of the defined benefit obligations ¹	84	(1,309)
Other	195	214
Present value of defined benefit obligations at the end of the year	65,625	66,603

¹ The differences arising from the remeasurement of the present value of the defined benefit obligations resulted primarily from changes in financial assumptions.

Reconciliation of Plan Assets

Changes in the fair value of plan assets are as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Fair value of plan assets at the beginning of the year	5,450	5,630
Contributions to the plan	433	494
Other	(253)	(766)
Fair value of plan assets at the end of the year	5,630	5,358

The breakdown of the fair value by type of plan assets is as follows:

(In millions of yen)

	As of March 31, 2022	As of March 31, 2023 Bn
Cash and cash equivalents	94	152
General accounts of life insurance companies	3,603	3,466
Investment trusts ¹	1,753	1,740
Other	178	-
Total	5,630	5,358

¹ Investment trusts are investment vehicles such as commingled investment funds and are primarily invested in marketable securities such as Japanese stocks, foreign stocks, Japanese bonds and foreign bonds in active markets.

Effects on Future Cash Flows

Actuarial Assumptions

Significant actuarial assumptions (in the form of weighted averages) are as follows:

	As of March 31, 2022	As of March 31, 2023
Discount rate	0.5%	1.0%

Sensitivity Analysis

The effects of a 0.5% increase or decrease in the discount rate on the present value of defined benefit obligations as of the end of the year are as follows:

This analysis assumes that the other variables are constant, but in reality the assumptions do not always change independently.

Negative figures represent a decrease in the present value of defined benefit obligations, while positive figures represent an increase in the present value of defined benefit obligations.

(In millions of yen)

	Changes in assumptions	As of March 31, 2022	As of March 31, 2023
Discount rate	0.5% increase	(2,596)	(2,901)
	0.5% decrease	2,995	3,183

Effects on Defined Contribution Plans

Expenses for contributions to the Company's defined contribution pension plans for the years ended March 31, 2022 and 2023 are 67,720 million yen and 87,184 million yen, respectively, which are recognized as "Cost of sales" and "Selling, general and administrative expenses," in the consolidated statement of profit or loss.

Employee Benefit Expenses

The total amounts of employee benefits expense included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statement of profit or loss for the years ended March 31, 2022 and 2023 are 1,725,123 million yen and 2,048,466 million yen, respectively.

19 Common Stock and Other Items of Equity

Common Stock

	Number of shares authorized (No-par value common stock)	Number of shares issued (No-par value common stock)
As of April 1,2021	6,000,000,000	1,695,960,030
Changes during the period	-	-
As of March 31, 2022	6,000,000,000	1,695,960,030
Changes during the period	-	-
As of March 31, 2023	6,000,000,000	1,695,960,030

Treasury Stock

	Number of shares
As of April 1, 2021 ¹	61,763,564
Changes during the period ²	24,922,826
As of March 31, 2022 ¹	86,686,390
Changes during the period ³	30,158,414
As of March 31, 2023 ¹	116,844,804

¹ Includes shares of the Company held by the BIP Trust and the ESOP Trust of 1,389,130 shares, 12,738,818 shares, and 67,803,787 shares, as of April 1,2021, March 31, 2022 and March 31, 2023, respectively.
² The increase in the number of shares of treasury stock for the year ended March 31, 2022 resulted mainly from the purchase of 26,555,258 treasury stocks based on the resolution at the meeting of the Board of Directors held on January 28, 2022. This includes the increase of 470,600 shares from the purchase of the shares of the Company by the BIP Trust and the ESOP Trust and the decrease of 1,915,012 shares from the disposal and delivery of the shares of the Company by the BIP Trust and the ESOP Trust.
³ The increase in the number of shares of treasury stock for the year ended March 31, 2023 resulted mainly from the purchase of 35,004,100 treasury stocks based on the resolution at the meeting of the Board of Directors held on October 17, 2022. This includes the increase of 435,500 shares from the purchase of the shares of the Company by the BIP Trust and the ESOP Trust and the decrease of 5,126,631 shares from the disposal and delivery of the shares of the Company by the BIP Trust and the ESOP Trust.

Share Premium

The Companies Act of Japan prescribes that at least one-half of the consideration received on the issuance of shares must be recognized as common stock and the remaining amount must be recognized as legal capital surplus, which is included in share premium. Legal capital surplus may be reclassified to common stock by resolution at the Shareholders Meeting.

Retained Earnings

The Companies Act of Japan prescribes that one-tenth of the amount of dividends from distributable profits must be set aside as legal capital surplus or legal retained earnings until the total amount of legal capital surplus and legal retained earnings reaches 25% of the amount of common stock. Legal retained earnings may be utilized to reduce a deficit or be reversed to retained earnings by resolution at the Shareholders Meeting.

20 Dividends

The amounts of dividends paid are as follows:

For the Year Ended March 31, 2022

	Type of shares	Total amount of dividends	Dividend per share
Resolution		(In millions of yen)	(Yen)	Record date	Effective date
May 17, 2021 Meeting of the Board of Directors ¹	Common stock	17,173	10.5	March 31, 2021	June 18, 2021
November 15, 2021 Meeting of the Board of Directors ²	Common stock	17,309	10.5	September 30, 2021	December 10, 2021

¹ The total amount of dividends includes dividends of 14 million yen on the shares of Recruit Holdings held by the BIP Trust.
² The total amount of dividends includes dividends of 152 million yen on the shares of Recruit Holdings held by the BIP Trust and the ESOP Trust.

For the Year Ended March 31, 2023

Resolution	Type of shares	Total amount of dividends	Dividend per share	Record date	Effective date
		(In millions of yen)	(Yen)
May 16, 2022 Meeting of the Board of Directors ¹	Common stock	17,031	10.5	March 31, 2022	June 22, 2022
November 14, 2022 Meeting of the Board of Directors ²	Common stock	18,143	11.0	September 30, 2022	December 12, 2022

¹ The total amount of dividends includes dividends of 133 million yen on the shares of Recruit Holdings held by the BIP Trust and the ESOP Trust.
² The total amount of dividends includes dividends of 426 million yen on the shares of Recruit Holdings held by the BIP Trust and the ESOP Trust.

Dividend whose record date is in the year ended March 31, 2023 but whose effective date is in the following fiscal year is as follows:

	Type of	Total amount of dividends	Dividend per share	Record date	Effective date
Resolution	shares	(In millions of yen)	(Yen)
May 15, 2023 Meeting of the Board of Directors ¹	Common stock	18,116	11.0	March 31, 2023	June 27, 2023

¹ The total amount of dividends includes dividends of 745 million yen on the shares of Recruit Holdings held by the BIP Trust and the ESOP Trust.

