KFY Korn Ferry

Highlights

• Fee revenue in Q2 FY'25 was $674.4 million, a year-over-year decrease of 4%, flat on a sequential quarter basis.
• Completed our sixth consecutive quarter of improved profitability:
  • Operating income was $87.5 million and Adjusted EBITDA was $117.0 million.
  • Operating margin increased 980bps year-over-year to 13.0%. Adjusted EBITDA margin was 17.4%, a 340bps increase compared to the year-ago quarter.
• Net income attributable to Korn Ferry was $60.8 million, while diluted and adjusted diluted earnings per share were $1.14 and $1.21 in Q2 FY'25, respectively.
• The Company repurchased 456,250 shares of stock during the quarter for $32.6 million.
• Declared a quarterly dividend of $0.37 per share on December 4, 2024, which is payable on January 15, 2025 to stockholders of record on December 20, 2024.
• On November 1, 2024, Korn Ferry completed the acquisition of Trilogy, a leading provider of technology/digital interim talent across Europe and in the United States, which will be included in the Professional Search & Interim segment starting in Q3 FY'25.

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced second quarter fee revenue of $674.4 million. In addition, second quarter diluted earnings per share was $1.14 and adjusted diluted earnings per share was $1.21.

“I am pleased with our second quarter results, as we generated $674 million in fee revenue,” said Gary D. Burnison, CEO, Korn Ferry. “Earnings and profitability increased year over year and sequentially as we delivered $117 million of Adjusted EBITDA, at a 17.4% margin, which is our sixth consecutive quarter of profitability improvement.

“Overall, our execution has been solid,” added Burnison. “The durability and potential of our business were evident once again during the quarter with stability in our Talent Acquisition fee revenues and new business, Digital new business trends improving and steady performance in Consulting. We also continue to invest for the future, as evidenced by the launch of the Korn Ferry Talent Suite, which brings together our assessment, development, talent management, and total rewards solutions, allowing our clients to license our decades of expertise, proprietary insights and data-driven intelligence via a subscription-based model. Additionally, our recent Trilogy International investment expands our interim professional offerings to EMEA, which is a substantial addressable market opportunity.”

Selected Financial Results

(dollars in millions, except per share amounts) (a)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

674.4

 

 

$

704.0

 

 

$

1,349.3

 

 

$

1,403.2

 

Total revenue

$

682.0

 

 

$

712.4

 

 

$

1,364.7

 

 

$

1,418.7

 

Operating income

$

87.5

 

 

$

22.8

 

 

$

163.5

 

 

$

79.6

 

Operating margin

 

13.0

%

 

 

3.2

%

 

 

12.1

%

 

 

5.7

%

Net income (loss) attributable to Korn Ferry

$

60.8

 

 

$

(1.7

)

 

$

123.4

 

 

$

44.9

 

Basic earnings (loss) per share

$

1.16

 

 

$

(0.04

)

 

$

2.34

 

 

$

0.86

 

Diluted earnings (loss) per share

$

1.14

 

 

$

(0.04

)

 

$

2.30

 

 

$

0.86

 

 

 

 

 

 

 

 

 

Adjusted Results (b):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

117.0

 

 

$

98.5

 

 

$

228.2

 

 

$

194.2

 

Adjusted EBITDA margin

 

17.4

%

 

 

14.0

%

 

 

16.9

%

 

 

13.8

%

Adjusted net income attributable to Korn Ferry

$

64.7

 

 

$

51.0

 

 

$

127.8

 

 

$

102.5

 

Adjusted basic earnings per share

$

1.23

 

 

$

0.98

 

 

$

2.42

 

 

$

1.97

 

Adjusted diluted earnings per share

$

1.21

 

 

$

0.97

 

 

$

2.38

 

 

$

1.96

 

______________________

(a)

Numbers may not total due to rounding.

(b)

Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets and restructuring charges, net when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Integration/acquisition costs

$

3.9

 

$

5.0

 

$

5.0

 

$

9.2

Restructuring charges, net

$

0.6

 

 

$

63.5

 

 

$

0.6

 

 

$

63.9

 

Impairment of fixed assets

$

—

 

 

$

1.5

 

 

$

—

 

 

$

1.6

 

Impairment of right-of-use assets

$

—

 

 

$

—

 

 

$

—

 

 

$

1.6

 

The Company reported fee revenue in Q2 FY'25 of $674.4 million, a decrease of 4% compared to Q2 FY'24. The decrease in fee revenue was primarily due to lower fee revenues in Professional Search & Interim and Consulting driven by a decline in demand due to the current economic environment, partially offset by an increase in Executive Search fee revenue. The impact of foreign currency was not material in the current quarter.

