KFY Korn Ferry

Highlights

• Korn Ferry reports Q1 FY'25 fee revenue of $674.9 million, a year-over-year decrease of 3% (down 2% on a constant currency basis).
  • Executive Search fee revenue grew 2% year-over-year (up 3% at constant currency).
  • Fee revenue for Consulting and Digital was flat year-over-year (up 1% and 2%, respectively, at constant currency), continuing to demonstrate stability in a challenging market.
• Net income attributable to Korn Ferry was $62.6 million, while diluted and adjusted diluted earnings per share were $1.17 and $1.18 in Q1 FY'25, respectively.
• Operating income was $76.1 million and Adjusted EBITDA was $111.2 million.
• Operating margin increased 320bps year-over-year to 11.3%. Adjusted EBITDA margin was 16.5%, a 280bps increase compared to the year-ago quarter, and our fifth consecutive quarter of sequential improvement.
• The Company repurchased 351,250 shares of stock during the quarter for $23.5 million.
• Declared a quarterly dividend of $0.37 per share on September 4, 2024, which is payable on October 15, 2024 to stockholders of record on September 19, 2024.

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced first quarter fee revenue of $674.9 million. In addition, first quarter diluted earnings per share was $1.17 and adjusted diluted earnings per share was $1.18.

“I am pleased with our first quarter results, as we generated $675 million in fee revenue,” said Gary D. Burnison. “Earnings and profitability increased year over year as we delivered $111 million of Adjusted EBITDA, at a 16.5% margin, which is our fifth consecutive quarter of profitability improvement.

“Our sustained success stems from a balanced approach – from our colleagues and IP to our diversified strategy and broad offerings. As a result, our topline is more than 30 percent higher than before the pandemic, with even greater profitability. During the quarter, Consulting and Digital maintained their positive momentum, with improved growth in Executive Search and stable trends across Professional Search permanent placement and RPO. We are also confident about the future, as evidenced by our capital allocation, which not only included share buybacks but also more than a twofold increase in our quarterly dividend year over year. Moving forward, we will continue to transform the business to enable our clients to Be More Than.”

Selected Financial Results

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

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

674.9

 

 

$

699.2

 

Total revenue

$

682.8

 

 

$

706.3

 

Operating income

$

76.1

 

 

$

56.8

 

Operating margin

 

11.3

%

 

 

8.1

%

Net income attributable to Korn Ferry

$

62.6

 

 

$

46.6

 

Basic earnings per share

$

1.19

 

 

$

0.89

 

Diluted earnings per share

$

1.17

 

 

$

0.89

 

 

 

 

 

Adjusted Results (b):

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

111.2

 

 

$

95.7

 

Adjusted EBITDA margin

 

16.5

%

 

 

13.7

%

Adjusted net income attributable to Korn Ferry

$

63.1

 

 

$

51.5

 

Adjusted basic earnings per share

$

1.20

 

 

$

0.99

 

Adjusted diluted earnings per share

$

1.18

 

 

$

0.99

 

 

(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):

 

First Quarter

 

FY’25

 

FY’24

Integration/acquisition costs

$

1.1

 

$

4.1

Impairment of fixed assets

$

—

 

 

$

0.1

 

Impairment of right-of-use assets

$

—

 

 

$

1.6

 

Restructuring charges, net

$

—

 

 

$

0.4

 

The Company reported fee revenue in Q1 FY'25 of $674.9 million, a decrease of 3% (down 2% on a constant currency basis) compared to Q1 FY'24. The decrease in fee revenue was primarily due to lower fee revenues in Professional Search & Interim and RPO driven by a decline in demand due to the current economic environment, partially offset by an increase in Executive Search fee revenue.