21 Revenue

Reconciliation of Disaggregated Revenue to Segment Revenue

The reconciliation of revenue disaggregated by major goods/service and operating segments is as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
HR Technology	861,400	1,116,159
US	644,090	812,715
Non-US	217,309	303,443
Matching & Solutions	658,616	760,687
Marketing Solutions	396,548	451,594
HR Solutions	249,358	297,496
Other and Elimination	12,709	11,596
Staffing	1,378,492	1,585,274
Japan	604,943	684,161
Europe, US and Australia	773,549	901,112
Adjustments	(26,804)	(32,601)
Total	2,871,705	3,429,519

Due to the growth in revenue of HR Technology, effective from FY2022, revenue of HR Technology is disaggregated into two categories: the US and non-US.

The Company has three reportable segments, HR Technology, Matching & Solutions, and Staffing, whose operating results are reviewed regularly by the Board of Directors to decide on the allocation of operating resources and to assess business performance.

Revenues from these businesses are recognized based on contracts with customers.

The amount of variable considerations included in revenue is immaterial. Furthermore, the amount of promised consideration does not include any significant financing components.

HR Technology

The Company receives consideration from customers by providing services which enable job seekers to search for opportunities and customers to find candidates by operating an online matching and hiring platform. Revenue is recognized when the performance obligation is satisfied, which is when an individual user accesses or submits an application to the customer's job information through a paid advertisement placed by the customer on the online job search engine site.

Matching & Solutions: Marketing Solutions

The Company receives advertising fees from customers by providing housing, beauty, travel, bridal and dining related information through its websites and printed media to prospective users of the services or purchasers of the products. For online advertisement placement services, regarding advertisement-related services with a guaranteed placement period, the Company has an obligation to place an advertisement over a period specified in a contract. Since the performance obligation is satisfied over time, revenue is recognized over the contract period on a straight-line basis.

For advertisement placement services in printed media, the Company provides advertisement-related services without a definite placement period to customers based on a contract, under which it is obliged to place an advertisement on a specific page of a printed media. Accordingly, the Company considers the performance obligation to be satisfied at the issuance date of the printed media, and revenue is recognized when the media containing the advertisement are displayed at stores and are available for purchase or browsing by consumers, or when they are delivered to subscribers.

Matching & Solutions: HR Solutions

The Company provides employment matching services where it introduces job seekers considering a career change to customers recruiting mid-career professionals by determining the requirements for a successful candidate and then selecting candidates whose work experience, skills and intention meet those requirements. The Company receives referral fees from the customer when the referred job seeker is employed and recognizes revenue at the time of employment. Regarding employment placement services, the Company has an obligation to provide individual employment arrangement services based on a contract. Since the performance obligation is satisfied at the time of employment, revenue is recognized at that point of time.

The Company also receives advertising fees from customers who are recruiting new graduates or mid-career professionals by supporting the entire process from recruitment to employment through advertisement placements on its websites and printed media.

For online advertisement placement services, regarding advertisement-related services with a guaranteed placement period, the Company has an obligation to place an advertisement over a period specified in a contract. Since the performance obligation is satisfied over time, revenue is recognized over the contract period on a straight-line basis.

For advertisement placement services in printed media, the Company provides advertisement-related services without a definite placement period to customers based on a contract, under which it is obliged to place an advertisement on a specific page of a printed media. Accordingly, the Company considers the performance obligation to be satisfied at the issuance date of the printed media and revenue is recognized when the media containing the advertisement are displayed at stores and are available for purchase or browsing by consumers, or when they are delivered to subscribers.

Regarding the sale of a set of services or a series of placements, the Company determines the stand-alone selling price for each underlying service at the inception of the contract, and allocates the transaction price in proportion to those stand-alone selling prices.

Any discount is allocated in proportion to the stand-alone selling prices to each performance obligation in the contract.

Staffing

The Company provides staffing services for clerical jobs, manufacturing jobs and light duty works, as well as various specialist positions to customers. For staffing services, the Company has an obligation to provide personnel based on a contract. The Company considers the performance obligation to be satisfied when labor is provided by the temporary employee. Accordingly, revenue is recognized based on the total number of hours worked by the temporary employee during their dispatched period.

Contract Balances

The details of receivables (accounts receivable - trade), and contract liabilities arising from contracts with customers are described in "7 Trade and Other Receivables," and "16 Other Liabilities," respectively.

Transaction Price allocated to the Remaining Performance Obligations

Applying the expedient in IFRS 15, the Company does not disclose information on contracts with an individual expected contract period of one year or less or contracts for which revenue is recognized in the amount to which the Company has a right to invoice directly based on the value of the services performed. The Company has no significant transactions with an individual expected contract period exceeding one year.

Assets recognized for Costs of Obtaining or Fulfilling Contracts with Customers

The amount of assets recognized for costs of obtaining or fulfilling contracts with customers in the years ended March 31, 2022 and 2023 are not material.

22 Selling, General and Administrative Expenses

The breakdown of selling, general and administrative expenses is as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Sales commission	31,320	35,645
Promotion expenses	58,056	78,851
Advertising expenses	231,253	264,916
Employee benefit expenses	555,984	750,732
Service outsourcing expenses	154,468	222,639
Rent expenses	20,592	29,976
Depreciation and amortization	118,571	117,310
Other	80,057	103,171
Total	1,250,305	1,603,242

23 Other Operating Expenses

The breakdown of other operating expenses is as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Impairment losses ¹	16,698	31,073
Losses from disposals of subsidiary shares	1,002	-
Restructuring expenses ²	150	17,898
Loss on retirement of property and equipment and intangible assets	886	2,628
Other	4,305	2,288
Total	23,043	53,888

¹ Includes impairment losses of 13,902 million yen on right-of-use assets and property and equipment in connection with the integration of offices in HR Technology, impairment losses of 9,374 million yen on software and other assets in connection with the decline in profitability of certain cash-generating units in Matching & Solutions, impairment losses of 4,419 million yen on goodwill in connection with the decline in profitability of certain cash-generating units as well as impairment losses of 3,365 million yen on software in connection with changes in development plans in Staffing for the year ended March 31, 2023.
² Includes an expense of 17,685 million yen related to a workforce reduction of approximately 2,400 employees, which consisted 15% of HR Technology segment's employees, for the year ended March 31, 2023.

