en Japan 4849

エン・ジャパン

Recent Updates

2021-11-12

1H FY03/22 flash update

2021-11-11

1H FY03/22 flash update

2021-09-15

Q1 FY03/22 report update

Get in touch

Shinjuku I-land Tower 6-5-1 Nishi-Shinjuku Shinjuku-ku Tokyo, Japan 163-1335

https://corp.en-japan.com/index.html

03-3342-3386

Summary

Pioneer of online recruitment information websites, with a particular focus on mid-career and experienced worker hiring. Now looking to expand into Asia and bilingual staff recruiting.

Professional Services

Key dates

2011-10-18

Coverage initiation

Full Report

2021-11-12

1H FY03/22 flash update

2021-11-12

Q1 FY03/22 flash update

2021-08-16

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Key financial data

Income statement			FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22
(JPYmn)			Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Est.
Sales			16,755	19,624	26,135	31,719	40,710	48,733	56,848	42,725	51,000
		YoY	23.5%	17.1%	33.2%	21.4%	28.3%	19.7%	16.7%	-24.8%	19.4%
Gross profit			14,833	17,693	23,739	28,533	36,875	44,051	46,397	34,159	41,223
		YoY	27.5%	19.3%	34.2%	20.2%	29.2%	19.5%	5.3%	-26.4%	20.7%
		Gross profit margin	88.5%	90.2%	90.8%	90.0%	90.6%	90.4%	81.6%	80.0%	80.8%
	SG&A expenses		11,392	13,750	18,621	21,677	27,243	32,389	35,392	26,387	31,223
		YoY	28.7%	20.7%	35.4%	16.4%	25.7%	18.9%	9.3%	-25.4%	18.3%
		SG&A ratio	68.0%	70.1%	71.2%	68.3%	66.9%	66.5%	62.3%	61.8%	61.2%
Operating profit			3,441	3,943	5,118	6,856	9,631	11,661	11,005	7,771	10,000
		YoY	23.6%	14.6%	29.8%	34.0%	40.5%	21.1%	-5.6%	-29.4%	28.7%
		Operating profit margin	20.5%	20.1%	19.6%	21.6%	23.7%	23.9%	19.4%	18.2%	19.6%
Recurring profit			3,747	4,259	5,047	6,848	9,736	11,834	11,057	7,939	9,999
		YoY	31.9%	13.7%	18.5%	35.7%	42.2%	21.5%	-6.6%	-28.2%	25.9%
		Recurring profit margin	22.4%	21.7%	19.3%	21.6%	23.9%	24.3%	19.5%	18.6%	19.6%
Net income			2,789	2,531	2,756	4,005	6,368	8,144	7,125	3,502	6,842
		YoY	80.4%	-9.2%	8.9%	45.3%	59.0%	27.9%	-12.5%	-50.8%	95.4%
		Net margin	16.6%	12.9%	10.5%	12.6%	15.6%	16.7%	12.5%	8.2%	13.4%
Per-share data
Shares issued (year-end; '000)			24,858	24,858	24,858	49,716	49,716	49,716	49,716	49,716
EPS			125.6	112.7	121.6	88.0	140.0	179.0	156.2	78.2	152.8
EPS (fully diluted)			-	-	121.4	87.8	139.5	178.5	155.8	78.0
Dividend per share			24.5	32.0	34.5	27.6	46.5	62.8	74.8	37.1	72.5
Book value per share			761.4	874.3	921.1	516.9	625.6	762.5	834.7	810.7
Balance sheet
		Cash and cash equivalents	13,169	11,138	14,153	20,228	25,505	30,409	30,128	28,405
		Accounts receivable	2,833	5,465	3,269	5,567	6,662	5,614	5,736	4,347
		Inventories	15	13	13	17	10	22	42	16
	Total current assets		15,814	14,344	19,880	24,826	31,405	37,255	37,065	33,724
	Tangible fixed assets		452	744	699	640	580	719	1,021	621
	Investments and other assets		1,689	3,457	1,942	2,187	2,830	5,018	6,096	5,299
	Intangible assets		4,780	6,697	6,037	5,246	5,677	6,858	7,712	6,999
Total assets			22,734	25,241	28,559	32,900	40,492	49,852	51,896	46,644
		Accounts payable	65	46	59	72	111	126	475	434
		Short-term debt	-	-	-	-	-	-	-	-
	Total current liabilities		5,179	4,860	6,774	8,533	10,982	13,274	11,762	8,260
		Long-term debt	3	18	-	-	-	-	-	-
	Total fixed liabilities		419	605	672	724	990	1,111	1,485	1,527
Total liabilities			5,598	5,465	7,446	9,258	11,864	14,385	13,247	9,788
Total net assets			17,136	19,776	21,113	23,642	28,628	35,466	38,648	36,856
Cash flow statement (JPYmn)
Cash flows from operating activities			3,695	2,534	5,792	7,597	9,458	10,680	8,044	5,652
Cash flows from investing activities			-1,166	-6,149	1,783	-1,927	-2,724	-4,556	-4,127	-2,150
Cash flows from financing activities			-61	-609	-812	-1,387	-1,339	-2,237	-5,036	-4,983
Financial ratios
Interest-bearing debt			3	18	-	-	-	-	-	-
Net cash			13,166	11,120	14,153	20,228	25,505	30,409	30,128	28,405
ROA (RP-based)			18.2%	17.8%	18.8%	22.3%	26.5%	26.2%	21.7%	16.1%
ROE			17.3%	13.8%	13.6%	18.0%	24.5%	25.8%	19.6%	9.5%
Equity ratio			74.8%	77.9%	73.4%	71.5%	70.3%	69.8%	72.8%	77.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: FY03/12 is an irregular 15-month period (January 1, 2011 to March 31, 2012).
Note: The company conducted a 100-for-1 stock split on October 1, 2013 and a 2-for-1 stock split on April 1, 2016.
Note: Earnings per share (EPS; used to calculate the dividend payout ratio) is net income divided by total number of outstanding shares excluding treasury stock. Treasury stock includes stock held in an employee stock ownership plan (2,397,000 shares held in J-ESOP trust). The dividend payout ratio that reflects dividends paid on these shares was 35.0% in FY03/18, 37.0% in FY03/19, and will be 50.0% in FY03/20.