Operating income was $87.5 million with an operating margin of 13.0%, in Q2 FY'25, compared to $22.8 million with an operating margin of 3.2% in the year-ago quarter, an increase in operating margin of 980bps. Net income attributable to Korn Ferry was $60.8 million in Q2 FY'25, compared to net loss attributable to Korn Ferry of $1.7 million in Q2 FY'24. Adjusted EBITDA was $117.0 million in Q2 FY'25 compared to $98.5 million in Q2 FY'24. Adjusted EBITDA margin was 17.4% in Q2 FY'25, an increase of 340bps compared to the year-ago quarter.

Operating income, operating margin, and net income attributable to Korn Ferry increased as a result of decreases in restructuring charges, net, integration/acquisition costs, disciplined cost management, and lower cost of services expense compared to the year-ago quarter. These decreases in expenses were partially offset by the decrease in fee revenue discussed above.

Adjusted EBITDA and margin increased due to the same factors above excluding restructuring charges, net and integration/acquisition costs.

Results by Line of Business

Selected Consulting Data

(dollars in millions) (a)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

166.8

 

 

$

177.8

 

 

$

334.6

 

 

$

345.9

 

Total revenue

$

169.4

 

 

$

181.0

 

 

$

340.2

 

 

$

351.7

 

 

 

 

 

 

 

 

 

Ending number of consultants and execution staff (b)

 

1,646

 

 

 

1,780

 

 

 

1,646

 

 

 

1,780

 

Hours worked in thousands (c)

 

398

 

 

 

431

 

 

 

793

 

 

 

858

 

Average bill rate (d)

$

419

 

 

$

413

 

 

$

422

 

 

$

403

 

 

 

 

 

 

 

 

 

Adjusted Results (e):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

29.1

 

 

$

28.9

 

 

$

58.4

 

 

$

54.1

 

Adjusted EBITDA margin

 

17.5

%

 

 

16.3

%

 

 

17.5

%

 

 

15.6

%

______________________

(a)

Numbers may not total due to rounding.

(b)

Represents number of employees originating, delivering and executing consulting services.

(c)

The number of hours worked by consultant and execution staff during the period.

(d)

The amount of fee revenue divided by the number of hours worked by consultants and execution staff.

(e)

Adjusted results exclude the following:

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Restructuring charges, net

$

0.4

 

$

17.6

 

$

0.4

 

$

17.8

Impairment of right-of-use assets

$

—

 

 

$

—

 

 

$

—

 

 

$

0.6

 

Fee revenue was $166.8 million in Q2 FY'25 compared to $177.8 million in Q2 FY'24, a decrease of $11.0 million or 6%, and was essentially flat on a sequential quarter. The year-over-year decrease in Consulting fee revenue was primarily driven by a decline in our organizational strategy and leadership and professional development offerings.

Adjusted EBITDA was $29.1 million in Q2 FY'25 compared to $28.9 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 120bps to 17.5%. These increases resulted primarily from higher average bill rates with greater consultant and execution staff productivity and disciplined cost management.

Selected Digital Data

(dollars in millions) (a)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

92.9

 

 

$

97.1

 

 

$

181.1

 

 

$

185.1

 

Total revenue

$

93.0

 

 

$

97.2

 

 

$

181.2

 

 

$

185.2

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

260

 

 

 

284

 

 

 

260

 

 

 

284

 

Subscription & License fee revenue

$

34.6

 

 

$

32.4

 

 

$

68.7

 

 

$

64.9

 

 

 

 

 

 

 

 

 

Adjusted Results (b):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

29.2

 

 

$

29.0

 

 

$

55.8

 

 

$

53.3

 

Adjusted EBITDA margin

 

31.4

%

 

 

29.9

%

 

 

30.8

%

 

 

28.8

%

______________________

(a)

Numbers may not total due to rounding.

(b)

Adjusted results exclude the following:

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Restructuring charges, net

$

—

 

$

8.9

 

$

—

 

$

8.9

Impairment of fixed assets

$

—

 

 

$

1.5

 

 

$

—

 

 

$

1.5

 

Fee revenue was $92.9 million in Q2 FY'25 compared to $97.1 million in Q2 FY'24, a decrease of $4.2 million or 4%, up 5% on a sequential quarter basis. The year-over-year decrease in fee revenue was primarily driven by a decrease in demand in our leadership and professional development offerings.

Adjusted EBITDA was $29.2 million in Q2 FY'25 compared to $29.0 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 150bps to 31.4%. The increase in Adjusted EBITDA margin was mainly due to improved consultant productivity and disciplined cost management.