24 Other Comprehensive Income

The breakdown of other comprehensive income and the tax effects thereof (including non-controlling interests) are as follows:

(In millions of yen)

	For the Year Ended March 31, 2022
Category	Before tax effects	Tax effects	After tax effects
Items that will not be reclassified to profit or loss:
Net change in financial assets measured at fair value through other comprehensive income
Amount recognized	530	922	1,452
Changes during the year	530	922	1,452
Remeasurements of defined retirement benefit plans
Amount recognized	(547)	167	(380)
Changes during the year	(547)	167	(380)

	For the Year Ended March 31, 2023
Category	Before tax effects	Tax effects	After tax effects
Items that will not be reclassified to profit or loss:
Net change in financial assets measured at fair value through other comprehensive income
Amount recognized	20,067	(8,879)	11,188
Changes during the year	20,067	(8,879)	11,188
Remeasurements of defined retirement benefit plans
Amount recognized	524	(145)	378
Changes during the year	524	(145)	378

	For the Year Ended March 31, 2022
Category	Before tax effects	Tax effects	After tax effects
Share of other comprehensive income of associates and joint ventures
Amount recognized	(255)	-	(255)
Changes during the year	(255)	-	(255)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Amount recognized	99,416	-	99,416
Reclassification adjustment on profit	(578)	-	(578)
Changes during the year	98,838	-	98,838
Effective portion of the change in the fair value of cash flow hedges
Amount recognized	2,683	(821)	1,862
Reclassification adjustment on profit	(2,877)	881	(1,996)
Changes during the year	(193)	59	(134)
Total other comprehensive income (loss)	98,371	1,149	99,521

	For the Year Ended March 31, 2023
Category	Before tax effects	Tax effects	After tax effects
Share of other comprehensive income of associates and joint ventures
Amount recognized	(37)	-	(37)
Changes during the year	(37)	-	(37)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Amount recognized	97,349	-	97,349
Reclassification adjustment on profit	66	-	66
Changes during the year	97,415	-	97,415
Effective portion of the change in the fair value of cash flow hedges
Amount recognized	2,559	(783)	1,775
Reclassification adjustment on profit	(2,543)	778	(1,764)
Changes during the year	15	(4)	10
Total other comprehensive income (loss)	117,984	(9,029)	108,955

25 Per Share Information

The amount of basic earnings per share and the basis for its calculation are as follows:

(In millions of yen, unless otherwise indicated)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Basic earnings per share (Yen)	181.68	168.59
Basis for calculation:
Profit attributable to owners of the parent	296,833	269,799
Amount not attributable to common shareholders of the parent	-	-
Profit used in the calculation of basic earnings per share	296,833	269,799
Weighted average number of shares of common stock outstanding (Thousand shares)	1,633,830	1,600,299

The amount of diluted earnings per share and the basis for its calculation are as follows:

(In millions of yen, unless otherwise indicated)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Diluted earnings per share (Yen)	180.83	167.44
Basis for calculation:
Profit used in the calculation of diluted earnings per share
Profit used in the calculation of basic earnings per share	296,833	269,799
Adjustment on profit	-	-
Profit used in the calculation of diluted earnings per share	296,833	269,799
Weighted average number of shares of common stock outstanding used in the calculation of diluted earnings per share
Weighted average number of shares of common stock outstanding used in the calculation of basic earnings per share (Thousand shares)	1,633,830	1,600,299
Effect of dilutive potential common stock (Thousand shares)
Stock options	1,172	838
Board Incentive Plan ("BIP") Trust	1,570	1,848
Employee Stock Ownership Plan ("ESOP") Trust	4,912	8,294
Weighted average number of shares of common stock outstanding used in the calculation of diluted earnings per share (Thousand shares)	1,641,487	1,611,280

26 Equity Compensation

Stock Options

Overview

The Company has a stock option plan under which stock options are granted to Directors of the Board, Senior Vice Presidents and Corporate Professional Officers (Senior Vice Presidents and Corporate Professional Officers are collectively referred to as "Senior Management") and key management personnels of Recruit Holdings. Stock options are granted to target individuals as resolved by the Board of Directors of Recruit Holdings based on terms approved by its Shareholders Meeting.

The Company's stock option plan is accounted for as an equity-settled share-based payment.

The Company implemented a ten-for-one stock split of its common stock effective July 31, 2014 and a three-for-one stock split of its common stock effective July 1, 2017. Number of shares granted for stock options presented in each fiscal year are adjusted to reflect these stock splits.

Equity compensation agreements outstanding as of the year ended March 31, 2023 are as follows:

Type	For the Year Ended March 31, 2014	For the Year Ended March 31, 2015	For the Year Ended March 31, 2016
Grant date	August 31, 2013	December 26, 2014	September 25, 2015
Number of	1,002,000	876,000	967,800
shares granted	shares of common stock	shares of common stock	shares of common stock
Contractual life	20 years	20 years	20 years
Method of settlement	Equity	Equity	Equity
Vesting conditions	-	-	-
Exercise period	From September 1, 2013 to August 31, 2033 ^2,3	From December 27, 2014 to December 26, 2034 ^{2, 3}	From September 26, 2015 to September 25, 2035 ^{2, 3}

Type	For the Year Ended March 31, 2020	For the Year Ended March 31, 2021	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Grant date	July 31, 2019	July 27, 2020	July 29, 2021	July 25, 2022
Number of	434,900	282,100	720,800	504,400
shares granted	shares of common stock	shares of common stock	shares of common stock	shares of common stock
Contractual life	10 years	10 years	10 years	10 years
Method of settlement	Equity	Equity	Equity	Equity
Vesting conditions	(Note 1)	(Note 1)	(Note 1)	(Note 1)
Exercise period	From July 31, 2019 to July 30, 2029 ^{2, 4}	From July 27, 2020 to July 26, 20302,4	From April 1, 2022 to July 28, 2031 ^{2, 4}	From April 1, 2023 to July 24, 2032 ^{2, 4}

¹ In principle, vesting conditions require continuous service until the vesting date, and stock options are vested in stages depending on the service period starting from the grant date.
² The exercise period is specified in the allotment agreement. If stock options are not exercised within the exercise period, the stock acquisition rights are forfeited.
³ The stock option holders may exercise their options only within 10 days from the date on which they cease to be Directors of the Board and Senior Management during the exercise period.
⁴ The stock option holders may exercise their options only for the period up to the earlier of the day that is the last day of the exercise period of the stock options or three years from the date on which they cease to be Directors of the Board, Senior Management, or key management personnels during the period.

Estimation Method for Fair Value of Unit Price of Stock Options Granted

The fair value of unit price of the stock options is estimated by applying the Black-Scholes model. The grant-date weighted average fair values of the stock options granted during the years ended March 31, 2022 and 2023 are 1,619 yen and 1,646 yen, respectively.

