Atrae defines its business domain as “People Tech,” based on its aim of “creating businesses that expand people’s potential through technology.” It provides services in the area of human resources (dealing with job changes, employee engagement, and other aspects) using technologies such as AI and data analysis. Its main businesses are the Green success fee-based recruiting media, the Wevox engagement analysis tool, and new businesses.
Interactive Media & Services
Executive summary
Business overview
Business description: Atrae defines itself as a “People Tech Company,” based on its aim of “creating businesses that expand people’s potential through technology.” The company's reportable segments include the People Tech segment, through which it provides services leveraging data analysis, AI, and other technologies (services focused on HR-related matters such as career change and work engagement), and the Sports Tech segment, through which it operates a professional basketball club and other sports-related organizations. The company established the Sports Tech segment in FY09/21, and it had only negligible impact on results in the same year. The primary operations of the People Tech segment include Green, a success fee-based recruitment media (generated 80.0% of consolidated revenue in FY09/21); Wevox, an engagement analysis tool (18.0%), and new businesses (2.0%).
Green success fee-based recruiting media: With Green, a service launched in July 2006, the company aims to replace conventional recruitment services by using data analysis and other technologies. It obtains information online pertaining to jobseekers and employers. A jobseeker applies for a mid-career position at an employer, goes through document screening and interviews, and once the employer hires the jobseeker, it pays Atrae a fixed success fee. What makes this service different from conventional recruitment services is that Atrae has built a matching system that analyzes data it has accumulated regarding both employers and jobseekers and provides both parties with information on their most suitable matches. This system replaces the work done by conventional career consultants to identify jobseekers and introduce them to employers and has achieved a screening pass rate (number of applicants passing the selection process divided by total number of applications) of 25–30%. This rate is similar to what conventional recruitment services achieve, and it does this at lower cost than when using career consultants. Another difference is that conventional ad-based recruiting media incur a fixed fee for the period of time a recruitment ad is posted, while Green uses a success fee-based system, meaning that there is no time limit on job postings and no wasted ad spending. Since there is no time limit on job postings, jobseekers can more easily access information on the most suitable jobs.
Low fee structure: Conventional recruitment services typically charge about 35% of a jobseeker’s annual salary as a success fee (so for a salary of JPY6.0mn, the fee is JPY2.1mn). Green’s success fee is a fixed fee that differs by region, but averages about JPY800,000. When first using the service, employers also pay an initial setup fee, which varies depending on the content of their job postings, but averages about JPY600,000. In addition to keeping costs low by eliminating the need for career consultants, Atrae mainly gains clients (employers seeking workers) through natural flow to the Green website, which means it spends less on sales staff than most recruitment services do. Conventional ad-based recruiting media rely on job posting fees as a source of revenue, so they have to maintain large sales teams to win clients, but Atrae has no such need.
User demographics: About 90% of clients are in the IT, e-commerce, and internet-related industries, and approximately 88% have no more than 300 employees (as of December 2021).
Green’s revenue and expenses: Green’s revenue comprises initial setup fees and success fees. Total success fees can be calculated by multiplying the number of people hired (the number of jobseekers taken on by Atrae’s client companies) by the success fee rate (the fixed fee differs by region, but averages about JPY800,000). Expenses mainly comprise advertising expenses and personnel expenses. Advertising spending, with a ratio to consolidated sales of about 40%, centers on online advertising to attract jobseekers. The majority of personnel are engineers and designers involved primarily in system development, and personnel expenses are largely fixed costs that do not vary in direct relation to the scale of revenue.
Green’s KPIs: The key indicator for Green is the number of jobseekers who find jobs via the service (number of people hired), which was 3,583 (+14.3% YoY) in FY09/21. In terms of factors that impact the number of people hired, there were 51,567 active users (+6.3% YoY), 8,317 registered companies (+13.0% YoY), and 23,969 job posting (+50.1% YoY).
Green’s recruitment market share: The market is valued at some JPY303bn, so with revenue of JPY3.6bn in FY09/21, Green had a market share of only about 1.6%.
Wevox engagement analysis tool: Atrae began providing Wevox in May 2017. The service quantitatively analyzes employee engagement through surveys (questionnaires completed by the employees) and uses the results to help improve the organization. Companies with high engagement scores tend to have robust KPIs, low turnover, and better quality in products and services (more detail later). Atrae says Wevox is the first tool available in Japan for visualizing engagement and is characterized by convenience for targets (employees), low cost to client companies, and academic backing. Atrae has no need of a large sales team, since client acquisition centers on passive sales to prospective clients who request information.
Wevox’s revenue and expenses: Wevox’s revenue can be calculated by multiplying the number of survey targets by the monthly user fee (JPY300). The company plans to raise Wevox's price per survey target moving forward, and since FY09/21, it has been developing advanced security functions such as two-factor authentication, mental health issue prevention features, and optional fee-based services for advanced analysis and analytics, which each costs an additional JPY200 per target. Expenses are mainly personnel expenses. The majority of personnel are engineers and designers involved primarily in system development, and personnel expenses do not vary substantially in relation to the scale of revenue.
Wevox’s KPIs: In FY09/21, revenue totaled JPY803mn (+93.0% YoY), 2,140 companies had adopted the tool (+26.6% YoY), and the total number of user responses was 73.8mn. Wevox's monthly customer churn rate remained below 1.0%.