Operating income was $76.1 million (at an operating margin of 11.3%) in Q1 FY'25, compared to $56.8 million (at an operating margin of 8.1%) in the year-ago quarter, an increase of 320bps. Net income attributable to Korn Ferry was $62.6 million in Q1 FY'25, compared to $46.6 million in Q1 FY'24. Adjusted EBITDA was $111.2 million in Q1 FY'25 compared to $95.7 million in Q1 FY'24. Adjusted EBITDA margin was 16.5% in Q1 FY'25, an increase of 280bps.

Operating income, margin, and net income attributable to Korn Ferry increased as a result of strong cost management, coupled with the 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 but excluded integration/acquisition costs.

Results by Line of Business

Selected Consulting Data

(dollars in millions) (a)

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

167.9

 

 

$

168.1

 

Total revenue

$

170.8

 

 

$

170.8

 

 

 

 

 

Ending number of consultants and execution staff (b)

 

1,663

 

 

 

1,855

 

Hours worked in thousands (c)

 

395

 

 

 

427

 

Average bill rate (d)

$

425

 

 

$

394

 

 

 

 

 

Adjusted Results (e):

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

29.3

 

 

$

25.2

 

Adjusted EBITDA margin

 

17.5

%

 

 

15.0

%

 

(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:

 

First Quarter

 

FY’25

 

FY’24

Impairment of right-of-use assets

$

—

 

$

0.6

Restructuring charges, net

$

—

 

 

$

0.2

 

Fee revenue was $167.9 million in Q1 FY'25 compared to $168.1 million in Q1 FY'24, essentially flat (up 1% on a constant currency basis) compared to Q1 FY'24.

Adjusted EBITDA increased 16.3% compared to Q1 FY'24 to $29.3 million. Adjusted EBITDA margin in the quarter increased year-over-year by 250bps to 17.5%. These increases resulted primarily from higher average bill rates and greater consultant and execution staff productivity.

Selected Digital Data

(dollars in millions) (a)

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

88.2

 

 

$

88.0

 

Total revenue

$

88.2

 

 

$

88.0

 

 

 

 

 

Ending number of consultants

 

259

 

 

 

336

 

Subscription & License fee revenue

$

34.1

 

 

$

32.5

 

 

 

 

 

Adjusted Results:

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

26.6

 

 

$

24.3

 

Adjusted EBITDA margin

 

30.2

%

 

 

27.6

%

 

(a)

 

Numbers may not total due to rounding.

Fee revenue was $88.2 million in Q1 FY'25 compared to $88.0 million in Q1 FY'24, essentially flat year-over-year and up 2% on a constant currency basis. Subscription and license fee revenue in the quarter increased 5% year-over-year.

Adjusted EBITDA was $26.6 million in Q1 FY'25 compared to $24.3 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 260bps to 30.2%. The increase in Adjusted EBITDA and Adjusted EBITDA margin was mainly due to improved consultant productivity and strong cost management.

Selected Executive Search Data (a)

(dollars in millions) (b)

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

208.6

 

 

$

205.2

 

Total revenue

$

210.4

 

 

$

207.6

 

 

 

 

 

Ending number of consultants

 

559

 

 

 

612

 

Average number of consultants

 

551

 

 

 

607

 

Engagements billed

 

3,448

 

 

 

3,633

 

New engagements (c)

 

1,556

 

 

 

1,549

 

 

 

 

 

Adjusted Results (d):

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

49.4

 

 

$

42.5

 

Adjusted EBITDA margin

 

23.7

%

 

 

20.7

%

 

(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:

 

First Quarter

 

FY’25

 

FY’24

Impairment of fixed assets

$

—

 

$

0.1

Impairment of right-of-use assets

$

—

 

 

$

0.9

 

Restructuring charges, net

$

—

 

 

$

0.2

 

Fee revenue was $208.6 million in Q1 FY'25, an increase of $3.4 million or 2% compared to Q1 FY'24 (up 3% on a constant currency basis). The increase in fee revenue was primarily driven by a 4% increase in the number of engagements billed in our North America region.

