Hello, everyone. I am Kobayashi, Director at SHIFT. Thank you very much for taking time out to join us for the live webcast of our Q3 financial results briefing for the fiscal year ending August 2025. At today's briefing, I will present our Q3 results. This will be followed by a review of Q3 and initiatives for achieving further high growth in Q3. Finally, I will explain our growth strategy, SHIFT 3000, which is aimed at achieving net sales of JPY 300 billion. I will then move on to the Q&A session after the explanation. President and CEO Tange will also be present during the Q&A session. If you have any questions, please send them in the chat box, making sure to include the name of the institution and your name. Please try to enter your questions before we finish our explanation. Now, let me move on to the presentation.
I will start by presenting the business results. Firstly, here is the executive summary. In Q3, we achieved the improvement in utilization rates that we had been working on since the previous period. As utilization rates improved, we achieved an increase in gross profit margin. Thanks to this increase, we achieved an operating profit that exceeded our plan. We have also made progress on various future initiatives, including the implementation of a multifaceted approach to our services and AI. On the other hand, one of our challenges is achieving sales growth. This issue is given close attention in this presentation. We would like to improve customer repeat rates and achieve sales growth in the future. I will now explain our financial results for Q3. As you can see, we achieved a gross profit margin of 35.1%, which is an improvement of 3.4 points compared to the previous fiscal year.
Furthermore, operating profit margin improved significantly by 3.2 points YoY, reaching 11.4%. Consequently, cumulative operating profit reached approximately JPY 12 billion, representing an 88.2% progress rate. We have therefore revised our operating profit and ordinary profit forecasts upwards. This shows the cumulative performance progress. As you can see here, net sales have continued to grow steadily QoQ. As I mentioned earlier, we have also made significant progress towards our operating profit target of JPY 13.5 billion and have therefore revised our forecast upwards to JPY 15 billion. This shows the progress of our gross profit margin. In most years, Q3 is a slow period with a typical decline of about one point from Q2. However, in addition to achieving a high occupancy rate this year, we also had an acceptance inspection of a major project in March.
This meant that despite it being a slow period, we were able to maintain a high gross profit margin in Q3. Compared to Q2, the decrease was limited to just 0.4 points. Meanwhile, in terms of recruitment, we have hired 380 new graduates this year. They will start working on-site in June. We anticipate a temporary decline in the utilization rate in June. Therefore, we expect the gross profit margin to decline in Q4, taking into account the impact of these new graduates. Nevertheless, we anticipate achieving solid figures as the improvement in the overall gross profit margin progresses. This shows the trend in sales per customer, which is an important KPI. We place great importance on sales per customer. We have developed our capacity to acquire new customers and have steadily grown and retained those we have acquired.
As a result, the number of loyal customers increased by 47 in Q3 compared to Q2. However, as these 47 new customers are still in the early stages of growth, the overall average sales per loyal customer have decreased. Meanwhile, the average sales per loyal customer who has been with us since Q1 has increased to JPY 12.6 million . Our strategy of retaining and expanding our customer base is proving successful, with customer unit prices showing an upward trend on both a standalone and a consolidated basis. This is the project unit price. We also consider this to be an important KPI. Project unit prices tend to increase depending on the scope of services proposed to customers and the project's duration.
As a result, there was initially a downward trend at the beginning of FY 2025, but we were able to reverse this through improvements in sales activities and achieve an upward trend. Going forward, we aim to continue increasing the monthly project unit price. This shows the trend in the unit price for engineers. Thanks to improved utilization rates, we have been able to maintain high utilization levels. In addition, our successful recruitment of high-skilled engineers has led to a significant increase in unit price for engineers.
In terms of the number of engineers, we have stepped up our efforts to recruit new graduates, and we plan to increase our recruitment activity further in April. Consequently, we have established a steady growth trend in the number of engineers. We will continue to maintain this trend while striving to achieve growth in top-line revenue. This shows the performance by segment.
In particular, gross profit margin for software testing- related services has improved by 3.5 points compared to the same period last year. This improvement is directly attributable to our successful efforts to enhance the utilization rate and increase the number of engineers with high unit prices, both of which have contributed to the improvement. In addition, the gross profit margin for software development-related services improved by 1.7 points compared to the same period last year. The improvement in utilization rates across the entire group has contributed to this high level of gross profit margin improvement for this quarter. This is the SG&A expenses. In Q3, we significantly expanded our recruitment efforts, including hiring new graduates. This resulted in a recruitment expense ratio of 3.8% of net sales, reflecting the increase in recruitment expenses associated with business growth.
