Hi, I'm Haruo Amano, Director of HENNGE. Thank you for joining us today for our financial results briefing for the first quarter of fiscal year 2025. Today, our CFO, Ryo Kobayashi, will explain our financial results and the progress against our four-year forecast. Then, I will explain our growth strategy and give my impression of this quarter.
Hi, I'm Ryo Kobayashi, CFO of HENNGE. First, let me explain the financial results for the first quarter of FY2025. This is the summary of our consolidated financial results. We achieved significant growth year-on-year, which is in line with our FY2025 forecast. Our quarterly consolidated net sales are as presented on the slide. Since the net sales of HENNGE One Business is recurring in nature, it has been increasing throughout each quarter. We have seen significant growth this quarter, sustaining consistent growth. Our year-on-year consolidated net sales are as presented on the slide. Our quarterly gross profit and gross profit margin are as presented on the slide. Our year-on-year gross profit and gross profit margin are as presented on the slide. Gross profit margin increased mainly due to higher RPU maintaining the high level. The quarter-on-quarter breakdown of operating expenses is as presented on the slide.
The year-on-year breakdown of operating expenses is as presented on the slide. As a result of proceeding with various activities aligned with our annual plan, other selling, general, and administrative expenses, including recruiting expenses, personnel expenses, and advertising expenses increased year-on-year. Our quarterly net sales and operating expenses are as presented on the slide. The number of employees is as presented on the slide. Net employee growth resulted in 11 compared with the end of the previous fiscal year. Now, I will explain our business activities during this quarter. This is an overview of our business highlights. Major advertising activities for the first quarter are as presented on the slide. We hosted physical advertising events, HENNGE Meetup 2024, in Taipei and Bangkok. We have also accelerated advertising activities in various regions, engaging in over 60 events focused mainly on physical events.
Next, I would like to explain the results of our KPIs. HENNGE One KPIs of the first quarter are as presented on the slide. Year-on-year KPI results for HENNGE One are as presented on the slide. The churn rate of HENNGE One is as presented on the slides. During this quarter, cancellations triggered by the price revision have occurred in addition to the conventional reasons for cancellations. As there were no cancellations from the large customers, the churn rate has improved, resulting in lower than the expectation. We expect the impact of improved churn rates on the financials to be limited. We will continue to pay close attention to churn trends as plan migrations continue throughout the first half of this fiscal year. The theoretical average contract period exceeds 15 years. The numbers of contracted companies and users are as presented on the slide.
We achieved robust growth in the number of contracted companies through acquiring contracts with small to mid-sized companies by strengthening partnerships with resellers. On the other hand, the number of contracted users grew significantly from acquisitions of relatively large customers, and the impact of churn being lower than expected. Our ARR and RPU are as presented in the slide. This quarter, there were larger customers contracting the single-featured plans, together with a higher portion acquired from our top-tier plan, HENNGE One Pro. These factors, combined with the impact of the price revision effective from April 2024, resulted in the growth of both ARR and RPU. As of the end of the first quarter, approximately 70% of our customers subject to the price revision have successfully migrated to the revised price based on the number of contracted companies.
We will continue to promote and deliver the value of HENNGE One to make this change successful. Next, I will touch on our full-year outlook of FY2025. By strengthening our corporate branding, we aim to accelerate mid- to long-term ARR growth and improve productivity. This is the policy stated for FY2025 as shown on the slide. This slide shows our full-year forecast for FY2025. There is no change from the forecast, which was disclosed on November 8, 2024. The net sales by business are as presented on the slide. Results of the first quarter are in line with our full-year forecast. Advertising expenses and operating expenses, excluding advertising expenses, are as presented on the slide. We will continue our investments in areas including corporate branding to accelerate our ARR growth in the mid- to long term.