Trends and outlook
FY09/21 results: Atrae posted revenue of JPY4.5bn (+30.1% YoY), operating profit of JPY1.0bn (+38.0% YoY), recurring profit of JPY1.0bn (+37.2% YoY), and net income attributable to owners of the parent of JPY646mn (+48.9% YoY). Revenue from the mainstay Green success fee-based recruiting media and Wevox engagement analysis tool increased.
FY09/22 forecast: The company announced revisions to its FY09/22 forecast in May 2022. The revised forecast calls for revenue of JPY6.4bn (+42.2% YoY), operating profit of JPY1.0bn (-1.1% YoY), recurring profit of JPY994mn (-1.2% YoY), and net income attributable to owners of the parent of JPY600mn (-7.1% YoY). Versus the previous forecast, the revised forecast increased the revenue target by JPY500mn, the operating profit target by JPY500mn, the recurring profit target by JPY496mn, and the net income target by JPY400mn. The company raised its full-year FY09/22 forecasts considering the performance of Green, which continued to accelerate its growth by leveraging its unique competitive advantage in the job change market, and Wevox, which exceeded the company's expectations through its accelerated adoption by large companies.
Medium-term outlook: Atrae has not announced a medium-term management plan, but has indicated that it anticipates revenue growth at Green and Wevox in the medium term. Green’s revenue grew at a CAGR of about 22% over the five years through FY09/21, and the company aims to achieve and maintain a revenue CAGR of 25% or more over the medium term. With Wevox, launched in May 2017, the company has realized a subscription model with strong growth potential. It is emphasizing future revenue growth over profits in the shorter term, so there may not be significant profit growth for the time being. The company aims for OPM of about 30–40% as cost fluctuations level off.
Strengths and weaknesses
Shared Research believes Atrae’s strengths are:
1) Ability to achieve low prices that conventional recruitment agencies cannot by replacing the matching process with a system and controlling costs
2) Competitive pricing and superior data accumulation of the Wevox engagement analysis tool
3) Data analysis and system development capabilities that support the core of its businesses
Conversely, the company’s weaknesses are:
1) Limited brand recognition as a latecomer to the recruitment market and lower jobseeker count (a key competitive factor) than larger peers
2) Lower ratio of large corporate clients, a large market with relatively high rates of growth, at Green than at peers:
(See the “Strengths and weaknesses” section for detail.)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc., in July 2020 and shifted to consolidated accounting from FY09/21. YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Note: In April 2021, the company conducted a 2-for-1 stock split. The per-share data in this table takes this split into account.
Recent updates
Company announces revisions to full-year FY09/22 earnings forecast
Atrae, Inc. announced revisions to its full-year FY09/22 earnings forecast.
Revisions to full-year FY09/22 earnings forecast
Reason for the revisions
The company expects full-year revenue for FY09/22 to exceed the previous forecast as success fee-based recruitment media Green, the company's core business, has continued to accelerate its growth by leveraging its unique competitive advantage in the job market, while engagement analysis tool Wevox outperformed the company's expectations through its accelerated adoption by large companies.
Earnings trends
Quarterly performance
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc., in July 2020 and shifted to consolidated accounting from FY09/21. YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc., in July 2020 and shifted to consolidated accounting from FY09/21. YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Note: Revenue by segment refers to revenue from sales to external clients, and does not include revenue from internal sales.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The number of job openings per active user is calculated as number of job postings divided by active user count.
Note: Figures may differ from company materials due to differences in rounding methods.
1H FY09/22 results
Overview of 1H FY09/22 results
1H FY09/22 summary
Revenue grew YoY on the back of higher revenue from both success fee-based recruiting media Green and organization enhancement platform Wevox. The revenue breakdown was JPY2.3bn (+53.6% YoY) from Green, JPY603mn (+81.3% YoY) from Wevox, and JPY50mn (+35.1% YoY) from new businesses (Yenta).
On the profit front, growth in SG&A expenses (+69.9% YoY) outstripped growth in revenue (+64.7% YoY). However, growth at Green and Wevox continued to accelerate, and both operating profit and recurring profit were up YoY.
People Tech
Revenue was JPY3.0bn (+58.1% YoY) and operating profit JPY936mn (+52.2% YoY). Main items in SG&A expenses included advertising expenses of JPY1.1bn (+78.1% YoY) and personnel expenses of JPY465mn (+42.6% YoY).
Green success fee-based recruiting media
Atrae implemented various measures, such as expanding content to improve efficiency in matching employers with jobseekers, improving recommendation accuracy through big data analysis, and conducting online marketing to increase the number of registered users.
In 1H FY09/22, Green generated revenue of JPY2.3bn (+53.6% YoY). This revenue comprises initial setup fees employers pay when they first register with Green and success fees employers pay after hiring jobseekers via Green. The total amount of success fees rose thanks to a YoY rise in the number of people hired, and initial setup fees increased on an increasing number of newly registered companies.
The number of hired people, a key indicator for success fees, rose 51.9% YoY to 2,293. While the course of the COVID-19 pandemic and trends in economic activity remain uncertain, there were signs of a recovery in the willingness of companies to hire.
