Hi, I am Kazuhiro Ogura, the CEO of HENNGE. Thank you for watching our video today. Today our director Haruo Amano will explain our full year financial results for fiscal year ended September 2024. Then I will explain our full year forecast for the fiscal year ending September 2025 and our growth strategy.
Hi, I'm Haruo Amano. First, let me explain the full-year financial results for FY 2024. This is the summary of our consolidated financial results. Net sales resulted in line with the initial forecast for FY 2024. Each profit exceeded the initial forecast for FY 2024 and in particular the net profit overachieved significantly due to the extraordinary income recognized in the third quarter. A quarterly trend of consolidated net sales is as shown in the slide. Net sales of HENNGE One business are composed of recurring revenue and they are on an increasing trend quarter on quarter following the third quarter. The net sales of HENNGE One business grew significantly in this quarter due to the price revision that has started from April 2024. Year on year fluctuation for consolidated net sales is as shown in the slide.
Our quarterly trends for gross profit and gross profit margin are as shown in the slide. Year on year fluctuations for gross profit and gross profit margin are as shown in the slide. Despite the increase in infrastructure costs for HENNGE One mainly from the exchange rate fluctuations and the security enhancements and the expansion of R & D personnel, the gross profit margin increased as a result of higher ARPU. We consider that our gross profit margin remains high. The chart in the slide shows the quarter on quarter fluctuation of operating expenses. By nature, personnel expenses increased due to the year-end bonuses and allowances. The other SG&A expenses also increased significantly from the previous quarter mainly due to the higher recruitment expenses incurred such as for intensive recruitment advertising in September 2024 which we spent around JPY 100 million.
Our year on year fluctuation of operating expenses by nature is as shown in the slide in FY 2024. Personnel expenses resulted in lower than the initial plan due to the difficulties in recruitment. However, the recruitment expenses increased mainly due to the intensive recruitment advertising in September that was not included in the initial plan and the infrastructure costs for HENNGE One which also grew beyond the initial plan as a result of security enhancements. Overall, the total operating expenses were generally in line with the initial forecast. This chart shows quarterly trends in the net sales and operating expenses. The transition in the number of employees is as shown in the bar chart. Although the initial plan for FY 2024 was to achieve a net increase of more than 50 employees. It resulted in a net increase of 28.
This is mainly due to the difficulties in recruitment such as severe competition, low acknowledgment of our brand from the overall recruitment market and a lack of recruiting capabilities. The trend in cash flow is as shown in the slide. Now I will explain our business activities during this quarter. This is an overview of our business highlights. Major advertising activities for the fourth quarter is as shown in the slide. In order to deliver the new values of rebranded HENNGE One, we exhibited, sponsored and participated in various events nationwide. In September 2024, we conducted recruitment advertising across the major train stations and the universities in Japan to raise awareness among recruitment candidates. In July 2024, three features were added to HENNGE One.
We will continue to meet the latest market demands and focus further on our corporate philosophy Liberation of Technology. Next, I would like to explain our results of KPIs. This slide shows the progress of KPIs for HENNGE One from the previous fiscal year. This slide shows the year on year fluctuation of KPIs for HENNGE One. This slide shows the average monthly churn rate during this quarter. Cancellations triggered by the price revision have occurred. In addition to the conventional reasons for cancellations, there were a few cancellations by relatively large companies which impacted the churn rate. However, as we had price revision planned from April 2024 in our forecast, we have taken into account for a certain increase in the churn rate. It remains with our expectation and we believe that we are able to continue maintaining a stable and sustainable growth model.
The theoretical average contract period is more than 15 years. This slide shows the quarterly trends in the number of contracted companies and users. We have steadily acquired contracts with relatively small to mid-sized companies as a result of strengthened relationships with resellers. On the other hand, the number of contracted users resulted in a slight increase due to the impact of the cancellations by relatively large companies. The quarterly trends in ARR and ARPU are as shown in the slide. ARPU increased steadily due to the price revision effective from April 2024. At the end of this quarter, based on the number of companies, approximately 50% of the customers subject to the price revision have renewed their contracts with the new plan. We will continue to promote activities to deliver the value of HENNGE One in order to make this change successful.
