The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, incl ...

The U.S. labor market concluded last year on a solid note as the pace of hiring exceeded expectations. Job additions improved in most of the sectors in December amid a lower unemployment rate.The Labor Department stated that employers added 216,000 new jobs last month, way more than November’s downwardly revised 173,000, and higher than economists’ projections of 170,000.Hiring, by the way, was also revised down in October. But employers successfully added 2.7 million jobs in 2023, at an average monthly gai ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Korn Ferry's unaudited consolidated financial statements for the quarter ended October 31, 2023, detailing financial position and performance [Consolidated Financial Statements Overview](index=3&type=section&id=1.1%20Consolidated%20Financial%20Statements%20Overview) Korn Ferry reported total revenue of **$1.42 billion** for the six months ended October 31, 2023, with operating income significantly impacted by restructuring charges Key Financial Highlights (Six Months Ended October 31) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,418,709 | $1,438,867 | -1.4% | | **Operating Income** | $79,584 | $231,246 | -65.6% | | **Net Income Attributable to Korn Ferry** | $44,894 | $150,788 | -70.2% | | **Diluted EPS** | $0.86 | $2.83 | -69.6% | Consolidated Balance Sheet Summary (in thousands) | Account | Oct 31, 2023 | Apr 30, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $1,421,540 | $1,638,669 | | **Total Assets** | $3,360,961 | $3,574,444 | | **Total Current Liabilities** | $764,119 | $976,260 | | **Total Liabilities** | $1,700,461 | $1,921,439 | | **Total Stockholders' Equity** | $1,660,500 | $1,653,005 | Consolidated Cash Flow Summary (Six Months Ended, in thousands) | Activity | Oct 31, 2023 | Oct 31, 2022 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(141,896) | $(98,718) | | **Net cash used in investing activities** | $(22,306) | $(150,177) | | **Net cash used in financing activities** | $(38,649) | $(96,063) | | **Net decrease in cash and cash equivalents** | $(223,188) | $(384,170) | [Notes to Financial Statements](index=8&type=section&id=1.2%20Notes%20to%20Financial%20Statements) Notes detail business structure, accounting policies, and key financial items, including fee revenue breakdown, significant restructuring charges, and a dividend increase - The company operates through five core solutions: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition. Its go-to-market strategy focuses on approximately **340 Marquee and Regional accounts**, which generate about **35% of consolidated fee revenue**[21](index=21&type=chunk)[24](index=24&type=chunk) Fee Revenue by Industry (Three Months Ended Oct 31, 2023) | Industry | Fee Revenue (in thousands) | Percentage | | :--- | :--- | :--- | | Industrial | $204,931 | 29.1% | | Life Sciences/Healthcare | $123,865 | 17.6% | | Financial Services | $122,048 | 17.3% | | Technology | $98,129 | 13.9% | | Consumer Goods | $96,996 | 13.8% | | Education/Non–Profit/General | $58,034 | 8.3% | - In Q2 FY24, the company initiated a restructuring plan due to the challenging macroeconomic environment, resulting in charges of **$63.5 million** for severance related to position eliminations across all business lines[124](index=124&type=chunk) - On December 5, 2023, the Board of Directors approved an **83% increase** in the quarterly dividend to **$0.33 per share**, payable on January 12, 2024[127](index=127&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting a fee revenue decrease, a net loss due to restructuring, and a strong liquidity position with ongoing capital returns [Results of Operations](index=34&type=section&id=2.1%20Results%20of%20Operations) Fee revenue decreased **3%** to **$704.0 million** due to talent acquisition slowdowns, resulting in a **$1.7 million** net loss primarily from restructuring charges - A workforce reduction plan was initiated on October 23, 2023, affecting approximately **8% of employees**, expected to reduce annualized costs by **$110-$120 million**. This resulted in a **$63.5 million** restructuring charge in Q2 FY24[137](index=137&type=chunk) Fee Revenue by Segment (Three Months Ended Oct 31, $ in millions) | Segment | Q2 FY24 | Q2 FY23 | % Change | | :--- | :--- | :--- | :--- | | Consulting | $177.8 | $173.1 | +3% | | Digital | $97.1 | $94.3 | +3% | | Executive Search | $203.0 | $218.4 | -7% | | Professional Search & Interim | $138.4 | $134.7 | +3% | | RPO | $87.7 | $107.3 | -18% | | **Total** | **$704.0** | **$727.8** | **-3%** | Adjusted EBITDA by Segment (Three Months Ended Oct 31, $ in millions) | Segment | Q2 FY24 | Q2 FY23 | % Change | | :--- | :--- | :--- | :--- | | Consulting | $28.9 | $31.1 | -7% | | Digital | $29.0 | $27.5 | +5% | | Executive Search | $39.7 | $54.5 | -27% | | Professional Search & Interim | $25.6 | $32.5 | -21% | | RPO | $8.9 | $16.0 | -44% | | **Consolidated** | **$98.5** | **$131.1** | **-25%** | [Liquidity and Capital Resources](index=49&type=section&id=2.2%20Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$843.8 million** in cash and marketable securities, actively returning capital to shareholders through dividends and share repurchases - As of October 31, 2023, the company had **$843.8 million** in cash, cash equivalents, and marketable securities[254](index=254&type=chunk) - The company has a **$400 million** principal amount of **4.625% Senior Unsecured Notes due 2027** and a **$650 million** revolving credit facility maturing in 2027, with no outstanding balance on the revolver as of October 31, 2023[248](index=248&type=chunk)[249](index=249&type=chunk) - The share repurchase program has **$226.7 million** remaining available as of October 31, 2023. The company repurchased **$8.6 million** of stock in the six months ended October 31, 2023[252](index=252&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations and interest rate changes, with potential **$11.3 million** impact from currency shifts - The company's main market risks are foreign currency fluctuations and interest rate changes[264](index=264&type=chunk) - A hypothetical **10% increase or decrease** in the value of key foreign currencies against the U.S. Dollar could result in a foreign exchange gain or loss of **$11.3 million**[267](index=267&type=chunk) - Interest rate risk is primarily related to the variable-rate Credit Facilities, which had no outstanding balance as of October 31, 2023, and borrowings against COLI contracts[268](index=268&type=chunk)[269](index=269&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of October 31, 2023, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of October 31, 2023[270](index=270&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[270](index=270&type=chunk) [Part II. Other Information](index=53&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially adversely affect its business or financial condition - As of the report date, Korn Ferry is not engaged in any legal proceedings expected to have a material adverse effect on the company[272](index=272&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have occurred to the risk factors described in the company's Form 10-K[273](index=273&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **92,500** shares for **$4.4 million** during the quarter, with **$226.7 million** remaining for future repurchases Issuer Purchases of Equity Securities (Quarter Ended Oct 31, 2023) | Period | Total Shares Purchased | Avg. Price Paid | Shares Purchased (Public Program) | Remaining Authorization | | :--- | :--- | :--- | :--- | :--- | | Aug 2023 | — | — | — | $231.0M | | Sep 2023 | 7,615 | $47.92 | — | $231.0M | | Oct 2023 | 100,348 | $47.45 | 92,500 | $226.7M | - The share repurchase program has no expiration date. As of October 31, 2023, **$226.7 million** was available for repurchases[274](index=274&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[275](index=275&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Key exhibits filed include CEO and CFO certifications pursuant to the Exchange Act and Sarbanes-Oxley Act, and Inline XBRL data files[276](index=276&type=chunk)

Korn Ferry (NYSE:KFY) Q2 2024 Earnings Call Transcript December 6, 2023 12:00 PM ET Company Participants Gary Burnison - CEO Bob Rozek - CFO, EVP and Chief Corporate Officer Gregg Kvochak - SVP Business Development & Analytics Tiffany Louder - VP, IR Conference Call Participants George Tong - Goldman Sachs Mark Marcon - Baird Tobey Sommer - Truist Securities Trevor Romeo - William Blair Josh Chan - UBS Operator Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry Second Quarter Fisc ...