Wevox organization enhancement platform
Wevox helps companies make organizational improvements by applying a scoring system to enable visualization of the state of the organization, and then recommending improvement measures based on the results. As of March 2022, the number of companies using Wevox numbered 2,350 (versus 1,900 in March 2021), and these companies operate in a wide range of industries. The number of companies, including major companies, that have adopted Wevox increased in 1H so that it generated revenue of JPY603mn (+81.3% YoY) for the half.
New businesses (Yenta matching app for business professionals)
The number of users increased as people refrained from going out amid the COVID-19 pandemic.
Sports Tech
Revenue was JPY173mn (no revenue recorded in 1H FY03/21) and an operating loss of JPY272mn (versus an operating loss of JPY24mn in 1H FY03/21).
In this segment, wholly owned subsidiary Altiri, Inc. (established in July 2020) manages a professional basketball team that entered Japan’s B3 League for the 2021–22 season, Altiri Chiba.
FY09/22 company forecasts
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc., in FY09/20 and shifted to consolidated accounting from FY09/21. Accordingly, YoY figures in FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc. in July 2020 (FY09/20) and shifted to consolidated accounting from FY09/21. Accordingly, YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
In May 2022, the company announced revisions to its FY09/22 forecast. The revised forecast calls for revenue of JPY6.4bn (+42.2% YoY), operating profit of JPY1.0bn (-1.1% YoY), recurring profit of JPY994mn (-1.2% YoY), and net income attributable to owners of the parent of JPY600mn (-7.1% YoY). Versus the previous forecast, the revised forecast increased the revenue target by JPY500mn, the operating profit target by JPY500mn, the recurring profit target by JPY496mn, and the net income target by JPY400mn.
Reason for the revisions
The company expects full-year revenue for FY09/21 to exceed the previous forecast due to the continued acceleration of growth in Green and Wevox, with Green growing by leveraging its unique competitive advantage in the job market and Wevox being increasingly adopted by large companies.
The following commentary is based on the previous forecast.
The company expects revenue growth at Green as a result leveraging its unique competitive advantage in the job change market and at Wevox as a result of its accelerated adoption.
On the profit front, the company expects profit items from operating level and below to decrease due to an increase in operating expenses to accelerate growth. The company's forecast assumes the COVID-19 pandemic will have no impact on its performance.
People Tech
The company projects People Tech revenue of JPY5.7bn (+26.5% YoY). It forecasts that Green will generate JPY4.3bn of this amount (+20.4% YoY), while Wevox will generate JPY1.3bn (+55.9% YoY), and new businesses will generate JPY100mn (+11.1% YoY).
Green success fee-based recruitment media
Hiring demand has been recovering since Q3 FY09/21 (April–June 2021), and the company is accordingly targeting ongoing growth in FY09/22. It plans to regularly air TV commercials aimed at raising awareness of Green as it endeavors to increase the number of registered users.
Wevox engagement analysis tool
As in FY09/21, the company projects that this service will be adopted by additional large companies and other clients and therefore also anticipates a rise in survey targets. Additionally, it plans to raise Wevox's price per survey target moving forward, and since FY09/21, it has been developing advanced security functions such as two-factor authentication, mental health issue prevention features, and optional fee-based services for advanced analysis and analytics, which each costs an additional JPY200 per target. Furthermore, the company will increase the size of its Customer Success Team to maintain and reduce the monthly customer churn rate of Wevox (which was less than 1.0% in FY09/21).
Sports Tech
The company forecasts Sports Tech revenue of JPY200mn (none recorded in FY09/21).
In July 2020, the company established a wholly owned subsidiary, Altiri, Inc., and created a professional basketball club, Altiri Chiba, which subsequently joined the B3 League in October 2021.
The company's basketball club generates revenue through proceeds from sponsorships, ticket sales, and merchandise sales. Outlays include personnel expenses for players and coaches, as well as operating costs such as arena rental fees and advertising. Altiri Chiba aims to join the B1 League as soon as possible.
Chibajets Funabashi, which manages the Chiba Jets, the team that won the Nippon Life B.LEAGUE FINALS 2020-21 competition, reported JPY2.0bn in revenue and JPY118mn in net income before taxes in FY2021. Proceeds from sponsorships accounted for 64.2% of revenue, while ticket sales generated 12.8%, merchandise sales 5.8%, and other sources 17.2%.
Operating expenses
The company anticipates FY09/22 operating expenses of JPY5.4bn (+54.9% YoY). It forecasts that expenses will increase by approximately JPY1.0bn in the People Tech segment and about JPY900mn in the Sports Tech segment. In People Tech, in addition to ad spending to increase Green’s recognition, the company plans to hire personnel mainly to enhance the Customer Success Team in the Wevox business. In Sports Tech, the company plans strategic upfront spending aimed at creating new value in the sports business.
Medium- and long-term outlook
Atrae has not announced a medium-term management plan, but is aiming for ongoing revenue growth of at least 30% each year. The company projects medium-term revenue growth in both the People Tech and Sports Tech segments. In the People Tech business, it also growth in revenue from its Green and Wevox services.
Green’s revenue grew at a CAGR of nearly 40% annually over the five years through FY09/19. Prior to the COVID-19 outbreak, the company had envisioned revenue continuing to grow at 20–25% YoY. However, the pace of growth temporarily slowed in FY09/20 due to employers’ diminished willingness to hire against the backdrop of uncertainty triggered by the pandemic. Starting in FY09/22, the company will aim to achieve YoY growth of at least 25%.
