Korn Ferry Announces Third Quarter Fiscal 2024 Results of Operations
Highlights
-
Korn Ferry $668.7 million , a year-over-year decrease of 2% at both actual and constant currency. -
Net income attributable to
Korn Ferry was$59.1 million , while diluted and adjusted diluted earnings per share were$1.13 and$1.07 in Q3 FY'24, respectively. -
Operating income was
$49.9 million with an operating margin of 7.5%, a 570bps increase compared to year-ago quarter, and Adjusted EBITDA was$101.7 million with an Adjusted EBITDA margin of 15.2%, a 110bps increase compared to year-ago quarter. -
Consulting and Digital continued to show resilient business operations:
-
Consulting fee revenue grew 3% year-over-year with a 12% increase in average bill rate to
$438 per hour. -
Digital fee revenue grew 6% year-over-year with an 11% increase in Subscription & License fee revenue which approximated
$33.0 million in the quarter.
-
Consulting fee revenue grew 3% year-over-year with a 12% increase in average bill rate to
-
The Company repurchased 382,500 shares of stock during the quarter for
$21.0 million . -
Declared a quarterly dividend of
$0.33 per share onMarch 5, 2024 , which is payable onApril 15, 2024 to stockholders of record onMarch 27, 2024 .
“I am pleased with our third quarter results, as we generated
“Fee revenue from Consulting and Digital (up 3% and 6% over the prior year, respectively), when combined with our Interim fee revenue, now generate 50% of our top line. Our Consulting bill rate increased 12% and our Digital subscription and license fee revenue increased 11%,” Burnison added. “The strategy is clearly working – I am enormously proud of our organization and the results demonstrate the resiliency and potential for Korn Ferry.”
Selected Financial Results (dollars in millions, except per share amounts) (a) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
668.7 |
|
|
$ |
680.8 |
|
|
$ |
2,071.9 |
|
|
$ |
2,104.5 |
|
Total revenue |
$ |
676.9 |
|
|
$ |
686.8 |
|
|
$ |
2,095.6 |
|
|
$ |
2,125.7 |
|
Operating income |
$ |
49.9 |
|
|
$ |
12.5 |
|
|
$ |
129.5 |
|
|
$ |
243.8 |
|
Operating margin |
|
7.5 |
% |
|
|
1.8 |
% |
|
|
6.2 |
% |
|
|
11.6 |
% |
Net income attributable to |
$ |
59.1 |
|
|
$ |
11.2 |
|
|
$ |
104.0 |
|
|
$ |
162.0 |
|
Basic earnings per share |
$ |
1.14 |
|
|
$ |
0.21 |
|
|
$ |
2.00 |
|
|
$ |
3.07 |
|
Diluted earnings per share |
$ |
1.13 |
|
|
$ |
0.21 |
|
|
$ |
1.99 |
|
|
$ |
3.05 |
|
Adjusted Results (b): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
101.7 |
|
|
$ |
96.1 |
|
|
$ |
295.9 |
|
|
$ |
359.4 |
|
Adjusted EBITDA margin |
|
15.2 |
% |
|
|
14.1 |
% |
|
|
14.3 |
% |
|
|
17.1 |
% |
Adjusted net income attributable to |
$ |
55.8 |
|
|
$ |
53.0 |
|
|
$ |
158.3 |
|
|
$ |
209.1 |
|
Adjusted basic earnings per share (c) |
$ |
1.07 |
|
|
$ |
1.01 |
|
|
$ |
3.04 |
|
|
$ |
3.96 |
|
Adjusted diluted earnings per share (c) |
$ |
1.07 |
|
|
$ |
1.01 |
|
|
$ |
3.03 |
|
|
$ |
3.93 |
|
______________________ |
||
(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): |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of fixed assets |
$ |
— |
|
$ |
4.4 |
|
$ |
1.6 |
|
$ |
4.4 |
Impairment of right of use assets |
$ |
— |
|
$ |
5.5 |
|
$ |
1.6 |
|
$ |
5.5 |
Integration/acquisition costs |
$ |
3.9 |
|
$ |
2.5 |
|
$ |
13.1 |
|
$ |
9.5 |
Restructuring charges, net |
$ |
4.6 |
|
$ |
41.2 |
|
$ |
68.6 |
|
$ |
41.2 |
(c) |
|
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a |
The Company reported fee revenue in Q3 FY'24 of
Operating margin was 7.5% in Q3 FY'24, compared to 1.8% in the year-ago quarter, an increase of 570bps. Adjusted EBITDA margin was 15.2% in Q3 FY'24, compared to 14.1% in the year-ago quarter, an increase of 110bps. Net income attributable to
Operating income and margin increased compared to the year-ago quarter primarily due to 1) lower restructuring charges, net recorded in Q3 FY'24 compared to the year-ago quarter, 2) a decrease in compensation and benefits expense driven by the previous quarter's cost reduction actions, and 3) a decrease in charges for impairment of fixed and right of use assets in the year-ago quarter. This increase was partially offset by the decrease in fee revenue discussed above, and higher cost of services expense associated with the acquired Interim businesses. Net income attributable to
Adjusted EBITDA and margin increased due to the previous quarter's cost reduction actions, partially offset by the decrease in fee revenue discussed above and an increase in cost of services expense associated with the acquired businesses.