Attracting and retaining top talent by investing in initiatives that build a world-class organization aligned to strategy and staffed by a capable, motivated and agile workforce. 4 | --- | --- | --- | |-------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------- ...

Korn Ferry (NYSE:KFY) Q1 2023 Results Conference Call August 7, 2023 12:00 PM ET Company Participants Gary Burnison - CEO Bob Rozek - CFO, EVP and Chief Corporate Officer Gregg Kvochak - SVP Business Development & Analytics Tiffany Louder - VP, IR Conference Call Participants George Tong - Goldman Sachs Mark Marcon - Baird Trevor Romeo - William Blair Tobey Sommer - Truist Securities Operator Ladies and gentlemen, thank you for standing by, and welcome to the Korn Ferry First Quarter Fiscal Year 2024 Confer ...

Part I. Financial Information [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201%2E%20Consolidated%20Financial%20Statements) This section presents Korn Ferry's unaudited consolidated financial statements for Q1 FY2024, highlighting a slight revenue increase, a significant net income decrease, and negative operating cash flow Consolidated Balance Sheets Consolidated Balance Sheets | Balance Sheet Items | July 31, 2023 (unaudited, $ in thousands) | April 30, 2023 ($ in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $562,209 | $844,024 | | Total current assets | $1,366,607 | $1,638,669 | | Goodwill | $910,211 | $909,491 | | Total assets | $3,313,468 | $3,574,444 | | **Liabilities & Equity** | | | | Compensation and benefits payable | $240,956 | $532,934 | | Total current liabilities | $655,791 | $976,260 | | Long-term debt | $396,379 | $396,194 | | Total liabilities | $1,620,938 | $1,921,439 | | Total stockholders' equity | $1,692,530 | $1,653,005 | - Cash and cash equivalents decreased significantly from **$844.0 million** at April 30, 2023, to **$562.2 million** at July 31, 2023, primarily due to a reduction in compensation and benefits payable reflecting annual bonus payments[7](index=7&type=chunk) Consolidated Statements of Income Consolidated Statements of Income | Income Statement Items | Three Months Ended July 31, 2023 ($ in thousands, except per share data) | Three Months Ended July 31, 2022 ($ in thousands, except per share data) | | :--- | :--- | :--- | | Fee revenue | $699,189 | $695,903 | | Total revenue | $706,262 | $703,148 | | Operating income | $56,768 | $111,599 | | Net income attributable to Korn Ferry | $46,605 | $77,247 | | Diluted EPS | $0.89 | $1.45 | | Cash dividends declared per share | $0.18 | $0.15 | - Operating income for the quarter fell by nearly **50%** year-over-year, from **$111.6 million** to **$56.8 million**, primarily due to a significant increase in Cost of Services from **$38.0 million** to **$77.2 million** and higher Compensation and Benefits expenses[9](index=9&type=chunk) Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows | Cash Flow Items | Three Months Ended July 31, 2023 ($ in thousands) | Three Months Ended July 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($274,487) | ($231,886) | | Net cash provided by (used in) investing activities | $11,443 | ($40,418) | | Net cash used in financing activities | ($20,626) | ($51,049) | | Net decrease in cash and cash equivalents | ($281,815) | ($338,286) | - The company experienced a net cash outflow from operating activities of **$274.5 million**, largely driven by a **$321.5 million** decrease in accounts payable and accrued liabilities, reflecting payments of annual performance-related bonuses[18](index=18&type=chunk) [Notes to Consolidated Unaudited Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Unaudited%20Financial%20Statements) These notes detail accounting policies, financial statement breakdowns, core solutions, revenue recognition, segment performance, debt structure, and lease obligations, highlighting revenue shifts and contracted Adjusted EBITDA margins - The company's five core solutions are Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition, delivered through five lines of business: Consulting, Digital, Executive Search, Professional Search & Interim, and RPO[21](index=21&type=chunk)[25](index=25&type=chunk)[34](index=34&type=chunk) Fee Revenue by Industry | Fee Revenue by Industry | Q1 FY24 ($M) | Q1 FY24 % | Q1 FY23 ($M) | Q1 FY23 % | | :--- | :--- | :--- | :--- | :--- | | Industrial | $201.9 | 28.9% | $195.9 | 28.2% | | Financial Services | $128.3 | 18.3% | $118.8 | 17.1% | | Life Sciences/Healthcare | $119.4 | 17.1% | $133.2 | 19.1% | | Technology | $115.8 | 16.6% | $122.7 | 17.6% | | Consumer Goods | $96.4 | 13.8% | $95.9 | 13.8% | | Education/Non–Profit/General | $37.4 | 5.3% | $29.4 | 4.2% | | **Total Fee Revenue** | **$699.2** | **100.0%** | **$695.9** | **100.0%** | Fee Revenue by Segment | Fee Revenue by Segment | Q1 FY24 ($M) | Q1 FY23 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Consulting | $168.1 | $166.5 | +1.0% | | Digital | $88.0 | $83.8 | +5.0% | | Executive Search | $205.2 | $232.8 | -11.8% | | Professional Search & Interim | $142.2 | $98.9 | +43.8% | | RPO | $95.7 | $113.9 | -16.0% | | **Total** | **$699.2** | **$695.9** | **+0.5%** | Adjusted EBITDA by Segment | Adjusted EBITDA by Segment | Q1 FY24 ($M) | Q1 FY23 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Consulting | $25.2 | $29.6 | -14.9% | | Digital | $24.3 | $24.2 | +0.4% | | Executive Search | $42.5 | $62.2 | -31.7% | | Professional Search & Interim | $24.3 | $29.2 | -16.8% | | RPO | $10.5 | $17.7 | -40.7% | | Corporate | ($31.1) | ($30.6) | -1.6% | | **Total** | **$95.7** | **$132.2** | **-27.6%** | - As of July 31, 2023, the company had **$396.4 million** in long-term debt, primarily from its **4.625%** Senior Unsecured Notes due 2027, with no outstanding borrowings under its **$650 million** revolving credit facility[104](index=104&type=chunk)[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes flat fee revenue to acquisition-driven growth offsetting declines from economic slowdown, with net income and Adjusted EBITDA drops due to higher costs and compensation, while maintaining strong liquidity and a balanced capital allocation strategy [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Fee revenue remained flat at **$699.2 million** due to segment shifts, while operating income fell to **$56.8 million** and Adjusted EBITDA decreased **28%** to **$95.7 million**, driven by revenue mix changes and higher compensation expenses - Fee revenue remained constant primarily due to an increase in the Interim portion of the Professional Search & Interim segment from acquisitions, offset by decreases in Executive Search, RPO, and permanent placements due to a decline in demand driven by the global economic slowdown[142](index=142&type=chunk) - Compensation and benefits expense increased by **$14.3 million** (**3%**) to **$479.9 million**, mainly due to higher deferred compensation expenses (**$12.8 million**) and severance costs (**$5.2 million**), partially offset by lower performance-related bonus expense (**$9.7 million**)[151](index=151&type=chunk) - Cost of services expense more than doubled to **$77.2 million** from **$38.0 million** year-over-year, an increase of **$39.2 million**, primarily driven by recent acquisitions in the Professional Search & Interim segment's interim services business due to its higher cost structure[172](index=172&type=chunk) - Adjusted EBITDA margin decreased from **19.0%** to **13.7%** year-over-year, primarily due to a change in fee revenue mix from higher-margin Executive Search and Permanent Placement to lower-margin Interim revenue[141](index=141&type=chunk)[176](index=176&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operations and credit facilities, with **$781.1 million** in cash and equivalents and **$645.4 million** available under its **$650 