Trends and outlook

Quarterly trends and results

Quarterly earnings

Cumulative		FY03/21				FY03/22				FY03/22		FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	1H Est.	% of Est.	FY Est.
Sales		10,442	20,650	31,116	42,725	12,060	25,044			105.1%	23,818	49.1%	51,000
	YoY	-24.1%	-26.8%	-25.7%	-24.8%	15.5%	21.3%				15.3%		19.4%
Gross profit		8,094	16,264	24,714	34,159	9,681	19,968					48.4%	41,223
	YoY	-27.9%	-29.4%	-27.6%	-26.4%	19.6%	22.8%						20.7%
	Gross profit margin	77.5%	78.8%	79.4%	80.0%	80.3%	79.7%						80.8%
SG&A expenses		6,846	13,347	19,669	26,387	7,371	15,228					48.8%	31,223
	YoY	-17.7%	-20.7%	-24.1%	-25.4%	7.7%	14.1%						18.3%
	SG&A ratio	65.6%	64.6%	63.2%	61.8%	61.1%	60.8%						61.2%
Operating profit		1,248	2,917	5,044	7,771	2,310	4,740			115.0%	4,122	47.4%	10,000
	YoY	-57.0%	-53.0%	-38.5%	-29.4%	85.1%	62.5%				41.3%		28.7%
	Operating profit margin	12.0%	14.1%	16.2%	18.2%	19.2%	18.9%				17.3%		19.6%
Recurring profit		1,236	2,995	5,150	7,939	2,314	4,810			116.5%	4,128	48.1%	9,999
	YoY	-57.3%	-51.7%	-37.0%	-28.2%	87.2%	60.6%				37.8%		25.9%
	Recurring profit margin	11.8%	14.5%	16.6%	18.6%	19.2%	19.2%				17.3%		19.6%
Net income		618	1,549	2,948	3,502	1,515	3,240			114.7%	2,825	47.4%	6,842
	YoY	-67.8%	-62.3%	-46.2%	-50.8%	145.1%	109.2%				82.4%		95.4%
	Net margin	5.9%	7.5%	9.5%	8.2%	12.6%	12.9%				11.9%		13.4%
Advertising and promotion expenses		1,070	2,303	3,748	5,574	1,944	4,289			181.2%	2,367	50.3%	8,532
	% of sales	10.2%	11.2%	12.0%	13.0%	16.1%	17.1%				9.9%		16.7%
Quarterly		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		10,442	10,208	10,466	11,609	12,060	12,984
	YoY	-24.1%	-29.3%	-23.6%	-22.3%	15.5%	27.2%
Gross profit		8,094	8,170	8,450	9,445	9,681	10,287
	YoY	-27.9%	-30.8%	-23.9%	-23.0%	19.6%	25.9%
	Gross profit margin	77.5%	80.0%	80.7%	81.4%	80.3%	79.2%
SG&A expenses		6,846	6,501	6,322	6,718	7,371	7,857
	YoY	-17.7%	-23.6%	-30.5%	-29.0%	7.7%	20.9%
	SG&A ratio	65.6%	63.7%	60.4%	57.9%	61.1%	60.5%
Operating profit		1,248	1,669	2,127	2,727	2,310	2,430
	YoY	-57.0%	-49.4%	6.5%	-2.9%	85.1%	45.6%
	Operating profit margin	12.0%	16.3%	20.3%	23.5%	19.2%	18.7%
Recurring profit		1,236	1,759	2,155	2,789	2,314	2,496
	YoY	-57.3%	-46.8%	8.9%	-3.2%	87.2%	41.9%
	Recurring profit margin	11.8%	17.2%	20.6%	24.0%	19.2%	19.2%
Net income		618	931	1,399	554	1,515	1,725
	YoY	-67.8%	-57.5%	1.7%	-66.3%	145.1%	85.3%
	Net margin	5.9%	9.1%	13.4%	4.8%	12.6%	13.3%
Advertising and promotion expenses		1,070	1,233	1,445	1,826	1,944	2,345
	% of sales	10.2%	12.1%	13.8%	15.7%	16.1%	18.1%

