Cloud Works, which develops and operates a matching platform connecting companies and individuals, such as Japan's largest cloud sourcing "Cloud Works" <3900>, announced that it has acquired 100% of the issued shares of Ingate Co., Ltd. (hereinafter referred to as "Ingate") after the close of trading on October 29th, and will make the company a consolidated subsidiary. Cloud Works has significantly strengthened its M&A promotion system to accelerate its growth, and progress in its strategy has been confirmed. In addition, on October 17th, it revised upwards its full-year 2024 profit forecast, and on August 2nd, it announced its first dividends and shareholder benefits, with positive news for its stock price.

Ingate, since its establishment in 2006 with the mission of supporting "people" and "IT", has been providing services to strengthen companies' human resources strategies in the personnel introduction business and providing seamless support from upstream to downstream processes in the IT solution business as a value. Both businesses are closely linked in recruitment and sales, building a high-profit unique business model that leverages mutual synergy. In the fiscal year ending in March 2024, the revenue increased by 3.5% compared to the previous year to 1,566 million yen, operating profit increased by the same rate to 299 million yen, and net assets reached 1,060 million yen.

By making Ingate a group company, Cloud Works will be able to make more high-value proposals in the engineering/designer field, which accounts for about 60% of Cloud Works' total gross profit. Cloud Works has surpassed 0.99 million client companies and 6.548 million registered workers on its platform, establishing its position as a leading company in the talent matching market. The participation of freelance talent registered on this platform in Ingate's development and operation projects is expected to promote growth for both companies. In addition, leveraging Cloud Works' customer base of 0.99 million companies and synergy in recruitment is expected to drive revenue growth in Ingate's talent introduction business.

The acquisition cost for this transaction was 2400 million yen. The consolidation of Ingate as a subsidiary is expected to be included in Cloud Works' consolidated performance from the first quarter of the fiscal year ending in September 2025. The financial forecast for the fiscal year ending in September 2025, after including Ingate, will be disclosed in the financial results briefing materials for the fiscal year ending in September 2024, scheduled to be disclosed in November 2024. Given the synergy with Cloud Works' existing core business, the talent platform business, it is expected that profit contribution including goodwill amortization will be seen in the near future.

The infrastructure to promote M&A at the company has been gradually strengthened, and in the previous fiscal year ending in September 2024, the number of M&A and capital business partnerships executed per year doubled from the previous pace of 2 per year. It has been numerically shown that M&A prior to the previous fiscal year has been relatively well integrated into the company. However, starting in August, to significantly expand the M&A infrastructure, four executive officers have transitioned to an executive system that closely coordinates M&A and PMI. In addition, a capital of 12 billion yen (2 billion yen from current deposits and 10 billion yen from borrowing) is secured as a growth investment fund for M&A, indicating the company's policy of aiming for discontinuous growth different from before.

The company's business scope has expanded from the freelance market of its founding business to the dispatch business, side business, and consulting / BPO business. As part of this growth strategy, the company acquired a development company (Sonic Move Co., Ltd.) strong in UI/UX design in July. The company aims to strengthen its DX consulting by combining the high-level freelance talent of the company with the UI/UX development capabilities. With the announced integration of Ingate as a consolidated subsidiary, the company's DX consulting area is expected to be further strengthened, accelerating the M&A strategy for the company's growth.