Recruit Holdings Co., Ltd. (6098) September 10, 2026 Conference Transcript

Hello, everyone, and welcome to the Recruit Holdings Fireside Chat at the Goldman Sachs Comunagopia Technology Conference. It's a great pleasure to have Hisayuki Rekova, CEO of Recruit Holdings, here today. My name is Minami Munakata. I cover Recruit Holdings and Internet Entertainment here at Goldman Sachs. We have about 35 minutes for today's session, inclusive of audience Q&A at the end. And so with that, Deku-san, thank you very much for being here.

Thank you for having me.

Thank you. So let's get started. So Deku-san indeed began as a job advertisement business, but pay more, get more, suggests what employees pay for today is much closer to an actual hiring outcome. So could you walk us through that evolution and how you personally define what Indeed is exactly selling?

What Indeed is exactly selling? So we're selling basically hires. We're selling hires. That's the very important part. And, you know, basically AI technology helped us to make sure that we're delivering qualified candidates. That is the most important part. I'm going to give you a good example. In the past, Indeed was more like a search engine, meaning like we were charging one dollar for this click, one dollar for this click, one dollar for this click. It doesn't matter who is clicking it, right? Meaning like if this click was done by the person who just graduated high school or just graduated university, whatever, for three years experience, 20 years experience. We were charging $1, $1, $1. So as a result, sometimes employers said, oh, we allocated a bunch of budget. We got 200 applications, but quality was not great. But now with AI, we have a great AI technology to detect, okay, how qualified this candidate is. Who is clicking this? Who is clicking that? Who is clicking this? And we are charging, let's say, the same three dollars, we're charging $2.7 for 20 years experienced person and probably 0.1, 0.1 from these two cliques. As a result, when employers are allocating more budget, they can get qualified candidates sooner. So what's happening is there are so many positions employers are striving to fill. When they increase the budget, they can get qualified candidates, not adjust the quantity of candidates. That's the big evolution we've been doing for the last 18 months. Is that your question?

Yeah, you're feeling better experience. And I think you started to disclose U.S. AppJ, KPI. So USFJ grew 35% while indeed the job posting declined 4%. I get a constant question on whether that is sustainable at this level. Should we expect USFJ to slow down from Q2 onwards?

I'm so focused on the long-term innovation. So what I believe is right now, it doesn't matter inside recruiters, which employers have 50 people, 100 people in their talent acquisition team, or outsourced, which is staffing agencies or recruiting agencies, employers paying a lot to them. what they're doing is human beings is checking thousands of resumes if they're qualified or not. And also even if they're qualified, most of the time what they're doing is they're sometimes reaching out to them like, oh, do you really have driver's license? That's the manual repetitive tasks human being recruiters are doing every day. And five years later, 10 years later, I really, really, really want to automate these manual repetitive tasks. And that's our goal. And if we can do it, so what we're doing is literally almost like an AI company, right? We have a lot of two-sided marketplace data, and we are training our model to detect which candidate is a great qualified candidate for this job, this specific employer and so if we can do it, I think it doesn't matter. We should be able to monetize our body because that's the work which is there's a cost associated with right? $315 billion market, 65% 70% of This $350 billion HR market is the manual cost, human labor cost. And I think people are worried about AI changing people's jobs, whatever. But I think we should be automating these things to boost actual productivity of all employers. That's our goal. and so short term what i've been focusing on is more like a i'd be very careful about employer satisfaction client satisfaction and the speed of the change because this ai change is so fast the speed of the change is so quick so we're delivering value i've been very careful getting a good feedback from employers but i've been very careful okay is this too fast or not too quick or not so that's the balance i'm very careful but uh that's more like my short-term focus

great so let me ask something on about your you know comment about user satisfaction so take credit is still under 1% implies really headroom, but you also said you will sell monetization if the value is not there. How do you judge whether Indeed is expensive or cheap? So, how much of the value created should Indeed capture?