Wevox was launched in May 2017, and FY09/20 saw substantial growth in the number of companies implementing the service due to growing need to monitor employee status as they relied more on teleworking in light of the pandemic. Since FY09/21, the company has been targeting an increase in companies using Wevox, and it is currently striving to achieve accelerated growth by raising the average price paid per user through the rollout of optional fee-based services. Shared Research believes there is still plenty of room for growth at Wevox in the long term.
Through its Sports Tech segment, the company will attempt to facilitate the early promotion of its Altiri Chiba professional basketball club to the JPBL's B1 League as it strives to increase revenue generated through sponsorships, ticket sales, and merchandise sales. At the same time, the company will ensure that the team is operated efficiently by utilizing the management expertise it has accumulated through its People Tech segment.
Atrae is in a growth phase, and is emphasizing future revenue growth over profits in the shorter term. Shared Research recognizes that profit growth may not be realized in the short term if the company invests for future sales growth, for example through ad spending or investing to launch new businesses. However, as the company’s operations expand, its ability to absorb costs related to growth and new businesses will increase. It is therefore targeting OPM of about 30–40% on the assumption that the ratio of strategic spending to revenue will level off. From FY09/16 to FY09/18, OPM was about 30%.
Note: The company established wholly owned subsidiary Altiri, Inc. in July 2020 (FY09/20) and shifted to consolidated accounting from FY09/21. Accordingly, YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Growth of Green
Green’s targeted market (recruitment market)
Japan’s recruitment market is growing about 15% annually (please refer to the “Market and value chain” section). Although the working population has been declining, there has been greater movement of human resources and companies have been using recruitment agencies more and more. Shared Research therefore believes the recruitment market will continue to grow in the medium and long term.
In FY09/21, Green generated revenue of JPY3.6bn compared to the total recruitment market of about JPY303bn (source: Yano Research Institute’s “Human Resources Business 2019”). Atrae says that, based on the fees set for Green, which is about 60% of existing recruitment services, its potential market would comprise about 60% of the existing recruitment market, or JPY181bn. Green’s share of this potential market is 1.6%. Focusing on IT and web-related businesses, where the majority of the jobseekers and employers using Green are located, the market size would be JPY54bn (30% of total), and its share of this market subset was 6.6%.
Source of Green’s growth
The bulk of Green’s revenue comprises success fees (the number of people hired multiplied for the per-person success fee). Shared Research believes revenue will grow as the number of people hired increases in the medium term.
Number of people hired via Green
Past growth and FY09/20 stagnation: The CAGR for number of people hired via Green was 37% for the five years from FY09/14 to FY09/19. However, the pace of growth temporarily slowed in FY09/20 (to just 3.1% YoY) due to employers’ diminished willingness to hire against the backdrop of uncertainty triggered by the pandemic. In FY09/21, growth accelerated once again as individuals hired rose 14.3% YoY. Companies are promoting remote work as a means of thwarting the spread of COVID-19, and an increasing number of these companies are using web services to augment their recruiting activities as business operations become further digitized and these services become more widely available.
Virtuous cycle phase: The active user count and job posting count are the basis for the number of people hired. When these figures increase, the absolute number of matches increases, resulting in a greater number of people hired. In addition, Shared Research understands that the structure of recruiting media is such that the number of jobseekers and the number of employers looking to hire interact with each other to expand. In other words, when the active user count increases, the number of companies registering for the service grows because companies hear that they can hire good people at a lower cost than at recruitment agencies. As the number of registered companies grows, the job posting count increases. As the job posting count increases, the active user count rises even more. Once a virtuous cycle is achieved in this manner, it is easier to continue expanding. Green launched in July 2006, and maintained this sort of virtuous cycle for the five years through FY09/19.
Medium-term growth potential remains unchanged: In FY09/20, the pandemic led to a decline in companies’ willingness to hire, and the job posting count declined. However, the active user count continued to rise, as there was no change in the facts that Atrae has a large pool of IT and web-related jobseekers and that the Green service is cheaper than conventional recruitment agencies. Shared Research therefore believes the pace of growth in the number of people hired via Green will recover to double digits again once employers’ willingness to hire recovers.
Note: The number of job postings per active user is calculated as job posting count divided by active user count.
Success fee per person
As of September 2021, the average success fee per person was approximately JPY800,000.
Growth of Wevox
Wevox’s targeted market
According to the Ministry of Internal Affairs and Communications Statistics Bureau’s “Labour Force Survey,” the number of workers in 2019 was 67.3mn (+0.9% YoY). Wevox targets all employed people, so multiplying the number of workers by the monthly fee of JPY300 by 12 months indicates that its potential market is about JPY242.1bn. In FY09/21, Wevox’s revenue was JPY803mn, or 0.3% of that potential market.
Source of Wevox’s growth
Shared Research believes Wevox’s revenue will increase as the number of employees covered by the service grows along with the number of companies using the service. In addition, although Wevox's monthly user fee is JPY300, but the company plans to raise the average price paid per survey target through optional fee-based services.
Increase in the number of companies using Wevox
Since its official release in May 2017, Wevox has seen a steady increase in the number of companies adopting it, with the number reaching 1,690 (+53.6% YoY) at end-FY09/20. Large corporations are also using the service, including Sumitomo Mitsui Banking Corporation (applied to some 28,000 employees at domestic offices) from February 2020, KDDI Corporation (applied to all employees at domestic offices) from May 2020, and Mitsui Sumitomo Insurance Co., Ltd. (applied to some 20,000 employees) from August 2020.