Source: Shared Research based on company data

Earnings by segment

Segments (cumulative)			FY03/21				FY03/22				FY03/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Sales			10,442	20,650	31,116	42,725	12,060	25,044			49.1%	51,000
	YoY		-24.1%	-26.8%	-25.7%	-24.8%	15.5%	21.3%				19.4%
	Domestic Job Board		4,642	9,839	15,452	21,774	6,435	13,248			47.4%	27,940
		YoY	-38.5%	-37.4%	-34.2%	-32.2%	38.6%	34.6%				28.3%
	Domestic Permanent Recruitment		2,812	5,018	7,107	9,385	2,451	4,936			49.4%	10,000
		YoY	-7.8%	-16.9%	-19.3%	-21.0%	-12.8%	-1.6%				6.6%
	Overseas		2,208	4,162	6,013	8,011	2,138	4,805			54.8%	8,770
		YoY	-19.1%	-24.7%	-26.5%	-25.4%	-3.2%	15.4%				9.5%
	HR-Tech		246	515	839	1,215	857	1,747			50.3%	3,470
		YoY	472.1%	315.3%	257.0%	155.8%	248.4%	239.2%				185.6%
	Other Domestic Businesses and Subsidiaries		657	1,319	1,984	2,694	263	498			47.9%	1,040
		YoY	27.8%	27.1%	27.8%	27.5%	-60.0%	-62.2%				-61.4%
Operating profit			1,248	2,917	5,044	7,771	2,310	4,740			47.4%	10,000
	YoY		-57.0%	-53.0%	-38.5%	-29.4%	85.1%	62.5%				28.7%
	Operating profit margin		12.0%	14.1%	16.2%	18.2%	19.2%	18.9%				19.6%
	Domestic Job Board		1,218	3,384	5,819	8,345	1,920	3,690			43.7%	8,450
		YoY	-57.2%	-44.0%	-31.5%	-28.9%	57.6%	9.0%				1.3%
		Segment profit margin	26.2%	34.4%	37.7%	38.3%	29.8%	27.9%				30.2%
	Domestic Permanent Recruitment		448	408	332	517	332	752			76.7%	980
		YoY	21.1%	-45.7%	-63.2%	-63.7%	-25.9%	84.3%				89.6%
		Segment profit margin	15.9%	8.1%	4.7%	5.5%	13.5%	15.2%				9.8%
	Overseas		128	185	355	551	187	491			70.1%	700
		YoY	-55.1%	-68.9%	-54.3%	-39.5%	46.1%	165.4%				27.0%
		Segment profit margin	5.8%	4.4%	5.9%	6.9%	8.7%	10.2%				8.0%
	HR-Tech		-295	-612	-849	-937	103	258			36.9%	700
		YoY	-	-	-	-	-	-				-
		Segment profit margin	-	-	-	-	12.0%	14.8%				20.2%
	Other Domestic Businesses and Subsidiaries		-41	-29	-5	67	-49	-102			-	-280
		YoY	-	-	-	-	-	-				-
		Segment profit margin	-	-	-	2.5%	-	-				-
Quarterly			FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales			10,442	10,208	10,466	11,609	12,060	12,984
	YoY		-24.1%	-29.3%	-23.6%	-22.3%	15.5%	27.2%
	Domestic Job Board		4,642	5,197	5,613	6,322	6,435	6,813
		YoY	-38.5%	-36.4%	-27.7%	-26.8%	38.6%	31.1%
	Domestic Permanent Recruitment		2,812	2,206	2,089	2,278	2,451	2,485
		YoY	-7.8%	-26.2%	-24.5%	-25.8%	-12.8%	12.6%
	Overseas		2,208	1,954	1,851	1,998	2,138	2,667
		YoY	-19.1%	-30.1%	-30.3%	-22.1%	-3.2%	36.5%
	HR-Tech		246	269	324	376	857	890
		YoY	472.1%	232.1%	191.9%	56.7%	248.4%	230.9%
	Other Domestic Businesses and Subsidiaries		657	662	665	710	263	235
		YoY	27.8%	26.3%	29.4%	26.6%	-60.0%	-64.5%
Operating profit			1,248	1,669	2,127	2,727	2,310	2,430
	YoY		-57.0%	-49.4%	6.5%	-2.9%	85.1%	45.6%
	Operating profit margin		12.0%	16.3%	20.3%	23.5%	19.2%	18.7%
	Domestic Job Board		1,218	2,166	2,435	2,526	1,920	1,770
		YoY	-57.2%	-32.3%	-0.9%	-21.8%	57.6%	-18.3%
		Segment profit margin	26.2%	41.7%	43.4%	40.0%	29.8%	26.0%
	Domestic Permanent Recruitment		448	-40	-76	185	332	420
		YoY	21.1%	-	-	-64.7%	-25.9%	-
		Segment profit margin	15.9%	-	-	8.1%	13.5%	16.9%
	Overseas		128	57	170	196	187	304
		YoY	-55.1%	-81.6%	-6.6%	45.2%	46.1%	433.3%
		Segment profit margin	5.8%	2.9%	9.2%	9.8%	8.7%	11.4%
	HR-Tech		-295	-317	-237	-88	103	155
		YoY	-	-	-	-	-	-
		Segment profit margin	-	-	-	-	12.0%	17.4%
	Other Domestic Businesses and Subsidiaries		-41	12	24	72	-49	-53
		YoY	-	-40.0%	-	-	-	-
		Segment profit margin	-	1.8%	3.6%	10.1%	-	-

Source: Shared Research based on company data
Note: In FY03/22, some services belonging to the Other domestic businesses and subsidiaries segment were reclassified to other segments, mostly the HR-Tech segment. The YoY comparisons show the percentage change compared with results prior to the reclassification.

engage performance

engage performance (Cumulative)		FY03/21				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Sales		246	515	839	1,215	386	425
	YoY	472.1%	315.3%	257.0%	155.8%	56.9%	-17.5%
Operating profit		-295	-612	-849	-937	-30	18
	YoY	-	-	-	-	-	-
engage users (thousand companies)		287	301	317	337	353	373
	YoY change	77	71	67	67	66	72
	YoY	36.7%	30.9%	26.8%	24.8%	23.0%	23.9%
	QoQ change	17	14	16	20	16	20
	QoQ	6.3%	4.9%	5.3%	6.3%	4.7%	5.7%
engage performance (Quarterly)		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		246	269	324	376	386	39
	YoY	472.1%	232.1%	191.9%	56.7%	56.9%	-85.5%
Operating profit		-295	-317	-237	-88	-30	48
	YoY	-	-	-	-	-	-

Source: Shared Research based on company data

Reference: Trends in number of recruitment ads

			2020	2020	2020	2021	2021	2021	2021	2022
('000)			Jun	Sep	Dec	Mar	Jun	Sep	Dec	Mar
Average weekly number of recruitment ads			647	689	811	887	833
	YoY		-58.2%	-55.5%	-43.4%	-40.3%	28.7%
	Of which, ads for permanent positions		109	110	147	163	161
		YoY	-62.6%	-60.2%	-45.8%	-27.5%	48.0%

Source: Shared Research, based on "Permanent, part-time, and temporary positions advertised by job category," Association of Job Information of Japan

1H FY03/22 results (out November 11, 2021)

Sales: JPY25.0bn (+21.3% YoY)
Operating profit: JPY4.7bn (+62.5% YoY)
Recurring profit: JPY4.8bn (+60.6% YoY)
Net income attributable to owners of the parent: JPY3.2bn (+109.1% YoY)

The company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) effective from the beginning of Q1 FY03/22. As a result, 1H sales were JPY879mn higher than they would have been had the previous accounting standard been applied, and SG&A expenses were JPY1.2bn higher. Consequently, all profit lines declined by JPY288mn compared to the levels at which they would have finished, had the previous accounting standard been applied. Rates of YoY change have been calculated by comparing results in 1H FY03/22 with 1H FY03/21 results that were recorded using the previous accounting standard.