Meanwhile, the training costs of new graduates hired in April and May are included in personnel expenses, which has resulted in an increase in this category. However, some of these costs will be transferred to the cost of sales from June onwards, so we view this increase as temporary. Consequently, SG&A expenses remained at the usual level of 23.7% of net sales. Next up is balance sheet. As announced in Q3, we are proceeding with a business and capital alliance with Rise Consulting Group. We are currently raising funds for this alliance, which has temporarily increased our short-term debt. Our borrowing capacity remains sufficient in relation to our capital adequacy ratio. Our financial foundation is solid, and we intend to accelerate M&A activities further. Finally, this is the full- year guidance revision.
Regarding net sales, we have kept the forecast at JPY 130 billion, as we believe there is significant potential for further growth. However, the gross profit margin has significantly exceeded the initial forecast. This has led us to revise our forecasts for operating profit and ordinary profit upwards. We have decided to maintain the forecast for net profit for the current period unchanged, taking into account the associated risks due to various external factors such as asset valuations. As a result of this upward revision, we will aim to exceed these revised targets. I will now go on to discuss our results for Q3. As mentioned in the explanation of the results, we have achieved improvements in gross profit margin through improved utilization rates, as well as improvements in operating profit margin. Our efforts to restore our net sales growth rate remain. I will explain these.
This graph shows the breakdown of net sales growth. It illustrates changes from Q4 of the previous quarter. We have achieved a 45% increase through our own sales expansion efforts, such as expanding existing customer bases, expanding horizontally, and acquiring new customers. Conversely, our ability to retain existing customers has weakened due to churn and downsizing. This has resulted in a 32% decrease. Our next challenge is to suppress this churn and downsizing in order to improve the annual growth rate. Cumulative growth through Q3 currently stands at 113%, with a QoQ growth rate of 4%. This equates to an annualized growth rate of approximately 117%. If we can reduce churn and downsizing by 6% while achieving a QoQ growth rate of 10%, we estimate that our growth rate will be 146%.
To achieve this, we will break down our net sales KPIs into categories based on customers, projects, and engineers, and provide detailed explanations of each category. Until now, we have broken down net sales into categories based on customers, projects, and engineers, and we have particular strengths in recruitment and a solid track record in acquiring engineers. By recruiting high-skilled engineers, we are also able to hire upstream talent at a high unit price. In terms of customer acquisition, we have also enhanced our capabilities in this area and now have the capacity to expand our customer base.
Meanwhile, as mentioned previously with regard to the customer unit price, we are currently strengthening our efforts to retain loyal customers. Although we have launched all these initiatives, the project unit price has not increased significantly, as can be seen from previous KPI trends. We plan to strengthen this area further.
First, I will explain the unit price for engineer. This fiscal year, we restrained hiring in Q1 and Q2. However, we continued to recruit professionals and high-skilled personnel, securing a certain number of new employees in the process. In Q3, we were able to return to the usual level of hiring, with 896 new employees, due to the hiring of new graduates and strong sales growth. Going forward, we will continue to hire in line with sales demand. As we have previously communicated, for the current fiscal year, we plan to hire approximately 2,100 people. Thereafter, we will adjust hiring in accordance with demand. We have stepped up our recruitment efforts to attract high-skilled and professional employees, and we are now in a position to recruit truly talented individuals to join SHIFT. To date, our focus has been on recruiting professional and high-skilled personnel.
In particular, we have made progress in hiring individuals with executive experience of driving business initiatives. Additionally, within the high-skilled segment, we have started hiring professionals such as project managers and consultants who can deliver projects. A significant change has emerged. Individuals from major system integrators and foreign IT consulting firms are now joining SHIFT. In response, we are strengthening our brand and accelerating our hiring efforts. To that end, we are currently stepping up our recruitment efforts across various channels and layers. So far, we have found that our messaging strongly resonates with high-skilled professionals, middle-level employees, members, and semi-recent college graduates. This allows us to proceed with recruitment smoothly. Conversely, the professional segment is a highly competitive market. There are still challenges to be addressed before SHIFT can consider itself to be in a strong position in terms of recruitment.