million** revolving credit facility, supporting growth investments, dividends, and share repurchases - The company's balanced capital allocation approach includes investing in growth, returning capital to stockholders via dividends, and opportunistic share repurchases[189](index=189&type=chunk) - On June 26, 2023, the Board of Directors approved a **20%** increase in the quarterly dividend to **$0.18** per share[192](index=192&type=chunk) - As of July 31, 2023, **$231.0 million** remained available for common stock repurchases under the company's program, with **$4.2 million** of stock repurchased during the quarter[193](index=193&type=chunk) - The company had **$645.4 million** available under its Credit Facilities as of July 31, 2023, following the expiration of the **$500 million** Delayed Draw Facility on June 24, 2023[138](index=138&type=chunk)[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations and interest rate changes, mitigating foreign exchange exposure with forward contracts, while interest rate risk is limited due to fixed-rate debt and undrawn variable-rate facilities - The company's main market risks are foreign currency exchange fluctuations and interest rate changes[205](index=205&type=chunk) - A hypothetical **10%** increase or decrease in key foreign currency values could result in an **$11.6 million** foreign exchange gain or loss, which the company offsets using forward contracts[208](index=208&type=chunk) - Interest rate risk is limited as the company's **$400 million** Senior Notes are fixed-rate, with no outstanding balances on its variable-rate credit facilities as of July 31, 2023[190](index=190&type=chunk)[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of July 31, 2023, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of July 31, 2023[211](index=211&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[211](index=211&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=44&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not currently engaged in any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations - As of the report date, the company is not involved in any legal proceedings expected to have a material adverse effect on its business[213](index=213&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended April 30, 2023 - No material changes have occurred to the risk factors described in the company's most recent Form 10-K[214](index=214&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 FY2024, the company repurchased **291,441** shares at an average price of **$49.27**, including **90,000** shares under its public program for **$4.2 million**, with **$231.0 million** remaining for future repurchases Share Repurchase Activity | Period | Total Shares Purchased (Shares) | Average Price Paid ($) | Shares Purchased (Public Program, Shares) | Value Remaining in Program ($) | | :--- | :--- | :--- | :--- | :--- | | May 2023 | 90,000 | $46.48 | 90,000 | $231.0 million | | June 2023 | 514 | $51.55 | 0 | $231.0 million | | July 2023 | 200,927 | $50.51 | 0 | $231.0 million | | **Total** | **291,441** | **$49.27** | **90,000** | **$231.0 million** | - The share repurchase program has no expiration date, with approximately **$231.0 million** remaining authorized for repurchases as of July 31, 2023[215](index=215&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205%2E%20Other%20Information) No other material information or Rule 10b5-1 trading arrangements by directors or Section 16 officers were reported for the quarter - During the quarter ended July 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[216](index=216&type=chunk)

Korn Ferry (NYSE:KFY) Q4 2023 Earnings Conference Call June 27, 2023 12:00 PM ET Company Participants Gary Burnison - Chief Executive Officer Bob Rozek - Chief Financial Officer Gregg Kvochak - Senior Vice President, Investor Relations Tiffany Louder - Vice President, Investor Relations Conference Call Participants George Tong - Goldman Sachs Jasper Bibb - Truist Securities Trevor Romeo - William Blair Marc Riddick - Sidoti Andre Childress - Baird Operator Ladies and gentlemen, thank you for standing by, an ...

Financial Performance - Korn Ferry generated $2,835.4 million in fee revenue for fiscal 2023, an increase of 8.0% compared to fiscal 2022[22]. - Net Income attributable to Korn Ferry was $209.5 million, with an operating income of $316.3 million and an Adjusted EBITDA of $457.3 million, representing margins of 11.2% and 16.1% respectively[22]. - Fiscal 2023 fee revenue for the Professional Search & Interim segment was $875.8 million, a decrease of 6% compared to fiscal 2022, representing 31% of total fee revenue[36]. - Adjusted EBITDA for the Professional Search & Interim segment was $205.8 million with an Adjusted EBITDA margin of 23.5%[36]. - The Executive Search segment generated fee revenue of $503.4 million, an increase of 69% compared to fiscal 2022, representing 18% of total fee revenue[37]. - Fee revenue for fiscal 2023 was $2,835.4 million, an increase of $208.7 million, or 8%, compared to $2,626.7 million in fiscal 2022, with all lines of business except Executive Search showing growth[193]. - Net income attributable to Korn Ferry decreased by $116.9 million to $209.5 million in fiscal 2023 from $326.4 million in fiscal 2022[193]. - Adjusted EBITDA was $457.3 million, a decrease of $81.6 million from $538.9 million in fiscal 2022[193]. - Total revenue for 2023 was $2,863,836, up from $2,643,455 in 2022[212]. Client Engagement and Loyalty - Korn Ferry worked with nearly 15,000 organizations in fiscal 2023, achieving a client loyalty rate of nearly 80% for repeat engagements[16]. - The company generated over 25% of total fee revenues through referrals between different lines of business, highlighting the effectiveness of its integrated solutions[18]. - Korn Ferry's go-to-market strategy resulted in approximately 80% of revenue coming from clients using multiple lines of business in fiscal 2023[49]. - Nearly 80% of assignments in fiscal 2023 were for clients who had previously engaged the Company, demonstrating strong client loyalty[188]. Investments and Acquisitions - The company invested $254.8 million in acquisitions and $61.0 million in capital expenditures during fiscal 2023, while returning $93.9 million in share repurchases and $33.0 million in dividends to shareholders[22]. - Korn Ferry's acquisition strategy included the purchase of three Interim hiring firms in the last 18 months, enhancing its capabilities in the Professional Search and Interim sectors[16]. - The company completed several strategic acquisitions, including The Lucas Group and Patina Solutions Group, Inc. in fiscal 2022, and Infinity Consulting Solutions and Salo LLC in fiscal 2023, as part of its growth strategy[129]. - The company acknowledges risks associated with acquisitions, including potential liabilities and operational issues that may not be discovered during due diligence[151]. Operational Metrics - Korn Ferry opened more than 6,300 new engagements in fiscal 2023, averaging 594 consultants per engagement[36]. - The company operates in 108 offices across 53 countries, with a workforce of 10,697 full-time employees, 62% of whom are female in the U.S.