Selected Executive Search Data(a)

(dollars in millions) (b)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

206.0

 

 

$

203.0

 

 

$

414.6

 

 

$

408.2

 

Total revenue

$

208.0

 

 

$

204.8

 

 

$

418.3

 

 

$

412.4

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

555

 

 

 

586

 

 

 

555

 

 

 

586

 

Average number of consultants

 

557

 

 

 

599

 

 

 

549

 

 

 

594

 

Engagements billed

 

3,566

 

 

 

3,488

 

 

 

5,474

 

 

 

5,555

 

New engagements (c)

 

1,567

 

 

 

1,531

 

 

 

3,123

 

 

 

3,080

 

 

 

 

 

 

 

 

 

Adjusted Results (d):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

51.4

 

 

$

39.7

 

 

$

100.8

 

 

$

82.2

 

Adjusted EBITDA margin

 

24.9

%

 

 

19.6

%

 

 

24.3

%

 

 

20.1

%

______________________

(a)

Executive Search is the sum of the individual Executive Search Reporting Segments described in our annual and quarterly reporting on Forms 10-K and 10-Q and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.

(b)

Numbers may not total due to rounding.

(c)

Represents new engagements opened in the respective period.

(d)

Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Restructuring charges, net

$

0.2

 

$

25.7

 

$

0.2

 

$

25.9

Impairment of right-of-use assets

$

—

 

 

$

—

 

 

$

—

 

 

$

0.9

 

Impairment of fixed assets

$

—

 

 

$

—

 

 

$

—

 

 

$

0.1

 

Fee revenue was $206.0 million in Q2 FY'25, an increase of $3.0 million or 1% compared to the year-ago quarter and essentially flat on a sequential quarter. The year-over-year increase in fee revenue was primarily driven by an increase in the number of engagements billed.

Adjusted EBITDA was $51.4 million in Q2 FY'25 compared to $39.7 million in the year-ago quarter. Adjusted EBITDA margin increased by 530bps to 24.9% in Q2 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to higher consultant productivity and disciplined cost management.

Selected Professional Search & Interim Data

(dollars in millions) (a)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

121.1

 

 

$

138.4

 

 

$

242.8

 

 

$

280.6

 

Total revenue

$

122.0

 

 

$

139.5

 

 

$

244.7

 

 

$

282.5

 

 

 

 

 

 

 

 

 

Permanent Placement:

 

 

 

 

 

 

 

Fee revenue

$

52.8

 

 

$

56.5

 

 

$

105.0

 

 

$

114.8

 

Engagements billed

 

1,740

 

 

 

2,018

 

 

 

2,844

 

 

 

3,455

 

New engagements (b)

 

947

 

 

 

1,184

 

 

 

1,919

 

 

 

2,419

 

Ending number of consultants

 

292

 

 

 

383

 

 

 

292

 

 

 

383

 

Interim:

 

 

 

 

 

 

 

Fee revenue

$

68.3

 

 

$

81.9

 

 

$

137.8

 

 

$

165.8

 

Average bill rate (c)

$

140

 

 

$

126

 

 

$

137

 

 

$

124

 

Average weekly billable consultants (d)

 

980

 

 

 

1,336

 

 

 

1,024

 

 

 

1,387

 

 

 

 

 

 

 

 

 

Adjusted Results (e):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

27.2

 

 

$

25.6

 

 

$

52.9

 

 

$

50.0

 

Adjusted EBITDA margin

 

22.5

%

 

 

18.5

%

 

 

21.8

%

 

 

17.8

%

_____________________

(a)

Numbers may not total due to rounding.

(b)

Represents new engagements opened in the respective period.

(c)

Fee revenue from interim divided by the number of hours worked by consultants.

(d)

The number of billable consultants based on a weekly average in the respective period.

(e)

Adjusted results exclude the following:

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Integration/acquisition costs

$

1.4

 

$

4.9

 

$

2.5

 

$

8.9

Restructuring charges, net

$

—

 

 

$

3.8

 

 

$

—

 

 

$

3.8

 

Fee revenue was $121.1 million in Q2 FY'25, a decrease of $17.3 million or 13% compared to the year-ago quarter and essentially flat on a sequential quarter basis. The year-over-year decrease is primarily due to lower demand in the current economic environment.

Adjusted EBITDA was $27.2 million in Q2 FY'25 compared to $25.6 million in the year-ago quarter. Adjusted EBITDA margin increased year-over-year by 400bps to 22.5%. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to a higher average bill rate in Interim, increased consultant productivity in Permanent Placement and disciplined cost management.

