Hi, I'm Kazuhiro Ogura, CEO of HENNGE. Thank you very much for watching our video today. Today, our CFO, Haruo Amano, will explain the full year financial results for the fiscal year ending September 2021. Then I will explain the full year forecast for the fiscal year ending September 2022 and about our growth strategy.
I'm Haruo, the CFO of HENNGE. Let me first explain about our full year financial results for FY 2021. Our consolidated net sales expanded steadily as shown on the slide. This slide shows a summary of our consolidated financial results. Sales for HENNGE One were slightly lower, and sales for professional service and others was slightly higher than the forecast. As a result, our overall consolidated net sales for FY 2021 were in line with the forecast, which we announced at the beginning of the fiscal year. Each profit lines exceeded our forecasts. Gross profit margin remained high and consistent to the previous year. Our year-on-year net profit fluctuation is as shown on the slide. Our year-on-year fluctuation of operating expenses by nature is as shown on the slide. The chart on the slide shows quarter-on-quarter fluctuation of operating expenses.
During the fourth quarter, we focused to invest on the activities which are expected to contribute for the further growth of the company going forward. As for the other SG&A, we actively carried out recruitment activities during the quarter. As for the advertisement expenses, in order to accommodate the demands from our customers about the new features that we've announced in August, we have aggressively held relevant events and advertisements. At the same time increased outsourcing costs in order to support our increased sales and customer success activities. Personnel expenses increased compared to the third quarter, mainly due to the additional support given to the employees in relation with remote working. The sum of cost of sales and R&D expenses increased by JPY 24 million quarter on quarter due to the timing on the completion of the project, which corresponds to the sales of professional services and other businesses.
This chart shows quarterly trends in net sales and operating expenses. As to the employees, currently we have 230 employees. Breakdown by function is as shown in the pie chart. The transition in the number of employees is as shown in the bar chart. As initially planned, recruiting activities for HENNGE One sales and customer success positions are on track. As we explained in the previous earnings call, currently over 70% of the team member for HENNGE One R&D employees is composed of non-Japanese employees, and we have mainly hired them from overseas. The number of HENNGE One R&D employees decreased slightly compared to that of previous year, and this is mainly due to some prospective employees living outside of Japan were unable to cross the border because of COVID-19 restrictions. For now, we believe that there will be no significant impact on R&D activities.
However, we will keep our close attention to the situation. In terms of our organizational structure, we have made a change in the third quarter in order to further enhance our product. As a result, part of customer success employees are integrated into business development section. Furthermore, we will continue to actively recruit in each function. Cash flow status is as shown on the slide. Operating cash flows decreased compared to the previous year, mainly due to holding large scale event, HENNGE NOW!, and accompanying advertisements during second quarter of FY 2021. Despite a large spend, we have made cash and cash equivalents balance grow steadily year-on-year. Now, I will explain our business activities during the year. This is an overview of our business highlights.
We continuously held a number of online events to follow up on HENNGE NOW!, a large scale digital event held in the second quarter, and to raise recognition of the new license lineups announced in August. We held an online meeting for resellers of HENNGE One in order to explain about our new license lineups and also introduce our marketing support measures for our resellers. We will further enhance the relationship with our resellers and improve our ways of approaching to the customers in both quantitatively and qualitatively. As we explained in detail at the earnings call for the third quarter of FY 2021, we announced the new features of HENNGE One in August 2021 and launched them from October 2021. I will not go into the details of new features today, but it got equipped with three wonderful new features to meet the demands newly recognized under the pandemic.
We are proud that we can now provide more value to our customers. We have announced that the licensed lineups of HENNGE One were updated from October 2021 in line with this big version up. While we are mainly targeting to sell higher value added suite plans, as a new attempt, we will also set up single function plans that would be attractive to light users. This is for us to approach a wider range of customers. Next, I would like to explain our results of KPIs. This slide shows a year-on-year fluctuation of KPIs for HENNGE One. The progress of KPIs for HENNGE One from the end of the previous fiscal year is as shown in the slide. The average monthly churn rate is 0.25%, which is continuously very low. This slide shows the quarterly trends in the number of contracted companies and users.
As you can see from the charts, both the number of contracted companies and users increased steadily. ARPU is continuously on an upward trend together with steady growth in ARR. These were the business results for FY 2021. Thank you very much.
Turning to our full year outlook for FY 2022. Our target for FY 2022 is an extension of FY 2021's target, which is to keep aggressively investing in marketing activities to capture the expanding business opportunities under the new normal and to help accelerate HENNGE's midterm ARR growth. As for the marketing investment, we will continue to carry out advertisements not only limited to TV commercials but also through web print advertisements, out-of-home advertisements, and other approaches to raise our recognition of the new services. Also, we'll try a multilayered approach to the market, such as attempting both physical events and online events, considering the situation of the post-pandemic and not just holding a large digital event as we've done for FY 2021.