[41]. - The company has approximately 1.1 million square feet of leased office space across 107 locations in North America, EMEA, Asia Pacific, and Latin America as of April 30, 2023[156]. - The company promoted over 1,200 employees across its five lines of business and Corporate in fiscal 2023[58]. Financial Risks and Liabilities - The company faces significant competition from larger consulting firms, which may lead to pricing pressures and reduced market share[71]. - The company is highly dependent on a small executive team, and the loss of any key executive could adversely affect operations[80]. - The company is exposed to inflationary pressures that may increase operating costs, including labor and borrowing costs[99]. - The company may incur significant expenses to comply with evolving government regulations, which could adversely impact its business[89]. - The company is subject to interest rate risk due to its variable rate indebtedness, which could significantly increase debt service obligations if interest rates rise[106]. - A decline in operating results or available cash could lead to difficulties in complying with financial covenants, potentially resulting in bankruptcy or liquidation[114]. Employee Well-being and Diversity - Korn Ferry's employee well-being initiatives include mental health awareness campaigns and flexible work schedules[62]. - The company is implementing diversity, equity, and inclusion initiatives to enhance talent recruitment and retention[79]. - The company has been recognized as the best company for Parents 2022 and one of the Human Rights Campaign's Best Places to Work for LGBTQ Equality 2022[59]. Market and Economic Conditions - The company is exposed to economic conditions that can impact demand for its services, including recessions and inflation, which could negatively affect its financial results[134]. - The company faces potential operational challenges and client-related risks due to pandemics, including heightened attention to employee health and safety and disruptions in service delivery[154]. - The company faces risks related to compliance with various international laws and regulations, which could impact its operations and financial condition[136]. Financial Management and Capital Allocation - The company’s capital allocation strategy prioritizes investments in growth initiatives, including hiring consultants and developing intellectual property, while also considering share repurchases and dividends[173]. - The company approved an increase in its stock repurchase program by approximately $300 million, bringing the total capacity to $318 million[177]. - In fiscal 2023, the Company repurchased approximately $93.9 million of its common stock, compared to $98.8 million in fiscal 2022 and $30.4 million in fiscal 2021[177]. - The company has $645.4 million of availability under its $650.0 million five-year senior secured revolving credit facility[102]. Compliance and Regulatory Risks - Compliance with data protection laws such as GDPR has resulted in additional costs and may require changes to business practices, with potential penalties for non-compliance reaching up to 4% of annual worldwide revenue[123]. - The evolving regulatory landscape, including new cybersecurity laws in various U.S. states, may impose additional obligations and increase compliance costs[124]. - The company relies on third-party vendors for critical functions, and any failure on their part could lead to operational disruptions and increased costs[119]. - Cybersecurity incidents pose a risk of unauthorized disclosure of sensitive information, which could adversely impact the company's reputation and financial results[120].

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents Korn Ferry's unaudited consolidated financial statements and management's discussion and analysis for the reported periods [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Presents Korn Ferry's unaudited consolidated financial statements and detailed notes for periods ended January 31, 2023, and April 30, 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Summarizes Korn Ferry's financial position, detailing assets, liabilities, and equity as of January 31, 2023, and April 30, 2022 Consolidated Balance Sheets (in thousands) | Metric | Jan 31, 2023 (unaudited) (in thousands) | Apr 30, 2022 (in thousands) | | :-------------------------------- | :-------------------------------------- | :-------------------------- | | Cash and cash equivalents | $771,898 | $978,070 | | Total current assets | $1,613,427 | $1,759,970 | | Total assets | $3,406,188 | $3,464,546 | | Total current liabilities | $856,347 | $984,225 | | Total liabilities | $1,793,174 | $1,914,957 | | Total stockholders' equity | $1,613,014 | $1,549,589 | - Cash and cash equivalents decreased by **$206.172 million** from April 30, 2022, to January 31, 2023[7](index=7&type=chunk) - Total assets decreased by **$58.358 million**, while total liabilities decreased by **$121.783 million**, and total stockholders' equity increased by **$63.425 million**[7](index=7&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Details Korn Ferry's financial performance, including revenue, operating income, and net income for the three and nine months ended January 31, 2023 Consolidated Statements of Income (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Fee revenue | $680,782 | $680,741 | $2,104,534 | $1,905,579 | | Total revenue | $686,845 | $684,956 | $2,125,712 | $1,916,452 | | Operating income | $12,513 | $126,290 | $243,759 | $331,321 | | Net income attributable to Korn Ferry | $11,247 | $84,101 | $162,035 | $234,696 | | Basic EPS | $0.21 | $1.55 | $3.07 | $4.33 | | Diluted EPS | $0.21 | $1.54 | $3.05 | $4.28 | | Cash dividends declared per share | $0.15 | $0.12 | $0.45 | $0.36 | - For the three months ended January 31, 2023, net income attributable to Korn Ferry decreased by **86.6% YoY**, and diluted EPS decreased by **86.4% YoY**[9](index=9&type=chunk) - For the nine months ended January 31, 2023, net income attributable to Korn Ferry decreased by **31.0% YoY**, and diluted EPS decreased by **28.7% YoY**[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Presents Korn Ferry's comprehensive income, including net income and other comprehensive income components for the reported periods Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $11,769 | $85,057 | $164,920 | $237,786 | | Comprehensive income | $52,065 | $70,822 | $160,931 | $208,687 | | Comprehensive income attributable to Korn Ferry | $51,110 | $69,913 | $157,418 | $205,798 | - Comprehensive income attributable to Korn Ferry decreased by **26.9%** for the three months ended January 31, 2023, and by **23.5%** for the nine months ended January 31, 2023, compared to the respective prior-year periods[12](index=12&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in Korn Ferry's stockholders' equity, including common stock, retained earnings, and other comprehensive income for the reported periods Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Jan 31, 2023 | Apr 30, 2022 | | :-------------------- | :----------- | :----------- | | Common Stock Amount | $434,163 | $502,008 | | Retained Earnings | $1,271,618 | $1,134,523 | | Total Korn Ferry Stockholders' Equity | $1,608,979 | $1,544,346 | - Total Korn Ferry stockholders' equity increased by **$64.633 million** from April 30, 2022, to January 31, 2023[15](index=15&type=chunk) - The company repurchased **1,454,867 shares** of common stock for **$80.5 million** during the nine months ended January 31, 2023[15](index=15&type=chunk)[76](index=76&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Analyzes Korn Ferry's cash inflows and outflows from operating, investing, and financing activities for the nine months ended January 31, 2023 Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $92,784 | $221,477 | | Net cash used in investing activities | $(165,356) | $(136,553) | | Net cash used in financing activities | $(130,119) | $(62,833) | | Net decrease in cash and cash equivalents | $(206,172) | $(4,273) | | Cash and cash equivalents at end of period | $771,898 | $846,505 | - Net cash provided by operating activities decreased by **$128.693 million (58.1%)** for the nine months ended January 31, 2023, compared to the prior-year period[21](index=21&type=chunk) - Net cash used in investing activities increased by **$28.803 million (21.1%)** due to higher cash paid for acquisitions and property/equipment[21](index=21&type=chunk)[256](index=256&type=chunk) - Net cash used in financing activities increased by **$67.286 million (107.1%)** primarily due to increased stock repurchases and dividend payments[21](index=21&type=chunk)[257](index=257&type=chunk) [Notes to Consolidated Unaudited Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Unaudited%20Financial%20Statements) Provides detailed explanations of Korn Ferry's accounting policies, financial instruments, segment performance, and recent corporate actions [1. Organization and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) Outlines Korn Ferry's global consulting business, eight segments, and key accounting policies like revenue recognition and compensation - Korn Ferry is a global organizational consulting firm focused on synchronizing strategy and talent to drive performance[22](index=22&type=chunk) - The company has transformed from a mono-line to a diversified business, expanding client engagement opportunities[23](index=23&type=chunk) - Effective fiscal 2023, the RPO & Professional Search segment was separated into two distinct segments: Professional Search & Interim and RPO, to align with strategic decisions and performance assessment[23](index=23&type=chunk)[96](index=96&type=chunk) - Consulting: Aligns organization structure, culture, performance, and people - Digital: Delivers scalable tech-enabled solutions for structures, roles, capabilities, and behaviors - Executive Search: Recruits board-level, chief executive, and senior executive talent (managed geographically across North America, EMEA, Asia Pacific, Latin America) - Professional Search & Interim: Provides enterprise talent acquisition for professional-level middle and upper management, including permanent and interim placements - RPO: Offers scalable recruitment outsourcing solutions leveraging technology and talent insights[24](index=24&type=chunk)[100](index=100&type=chunk) - Revenue recognition is based on a five-step model, with consulting revenue recognized as services are rendered, digital revenue as services are delivered or over contract term for symbolic IP, and executive/professional search revenue generally over the course of a search or duration of interim services[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The company recorded restructuring charges of **$41.2 million** for the three and nine months ended January 31, 2023, related to workforce realignment[55](index=55&type=chunk)[119](index=119&type=chunk) [2. Basic and Diluted Earnings Per Share](index=14&type=section&id=2.%20Basic%20and%20Diluted%20Earnings%20Per%20Share) Details the calculation of basic and diluted EPS using the two-class method, summarizing net earnings and weighted-average shares outstanding - The company uses the two-class method for EPS calculation due to unvested share-based payment awards with non-forfeitable dividend rights[59](index=59&type=chunk) Basic and Diluted Earnings Per Share (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic net earnings attributable to common stockholders | $10,998 | $82,303 | $158,490 | $229,333 | | Diluted net earnings attributable to common stockholders | $10,998 | $82,318 | $158,510 | $229,385 | | Basic weighted-average number of common shares outstanding | 51,278 | 52,999 | 51,639 | 52,958 | | Diluted weighted-average number of common shares outstanding | 51,431 | 53,495 | 51,999 | 53,538 | | Basic earnings per share | $0.21 | $1.55 | $3.07 | $4.33 | | Diluted earnings per share | $0.21 | $1.54 | $3.05 | $4.28 | - Restricted stock awards of **1.2 million shares** were anti-dilutive and excluded from diluted EPS computation for both periods[61](index=61&type=chunk) [3. Comprehensive Income](index=15&type=section&id=3.%20Comprehensive%20Income) Defines comprehensive income and breaks down accumulated other comprehensive loss, including foreign currency and pension adjustments - Comprehensive income includes net income and other changes to stockholders' equity not from investments by or distributions to stockholders[63](index=63&type=chunk) Accumulated Other Comprehensive Loss, Net (in thousands) | Component (in thousands) | Jan 31, 2023 | Apr 30, 2022 | | :----------------------- | :----------- | :----------- | | Foreign currency translation adjustments | $(97,509) | $(92,717) | | Deferred compensation and pension plan adjustments, net of tax | $1,126 | $961 | | Marketable securities unrealized loss, net of tax | $(419) | $(429) | | Accumulated other comprehensive loss, net | $(96,802) | $(92,185) | - Accumulated other comprehensive loss, net, increased by **$4.617 million** from April 30, 2022, to January 31, 2023, primarily due to foreign currency translation adjustments[64](index=64&type=chunk)[65](index=65&type=chunk) [4. Employee Stock Plans](index=17&type=section&id=4.%20Employee%20Stock%20Plans) Details Korn Ferry's stock-based compensation plans, summarizing expense, restricted stock activity, and shares available for future issuance Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Restricted stock | $9,350 | $7,141 | $26,327 | $21,391 | | ESPP | $134 | $185 | $583 | $584 | | Total stock-based compensation expense | $9,484 | $7,326 | $26,910 | $21,975 | - Total stock-based compensation expense increased by **29.5%** for the three months and **22.5%** for the nine months ended January 31, 2023, compared to the prior-year periods[69](index=69&type=chunk) - As of January 31, 2023, **$78.8 million** of total unrecognized compensation cost related to non-vested restricted stock awards is expected to be recognized over a weighted-average period of **2.6 years**[74](index=74&type=chunk) - The company repurchased **370,857 shares** of restricted stock for **$22.1 million** to cover taxes on vested restricted stock during the nine months ended January 31, 2023[74](index=74&type=chunk) - The 2022 Stock Incentive Plan increased available shares by **1,700,000**, with **2,248,284 shares** remaining for issuance[70](index=70&type=chunk) - The ESPP had approximately **1.8 million shares** remaining available for future issuance as of January 31, 2023[75](index=75&type=chunk) [5. Financial Instruments](index=19&type=section&id=5.%20Financial%20Instruments) Details Korn Ferry's financial instruments, including marketable securities and foreign currency contracts, outlining fair value and balance sheet impact Financial Instrument Fair Value (in thousands) | Financial Instrument (in thousands) | Jan 31, 2023 Fair Value | Apr 30, 2022 Fair Value | | :---------------------------------- | :---------------------- | :---------------------- | | Total debt investments | $47,090 | $79,774 | | Total equity investments | $188,809 | $168,742 | | Cash | $735,392 | $874,490 | | Money market funds | $36,506 | $88,091 | | Foreign currency forward contracts | $1,303 | $(204) | - The fair value of equity investments (mutual funds held in trust for deferred compensation) increased by **$20.067 million** from April 30, 2022, to January 31, 2023[77](index=77&type=chunk)[78](index=78&type=chunk) - The company recognized a gain of **$12.7 million** and **$3.0 million** from the fair value increase of ECAP investments for the three and nine months ended January 31, 2023, respectively[78](index=78&type=chunk) - Foreign currency forward contracts resulted in a gain of **$3.3 million** and **$1.2 million** for the three and nine months ended January 31, 2023, respectively[80](index=80&type=chunk) [6. Deferred Compensation and Retirement Plans](index=21&type=section&id=6.