We will work to resolve these issues while increasing recruitment within this segment. Within this segment, we achieved 208 hires by the end of Q3 and 797 hires overall. When it comes to these professional segments, as well as new graduates, we believe it's essential to focus on attracting top talent. That's why we need to make sure we're thoroughly recruiting new graduates as well. To this end, we will continue to strengthen our recruitment capabilities. We also consider the current layer-based hiring process from the perspective of recruiting lead time. For middle-level staff, members, and semi-recent college graduates, the recruitment and assignment process can be completed relatively quickly. Therefore, while strengthening our sales force in this volume zone, we can immediately recruit well-suited candidates in line with demand.
As mentioned earlier, we intend to continue with strategic recruitment in the highly competitive market for professional and high-skilled personnel in the long term. Additionally, there has recently been an increase in early recruitment activities among new graduates. We aim to enhance our brand power and awareness in order to attract talented individuals who can contribute to our future growth. Our plan is to strengthen our recruitment of new graduates, with the aim of hiring 380 this fiscal year, 500 next year, and 1,000 in the future.
Among these efforts, SHIFT has achieved significant results. It ranked third in this year's job popularity rankings, surpassing 10,000 test takers. This demonstrates a significant increase in brand recognition and awareness within the new graduate market. However, we recognize that there is a risk of reduced utilization rates depending on the timing of assignments with such a large-scale hiring initiative, particularly in June.
To address this, we have implemented activities to enable new graduates to contribute effectively from the outset. In particular, the changes we have implemented this fiscal year include providing pre-employment training in April to ensure that some members have a solid understanding of SHIFT. Alongside this, we have brought the assignment date forward from June to May, with the aim of enabling earlier paid assignments and achieving a smooth increase in utilization rates, as well as the successful onboarding of new graduates. As of July, the rate of paid assignments is 64.1%. We believe there is still room for improvement in this area. Our aim is to improve performance in this area and ensure that initial assignment rates are based on performance rather than on whether someone is a recent graduate. This shows the unit price for engineers by service.
As previously mentioned, we at SHIFT believe that the unit prices for items one to four are still lower than the general market average based on our benchmarking. We believe that three factors are required to enhance unit prices. Firstly, we will strengthen our service capabilities, expand our scope, and deliver actual results. Then, we will enhance our brand strength through these efforts. In terms of testing, we have all the necessary elements in place, including service capabilities, actual results, and brand strength. This has enabled us to increase unit price for engineers significantly. Conversely, we still consider our capabilities in consulting, PMO, ERP, and other areas to be inadequate. We intend to steadily increase unit prices by expanding our service capabilities, as well as through recruitment. Additionally, we have built up considerable capabilities and achieved notable results in security and agile development.
We intend to convert these capabilities into value that can be reflected in unit prices and offered to our customers. We have been strengthening our agile development efforts within SHIFT for some time now. As part of this, we have set up an AWS Center of Excellence team and have been continuously improving our AWS skills internally. As a result, we have produced an AWS Ambassador among AWS experts. This ambassador is one of only 300 worldwide, making them highly skilled and a rare talent, even in Japan. We intend to build a team centered around these AWS Ambassadors, enhance our technical capabilities, strengthen our brand, and establish SHIFT as the leading choice for AWS in agile development. This is about brand enhancement. We were featured in Nikkei Business, one of Japan's most widely recognized business publications.
As a result, we gained exposure in various media outlets, including Nikkei xTECH, Nikkei Computer, and The Nikkei. This exposure has significantly increased awareness of our human capital and the capabilities of SHIFT services. Additionally, alongside this media exposure, we have increased the number of external valuations we undertake. By continuing to participate in initiatives such as the Human Capital Disclosure Award and the Human Capital Management Excellence Award, SHIFT's brand power has grown. Since April of this year, we have also placed advertisements inside bullet trains. We have received positive feedback from customers who have seen them, which has further strengthened our brand. Since 2019, we have been conducting brand awareness surveys, and the results have steadily improved from an initial 28% to the current 56%. We intend to leverage these results to attract customers and recruit new employees. This is about project.
This chart illustrates the trend in project counts. We currently have 2,000 projects per month, with an annual growth rate of 13.3%, which indicates a significant increase in the number of projects. Looking at projects by service, we see particularly high sales growth rates in areas such as consulting, PMO, and ERP. There is still room for growth in unit price for engineers in these areas.
Additionally, these areas have high customer retention rates. On the other hand, we have noticed that the development, security, and software testing services that we provide on an ongoing basis are increasingly being offered as individual services. However, offering these services individually means that some projects end up being one-offs, which leaves room for improvement in terms of the retention rate. We see scope for improvement in the areas highlighted in blue and would like to increase the repeat rate in these areas.