Next, turning to our full year outlook for FY 2025 by strengthening our corporate branding, we aim to accelerate mid to long term ARR growth and improve productivity. This is the policy stated for FY 2025 as for our main service HENNGE One business, we aim to exceed JPY 10 billion for ARR and FY 2025. As for marketing, recruiting and business investments, we will continue our activities for further business expansion and looking to be JPY 10 billion for ARR. In addition to these initiatives, we believe that strengthening our corporate branding is crucial to accelerate mid to long term ARR growth. This is not something that can be achieved in a short term where we need sequential investments by foreseeing our future. This slide shows our forecast for FY 2025.
We will aim for above 20% annual growth for net sales in FY 2025 and we expect an increase in each profit as well. This slide shows the trends in net sales over the last three years as well as our forecast for FY 2025. This slide shows the actual advertising expenses and operating expenses excluding advertising expenses over the last three years as well as the forecasts for FY 2025. Our advertising expenses includes a budget for corporate branding activities. 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 earned over the future. We would like to build a solid business model that can stably 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: 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 ARPU.
The progress of three KPIs for HENNGE One is as shown in 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. You can see HENNGE One's ARR is steadily and stably increasing year on year. Especially for the recent years, the number of companies who transfer to cloud based working style in major cities other than Tokyo is increasing. Capturing these opportunities, we have acquired relatively small to mid sized contracts efficiently through strengthening relationships with resellers by releasing number of new services and features which met the expanding market demands. ARPU has also successfully increased. As a result, ARR increased more than JPY 1.8 billion in FY 2024 and the growth rate of ARR was also risen significantly.
We aim to achieve JPY 10 billion for ARR in FY 2025 and next. Our milestone is set at JPY 20 billion as the group's ARR by FY 2029. Having our current businesses as focus areas during this period, we will also take on challenges to create an inflection point of ARR growth rate in the future, such as by expanding regions outside of Japan and having M&As with the partners who we've got business synergies. We want to build a solid foundation that will allow us to continue growing beyond 20 billion Japanese yen. For that reason, we set our operating margin target at 20% in FY 2029.
We will continue to proceed with our corporate philosophy, Liberation of Technology. Our aim is to establish a business model which enables us to achieve and exceed JPY 100 billion for ARR and a potential operating profit margin of 50% within FY 2035 to FY 2037, as it requires to keep our average growth rate between 20% and 30% over the next decade or more. We consider that it is not easy to be achieved. We will continue to proactively cultivate new markets and keep on a cycle of value creation through M&A and other measures to increase the certainty of realizing our vision for the future. We anticipate that we will be encountering various obstacles in achieving these steps.
Challenges to overcome these obstacles and propelling our business forward to become a world class IT company would be what we will be aiming for and in order to make this happen, establishing a strong and robust HENNGE brand is essential. For example, if high quality personnel sympathize with and attracted to HENNGE's philosophy, recruitment will be easier to promote. If our business partners believe that collaborating with HENNGE will accelerate their business and something interesting will definitely happen with HENNGE, M&A, and alliances may proceed smoothly if customers recognize and trust the superiority backed by HENNGE's track record, new market developments can be promoted efficiently. If customers are convinced of HENNGE's foresight and values brought by it, we believe this will lead to an increase in ARPU. A strong and robust HENNGE brand cannot be established easily or in a short period.
Therefore, we will continue to focus on brand building activities to firm up our path towards achieving JPY 100 billion for ARR. As I have explained, we aim to continue growing our business and keep improving our enterprise value. As the company grows, we may consider switching to a higher tier stock market which would require us to strengthen our corporate governance and shareholder returns. We need to strengthen the independence and transparency of the corporate structure by appointing members with diverse expertise and backgrounds to the Board of Directors or by reducing the shareholding ratio of the founders to address various requirements and challenges. We are planning to transition to have an Audit and Supervisory Committee. We will continue to strengthen our corporate governance going forward. We also believe that shareholder returns are important to enhance enterprise value and promote long term growth.
At the Annual General Meeting of Shareholders in December 2024, we plan to propose a dividend of JPY 3 per share. We aim to have progressive dividend going forward. This concludes our explanation of the fiscal year 2024. Thank you for taking your time to watch our video.