Results by Line of Business Selected Consulting Data (dollars in millions) (a) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
166.9 |
|
|
$ |
162.2 |
|
|
$ |
512.8 |
|
|
$ |
501.7 |
|
Total revenue |
$ |
169.9 |
|
|
$ |
164.4 |
|
|
$ |
521.7 |
|
|
$ |
509.0 |
|
|
|
|
|
|
|
|
|
||||||||
Ending number of consultants and execution staff (b) |
|
1,687 |
|
|
|
1,877 |
|
|
|
1,687 |
|
|
|
1,877 |
|
Hours worked in thousands (c) |
|
381 |
|
|
|
414 |
|
|
|
1,239 |
|
|
|
1,340 |
|
Average bill rate (d) |
$ |
438 |
|
|
$ |
392 |
|
|
$ |
414 |
|
|
$ |
374 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Results (e): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
27.8 |
|
|
$ |
23.3 |
|
|
$ |
81.9 |
|
|
$ |
83.9 |
|
Adjusted EBITDA margin |
|
16.7 |
% |
|
|
14.4 |
% |
|
|
16.0 |
% |
|
|
16.7 |
% |
______________________ |
||
(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: |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of fixed assets |
$ |
— |
|
$ |
2.8 |
|
$ |
— |
|
$ |
2.8 |
Impairment of right of use assets |
$ |
— |
|
$ |
3.1 |
|
$ |
0.6 |
|
$ |
3.1 |
Restructuring charges, net |
$ |
1.1 |
|
$ |
10.8 |
|
$ |
18.9 |
|
$ |
10.8 |
Fee revenue was
Adjusted EBITDA was
Selected Digital Data (dollars in millions) (a) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
90.3 |
|
|
$ |
85.1 |
|
|
$ |
275.4 |
|
|
$ |
263.2 |
|
Total revenue |
$ |
90.4 |
|
|
$ |
85.1 |
|
|
$ |
275.6 |
|
|
$ |
263.5 |
|
|
|
|
|
|
|
|
|
||||||||
Ending number of consultants |
|
275 |
|
|
|
365 |
|
|
|
275 |
|
|
|
365 |
|
Subscription & License fee revenue |
$ |
32.8 |
|
|
$ |
29.6 |
|
|
$ |
97.7 |
|
|
$ |
88.1 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Results (b): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
27.4 |
|
|
$ |
22.2 |
|
|
$ |
80.7 |
|
|
$ |
73.9 |
|
Adjusted EBITDA margin |
|
30.3 |
% |
|
|
26.0 |
% |
|
|
29.3 |
% |
|
|
28.1 |
% |
______________________ |
||
(a) |
|
Numbers may not total due to rounding. |
(b) |
|
Adjusted results exclude the following: |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of fixed assets |
$ |
— |
|
$ |
1.5 |
|
$ |
1.5 |
|
$ |
1.5 |
Impairment of right of use assets |
$ |
— |
|
$ |
1.7 |
|
$ |
— |
|
$ |
1.7 |
Restructuring charges, net |
$ |
0.6 |
|
$ |
2.9 |
|
$ |
9.5 |
|
$ |
2.9 |
Fee revenue was
Adjusted EBITDA was
Selected Executive Search Data(a) (dollars in millions) (b) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
199.3 |
|
|
$ |
212.0 |
|
|
$ |
607.5 |
|
|
$ |
663.2 |
|
Total revenue |
$ |
201.2 |
|
|
$ |
213.8 |
|
|
$ |
613.5 |
|
|
$ |
668.7 |
|
|
|
|
|
|
|
|
|
||||||||
Ending number of consultants |
|
562 |
|
|
|
616 |
|
|
|
562 |
|
|
|
616 |
|
Average number of consultants |
|
574 |
|
|
|
619 |
|
|
|
582 |
|
|
|
601 |
|
Engagements billed |
|
3,469 |
|
|
|
4,080 |
|
|
|
7,269 |
|
|
|
8,272 |
|
New engagements (c) |
|
1,367 |
|
|
|
1,516 |
|
|
|
4,349 |
|
|
|
4,835 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Results (d): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
43.4 |
|
|
$ |
46.4 |
|
|
$ |
125.6 |
|
|
$ |
163.2 |
|
Adjusted EBITDA margin |
|
21.8 |
% |
|
|
21.9 |
% |
|
|
20.7 |
% |
|
|
24.6 |
% |
______________________ |
||
(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: |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