Next, we are looking at the distribution of the number of projects by project unit price. When we think about how to increase our project unit price, let's focus on the right side, labeled one, two, and three. First and foremost, our basic premise is to raise the project unit price. We aim to further enhance our sales capabilities in areas with significant growth potential while increasing the unit price for engineers. Once these goals have been achieved, we will work to offer repeat services that are currently provided as stand-alone services.
As previously mentioned, the overall repeat rate for projects is currently 51%, leaving room for improvement. We will work to increase repeat rates and build trust. By doing so, we can offer combination and multi-services to our customers, increase project unit prices, and secure large-scale projects through multi-services. We plan to implement this approach from steps one to three.
As mentioned earlier, the repeat rate currently stands at 51%, which remains relatively low. As I said at the start, the annual growth rate is 117%. Based on last year's figures, maintaining sales at a repeat rate of 58% would result in the annual growth rate increasing to 147%. We plan to proceed with improvements at SHIFT based on this model. In terms of improving the repeat rate, we will compare sales capabilities and sales activities. In terms of the project, sales activities include sales of new orders before delivery, as well as sales aimed at obtaining repeat orders after delivery. Examining pre-order, in-operation and post-project activities, we can see that only 10% of activities fall into the latter category. In order to improve the repeat rate, we intend to strengthen post-project activities. Post-project activities include reviewing projects and interviewing customers to address their concerns.
If we can achieve this, we believe that we can improve the conversion rate, as shown on the right. The current average conversion rate is 77%, but we believe that increasing it to 80% or 81% could boost the repeat rate. With regard to sales approaches for new and existing customers, we have been working to expand our customer base this fiscal year and have made changes to our sales activities for existing customers. Currently, around 75% of our activities focus on existing customers. Naturally, we cannot secure future customers without engaging in activities to attract new ones, so we intend to maintain a careful balance between the two. It is not enough to simply say that 10% is poor and that we need to increase it to 77%. Changing activities is not something that can be done overnight.
For this reason, we have promoted AI support tooling and data aggregation extensively in activities before and after the project. In Q3, we have significantly reinforced the areas marked A to F, shown on the left. Going forward, we would like to increase our growth capability beyond 45%. At the same time, we believe the following four things are necessary to strengthen our continuity capability and reduce the churn rate from 32% to 26%. First, given that we are currently responsible for overall delivery, we will ensure that the sales team has a thorough understanding of all the relevant information. Then, we will provide support for proposals that consider what challenges exist in relation to the results and what can be proposed as the next steps to address the customer's challenges. Also, we will optimize the timing of customer visits.
We will establish a process where we can clearly instruct who should do what, when, and how. Through these efforts, we will use AI to improve order and retention rates. Once these have been achieved, we can naturally scale up horizontally. We also aim to increase the number of people within the customer organization who can drive service expansion. The next strategy for increasing project unit prices is multi-service transformation. This shows the current project unit price for each service. Currently, 86% of projects can only provide one service. However, as we are able to propose and provide multiple services in the future, such as two, three, or four services, we expect the project unit price to increase significantly. This will make it relatively easier to raise the project unit price.
Therefore, we would like to focus on services that lend themselves well to multi-servicing, such as consulting, ERP, and agile. We will then connect these services so that they can be multi-serviced after the project is completed. For example, we believe that multi-servicing can be achieved after consulting by connecting tasks, such as testing and development. Another strategy for increasing project unit price is to develop large-scale projects. We have strengthened our sales activities regarding large-scale projects, enabling us to establish relatively strong connections with CxOs. Consequently, we are currently engaged in negotiations for large-scale projects spanning various industries. Until now, breaking through the JPY 1 billion or JPY 2 billion target per company has been difficult, but recent orders and business negotiations suggest that we are currently in the midst of multiple deals worth over JPY 1 billion.
We intend to finalize these deals and deliver them successfully in order to expand our large-scale projects and increase our project unit prices. The total current opportunity stands at JPY 250 billion, of which JPY 153 billion has been converted into deals. Some of these are multi-year contracts, and we have succeeded in reaching this level. We will continue to strengthen our proposal capabilities in order to realize these opportunities and drive sales growth. Next is customer count. When it comes to customer count, we believe that the most important thing is to increase the number of loyal customers. This fiscal period, we changed our sales strategy. We have focused on acquiring new customers and converting them into loyal customers, as well as increasing sales activities with existing customers to encourage loyalty. As a result, the number of loyal customers increased by 47 in the quarter.