For the personnel plan, we will continue to actively recruit in each function and aim to increase more than 50 headcounts in order to accelerate our growth going forward. Although we are aiming to hire people in each function, our main target still remains with sales and customer success positions. This is to further promote our new license lineups, which were released in October. Until the team is up to speed, we will utilize outsourcing resources for support so that we won't be missing any business opportunities. This will be the top priority for us. Reason being as a top priority is that communication with existing customers during FY 2022 will be key in order to approach them to transit from the old plan, which we are expecting to happen during FY 2023. This slide shows our forecast for FY 2022.
As for the HENNGE One business, we aim to achieve sustained annual growth of above 20% by aggressively taking advantage of the opportunities generated from the large-scale event held in FY 2021. Therefore, we will actively carry out marketing activities, but for FY 2022, we'll be attempting a variety of marketing activities instead of holding one large event like we did in FY 2021. As a result of these activities, our operating income and net income for FY 2022 are expected to increase compared to that of FY 2021. These charts show the transition of our sales by business over the last few years and forecasts for FY 2022. This slide shows the actual advertising expenses and operating expenses excluding advertising expenses until FY 2021 and the forecast for FY 2022.
For FY 2022, we are actively going to invest in advertising expenses at the same level as FY 2021 and also invest in areas where it contributes to accelerating our future growth, such as recruitment and outsourcing resources. 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 life better. We want to deliver the power of technology to as many people as we can and change the world into 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 SaaS is the fairest and most sophisticated approach to liberate technologies.
This is one reason why we are providing SaaS and why we want to promote its use among our customers as well. Total amount of technology that we provide to the customer and the total amount of liberated technology are measures to prove our progress on our philosophy, and this is expressed as LTV: lifetime value, or in another word, the total value arising from the current contract with customers. Our growth strategy is to maximize this LTV. Our average contract period and gross profit margin are already high numbers; therefore, in order to maximize LTV, we think that it is essential to maximize ARR. For this reason, we do not focus that much on the short-term operating profit result, but rather invest aggressively for the future and aim to accumulate ARR as much as possible.
ARR can be broken into three factors N, n, and ARPU, which represent the number of contracted companies, average number of users per contracted company, and average revenue per user respectively, and can be analyzed based on those three factors. The progress of the three factors for HENNGE One is as shown on the slide. Including our main service, HENNGE One, our group mainly operates subscription model businesses. Barring any cancellations, the contracts secured this year should continue to generate sales and become foundational sales for next year onwards. You can see HENNGE’s ARR is steadily and stably increasing year-on-year. However, focusing on the ARR growth ratio, you can see that it was decreasing year-on-year until fiscal year 2020. If we are to say what our challenge is, then it is the growth rate of ARR.
In order to address this issue, as we've been explaining since the beginning of fiscal year 2021, we would like to create an inflection point for the ARR growth, which would create an accelerated upward trend of ARR growth by having fiscal year 2021's growth rate as a bottom. I do understand the difficulties of making this happen. However, considering when is the right timing to have an opportunity to accelerate our business, I do strongly believe it is now, and this is consistent to what I've been insisting in the previous earnings call. COVID-19 pandemic has changed the ways of working, including how company operates, and there definitely will be a situation where SaaS and cloud adoption will be expanded.
In order to capture such an opportunity, we invested aggressively on marketing activities, which would lead to acknowledgment on further strength of HENNGE One and brand value of HENNGE to the decision makers of the company, partner companies, and more. These activities were expected to pay off starting from fiscal year 2022, but in fact, our continuous sales and customer success activities so far resulted in a slight increase in ARR growth for fiscal year 2021. Still, we would like to keep creating a growth trend by having fiscal year 2021's growth rate as a bottom number for the coming years. In fact, with the large scale marketing advertising investment in fiscal year 2021 and the launch of new licensed lineups in October 2021, we consider that our ARR growth trend will soon enter a new phase.
We will keep accelerating this new growth trend and achieve medium term ARR growth in the mid 20s in CAGR by increasing both N and ARPU. Our aim is to achieve and exceed JPY 10 billion for HENNGE One's ARR. Since launching HENNGE One as a service with a single feature in 2011, we have gradually added new features in response to the customers needs and grown it as an IDaaS consisting of five main features and one option. in October 2021, we've added three new features, but this is not the end of HENNGE One's evolution. We will continuously add more and more essential features that will help our customers transformation led by SaaS utilization, and maximize the amount of technology that we liberate and provide to our customers in accordance with our corporate philosophy.
HENNGE One is an IDaaS which brings higher and higher value to the customers as those customers get powered by more and more sources. We will continuously stimulate further expansion of cloud service adoption in Japan, and at the same time collaborate more and more with other SaaS companies to form a SaaS platform bringing further growth in the market. This concludes our explanation for financial result of fiscal year 2021 and outlook for fiscal year 2022. Thank you very much for taking your time to watch our video.