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Recruit Holdings: Exposure To Fast-Growing Glassdoor And Indeed

Jun. 08, 2020 12:04 PM ETRecruit Holdings Co., Ltd. (RCRUY)1 Comment
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  • Two of the most well-known global HR sites, Indeed and Glassdoor, are subsidiaries of Recruit Holdings of Japan. Both are reported under the HR Technology business segment.
  • Both businesses have an impressive 30%-50% YoY revenue growth with a double-digit EBITDA margin.
  • Having made up 13% of Recruit's ¥2.3 trillion (~$20 billion) revenue in 2019, Indeed and Glassdoor increasingly look like the future of Recruit's business.


Founded in Japan over 55 years ago, Recruit Holdings (OTCMKTS: OTCPK:RCRUY) (JPX: 6098) is the largest HR (Human Resources) company in Japan. We believe the stock presents an attractive investment opportunity due to its strong growth and profitability, driven by its fast-growing HR technology and profitable staffing and media businesses. We believe that Recruit will continue to benefit from its ownership in Indeed.com and Glassdoor.com, two US-based HR technology companies with strong market share, growth, and brand presence. In our view, both companies are the future of Recruit's business. Furthermore, their resiliences have also helped Recruit weather the pandemic. The stock is currently trading at ¥3,818 (~$35) per share, down by ~15% from YTD-high, given the COVID-19 situation that has modestly impacted its core staffing and media businesses. We think that the current price level provides a good entry point, and as such, we will maintain our overweight rating on the stock.


Glassdoor and Indeed are both fast-growing and profitable businesses with attractive long-term prospects. Recruit acquired Indeed in 2012 and Glassdoor in 2018 for $1.2 billion in cash. So far, the business units, which are consolidated under the HR Technology segment, have been delivering outperformance for Recruit. The HR technology is the newer business segment in Recruit, whose core business has been in staffing. Along with the media business, staffing provides a steady revenue and profitability. With ~¥1.3 trillion of revenue, staffing still makes up over half of the Recruit’s business. The media makes up ~30% of the business and is the most profitable segment with a ~23% EBITDA margin as of FY 2018. While revenues for staffing and media have relatively been flat YoY, the HR technology segment has been fastest-growing.

(source: Recruit’s 2019 annual report)

In the 2018 fiscal year ending March 31, 2019 (FY 2018), the HR

This article was written by

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Former tech operator, entrepreneur, and venture capitalist with over a decade of experience starting, investing, and building companies in Asia and US. Long-only manager seeking multi-asset technology / growth opportunities driving disruptive innovation globally.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

Interesting company.
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