Compared to past trends, we can see that the conversion of customers into loyal customers has progressed significantly. As more customers become loyal customers, sales tend to increase. On the other hand, when we look at the reasons why customers are downsizing, we see that some projects have ended or that we could only provide our services on a spot basis. Additionally, although this is only temporary, fixed-price projects are also having an impact. Of the cases where we were unable to continue after implementing these projects, approximately 91% are shown here. On the other hand, factors that we cannot influence, such as the customer's business performance or a sluggish market, make up 4%. By contrast, factors beyond our control, such as customer performance or market downturns, account for 4%. Approximately 4% can be sustained by improving our own services.
Although service enhancement is certainly necessary, we plan to strengthen sales support. In terms of customer unit price, the first step we take after acquiring a customer is to establish a relationship with them and ensure that they continue to use our services every month. Beyond that, our aim is to grow the business. As previously explained, we believe that increasing the unit price for engineers and projects will enable us to achieve this level of continuity. Furthermore, increasing the number of customer executives within customer organizations who place orders with SHIFT will enable us to achieve large-scale growth, as reflected in the numbers. To achieve this, we plan to gain the trust of our customers by introducing ourselves to their executives and other relevant parties and consulting with them on projects.
This will enable us to increase the number of customer executives and raise the average unit price per loyal customer. For instance, we can increase sales for customers with annual sales of JPY 1 billion or more to approximately JPY 66 million per month, which is a considerable increase. We aim to expand these efforts. The above gives an overview of how we have improved our sales activity. In summary, improving repeat rates is our main challenge at the moment.
In order to improve these, we plan to focus on project unit prices, customer unit prices, engineer unit prices, and sales activities. Another pillar of our business is AI and BPaaS, and I would like to explain our initiatives in these areas. First, we are quite advanced in our use of AI ourselves. We are expanding its use across the entire company, including in sales, delivery, management, and human resources.
Rather than focusing on validation, we are ensuring that AI is firmly embedded in the workplace. Looking at the current market, most companies are still in the validation phase. Only 4% of the company uses AI across all areas, while 74% does not use it at all. It is therefore fair to say that AI is still in its early stage. As previously mentioned, we have completed the verification phase and are now applying AI from a variety of perspectives across various departments, including the business division and the back office. We are also seeing positive results. We have now moved on to the application phase and intend to leverage our AI skills and capabilities to improve business performance. Even now, when we assess efficiency in areas such as human resources, we use AI to analyze conversions and post-offer attraction tools.
These measures have increased the acceptance rate of job offers by 10%. In this way, we are using AI to strengthen our recruitment capabilities. In sales, we use AI to collect customer data and make recommendations on sales activities. Through these efforts, we hope to increase appointments and create new sales pipelines. During the expansion phase, we plan to leverage our AI expertise to sell our services externally and generate profit from them. Next is BPaaS. Here is an update on Wasurenai AI. The number of companies adopting Wasurenai AI continues to grow. Additionally, sales of BPO services related to this are also increasing. With regard to BPO, we believe that the Japanese market is vast. Within the JPY 40 trillion market, our initial focus will be on BPO services related to accounting, given SHIFT's expertise in core systems and business knowledge.
Regarding BPO services related to accounting, we estimate the market size to be JPY 3 trillion. We work with customers on a case-by-case basis, such as by providing BPO services on-site, offering consulting services to identify areas where BPO can drive business growth, or proposing solutions that involve introducing systems. We aim to expand our services based on these practical examples. In particular, we believe that developing our AI expertise will give us a significant competitive advantage in the BPO sector. I would like to introduce two major models for BPO and horizontal expansion. The model on the left is Wasurenai AI, which offers free business consultancy before moving on to BPO. This is because, as we have expanded and improved SHIFT's performance, we have also developed highly advanced business consulting capabilities.
We believe that we can leverage SHIFT's expertise to provide BPO services with visualization and operational capabilities that link all KPIs. Additionally, we are currently receiving a high volume of inquiries from customers regarding enterprise applications. In this context, there are large enterprise applications such as SAP, Salesforce, ServiceNow, and AWS as part of the 3S+A expansion. In terms of SAP, we have standardized our processes through ERP. By securing skilled engineers, obtaining SAP certifications, and providing services to our customers, we are now entering a JPY 500 billion blue ocean market. Similarly, we have accumulated considerable expertise in Salesforce. For instance, we currently employ 100 consultants and have developed a standardized approach for Salesforce that is similar to the one we created for SAP. Our next step is to apply this standardized approach to ServiceNow. As mentioned earlier, we have an AWS Ambassador regarding AWS.