The assumptions used in the Black-Scholes model for valuing the stock options granted during the years are as follows:

	For the Year Ended March 31, 2022
Vesting period	From July 29, 2021 to April 1, 2022	From July 29, 2021 to April 1, 2023	From July 29, 2021 to April 1, 2024	From July 29, 2021 to April 1, 2025
Remaining life of options	5.5 years	6 years	6.5 years	7 years
Share price	5,762 yen	5,762 yen	5,762 yen	5,762 yen
Exercise price	5,762 yen	5,762 yen	5,762 yen	5,762 yen
Volatility ¹	34.506%	34.506%	34.506%	34.506%
Dividend per share	20 yen	20 yen	20 yen	20 yen
Risk-free interest rate	(0.129)%	(0.130)%	(0.127)%	(0.123)%

¹ Calculated based on historical daily share prices since going public.

	For the Year Ended March 31, 2023
Vesting period	From July 25, 2022 to April 1, 2023	From July 25, 2022 to April 1, 2024	From July 25, 2022 to April 1, 2025	From July 25, 2022 to April 1, 2026
Remaining life of options	5.5 years	6 years	6.5 years	7 years
Share price	4,700 yen	4,700 yen	4,700 yen	4,700 yen
Exercise price	4,700 yen	4,700 yen	4,700 yen	4,700 yen
Volatility ¹	38.144%	38.144%	38.144%	38.144%
Dividend per share	21 yen	21 yen	21 yen	21 yen
Risk-free interest rate	0.019%	0.036%	0.053%	0.070%

¹ Calculated based on historical daily share prices since going public.

Share-based Payment Expenses

Expenses for the stock option plan, which are included within "Selling, general and administrative expenses" in the consolidated statement of profit or loss, for the years ended March 31, 2022 and 2023 are 596 million yen and 710 million yen, respectively.

Changes in the Number of Stock Options and Weighted average Exercise Prices thereof

The weighted average share prices upon exercise of stock options during the year are 5,653 yen and 5,463 yen for the years ended March 31, 2022 and 2023, respectively. The weighted average remaining contractual lives as of March 31, 2022 and 2023 were 10.2 years and 9.1 years, respectively.

Changes in the number of stock options and weighted average exercise prices thereof are as follows:

	For the Year Ended March 31, 2022		For the Year Ended March 31, 2023
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
		(Yen)		(Yen)
Outstanding at the beginning of the year	1,711,400	1,463.90	2,243,600	2,888.30
Granted	720,800	5,762.00	504,400	4,700.00
Exercised	188,600	945.77	155,400	1.00
Forfeited	-	-	-	-
Expired at maturity	-	-	-	-
Outstanding at the end of the period	2,243,600	2,888.30	2,592,600	3,413.84
Outstanding and exercisable at the end of the period	1,614,400	1,873.29	1,785,300	2,600.14

Board Incentive Plan Trust

Overview of the Board Incentive Plan Trust

The Company has introduced an equity compensation plan using an equity-settled Board Incentive Plan Trust as an incentive plan for the Directors of the Board and Senior Management of Recruit Holdings and some of its subsidiaries.

The plan is implemented as a long-term incentive plan for the Directors and Senior Management, and is intended to motivate them to improve the Company's business performance and increase its enterprise value over the mid- to long-term, by clarifying and strengthening the interrelation between their compensation and shareholder value. In the plan, the Directors and Senior Management are granted the Recruit Holdings' shares or receive the monetary equivalent value of such shares according to their ranks or the level of attainment of performance targets when linked to business performances.

The plan is accounted for as an equity-settled share-based payment.

Share-based Payment Expenses

Expenses for the Board Incentive Plan Trust, which are included within "Selling, general and administrative expenses" in the consolidated statement of profit or loss, for the years ended March 31, 2022 and 2023 are 1,760 million yen and 1,692 million yen, respectively.

Method for Measurement of Fair Value of the Recruit Holdings Shares granted during the Year Based on the Board Incentive Plan Trust

The weighted average fair value of the Recruit Holdings' shares granted during the year is determined based on the following preconditions:

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Number of shares granted (Shares)	477,198	294,972
Weighted average fair value (Yen) ¹	6,075	4,712
Vesting conditions	(Note 2)	(Note 2)

¹ For shares granted, the fair values are measured based on observable market prices.
² In principle, vesting conditions require continuous service until the vesting date.

Equity-settled Employee Stock Ownership Plan Trust

Overview of the Equity-settled Employee Stock Ownership Plan Trust

The Company has introduced an equity-based incentive plan using an equity-settled Employee Stock Ownership Plan Trust as an incentive plan for employees of its subsidiaries.

The plan is implemented as a long-term incentive plan for the employees and is intended to motivate them to improve the Company's business performance and increase its enterprise value over the mid- to long-term, by clarifying and strengthening the interrelation between their compensation and shareholder value. In the plan, the employees are granted the Recruit Holdings' shares or receive the monetary equivalent value of such shares according to the vesting period.

This plan is accounted for as an equity-settled share-based payment.

Share-based Payment Expenses

Expenses for the Employee Stock Ownership Plan Trust, which are included within "Selling, general and administrative expenses" in the consolidated statement of profit or loss, for the years ended March 31, 2022 and 2023 are 30,090 million yen and 70,303 million yen, respectively.

Method for Measurement of Fair Value of the Recruit Holdings Shares granted during the Year Based on Equity-settled Employee Stock Ownership Plan Trust

The weighted average fair value of the Recruit Holdings' shares granted during the year is determined based on the following preconditions:

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Number of shares granted (Shares)	13,068,080	33,831,014
Weighted average fair value (Yen) ¹	5,621	4,398
Vesting conditions	(Note 2)	(Note 2)

¹ For shares granted, the fair values are measured based on observable market prices. Expected dividends are incorporated into the measurement of fair value.
² In principle, vesting conditions require continuous service until the vesting date.

27 Financial Instruments

Capital Management

Details of capital management are as presented in "Capital Resources and Liquidity" in "Management's Discussion and Analysis of Financial Position, Results of Operations, and Cash Flows."

Financial Risk Management

In the course of conducting its business activities, the Company is exposed to financial risks (credit risk, liquidity risk, foreign currency risk, interest rate risk, and price risk). The Company monitors these financial risks in order to avoid or reduce the risks as necessary.

The Company uses derivative transactions to hedge foreign currency risk and interest rate risk, and not for speculative purposes.

Credit Risk Management

The Company's trade receivables such as notes and accounts receivable - trade are exposed to customer credit risk.