However, Atrae believes even more companies will seek to increase engagement to improve performance and employee retention. Given the size of the potential market, the company is therefore aiming for YoY revenue growth of around 70–80% over the medium term.
Targeting an increase in Wevox's average price paid per survey target
In FY09/21, the company began rolling out the following three optional fee-based services at a price of JPY200 per survey target in an effort to increase Wevox's average price paid per survey target.
Security enhancement features: These features, which include IP address restriction, two-factor authentication settings, and an SAML Single Sign-On system, provide an advanced security environment.
Member support: Member support functions help users identify organization members who need mental health support.
Advanced analysis: Provides sophisticated environments and advanced analysis capabilities that facilitate analysis on three or more axes.
Growth in the Sports Tech segment
In July 2020, the company established a wholly owned subsidiary, Altiri, Inc., and created a professional basketball club, Altiri Chiba, which subsequently joined the B3 League in October 2021.
The company's basketball club generates revenue through proceeds from sponsorships, ticket sales, and merchandise sales. Outlays include personnel expenses for players and coaches, as well as operating costs such as arena rental fees and advertising. Altiri Chiba aims to join the B1 League as soon as possible.
Chibajets Funabashi, which manages the Chiba Jets, the team that won the Nippon Life B.LEAGUE FINALS 2020-21 competition, reported JPY2.0bn in revenue and JPY118mn in net income before taxes in FY2021. Proceeds from sponsorships accounted for 64.2% of revenue, while ticket sales generated 12.8%, merchandise sales 5.8%, and other sources 17.2%.
Potential for new businesses
Atrae launches an average of about one new business every five years. The company was established in October 2003. It went on to launch Green in July 2006, the JobShare social recruiting service in December 2012, the Yenta matching app for business professionals in January 2016, and the Wevox engagement analysis tool in May 2017. In July 2021, the company launched its Sports Tech business segment with the creation of Altiri Chiba, a professional basketball club.
In the People Tech business, the company utilizes various technologies to provide services not limited to the conventional human resources domain (job change and other personnel-related services), and also plans to launch new businesses in the medium term. Even just in the human resources domain, in addition to the mid-career recruitment and organizational improvement services the company is already engaged in, there are other services to be provided, such as new graduate recruitment, human resource development, personnel evaluation, labor management, and the planning and revision of personnel systems, and Shared Research believes there is a great deal of room for replacing manual work with technology in these areas.
In terms of investment in and expenses for new businesses, Atrae’s policy is to use technology in all of its businesses and avoid large capital investments or businesses that would require growth in headcount to increase revenue.
Overseas development of businesses
In August 2020, Atrae announced plans for global expansion of the Yenta matching app for business professionals, with India to be the first target. While the company is considering expanding other businesses overseas eventually, the timing and method of such expansion remains pending.
Business
Overview
Yoshihide Arai, Atrae’s current president and CEO, established the company in October 2003. The company defines itself as a "People Tech Company" based on its aim of “creating businesses that expand people’s potential through technology.”
The company's reportable segments include the People Tech segment, through which it provides services leveraging data analysis, AI, and other technologies (services focused on HR-related matters such as career change and work engagement), and the Sports Tech segment, through which it operates a professional basketball club and other sports-related organizations. The company established the Sports Tech segment in FY09/21, and it had only negligible impact on results in the same year. The primary operations of the People Tech segment include Green, a success fee-based recruitment media (generated 80.0% of consolidated revenue in FY09/21); Wevox, an engagement analysis tool (18.0%), and new businesses (2.0%). In the category of new businesses, the company is developing Yenta, a matching application for businesspeople.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company established wholly owned subsidiary Altiri, Inc. in July 2020 (FY09/20) and shifted to consolidated accounting from FY09/21. Accordingly, YoY figures for FY09/21 are for reference only, since they compare consolidated results with parent-only results.
Green success fee-based recruiting media (80.0% of revenue in FY09/21)
Launched in July 2006, Green is a success fee-based recruiting media service that aims to replace conventional recruitment services using data analysis and other technologies. The company acquires jobseekers and employers via the internet. The jobseekers apply for mid-career positions with the employers and undergo screening and interviews leading to job offers. Once the jobseeker has been taken onboard by an employer, that employer pays Atrae a fixed success fee.
The difference between Green and conventional recruitment services is that Atrae has built a matching system that analyzes data it has accumulated regarding both employers and jobseekers and provides both parties with information on their most suitable matches. This system replaces the work done by conventional career consultants to identify suitable jobseekers and introduce them to employers. Over more than 15 years, the company has accumulated data on the hiring process, taking into consideration the perspectives of both employers and jobseekers, and has developed its own algorithms for its recommendation system. This has enabled it to achieve a screening pass rate (number of applicants passing the selection process divided by total number of applications) of 25–30%, which is comparable to what conventional recruitment services achieve, and it does this at lower cost than when using career consultants.
Another difference is that conventional ad-based recruiting media incur a fixed fee for the period of time a recruitment ad is posted, typically two or four weeks, while Green uses a success fee-based system, meaning that there is no time limit on how long jobs can be posted and no wasted ad spending.