As outlined in the previous slides, we have steadily built up sales in line with our forecast. We expect the positive impact of the price revision to diminish in the latter half of the fiscal year as the migration ends, leading to lower sales growth rates. Regarding operating expenses, our progress remains firmly on track with our forecast. We remain committed to investments that foster future growth, and depending on the timing of these investments, profits may fluctuate from quarter to quarter. On the talent acquisition front, although we achieved a net employee growth of 11 this quarter, the labor market remains a critical challenge for us, similar to that of last fiscal year.
The recruitment advertising campaign we conducted last September was aimed at enhancing awareness of HENNGE among potential candidates that we aspire to attract, so that, for example, they think of HENNGE when considering a career change or to reduce barriers to applying for this audience. This campaign represents one of the initiatives of our broader mid- to long-term strategy to enhance brand awareness. While the campaign yielded a limited number of direct applications, we observed a substantial increase in overall applications following its launch. Although qualitative, we believe that this has led to an increase in our brand awareness from various perspectives. We believe it is important to continuously take various initiatives toward the enhancement of brand awareness, leveraging the outcomes and insights gained from this campaign to inform our future efforts.
In summary, while we recognize that there are issues to be tackled in the mid- to long term, our first quarter results are robust and in line with our annual forecast.
Finally, please let me explain our growth strategy. Our corporate philosophy is Liberation of Technology. We believe in the power of technology. We love technology, and we strongly believe that technology will make our lives better. We want to deliver the power of technology to as many people as we can and to change the world to be a better place. We established HENNGE more than 25 years ago, and since then, we set our philosophy as Liberation of Technology, which we actually have demonstrated in various areas. From the experience we gained, we think that software as a service is the most fair and sophisticated approach to liberate technologies. This is one of the reasons why we're providing software as a service, and we want to promote the use of cloud services among our customers as well.
The total amount of technology that we provide to the customers and the total amount of liberated technology are the measures to prove our progress on our philosophy, and this is expressed as LTV. LTV, or lifetime value, is the total value arising from the current contracts with the customers. Our growth strategy is to maximize this LTV. Maximizing LTV, that is, by seeking to maximize the total gross profit and over the future, we would like to build a solid business model that can still increase profits even if the investments for further business growth are increased. Currently, our average contract period and gross profit margin are already in a high number. Therefore, in order to maximize LTV, we think that it is essential to maximize ARR. We will actively engage in activities with expected high return on investment and aim to accumulate ARR as much as possible.
ARR can be broken into three factors: the number of contracted companies, average number of users per contracted company, and average revenue per user. In these three factors, we aim to increase ARR by focusing on increasing the number of contracted companies and RPU. The KPIs for our growth strategy of HENNGE One are as presented on the slide, including our main service, HENNGE One. Our group mainly operates a subscription model business. Barring any cancellations, the contracts secured this year will continue to generate sales and become the foundational sales from next year onwards. The figures on this slide demonstrate the robust and stable growth of the ARR of HENNGE One. Especially for the recent years, the number of companies who transferred to cloud-based working style in major cities other than Tokyo is increasing.
Capturing these opportunities, we have acquired small to mid-sized contracts efficiently through strengthening relationships with resellers. By releasing new services and features which met the expanding market demands, RPU has also successfully increased. While focusing on driving growth within our current business lines, we will also pursue initiatives that solidify our path to achieving JPY 20 billion in ARR and further growth beyond. This includes expansion into new geographic markets beyond Japan and pursuing M&A activities. Finally, allow me to reflect on this quarter. FY2025 has begun, a year in which we aim to achieve JPY 10 billion in ARR. We believe this quarter marks a solid start to the fiscal year, showing positive results compared to past performances. This strong performance is a result of our continuous and diligent sales efforts successfully leading to the acquisition of contracts.
While the price revision effective from April 2024 is progressing without any major surprises, we will remain cautious and strive to achieve our full-year forecasts by working collaboratively as a unified team. Furthermore, we will stay committed to taking initiatives toward our target of JPY 20 billion in ARR and further growth beyond, including enhancing brand awareness and competitive advantage in talent acquisition. This concludes our briefing on the first quarter of fiscal year 2025. Thank you for your time and attention.