%20Deferred%20Compensation%20and%20Retirement%20Plans) Describes Korn Ferry's deferred compensation and retirement plans, including pension and ECAP, and their net periodic benefit costs and COLI funding Net Periodic Benefit Costs (in thousands) | Metric (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Service cost | $10,573 | $9,762 | $30,200 | $28,190 | | Interest cost | $2,439 | $1,038 | $7,263 | $3,095 | | Net periodic benefit costs | $12,840 | $10,849 | $36,946 | $31,443 | - Net periodic benefit costs increased by **18.4%** for the three months and **17.5%** for the nine months ended January 31, 2023, compared to the prior-year periods[82](index=82&type=chunk) - The cash surrender value of COLI contracts, net of loans, was **$198.6 million** as of January 31, 2023, up from **$183.3 million** at April 30, 2022[84](index=84&type=chunk)[258](index=258&type=chunk) - Deferred compensation liability increased, leading to compensation expense of **$12.1 million** and **$3.5 million** for the three and nine months ended January 31, 2023, respectively[87](index=87&type=chunk) [7. Fee Revenue](index=22&type=section&id=7.%20Fee%20Revenue) Details Korn Ferry's contract balances, performance obligations, and disaggregation of fee revenue by industry, including recognition timing Contract Balances (in thousands) | Contract Balances (in thousands) | Jan 31, 2023 | Apr 30, 2022 | | :------------------------------- | :----------- | :----------- | | Contract assets-unbilled receivables | $112,299 | $100,652 | | Contract liabilities-deferred revenue | $268,611 | $244,149 | - The aggregate transaction price allocated to unsatisfied performance obligations for contracts with an expected duration greater than one year was **$1,166.9 million** as of January 31, 2023[90](index=90&type=chunk) Industry Fee Revenue (in thousands) | Industry Fee Revenue (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :---------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Industrial | $199,341 (29.3%) | $181,016 (26.6%) | $601,698 (28.6%) | $500,078 (26.2%) | | Life Sciences/Healthcare | $125,064 (18.4%) | $126,840 (18.6%) | $391,863 (18.6%) | $370,009 (19.4%) | | Financial Services | $117,880 (17.3%) | $121,459 (17.8%) | $367,878 (17.5%) | $341,099 (17.9%) | | Technology | $112,218 (16.5%) | $124,903 (18.4%) | $359,475 (17.1%) | $323,504 (17.0%) | | Consumer Goods | $88,631 (13.0%) | $97,210 (14.3%) | $283,859 (13.5%) | $271,233 (14.2%) | | Education/Non–Profit/General | $37,648 (5.5%) | $29,313 (4.3%) | $99,761 (4.7%) | $99,656 (5.3%) | | Total Fee Revenue | $680,782 (100.0%) | $680,741 (100.0%) | $2,104,534 (100.0%) | $1,905,579 (100.0%) | - Industrial sector fee revenue increased by **10.1%** for the three months and **20.3%** for the nine months ended January 31, 2023, becoming the largest contributor[92](index=92&type=chunk) [8. Credit Losses](index=23&type=section&id=8.%20Credit%20Losses) Outlines Korn Ferry's methodology for estimating credit losses on trade receivables and details unrealized losses on available-for-sale debt securities Allowance for Credit Losses (in thousands) | Allowance for Credit Losses (in thousands) | Amount | | :--------------------------------------- | :----- | | Balance at April 30, 2022 | $36,384 | | Provision for credit losses | $16,725 | | Write-offs | $(10,116) | | Recoveries | $598 | | Foreign currency translation | $15 | | Balance at January 31, 2023 | $43,606 | - The allowance for credit losses on trade receivables increased by **$7.222 million** from April 30, 2022, to January 31, 2023[94](index=94&type=chunk) - Unrealized losses on available-for-sale debt securities were primarily due to fluctuations in market interest rates, with the company not intending to sell these investments before maturity[94](index=94&type=chunk) [9. Income Taxes](index=24&type=section&id=9.%20Income%20Taxes) Provides income tax provision and effective tax rates for the reported periods, explaining factors influencing rate variability Income Tax Provision | Income Tax Provision | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Tax Expense (in millions) | $8.5 | $26.9 | $63.6 | $77.0 | | Effective Tax Rate | 41.8% | 24.0% | 27.8% | 24.4% | - The effective tax rate for the three months ended January 31, 2023, was significantly higher (**41.8% vs. 24.0%**) due to common permanent tax adjustments applied to lower earnings resulting from restructuring charges and tax expense for non-creditable withholding taxes[95](index=95&type=chunk) [10. Segments](index=24&type=section&id=10.%20Segments) Details Korn Ferry's revised eight-segment reporting structure, providing financial highlights like fee revenue and Adjusted EBITDA for each segment - Effective May 1, 2022, the RPO & Professional Search segment was separated into Professional Search & Interim and RPO, resulting in eight reportable segments[96](index=96&type=chunk)[98](index=98&type=chunk) - Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs, and non-cash impairment charges[99](index=99&type=chunk) Segment Fee Revenue (in thousands) | Segment Fee Revenue (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consulting | $162,155 | $162,889 | $501,731 | $476,260 | | Digital | $85,071 | $90,194 | $263,161 | $259,504 | | Executive Search (Total) | $212,045 | $238,999 | $663,193 | $691,362 | | Professional Search & Interim | $117,980 | $90,015 | $351,670 | $196,411 | | RPO | $103,531 | $98,644 | $324,779 | $282,042 | | Consolidated Total Fee Revenue | $680,782 | $680,741 | $2,104,534 | $1,905,579 | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consulting | $23,305 | $28,556 | $83,944 | $85,458 | | Digital | $22,153 | $28,142 | $73,855 | $82,330 | | Executive Search (Total) | $46,427 | $65,717 | $163,150 | $193,443 | | Professional Search & Interim | $21,969 | $31,344 | $83,587 | $72,608 | | RPO | $9,849 | $12,765 | $43,562 | $41,726 | | Corporate | $(27,592) | $(28,193) | $(88,676) | $(81,022) | | Consolidated Adjusted EBITDA | $96,111 | $138,331 | $359,422 | $394,543 | [11. Long-Term Debt](index=27&type=section&id=11.%20Long-Term%20Debt) Details Korn Ferry's long-term debt, including Senior Unsecured Notes and the Amended Credit Agreement, outlining terms, covenants, and available capacity - The company has **$400 million** in 4.625% Senior Unsecured Notes due 2027, with a fair value of **$377.0 million** as of January 31, 2023[105](index=105&type=chunk)[247](index=247&type=chunk) - The Amended Credit Agreement provides for **$1,150.0 million** in senior secured credit facilities, including a **$650.0 million** revolving credit facility and a **$500.0 million** delayed draw term loan facility, maturing June 24, 2027[107](index=107&type=chunk)[248](index=248&type=chunk) - As of January 31, 2023, there was no outstanding liability under the Credit Facilities, and the company was in compliance with its debt covenants[111](index=111&type=chunk) - The company had **$1,145.3 million** available under the Credit Facilities as of January 31, 2023[112](index=112&type=chunk)[248](index=248&type=chunk) [12. Leases](index=29&type=section&id=12.%20Leases) Provides information on Korn Ferry's operating and finance leases, including terms, rates, and expense components, detailing real estate impairment charges - The company recorded an impairment charge of ROU assets of **$5.5 million** for both the three and nine months ended January 31, 2023, due to real estate footprint reduction[116](index=116&type=chunk) Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :--------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Finance lease cost | $413 | $267 | $1,245 | $849 | | Operating lease cost | $12,339 | $13,013 | $36,957 | $40,288 | | Lease impairment cost | $5,471 | $0 | $5,471 | $7,392 | | Total lease cost | $20,687 | $16,096 | $49,563 | $56,467 | - Total lease cost increased by **28.5%** for the three months ended January 31, 2023, primarily due to lease impairment costs[116](index=116&type=chunk) Weighted Average Lease Terms | Weighted Average Lease Terms | Jan 31, 2023 | Apr 30, 2022 | | :--------------------------- | :----------- | :----------- | | Operating leases | 4.5 years | 5.1 years | | Finance leases | 3.9 years | 3.3 years | [13. Restructuring Charges, Net](index=31&type=section&id=13.