The Company reviews new clients to understand and mitigate at an early stage the potential uncollectability of receivables due to deterioration in their financial conditions. Regarding trade receivables, the Company manages the due dates and balances of each client and also monitors the financial condition of major clients on a regular basis. In addition, the Company enters into transactions only with financial institutions with high credit ratings to mitigate counterparty risk. The Company is not exposed to credit risk that is excessively concentrated in a particular counterparty. Asides from guarantee obligations, the Company's maximum exposure to credit risk is the carrying amount of the financial assets presented in the consolidated statement of financial position after impairment.

Reconciliation of Loss Allowance

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Beginning balance	10,242	12,003
Increase	10,806	13,493
Decrease (utilization)	(7,489)	(11,994)
Decrease (reversal)	(1,952)	(1,993)
Decrease due to loss of control	(149)	(36)
Other	545	603
Ending balance	12,003	12,075

Assessment of Credit Risk Exposure

Trade and other receivables

The Company is not exposed to credit risk that is excessively concentrated in any single counterparty or group to which it belongs.

Liquidity Risk Management

The Company manages its liquidity risk by preparing and updating a cash management plan at each subsidiary level, ensuring liquidity is available based on estimated revenue and expenditures, and realizing group financing through a cash-pooling system. In addition, the Company has entered into commitment line contracts with financial institutions to further prepare for liquidity risk.

Financial liabilities by maturity are as follows. Contractual cash flows are presented as undiscounted cash flows including interest payments.

As of March 31, 2022

(In millions of yen)

	Carrying amount	Contractual cash flows	1 year or less	Over 1 year through 5 years	Over 5 years
(Financial liabilities other than derivatives)
Trade and other payables	283,849	283,849	283,849	-	-
Bonds and borrowings	60,636	61,168	26,520	33,265	1,382
Lease liabilities	210,789	215,563	41,468	100,647	73,447
(Derivatives)
Derivative liabilities ¹	0	0	0	0	-
Total	555,276	560,583	351,839	133,912	74,830

As of March 31, 2023

(In millions of yen)

	Carrying amount	Contractual cash flows	1 year or less	Over 1 year through 5 years	Over 5 years
(Financial liabilities other than derivatives)
Trade and other payables	349,916	349,916	349,916	-	-
Bonds and borrowings	35,274	35,992	34,406	80	1,505
Lease liabilities	219,680	236,840	44,954	121,684	70,202
(Derivatives)
Derivative liabilities ¹	-	-	-	-	-
Total	604,870	622,749	429,276	121,764	71,707

¹ Cash flows are expected to affect profit or loss mostly in the same periods as they occur.

Foreign Currency Risk

Foreign Currency Risk Management

The Company is exposed to the risk of rapid fluctuation of foreign exchange rates.

For certain foreign currency-denominated receivables and payables, the foreign currency fluctuation risk is hedged on an individual basis.

Foreign Currency Sensitivity Analysis

The effect of a 1% strengthening of Japanese yen against the US dollar on profit before tax of the Company in each reporting period is as follows. Currencies other than the one used in the analysis are assumed to be constant. In addition, this analysis does not include the effects of translating financial instruments denominated in the functional currency as well as the assets and liabilities of foreign operations into Japanese yen.

A 1% weakening of Japanese yen against the US dollar on profit before tax of the Company will have an opposite effect by the same amount as shown in the following table.

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Profit before tax
US dollar	(14)	(18)

Interest Rate Risk

Interest Rate Risk Management

Borrowings are appropriated for working capital and funds for capital investment, and since a large portion of borrowings have floating interest rates, they are exposed to interest rate fluctuation risk.

Regarding interest rate fluctuation risk of borrowings, interest rate swaps are used to fix a portion of or the entire interest expense.

Price Risk

Price Risk Management

The Company is exposed to market price fluctuation risk associated with equity instruments.

Equity instruments are managed by regularly monitoring the market prices and financial condition of issuers and, on an ongoing basis, evaluating the holding status in light of the relationship with issuers.

Price Sensitivity Analysis

Assuming that the fair values of all equity financial assets with active markets decrease by 10% at the end of each fiscal year, the effects on other comprehensive income (before tax effects) are as follows:

(In millions of yen)

	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Other comprehensive income (before tax effects)	(8,815)	(8,402)

Derivatives and hedge accounting

Risk Management Policies

The Company uses derivatives to hedge foreign currency risk and interest rate risk. Derivatives are limited to transactions with actual demand and not entered into for speculative purposes. Where natural hedges cannot be used against market risk, the Company applies hedge accounting by designating such derivatives as hedges based on the risk management policies.

To mitigate interest rate risk and foreign currency risk arising from business operations, cash flow hedges are applied. The Company generally assesses qualitatively whether the critical terms for the hedged item and the hedging instrument are matched or closely aligned, or quantitatively whether changes in the values of the hedged item and the hedging instrument have an offsetting relationship on the same risk in order to confirm the economic relationship between the hedged item and the hedging instrument. For a hedging relationship in which ineffectiveness is expected to occur, the amount of the ineffectiveness is determined using a quantitative method. The Company implements highly effective hedges, and the amount of hedge ineffectiveness is not material.

Derivatives subject to hedge accounting are managed under the risk management policies, and part or all of the risk is hedged.

Quantitative Information on Derivatives (Subject to Hedge Accounting)

(In millions of yen)

		As of March 31, 2022		As of March 31, 2023
	Hedging instrument	Notional amount	Carrying amount	Notional amount	Carrying amount
Interest rate risk	Interest rate swaps	14,974	(0)	4,991	0
Interest rate risk/ Foreign currency risk	Interest rate and currency swaps	22,461	1,936	7,487	1,444
Total		37,436	1,935	12,478	1,444

Assets and liabilities arising from derivatives are recorded within "Other financial assets" and "Other financial liabilities," respectively, in the consolidated statement of financial position. The fair values are determined based on prices presented by financial institutions. The period in which cash flows are expected to occur under cash flow hedges is one year, and is expected to affect profit or loss mostly in the same periods as they occur.

Effects of Applying Hedge Accounting on the Consolidated Statement of Profit or Loss and the Consolidated Statement of Comprehensive Income

(In millions of yen)

	For the Year Ended March 31, 2022		For the Year Ended March 31, 2023
	Gain (loss) on hedge recognized in cash flow hedge reserves	Amount reclassified from cash flow hedge reserves to profit or loss	Gain (loss) on hedge recognized in cash flow hedge reserves	Amount reclassified from cash flow hedge reserves to profit or loss
Interest rate risk	16	(1)	2	(1)
Interest rate risk/ Foreign currency risk	1,845	(1,995)	1,772	(1,763)
Total	1,862	(1,996)	1,775	(1,764)

The amount reclassified from cash flow hedge reserves to profit or loss is recorded within "Finance income" or "Finance costs" in the consolidated statement of profit or loss.