— |
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
0.9 |
|
$ |
— |
Restructuring charges, net |
$ |
2.3 |
|
$ |
19.4 |
|
$ |
28.2 |
|
$ |
19.4 |
Fee revenue was
Adjusted EBITDA was
Selected Professional Search & Interim Data (dollars in millions) (a) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
130.9 |
|
|
$ |
118.0 |
|
|
$ |
411.5 |
|
|
$ |
351.7 |
|
Total revenue |
$ |
131.8 |
|
|
$ |
118.6 |
|
|
$ |
414.3 |
|
|
$ |
354.4 |
|
|
|
|
|
|
|
|
|
||||||||
Permanent Placement: |
|
|
|
|
|
|
|
||||||||
Fee revenue |
$ |
52.4 |
|
|
$ |
65.0 |
|
|
$ |
167.2 |
|
|
$ |
218.5 |
|
Engagements billed |
|
1,901 |
|
|
|
2,428 |
|
|
|
4,511 |
|
|
|
6,104 |
|
New engagements (b) |
|
995 |
|
|
|
1,460 |
|
|
|
3,414 |
|
|
|
5,122 |
|
Ending number of consultants |
|
344 |
|
|
|
448 |
|
|
|
344 |
|
|
|
448 |
|
Interim: |
|
|
|
|
|
|
|
||||||||
Fee revenue |
$ |
78.5 |
|
|
$ |
53.0 |
|
|
$ |
244.3 |
|
|
$ |
133.1 |
|
Average bill rate (c) |
$ |
129 |
|
|
$ |
107 |
|
|
$ |
126 |
|
|
$ |
110 |
|
Average weekly billable consultants (d) |
|
1,283 |
|
|
|
1,061 |
|
|
|
1,352 |
|
|
|
878 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Results (e): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
23.8 |
|
|
$ |
22.0 |
|
|
$ |
73.7 |
|
|
$ |
83.6 |
|
Adjusted EBITDA margin |
|
18.2 |
% |
|
|
18.6 |
% |
|
|
17.9 |
% |
|
|
23.8 |
% |
_____________________ |
||
(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: |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of fixed assets |
$ |
— |
|
$ |
0.1 |
|
$ |
— |
|
$ |
0.1 |
Impairment of right of use assets |
$ |
— |
|
$ |
0.6 |
|
$ |
— |
|
$ |
0.6 |
Integration/acquisition costs |
$ |
3.8 |
|
$ |
1.7 |
|
$ |
12.7 |
|
$ |
6.6 |
Restructuring charges, net |
$ |
— |
|
$ |
4.8 |
|
$ |
3.8 |
|
$ |
4.8 |
Fee revenue was
Adjusted EBITDA was
Selected Recruitment Process Outsourcing ("RPO") Data (dollars in millions) (a) |
|||||||||||||||
|
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Fee revenue |
$ |
81.2 |
|
|
$ |
103.5 |
|
|
$ |
264.7 |
|
|
$ |
324.8 |
|
Total revenue |
$ |
83.6 |
|
|
$ |
104.9 |
|
|
$ |
270.5 |
|
|
$ |
330.1 |
|
|
|
|
|
|
|
|
|
||||||||
Remaining revenue under contract (b) |
$ |
695.8 |
|
|
$ |
836.9 |
|
|
$ |
695.8 |
|
|
$ |
836.9 |
|
RPO new business (c) |
$ |
122.1 |
|
|
$ |
44.0 |
|
|
$ |
311.2 |
|
|
$ |
482.7 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Results (d): |
Third Quarter |
|
Year to Date |
||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||||||
Adjusted EBITDA |
$ |
9.3 |
|
|
$ |
9.8 |
|
|
$ |
28.6 |
|
|
$ |
43.6 |
|
Adjusted EBITDA margin |
|
11.4 |
% |
|
|
9.5 |
% |
|
|
10.8 |
% |
|
|
13.4 |
% |
______________________ |
||
(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: |
|
Third Quarter |
|
Year to Date |
||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
||||
Impairment of right of use assets |
$ |
— |
|
$ |
0.1 |
|
$ |
0.1 |
|
$ |
0.1 |
Restructuring charges, net |
$ |
0.7 |
|
$ |
3.1 |
|
$ |
7.9 |
|
$ |
3.1 |
Fee revenue was
Adjusted EBITDA was
Outlook
Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:
-
Q4 FY’24 fee revenue is expected to be in the range of
$675 million and$695 million ; and -
Q4 FY’24 diluted earnings per share is expected to range between
$1.06 to$1.14 .
