Image credit: Getty Images Artificial intelligence (AI) is no longer a futuristic promise in recruitment. The technology is already embedded in hiring workflows, delivering measurable improvements in speed, efficiency, and decision-making. In fact, 70 per cent of talent acquisition leaders say that using AI in hiring improves efficiency.But efficiency is only part of the story. As organisations navigate tighter labor markets, evolving skill demands, and heightened candidate expectations, AI is increasingly ...

A specter is haunting Europe—the specter of aging.Many Western countries are facing what the World Bank calls a “profound demographic crisis”: The twin perils of an aging population and record-low fertility rates are predicted to send their populations plunging in the coming decades. The worst consequences of this demographic shift, per the World Bank, are economic. Soon, the shrinking working population in the U.S., Canada, or Germany won’t be able to meet their own constant demands for high-quality goods ...

Core Insights - Korn Ferry (KFY) has been rated as a buy due to improved conditions driven by growth in high-value projects and strong performance in professional search interim [1] Group 1: Investment Philosophy - The investment approach focuses on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Emphasis is placed on understanding core business economics, including competitive moat, unit economics, reinvestment opportunities, and management quality [1] - The goal is to translate these factors into long-term free cash flow generation and shareholder value creation [1] Group 2: Market Focus - The analysis is directed towards sectors that exhibit strong secular tailwinds, indicating a preference for industries with favorable long-term growth prospects [1] - The investment strategy is rooted in fundamental research, aiming to highlight what drives long-term equity value [1] Group 3: Author's Background - The author has 10 years of self-educated investment experience and currently manages personal funds sourced from friends and family [1] - The motivation for sharing insights on Seeking Alpha is to provide valuable investment analysis and receive feedback from the investment community [1]

Core Insights - Korn Ferry (KFY) has been rated as a buy due to improved conditions driven by growth in high-value projects and strong performance in professional search interim [1] Group 1: Investment Approach - The investment strategy focuses on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to translate these factors into long-term free cash flow generation and shareholder value creation [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on Seeking Alpha is to provide valuable investment analysis and receive feedback from other investors [1] - The analysis aims to help readers focus on the drivers of long-term equity value [1]

