Highlights

• Fee revenue in Q3 FY'25 was $668.7 million, flat year over year (2% increase on a constant currency basis).
• RPO fee revenue increased 4% year over year and new business in Q3 FY'25 was $210 million, of which 64% and 36% was from new client wins and renewals/extensions, respectively.
• Net income attributable to Korn Ferry was $58.4 million with a net income attributable to Korn Ferry margin of 8.7%, a 10bps decrease compared to the year-ago quarter. Adjusted EBITDA was $114.5 million with an Adjusted EBITDA margin of 17.1%, a 190bps increase compared to the year-ago quarter.
• Diluted and adjusted diluted earnings per share were $1.10 and $1.19 in Q3 FY'25, respectively.
• The Company repurchased 237,000 shares of stock during the quarter for $17.9 million.

LOS ANGELES--(BUSINESS WIRE)--Mar. 11, 2025-- Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced third quarter fee revenue of $668.7 million. In addition, third quarter diluted earnings per share was $1.10 and adjusted diluted earnings per share was $1.19.

“I am pleased with our third quarter results, which clearly demonstrate the power of our business and the strength of our diversification,” said Gary D. Burnison, CEO, Korn Ferry. “Tomorrow’s macro environment will be encircled by a labor supply/demand imbalance which will require companies to reimagine and reskill their workforce; inspire, employ, develop and retain talent; and embrace technologies that drive a new world of work—all of which present tremendous opportunity for Korn Ferry as we deliver offerings and expertise that drive organizational performance.”

The Company reported fee revenue in Q3 FY'25 of $668.7 million, which was flat year over year (up 2% at constant currency). During the quarter, fee revenue increased slightly in Executive Search, RPO and Digital, offset by a decline in fee revenue in Consulting.

Net income attributable to Korn Ferry was $58.4 million with a net income attributable to Korn Ferry margin of 8.7%, in Q3 FY'25, compared to net income attributable to Korn Ferry of $59.1 million with a net income attributable to Korn Ferry margin of 8.8%, in the year-ago quarter, a decrease in net income attributable to Korn Ferry margin of 10bps. Adjusted EBITDA was $114.5 million in Q3 FY'25 compared to $101.7 million in Q3 FY'24. Adjusted EBITDA margin was 17.1% in Q3 FY'25, an increase of 190bps compared to the year-ago quarter.

Net income attributable to Korn Ferry and net income attributable to Korn Ferry margin decreased as a result of higher income tax provision in the current period compared to a non-recurring tax benefit recorded in the year-ago quarter from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance, partially offset by disciplined cost management and strong consultant productivity.

Adjusted EBITDA and Adjusted EBITDA margin increased due to disciplined cost management and strong consultant productivity.

Results by Line of Business

Fee revenue was $158.7 million in Q3 FY'25, a decrease of 5% compared to year-ago quarter (down 3% at constant currency). The year-over-year decrease in Consulting fee revenue was primarily driven by a decline in our organizational strategy and total rewards offerings, due to the increase in larger engagements (those over $1.0 million) which convert to fee revenue over a longer duration and, to a lesser extent, slower client consumption of solutions and services such as assessments and training development.

Adjusted EBITDA was $28.0 million in Q3 FY'25 compared to $27.8 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 100bps to 17.7%. These increases resulted primarily from higher average bill rates, greater consultant and execution staff productivity, and disciplined cost management.

Fee revenue was $90.8 million in Q3 FY'25 compared to $90.3 million in Q3 FY'24, essentially flat year-over-year (up 3% at constant currency).

Adjusted EBITDA was $28.4 million in Q3 FY'25 compared to $27.4 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 100bps to 31.3%. The increase in Adjusted EBITDA margin was mainly due to improved consultant productivity and disciplined cost management.

Fee revenue was $204.6 million in Q3 FY'25, an increase of $5.3 million or 3% compared to the year-ago quarter (up 4% at constant currency). The year-over-year increase in fee revenue was primarily driven by an increase in the number of engagements billed.

Adjusted EBITDA was $51.2 million in Q3 FY'25 compared to $43.4 million in the year-ago quarter. Adjusted EBITDA margin increased by 320bps to 25.0% in Q3 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin was due to higher fee revenue, consultant productivity, and disciplined cost management.

Fee revenue was $130.0 million in Q3 FY'25 compared to $130.9 million Q3 FY'24, essentially flat year-over-year at actual and constant currency. During the quarter, fee revenue was impacted by the Industry-wide slowdown in demand for Permanent and Interim professionals offset by an increase in fee revenue from the acquisition of Trilogy, effective November 1, 2024.

Adjusted EBITDA was $27.3 million in Q3 FY'25 compared to $23.8 million in the year-ago quarter. Adjusted EBITDA margin increased year-over-year by 280bps to 21.0%. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to disciplined cost management.

Fee revenue was $84.7 million in Q3 FY'25 compared to $81.2 million in Q3 FY'24, an increase of 4%, (up 6% at constant currency). RPO fee revenue increased due to recent new client wins being stood up and an increase in demand from our base clients in the North America and Asia Pacific regions.

Adjusted EBITDA was $12.7 million in Q3 FY'25 compared to $9.3 million in the year-ago quarter. Adjusted EBITDA margin increased 360bps to 15.0% in Q3 FY'25. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from an increase in fee revenue, 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:

• Q4 FY’25 fee revenue is expected to be in the range of $680 million and $700 million; and

• Q4 FY’25 diluted earnings per share is expected to range between $1.20 to $1.28.

On a consolidated adjusted basis:

• Q4 FY’25 adjusted diluted earnings per share is expected to be in the range from $1.22 to $1.30.

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, bringing together strategy and talent to drive superior performance for our clients. We work with our clients to design their organization structures, roles, and responsibilities. We help them hire the right people and advise them on how to reward, develop, and motivate their workforce. And we help professionals navigate and advance their careers.

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 labor market conditions, 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, trade wars, interest rates, labor market conditions, 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 corporate responsibility 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, and to exclude a $9.7 million non-recurring tax benefit in the quarter ended January 31, 2024 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 in the quarter ended January 31, 2024 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; 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, 4) restructuring charges, net to align workforce to challenging macroeconomic business environment and 5) to exclude a $9.7 million non-recurring tax benefit in the quarter ended January 31, 2024 from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance. 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.