Adjusted EBITDA was $49.4 million in Q1 FY'25 compared to $42.5 million in the year-ago quarter. Adjusted EBITDA margin increased by 300bps to 23.7% in Q1 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to higher consultant productivity and strong cost management.

Selected Professional Search & Interim Data

(dollars in millions) (a)

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

121.7

 

 

$

142.2

 

Total revenue

$

122.7

 

 

$

143.1

 

 

 

 

 

Permanent Placement:

 

 

 

Fee revenue

$

52.2

 

 

$

58.3

 

Engagements billed

 

1,820

 

 

 

2,209

 

New engagements (b)

 

972

 

 

 

1,235

 

Ending number of consultants

 

319

 

 

 

405

 

Interim:

 

 

 

Fee revenue

$

69.5

 

 

$

83.9

 

Average bill rate (c)

$

133

 

 

$

122

 

Average weekly billable consultants (d)

 

1,068

 

 

 

1,485

 

 

 

 

 

Adjusted Results (e):

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

25.7

 

 

$

24.3

 

Adjusted EBITDA margin

 

21.1

%

 

 

17.1

%

 

(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:

 

First Quarter

 

FY’25

 

FY’24

Integration/acquisition costs

$

1.1

 

$

4.0

Fee revenue was $121.7 million in Q1 FY'25, a decrease of 14% in both actual and constant currency compared to the year-ago quarter, due primarily to lower demand in the current economic environment.

Adjusted EBITDA was $25.7 million in Q1 FY'25 compared to $24.3 million in the year-ago quarter. Adjusted EBITDA margin increased year-over-year by 400bps to 21.1%. 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 strong cost management.

Selected Recruitment Process Outsourcing ("RPO") Data

(dollars in millions) (a)

 

 

First Quarter

 

FY’25

 

FY’24

Fee revenue

$

88.5

 

 

$

95.7

 

Total revenue

$

90.7

 

 

$

96.8

 

 

 

 

 

Remaining revenue under contract (b)

$

656.1

 

 

$

679.8

 

RPO new business (c)

$

103.6

 

 

$

48.2

 

 

 

 

 

Adjusted Results (d):

First Quarter

 

FY’25

 

FY’24

Adjusted EBITDA

$

12.5

 

 

$

10.5

 

Adjusted EBITDA margin

 

14.1

%

 

 

10.9

%

 

(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:

 

First Quarter

 

FY’25

 

FY’24

Impairment of right-of-use assets

$

—

 

$

0.1

Fee revenue was $88.5 million in Q1 FY'25, a decrease of $7.2 million or 8% (down 7% on a constant currency basis) compared to the year-ago quarter. RPO fee revenue decreased due to moderation in the hiring volume in the existing base of clients due to the current economic environment.

Adjusted EBITDA was $12.5 million in Q1 FY'25 compared to $10.5 million in the year-ago quarter. Adjusted EBITDA margin increased 320bps to 14.1% in Q1 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from greater execution staff productivity and strong cost management.

Outlook

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

• Q2 FY’25 fee revenue is expected to be in the range of $655 million and $685 million; and
• Q2 FY’25 diluted earnings per share is expected to range between $1.11 to $1.23.

On a consolidated adjusted basis:

• Q2 FY’25 adjusted diluted earnings per share is expected to be in the range from $1.14 to $1.26.

 

Q2 FY’25

Earnings Per Share Outlook

 

Low

 

High

 

 

Consolidated diluted earnings per share

$

1.11

 

 

$

1.23

 

Integration/acquisition costs

0.03

 

 

0.03

 

Consolidated adjusted diluted earnings per share(1)

$

1.14

 

$

1.26

 

(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 (EDT) 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, 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 associated with the decision to terminate and sublease some of our offices, 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 realign our workforce with the Company's business needs and objectives. 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 INCOME

(in thousands, except per share amounts)

 

 

Three Months Ended

July 31,

 

 

2024

 

 

 

2023

 

 

 

 

 

 

(unaudited)

Fee revenue

$

674,946

 

 

$

699,189

 