Financial Performance - Q2 FY'26 fee revenue was $721.7 million, a year-over-year increase of 7%[109] - Net income attributable to Korn Ferry was $72.4 million, a 19% year-over-year increase, with a margin of 10.0%, up 100bps year-over-year[109] - Diluted earnings per share increased to $1.36 in Q2 FY'26, up 19% compared to the year-ago quarter[109] - Total revenue for the three months ended October 31, 2025, was $729.8 million, reflecting a 7.0% increase from $682.0 million in the same quarter of 2024[112] - Net income attributable to Korn Ferry increased by $11.6 million, or 19%, to $72.4 million in the three months ended October 31, 2025, compared to $60.8 million in the year-ago quarter[145] - Net income attributable to Korn Ferry increased by $15.6 million, or 13%, to $139.0 million in the six months ended October 31, 2025 compared to $123.4 million in the year-ago period[192] Revenue Breakdown - Executive Search fee revenue grew 10% year-over-year, while Professional Search & Interim grew 17% year-over-year[109] - Consulting fee revenue for the three months ended October 31, 2025, was $172.8 million, accounting for 23.9% of total fee revenue, compared to $166.8 million and 24.7% in the prior year[113] - Digital fee revenue for the six months ended October 31, 2025, was $180.2 million, representing 12.6% of total fee revenue, slightly down from $181.1 million and 13.4% in the same period of 2024[110] - Executive Search North America reported fee revenue of $142.1 million, an increase of $12.2 million, or 9%, attributed to a 5% increase in the weighted-average fee billed per engagement[118] - Professional Search & Interim fee revenue increased by $20.0 million, or 17%, to $141.1 million, largely due to interim fee revenue associated with the acquisition of Trilogy International[122] - Fee revenue for the three months ended October 31, 2025, was $721.7 million, an increase of $47.3 million, or 7%, compared to $674.4 million in the year-ago quarter[115] Expenses and Costs - Compensation and benefits expense increased by $24.6 million, or 6%, to $462.0 million, primarily due to higher performance-related bonuses[124] - General and administrative expenses for the three months ended October 31, 2025, decreased to 7.0% of total revenue from 9.6% in the same period of 2024[110] - Cost of services expense increased by $14.4 million, or 22%, to $79.1 million, with Professional Search & Interim accounting for $14.0 million of the increase[142] - Depreciation and amortization expenses increased by $11.9 million, or 60%, to $31.6 million, primarily due to accelerated depreciation related to the sunset of the Digital platform[143] - General and administrative expenses decreased by $10.4 million, or 8%, to $114.1 million in the six months ended October 31, 2025 from $124.5 million in the year-ago period, primarily due to a $13.9 million gain from the modification of an office lease[179] Adjusted EBITDA - Adjusted EBITDA for Q2 FY'26 was $124.8 million, a 7% year-over-year increase, with a margin of 17.3%, essentially flat year-over-year[109] - Adjusted EBITDA for the six months ended October 31, 2025, was $245.2 million, with an EBITDA margin of 17.1%, up from $228.2 million and 16.9% in the same period of 2024[114] - Adjusted EBITDA increased by $7.8 million, or 7%, to $124.8 million in the three months ended October 31, 2025, compared to $117.0 million in the year-ago quarter[146] - Executive Search North America Adjusted EBITDA increased by $11.2 million, or 16%, to $83.2 million in the six months ended October 31, 2025 compared to $72.0 million in the year-ago period[196] - Professional Search & Interim Adjusted EBITDA was $58.2 million in the six months ended October 31, 2025, an increase of $5.3 million, or 10%, compared to $52.9 million in the year-ago period[200] Cash and Working Capital - The company had $1,038.3 million in cash and cash equivalents as of October 31, 2025, down from $1,277.0 million as of April 30, 2025[213] - Working capital increased to $857.0 million as of October 31, 2025, up from $794.5 million as of April 30, 2025, primarily due to a decrease in compensation and benefits payable[216] - Cash used in investing activities was $41.9 million for the six months ended October 31, 2025, compared to $36.3 million in the prior year[217] - Cash used in financing activities decreased to $87.8 million for the six months ended October 31, 2025, from $111.1 million in the same period last year[218] Other Financial Metrics - Interest expense for the three months ended October 31, 2025, was $5.8 million, representing 0.8% of total revenue, compared to $5.6 million and 0.9% in the same period of 2024[112] - The provision for income tax was $51.9 million with an effective tax rate of 26.9%, compared to $47.3 million and 27.2% in the previous year[204] - Other income, net was $7.1 million in the three months ended October 31, 2025, compared to $5.4 million in the year-ago quarter[155] - Other income, net was $19.8 million for the six months ended October 31, 2025, slightly down from $19.9 million in the same period last year[202] - Net interest expense decreased to $9.3 million for the six months ended October 31, 2025, compared to $9.6 million in the prior year[203]

Core Insights - Korn Ferry shares increased following the release of stronger quarterly profit and revenue, driven by broad-based growth across its businesses [1][2] Financial Performance - The company reported second-quarter adjusted earnings per share of $1.33, surpassing the analyst consensus estimate of $1.31 [2] - Quarterly sales reached $729.80 million, exceeding the expected $705.97 million [2] - Fee revenue for the second quarter was $721.7 million, reflecting a 7% increase year-over-year [3] - Executive Search revenue rose by 10%, while Professional Search & Interim revenue increased by 17% [3] - Adjusted EBITDA grew to $124.8 million, a 7% increase from the previous year, with a margin of 17.3% remaining stable [5] - The company ended the quarter with cash and equivalents totaling $761.579 million [5] - Estimated remaining fees under existing contracts were $1.842 billion, marking a 20% year-over-year increase [5] Strategic Positioning - Korn Ferry emphasizes the need for adaptable strategies in a rapidly changing economy, positioning itself as a partner to help organizations align strategy, operations, and talent [4] - The CEO highlighted the company's outstanding performance, noting the fourth consecutive quarter of accelerated growth, particularly from Marquee and Diamond accounts [4] Dividend Announcement - The company declared a cash dividend of 48 cents per share, payable on January 15, 2026, to shareholders of record on December 19, 2025 [6] Future Outlook - For the third quarter, Korn Ferry expects adjusted EPS between $1.19 and $1.25, aligning closely with the Street's estimate of $1.24 [7] - The projected GAAP EPS for the third quarter is between $1.15 and $1.21, which is below the Street's estimate of $1.26 [7] - Fee revenue for the third quarter is anticipated to be between $680 million and $694 million [7] - At the time of publication, Korn Ferry shares were up 3.52% at $67.26 [7]