With Green, Atrae aims to replace conventional recruitment services. In FY09/21, Green generated revenue of JPY3.6bn compared to the total recruitment market of about JPY303bn (source: Yano Research Institute’s “Human Resources Business 2019”). Atrae says that, based on the fees set for Green, which is about 60% of existing recruitment services, its potential market would comprise about 60% of the existing recruitment market, or JPY181bn. Green’s share of this potential market is 1.6%. Focusing on IT and web-related businesses, where the majority of the jobseekers and employers using Green are located, the market size would be JPY54bn (30% of total), and its share of this market subset was 6.6%.
About 90% of clients are in the IT, e-commerce, and internet-related industries, and approximately 88% have no more than 300 employees (as of December 2021).
Green’s KPI is the number of jobseekers who find jobs via the Green service (number of people hired), which was 3,583 (+14.3% YoY) in FY09/21. In terms of factors that impact the number of people hired, there were 51,567 active users (+6.3% YoY), 8,317 registered companies (+13.0% YoY), and 23,969 job postings (+50.1% YoY).
Merits of Green: Recommendation system
Atrae says conventional ad-based recruiting media derive their revenue from listing fees paid by employers, so in their sales activities they strive to understand the trends and needs of those companies. On the other hand, there is no need to understand the hiring process from the perspective of jobseekers, so it tends to be difficult to accumulate data regarding those jobseekers.
Unlike conventional ad-based recruiting media, Green relies on success fees from employers as its revenue source, so it is necessary to track the hiring process all the way to the jobseekers being hired by employers. To do this, the company accumulates data on jobseekers’ work history, professional skills, and years of experience, what kind of company they approached in terms of industry, job type, size, and corporate culture, whether they passed the screening process, how many interviews they had, and whether they received job offers or joined a certain company.
By analyzing these data, the recommendation system is able to deliver the most suitable job information to jobseekers and the most suitable candidate information to employers. This makes it possible to match jobseekers and employers in much the same way as career consultants do at recruitment agencies. Atrae says 25–30% of jobseekers using Green pass the screening process, a percentage comparable to that of recruitment agencies.
Realizing suitable matching of jobseekers and employers with a system based on data accumulation and analysis
Green’s recommendation system, as aforementioned, accumulates and analyzes past recruitment data on jobseekers, and matches jobseekers to employers based on those data. In other words, when a jobseeker uses Green to search for a potential employer, the system analyzes the jobseeker’s profile data, and displays companies the jobseeker would be most likely to join. It works similarly when an employer searches for candidates, displaying those jobseekers who would be most likely to fulfill the needs of the company performing the search. At conventional recruitment agencies, career consultants match jobseekers and employers based on their own databases and experience. Atrae replaces the work down by career consultants at recruitment agencies with data collection and analysis, but still achieves matching success comparable to that of the conventional recruitment agencies.
Another unique feature of Green is the “I’m interested/would like to meet” function. Either a jobseeker or employer can send the other a message saying “I’m interested/would like to meet,” so users can easily express their desire to arrange a meeting or interview.
Maintaining a screening pass rate comparable to recruitment agencies
As mentioned, at conventional recruitment agencies, career consultants match jobseekers and employers based on their own databases and experience. This reduces the burden on both jobseekers and employers, and improves the rate at which jobseekers make it through document screening.
Green replaces the work done by recruitment agencies with data accumulation and analysis, using a recommendation system to identify viable matches. The accuracy of matching is managed based on the screening pass rate. The company says a pass rate that is too high will lead to connections being made between only the cream of the jobseekers and employers, resulting in lost opportunities. In other words, an excessively high pass rate means that jobseekers will be limited in the employers they can view and apply to, and employers will only receive applications from a limited number of jobseekers, resulting in decreases in the absolute number of both parties. On the other hand, if the screening pass rate is too low, jobseekers can apply to a large number of companies but end up not passing screening, and employers will receive an overabundance of applications from jobseekers not necessarily suitable for the position in question, increasing the workload on those responsible for hiring, since they have to reject many applicants.
The company believes a 25-30% document screening pass rate is the appropriate level to improve the efficiency of the matching process and avoid inconvenience to both jobseekers and employers. This rate is also comparable to the rate at conventional recruitment agencies. In FY09/20, selection delays and stricter hiring practices at employers because of the COVID-19 pandemic meant the pass rate temporarily fell to 19.6%. However, it later recovered to 22.2% in Q4 FY09/21 (July–September 2021).
Note: The screening pass rate is calculated as the number of documents that pass screening in a year divided by the total number of documents submitted for screening that year.
Merits of Green: Benefits of success fee-based recruiting media
With conventional ad-based recruiting media, employers must pay a fee to the posting media to post an ad for two or four weeks, regardless of whether or not they end up hiring anyone. By contrast, Green uses a success fee system, with no limits on how long a job can be posted or how many jobs can be posts, so employers can seek candidates on an ongoing basis. As there is no time limit, jobseekers always have access to the most suitable job information.
Employers can identify and hire candidates in specialty fields
The advantage of conventional ad-based recruiting media is that employers can post job info for a specified period and recruit from among a large pool of jobseekers. However, employers risk wasting the advertising fee if they are unable to attract applicants who meet their hiring requirements within the posting period. For this reason, rather than for specialty fields, conventional media is more suited to recruiting multiple candidates for general positions with less restrictive hiring requirements.