In 1H FY03/22, hiring demand for full-time employees continued to recover. Demand for top-tier personnel with relatively high annual salaries increased to levels exceeding those observed before the outbreak of the COVID-19 pandemic.

Sales increased YoY, driven by the Domestic Job Board and HR-Tech segments.

Despite an increase in advertising and promotion expenses, the company reported double-digit growth on all profit lines thanks to the increase in sales. SG&A expenses were JPY15.2bn (+14.1% YoY), of which personnel expenses were JPY6.4bn (-5.5% YoY) and advertising and promotion expenses were JPY4.3bn (+86.2% YoY).

In Q1 FY03/22, some services belonging to the Other Domestic Businesses and Subsidiaries segment were reclassified to other segments, mostly the HR-Tech segment. The YoY comparisons below show the percentage change compared with results prior to the reclassification.

ATS/test business (including ZEKU's hiring/application management system and en Japan's online aptitude test), and services to provide post-hiring follow-up or to activate organizations (such as online training services and retention tools) were reclassified to the HR-Tech segment.

Brocante (sites for freelancers) and i Tank Japan (internship sites) were shifted to the Domestic Job Board segment.

Services for fresh graduates, OWLS (UI, UX), and new business development were not reclassified and remain part of the Other domestic businesses and subsidiaries segment.

Discussion of key businesses follows.

Domestic Job Board

Sales: JPY13.2bn (+34.6% YoY)
Operating profit: JPY3.7bn (+9.0% YoY)

In Q2 (July–September 2021), sales by service were as follows.

On [en] Career Change Info, a job board site for individuals seeking full-time employment, the company observed an increase in the intensity of recruitment, especially among large companies. Recruitment within industries that incurred comparatively greater impact from the COVID-19 pandemic also showed signs of recovery, albeit at a slower pace than the company had expected.

Among websites for permanent recruiting agencies, hiring demand for top-tier personnel exceeded pre-pandemic levels. AMBI achieved relatively high growth due to an increase in demand for young, top-tier staff.

At websites targeting temporary staffing agencies, the number of new job listings for office-related temporary staffing work was lower than expected, but the activities of these agencies have intensified in preparation for FY03/23. In the part-time jobs market, the company saw signs of recovery, especially in the restaurant and distribution industries.

The company stepped up advertising in anticipation of a future recovery in demand. As a result, segment profit declined in Q2 (July–September 2021) but increased in 1H.

Domestic Permanent Recruitment

Sales: JPY4.9bn (-1.6% YoY)
Operating profit: JPY752mn (+84.3% YoY)

In Q2 (July–September 2021), sales by service were as follows.

Despite an increase in the average income per recruitment associated with en Agent, a permanent recruitment service provided by en Japan, segment sales declined due to a decrease in the number of individuals hired through the service. Demand for inexperienced workers is improving within some industries, and the company focused on industries in which this demand was comparatively strong.

en world Japan K.K., which specializes in top-tier human resources, reported an increase in sales due to growth in the number of individuals recruited through its services. The company strengthened the staff at en world Japan with the goal of responding to brisk market conditions.

The earnings model of Domestic Permanent Recruitment is primarily based on performance-related fees. This means there tends to be a two to four month lag between the decision to hire (contract) and the booking of sales. As a result, the impact of the pandemic on Q1 FY03/21 results was limited.

In 1H, segment profit grew by double digits thanks to recovery in sales and improved productivity at en world Japan.

Overseas

Sales: JPY4.8bn (+15.4% YoY)
Operating profit: JPY491mn (+165.4% YoY)

There is a three-month lag to the inclusion of Overseas business results in consolidated earnings. Other than in China, results in 1H FY03/21 were little affected by the pandemic. In 1H FY03/22, demand in both India and Vietnam showed signs of recovery.

Earnings in the focus countries of Vietnam and India began feeling the full force of the COVID-19 pandemic in Q2 FY03/21 (locally, April–June 2021).

Within India, the company focuses primarily on its IT staffing business. IT demand in India and the US continued to be active, and the IT staffing business drove the recovery in segment sales. Downward impact from the COVID-19 delta variant was negligible, primarily because dispatched staff were encouraged to work from home.

In Vietnam, the company mainly operates the job board service. Corporate hiring demand remained strong. Operating profit generated in Vietnam recovered due to growth in sales and cost mitigation efforts. The company expects recovery in demand to slow down temporarily beginning in Q3 (locally, July–September) due to COVID-19 lockdowns being implemented in Vietnam.

HR-Tech

Sales: JPY1.7bn (+239.2% YoY)
Operating profit: JPY258mn (operating loss of JPY612mn in 1H FY03/21)

In HR-Tech, in addition to the recruitment and hiring business (engage), the company is engaged in the ATS/test business (including ZEKU's hiring/application management system and en Japan's online aptitude test), and services to provide post-hiring follow-up or to activate organizations (such as online training services and retention tools).

Recruitment and hiring (engage): Sales of JPY811mn (+57.5% YoY) and an operating loss of JPY12mn (operating loss of JPY612mn in 1H FY03/21). The company's promotion of paid services helped to steadily propel sales beyond its expectations. The engage personnel and recruitment platform had 373,000 customers as of September 2021 (up from 301,000 customers in September 2020).