On a consolidated adjusted basis:
-
Q4 FY’24 adjusted diluted earnings per share is expected to be in the range from
$1.09 to$1.17 .
|
Q4 FY’24 Earnings Per Share Outlook |
||||||
|
Low |
|
High |
||||
|
|
|
|
||||
Consolidated diluted earnings per share |
$ |
1.06 |
|
|
$ |
1.14 |
|
Integration/acquisition and restructuring charges |
|
0.05 |
|
|
|
0.05 |
|
Tax Rate Impact |
|
(0.02 |
) |
|
|
(0.02 |
) |
Consolidated adjusted diluted earnings per share(1) |
$ |
1.09 |
|
|
$ |
1.17 |
|
______________________ |
||
(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
About
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, our workforce reduction plan, 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
Use of Non-GAAP Financial Measures
This press release contains financial information calculated other than in accordance with
-
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 and to exclude a$9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance; -
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, and to exclude a
$9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance; - 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;
- 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 AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(unaudited) |
||||||||||||||
Fee revenue |
$ |
668,679 |
|
|
$ |
680,782 |
|
|
$ |
2,071,871 |
|
|
$ |
2,104,534 |
|
Reimbursed out-of-pocket engagement expenses |
|
8,194 |
|
|
|
6,063 |
|
|
|
23,711 |
|
|
|
21,178 |
|
Total revenue |
|
676,873 |
|
|
|
686,845 |
|
|
|
2,095,582 |
|
|
|
2,125,712 |
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits |
|
456,216 |
|
|
|
479,382 |
|
|
|
1,389,956 |
|
|
|
1,409,774 |
|
General and administrative expenses |
|
62,661 |
|
|
|
72,785 |
|
|
|
194,315 |
|
|
|
202,328 |
|
Reimbursed expenses |
|
8,194 |
|
|
|
6,063 |
|
|
|
23,711 |
|
|
|
21,178 |
|
Cost of services |
|
75,814 |
|
|
|
57,903 |
|
|
|
231,516 |
|
|
|
157,152 |
|
Depreciation and amortization |
|
19,509 |
|
|
|
17,037 |
|
|
|
58,075 |
|
|
|
50,359 |
|
Restructuring charges, net |
|
4,612 |
|
|
|
41,162 |
|
|
|
68,558 |
|
|
|
41,162 |
|
Total operating expenses |
|
627,006 |
|
|
|
674,332 |
|
|
|
1,966,131 |
|
|
|
1,881,953 |
|
|
|
|
|
|
|
|
|
||||||||
Operating income |
|
49,867 |
|
|
|
12,513 |
|
|
|
129,451 |
|
|
|
243,759 |
|
Other income, net |
|
23,817 |
|
|
|
13,097 |
|
|
|
23,559 |
|
|
|
4,824 |
|
Interest expense, net |
|
(4,946 |
) |
|
|
(5,378 |
) |
|
|
(16,282 |
) |
|
|
(20,088 |
) |
Income before provision for income taxes |
|
68,738 |
|
|
|
20,232 |
|
|
|
136,728 |
|
|
|
228,495 |
|
Income tax provision |
|
9,018 |
|
|
|
8,463 |
|
|
|
29,779 |
|
|
|
63,575 |
|
Net income |
|
59,720 |
|
|
|
11,769 |
|
|
|
106,949 |
|
|
|
164,920 |
|
Net income attributable to noncontrolling interest |
|
(649 |
) |
|
|
(522 |
) |
|
|
(2,984 |
) |
|
|
(2,885 |
) |
Net income attributable to |
$ |
59,071 |
|
|
$ |
11,247 |
|
|
$ |
103,965 |
|
|
$ |
162,035 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share attributable to |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.14 |
|
|
$ |
0.21 |
|
|
$ |
2.00 |
|
|
$ |
3.07 |
|
Diluted |
$ |
1.13 |
|
|
$ |
0.21 |
|
|
$ |
1.99 |
|
|
$ |
3.05 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
51,126 |
|
|
|
51,278 |
