Private Musings: Will Wantedly keep up the pace?
Why Wantedly will need to be 10 times bigger in Size.
For businesses, it is always a race for relevance.
Wantedly’s claim to fame and rise in Japan came from capitalizing on evolving trends in the domestic job market and having successfully differentiated from Linkedin, other SMEs and the incumbents. Wantedly began its IPO journey back in 2017 and founder Akiko Naka harboured ambitions to hit the magical 100 billion yen mark in valuation for her brainchild.
Wantedly had lost ~50% of its market value since announcing FY19 results. (chart: markets.ft.com) Wantedly's, in orange, market performance compared against TSE Mothers Core Index, in green.
Today, Wantedly is roughly 16 billion yen in enterprise value and 3 billion yen in size. New Work is a close contemporary of Wantedly and was once touted as the German Linkedin. Publicly traded, New Work operates the Xing platform and is a dominant player in Europe.
Back in 2008, New Work was similar in size and had a market value equivalent of today’s Wantedly. New Work took 8 years to achieve a similar goal in market value. By end 2019, New Work has achieved 180 billion yen in enterprise value and is 31 billion yen in size. If New Work proves a fair comparison, Wantedly will first and foremost have to aim to be 10 times bigger than they are today in size.
Is Wantedly showing growth fatigue?
Wantedly grew at 51% CAGR from FY16 to FY19, more than doubling the initial listing price with consecutive quarters of strong performance. However, this momentum bucked in late 2019.
Financial wise the company looks more solid than ever. A look at their balance sheets shows that the company is well positioned for self-funded growth in the 30s to 40s. However, for now at least, the company seems intent to continue growing organically in a range below the 20s and focus on their products and offerings.
Growth have been accretive with the company seeing huge jumps in their operating profits. However, for reference, Xing (2008), had a EBITDA of 37% while Wantedly's is estimated to sit around the low teens. There is still room to improve but projected profits indicates that the current business model has reached an equilibrium with operating expenses. Year over year growth and snapshot of P&L line items.
The company sees itself in recruiting and ads solutions. Truth be told, based on the market size data the company presented, the conservative growth forecast was rather puzzling. Diving deeper and infering from the reported numbers, it is observed that addressable market is quickly saturating and revenue productivity has peaked in FY17/18 for Wantedly.
The global online recruitment market is expected to grow at a CAGR of 8% to 9% in the next 5-years while Wantedly gave a growth guidance of 18% for FY20. Overall, their future growth target is still more than 2-times the global market average, but this is far off the pace required to hit the size required for 100 billion yen anytime soon.
Other businesses in the same sphere, such as BizReach, CrowdWorks and Daijob, continue to exploit Wantedly's market whitespaces and joist for marketshare in the ones that overlap. Adding to that, the recent Rikunabi scandal has also raised awareness for the need to better protect job seekers on online platforms. It may be a blessing for Wantedly to slow things down and be allowed room not only to recalibrate, but also to better plan for their next steps in international markets like Singapore and Hong Kong.
In the quest for non-linear scaling and expansion, market leaders have always sampled widely and resorted to acquisitions. Linkedin continues to speed boat forward with a wide array of monetisation schemes, while incumbents are transforming their value chain through diversification. One such incumbent is Recruit, which acquired Glassdoor, a social media platform, and is hoping to create business synergy with Indeed, a career platform they also own. Other players such as En-Japan「1」, SEEK「2」and New Work「3」have been doing the same and continue to strengthen through purchases of niche businesses in key markets.
Wantedly's choice to slow down was probably a culmination of external and internal factors. While I believe the company will have to adjust to the growing pains after sudden sprouts, the changing recruitment landscape in Japan「4」will also usher in new opportunities and competition.
The only constant is change and endearing businesses adapt for The Infinite Game. Wantedly has achieved something truely amazing in Japan and I for one can't help but continue to cheer them on. Once a champion of change at the crest of the wave, they too will probably evolve for the next wave. What will Wantedly choose to do next?
The above represents the author's own thoughts and opinions. Apart from being a user of social media networks, the author has no association with the companies mentioned above.
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「2」SEEK acquires GradConnection
「3」New Work acquires Honeypot
「4」BBC report: Why Japan's 'shukatsu' job-seeking system is changing