ATS/Testing: Sales were strong at JPY751mn as ZEKU, which provides subscription-based application management system, expanded its sales targeting general business companies.

Services to provide post-hiring follow-up or to activate organizations: Sales were JPY187mn, driven by an increase in agreements associated with en-college (an employee training service) and HR OnBoard (an online questionnaire tool).

HR-Tech returned to profit, reflecting growth in sales from engage and upward impact from both the company's streamlining of sales activities and the segment reorganization efforts it implemented in FY03/21.

Company forecast

			FY03/21			FY03/22
(JPYmn)			1H Act.	2H Act.	FY Act.	1H Act.	2H Est.	FY Est.
Sales			20,650	22,075	42,725	25,044	25,956	51,000
	YoY		-26.8%	-22.9%	-24.8%	21.3%	17.6%	19.4%
Cost of sales			4,385	4,181	8,566	5,075	4,701	9,776
	Personnel expenses		2,629	2,555	5,184	2,874	3,327	6,201
		YoY	-18.2%	-24.9%	-21.6%	9.3%	30.2%	19.6%
		% of sales	12.7%	11.6%	12.1%	11.5%	12.8%	12.2%
	Other		1,756	1,625	3,381	2,201	1,373	3,574
		YoY	-10.6%	-13.1%	-11.8%	25.3%	-15.5%	5.7%
		% of sales	8.5%	7.4%	7.9%	8.8%	5.3%	7.0%
Gross profit			16,264	17,895	34,159	19,968	21,255	41,223
	YoY		-29.4%	-23.4%	-26.4%	22.8%	18.8%	20.7%
	Gross profit margin		78.8%	81.1%	80.0%	79.7%	81.9%	80.8%
SG&A expenses			13,347	13,040	26,387	15,228	15,995	31,223
	SG&A ratio		64.6%	59.1%	61.8%	60.8%	61.6%	61.2%
	Personnel expenses		6,754	6,218	12,972	6,385	6,245	12,630
		YoY	-4.8%	-12.5%	-8.6%	-5.5%	0.4%	-2.6%
		% of sales	32.7%	28.2%	30.4%	25.5%	24.1%	24.8%
	Advertising and promotion expenses		2,303	3,271	5,574	4,289	4,243	8,532
		YoY	-53.2%	-47.4%	-50.0%	86.2%	29.7%	53.1%
		% of sales	11.2%	14.8%	13.0%	17.1%	16.3%	16.7%
	Other		4,289	3,551	7,840	4,554	5,506	10,060
		YoY	-10.8%	-32.4%	-22.0%	6.2%	55.1%	28.3%
		% of sales	20.8%	16.1%	18.3%	18.2%	21.2%	19.7%
Operating profit			2,917	4,854	7,771	4,740	5,260	10,000
	YoY		-53.0%	1.0%	-29.4%	62.5%	8.4%	28.7%
	Operating profit margin		14.1%	22.0%	18.2%	18.9%	20.3%	19.6%
Recurring profit			2,995	4,944	7,939	4,810	5,189	9,999
	YoY		-51.7%	1.7%	-28.2%	60.6%	5.0%	25.9%
	Recurring profit margin		14.5%	22.4%	18.6%	19.2%	20.0%	19.6%
Net income			1,549	1,953	3,502	3,240	3,602	6,842
	YoY		-62.3%	-35.3%	-50.8%	109.2%	84.4%	95.4%
	Net margin		7.5%	8.8%	8.2%	12.9%	13.9%	13.4%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Company forecasts by segment

			FY03/21			FY03/22
(JPYmn)			1H Act.	2H Act.	FY Act.	1H Act.	2H Est.	FY Est.
Sales			20,650	22,075	42,725	25,044	25,956	51,000
	YoY		-26.8%	-22.9%	-24.8%	21.3%	17.6%	19.4%
	Domestic Job Board		9,839	11,935	21,774	13,248	14,692	27,940
		YoY	-37.4%	-27.2%	-32.2%	34.6%	23.1%	28.3%
	Domestic Permanent Recruitment		5,018	4,367	9,385	4,936	5,064	10,000
		YoY	-16.9%	-25.2%	-21.0%	-1.6%	16.0%	6.6%
	Overseas		4,162	3,849	8,011	4,805	3,965	8,770
		YoY	-24.7%	-26.3%	-25.4%	15.4%	3.0%	9.5%
	HR-Tech		515	700	1,215	1,747	1,723	3,470
		YoY	315.3%	99.4%	155.8%	239.2%	146.1%	185.6%
	Other Domestic Businesses and Subsidiaries		1,319	1,375	2,694	498	542	1,040
		YoY	27.1%	27.9%	27.5%	-62.2%	-60.6%	-61.4%
Operating profit			2,917	4,854	7,771	4,740	5,260	10,000
	YoY		-53.0%	1.0%	-29.4%	62.5%	8.4%	28.7%
	Operating profit margin		14.1%	22.0%	18.2%	18.9%	20.3%	19.6%
	Domestic Job Board		3,384	4,961	8,345	3,690	4,760	8,450
		YoY	-44.0%	-12.8%	-28.9%	9.0%	-4.1%	1.3%
		Segment profit margin	34.4%	41.6%	38.3%	27.9%	32.4%	30.2%
	Domestic Permanent Recruitment		408	109	517	752	228	980
		YoY	-45.7%	-83.8%	-63.7%	84.3%	109.2%	89.6%
		Segment profit margin	8.1%	2.5%	5.5%	15.2%	4.5%	9.8%
	Overseas		185	366	551	491	209	700
		YoY	-68.9%	15.5%	-39.5%	165.4%	-42.9%	27.0%
		Segment profit margin	4.4%	9.5%	6.9%	10.2%	5.3%	8.0%
	HR-Tech		-612	-325	-937	258	442	700
		YoY	-	-	-	-	-	-
		Segment profit margin	-	-	-	14.8%	25.7%	20.2%
	Other Domestic Businesses and Subsidiaries		-27	94	67	-102	-178	-280
		YoY	-	-	-	-	-	-
		Segment profit margin	-	6.8%	2.5%	-	-	-

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

The full-year FY03/22 earnings forecast calls for sales of JPY51.0bn (+19.4% YoY), operating profit of JPY10.0bn (+28.7% YoY), recurring profit of JPY10.0bn (+25.9% YoY), and net income attributable to owners of the parent of JPY6.8bn (+95.4% YoY).

