Warning: Only 10% of Japanese IPOs trade higher than their IPO listing prices a few years after listing
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Timee Inc. (215A) operates a gig worker placement platform. You might think that Japanese job placement stocks have underperformed recently. One reason could be the market’s current aversion to growth-oriented stocks.
For Timee, the listing at ¥1,450 leads to FY 10/24E PE of 61x. This high P/E highlights a high expectation for this ¥100 Bn IPO (versus the majority of Japanese IPOs at a market cap of JPY 10 Bn).
Below is a short list of Timee’s comps and their next fiscal year P/Es:
Lancers: 49.6x
Coconala: 60.6x
Crowdworks: 20.4x
Below, I outline the reasons why I believe this unique Sukima (the Japanese term for "gap time" that workers can utilize for short-term jobs) gig worker platform deserves the premium valuation.
Summary
Timee, founded in August 2017, operates the job placement service “Timee,” which specializes in matching “desired working hours” with “hours needed by employers (Timee calls them clients)” for short-term jobs. Timee is characterized by its simplicity, eliminating interviews and resumes, and offering immediate payment to workers. The company does not charge initial fees or fees for posting job information on “Timee,” instead adopting a performance-based fee structure.
In 2021, it entered into a capital and business alliance with Itochu Corporation (8001). The 27-year-old founder, Rei Ogawa, is the largest shareholder, but major shareholders also include funds, MIXI (2121), and en-japan (4849).
Previous Funding: In September 2021, Timee raised ¥4 Bn in a Series D round from several investors, including Keyrock Capital Management, Kadensa Capital, Seiga Asset Management, THE FUND, Itochu Corporation, and KDDI Open Innovation Fund. They also secured ¥1.3 Bn in loans from major financial institutions, led by Mizuho Bank, bringing the total funding to ¥5.3 Bn. Since its launch in August 2018, Timee has raised approximately ¥9 Bn. Additionally, Timee signed a capital and business alliance with Itochu Corporation and a basic agreement with KDDI Corporation to explore further business collaboration and expansion.
TABLE OF CONTENT
1. Explosive Growth
2. Growing Sukima-Gig Industry
3. Why Timee?
4. Risk – Competition
5. Where and How to Buy Timee Stock:1. Explosive Growth: ¥27.6 Bn Sales Forecast with 10%+ Operating Profit Margin for Two Terms
Timee has shown remarkable growth. Sales were less than ¥100 MM in the fiscal year ending October 2019 but exceeded ¥6 Bn by the end of October 2022, turning profitable. For the fiscal year ending October 2023, sales increased by about ¥10 Bn year-on-year, with an operating profit margin exceeding 10%. The sales forecast for the fiscal year ending October 2024 is also an increase of about ¥10 Bn, reaching ¥27.6 Bn.
The growth is driven by individuals who are seeking flexible, short-term employment opportunities that match their specific availability and businesses that need workers for short periods. The number of active workers and clients has grown rapidly. During the cumulative period of Q2 2024, the number of registered workers exceeded 7.7 MM, and the number of registered client offices exceeded 254,000 locations. The total transaction amount was ¥41,962 MM (an increase of 76.5% compared to the same period last year).
2. Growing Sukima-Gig Industry – What is Driving Timee’s Growth?
Timee is growing by addressing Japan’s most urgent issues: 1) sluggish wage growth and 2) population decline:
Wages Are Not Rising: In May 2024, real wages in Japan declined by 1.4% compared to the same month in 2023. Since 2023, the sharpest decline in real wages of establishments with five or more employees was recorded in January 2023 at 4.1% (per Statista on 16/7/24). Workers are forced to find side jobs to make up for the lackluster wage increase from their regular jobs.
Labor Shortage: The Bank of Japan's quarterly Tankan business sentiment survey underlines the acute labor crunch. Its employment diffusion index -- the percentage of companies saying they had excess workers minus those saying they had too few -- dropped to minus 35 in the December report, its lowest point since the first quarter of 2019 (as per Nikkei Asia 6/4/24).
Many companies, especially those in retail, food services, construction, and logistics, are struggling to fill the needed positions. The above economic forces combined have created the need for the sukimagig industry, which Timee estimates to be worth ¥3.9 Tn.
The rationale for this TAM calculation is below:
In Japan, it is estimated that there are 21.31 MM non-regular workers and 14.69 MM regular workers who are interested in side jobs. The market size for gig work services is estimated by Timee to be ¥3.9 Tn. The estimate is based on the potential replacement of existing labor markets by the government data as below:
Part-time wages: ¥19.5 Tn
Non-regular workers such as temporary workers and contractors: ¥19.3 Tn
Labor shortage: ¥1.9 Tn
From a total of ¥40.7 Tn of the above three numbers, removing long-term assignments and assuming only half of the jobs can be filled by gig workers, the company gets a ¥10.3 Tn total available market. Applying 30% of Timee’s fees to this number, Timee’s total addressable market can be estimated at ¥3.9 Tn. The company’s current sales are less than 1% of this estimate, indicating the company has a long runway.