This means that we have acquired all the necessary skills and know-how for the 3S+A framework centered around AWS. We aim to deliver these capabilities to the market and drive business expansion. The above summarizes our progress towards our business targets. The next step is to move on towards SHIFT 3000. Although we have revised our full year targets for FY 2025 upwards, there is still much to be done in terms of sales growth and M&A transformation. Looking back from 2020, however, we have achieved annual growth of around 20%. We would like to continue growing in this way. We have set targets for SHIFT 2000 for FY 2027 and FY 2028. As I explained earlier, our main challenge is to increase customer loyalty so that they continue to use our services. Enhancing this repeat rate will lead to sales growth.
Regarding SHIFT 2000, our aim is to improve the repeat rate. By 2028 or possibly even 2027, we hope to accelerate the timeline. As for SHIFT 3000, our plans include expanding our BPO services based on Wasurenai AI, as well as developing BPaaS and expanding AI-based BPO. We aim to become the industry leader by strengthening BPaaS, AI, and M&A, and to achieve SHIFT 3000 as soon as possible. As always, SHIFT will continue to develop its business as a company that solves social issues, striving to make a significant impact on the IT industry and the Japanese economy. We will continue to work towards further business expansion. That concludes today's presentation of our financial results. Thank you very much for your attention. Now, we will move on to the Q&A session. First, here is the first question. Your company has revised its business plan upwards.
However, the operating profit has only increased by JPY 1 billion compared to the previous plan due to the conservative estimation of non-operating expenses. Meanwhile, the net profit for the current period has remained unchanged. Could you please explain your expectations for non-operating expenses and extraordinary losses for the current fiscal year? I will answer this question. As explained, we were able to improve gross profit through our own efforts regarding operating profit, but the portion beyond that is largely due to external factors or factors beyond our control. For example, there are multiple uncontrollable factors such as minority investments, interest burdens, and accounting factors. Therefore, we have adopted a conservative approach and disclosed the figures for ordinary profit and below accordingly. Next, the second question. Regarding the improvement of the gross profit margin, page five mentions the need for thorough operational improvements.
Could you provide specific examples of these improvements and explain how they will be sustained? Also, page 14 states that net profit for the current period will remain unchanged due to various asset valuations depending on external factors. Could you provide a rough estimate of the expected impairment loss on assets for Q4? Regarding the latter part of your question, as I mentioned earlier, there are various factors to consider, such as minority investments, interest burdens, and accounting considerations. Therefore, we have decided to take a conservative approach and proceed as we have done this time. In the first part of this question, we are asked whether the improvement in gross profit margin, which is due to thorough operational improvements, will be sustainable. First, the improvement in gross profit margin is related to the improved utilization rate.
We have brought sales and delivery closer together, carefully matched hiring to demand, and coordinated with sales to speed up the assignment of available members. These are not temporary measures, but rather organizational and systemic changes, so we believe they will be highly sustainable. We will continue to evolve and improve our operations to maintain a high gross profit margin. All right, moving on. This is the third question. In the field of software testing-related services, the gross profit margin of end user companies has increased by 4% compared to the previous year. In the fiscal year ending August 2025, gross profit margin has improved YoY. Could you tell us what factors have contributed to this improvement? What are your thoughts on the sustainability of this trend? This is also about improving gross profit margin.
As mentioned earlier, utilization rates are one factor that make up the gross profit margin, as is the ratio of sales from premium services. Controlling projects with potential issues also affects the gross profit margin. We have established a solid system for utilization rates, enabling us to achieve this. As for the ratio of sales from premium services, we have increased the number of high-skilled employees and accumulated our experience, leading to an increase in sales of high-priced services, such as consulting. Also, with regard to projects that may have issues, we have set up a team to closely monitor the status of all projects and resolve any issues at an early stage. We intend to continue our efforts to improve our operations in this area and ensure that these improvements are sustained. Next, this is the fourth question.
What factors are behind the decision to maintain the net profit forecast for the current fiscal year? Are there impairment losses or other factors exceeding expectations? If so, how will they be controlled in the next fiscal year? As I mentioned in response to the first question, there are some things beyond our control, such as minority investments, interest burdens, and accounting factors. At the same time, we consider M&A to be a very important strategy. From next fiscal year onwards, we would like to establish firm discipline and promote M&A based on that discipline. One approach will be to eliminate impairment losses, while another will be to rigorously manage risks within the framework of these guidelines. Once our investment philosophy has been updated, we will incorporate it into our IR materials and inform investors of our plans. Next is fifth question.