The company expects the COVID-19 vaccination program to progress in Japan during 1H, resulting in stronger recovery in hiring activity in 2H in the service and retail sectors, where the impact of the pandemic on economic and hiring activity was especially harsh. This should contribute to improved sales and profits.

As demand for workers recovers, the company plans to invest more in advertising and promotion than it did in FY03/21, aiming to attract job seekers and raise awareness of its services. It will also spend toward outsourcing and other variable costs as needed.

Effective from FY03/22 the company has adopted a new revenue recognition standard. Whereas previously, sales through agencies were accounted for on a net basis (excluding sales commissions), they are now accounted for on a gross basis (total amount), with sales commissions to agencies recorded as SG&A expenses. Also, whereas the company previously booked job posting fees as sales in a lump sum coinciding with the initial posting, under the new standard the fees are booked as sales on a pro rata basis across the duration of the job posting. According to management, these changes will add around JPY20bn to both sales and SG&A expenses.

In FY03/22, some services belonging to the Other Domestic Businesses and Subsidiaries segment were reclassified to other segments, mostly the HR-Tech segment.

ATS/test business (ZEKU's hiring/application management system and en Japan's online aptitude test), and services to provide post-hiring follow-up or to activate organizations (such as online training services and retention tools) were reclassified to the HR-Tech segment.

Brocante (sites for freelancers) and i Tank Japan (internship sites) were shifted to the Domestic Job Board segment.

Services for fresh graduates, OWLS (UI, UX), and new business development will remain part of Other domestic businesses and subsidiaries segment.

Domestic Job Board

The company forecasts segment sales of JPY27.9bn (+28.3% YoY) and operating profit of JPY8.5bn (+1.3% YoY).

In 1H FY03/22 the company expects segment sales to increase sharply YoY, as sales in the year-earlier period were affected substantially by COVID-19. Over the full year it sees sales rising roughly 20% YoY if effects from the aforementioned change in revenue recognition method are excluded, and falling about 20% relative to FY03/20, before COVID-19 started to weigh on earnings. At the profit level the company expects increased sales to drive profit higher also. However, it sees the OPM falling 8.1pp YoY to 30.2%, as it plans to ramp up advertising in anticipation of a market recovery, and also run TV commercials.

By service, the company projects higher sales for [en] Career Change Info and websites for permanent recruitment agencies, but expects sales to be largely level YoY in websites for temporary staffing agencies. It sees higher sales at [en] Career Change Info driving growth in overall segment sales.

Domestic Permanent Recruitment

The company forecasts segment sales of JPY10.0bn (+6.6% YoY) and operating profit of JPY980mn (+89.6% YoY).

In 1H FY03/22 the company looks for sales to be pretty much flat YoY, as the segment operates via a performance-based earnings model, and accordingly in 1H FY03/21 there were virtually no adverse effects from COVID-19. Over the full year it expects sales to increase YoY, as 2H FY03/21 earnings were squeezed by COVID-19 but in 2H FY03/22 any such impact should be limited. The company also sees segment profit increasing YoY, on the back of higher sales and right-sizing of consultant remuneration to levels in line with the industry average (previously, consultant remuneration at en World Japan has tended to surpass the industry average).

The earnings model of Domestic Permanent Recruitment is primarily based on performance-related fees. As is the case with websites for permanent recruitment agencies, there tends to be a two to four month lag between the decision to hire (contract) and the booking of sales.

By service, the company anticipates a relatively swift recovery at en World Japan, but assumes it will be Q3 (October–December 2021) or later before earnings at en Agent rebound.

Overseas

The company forecasts segment sales of JPY8.8bn (+9.5% YoY) and operating profit of JPY700mn (+27.0% YoY).

Performance overseas is reflected in results with a lag of three months. The company looks for sales to decrease YoY in 1H FY03/22, as in the year-earlier period effects from COVID-19 were limited. In 2H, though, it sees sales tracking upward in India and Vietnam, such that full-year sales also increase YoY. The company expects profit growth to outpace sales growth, thanks to prior-year cost control initiatives and exits of unprofitable subsidiaries.

HR-Tech

The company forecasts segment sales of JPY3.5bn (+185.6% YoY) and operating profit of JPY700mn (operating loss of JPY937mn in FY03/21).

As outlined above, in FY03/22 the company has amended its segment composition. Following this reshuffle, subsegments within the HR-Tech segment comprise the original recruiting/hiring business (former HR-Tech), as well as the ATS/test business (including ZEKU's hiring/application management system and en Japan's online aptitude test), and services to provide post-hiring follow-up and to activate organizations (such as online training services and retention tools). Of these subsegments, the ATS/test business has a relatively larger earnings contribution.

For the recruiting/hiring business (former HR-Tech), the company forecasts sales of JPY1.6bn (+30.0% YoY) and operating profit of JPY180mn (operating loss of JPY376mn in FY03/21). It plans to cross-sell engage to those [en] Career Change clients who are large companies also using the services of rival vendors. In particular, the company believes engage can be an effective tool for large firms with nationwide operations, and it plans to promote uptake at such companies by deploying salespersons widely. The company looks for losses at the business to narrow YoY, as the sales force has shrunk following sales structure reforms undertaken in Q4 FY03/21 to promote use of paid services, switching from an approach built around cold calls to SMEs to one of following up on inquiries made by SMEs.