Reimbursed out-of-pocket engagement expenses

 

7,815

 

 

 

7,073

 

Total revenue

 

682,761

 

 

 

706,262

 

 

 

 

 

Compensation and benefits

 

451,775

 

 

 

479,881

 

General and administrative expenses

 

59,999

 

 

 

65,917

 

Reimbursed expenses

 

7,815

 

 

 

7,073

 

Cost of services

 

67,544

 

 

 

77,190

 

Depreciation and amortization

 

19,578

 

 

 

19,012

 

Restructuring charges, net

 

—

 

 

 

421

 

Total operating expenses

 

606,711

 

 

 

649,494

 

 

 

 

 

Operating income

 

76,050

 

 

 

56,768

 

Other income, net

 

14,505

 

 

 

13,577

 

Interest expense, net

 

(3,945

)

 

 

(4,740

)

Income before provision for income taxes

 

86,610

 

 

 

65,605

 

Income tax provision

 

22,354

 

 

 

18,420

 

Net income

 

64,256

 

 

 

47,185

 

Net income attributable to noncontrolling interest

 

(1,652

)

 

 

(580

)

Net income attributable to Korn Ferry

$

62,604

 

 

$

46,605

 

 

 

 

 

Earnings per common share attributable to Korn Ferry:

 

 

 

Basic

$

1.19

 

 

$

0.89

 

Diluted

$

1.17

 

 

$

0.89

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

Basic

 

51,950

 

 

 

50,934

 

Diluted

 

52,745

 

 

 

51,082

 

 

 

 

 

Cash dividends declared per share:

$

0.37

 

 

$

0.18

 

 

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY REPORTING SEGMENT

(dollars in thousands)

(unaudited)

 

 

Three Months Ended July 31,

 

 

2024

 

 

 

2023

 

 

% Change

Fee revenue:

 

 

 

 

 

Consulting

$

167,870

 

$

168,088

 

(0.1

%)

Digital

 

88,180

 

 

 

87,986

 

 

0.2

%

Executive Search:

 

 

 

 

 

North America

 

134,752

 

 

 

127,498

 

 

5.7

%

EMEA

 

45,981

 

 

 

46,776

 

 

(1.7

%)

Asia Pacific

 

20,579

 

 

 

24,539

 

 

(16.1

%)

Latin America

 

7,323

 

 

 

6,421

 

 

14.0

%

Total Executive Search (a)

 

208,635

 

 

 

205,234

 

 

1.7

%

Professional Search & Interim

 

121,741

 

 

 

142,179

 

 

(14.4

%)

RPO

 

88,520

 

 

 

95,702

 

 

(7.5

%)

Total fee revenue

 

674,946

 

 

 

699,189

 

 

(3.5

%)

Reimbursed out-of-pocket engagement expenses

 

7,815

 

 

 

7,073

 

 

10.5

%

Total revenue

$

682,761

 

 

$

706,262

 

 

(3.3

%)

(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)

 

 

July 31,

2024

 

April 30,

2024 (1)

 

(unaudited)

 

 

ASSETS

 

 

 

Cash and cash equivalents

$

633,376

 

 

$

941,005

 

Marketable securities

 

40,626

 

 

 

42,742

 

Receivables due from clients, net of allowance for doubtful accounts of $46,714 and $44,192 at July 31, 2024 and April 30, 2024, respectively

 

573,019

 

 

 

541,014

 

Income taxes and other receivables

 

49,606

 

 

 

40,696

 

Unearned compensation

 

62,375

 

 

 

59,247

 

Prepaid expenses and other assets

 

56,479

 

 

 

49,456

 

Total current assets

 

1,415,481

 

 

 

1,674,160

 

 

 

 

 

Marketable securities, non-current

 

231,195

 

 

 

211,681

 

Property and equipment, net

 

159,522

 

 

 

161,849

 

Operating lease right-of-use assets, net

 

155,881

 

 

 

160,464

 

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

 

