Korn Ferry. (NYSE:KFY) Q3 2021 Results Earnings Conference Call February 22, 2021 12:00 PM ET Company Participants Gregg Kvochak - Senior Vice President of Investor Relations Gary Burnison - Chief Executive Officer Bob Rozek - Chief Financial Officer, EVP & Chief Corporate Officer Conference Call Participants George Tong - Goldman Sachs Tim Mulrooney - William Blair Mark Marcon - Baird Marc Riddick - Sidoti Toby Sommer - Truist Securities Operator Ladies and gentlemen, thank you for standing by, and welcome ...

< R KORN FERRY FY'21 Q3 Earnings Call February 22, 2021 Safe Harbor Statement FORWARD-LOOKING STATEMENTS Statements in this presentation that relate to our outlook, projections, goals, strategy, future plans and expectations, and other statements of future events or conditions future results and events are based on Korn Ferry's current expectations. You are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected because o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 001-14505 KORN FERRY (Exact Name of Registrant as Specified in its Charter) Delaware 95-2623879 (State or Other Jurisdi ...

Financial Data and Key Metrics Changes - Revenue increased by 27% sequentially to $435 million, with adjusted EBITDA of $66 million and an adjusted EBITDA margin of 15.2% [8][30][32] - Fee revenue declined only 12% year-over-year, showing improvement each month of the quarter [30][32] - Adjusted fully diluted earnings per share rose to $0.54, up from $0.73 sequentially [32] Business Line Data and Key Metrics Changes - Digital segment revenue was $75 million, up 34% sequentially and 14% year-over-year, with subscription-based fee revenue at $22.7 million, up 43% year-over-year [37][24] - Consulting generated $126.7 million in fee revenue, up 28% sequentially and down 12% year-over-year, with strong demand for virtually delivered solutions [38] - RPO and professional search revenue was $85.6 million, up 25% sequentially and down 10% year-over-year, with RPO new business reaching $120 million [40][28] - Executive Search revenue was approximately $148 million, up 23% sequentially, with North America seeing a 32% increase [42] Market Data and Key Metrics Changes - Marquee and regional account fee revenue declined approximately 14% year-over-year, compared to a 23% decline in the rest of the portfolio [23] - Subscription-based new business improved to $29 million, up 39% year-over-year [24] - Monthly new business trends improved, with November in line with previous months and years [44] Company Strategy and Development Direction - The company aims to build a preeminent global organizational consultancy, focusing on digital transformation and organizational restructuring [19][12] - Leadership U for Humanity initiative launched to develop diverse leaders, aiming to create 1 million new leaders [14][15] - The shift from analog to digital delivery is a key strategy, with 23% of revenue in FY 2020 coming from this segment [16] Management's Comments on Operating Environment and Future Outlook - Management believes there will be more change in the next two years than in the last decade, presenting opportunities for the company [11] - The company is cautious about future guidance due to uncertainties surrounding COVID-19 and its economic impact [46][110] - Management expects a typical seasonal decline of 3% to 5% in the third quarter, but the impact of COVID-19 remains uncertain [47] Other Important Information - The company has a strong balance sheet with cash and marketable securities totaling $774 million [33] - Cost-saving initiatives have been implemented, with plans to maintain a leaner cost structure moving forward [34][56] Q&A Session Summary Question: Trends in Digital Business - The digital business saw a broad-based customer response, particularly in training and development, with a significant shift to virtual delivery [50][51] Question: EBITDA Margins Outlook - Management anticipates that margins could improve over time due to reimagined business strategies and cost efficiencies [54][56] Question: Revenue Increase Drivers - The revenue increase is attributed to a combination of strategic execution and market resilience rather than solely pent-up demand [64][66] Question: Large Engagements and Margin Profile - Larger engagements are driven by organizational transformation and digital transition, with expectations of improved margins from these projects [72][73] Question: Recurring Business Models - The RPO business is characterized as a recurring model, with strong new business and renewals indicating a healthy trend [77][80] Question: Acquisition Strategy - Future acquisitions will focus on client impact and return on capital, with an emphasis on maintaining high margins [88][89] Question: Engagement Types and Focus Areas - Companies are focusing on organizational transformation, digital transition, and diversity and inclusion initiatives [105][106]