By contrast, companies that use Green do not risk wasting their ad spending. Green allows them to post and recruit for positions in specialty fields that might be difficult to fill using conventional ad-based recruiting media and would typically require them to approach a recruitment agency. On the other hand, for employers looking to hire multiple employees or part-time workers with annual salaries in the JPY2mn range, Green’s fees would be considered high and conventional ad-based recruiting media would be more suitable.
Continuous recruiting of excellent personnel is possible
With the success fee-based business model, many companies are able to post jobs on an ongoing basis, regardless of the strength of their hiring needs, so that they can hire excellent personnel as soon as they appear.
Merits of Green: Relatively low fees
Although there is some variation by region, Green’s success fee is a fixed fee averaging about JPY800,000 per hire. In addition, employers using Green for the first time must pay an initial setup fee of about JPY600,000, depending on the content of their job postings.
Success fee
The success fee is a fixed amount regardless of the annual salary or type of position, but with some variation by region. Atrae says that, with conventional recruitment services, it is customary for the employer to pay a success fee equal to roughly 35% of the annual salary of the person hired. If an employer hires someone at a salary of JPY5.0mn, they would typically pay a success fee of JPY1.75mn. By contrast, Green offers a fixed success fee averaging about JPY800,000 regardless of the annual salary for the position being filled.
Initial expense
Green offers several initial setup fee plans, depending on the content of an employer’s job posting, but the average is about JPY600,000.
Source of price competitiveness
Conventional recruitment agencies are expected to have specialist career consultants and counseling facilities. Green replaces those career consultants with data collection and analysis technologies, eliminating the need to hire career consultants or maintain counseling facilities. This makes it possible to offer lower success fees than conventional recruitment agencies can manage. Atrae mainly gains clients (employers seeking workers) through natural inflow via passive sales, which means it spends less on sales staff. In addition, unlike conventional ad-based recruiting media, which generate revenue from ad posting fees, Atrae does not need to hire a large number of salespeople to get employers to post job ads.
Attributes of jobseekers and employers
Jobseekers and employers centered in IT and web-related industries
Green has registered a large number of engineers and web designers, who are in high demand in the IT and web-related industries. About 90% of clients (employers) are in the IT, e-commerce, and internet-related industries, and approximately 88% have no more than 300 employees (as of December 2021).
The reason for the high proportion of both jobseekers and employers in the IT and web-related industries is that in 2006, when Green was first launched, the companies that tried to lower their recruitment costs by using the new service were mainly IT and other growth companies. Major corporations had already included recruitment expenses in their budgets based on the assumption that they would use conventional recruitment services, so they had no incentive to use a new service like Green. In addition, President and CEO Yoshihide Arai has an ideal that talented people should move from conventional industries to new industries, and he specifically aimed to have companies involved in IT, the internet, mobile, and other growth industries utilize Green.
However, Atrae places no limitations on the type of employers who can use Green. The company says there is growing need for IT and web-related personnel even at companies in more traditional industries.
Size of clients (employers)
As of December 2021, 50% of jobs available through Green were for companies with no more than 100 employees, while just 25% were for companies with 300 or more. Typical clients are SMEs. By contrast, at Recruit Agent, the largest recruitment agency in Japan, only 18% of clients were companies with no more than 100 employees, while 48% had 1,000 or more (data for companies with 300 or more employees is not available from Recruit Agent).
Green’s operating structure
Green’s system of operation, method of acquiring clients, and structure are as follows.
Green’s operating structure does not require any large facilities or equipment. The focus is on systems, and the company’s own employees handle development and operation.
The majority of its operational staff are those who develop and operate systems, and changes in revenue scale or the number of clients using Green trigger no significant change in headcount. Atrae launched Green in July 2006 and still had only 14 employees in total in FY09/12, prior to launching services other than Green. In FY09/21, Green’s revenue and the number of people hired via the system were both about 11× the FY09/12 figures, and the job posting count was about 8×, but the number of employees operating Green did not increase nearly as much.
Green mainly gains clients through natural inflow via passive sales. Members of the sales team only visit potential clients who have made inquiries or requested materials.
Green’s revenue, expenses, and KPIs
Green’s revenue
Green’s revenue comprises initial setup fees and success fees. Atrae emphasizes revenue growth in the form of success fees, and it expects the ratio of success fees to keep rising. It does not focus on initial setup fees, since it considers them to be a result of the natural inflow of clients, so it expects the ratio to decline.
Success fee revenue is calculated by multiplying the number of people hired via the service by the success fee per person hired. In FY09/21, there were 3,583 people hired (+14.3% YoY), and Shared Research estimates the average success fee per person to have been about JPY800,000.
Initial setup fee revenue is calculated by multiplying the number of newly registered companies by the initial setup fee per company. In FY09/21, there were 955 newly registered companies (+58.9% YoY), and Shared Research estimates the average initial setup fee per company to have been about JPY600,000.
Green’s expenses
Expenses mainly comprise advertising expenses and personnel expenses.
Ad spending is necessary to attract jobseekers. Atrae mainly uses online advertising and keeps advertising expenses to about 40% of the revenue generated by Green. According to the company, while managing ad spending by using cost per action (CPA, in this case meaning the cost to acquire a new user) as an indicator, it will consider increasing ad spending where it deems it possible to increase the number of registered users, perhaps even pushing the advertising expense-to-revenue ratio above 50%.