Selected Recruitment Process Outsourcing ("RPO") Data

(dollars in millions) (a)

 

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Fee revenue

$

87.6

 

 

$

87.7

 

 

$

176.1

 

 

$

183.4

 

Total revenue

$

89.6

 

 

$

90.1

 

 

$

180.3

 

 

$

186.9

 

 

 

 

 

 

 

 

 

Remaining revenue under contract (b)

$

659.2

 

 

$

680.5

 

 

$

659.2

 

 

$

680.5

 

RPO new business (c)

$

101.1

 

 

$

140.9

 

 

$

204.7

 

 

$

189.1

 

 

 

 

 

 

 

 

 

Adjusted Results (d):

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Adjusted EBITDA

$

12.9

 

 

$

8.9

 

 

$

25.4

 

 

$

19.3

 

Adjusted EBITDA margin

 

14.7

%

 

 

10.1

%

 

 

14.4

%

 

 

10.5

%

______________________

(a)

Numbers may not total due to rounding.

(b)

Estimated fee revenue associated with signed contracts for which revenue has not yet been recognized.

(c)

Estimated total value of a contract at the point of execution of the contract.

(d)

Adjusted results exclude the following:

 

Second Quarter

 

Year to Date

 

FY’25

 

FY’24

 

FY’25

 

FY’24

Restructuring charges, net

$

—

 

$

7.2

 

$

—

 

$

7.2

Impairment of right-of-use assets

$

—

 

 

$

—

 

 

$

—

 

 

$

0.1

 

Fee revenue was $87.6 million in Q2 FY'25, essentially flat compared to the year-ago quarter and sequential quarter.

Adjusted EBITDA was $12.9 million in Q2 FY'25 compared to $8.9 million in the year-ago quarter. Adjusted EBITDA margin increased 460bps to 14.7% in Q2 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from greater execution staff productivity and disciplined cost management.

Outlook

Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

• Q3 FY’25 fee revenue is expected to be in the range of $635 million and $665 million; and
• Q3 FY’25 diluted earnings per share is expected to range between $1.02 to $1.16.

On a consolidated adjusted basis:

• Q3 FY’25 adjusted diluted earnings per share is expected to be in the range from $1.06 to $1.18.

 

Q3 FY’25

Earnings Per Share Outlook

 

Low

 

High

Consolidated diluted earnings per share

$

1.02

 

 

$

1.16

 

Integration/acquisition costs

 

0.05

 

 

 

0.03

 

Tax rate impact

 

(0.01

)

 

 

(0.01

)

Consolidated adjusted diluted earnings per share(1)

$

1.06

 

 

$

1.18

 

______________________

(1)

Consolidated adjusted diluted earnings per share is a non-GAAP financial measure that excludes the items listed in the table.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 PM (EST) and hosted by CEO Gary Burnison, CFO Robert Rozek, SVP Business Development & Analytics Gregg Kvochak and VP Investor Relations Tiffany Louder. The conference call will be webcast and available online at ir.kornferry.com. We will also post to the investor relations section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people. Visit kornferry.com for more information.

Forward-Looking Statements

Statements in this press release and our conference call that relate to our outlook, projections, goals, strategies, future plans and expectations, including statements relating to expected demand for and relevance of our products and services, expected results of our business diversification strategy, expected benefits of the acquisition of Trilogy, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as “believes”, “expects”, “anticipates”, “goals”, “estimates”, “guidance”, “may”, “should”, “could”, “will” or “likely”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, interest rates, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, our ability to maintain relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in government laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property ("IP"), our ability to enhance, develop and respond to new technology, including artificial intelligence, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, resulting organizational changes, our indebtedness, and those relating to the ultimate magnitude and duration of any pandemic or outbreaks. For a detailed description of risks and uncertainties that could cause differences from our expectations, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In particular, it includes:

• Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets and restructuring charges, net of income tax effect;
• Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets and restructuring charges, net of income tax effect;
• Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period; and
• Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets and restructuring charges, net when applicable, and Consolidated and Executive Search Adjusted EBITDA margin.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of Korn Ferry’s ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Professional Search & Interim business, 2) impairment of fixed assets primarily due to software impairment charge in our Digital segment, 3) impairment of right-of-use assets due to the decision to terminate and sublease some of our offices and 4) restructuring charges, net to align workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic and geopolitical uncertainty. The use of non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. Adjusted net income attributable to Korn Ferry, adjusted basic and diluted earnings per share and Consolidated and Executive Search Adjusted EBITDA, exclude certain charges that management does not consider on-going in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company’s operating results. Management further believes that Consolidated and Executive Search Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. In the case of constant currency percentages, management believes the presentation of such information provides useful supplemental information regarding Korn Ferry's performance as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry's ongoing operations and financial and operational decision-making.