234,725

 

 

 

218,977

 

Deferred income taxes

 

124,180

 

 

 

133,564

 

Goodwill

 

908,485

 

 

 

908,376

 

Intangible assets, net

 

82,606

 

 

 

88,833

 

Unearned compensation, non-current

 

113,171

 

 

 

99,913

 

Investments and other assets

 

22,323

 

 

 

21,052

 

Total assets

$

3,447,569

 

 

$

3,678,869

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Accounts payable

$

49,611

 

 

$

50,112

 

Income taxes payable

 

23,775

 

 

 

24,076

 

Compensation and benefits payable

 

270,897

 

 

 

525,466

 

Operating lease liability, current

 

35,931

 

 

 

36,073

 

Other accrued liabilities

 

277,804

 

 

 

298,792

 

Total current liabilities

 

658,018

 

 

 

934,519

 

 

 

 

 

Deferred compensation and other retirement plans

 

469,583

 

 

 

440,396

 

Operating lease liability, non-current

 

137,218

 

 

 

143,507

 

Long-term debt

 

397,140

 

 

 

396,946

 

Deferred tax liabilities

 

4,173

 

 

 

4,540

 

Other liabilities

 

22,195

 

 

 

21,636

 

Total liabilities

 

1,688,327

 

 

 

1,941,544

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock: $0.01 par value, 150,000 shares authorized, 78,210 and 77,460 shares issued and 52,154 and 51,983 shares outstanding at July 31, 2024 and April 30, 2024, respectively

 

390,053

 

 

 

414,885

 

Retained earnings

 

1,468,648

 

 

 

1,425,844

 

Accumulated other comprehensive loss, net

 

(104,860

)

 

 

(107,671

)

Total Korn Ferry stockholders' equity

 

1,753,841

 

 

 

1,733,058

 

Noncontrolling interest

 

5,401

 

 

 

4,267

 

Total stockholders' equity

 

1,759,242

 

 

 

1,737,325

 

Total liabilities and stockholders' equity

$

3,447,569

 

 

$

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

July 31,

 

 

2024

 

 

 

2023

 

 

 

 

 

Net income attributable to Korn Ferry

$

62,604

 

 

$

46,605

 

Net income attributable to non-controlling interest

 

1,652

 

 

 

580

 

Net income

 

64,256

 

 

 

47,185

 

Income tax provision

 

22,354

 

 

 

18,420

 

Income before provision for income taxes

 

86,610

 

 

 

65,605

 

Other income, net

 

(14,505

)

 

 

(13,577

)

Interest expense, net

 

3,945

 

 

 

4,740

 

Operating income

 

76,050

 

 

 

56,768

 

Depreciation and amortization

 

19,578

 

 

 

19,012

 

Other income, net

 

14,505

 

 

 

13,577

 

Integration/acquisition costs (1)

 

1,076

 

 

 

4,128

 

Impairment of fixed assets (2)

 

—

 

 

 

123

 

Impairment of right-of-use assets (3)

 

—

 

 

 

1,629

 

Restructuring charges, net (4)

 

—

 

 

 

421

 

Adjusted EBITDA

$

111,209

 

 

$

95,658

 

 

 

 

 

Operating margin

 

11.3

%

 

 

8.1

%

Depreciation and amortization

 

2.9

%

 

 

2.7

%

Other income, net

 

2.1

%

 

 

2.0

%

Integration/acquisition costs (1)

 

0.2

%

 

 

0.6

%

Impairment of fixed assets (2)

 

—

%

 

 

—

%

Impairment of right-of-use assets (3)

 

—

%

 

 

0.2

%

Restructuring charges, net (4)

 

—

%

 

 

0.1

%

Adjusted EBITDA margin

 

16.5

%

 

 

13.7

%

 

 

 

 

Net income attributable to Korn Ferry

$

62,604

 

 

$

46,605

 

Integration/acquisition costs (1)

 

1,076

 

 

 