The average monthly sales per loyal customer have decreased due to the lower average price per new customer. While the price per new customer is expected to remain low, when do you anticipate the overall price per loyal customer to increase even when new customers are factored in? We consider loyal customers to be of great importance. Until last fiscal year, we placed a strong emphasis on acquiring new customers. Within this, we focused on those who would continue to use our services. Consequently, a relatively large number of new customers have become loyal customers this fiscal year. Once a customer becomes loyal, some generate over JPY 2 billion in annual sales through our services, for example. It is not an average figure.
In order to assess the increase in average unit prices paid by loyal customers across different tiers, we want to carefully analyze the unit price portfolio, growth rates, and other factors within the loyal customer base over the years since becoming a loyal customer. As I explained in the latter part of my presentation, our sales team will focus on increasing the repeat rate going forward. We believe that improving the repeat rate will also increase the number of customers who become loyal customers. We also aim to increase the average unit price and the proportion of loyal customers in order to contribute to overall sales growth. Although it is difficult to predict exactly when the overall trend will improve, we will continue to work on controlling and improving the situation to ensure an upward trend. All right. Moving on to the sixth question.
Please provide a detailed explanation of the main causes of customer churn and downsizing on page 17 of the document. What countermeasures are you considering? The main causes are listed on page 36. The most important of these is changes in the customer's environment, accounting for around 4% of the total. On the other hand, there are a few projects where customers have discontinued our service due to dissatisfaction. While improving the service could address this issue, the remaining 90% is due to large projects being completed and our inability to follow up with subsequent proposals. We consider this to be a major challenge. We plan to address this by taking measures to increase retention and repeat rates. For example, after testing, we will visualize the customer's issues based on the test results and make proposals tailored to them.
Rather than offering a service limited to testing, we provide a wide range of services, including development, consultancy, analysis, and customer support. Our plan is to reduce churn and downsizing by integrating these services. Moving on to the seventh question. Regarding the re-acceleration of hiring and the increase in recruitment for the next financial year, the total number of hires in Q3 was 896. Of these, 516 were mid-career hires, excluding new graduates, which saw a further increase. Could you please explain the reasoning behind this? Additionally, it was mentioned that the planned number of new graduates to be hired exceeds 500 for the next fiscal year, indicating further acceleration in hiring. Will the same apply to mid-career hires? Could you also provide an overview of the consolidated hiring plan for the next financial year, including the anticipated distribution across layers? In Q3, we hired 380 new graduates.
Excluding these, we made 516 mid-career hires, which has accelerated again. This shift towards accelerating hiring is due to our decision to reverse the previous strategy of restraining hiring in light of the improvement in utilization rates. We believe that the results of this change are beginning to emerge in Q3. Additionally, as mentioned in the financial results briefing, the lead time from recruitment to actual employment is still quite long for the high-skilled layer. We will continue to strengthen our recruitment efforts for the high-skilled and professional layers to ensure that outstanding candidates continue to join SHIFT. Meanwhile, we have one of the strongest recruitment capabilities for the middle layer, so we can shorten the recruitment lead time. We will monitor sales demand to prevent a decline in utilization rates and maintain control.
Regarding the next fiscal year, our sales are based on the unit price for engineers multiplied by engineer count. Therefore, we plan to recruit steadily and increase the number of SHIFT engineers. Therefore, while maintaining strict control, we intend to accelerate recruitment. In addition, since this will boost sales too, we also plan to recruit salespeople. Next, moving on to the eighth question. Regarding the recruitment expenses detailed on page 23 of the materials, we were previously informed that these accounted for around 30% of the total. This time, we have received a breakdown of the fee rates by layer. The rates for the professional and middle layers appear to be in line with the market average. Is the increase in fee rates due to intense competition?
Additionally, while we understand that there is flexibility in the rates charged by each layer, should we expect overall recruitment expenses to increase compared to previous levels? As mentioned, competition for the professional and high-skilled layers is indeed becoming increasingly fierce, so fee increases are necessary. However, we are implementing fee increases in a controlled manner, such as by selecting specific timing rather than implementing them year-round or by combining them with adjustments for the middle layer. As engineer recruitment intensifies, fees are gradually increasing. However, we are also recruiting mid-level engineers and semi-recent college graduates, as well as using referrals to expand our recruitment methods. This has enabled us to maintain an average recruitment cost of 30%-35% of the total. Compared to previous years, there has been a continuing trend of an increase of one to two points.