KORN FERRY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

(unaudited)

Fee revenue

$

674,365

 

 

$

704,003

 

 

$

1,349,311

 

 

$

1,403,192

 

Reimbursed out-of-pocket engagement expenses

 

7,595

 

 

 

8,444

 

 

 

15,410

 

 

 

15,517

 

Total revenue

 

681,960

 

 

 

712,447

 

 

 

1,364,721

 

 

 

1,418,709

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

437,427

 

 

 

453,859

 

 

 

889,202

 

 

 

933,740

 

General and administrative expenses

 

64,541

 

 

 

65,737

 

 

 

124,540

 

 

 

131,654

 

Reimbursed expenses

 

7,595

 

 

 

8,444

 

 

 

15,410

 

 

 

15,517

 

Cost of services

 

64,657

 

 

 

78,512

 

 

 

132,201

 

 

 

155,702

 

Depreciation and amortization

 

19,688

 

 

 

19,554

 

 

 

39,266

 

 

 

38,566

 

Restructuring charges, net

 

576

 

 

 

63,525

 

 

 

576

 

 

 

63,946

 

Total operating expenses

 

594,484

 

 

 

689,631

 

 

 

1,201,195

 

 

 

1,339,125

 

 

 

 

 

 

 

 

 

Operating income

 

87,476

 

 

 

22,816

 

 

 

163,526

 

 

 

79,584

 

Other income (loss), net

 

5,391

 

 

 

(13,835

)

 

 

19,896

 

 

 

(258

)

Interest expense, net

 

(5,626

)

 

 

(6,596

)

 

 

(9,571

)

 

 

(11,336

)

Income before provision for income taxes

 

87,241

 

 

 

2,385

 

 

 

173,851

 

 

 

67,990

 

Income tax provision

 

24,898

 

 

 

2,341

 

 

 

47,252

 

 

 

20,761

 

Net income

 

62,343

 

 

 

44

 

 

 

126,599

 

 

 

47,229

 

Net income attributable to noncontrolling interest

 

(1,543

)

 

 

(1,755

)

 

 

(3,195

)

 

 

(2,335

)

Net income (loss) attributable to Korn Ferry

$

60,800

 

 

$

(1,711

)

 

$

123,404

 

 

$

44,894

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share attributable to Korn Ferry:

 

 

 

 

 

 

 

Basic

$

1.16

 

 

$

(0.04

)

 

$

2.34

 

 

$

0.86

 

Diluted

$

1.14

 

 

$

(0.04

)

 

$

2.30

 

 

$

0.86

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

51,957

 

 

 

51,328

 

 

 

51,953

 

 

 

51,131

 

Diluted

 

52,750

 

 

 

51,328

 

 

 

52,864

 

 

 

51,401

 

 

 

 

 

 

 

 

 

Cash dividends declared per share:

$

0.37

 

 

$

0.18

 

 

$

0.74

 

 

$

0.36

 

 

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY REPORTING SEGMENT

(dollars in thousands)

(unaudited)

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% Change

Fee revenue:

 

 

 

 

 

 

 

 

 

 

 

Consulting

$

166,771

 

$

177,795

 

(6.2

%)

 

$

334,641

 

$

345,883

 

(3.3

%)

Digital

 

92,893

 

 

 

97,092

 

 

(4.3

%)

 

 

181,073

 

 

 

185,078

 

 

(2.2

%)

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

North America

 

129,891

 

 

 

132,512

 

 

(2.0

%)

 

 

264,643

 

 

 

260,010

 

 

1.8

%

EMEA

 

46,788

 

 

 

43,098

 

 

8.6

%

 

 

92,769

 

 

 

89,874

 

 

3.2

%

Asia Pacific

 

21,464

 

 

 

19,304

 

 

11.2

%

 

 

42,043

 

 

 

43,843

 

 

(4.1

%)

Latin America

 

7,856

 

 

 

8,079

 

 

(2.8

%)

 

 

15,179

 

 

 

14,500

 

 

4.7

%

Total Executive Search (a)

 

205,999

 

 

 

202,993

 

 

1.5

%

 

 

414,634

 

 

 

408,227

 

 

1.6

%

Professional Search & Interim

 

121,107

 

 

 

138,384

 

 

(12.5

%)

 

 

242,848

 

 

 

280,563

 

 

(13.4

%)

RPO

 

87,595

 

 

 

87,739

 

 

(0.2

%)

 

 

176,115

 

 

 

183,441

 

 

(4.0

%)

Total fee revenue

 

674,365

 

 

 

704,003

 

 

(4.2

%)

 

 

1,349,311

 

 

 

1,403,192

 

 

(3.8

%)

Reimbursed out-of-pocket engagement expenses

 

7,595

 

 

 

8,444

 

 

(10.1

%)

 

 

15,410

 

 

 

15,517

 

 

(0.7

%)

Total revenue

$

681,960

 

 

$

712,447

 

 

(4.3

%)

 

$

1,364,721

 

 

$

1,418,709

 

 

(3.8

%)

(a)

Total Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.

