See the help documentation here. In a previous thread on this topic, a Laserfiche employee said the following:

There isn't anything on the Laserfiche Rio side that would prevent using SQL Express instead of full SQL. I would primarily be worried about the limitations imposed by SQL Express. Last time I checked, it can only use 1 processor (socket) and up to 1 GB of RAM. The RAM especially can become a bottleneck real quickly if there's a lot of activity in the system.