However, even if it reaches 35%, we are working to offset the initial acquisition costs by reducing the LTV of engineers or their turnover rate so that it is reflected in profits. We are proceeding with this in a controlled manner. Here is the ninth question. In terms of Q3 sales of software testing- related services, net sales for the three months of Q3 totaled JPY 22.2 billion, representing an increase of JPY 1.9 billion compared to the previous quarter. This is a significant increase compared to previous rises of several billion yen. Please explain the factors contributing to this growth, including increased utilization rates, contributions from M&A activity, personnel increases, and price hikes, and the sustainability of this sales growth. Regarding software testing- related services, there are two key factors to consider in Q3. The first is the acquisition of KINSHA through M&A.
KINSHA provides debugging and localization services for the entertainment industry, which we have integrated into our own software testing- related services. Additionally, strong growth in security services and increased unit price for engineers have enabled us to expand our traditional organic testing related services, contributing to significant QoQ growth in Q3. We will continue to advance our sales activities to ensure this growth is sustained. Next, this will be the 10th question. In terms of increasing repeat rates, what type of projects are you acquiring? Are they similar projects or new developments? Please share any examples you have. When it comes to improving repeat rates, testing is the final stage of development projects. In testing, however, we offer services such as inspections to verify whether the requirements definition, which serves as input for testing, is sufficient. We also offer consulting services that go further upstream.
This enables us to connect not only testing, but also other services. In particular, we analyze test results to clarify customer issues and provide consulting services on how to proceed with development. We also connect development, testing, and customer support. This is how we aim to improve repeat rates. We offer a variety of services to large, loyal customers, and this is one example of how we achieve higher repeat rates. This brings us to the 11th question. The profit margin is stated as 34.4% on page 14 and 34.5% on page 44 of the revised plan. Please confirm which figure is correct. Additionally, the gross profit margin for Q4 is expected to decrease by over one point compared to Q3. Are there any other factors besides new graduate assignments contributing to increased expenses?
There has been a notable slowdown in revenue growth momentum for system development-related services, with Q3 revenue being slightly lower than in Q2. Please explain the factors behind the slowdown and your outlook. We apologize for that. The correct figure is 34.4%. On page 44, we indicated 34.5% in a broader category, which may have caused confusion. We would therefore like to correct this. In terms of software development services, Q2 saw an increase in fixed- price development projects. Q3 was also a slow period for some areas. As system engineering services companies operate on a fixed-price project basis rather than on a monthly production basis for software development services, fluctuations are inevitable due not only to seasonality but also to customer factors. This is why we are disclosing the information in this way. Moving on, this is the 12th question.
Could you provide more details on why existing customers are churning or downsizing their business? Even with one-off projects, if customers are satisfied, they often continue to use your services afterwards. Why hasn't this been the case so far, though? When it comes to customer repeat rates, larger projects are more likely to lead to continued business. However, when there are many small projects, testing tends to become sporadic, which can result in a lack of repeat business. This leads to increased variability. However, as I mentioned earlier, our focus is not only on testing but also on expanding our own services so that we can effectively connect these two areas. In addition, our customers are not limited to one person. For example, there may be other customers within the same department working on different projects or customers in neighboring departments.
By expanding our customer base horizontally within the company, we believe we can increase our customers' overall repeat rate. This is not only due to low customer satisfaction. We also believe that we need to adopt a sales approach that enables us to propose services tailored to our customers' needs and project timings. We believe there is room for improvement in the repeat rate and will work to increase it, as reflected in the numbers. This will be the 13th question. You mentioned that there will be no upward revision of net profit due to the risk of extraordinary losses. Could you please provide more specific details about these risks? Impairment losses from the M&A of non-listed companies are usually identified within the fiscal year or audit plans.
However, even with minority investments, if the company's shares are listed, we must recognize securities losses based on fair value and other factors. In other words, there are factors beyond our control. We have adopted a conservative approach and disclosed this information accordingly. We have received many more questions, but unfortunately, due to time constraints, we must conclude the Q&A session here. We will provide detailed responses to any questions that could not be addressed during this session through our IR department at a later date. We will now conclude the Q&A session. This concludes SHIFT's Q3 financial results briefing for the fiscal year ending August 2025. Thank you very much, everyone.