 

KORN FERRY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

 

October 31, 2024

 

April 30, 2024 (1)

 

(unaudited)

 

 

ASSETS

 

 

 

Cash and cash equivalents

$

694,850

 

 

$

941,005

 

Marketable securities

 

40,658

 

 

 

42,742

 

Receivables due from clients, net of allowance for doubtful accounts of $43,862 and $44,192 at October 31, 2024 and April 30, 2024, respectively

 

579,696

 

 

 

541,014

 

Income taxes and other receivables

 

55,033

 

 

 

40,696

 

Unearned compensation

 

64,265

 

 

 

59,247

 

Prepaid expenses and other assets

 

47,945

 

 

 

49,456

 

Total current assets

 

1,482,447

 

 

 

1,674,160

 

 

 

 

 

Marketable securities, non-current

 

231,956

 

 

 

211,681

 

Property and equipment, net

 

160,805

 

 

 

161,849

 

Operating lease right-of-use assets, net

 

162,441

 

 

 

160,464

 

Cash surrender value of company-owned life insurance policies, net of loans

 

236,928

 

 

 

218,977

 

Deferred income taxes

 

122,344

 

 

 

133,564

 

Goodwill

 

908,662

 

 

 

908,376

 

Intangible assets, net

 

76,504

 

 

 

88,833

 

Unearned compensation, non-current

 

122,263

 

 

 

99,913

 

Investments and other assets

 

22,303

 

 

 

21,052

 

Total assets

$

3,526,653

 

 

$

3,678,869

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Accounts payable

$

44,051

 

 

$

50,112

 

Income taxes payable

 

14,652

 

 

 

24,076

 

Compensation and benefits payable

 

346,434

 

 

 

525,466

 

Operating lease liability, current

 

38,526

 

 

 

36,073

 

Other accrued liabilities

 

274,120

 

 

 

298,792

 

Total current liabilities

 

717,783

 

 

 

934,519

 

 

 

 

 

Deferred compensation and other retirement plans

 

458,089

 

 

 

440,396

 

Operating lease liability, non-current

 

142,415

 

 

 

143,507

 

Long-term debt

 

397,336

 

 

 

396,946

 

Deferred tax liabilities

 

5,542

 

 

 

4,540

 

Other liabilities

 

22,623

 

 

 

21,636

 

Total liabilities

 

1,743,788

 

 

 

1,941,544

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock: $0.01 par value, 150,000 shares authorized, 78,232 and 77,460 shares issued and 51,748 and 51,983 shares outstanding at October 31, 2024 and April 30, 2024, respectively

 

368,260

 

 

 

414,885

 

Retained earnings

 

1,509,986

 

 

 

1,425,844

 

Accumulated other comprehensive loss, net

 

(100,501

)

 

 

(107,671

)

Total Korn Ferry stockholders' equity

 

1,777,745

 

 

 

1,733,058

 

Noncontrolling interest

 

5,120

 

 

 

4,267

 

Total stockholders' equity

 

1,782,865

 

 

 

1,737,325

 

Total liabilities and stockholders' equity

$

3,526,653

 

 

$

3,678,869

 

(1)

Information is derived from audited financial statements included in Form 10-K.

 

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Korn Ferry

$

60,800

 

 

$

(1,711

)

 

$

123,404

 

 

$

44,894

 

Net income attributable to non-controlling interest

 

1,543

 

 

 

1,755

 

 

 

3,195

 

 

 

2,335

 

Net income

 

62,343

 

 

 

44

 

 

 

126,599

 

 

 

47,229

 

Income tax provision

 

24,898

 

 

 

2,341

 

 

 

47,252

 

 

 

20,761

 

Income before provision for income taxes

 

87,241

 

 

 

2,385

 

 

 

173,851

 

 

 

67,990

 

Other (income) loss, net

 

(5,391

)

 

 

13,835

 

 

 

(19,896

)

 

 

258

 

Interest expense, net

 

5,626

 

 

 

6,596

 

 

 

9,571

 

 

 

11,336

 

Operating income

 

87,476

 

 

 

22,816

 

 

 

163,526

 

 

 

79,584

 

Depreciation and amortization

 

19,688

 

 

 

19,554

 

 

 

39,266

 

 

 

38,566

 

Other income (loss), net

 

5,391

 

 

 

(13,835

)

 

 

19,896

 

 

 

(258

)

Integration/acquisition costs (1)