28 Fair Value Measurement

Method of Fair Value Measurement

Assets

Since cash and cash equivalents, and trade and other receivables are settled within a short period of time, their carrying amounts approximate their fair values.

The fair value of other financial assets other than the following are determined by discounting the future cash flows to their present value by using an interest rate that reflects the remaining term and credit risk of the asset, and their carrying amounts approximate their fair value.

Equity Financial Assets and Debt Financial Assets

The fair value of stocks included in equity financial assets for which active markets exist is determined based on market prices. The fair value of stocks included in equity financial assets and debt financial assets for which active markets do not exist is assessed mainly based on transaction prices in the latest arm's length transactions.

Derivative Assets

The fair value of derivative assets is determined based on prices presented by financial institutions.

Liabilities

Since trade and other payables, and short-term borrowings are settled within a short period of time, their carrying amounts approximate their fair values.

The fair value of long-term borrowings is determined by discounting the future cash flows to the present value by using an interest rate that would be applied to new similar borrowings.

The fair value of bonds is determined with reference to market prices.

The fair value of other financial liabilities other than the following are determined by discounting the future cash flows to the present value by using an interest rate that reflects the remaining term and credit risk of the liability, and their carrying amounts approximate their fair values.

Derivative Liabilities

The fair value of derivative liabilities is determined based on prices presented by financial institutions.

Fair Value Hierarchy

Fair value measurements in the Company are categorized, depending on their observability in the market, into three different levels which are defined as follows:

	Level 1: Fair value measured at quoted prices in active markets
	Level 2: Fair value determined, either directly or indirectly, by using observable prices other than Level 1
	Level 3: Fair value determined using valuation techniques based on significant unobservable inputs

When more than one input is used to measure the fair value, the level of the fair value is determined based on the lowest level input that is significant to the measurement of the overall fair value. There were no significant transfers between Level 1, Level 2 and Level 3 during the years ended March 31,2022 and 2023. The Company recognizes transfers between the levels of the hierarchy at the end of the reporting period during which the event causing the transfer occurred.

The Breakdown by Level of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The breakdown by level of the fair value hierarchy of financial instruments is as follows:

As of March 31, 2022

(In millions of yen)

	Carrying amount	Level 1	Level 2	Level 3
Financial assets
Equity financial assets	153,639	88,156	2,427	63,055
Derivative assets	1,936	-	1,936	-
Total	155,576	88,156	4,364	63,055
Financial liabilities
Derivative liabilities	0	-	0	-
Total	0	-	0	-

As of March 31, 2023

(In millions of yen)

	Carrying amount	Level 1	Level 2	Level 3
Financial assets
Equity financial assets	171,434	84,020	-	87,414
Debt financial assets	30,426	-	-	30,426
Derivative assets	2,878	-	2,878	-
Total	204,739	84,020	2,878	117,841
Financial liabilities
Derivative liabilities	-	-	-	-
Total	-	-	-	-

Equity financial assets categorized within Level 1 are mainly stocks for which active markets exist.

Derivative assets and derivative liabilities categorized within Level 2 are mainly derivative financial instruments including interest rate swaps, currency swaps and forward foreign exchange contracts.

Equity financial assets categorized within Level 3 are mainly unlisted stocks for which active markets do not exist. Debt financial assets are convertible bonds for which active markets do not exist.

Reconciliation from the beginning balance to the ending balance of financial assets categorized within Level 3 of the fair value hierarchy is as follows:

As of March 31, 2022

(In millions of yen)

	Equity financial assets	Debt financial assets
Beginning balance	41,825	-
Profit or loss ¹	-	-
Other comprehensive income ²	19,677	-
Purchase	9,143	-
Sale	(2,654)	-
Other	(4,936)	-
Ending balance	63,055	-
Total unrealized profit or loss recognized as profit or loss for financial assets held as of March 31, 2022	-	-

As of March 31, 2023

(In millions of yen)

	Equity financial assets	Debt financial assets
Beginning balance	63,055	-
Profit or loss ¹	-	686
Other comprehensive income ²	23,784	-
Purchase ³	759	29,882
Sale	(2,117)	-
Other	1,932	(141)
Ending balance	87,414	30,426
Total unrealized profit or loss recognized as profit or loss for financial assets held as of March 31, 2023	-	686

¹ Related to financial assets measured at fair value through profit or loss and is included in "Finance income" and "Finance costs" under the consolidated statement of profit or loss.
² Related to financial assets measured at fair value through other comprehensive income and is included in "Net change in financial assets measured at fair value through other comprehensive income" under the consolidated statement of comprehensive income.
³ Purchase in the debt financial assets column is mainly the increase of convertible bonds received during FY2022 as consideration for the sale of a portion of shares as part of the going private transaction of 51job, Inc.

Financial Assets and Financial Liabilities Measured at Amortized Cost

The carrying amount and fair value of financial assets and financial liabilities measured at amortized cost are as follows:

(In millions of yen)

	As of March 31, 2022		As of March 31, 2023
	Carrying amount	Fair value	Carrying amount	Fair value
Bonds	19,982	19,980	19,991	19,994

The above table does not include financial assets and financial liabilities measured at amortized cost whose carrying amount approximates their fair value.

The fair value hierarchy of bonds is categorized as Level 2.

29 Cash Flow Information

Reconciliation of Liabilities from Financing Activities

Changes in liabilities from financing activities are as follows:

(In millions of yen)

	Borrowings	Bonds	Lease liabilities	Total
Balance at April 1, 2021	62,825	49,955	304,989	417,770
Cash movements	(24,913)	(30,000)	(42,956)	(97,870)
Changes due to new leases, contract modifications, etc.	-	-	(63,109)	(63,109)
Effects of changes in foreign exchange rates	2,742	-	12,411	15,154
Other	(0)	26	(546)	(519)
Balance at March 31, 2022	40,654	19,982	210,789	271,425
Cash movements	(24,980)	-	(45,318)	(70,299)
Changes due to new leases, contract modifications, etc.	-	-	42,335	42,335
Effects of changes in foreign exchange rates	(390)	-	11,874	11,483
Other	-	9	-	9
Balance at March 31, 2023	15,283	19,991	219,680	254,954

¹ Cash movements in "Borrowings" represent the net amount of "Proceeds from long-term borrowings," "Net increase (decrease) in short-term borrowings" included in "Other," and "Repayments of long-term borrowings" under cash flows from financing activities in the consolidated statement of cash flows.
² Changes due to new leases, contract modifications, etc., under "Lease liabilities" in the year ended March 31, 2022 include a decrease due to the remeasurement of lease liabilities associated with the reassessment of lease terms in the initial measurement of office buildings in Japan.