Relationship between revenue and advertising expenses from jobseeker registration to hire: In FY09/21, the company spent JPY1.9bn on advertising and acquired about 130,000 new registrants (jobseekers). This places the advertising cost per new registrant at about JPY15,000.
Significance of TV ads: Starting in FY09/19, Atrae has been using TV ads to attract jobseekers it had been unable to reach through online advertising alone and to raise awareness of the service. According to Shared Research’s understanding, the ratio of click-throughs that lead to registration (click-through performance) is higher for online ads that show up first in search results, but if the product or company’s name is easily recognized, it is still likely to be clicked even if it shows up in the second or third position. For this reason, increasing awareness of the service through TV ads may lead to CPA improvement.
As mentioned, the operational staff headcount does not change in line with revenue scale, so personnel expenses are essentially fixed costs.
Green’s KPIs
The key indicator for Green is the number of jobseekers who find jobs via the Green service (number of people hired), which is affected by the active user count, number of registered companies, and job posting count. As the active user count increases, the number of companies registered and the job posting count also increase, which in turn increases the number of people hired (and vice versa). In FY09/21, the number of people hired was 3,583 (+14.3% YoY), the active user (jobseeker) count was 51,567 (+6.3% YoY), the registered user ID count was 920,000 and new user ID count was 130,000, the number of registered companies (employers) was 8,317 (+13.0% YoY), and the job posting count was 23,969 (+50.1% YoY).
Note: Active users are jobseekers registered at Green who login at least once a month.
Note: Revenue per person hired is Green’s revenue divided by number of people hired.
Note: The number of job postings per user is calculated as the job posting count divided by active user count. This is the number of jobs available via Green per jobseeker.
Green’s position in the recruitment industry
Registration-type and search-type services
Recruitment services can be categorized into registration-type, search-type, and outplacement-type. Green is a registration-type service.
A registration-type service identifies candidates who match an employer’s hiring requirements from among those jobseekers who, as part of their registration, have provided their work experience, abilities, desired occupation, and desired working conditions. It then introduces these candidates to the employer.
A search-type (headhunting) service will, based on a request from an employer, search for suitable candidates and negotiate a job change to the requesting employer. The candidates to be introduced are likely to be currently employed and in many cases are not actively seeking a job change, but are willing to change if the right offer arises. Candidates are typically highly specialized and have good positions and high salaries, so the resultant success fees are relatively large. In addition to the success fee, some recruitment agencies also charge consulting fees and advances.
An outplacement-type service assists employees subject to restructuring or other disruption to employment with finding new employment.
For registration-type and search-type services, the attributes of jobseekers are not clearly defined. However, Shared Research estimates that registration-type services usually handle jobseekers looking for salaries of JPY3mn to the upper JPY7mn level, while search-type services usually deal with candidates earning at least JPY8mn, so registration-type services handle about 85% and search-type services 15% of recruitment needs. This assumes that distribution in terms of annual incomes of people changing jobs is the same as for all salaried workers (please refer to the “Market and value chain” section).
General and specialized services
Recruitment services can also be categorized as general or specialized. Green is the former, but its early clients were mainly IT and other growth companies and, because the company has a track record of energizing growth companies, it still has many jobseekers and employers involved in IT and web-related industries.
General services handle job information from a wide range of industries and do not focus on any particular one. They are therefore suitable for jobseekers who may want to consider possibilities of which they were not even previously aware, and who are open to something entirely new.
Specialized services cater to employers and jobseekers in specific industries, so they can more efficiently conduct job search and recruitment activities. Specialized services can focus on industries such as finance, healthcare, mass media, or restaurants.
Green’s aim is to take over the recruitment work done by conventional career consultants, so Atrae compares the service to recruitment agencies.
Wevox engagement analysis tool (18.0% of revenue in FY09/21)
Atrae launched Wevox in May 2017. The service quantitatively analyzes employee engagement through surveys (questionnaires completed by the employees) and uses the results to help improve the organization. Companies with high engagement scores tend to have robust KPIs, low turnover, and better quality in products and services.
Organizations that use Wevox can implement improvement measures based on the results of analysis of the survey, and then perform another survey and analysis to check the effectiveness of the measures. In the past, for many organizations, identifying issues and verifying the effectiveness of remedial measures were limited to qualitative judgments. However, by obtaining quantitative measurements and implementing a plan-do-check-act (PDCA) cycle appropriately and efficiently, organizations can improve their employee engagement. Wevox also recommends measures to promote organizational improvement.
How Wevox works
Wevox sends 16 questions once a month (32 the first time only) to the registered email addresses of survey targets.
Wevox automatically aggregates responses, determines scores based on the distribution of all aggregated data, and summarizes the survey results.
In addition to the rank, distribution, trends, and overall evaluation of scores, the survey results show scores for nine key drivers (duties, personal growth, health, support, human relations, approval, ideological strategy, organizational climate, and environment) and indicates areas for improvement. Wevox can also provide data by category (including department, team, and age group) and analysis by group or attribute.
Organizations using Wevox confirm the survey results and implement improvement measures where scores were low for certain departments or key drivers. Atrae also provides information on examples of improvement measures and their effectiveness in other organizations.