 

3,896

 

 

 

5,030

 

 

 

4,972

 

 

 

9,158

 

Impairment of fixed assets (2)

 

—

 

 

 

1,452

 

 

 

—

 

 

 

1,575

 

Impairment of right-of-use assets (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

1,629

 

Restructuring charges, net (4)

 

576

 

 

 

63,525

 

 

 

576

 

 

 

63,946

 

Adjusted EBITDA

$

117,027

 

 

$

98,542

 

 

$

228,236

 

 

$

194,200

 

 

 

 

 

 

 

 

 

Operating margin

 

13.0

%

 

 

3.2

%

 

 

12.1

%

 

 

5.7

%

Depreciation and amortization

 

2.9

%

 

 

2.8

%

 

 

2.9

%

 

 

2.7

%

Other income (loss), net

 

0.8

%

 

 

(1.9

%)

 

 

1.5

%

 

 

0.0

%

Integration/acquisition costs (1)

 

0.6

%

 

 

0.7

%

 

 

0.4

%

 

 

0.7

%

Impairment of fixed assets (2)

 

—

%

 

 

0.2

%

 

 

—

%

 

 

0.1

%

Impairment of right-of-use assets (3)

 

—

%

 

 

—

%

 

 

—

%

 

 

0.1

%

Restructuring charges, net (4)

 

0.1

%

 

 

9.0

%

 

 

0.0

%

 

 

4.5

%

Adjusted EBITDA margin

 

17.4

%

 

 

14.0

%

 

 

16.9

%

 

 

13.8

%

 

 

 

 

 

 

 

 

Net income (loss) attributable to Korn Ferry

$

60,800

 

 

$

(1,711

)

 

$

123,404

 

 

$

44,894

 

Integration/acquisition costs (1)

 

3,896

 

 

 

5,030

 

 

 

4,972

 

 

 

9,158

 

Impairment of fixed assets (2)

 

—

 

 

 

1,452

 

 

 

—

 

 

 

1,575

 

Impairment of right-of-use assets (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

1,629

 

Restructuring charges, net (4)

 

576

 

 

 

63,525

 

 

 

576

 

 

 

63,946

 

Tax effect on the adjusted items (5)

 

(585

)

 

 

(17,252

)

 

 

(1,145

)

 

 

(18,671

)

Adjusted net income attributable to Korn Ferry

$

64,687

 

 

$

51,044

 

 

$

127,807

 

 

$

102,531

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

1.16

 

 

$

(0.04

)

 

$

2.34

 

 

$

0.86

 

Integration/acquisition costs (1)

 

0.07

 

 

 

0.10

 

 

 

0.09

 

 

 

0.18

 

Impairment of fixed assets (2)

 

—

 

 

 

0.03

 

 

 

—

 

 

 

0.03

 

Impairment of right-of-use assets (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

0.03

 

Restructuring charges, net (4)

 

0.01

 

 

 

1.24

 

 

 

0.01

 

 

 

1.24

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

(0.35

)

 

 

(0.02

)

 

 

(0.37

)

Adjusted basic earnings per share

$

1.23

 

 

$

0.98

 

 

$

2.42

 

 

$

1.97

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

$

1.14

 

 

$

(0.04

)

 

$

2.30

 

 

$

0.86

 

Integration/acquisition costs (1)

 

0.07

 

 

 

0.10

 

 

 

0.09

 

 

 

0.18

 

Impairment of fixed assets (2)

 

—

 

 

 

0.03

 

 

 

—

 

 

 

0.03

 

Impairment of right-of-use assets (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

0.03

 

Restructuring charges, net (4)

 

0.01

 

 

 

1.23

 

 

 

0.01

 

 

 

1.23

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

(0.35

)

 

 

(0.02

)

 

 

(0.37

)

Adjusted diluted earnings per share

$

1.21

 

 

$

0.97

 

 

$

2.38

 

 

$

1.96

 

Explanation of Non-GAAP Adjustments

(1)

Costs associated with current and previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses.

(2)

Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment.

(3)

Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our offices.

(4)

Restructuring charges incurred to align our workforce to eliminate excess capacity resulting from challenging macroeconomic business environment.

(5)

Tax effect on integration/acquisition costs, impairment of fixed assets and right-of-use assets, and restructuring charges, net.

