Since the performance of SmartHR and LayerX has been a hot topic, I analyzed them along with other top listed SaaS companies! 📊
SmartHR's growth trajectory is high, with significant future expansion expected
Comparing the ARR growth rates at the point when each company reached 30 billion yen in ARR, SmartHR's growth rate is higher than Sansan, Money Forward, and freee, suggesting strong future growth potential.
Furthermore, SmartHR has successfully entered the enterprise sector, which accounts for 60-70% of domestic software investment. Compared to other SaaS companies that grew primarily through SMBs (Small and Medium Businesses), SmartHR appears to have greater room for ARPA expansion and cross-selling in the future.
On the other hand, Rakus's growth rate at that time was +49.6% (even without the transfer of the attendance management service business from HOYA, it was +45%), which is about 10 points higher than SmartHR. Despite having a high operating profit margin of nearly 30% currently, its PSR is around 5x.
For SmartHR to achieve a valuation of PSR 5x or higher, a key point will be whether it can leverage its position as a private company to maintain high growth while simultaneously improving profit margins behind the scenes.
This brings us to the next point: productivity.
Productivity is the key to balancing revenue expansion and profit generation (AI-driven business and organizational transformation)
Generally, ARR per employee tends to be higher in the enterprise sector than in SMBs, but SmartHR's stock productivity (= ARR ÷ employee count) is lower than freee's.
It is inferred that behind SmartHR's rapid growth, tasks that do not directly lead to revenue and coordination costs have also increased, preventing them from fully maximizing productivity.
In contrast, LayerX and freee have significantly improved their stock productivity recently.
Looking at press releases and IR materials from these two companies, common factors seem to be "early onboarding of sales personnel through AI utilization," "suppression of development labor costs through AI-driven development," and "strengthening of resale partnerships."
Also, while not visible from the outside, I suspect they are moving beyond "efficiency of existing tasks via AI" toward "redefining business and organization with AI as a prerequisite," and I would love to hear more about this.
LayerX, in particular, is very surprising for achieving such high productivity despite having a smaller ARR scale compared to other SaaS companies (generally, smaller SaaS companies have lower stock productivity).
Furthermore, LayerX's acquisition productivity (= net increase in ARR ÷ employee count) is about twice as high as other SaaS companies, indicating extremely efficient business investment and operation.
Representative Fukushima commented, "I'm tired of reinventing the wheel with dashboard creation (which I think includes metric creation) and AI tool creation" and "It is important to identify investments in things that can be reused to generate revenue, increase productivity, and continue to improve decision-making efficiency." This high productivity likely stems from the management team making high-resolution decisions about which activities to stop and which to invest in.
Summary
SmartHR has significant room for future ARR expansion due to its high growth rate and entry into the enterprise market. The focus will be on whether they can increase productivity and profit margins through AI-driven business and organizational transformation.
While LayerX's ARR scale is still small, its high stock and acquisition productivity are remarkable. The key point moving forward will be how far they can scale their organization and ARR while maintaining this high productivity.