Of course, you know, compared to other recruiting agencies, which are usually charging 15%, 20% of first-year salary, which is very expensive. So most of the time, employers, what they're doing is, okay, this position has been open for 90 days, 120 days. That's the, you know, most of the time they reach out to recruiting agencies, staffing agencies, can you help to fill this position? And so what's happening right now is, well, we're, you know, I think most of the time, well, I'm seeing the situation is more like a time-to-fill, meaning cost per hire is, of course, one measurement most of the time, like large enterprise customers, like monthly budget clients are thinking, okay, what's the cost per hire? But think about it. The cheapest cost per hire, meaning if you can wait 180 days, that's the cheapest cost per hire. You can, of course, wait the position to be open and no budget allocated, and if you can wait 180 days, you might get some candidate. You might be able to fill this position. That's the cheaper cost for hire. What's happening right now is if you can deliver qualified candidates in a day or in three days, they're happier. That's why they prefer to pay 50% more, 100% more, to get the qualified candidate faster. And that's why we're asking them, hey, you should try it. You should try it. And it's not only, you know, premium-sponsored jobs. So when we think about AI innovation, which is, like, happening everywhere, for example, AI sourcing, you know, recruiters, human-being recruiters are checking resumes online, LinkedIn, indeed, whatever, reaching out to job seekers. but 90% of the time, or 95% of the time, what they're hearing back from job seekers are, oh, thank you for reaching out to me, but I'm not actually looking for a job right now. But our AI sourcing knows, okay, which job seekers are active, checking jobs within 30 days, which job seekers are opening emails, which job seekers are checking the notifications. So that's why it's so productive. And so as a result, employers can feel that they can get the qualified candidate faster. I think most of the time, oh, okay, I'm going to pay this much, but I can get qualified candidates much, much faster. And that's why, you know, so far, you know, last week we had a client event we called Indeed Future Works. I literally had more than 100 conversations with the employers, but I got so many good feedbacks so far. So I'm a little bit worried we're charging too much, but actually what's happening is we're delivering good value and they're happier. that's what we're seeing right now you got a positive feedback from both small mid-sized enterprise and also large enterprise as well that's a good question big large enterprise have very complex tech stock most of the time so and also it's it's depending on you know what rebel of you know people were talking to, like head of HR or CFO, COO, or CEO, because this time this is more like an AI change. So that's why we're having more or more meetings with CFO, COO, or CEO, because most of the time CHRO is thinking more like HR way, but I know CFO or CEO is thinking, okay, how to use AI, to improve productivity dramatically. So sometimes this top-down is happening. So we're trying to have more and more meetings directly with CEOs.

You also mentioned for large enterprise, it takes some time to make some final decision, right? They need to test something first, right?

Yeah, actually, at the very beginning of this year, we couldn't have a good growth from the enterprise clients, but finally we're getting good growth from enterprise clients. It took time, but I think, of course, these are AI products. Most of the time we need to go through their legal and compliance processes. It took time, but we're getting it.

That's great. So let me switch gears a little bit. So indeed, Hireling Labs' view is that demographic, not AI, will be the bigger force on the size of the labor market leading to structural shortages through 2040, but likely not the consensus in this room. Do you know the consensus in this room? What informs it, and what does that well do to your monetization model?