30 Related Party Transactions

Transactions with Related Parties

Transactions with related parties and the balance of debt obligations are as follows:

As of March 31, 2022

There are no significant transactions with related parties (except for those eliminated in the consolidated financial statements).

As of March 31, 2023

(In millions of yen)

Attribute	Name of related party	Transaction detail	Transaction amount	Outstanding balance
Associate	51job, Inc.	Partial disposal of the shares of 51job, Inc.	68,984	-

¹ As a result of the sale of a portion of shares as part of the going private transaction of 51 job, Inc. and the receipt of convertible bonds and cash as consideration, investments in equity-method associates and joint ventures were decreased. Details on the convertible bonds received are stated in "28 Fair Value Measurement." In addition, proceeds from sales of investments in associates and joint ventures of 39,531 million yen are recorded. Transaction terms and conditions are determined based on a consent between the parties after negotiating each item separately.

Compensation for Key Management Personnel

Compensation for the Directors of the Board of the Holding Company are as follows:

(In millions of yen)

Type	For the Year Ended March 31, 2022	For the Year Ended March 31, 2023
Annual Incentive	656	969
Post-employment benefits	0	-
Share-based payments	1,382	1,322
Total	2,040	2,291

31 Major Subsidiaries

Major subsidiaries of the Holding Company are as follows:

Name	Reportable Segment	Ratio of voting rights held (%)
RGF OHR USA, INC.	HR Technology	100.0
Indeed, Inc.	HR Technology	100.0
Glassdoor, Inc.	HR Technology	100.0
Recruit Co., Ltd.	Matching & Solutions	100.0
RGF Staffing B.V.	Staffing	100.0
Recruit Staffing Co., Ltd.	Staffing	100.0
STAFF SERVICE HOLDINGS CO., LTD.	Staffing	100.0
RGF Staffing France SAS	Staffing	100.0
RGF Staffing Germany GmbH	Staffing	100.0
RGF Staffing the Netherlands B.V.	Staffing	100.0
RGF Staffing UK Limited	Staffing	100.0
Unique NV	Staffing	100.0
Staffmark Group, LLC	Staffing	100.0
The CSI Companies, Inc.	Staffing	70.0
Chandler Macleod Group Limited	Staffing	100.0

32 Subsequent Events

Share repurchase

The Company announced that its Board of Directors resolved on May 17, 2023 to conduct a share repurchase of its common stock of up to 23,000,000 shares through a tender offer (the "Self Tender Offer") as the specific purchase method pursuant to Article 156, Paragraph 1 of the Companies Act, as applied by replacing certain terms pursuant to Article 165, Paragraph 3 of such Act, and the provisions of the Company's Articles of Incorporation.

The Company completed the share repurchase of its common stock on June 14, 2023.

Reason of the share repurchase

The Company acknowledges that there has been a certain degree of concern in the capital markets regarding the possibility of uncoordinated sales by its Japanese business shareholders putting downward pressure on its stock price. Previously, when the Company was notified that several of its shareholders intended to reduce their holdings, the Company conducted secondary equity offerings and a self tender offer to provide these shareholders with opportunities to sell a large volume of shares at the same time in a coordinated manner.

Recently, the Company considered options to provide an opportunity for the smooth sale of its shares after Dai Nippon Printing Co., Ltd., which holds the largest ownership percentage among the Company's Japanese business shareholders, notified the Company of its intention to reduce by half its ownership stake in the Company's common stock by the end of March 2024.

The Company considered the intention of Dai Nippon Printing Co., Ltd., the potential impact on the Company's share price from the large uncoordinated sales of shares over a short period, the capacity to pursue future strategic business investments, the capital market's environment as well as the outlook of its financial position, and has determined it is appropriate to acquire its own shares in accordance with the Company's capital allocation policy.

As a specific measure, the Company has decided to acquire its shares from Dai Nippon Printing Co., Ltd. through a self tender offer at the purchase price of 3,326 yen as agreed by the shareholders of Dai Nippon Printing Co., Ltd., and has entered into a tender offer agreement.

The Company has determined that the Self Tender Offer enables the Company to minimize its cash outflow while enhancing shareholder value.

Details of the Board of Directors resolution concerning the share repurchase

Type of shares to be repurchased:	Common shares of the Company
Total number of shares to be repurchased:	23,000,100 shares (Maximum)
	(Up to 1.35% of total number of shares issued and outstanding)
Total purchase price:	76,498 million yen (Maximum)
Acquisition period:	From May 18 to July 31, 2023
Method of the purchase:	Self tender offer

Details of common stock repurchased pursuant to the Board of Directors resolution described above

Type of shares repurchased:	Common shares of the Company
Total number of shares repurchased:	18,827,759 shares
Total purchase price:	62,621 million yen
Acquisition period:	From May 18 to June 14, 2023

Outline of the Self Tender Offer

Total number of shares to be repurchased:	23,000,000 shares (Maximum)
Purchase price:	3,326 yen per share of common stock
Self Tender Offer period:	From May 18 to June 14, 2023
Date of public notice of commencement of the Self Tender Offer bid:	May 18, 2023
Settlement commencement date:	July 6, 2023

Result of the Self Tender Offer

Planned number of shares to be purchased:	23,000,000 shares
Expected number of excess shares:	-
Number of shares tendered:	18,827,759 shares
Number of shares purchased:	18,827,759 shares

Other

Quarterly Information for the Year Ended March 31, 2023

(In millions of yen, unless otherwise stated)

(Cumulative period)	First three months	First six months	First nine months	Full year
Revenue	843,175	1,721,649	2,601,768	3,429,519
Profit before tax	120,060	230,398	336,073	367,767
Profit attributable to owners of the parent	84,472	169,745	247,634	269,799
Basic earnings per share (Yen)	52.48	105.44	154.05	168.59

(Accounting period)	First quarter	Second quarter	Third quarter	Fourth quarter
Basic earnings per share (Yen)	52.48	52.96	48.60	14.04

Independent Auditor's Report

June 26, 2023

Recruit Holdings Co., Ltd.

Ernst & Young ShinNihon LLC Tokyo, Japan

The Board of Directors

Hitoshi Matsuoka, Certified Public Accountant Designated and Engagement Partner

Yoshifumi Mitsugi, Certified Public Accountant Designated and Engagement Partner

Takuto Miki, Certified Public Accountant Designated and Engagement Partner

Audit of Financial Statements

Opinion

Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the accompanying consolidated financial statements of Recruit Holdings Co., Ltd. and its subsidiaries (the Company), which comprise the consolidated statement of financial position as of March 31, 2023, and the consolidated statement of profit or loss, comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the consolidated financial statements. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial statements.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of goodwill related to RGF Staffing B.V.