For the ATS/test business, the company forecasts sales of JPY1.5bn (+20.0% YoY, where the YoY comparison is a reference value obtained when FY03/21 results are reclassified into the new segment composition). ZEKU provides an application/hiring management system (RPM) used by more than 250 companies including temporary staffing agencies and call centers (among the highest levels of uptake in the industry). It also offers an online aptitude test service.

In services to provide post-hiring follow-up and to activate organizations, the company forecasts sales of JPY350mn (+11% YoY, again where the YoY comparison is a reference value obtained when FY03/21 results are reclassified into the new segment composition). These services include online training services and retention tools.

Other Domestic Businesses and Subsidiaries segment

The company forecasts sales of JPY1.0bn (-61.4% YoY) and an operating loss of JPY280mn (operating loss of JPY67mn in FY03/21).

Both sales and profit are seen decreasing YoY owing to the change in segment composition that resulted in key subsidiaries and businesses shifting to HR-Tech and the Domestic Job Board segment.

Dividend outlook

The company plans to maintain its policy of a 50% dividend payout ratio in FY03/22, forecasting an annual dividend of JPY72.5 per share.

Medium-term business plan

The company in May 2020 retracted the FY03/20–FY03/22 medium-term business plan released in May 2019.

The company expects the slowdown in hiring, as well as the economic recession, the deterioration in customer earnings, and the suspension of some business activities as a result of the COVID-19 outbreak to have a sharp impact on the company’s earnings in the near term. While expecting a gradual recovery in staffing demand after the outbreak subsides thanks to the structural shortage of labor, the company believes uncertainty over when the outbreak will be brought under control makes it too difficult at this time to reasonably calculate medium-term business plan targets.

Given these conditions, the company has retracted its medium-term business plan, for which FY03/22 was to be the final year. It is making no major changes to its basic strategies and cites only the difficulties in calculating reasonable targets. The company aims to re-release its plan during FY03/22, once it again becomes possible to calculate reasonable figures.

In the medium-term business plan covering FY03/20 through FY03/22 announced in May 2019, the company targeted earnings growth supported by stable profits in the Domestic Job Board business, an increase in the number consultants in the Domestic Permanent Recruitment business, and spending on advertisements in the HR-Tech business.

The following commentary refers to the company’s segment strategy outlined in the medium-term plan it announced in May 2019.

Domestic Job Board

The company had previously focused on sales growth and increasing share of the job board market. However, in the medium-term plan it looks to focus on profit growth, except at AMBI (job aggregator site for recruitment agencies targeting people in their 20s for jobs with an annual salary of JPY5.0mn or above).

In the core [en] Career Change Info business, assuming that the market for online career change information services will grow at an annual rate of 7–8%, the company looks to focus on sales efforts to companies who hire a relatively large number of employees each year, mainly in Tokyo, Nagoya, Osaka, and other metropolitan areas. It aims to increase its share of each company’s hiring budget, outpace market growth, and raise profit margins. In FY03/19, the company adopted a new sales approach. Under the previous approach, it assigned a regional representative and a separate representative for each large customer. But under the new approach, it categorizes large customers by annual ad placement volume, and conducts sales only by phone to customers who place a relatively small number of job ads, thereby improving efficiency of sales activities.

AMBI has grown at a rate exceeding the company’s expectations ever since it was launched in FY03/18. In FY03/20, the company increased spending on advertisements and personnel. Expenses increased in FY03/20, but the company expects margins to rise in the medium term.

Domestic Permanent Recruitment

The Domestic Permanent Recruitment business includes consultation to job seekers and consultation to companies. In the medium-term plan, the company aims to increase the number of consultants for companies to boost the number of job ads. It also looks to raise the number of job applicants more efficiently by using its database of more than 8mn job seekers for full-time positions.

The company targeted. sales growth, driven by an increase in the number of consultants in FY03/20 and their contribution to sales. It does not assume a change in commission rates or other factors. It received commissions of roughly 30–35% of annual salaries in FY03/20. The company estimates that new consultants take around six months until they begin to contribute to sales, and for two years thereafter their productivity continues to improve. en Japan anticipates improved productivity of consultants will continue to push up profit margins in the medium term.

Overseas

The company focuses on earnings growth in Vietnam and India, where it expects the population and economy to expand.

The company looks for double-digit sales growth in the medium term, driven by growth in Vietnam and India. It expects sales growth to also drive profit growth.

Vietnam

en Japan has a roughly 80% share of the job board market in Vietnam and boasts the industry’s top sales. It aims to expand earnings further by leveraging its brand recognition, job seeker database, and customer base; opening business sites in new areas; and offering new services in the learning business, such as English and technology classes for business professionals.

Vietnam’s labor environment

Population	92.7mn in 2016, 103mn in 2030 (estimate)
Average age	32.6 years old (2020 estimate)
GDP YoY	7.1% (real GDP, 2018)

Source: Company data

India

en Japan acquired FFI in March 2019. FFI has 20 years of experience in IT staffing, its clientele includes leading IT companies in India, and it employs around 3,200 engineers. The company looks to train the engineers at FFI in advance technology so that they can be dispatched to companies at higher prices and increase profit margins. In addition, through collaboration with its India-based recruitment agency subsidiary New Era, en Japan looks to implement contract-to-hire staffing, in which temporary staff become eligible for a full-time position after the contract period.