Financial Data and Key Metrics Changes - Consolidated fee revenue grew 7% year-over-year to $722 million [11] - Adjusted EBITDA increased by $8 million, or 7% year-over-year, to $125 million, with an adjusted EBITDA margin of 17.3% [11] - Adjusted diluted earnings per share rose by $0.12, or 10% year-over-year, to $1.33 [11] - Estimated remaining fees under existing contracts increased to $1.84 billion, up 20% year-over-year [10] Business Line Data and Key Metrics Changes - Executive search fee revenue grew 10%, marking the sixth consecutive quarter of year-over-year growth [11] - Professional search and interim fee revenue increased by 17% year-over-year, with professional search up 7% and interim up 24% [11] - RPO delivered $253 million of new business in the quarter, with 16% from new logos and 84% from renewals [11] - Business referrals grew to 27.6% of consolidated fee revenue, up approximately 250 basis points year-over-year and quarter-sequential [10] Market Data and Key Metrics Changes - Fee revenue in the Americas was up 3% year-over-year, led by executive search and RPO [12] - EMEA fee revenue grew 20% year-over-year, with growth in executive search, professional search, interim, consulting, and digital [12] - APAC fee revenue remained flat, with moderate growth in executive search and professional search, offset by slight declines in RPO, consulting, and digital [12] Company Strategy and Development Direction - The company is focusing on a unified strategy under "We Are Korn Ferry," emphasizing client centricity and integrated solutions [4][7] - The launch of the new Talent Suite technology platform is expected to enhance the company's ability to serve clients as a holistic talent partner [9] - The company aims to drive long-term, profitable, and sustainable growth by leveraging foundational assets to deliver differentiated solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a strong 2026, despite the uncertain business environment [7][15] - The company anticipates fee revenue in the third quarter of fiscal 2026 to range from $680-$694 million, with adjusted EBITDA margins between 17.2%-17.4% [14] - Management noted that the current economic conditions have not significantly changed, and they remain focused on identified growth opportunities [25][59] Other Important Information - The company returned almost $70 million to shareholders through combined repurchases and dividends during the quarter [12] - Capital expenditures of $43 million were focused on Talent Suite, productivity tools, and other solution enhancements [13] Q&A Session Summary Question: Strength in Executive Search Business - Management noted significant growth in executive search worldwide, driven by changing leadership needs and demographic shifts [17][18] Question: Placement Solutions Improvement - Management confirmed that the strategy is working, with sequential growth in Professional Search and Interim Solutions, and highlighted the quality of their IP and AI integration [24][25] Question: Consulting Bill Rates and Margins - Management indicated that bill rates have increased due to larger, more impactful engagements, and there is substantial opportunity for further growth in consulting [26][30] Question: Seasonal Trends in Executive Search - Management expects typical seasonal softness in Q3 due to holiday impacts, which is factored into their guidance [33] Question: Digital Business Performance - Management acknowledged a purposeful reduction in sellers in the digital solution to pivot towards enterprise-oriented sales, impacting top-line performance [58][59] Question: New RPO Contracts - The majority of new RPO contracts were renewals from existing marquee clients, with a significant portion coming from the healthcare and industrial sectors [60][61]

Financial Data and Key Metrics Changes - Consolidated fee revenue grew 7% year-over-year to $722 million [11] - Adjusted EBITDA increased by $8 million, or 7% year-over-year, to $125 million, with an adjusted EBITDA margin of 17.3% [11] - Adjusted diluted earnings per share rose by $0.12, or 10% year-over-year, to $1.33 [11] Business Line Data and Key Metrics Changes - Executive search fee revenue grew 10%, marking the sixth consecutive quarter of year-over-year growth [11] - Professional search and interim fee revenue increased by 17% year-over-year, with professional search up 7% and interim, including the Trilogy acquisition, up 24% [11] - RPO delivered $253 million of new business in the quarter, with 16% from new logos and 84% from renewals [11] Market Data and Key Metrics Changes - Fee revenue in the Americas was up 3% year-over-year, driven by executive search and RPO [12] - EMEA fee revenue grew 20% year-over-year, with increases in executive search, professional search, interim, consulting, and digital [12] - APAC fee revenue remained flat, with moderate growth in executive search and professional search, offset by slight declines in RPO, consulting, and digital [12] Company Strategy and Development Direction - The company is focusing on a unified strategy under "We Are Korn Ferry," emphasizing client centricity and integrated solutions [4][7] - The launch of the new Talent Suite technology platform is expected to enhance the company's ability to serve clients and leverage foundational assets [9] - The company aims to drive long-term, profitable, and sustainable growth by delivering differentiated solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a strong 2026, despite economic uncertainties [7][14] - The company anticipates fee revenue for the third quarter of fiscal 2026 to range from $680 million to $694 million, with adjusted EBITDA margins between 17.2% and 17.4% [14] - Management noted that the current business environment presents opportunities for growth, particularly in organizational strategy and larger engagements [35] Other Important Information - Estimated remaining fees under existing contracts increased to $1.84 billion, with approximately 57% expected to be recognized within the next year [11] - The company returned almost $70 million to shareholders through repurchases and dividends during the quarter [12] Q&A Session Summary Question: Strength in executive search business - Management noted significant growth in executive search worldwide, driven by changing leadership needs and demographic shifts [17][18] Question: Placement-type solutions improvement - Management confirmed that the strategy is working, with sequential growth in professional search and interim solutions, and noted the quality of their IP and AI usage [24][25] Question: Consulting bill rates and margins - Management indicated that bill rates have increased due to larger engagements, and there is substantial opportunity for further growth in consulting [26][30] Question: Seasonal expectations for executive search - Management expects typical seasonal softness in Q3 due to holiday impacts, which is factored into guidance [33] Question: Digital business performance - Management acknowledged a purposeful reduction in sellers in the digital solution to pivot towards enterprise-oriented sales, impacting top-line performance [58] Question: New RPO contracts - The majority of new RPO contracts were renewals from marquee clients, with a significant portion coming from the healthcare and industrial sectors [61]