Description of Key Audit Matter

Auditor's Response

As described in the Note 11 Goodwill and Intangible Assets to the consolidated financial statements, the Company has recognized goodwill of JPY 168,120 million arising from the acquisition of RGF Staffing B.V., which operates a staffing business across Europe, and discloses the underlying assumptions used in impairment test of the goodwill.
In conducting the impairment test, the Company measures the recoverable amount of a cash-generating unit or a group of cash-generating units (collectively "CGU") to which goodwill is allocated based on value in use. Value in use is calculated using the present value of estimated pre-tax 5-year future cash flows based on a business plan approved by management of each CGU. The estimated 5-year future cash flows are determined based on internal and external sources including market growth rates as well as management's assessment of future trends in the industry and historical data. For the periods subsequent to the period covered by the estimated future cash flows, the Company calculated the terminal value based on indefinite life by discounting the future cash flows estimated using a growth rate assumption determined considering the environment of the country and the industry to which the CGU belongs. The pre-tax discount rate is determined based on the weighted average cost of capital considering the time value of money and the risks specific to the assets.
Key assumptions used in estimating value in use are: market growth rates within the estimated future cash flows based on the 5-year business plans; the growth rate for the periods subsequent to the period covered by the business plans; and the discount rate. The business plans are prepared based on management's best estimate.
The estimates of the market growth rates used in the estimate of future cash flows based on the 5-year business plans and the growth rate for the period beyond the 5 year period used in the impairment test are subject to uncertainties and require management's judgement because those rates are affected by changes in the employment environment driven by changes in the economic conditions. The estimate of the discount rate requires highly specialized knowledge in consideration of its method and inputs. For the year ended March 31, 2023, a rise in the discount rate due to a rise in interest rates had a significant impact to the calculation of the value in use. Therefore, we determined the valuation of goodwill to be a key audit matter.

We performed audit procedures to assess the valuation of goodwill related to RGF Staffing B.V. including:
- We assessed whether the estimated 5-year future cash flows are based on the business plans approved by management. For market growth rates that are a key assumption in estimating future cash flows, we inquired of management regarding the rationale of the rates and compared them to available external data such as forecast of staffing market growth rate per country provided by an external organization, performed trend analysis based on actual past performance, assessed progress toward business plans for the period subsequent to the date of the impairment test, and performed a sensitivity analysis.
- For the growth rate for the period beyond the 5-year period, we inquired of management regarding the rationale for the rate, performed a comparison to economic forecasts published by an external organization, performed trend analysis based on actual past performance, and performed a sensitivity analysis.
- With the involvement of the valuation specialists of our network firm for valuation methodologies for value in use and discount rate, we evaluated the acceptability of the valuation methodologies used by the Company according to the accounting standards and the consistency of the inputs used to calculate the discount rate with publicly available external data. For the discount rate, we performed a sensitivity analysis.

Other information

The other information consists of the information included in the Annual Report, other than the consolidated financial statements, the financial statements and our auditor's reports thereon. Management is responsible for preparation and disclosure of the other information. Audit and Supervisory Board Members and Audit and Supervisory Board are responsible for overseeing the Group's reporting process of the other information.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of Management, Audit and Supervisory Board Members and Audit and Supervisory Board for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern and disclosing, as required by IFRSs, matters related to going concern.

Audit and Supervisory Board members and Audit and Supervisory Board are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
•	In making those risk assessments, we consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectiveness of the Company's internal control.
•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
•	Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
•	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance with IFRSs.
•	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit and Supervisory Board members and Audit and Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit and Supervisory Board members and Audit and Supervisory Board with a statement that we have complied with the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate with them all relationships and other matters that may reasonably be thought to have impacts on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit and Supervisory Board members and Audit and Supervisory Board, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Audit of Internal Control

Opinion

Pursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the management's report on internal control over financial reporting of Recruit Holdings Co., Ltd., as of March 31, 2023.

In our opinion, the management's report on internal control over financial reporting referred to above, which represents that the internal control over financial reporting of Recruit Holdings Co., Ltd. as of March 31, 2023 is effectively maintained, presents fairly, in all material respects, the results of management's assessment of internal control over financial reporting in conformity with standards for assessment of internal control over financial reporting generally accepted in Japan.

Basis for Opinion

We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Internal Control Audit section of our report. We are independent of the Company in accordance with the ethical requirements in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management, Audit and Supervisory Board Members and Audit and Supervisory Board for the Management's Report on Internal Control over Financial Reporting

Management is responsible for designing and operating effective internal control over financial reporting and for the preparation and fair presentation of its report on internal control in accordance with standards for assessment of internal control over financial reporting generally accepted in Japan.

Audit and Supervisory Board members and Audit and Supervisory Board are responsible for overseeing and verifying the design and operating effectiveness of internal control over financial reporting.

There is a possibility that misstatements may not be completely prevented or detected by internal control over financial reporting.

Auditor's Responsibilities for the Internal Control Audit

Our responsibility is to obtain reasonable assurance about whether the management's report on internal control over financial reporting is free from material misstatement, and to express an opinion from an independent perspective on an internal control report, based on our internal control audit.

As part of an audit in accordance with auditing standards for internal control over financial reports generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•	Perform audit procedures to obtain audit evidence for the assessment results for internal control over financial reporting in management's report on internal control. Internal control audit procedures selected and applied depend on the auditor's judgment, taking into account the significance of effects on the reliability of financial reporting.
•	Examine representations on the scope, procedures, and results of assessment of internal control over financial reporting made by management, as well as evaluating the overall presentation of management's report on internal control.
•	Obtain sufficient appropriate audit evidence regarding the results of assessment of internal control over financial reporting in the management's report on internal control. We are responsible for direction, supervision and performance of the audit of management's report on internal control. We remain solely responsible for our audit opinion.

We communicate with the Audit and Supervisory Board members and Audit and Supervisory Board regarding the planned scope and timing of the internal control audit, results of the internal control audit, including identified material weakness which should be disclosed, the results of remediation, and other matters that are required by auditing standards for internal control.

We also provide the Audit and Supervisory Board members and Audit and Supervisory Board with a statement that we have complied with the ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to have impacts on our independence, and where applicable, related safeguards.

Conflicts of Interest

We have no interest in the Company which should be disclosed in accordance with the Certified Public Accountants Act.

Notes to the Readers of Independent Auditor's Report

This is an English translation of the Independent Auditor's Report as required by the Financial Instruments and Exchange Act of Japan for the conveniences of the reader.

Notes:

^1. The above is a digital version of the matters stated on the original audit report. The original is stored separately by the Holding Company (the company submitting the securities report).
^2. XBRL data is not included in the scope of the audit.