So, a bunch of people asked me, like, hey, you know, do you think AI will have, like, 20% eye employment rate, you know, AI is replacing human beings' jobs? Our research showed that for the next five years, the impact, especially I'm talking about U.S. market, but the impact of the aging workforce is much bigger than AI impact. We are losing experienced, skilled baby boomers every day. And these people, but that's why, you know, the impact is not the same for all industries. Think about a percentage of engineers which are like 60 years old or like a promise 60 years old is different. So what's happening is, for example, like an acquisition. You can find an acquisition job which is paying more than $200,000. It's so important, everybody, to build a data center to hire an acquisition. And that's why I also like the construction workers. If you want to hire skilled workers, I think it's happening even today. So we're going to lose 6 million workers in the next five years. 6 million workers. That's almost 4% of the U.S. labor force. And our current unemployment rate is 4%. So I would say it sounds weird, but the AI change, AI replacement is too slow. to catch up this, you know, the aging workforce change. Aging workforce is for sure happening. That's why employers are struggling to fill positions. And I think the competition is getting worse every day. And that's why they're struggling to fill skilled worker positions. That's why they're happier to pay more. I think actually the vacancy cost. everybody is underestimating vacancy costs you know actually I've been talking with some trucking some CEO told me they have more trucks than drivers that's the challenge that's why I know most of the big trucking companies are running CDL drivers licensed school they're trying to have the new drivers so anyway so i think i understand that people are worried about ai and job relationships but the reality is okay i'm going to give you one more example software engineering job everybody said software engineering jobs will be automated by ai and everybody will lose jobs but i know what we're seeing is last 12 months increase of hiring demand for software engineering jobs. Why? When we dig deeper into the details, you can see a lot of new job titles, which is AI ethics managers, AI conversation designer, AI prompt designers. So what I'm saying is the AI change is not like one-to-one change, meaning like, okay, this AI can replace this person's job no it's not happening human being is doing many tasks and one of the tasks or two you know some of the tasks were automated by ai so it requires a lot of change or a lot of redesigning for the leadership team or ceos that's what's happening that's why i'm very positive that AI is not a job killer. It's more like a job lead designer. That's how I'm thinking. Maybe I'm totally wrong, but from our data point of view, I think that's how I feel.

Interesting. So if we face a more severe shortage of the labor force, the monetization will be accelerated or you will change the monetization model of Indeed? it's going to be definitely tailwind for us yeah but I feel bad you know you said that oh you know competition is tough you can make more money I feel bad but that that's the that's the market and competition what's happening today great and also a growing number of companies are reporting rising AI token cost, so cutting into margins. So how are you managing your overall cost to keep investing in AI? And how does that factor into the midterm ambition you said last quarter of greater than 50% of margins?

Yeah, you know, we're managing the AI cost separated into two parts, which is external AI cost, meaning like external AI cost is job seeker is using AI, employees are using AI, and internal AI costs, which our employees are using AI. And external AI costs, we're lucky. We're investing a lot into AI, but I know we are able to monetize these AI costs. We can leverage the AI costs to monetize it. So I'm also worried about this part. Internal AI costs, I need to make sure all the AI investment costs into our employees has to be justified really well. So I need to keep checking almost like every month as the productivity is getting better. The typical numbers are revenue per one employee is it going up so that's how we're checking and you know as you guys know that the open weight model is getting really good and I feel like we're of course we're spending a lot of money for AI but the most of them are more like electricity and the computing power not a model I think and we're very flexible to have, based on the latency, we can have, you know, open-wave model or old model, and I'm also worried about AI investment cost. That's great.

So we cover a lot of interesting topics, so I'd like to open it up to the audience. If you have any questions, please feel free to raise your hand, please.

I hate to be the first question, so it's never very interesting. I know, I know, I know. It's going to be a letdown. But let me ask you, can you talk to us a little bit about AI in Japan? And to the extent that I feel like maybe this will be a little bit different than some of the cloud and some of the other technologies that a business there has embraced. It feels they're more – I'd just love to hear your thoughts about that. and as you think about the Japanese businesses, how do you think about bringing AI domestically?