3. Why Timee?
Unlike traditional job services, Timee allows clients and workers to enter into direct employment contracts on a daily basis.
From the worker’s perspective:
You can work at your preferred time
No interviews or resumes required
No skills or experience needed
Immediate payment after completion of work.
From the client’s perspective:
Easily find people who can work now. A job can be listed ONE HOUR before work begins.
Plenty of excellent workers with proven track records and repeaters
Comprehensive labor/payroll management by Timee. The pre-work contract is automatically prepared by Timee’s platform. Workers are paid immediately after completing their jobs. Clients send the total payments plus a 30% fee to Timee on a monthly basis. This arrangement simplifies clients’ working capital management.
Extensive support from dedicated personnel
Supported by both workers and clients, the 2Q 24 hired ratio (hired workers/wanted workers) is 88% versus 18% for a typical part-timer hired ratio. For FY10/24, the company plans to deepen its relationships with existing customers in logistics, food and beverage, and retail, while also expanding into new areas such as hospitality, nursing care, and insurance. The increase in Timee’s commission revenue will offset the rise in personnel and advertising expenses, leading to a significant increase in operating profit.
4. Risk – Competition
In a potentially large growth market, competition also becomes fierce. Currently, Timee is the top runner, but Mercari started “Mercari Halo” in March 2024. They announced that the number of registered users reached 2.5 MM in the first month of service and surpassed 5 MM by the end of May. Large internet companies with a huge customer base and capital strength are strong in making inroads, even if they are latecomers. In the smartphone payment market, PayPay rapidly expanded the market by utilizing various campaigns, and Mercari is also using point-giving campaigns. In fact, reasons for using Mercari Halo include points and the ease of registration for Mercari users. By effectively utilizing capital strength and customer base, acquisition and retention costs can be reduced.
In May 2025, Recruit Holdings announced the launch of “Townwork Sukima (tentative name)” in the fall of 2024. Recruit already has a customer base of workers, as well as a customer base of businesses where workers work through Townwork and payment services, and also has the human resources necessary for sales. These larger companies with solid balance sheets can undercut Timee with lower fees than Timee’s 30%.
Against these giants, Timee offers the following competitive advantages:
Specialized Focus: Timee’s platform is specifically designed for part-time job seekers and employers. This specialization allows Timee to tailor its features and services to meet the unique needs of this market segment, unlike Recruit, which covers a broader range of employment types.
Advanced Matching Algorithms: Timee employs sophisticated algorithms to match job seekers with suitable positions based on their skills, preferences, and availability. This technology-driven approach ensures more accurate matches, reducing the time and effort required for both job seekers and employers.
Market Penetration and Brand Recognition: Timee has gained a large mindshare in the Japanese gig work sector.
Clients’ Diversification Desire: If large companies monopolize the market as a result of competition, the clients’ bargaining power will decrease in the medium to long term.
If competition intensifies, business capital alliances with each other may make sense for both Timee and its larger peers.
5. Where and How to Buy Timee Stock:
To purchase Timee Inc. (215A) stock during its IPO in Japan, investors can use several major brokerage firms. Rakuten Securities offers a user-friendly platform and integration with the Rakuten ecosystem, making it a popular choice for retail investors. SBI Securities is well-known for its extensive range of financial products and lower transaction fees. Nomura Securities, one of Japan's leading brokerage firms, provides comprehensive services and detailed IPO processes. Matsui Securities and Monex Group also offer access to IPOs with modern interfaces and low-cost trading options. Timee's IPO is managed by Daiwa Securities, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., and Morgan Stanley, indicating these brokers will likely have IPO rights for the stock (RetireJapan) (Nomura) (JPX).
For international investors looking to buy Japanese IPO stocks, several brokers provide access to the Japanese market. Interactive Brokers offers extensive access to global markets, including Japan, and allows participation in IPOs. Charles Schwab and TD Ameritrade offer international trading services, including access to the Tokyo Stock Exchange. Fidelity is another major broker that provides access to international markets, including Japan. Investors should consult with these brokers for specific details on how to participate in IPOs and any associated fees or requirements (IPOX) (KPMG).
[Disclaimer]
The opinions expressed above should not be construed as investment advice. This commentary is not tailored to specific investment objectives. Reliance on this information for the purpose of buying the securities to which this information relates may expose a person to significant risk. The information contained in this article is not intended to make any offer, inducement, invitation, or commitment to purchase, subscribe to, provide, or sell any securities, service, or product, or to provide any recommendations on which one should rely for financial securities, investment, or other advice, or to make any decision. Readers are encouraged to seek individual advice from their personal, financial, legal, and other advisors before making any investment or financial decisions or purchasing any financial, securities, or investment-related service or product. Information provided, whether charts or any other statements regarding market, real estate, or other financial information, is obtained from sources which we and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future performance.
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