%20Restructuring%20Charges,%20Net) Details Korn Ferry's January 2023 restructuring plan to realign its workforce, outlining $41.2 million in severance and related charges - Korn Ferry initiated a restructuring plan on January 11, 2023, to realign its workforce, aiming to reduce annualized costs by **$45.0 million to $55.0 million**[119](index=119&type=chunk)[135](index=135&type=chunk) - Restructuring charges of **$41.2 million** were recorded for the three and nine months ended January 31, 2023, primarily for severance[119](index=119&type=chunk)[182](index=182&type=chunk) Restructuring Liability (in thousands) | Restructuring Liability (in thousands) | As of Oct 31, 2022 | As of Jan 31, 2023 | | :------------------------------------- | :----------------- | :----------------- | | Restructuring charges, net | $41,162 | $41,162 | | Reductions for cash payments | $(7,634) | $(8,067) | | Reductions for non-cash payments | $(10,827) | $(10,827) | | Balance | $463 | $23,297 | [14. Acquisition](index=32&type=section&id=14.%20Acquisition) Describes Korn Ferry's August 2022 acquisition of Infinity Consulting Solutions (ICS) for $99.3 million, enhancing interim professional placement - Korn Ferry acquired Infinity Consulting Solutions (ICS) on August 1, 2022, for **$99.3 million**, net of cash acquired[121](index=121&type=chunk)[133](index=133&type=chunk)[246](index=246&type=chunk) - ICS specializes in senior-level IT interim professional solutions and is integrated into the Professional Search & Interim segment[122](index=122&type=chunk)[134](index=134&type=chunk) Net Assets Acquired (in thousands) | Net Assets Acquired (in thousands) | Amount | | :--------------------------------- | :----- | | Current assets | $19,932 | | Long-term assets | $1,496 | | Intangible assets | $16,400 | | Current liabilities | $6,248 | | Long-term liabilities | $566 | | Net assets acquired | $31,014 | | Purchase price | $99,322 | | Goodwill | $68,308 | - The acquisition resulted in **$68.3 million** in goodwill, with **$66.0 million** being tax deductible[123](index=123&type=chunk)[124](index=124&type=chunk) [15. Subsequent Event](index=32&type=section&id=15.%20Subsequent%20Event) Discloses a subsequent event: the declaration of a quarterly cash dividend of $0.15 per share on March 7, 2023 - On March 7, 2023, the Board of Directors declared a quarterly cash dividend of **$0.15 per share**, payable April 14, 2023[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's overview of Korn Ferry's financial performance, condition, and strategic initiatives for the reported periods [Executive Summary](index=33&type=section&id=Executive%20Summary) Provides management's overview of Korn Ferry's financial performance, condition, and strategic initiatives for the reported periods - Korn Ferry is a global organizational consulting firm that helps clients with strategy, operations, and talent[130](index=130&type=chunk) - The company is pursuing a strategy to focus on clients and intensive collaboration, transforming talent management needs from a mono-line to a multi-faceted consultancy[131](index=131&type=chunk) - The RPO & Professional Search segment was separated into Professional Search & Interim and RPO in fiscal 2023 due to recent acquisitions (Lucas Group, Patina, ICS) and strategic alignment[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - A restructuring plan initiated on January 11, 2023, aims to realign the workforce, reduce annualized costs by **$45.0 million to $55.0 million**, and resulted in **$41.2 million** in restructuring charges and **$9.9 million** in impairment charges for the three and nine months ended January 31, 2023[135](index=135&type=chunk)[136](index=136&type=chunk) Key Financial Metrics (in millions) | Metric (in millions) | Three Months Ended Jan 31, 2023 | Three Months Ended Jan 31, 2022 | Change (YoY) | | :------------------- | :------------------------------ | :------------------------------ | :----------- | | Fee revenue | $680.8 | $680.7 | +$0.1 | | Net income attributable to Korn Ferry | $11.2 | $84.1 | -$72.9 | | Adjusted EBITDA | $96.1 | $138.3 | -$42.2 | - Fee revenue was essentially flat YoY for the three months ended January 31, 2023, but net income attributable to Korn Ferry decreased by **$72.9 million**, primarily due to restructuring and impairment charges, and increased compensation and cost of services[139](index=139&type=chunk)[183](index=183&type=chunk) - Adjusted EBITDA decreased by **$42.2 million (31%)** for the three months ended January 31, 2023, driven by increased cost of services, compensation, and general & administrative expenses, and a shift towards less profitable services[139](index=139&type=chunk)[184](index=184&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Analyzes Korn Ferry's revenue, expenses, and profitability trends for the three and nine months ended January 31, 2023, compared to prior periods [Three Months Ended January 31, 2023 Compared to Three Months Ended January 31, 2022](index=39&type=section&id=Three%20Months%20Ended%20January%2031,%202023%20Compared%20to%20Three%20Months%20Ended%20January%2031,%202022) Analyzes Korn Ferry's financial results for the three months ended January 31, 2023, highlighting flat fee revenue, decreased net income, and lower Adjusted EBITDA Financial Performance (in thousands) | Metric (in thousands) | Jan 31, 2023 | Jan 31, 2022 | Change (YoY) | % Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | :------------- | | Fee Revenue | $680,782 | $680,741 | $41 | 0.0% | | Compensation and Benefits | $479,382 | $445,870 | $33,512 | 7.5% | | General and Administrative Expenses | $72,785 | $60,811 | $11,974 | 19.7% | | Cost of Services | $57,903 | $31,666 | $26,237 | 82.9% | | Restructuring Charges, net | $41,162 | $0 | $41,162 | N/A | | Operating Income | $12,513 | $126,290 | $(113,777) | -90.1% | | Net Income Attributable to Korn Ferry | $11,247 | $84,101 | $(72,854) | -86.6% | | Adjusted EBITDA | $96,111 | $138,331 | $(42,220) | -30.5% | - Executive Search fee revenue decreased by **$26.954 million (11.3%) YoY**, primarily in North America and Asia Pacific, due to a decline in engagements and weighted-average fees[149](index=149&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) - Professional Search & Interim fee revenue increased by **$28.0 million (31.1%) YoY**, largely due to the acquisition of ICS[149](index=149&type=chunk)[156](index=156&type=chunk) - Compensation and benefits expense increased by **$33.5 million (7.5%) YoY**, driven by higher salaries, payroll taxes, and employee insurance due to increased headcount (**19%**) and wage inflation, partially offset by lower performance-related bonuses[158](index=158&type=chunk) - Cost of services expense increased by **$26.2 million (82.9%) YoY**, mainly attributable to the acquisitions in Professional Search & Interim, which has a higher cost of service[180](index=180&type=chunk) - Other income, net, improved significantly to **$13.1 million** from a loss of **$7.3 million YoY**, primarily due to gains from marketable securities held in trust for deferred compensation plans[193](index=193&type=chunk) [Nine Months Ended January 31, 2023 Compared to Nine Months Ended January 31, 2022](index=45&type=section&id=Nine%20Months%20Ended%20January%2031,%202023%20Compared%20to%20Nine%20Months%20Ended%20January%2031,%202022) Analyzes Korn Ferry's financial results for the nine months ended January 31, 2023, noting increased fee revenue but decreased net income and Adjusted EBITDA Financial Performance (in thousands) | Metric (in thousands) | Jan 31, 2023 | Jan 31, 2022 | Change (YoY) | % Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | :------------- | | Fee Revenue | $2,104,534 | $1,905,579 | $198,955 | 10.4% | | Compensation and Benefits | $1,409,774 | $1,273,746 | $136,028 | 10.7% | | General and Administrative Expenses | $202,328 | $175,143 | $27,185 | 15.5% | | Cost of Services | $157,152 | $77,988 | $79,164 | 101.5% | | Restructuring Charges, net | $41,162 | $0 | $41,162 | N/A | | Operating Income | $243,759 | $331,321 | $(87,562) | -26.4% | | Net Income Attributable to Korn Ferry | $162,035 | $234,696 | $(72,661) | -31.0% | | Adjusted EBITDA | $359,422 | $394,543 | $(35,121) | -8.9% | - Fee revenue increased by **$198.9 million (10.4%) YoY**, with Professional Search & Interim growing by **$155.3 million (79%)** due to acquisitions, and RPO by **$42.8 million (15%)**; Executive Search declined by **$28.169 million (4.1%)**[197](index=197&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - Compensation and benefits expense increased by **$136.1 million (10.7%) YoY**, driven by higher salaries, payroll taxes, and employee insurance due to a **23%** increase in average headcount and wage inflation[207](index=207&type=chunk) - Cost of services expense more than doubled, increasing by **$79.2 million (101.5%) YoY**, primarily due to the acquisitions in Professional Search & Interim[228](index=228&type=chunk) - General and administrative expenses increased by **$27.2 million (15.5%) YoY**, mainly due to higher marketing, computer software licenses, legal fees, and impairment of fixed assets[218](index=218&type=chunk) - The effective tax rate for the nine months ended January 31, 2023, was **27.8%**, up from **24.4%** in the prior-year period, influenced by non-creditable withholding taxes[243](index=243&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses Korn Ferry's capital allocation, liquidity sources, and the impact of acquisitions and dividends on cash flows for the reported periods - The company's capital allocation priorities are growth investments, regular quarterly dividends, and opportunistic share repurchases[245](index=245&type=chunk) - On February 1, 2023, Korn Ferry acquired Salo, a Minneapolis-based interim firm, for approximately **$155 million**, net of cash acquired[246](index=246&type=chunk) - Cash, cash equivalents, and marketable securities decreased by **$203.3 million** to **$1,007.8 million** at January 31, 2023, from **$1,211.1 million** at April 30, 2022[140](index=140&type=chunk)[252](index=252&type=chunk) - The decrease in cash was mainly due to annual bonus payments, retention payments, the ICS acquisition, interest payments on notes, capital expenditures, stock repurchases, and dividends[140](index=140&type=chunk) - The company repurchased **$80.5 million** of common stock during the nine months ended January 31, 2023, with **$248.6 million** remaining available under the share repurchase program[250](index=250&type=chunk) - Working capital decreased by **$18.7 million** to **$757.1 million** as of January 31, 2023, compared to **$775.7 million** at April 30, 2022[141](index=141&type=chunk)[254](index=254&type=chunk) - Cash provided by operating activities decreased by **$128.7 million** to **$92.8 million** for the nine months ended January 31, 2023, compared to **$221.5 million** in the prior-year period[255](index=255&type=chunk) - Cash used in investing activities increased by **$28.8 million** to **$165.4 million**, and cash used in financing activities increased by **$67.3 million** to **$130.1 million** for the nine months ended January 31, 2023[256](index=256&type=chunk)[257](index=257&type=chunk) [Off-Balance Sheet Arrangements](index=53&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms Korn Ferry has no off-balance sheet arrangements or transactions involving unconsolidated special purpose entities - Korn Ferry has no off-balance sheet arrangements and has not entered into any transactions involving unconsolidated, special purpose entities[260](index=260&type=chunk) [Critical Accounting Policies](index=53&type=section&id=Critical%20Accounting%20Policies) Identifies Korn Ferry's key accounting policies requiring significant judgment and estimation, with no material changes reported - Revenue recognition - Performance-related bonuses - Deferred compensation - Carrying values of receivables - Goodwill - Intangible assets - Leases - Recoverability of deferred income taxes[261](index=261&type=chunk) - There have been no material changes in critical accounting policies since the end of fiscal 2022[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses Korn Ferry's exposure to market risks, including foreign currency and interest rate fluctuations, and its risk management strategies - Korn Ferry is exposed to foreign currency exchange fluctuations and interest rate risk due to global operations[262](index=262&type=chunk) - A **10%** increase or decrease in the value of key currencies (USD, GBP, CAD, SGD, EUR, CHF, MXN) could result in a foreign exchange gain or loss of **$11.6 million** as of January 31, 2023[265](index=265&type=chunk) - The company uses foreign currency forward contracts, not designated as hedging instruments, to offset foreign currency exposures[265](index=265&type=chunk) - Interest rate risk is limited to Credit Facilities and borrowings against COLI contracts, with variable rates on COLI borrowings minimized by corresponding adjustments to crediting rates[266](index=266&type=chunk)[267](index=267&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates the effectiveness of Korn Ferry's disclosure controls and internal controls over financial reporting, confirming their effectiveness as of January 31, 2023 - Disclosure controls and procedures were effective as of January 31, 2023[268](index=268&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended January 31, 2023[268](index=268&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity security sales, and exhibits for Korn Ferry's interim financial report [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) Details Korn Ferry's involvement in legal proceedings, confirming no expected material adverse effects on its financial condition - The company is not engaged in any legal proceedings expected to have a material adverse effect on its business[270](index=270&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the risk factors previously disclosed in Korn Ferry's Annual Report on Form 10-K - No material changes to the risk factors described in the Form 10-K have occurred as of the report date[271](index=271&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Summarizes Korn Ferry's common stock repurchases and remaining authorization under its share repurchase program Common Stock Repurchases | Period (2022-2023) | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Programs | | :----------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------- | | Nov 1 - Nov 30 | 210,000 | $55.67 | $261.9 million | | Dec 1 - Dec 31 | 153,358 | $52.38 | $254.0 million | | Jan 1 - Jan 31 | 100,566 | $53.08 | $248.6 million | | Total | 463,924 | $54.02 | N/A | - The company repurchased approximately **$25.0 million** of common stock during the third quarter of fiscal 2023[272](index=272&type=chunk) - As of January 31, 2023, **$248.6 million** remained available for common stock repurchases under the program[250](index=250&type=chunk)[272](index=272&type=chunk) - Share repurchases and dividends are permitted as long as there is no default under the Amended Credit Agreement and the consolidated net leverage ratio is not greater than **5.00 to 1.00**[272](index=272&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications [SIGNATURES](index=57&type=section&id=SIGNATURES) Contains the required certifications and signatures for the submission of Korn Ferry's Form 10-Q