Thank you. Great question. I think I'll talk about, you know, two parts. One, in general, in Japan, people are welcoming AI a lot, including even, you know, like human robots. I think the demographic change is so big. Asian workforce is, they're losing labor every year 1%. They're losing 1%. So that's a huge thing. So all the employers are struggling to hire people. So they're welcoming AI, you know, compared to U.S. I still feel like a little bit hostile. And some, you know, clients or person is saying, like, I'm not going to have any AI. okay and I saw that situation I think Japan is different that's one thing and one more thing is regulation it's AI regulation is there are two things which is typical old-school HL related regulations in the u.s. which is fair question reporting act in Japan you need a license to recommend a job and in you You know, in European countries, there are many different old non-discrimination or, like, you know, you have to be fair type of typical HR-related regulations. There are so many. And that's one thing. And one more thing is AI-specific regulation, right? You know, EU AI Act, and Japan has AI regulation. So for us, we have to be very careful to clear these two regulations because most of the time old-school HR regulations didn't care about the automation. That's why you have to be sure that you are very compliant for the old regulations. And also we need to very take care of that AI-specific regulations, EUA Act, whatever. So the U.S. is relatively open for the new regulation, and Japan is actually open for the new AI regulation. As you know, the EU is more gray. But what we're doing is we're trying to be very compliant for both. But relatively speaking, Japan is relatively open, so we're testing a lot of new things. But, you know, you need to have rights to do the, you know, job recommendation or these type of things.

So that is answering your question.

Thank you for taking my question. When we look at the average revenue per job performance, I'm curious if there's any difference between customer cohort sizes. Does the growth look similar with large enterprises, medium-sized businesses, and small businesses? And maybe could you talk about the price elasticity of each, if it exists? Because I would think if you're adding the requisite value, there should be no elasticity. But sometimes small businesses don't fully appreciate things rationally, and large businesses sometimes expect discounts just because they're large. So maybe just talk about the customer reception and elasticity.

Yeah, great question. I think what I'm seeing is very clear gradation of the change of the speed. I mean, like the small, small businesses started to use these new AI products much, much faster. And when it's getting bigger, bigger, bigger, bigger, slower, slower, slower, slower. That's pretty much it. That's what I'm seeing. And a good example is, you know, there are so many enterprise, big, big, big brand companies which have a headquarter and regional managers and store managers. And most of the time, probably I should not say it, but store managers are so frustrated against the headquarter HR team. and headquarter ATL team is saying oh every month this is a budget we allocated it for the next five, six months but the store manager is like hey I need to hire logistics manager today he left today so I need to do the business with somebody that's why to be honest majority of enterprise customers are actually posting jobs directly to Indeed not using their tech stock because they're frustrated you know this is typical front line folks and headquarter type of situation and so they're trying to reimburse the cost and so that's why I know again like the enterprise clients from my point of view there are two different types of enterprise like it's more like enterprise enterprise which didn't have any doesn't have any you know region or like stores type of companies just one headquarter can manage everything but most of the time like if it's it has i don't let's say a thousand stores it's they have a different decision making process they're acting more like a small businesses so uh from my point of view it's just that uh that's why i do really care about the product is it working or not but you know it's The good test is when we deliver these products for small businesses, if they're okay, it's just a matter of time. Because if it's working, they will realize, oh, it's working. But big enterprise customers, it takes time to talk to the head of HR or headquarter people. They don't want to increase the monthly budget. But the frontline folks are different. So it takes time to convince people. And as I said, also, like, this time, it's more like an AI change. Sometimes we need to include CFO or CEO type of C-level people. And that's why, you know, we're having, you know, like, World Cup, World Cup sponsor, you know, Formula One. We're going to have a sponsor, and we're going to invite, and we're going to have a party. Typical, you know, enterprise sales, which we haven't done before. but I know how to do it my background is more like enterprise sales but I know we have just started this year and we're seeing the good uptick so I'm very I'm positive about it it's just a matter of time and as you said probably you know from the number of jobs point of view of course big enterprise customers are we still have probably the work much much more penetration compared to small businesses. That should be an upside. It's a good sign. We are seeing the good haptick of the revenue growth. I think it's going to be better next year.