4,128

 

Impairment of fixed assets (2)

 

—

 

 

 

123

 

Impairment of right-of-use assets (3)

 

—

 

 

 

1,629

 

Restructuring charges, net (4)

 

—

 

 

 

421

 

Tax effect on the adjusted items (5)

 

(560

)

 

 

(1,419

)

Adjusted net income attributable to Korn Ferry

$

63,120

 

 

$

51,487

 

 

 

 

 

Basic earnings per common share

$

1.19

 

 

$

0.89

 

Integration/acquisition costs (1)

 

0.02

 

 

 

0.08

 

Impairment of fixed assets (2)

 

—

 

 

 

—

 

Impairment of right-of-use assets (3)

 

—

 

 

 

0.03

 

Restructuring charges, net (4)

 

—

 

 

 

0.01

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

(0.02

)

Adjusted basic earnings per share

$

1.20

 

 

$

0.99

 

 

 

 

 

Diluted earnings per common share

$

1.17

 

 

$

0.89

 

Integration/acquisition costs (1)

 

0.02

 

 

 

0.08

 

Impairment of fixed assets (2)

 

—

 

 

 

—

 

Impairment of right-of-use assets (3)

 

—

 

 

 

0.03

 

Restructuring charges, net (4)

 

—

 

 

 

0.01

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

(0.02

)

Adjusted diluted earnings per share

$

1.18

 

 

$

0.99

 

 

Explanation of Non-GAAP Adjustments

(1)

 

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

(2)

 

Costs associated with impairment of fixed assets (i.e. leasehold improvements) due to terminating and deciding to sublease some of our offices.

(3)

 

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

(4)

 

Restructuring charges we incurred to realign our workforce with business needs and objectives due to shifts in global trade lanes and persistent inflationary pressures.

(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 July 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

$

167,870

 

$

170,767

 

$

29,294

 

17.5

%

 

$

168,088

 

$

170,793

 

$

25,180

 

15.0

%

Digital

 

88,180

 

 

 

88,211

 

 

 

26,623

 

 

30.2

%

 

 

87,986

 

 

 

88,012

 

 

 

24,325

 

 

27.6

%

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

134,752

 

 

 

136,087

 

 

 

35,098

 

 

26.0

%

 

 

127,498

 

 

 

129,413

 

 

 

28,756

 

 

22.6

%

EMEA

 

45,981

 

 

 

46,276

 

 

 

7,265

 

 

15.8

%

 

 

46,776

 

 

 

47,135

 

 

 

5,638

 

 

12.1

%

Asia Pacific

 

20,579

 

 

 

20,704

 

 

 

4,218

 

 

20.5

%

 

 

24,539

 

 

 

24,610

 

 

 

6,315

 

 

25.7

%

Latin America

 

7,323

 

 

 

7,326

 

 

 

2,798

 

 

38.2

%

 

 

6,421

 

 

 

6,422

 

 

 

1,741

 

 

27.1

%

Total Executive Search

 

208,635

 

 

 

210,393

 

 

 

49,379

 

 

23.7

%

 

 

205,234

 

 

 

207,580

 

 

 

42,450

 

 

20.7

%

Professional Search & Interim

 

121,741

 

 

 

122,730

 

 

 

25,706

 

 

21.1

%

 

 

142,179

 

 

 

143,069

 

 

 

24,329

 

 

17.1

%

RPO

 

88,520

 

 

 

90,660

 

 

 

12,494

 

 

14.1

%

 

 

95,702

 

 

 

96,808

 

 

 

10,471

 

 

10.9

%

Corporate

 

—

 

 

 

—

 

 

 

(32,287

)

 

 

 

 

—

 

 

 

—

 

 

 

(31,097

)

 

 

Consolidated

$

674,946

 

 

$

682,761

 

 

$

111,209

 

 

16.5

%

 

$

699,189

 

 

$

706,262

 

 

$

95,658

 

 

13.7

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240829500751/en/

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