|
|
|
51,129 |
|
|
|
51,639 |
|
Diluted |
|
51,343 |
|
|
|
51,431 |
|
|
|
51,329 |
|
|
|
51,999 |
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share: |
$ |
0.33 |
|
|
$ |
0.15 |
|
|
$ |
0.69 |
|
|
$ |
0.45 |
|
KORN FERRY AND SUBSIDIARIES FINANCIAL SUMMARY BY REPORTING SEGMENT (dollars in thousands) (unaudited) |
|||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||
Fee revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Consulting |
$ |
166,947 |
|
$ |
162,155 |
|
3.0 |
% |
|
$ |
512,830 |
|
$ |
501,731 |
|
2.2 |
% |
Digital |
|
90,317 |
|
|
85,071 |
|
6.2 |
% |
|
|
275,395 |
|
|
263,161 |
|
4.6 |
% |
Executive Search: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
121,449 |
|
|
132,810 |
|
(8.6 |
%) |
|
|
381,459 |
|
|
426,839 |
|
(10.6 |
%) |
EMEA |
|
48,999 |
|
|
48,960 |
|
0.1 |
% |
|
|
138,873 |
|
|
140,661 |
|
(1.3 |
%) |
|
|
21,324 |
|
|
22,621 |
|
(5.7 |
%) |
|
|
65,167 |
|
|
72,410 |
|
(10.0 |
%) |
|
|
7,541 |
|
|
7,654 |
|
(1.5 |
%) |
|
|
22,041 |
|
|
23,283 |
|
(5.3 |
%) |
Total Executive Search (a) |
|
199,313 |
|
|
212,045 |
|
(6.0 |
%) |
|
|
607,540 |
|
|
663,193 |
|
(8.4 |
%) |
Professional Search & Interim |
|
130,890 |
|
|
117,980 |
|
10.9 |
% |
|
|
411,453 |
|
|
351,670 |
|
17.0 |
% |
RPO |
|
81,212 |
|
|
103,531 |
|
(21.6 |
%) |
|
|
264,653 |
|
|
324,779 |
|
(18.5 |
%) |
Total fee revenue |
|
668,679 |
|
|
680,782 |
|
(1.8 |
%) |
|
|
2,071,871 |
|
|
2,104,534 |
|
(1.6 |
%) |
Reimbursed out-of-pocket engagement expenses |
|
8,194 |
|
|
6,063 |
|
35.1 |
% |
|
|
23,711 |
|
|
21,178 |
|
12.0 |
% |
Total revenue |
$ |
676,873 |
|
$ |
686,845 |
|
(1.5 |
%) |
|
$ |
2,095,582 |
|
$ |
2,125,712 |
|
(1.4 |
%) |
(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) |
||||||||
|
|
|
|
|||||
|
(unaudited) |
|
|
|||||
ASSETS |
|
|
|
|||||
Cash and cash equivalents |
$ |
736,797 |
|
|
$ |
844,024 |
|
|
Marketable securities |
|
45,727 |
|
|
|
44,837 |
|
|
Receivables due from clients, net of allowance for doubtful accounts of |
|
589,717 |
|
|
|
569,601 |
|
|
Income taxes and other receivables |
|
63,020 |
|
|
|
67,512 |
|
|
Unearned compensation |
|
60,071 |
|
|
|
63,476 |
|
|
Prepaid expenses and other assets |
|
49,377 |
|
|
|
49,219 |
|
|
Total current assets |
|
1,544,709 |
|
|
|
1,638,669 |
|
|
|
|
|
|
|||||
Marketable securities, non-current |
|
204,326 |
|
|
|
179,040 |
|
|
Property and equipment, net |
|
163,600 |
|
|
|
161,876 |
|
|
Operating lease right-of-use assets, net |
|
167,441 |
|
|
|
142,690 |
|
|
Cash surrender value of company-owned life insurance policies, net of loans |
|
216,450 |
|
|
|
197,998 |
|
|
Deferred income taxes |
|
121,267 |
|
|
|
102,057 |
|
|
|
|
909,330 |
|
|
|
909,491 |
|
|
Intangible assets, net |
|
95,151 |
|
|
|
114,426 |
|
|
Unearned compensation, non-current |
|
111,286 |
|
|
|
103,607 |
|
|
Investments and other assets |
|
22,765 |
|
|
|
24,590 |
|
|
Total assets |
$ |
3,556,325 |
|
|
$ |
3,574,444 |
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|||||
Accounts payable |
$ |
46,368 |
|
|
$ |
53,386 |
|
|
Income taxes payable |
|
23,599 |
|
|
|
19,969 |
|
|
Compensation and benefits payable |
|
423,268 |
|
|
|
532,934 |
|
|
Operating lease liability, current |
|
36,895 |
|
|
|
45,821 |
|
|
Other accrued liabilities |
|
312,511 |
|
|
|
324,150 |
|
|