 

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED

(unaudited)

 

 

Three Months Ended October 31,

 

2024

 

2023

 

Fee revenue

 

Total revenue

 

Adjusted EBITDA

 

Adjusted EBITDA margin

 

Fee revenue

 

Total revenue

 

Adjusted EBITDA

 

Adjusted EBITDA margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

Consulting

$

166,771

 

$

169,384

 

$

29,106

 

 

17.5

%

 

$

177,795

 

$

180,953

 

$

28,928

 

 

16.3

%

Digital

 

92,893

 

 

 

93,038

 

 

 

29,188

 

 

31.4

%

 

 

97,092

 

 

 

97,157

 

 

 

28,983

 

 

29.9

%

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

129,891

 

 

 

131,419

 

 

 

36,907

 

 

28.4

%

 

 

132,512

 

 

 

133,933

 

 

 

29,436

 

 

22.2

%

EMEA

 

46,788

 

 

 

47,132

 

 

 

7,487

 

 

16.0

%

 

 

43,098

 

 

 

43,315

 

 

 

5,619

 

 

13.0

%

Asia Pacific

 

21,464

 

 

 

21,540

 

 

 

4,432

 

 

20.6

%

 

 

19,304

 

 

 

19,460

 

 

 

3,875

 

 

20.1

%

Latin America

 

7,856

 

 

 

7,859

 

 

 

2,552

 

 

32.5

%

 

 

8,079

 

 

 

8,085

 

 

 

805

 

 

10.0

%

Total Executive Search

 

205,999

 

 

 

207,950

 

 

 

51,378

 

 

24.9

%

 

 

202,993

 

 

 

204,793

 

 

 

39,735

 

 

19.6

%

Professional Search & Interim

 

121,107

 

 

 

121,988

 

 

 

27,203

 

 

22.5

%

 

 

138,384

 

 

 

139,455

 

 

 

25,622

 

 

18.5

%

RPO

 

87,595

 

 

 

89,600

 

 

 

12,899

 

 

14.7

%

 

 

87,739

 

 

 

90,089

 

 

 

8,855

 

 

10.1

%

Corporate

 

—

 

 

 

—

 

 

 

(32,747

)

 

 

 

 

—

 

 

 

—

 

 

 

(33,581

)

 

 

Consolidated

$

674,365

 

 

$

681,960

 

 

$

117,027

 

 

17.4

%

 

$

704,003

 

 

$

712,447

 

 

$

98,542

 

 

14.0

%

 

Six Months Ended October 31,

 

2024

 

2023

 

Fee revenue

 

Total revenue

 

Adjusted EBITDA

 

Adjusted EBITDA margin

 

Fee revenue

 

Total revenue

 

Adjusted EBITDA

 

Adjusted EBITDA margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

Consulting

$

334,641

 

$

340,151

 

$

58,400

 

 

17.5

%

 

$

345,883

 

$

351,746

 

$

54,108

 

 

15.6

%

Digital

 

181,073

 

 

 

181,249

 

 

 

55,811

 

 

30.8

%

 

 

185,078

 

 

 

185,169

 

 

 

53,308

 

 

28.8

%

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

264,643

 

 

 

267,506

 

 

 

72,005

 

 

27.2

%

 

 

260,010

 

 

 

263,346

 

 

 

58,192

 

 

22.4

%

EMEA

 

92,769

 

 

 

93,408

 

 

 

14,752

 

 

15.9

%

 

 

89,874

 

 

 

90,450

 

 

 

11,257

 

 

12.5

%

Asia Pacific

 

42,043

 

 

 

42,244

 

 

 

8,650

 

 

20.6

%

 

 

43,843

 

 

 

44,070

 

 

 

10,190

 

 

23.2

%

Latin America

 

15,179

 

 

 

15,185

 

 

 

5,350

 

 

35.2

%

 

 

14,500

 

 

 

14,507

 

 

 

2,546

 

 

17.6

%

Total Executive Search

 

414,634

 

 

 

418,343

 

 

 

100,757

 

 

24.3

%

 

 

408,227

 

 

 

412,373

 

 

 

82,185

 

 

20.1

%

Professional Search & Interim

 

242,848

 

 

 

244,718

 

 

 

52,909

 

 

21.8

%

 

 

280,563

 

 

 

282,524

 

 

 

49,951

 

 

17.8

%

RPO

 

176,115

 

 

 

180,260

 

 

 

25,393

 

 

14.4

%

 

 

183,441

 

 

 

186,897

 

 

 

19,326

 

 

10.5

%

Corporate

 

—

 

 

 

—

 

 

 

(65,034

)

 

 

 

 

—

 

 

 

—

 

 

 

(64,678

)

 

 

Consolidated

$

1,349,311

 

 

$

1,364,721

 

 

$

228,236

 

 

16.9

%

 

$

1,403,192

 

 

$

1,418,709

 

 

$

194,200

 

 

13.8

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241127978293/en/

Investor Relations: Tiffany Louder, (214) 310-8407 Media: Dan Gugler, (310) 226-2645