Financial Data and Key Metrics Changes - Consolidated fee revenue grew 7% year-over-year to $722 million [11] - Adjusted EBITDA increased by $8 million, or 7% year-over-year, to $125 million, with an adjusted EBITDA margin of 17.3% [11] - Adjusted diluted earnings per share rose by $0.12, or 10% year-over-year, to $1.33 [11] Business Line Data and Key Metrics Changes - Executive search fee revenue grew 10%, marking the sixth consecutive quarter of year-over-year growth [11] - Professional search and interim fee revenue increased by 17% year-over-year, with professional search up 7% and interim, including the Trilogy acquisition, up 24% [11] - RPO delivered $253 million of new business in the quarter, with 16% from new logos and 84% from renewals [11] Market Data and Key Metrics Changes - Fee revenue in the Americas was up 3% year-over-year, led by executive search and RPO [12] - EMEA fee revenue grew 20% year-over-year, with growth in executive search, professional search, interim, consulting, and digital [12] - APAC fee revenue remained flat, with moderate growth in executive search and professional search, offset by slight declines in RPO, consulting, and digital [12] Company Strategy and Development Direction - The company is focusing on a unified "We Are Korn Ferry" strategy, integrating multiple solutions to create enduring client partnerships [4][6] - The launch of the new Talent Suite technology platform is expected to enhance the company's ability to serve clients as a holistic talent partner [9] - The company aims to drive long-term, profitable, and sustainable growth by leveraging foundational assets to deliver differentiated solutions [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a strong 2026, emphasizing the need for talent in the current uncertain business environment [8][14] - The outlook for the third quarter of fiscal 2026 anticipates fee revenue between $680 million and $694 million, with adjusted EBITDA margins ranging from 17.2% to 17.4% [13] - Management noted that the current economic conditions have not significantly changed, and they remain focused on identified growth opportunities [24] Other Important Information - Estimated remaining fees under existing contracts increased to $1.84 billion, up 20% year-over-year [11] - The company returned almost $70 million to shareholders through repurchases and dividends during the quarter [12] - The Talent Suite launch is expected to provide significant opportunities in areas such as pay transparency and analytics [47] Q&A Session Summary Question: Strength in executive search business - Management noted significant growth in executive search worldwide, driven by changing leadership needs and the retirement of baby boomers [16] Question: Historical referral rates and future expectations - Management indicated a historical referral rate of 25%-26%, with a goal to increase it to 35% as the strategy evolves [18] Question: Improvement in placement-type solutions - Management confirmed that the strategy is working, with sequential growth in Professional Search and Interim Solutions, and noted the quality of their IP and AI usage in RPO [24] Question: Consulting bill rates and margin dynamics - Management highlighted that bill rates have increased due to larger, more impactful engagements, and there remains substantial opportunity for further growth [27][33] Question: Impact of AI on search efficiency - Management stated that while technology has improved efficiency, the larger impact comes from changes in work processes post-COVID [38] Question: Financial impact of Talent Suite - Management expects the Talent Suite to significantly enhance client engagement and analytics capabilities, leading to increased monetization of IP [46][47] Question: Changes in behavior since competitor went private - Management reported no noticeable changes in market behavior following the competitor's transition to private [51]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]