Total current liabilities |
|
842,641 |
|
|
|
976,260 |
|
|
|
|
|
|
|||||
Deferred compensation and other retirement plans |
|
427,464 |
|
|
|
396,534 |
|
|
Operating lease liability, non-current |
|
151,159 |
|
|
|
119,220 |
|
|
Long-term debt |
|
396,755 |
|
|
|
396,194 |
|
|
Deferred tax liabilities |
|
5,709 |
|
|
|
5,352 |
|
|
Other liabilities |
|
25,186 |
|
|
|
27,879 |
|
|
Total liabilities |
|
1,848,914 |
|
|
|
1,921,439 |
|
|
|
|
|
|
|||||
Stockholders' equity |
|
|
|
|||||
Common stock: |
|
428,413 |
|
|
|
429,754 |
|
|
Retained earnings |
|
1,378,140 |
|
|
|
1,311,081 |
|
|
Accumulated other comprehensive loss, net |
|
(102,930 |
) |
|
|
(92,764 |
) |
|
Total |
|
1,703,623 |
|
|
|
1,648,071 |
|
|
Noncontrolling interest |
|
3,788 |
|
|
|
4,934 |
|
|
Total stockholders' equity |
|
1,707,411 |
|
|
|
1,653,005 |
|
|
Total liabilities and stockholders' equity |
$ |
3,556,325 |
|
|
$ |
3,574,444 |
|
KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (dollars in thousands) (unaudited) |
||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to |
$ |
59,071 |
|
|
$ |
11,247 |
|
|
$ |
103,965 |
|
|
$ |
162,035 |
|
|
Net income attributable to non-controlling interest |
|
649 |
|
|
|
522 |
|
|
|
2,984 |
|
|
|
2,885 |
|
|
Net income |
|
59,720 |
|
|
|
11,769 |
|
|
|
106,949 |
|
|
|
164,920 |
|
|
Income tax provision |
|
9,018 |
|
|
|
8,463 |
|
|
|
29,779 |
|
|
|
63,575 |
|
|
Income before provision for income taxes |
|
68,738 |
|
|
|
20,232 |
|
|
|
136,728 |
|
|
|
228,495 |
|
|
Other income, net |
|
(23,817 |
) |
|
|
(13,097 |
) |
|
|
(23,559 |
) |
|
|
(4,824 |
) |
|
Interest expense, net |
|
4,946 |
|
|
|
5,378 |
|
|
|
16,282 |
|
|
|
20,088 |
|
|
Operating income |
|
49,867 |
|
|
|
12,513 |
|
|
|
129,451 |
|
|
|
243,759 |
|
|
Depreciation and amortization |
|
19,509 |
|
|
|
17,037 |
|
|
|
58,075 |
|
|
|
50,359 |
|
|
Other income, net |
|
23,817 |
|
|
|
13,097 |
|
|
|
23,559 |
|
|
|
4,824 |
|
|
Integration/acquisition costs (1) |
|
3,899 |
|
|
|
2,456 |
|
|
|
13,057 |
|
|
|
9,472 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
4,375 |
|
|
|
1,575 |
|
|
|
4,375 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
5,471 |
|
|
|
1,629 |
|
|
|
5,471 |
|
|
Restructuring charges, net (4) |
|
4,612 |
|
|
|
41,162 |
|
|
|
68,558 |
|
|
|
41,162 |
|
|
Adjusted EBITDA |
$ |
101,704 |
|
|
$ |
96,111 |
|
|
$ |
295,904 |
|
|
$ |
359,422 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating margin |
|
7.5 |
% |
|
|
1.8 |
% |
|
|
6.2 |
% |
|
|
11.6 |
% |
|
Depreciation and amortization |
|
2.9 |
% |
|
|
2.5 |
% |
|
|
2.8 |
% |
|
|
2.4 |
% |
|
Other income, net |
|
3.5 |
% |
|
|
1.9 |
% |
|
|
1.2 |
% |
|
|
0.2 |
% |
|
Integration/acquisition costs (1) |
|
0.6 |
% |
|
|
0.4 |
% |
|
|
0.6 |
% |
|
|
0.4 |
% |
|
Impairment of fixed assets (2) |
|
— |
% |
|
|
0.7 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
Impairment of right of use assets (3) |
|
— |
% |
|
|
0.8 |
% |
|
|
0.1 |
% |
|
|
0.3 |
% |
|
Restructuring charges, net (4) |
|
0.7 |
% |
|
|
6.0 |
% |
|
|
3.3 |
% |
|
|
2.0 |
% |
|
Adjusted EBITDA margin |
|
15.2 |
% |
|
|
14.1 |
% |
|
|
14.3 |
% |
|
|
17.1 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to |
$ |
59,071 |
|
|
$ |
11,247 |
|
|
$ |
103,965 |
|
|
$ |
162,035 |
|
|
Integration/acquisition costs (1) |