India’s labor environment

Population	1.34bn in 2017, 1.51bn in 2030 (estimate)
Average age	26.7 years old (2020 estimate)
GDP YoY	7.2% (real GDP, 2018)

Source: Company data

HR-Tech

The HR-Tech business includes engage and other related services. engage offers a template for corporate recruitment pages and comes with a function to automatically post job ads on Indeed, Google for Jobs, and other job ad search engine sites that use web crawlers (programs that crawl the Internet by following links to collect information on websites). It also allows customers to track an applicant’s selection process for free. Other tools packaged with the service include HR OnBoard, a follow-up tool designed to prevent early employee turnover, and Talent Analytics, an online aptitude test. en Japan plans to add peripheral services, such as employment and labor management and employee training, centered on the core recruitment agency service at engage.

engage mainly caters to regional SMEs who hire a relatively small number of employees each year. Most sales activities are carried out through newspaper ads rather than in person. By doing so, it is able to cut personnel expenses and reach a user base that other job boards conducting in-person sales do not target, because sales expenses would make it difficult to generate profit. As of end-FY03/20, engage had 270,000 customers (up 80,000 vs. end-FY03/19).

From April 2019, the company introduced a premium paid plan that is expected to raise the number of applicants through posts on PR sections of job information websites such as [en] Career Change Info and en BAITO, thus contributing to profit. Under the new paid model, customers are charged for each job applicant (prices vary depending on profession, and average about JPY10,000).

In the medium term, en Japan aims to increase sales driven by premium plans. Sales at engage depend on the number of paying client companies, the number of applications per company, and price per application. In FY03/20, the company focused on advertising to increase the overall number of clients using engage, which are prospective paying clients. This brought the number of corporate clients to 270,000 as of end-March 2020 (+80,000 YoY). From FY03/21 onward, the company plans to grow sales of its paid services in light of hiring trends among corporate clients obtained via engage, and marketing paid services to companies that use the free option.

The company expects expenses to be comprised mainly of advertising expenses, along with call center operation fees. It anticipates continued outlays for advertising and call center operations, as well as the addition of services in peripheral businesses such as employment and labor management and employee training.

FY03/21 initiatives relating to engage included a major overhaul of services, sales structure reforms, and launch of the recruitment website, engage job board, promotion of engage services, and their functional enhancement.

Major overhaul of services

In September 2020, there was a major overhaul of engage services. The paid version offers greater exposure on other companies’ websites and has changed its charging methods. The company aims to increase the pace of growth in paying customers and boost the number of applicants per company, in the hope that an increase in applications from job seekers will drive earnings growth.

Paid version offers greater exposure on other websites: Customers using the paid version of engage can post job openings on the company’s job board, and these are also posted in the paid sections of other companies’ job boards, such as LINE Career and aggregator websites including Indeed, boosting their reach. As a result, page views on the paid version are roughly 23× those on the free version.

Adjustment to charging methods: Under previous charging methods, clients were not charged when they applied for the paid service. The client paid the company for months during which job applications were received. Under the new arrangements, clients must make an upfront deposit of JPY50,000 before they use the paid services, and the company’s fee is deducted from this deposit when a candidate applies for a job. The company said that customers can manage their recruitment budgets more easily under the new method as it does not involve monthly payments. It hopes to boost the number of applicants per company under the new charging method.

Sales structure reforms

In Q4 FY03/21, the company undertook sales structure reforms aimed at promoting use of paid services, switching from an approach built around cold calls to SMEs to one of following up on inquiries made by SMEs. As a means of generating more inquiries, the company is now focusing its marketing efforts on online seminars and mailouts. According to management, the new sales structure has enabled a reduction in personnel while also delivering an increase in paying users.

Launch of recruitment website, engage job board

In March 2021, the company opened engage job board, which pulls together job listings created on the engage platform. The engage job board launched as one of the largest recruitment websites in Japan, with full-time, part-time, and internship listings from about 100,000 companies.

Other: M&A and investment policy

In the medium-term plan withdrawn in May 2020 en Japan had allocated roughly JPY20.0bn for M&A and investments. In Japan, it looks to accelerate growth mainly in the HR-Tech business through M&A and investments in technology-related companies. Overseas, it aims to conduct M&A to strengthen its businesses in Vietnam and India as well as to bolster its technological capabilities.

Between April 2019 and March 2021, the company outlaid roughly JPY3.2bn for M&A and investments: JPY1.2bn on M&A and JPY2.0bn on investments.

Business

Description

A pioneer of online job-vacancy advertising in Japan, the company operates a variety of job advertisement websites and provides recruitment agency services.

en Japan’s segments are: Domestic Job Board, Domestic Permanent Recruitment, Overseas, and HR-Tech. The company aims to grow earnings in the Domestic Permanent Recruitment, Overseas, and HR-Tech segments, with a stable source of earnings in the Domestic Job Board segment.

Business model

The company’s clients can be divided into two main groups: companies looking to hire staff, and HR-related firms, such as recruitment and temporary staffing agencies. The company’s services are divided into two main groups: job boards and recruitment agency services.

Job boards

The company’s [en] Career Change Info website meets the needs of companies looking to recruit staff by connecting them directly to job hunters. The company plans and offers job vacancy ads to companies through interviews, and places these ads on its websites to receive ad posting fees. Job hunters can access the ads free of charge.

HR-related companies can use the company’s [en] Career Change Consultant, AMBI, [en] Temporary Placement Info, en BAITO (part-time work), and [en] Temp to Perm Info. The company sells advertising on their sites to HR-related companies, and job vacancy and HR-related information is available for free to registered users.

The company creates job vacancy ads for companies advertising on its sites while recruitment firms using en Japan’s websites post the information themselves. On the mainstay [en] Career Change Info site, the ads are placed for a fixed period of four weeks, and the fee is charged per each four-week course. Prices vary according to the plan chosen, although for all of the plans it is the company that creates the advert rather than the client. The average price per client per site varies according to the overall mix of sales plans chosen by clients.

Recruitment agency services

In August 2010, the company made en world Japan K.K. a subsidiary. EWJ provides job placement services in Japan and primarily serves global companies by introducing bilingual job hunters. In April 2013, en Japan also began full-scale operations of a recruitment agency service, en Agent, which the company is now promoting.

Business model for employment website and permanent recruitment

Source: Company data

Domestic Job Board