So when you're looking at the revenue per job growth, do you have some underlying sort of metrics, whether it's cost per hire or some sort of metric that you're ensuring it's sort of within certain bands so the enterprise are seeing good results this is a sort of a way of asking the potential pricing upside again like the probably one trickiest thing about the pricing increase which i'm uh is when we are talking about cost

per hire all the time you know we need to talk about the okay you have 100 people in your talent acquisition team you know you need to you know it happening like ai ai sourcing is a good example okay think about it you know you have this much recruiters and your recruiters are spending this much time to reach out to each resumes and ai recruiters can do this so right now our result is showing that we can save 11 hours per week so we need to discuss like this is more like enterprise type of talk like hey you need you can save 11 hours per week per person and blah blah okay how much you can pay you know this is typical and and also uh screening is like the big enterprise employers are having like thousands of applications and your team is spending let's say five minutes for each application to check resume that's like hours hours and you can automate it maybe then you can reduce 100 people to 80 people, and then you can replace this automation with this investment.

Whatever.

So that's like a cost for hire type of argument. But what's happening today is more like a time to fill, which is, I don't know if it's a good example, but I love Uber Eats. I don't want to spend time to buy ingredients and cook something but I I just want to you know get a nice food very quickly so what's happening is like it's more like a time to feel I want to fill this position as soon as possible are you okay to pay more money like employees a pain that's why again as I said it's happening from the small businesses or like a store manager rebel regional manager rebel it's going up now so That's why I know it's very tricky. Is it really cost per hire? But when we think about the value, it's actually not. The time to fail seems to be a great value for employers. That's why we can charge a lot better than last year. Is it? I'm asking your question. Sorry, maybe not. Yeah. Yeah, you know, we're taking our internal product KPI is number of qualified applications. And because the higher is ultimately accumulated successful speed of qualified candidates. So again, like now we have kind of score for each application. If it's good, you know, it should be like, you know, accumulated qualified applications is hitting like certain level they should be hiring somebody but that's the that's the metrics we're trying to have and we need to train everybody that not a quantity quality is the real body for you

thanks very much for taking the questions I have a three if it's not too many first of all is like the company has the partnership with Claude previously I was wondering what is your experience in in terms of, you know, protecting your data mode, at the same time trying to, you know, I guess, using cloud as maybe your distribution channel or any other strategic thinking on that. The second is your premium ads, basically the launch in Canada and the US, very successfully. What is the near-term plan to launch in the other markets?

The third one is, you know, previously you sort of cut off your free ad, majority in the US market. what is the next step in terms of the free ads what was the first question the first one is how is your experience when you partner with Claude we're using everything Claude and Gemini Gemini is good at extracting PDF or whatever and JGPT is good at this and that and Claude is good at this and also we have a Salesforce and Salesforce code, we're using it. And the second question is?

When you plan to launch the premium ads outside of the American market?

Okay, yeah, we're expanding it. As I said, the EU have different regulations where we have to be confined 100%, and each country has different regulations. Again, it's more like all the HR regulations. We have to be very prepared really well to expand, you know, expansion. But, you know, we've been doing it. It's going to be better next year and probably even today.

Would ANZ be falling to a next year plan as well?

We're starting to test new countries.

Did you want to fix it?

Or maybe I just... Yeah, you can go ahead.

Let me ask you, going back, We were actually your investors at the IPO many, many years ago, and it was very different. It was great, right? It was great. And it was a very different company before Indeed. It was just as good but very, very different. And what it was was it was the place where great Japanese entrepreneurs could express themselves and could build a great business. I wonder, as you think about RecruitX, indeed, whether with AI there is a new opportunity to be a leading technology company in Japan again, and whether you care to think about old Recruit, you know, kind of Tokyo Recruit, rather than just indeed, global indeed.

Great question. Is it okay to go over time? Yes, if we have time. I think me personally, I really believe that all the internet technology change is just a bedrock for the AI change, and AI innovation is such a great opportunity for all IT companies and I just want to all in, and HR is relatively easy to monetize it because it's crystal clear there are so many manual tasks and we have any other like two-sided marketplace models and we're trying to copy what India is doing and so we you know if we can find a manual tasks okay can we have AI to automate it that's what we're trying to do we'll see I know I know you have a lot of questions, but it's about time.

So thank you very much for your time today, Rekosan. And also thank you all for joining us today. Have a great day. Thank you so much.