|
3,899 |
|
|
|
2,456 |
|
|
|
13,057 |
|
|
|
9,472 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
4,375 |
|
|
|
1,575 |
|
|
|
4,375 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
5,471 |
|
|
|
1,629 |
|
|
|
5,471 |
|
|
Restructuring charges, net (4) |
|
4,612 |
|
|
|
41,162 |
|
|
|
68,558 |
|
|
|
41,162 |
|
|
Tax effect on the adjusted items (5) |
|
(2,092 |
) |
|
|
(11,705 |
) |
|
|
(20,763 |
) |
|
|
(13,410 |
) |
|
Tax adjustment (6) |
|
(9,714 |
) |
|
|
— |
|
|
|
(9,714 |
) |
|
|
— |
|
|
Adjusted net income attributable to |
$ |
55,776 |
|
|
$ |
53,006 |
|
|
$ |
158,307 |
|
|
$ |
209,105 |
|
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 to combine the companies. |
(2) |
|
Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23. |
(3) |
|
Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases. |
(4) |
|
Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty. |
(5) |
|
Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net. |
(6) |
|
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a |
KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED (unaudited) |
||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share |
$ |
1.14 |
|
|
$ |
0.21 |
|
|
$ |
2.00 |
|
|
$ |
3.07 |
|
|
Integration/acquisition costs (1) |
|
0.07 |
|
|
|
0.05 |
|
|
|
0.25 |
|
|
|
0.18 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
0.08 |
|
|
|
0.03 |
|
|
|
0.08 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
0.10 |
|
|
|
0.03 |
|
|
|
0.10 |
|
|
Restructuring charges, net (4) |
|
0.09 |
|
|
|
0.80 |
|
|
|
1.32 |
|
|
|
0.79 |
|
|
Tax effect on the adjusted items (5) |
|
(0.04 |
) |
|
|
(0.23 |
) |
|
|
(0.40 |
) |
|
|
(0.26 |
) |
|
Tax adjustment (6) |
|
(0.19 |
) |
|
|
— |
|
|
|
(0.19 |
) |
|
|
— |
|
|
Adjusted basic earnings per share |
$ |
1.07 |
|
|
$ |
1.01 |
|
|
$ |
3.04 |
|
|
$ |
3.96 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per common share |
$ |
1.13 |
|
|
$ |
0.21 |
|
|
$ |
1.99 |
|
|
$ |
3.05 |
|
|
Integration/acquisition costs (1) |
|
0.07 |
|
|
|
0.05 |
|
|
|
0.25 |
|
|
|
0.18 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
0.08 |
|
|
|
0.03 |
|
|
|
0.08 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
0.10 |
|
|
|
0.03 |
|
|
|
0.10 |
|
|
Restructuring charges, net (4) |
|
0.09 |
|
|
|
0.80 |
|
|
|
1.32 |
|
|
|
0.78 |
|
|
Tax effect on the adjusted items (5) |
|
(0.04 |
) |
|
|
(0.23 |
) |
|
|
(0.40 |
) |
|
|
(0.26 |
) |
|
Tax adjustment (6) |
|
(0.18 |
) |
|
|
— |
|
|
|
(0.19 |
) |
|
|
— |
|
|
Adjusted diluted earnings per share |
$ |
1.07 |
|
|
$ |
1.01 |
|
|
$ |
3.03 |
|
|
$ |
3.93 |
|
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 to combine the companies. |
(2) |
|
Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23. |
(3) |
|
Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases. |
(4) |
|
Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty. |
(5) |
|
Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net. |
(6) |
|
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a |
KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED (unaudited) |
|||||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||||
|
2024 |
|
2023 |
||||||||||||||||||||||
|
Fee revenue |
|
Total revenue |
|
Adjusted EBITDA |
|
Adjusted EBITDA margin |
|
Fee revenue |
|
Total revenue |
|
Adjusted EBITDA |
|
Adjusted EBITDA margin |
||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
Consulting |
$ |
166,947 |
|
$ |
169,929 |
|
$ |
27,812 |
|
|
16.7 |
% |
|
$ |
162,155 |
|
$ |
164,414 |
|
$ |
23,305 |
|
|
14.4 |
% |
Digital |
|
90,317 |
|
|
90,394 |
|
|
27,370 |
|
|
30.3 |
% |
|
|
85,071 |
|
|
85,087 |
|
|
22,153 |
|
|
26.0 |
% |
Executive Search: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
121,449 |
|
|
123,059 |
|
|
29,382 |
|
|
24.2 |
% |
|
|
132,810 |
|
|
134,255 |
|
|
30,446 |
|
|
22.9 |
% |
EMEA |
|
48,999 |
|
|
49,171 |
|
|
7,799 |
|
|
15.9 |
% |
|
|
48,960 |
|
|
49,195 |
|
|
7,981 |
|
|
16.3 |
% |
|
|
21,324 |
|
|
21,384 |
|
|
4,500 |
|
|
21.1 |
% |
|
|
22,621 |
|
|
22,694 |
|
|
5,538 |
|
|
24.5 |
% |
|
|
7,541 |
|
|
7,543 |
|
|
1,750 |
|
|
23.2 |
% |
|
|
7,654 |
|
|
7,658 |
|
|
2,462 |
|
|
32.2 |
% |
Total Executive Search |
|
199,313 |
|
|
201,157 |
|
|
43,431 |
|
|
21.8 |
% |
|
|
212,045 |
|
|
213,802 |
|
|
46,427 |
|
|
21.9 |
% |
Professional Search & Interim |
|
130,890 |
|
|
131,824 |
|
|
23,795 |
|
|
18.2 |
% |
|
|
117,980 |
|
|
118,616 |
|
|
21,969 |
|
|
18.6 |
% |
RPO |
|
81,212 |
|
|
83,569 |
|
|
9,291 |
|
|
11.4 |
% |
|
|
103,531 |
|
|
104,926 |
|
|
9,849 |
|
|
9.5 |
% |
Corporate |
|
— |
|
|
— |
|
|
(29,995 |
) |
|
|
|
|
— |
|
|
— |
|
|
(27,592 |
) |
|
|
||
Consolidated |
$ |
668,679 |
|
$ |
676,873 |
|
$ |
101,704 |
|
|
15.2 |
% |
|
$ |
680,782 |
|
$ |
686,845 |
|
$ |
96,111 |
|
|
14.1 |
% |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
2023 |
||||||||||||||||||||||
|
Fee revenue |
|
Total revenue |
|
Adjusted EBITDA |
|
Adjusted EBITDA margin |
|
Fee revenue |
|
Total revenue |
|
Adjusted EBITDA |
|
Adjusted EBITDA margin |
||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
Consulting |
$ |
512,830 |
|
$ |
521,675 |
|
$ |
81,920 |
|
|
16.0 |
% |
|
$ |
501,731 |
|
$ |
508,994 |
|
$ |
83,944 |
|
|
16.7 |
% |
Digital |
|
275,395 |
|
|
275,563 |
|
|
80,678 |
|
|
29.3 |
% |
|
|
263,161 |
|
|
263,479 |
|
|
73,855 |
|
|
28.1 |
% |
Executive Search: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
381,459 |
|
|
386,405 |
|
|
87,574 |
|
|
23.0 |
% |
|
|
426,839 |
|
|
431,286 |
|
|
112,164 |
|
|
26.3 |
% |
EMEA |
|
138,873 |
|
|
139,621 |
|
|
19,056 |
|
|
13.7 |
% |
|
|
140,661 |
|
|
141,443 |
|
|
24,577 |
|
|
17.5 |
% |
|
|
65,167 |
|
|
65,454 |
|
|
14,690 |
|
|
22.5 |
% |
|
|
72,410 |
|
|
72,669 |
|
|
18,723 |
|
|
25.9 |
% |
|
|
22,041 |
|
|
22,050 |
|
|
4,296 |
|
|
19.5 |
% |
|
|
23,283 |
|
|
23,289 |
|
|
7,686 |
|
|
33.0 |
% |
Total Executive Search |
|
607,540 |
|
|
613,530 |
|
|
125,616 |
|
|
20.7 |
% |
|
|
663,193 |
|
|
668,687 |
|
|
163,150 |
|
|
24.6 |
% |
Professional Search & Interim |
|
411,453 |
|
|
414,348 |
|
|
73,746 |
|
|
17.9 |
% |
|
|
351,670 |
|
|
354,430 |
|
|
83,587 |
|
|
23.8 |
% |
RPO |
|
264,653 |
|
|
270,466 |
|
|
28,617 |
|
|
10.8 |
% |
|
|
324,779 |
|
|
330,122 |
|
|
43,562 |
|
|
13.4 |
% |
Corporate |
|
— |
|
|
— |
|
|
(94,673 |
) |
|
|
|
|
— |
|
|
— |
|
|
(88,676 |
) |
|
|
||
Consolidated |
$ |
2,071,871 |
|
$ |
2,095,582 |
|
$ |
295,904 |
|
|
14.3 |
% |
|
$ |
2,104,534 |
|
$ |
2,125,712 |
|
$ |
359,422 |
|
|
17.1 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240301952759/en/
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