Part I. Financial Information [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Korn Ferry experienced a significant downturn in Q1 FY2021 due to COVID-19, reporting decreased revenue, a net loss, and negative operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) | Balance Sheet Items | July 31, 2020 (in thousands) | April 30, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $1,093,282 | $1,237,083 | | **Total Assets** | $2,618,103 | $2,743,828 | | **Total Current Liabilities** | $491,331 | $624,207 | | **Total Liabilities** | $1,400,082 | $1,520,137 | | **Total Stockholders' Equity** | $1,218,021 | $1,223,691 | - Cash and cash equivalents decreased from **$689.2 million** at April 30, 2020, to **$542.8 million** at July 31, 2020[7](index=7&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) | Income Statement Items | Three Months Ended July 31, 2020 (in thousands) | Three Months Ended July 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | $346,883 | $496,198 | | **Total Operating Expenses** | $390,678 | $435,864 | | **Operating (Loss) Income** | $(43,795) | $60,334 | | **Net (Loss) Income Attributable to Korn Ferry** | $(30,833) | $42,951 | | **Diluted (Loss) Earnings Per Share** | $(0.58) | $0.76 | - The company incurred restructuring charges of **$27.5 million** in the quarter ended July 31, 2020, with no similar charges in the prior-year period[9](index=9&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Items | Three Months Ended July 31, 2020 (in thousands) | Three Months Ended July 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(144,262) | $(161,919) | | **Net Cash Used in Investing Activities** | $(13,210) | $(9,209) | | **Net Cash Used in Financing Activities** | $(7,805) | $(24,927) | | **Net Decrease in Cash and Cash Equivalents** | $(146,458) | $(201,723) | [Notes to Consolidated Unaudited Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Unaudited%20Financial%20Statements) - The company operates through four global segments: Consulting, Digital, Executive Search, and Recruitment Process Outsourcing (RPO) & Professional Search[24](index=24&type=chunk) - In response to the COVID-19 pandemic, the company adopted a restructuring plan, resulting in charges of **$27.5 million** for the quarter, primarily for severance costs[93](index=93&type=chunk) | Industry | Fee Revenue Q1'21 (in thousands) | % of Total | Fee Revenue Q1'20 (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Industrial | $95,311 | 27.7% | $138,312 | 28.5% | | Financial Services | $65,727 | 19.1% | $86,212 | 17.8% | | Life Sciences/Healthcare | $65,450 | 19.0% | $82,265 | 17.0% | | Consumer Goods | $44,778 | 13.0% | $71,698 | 14.8% | | Technology | $49,324 | 14.4% | $70,803 | 14.6% | | Education/Non-Profit/General | $23,507 | 6.8% | $35,259 | 7.3% | - As of July 31, 2020, the company had **$400 million** in 4.625% Senior Unsecured Notes due 2027 and no outstanding balance on its **$650 million** revolving credit facility[100](index=100&type=chunk)[102](index=102&type=chunk)[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the revenue decline to COVID-19, initiated a restructuring plan to reduce costs, and affirms sufficient liquidity despite operating losses and negative cash flow [The Impact of COVID-19](index=27&type=section&id=The%20Impact%20of%20COVID-19) - The COVID-19 pandemic severely restricted economic activity, leading to a significant decrease in demand for the company's products and services across all business segments and geographies in Q1 FY2021[121](index=121&type=chunk) - On April 20, 2020, the company initiated a restructuring plan to adjust its cost base, which included workforce reductions, temporary furloughs, salary reductions, and other G&A cost-saving measures[123](index=123&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) | Segment | Fee Revenue Q1'21 (in millions) | Fee Revenue Q1'20 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Consulting | $99.3 | $137.5 | -28% | | Digital | $56.0 | $58.0 | -3% | | Executive Search | $120.1 | $193.2 | -38% | | RPO & Professional Search | $68.7 | $95.8 | -28% | | **Total** | **$344.1** | **$484.5** | **-29%** | - Compensation and benefits expense decreased by **14%** to **$284.0 million**, primarily due to an **11%** decrease in average headcount and other cost-saving actions[148](index=148&type=chunk) - General and administrative expenses fell **28%** to **$47.1 million**, driven by lower marketing, premises, legal, and travel-related expenses[155](index=155&type=chunk) - The company recorded an operating loss of **$43.8 million**, a **$104.1 million** decrease from the **$60.3 million** operating income in the prior-year quarter, driven by lower revenue and restructuring charges[165](index=165&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's capital allocation priorities are investing in growth, returning capital to stockholders via a regular quarterly dividend of **$0.10 per share**, and opportunistic share repurchases[182](index=182&type=chunk)[187](index=187&type=chunk) - As of July 31, 2020, the company had cash, cash equivalents, and marketable securities of **$733.0 million** and **$646.0 million** available for borrowing under its revolving credit facility[190](index=190&type=chunk)[186](index=186&type=chunk) - Net cash used by operating activities was **$144.3 million** for the quarter, primarily due to the payment of annual bonuses earned in fiscal 2020[192](index=192&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency fluctuations and interest rate changes, managed through forward contracts and limited by fixed-rate debt - The company is exposed to foreign currency risk, primarily from the Pound Sterling, Canadian Dollar, Euro, and other major currencies. A hypothetical **10%** change in these exchange rates could result in a gain or loss of **$12.3 million**[208](index=208&type=chunk) - Interest rate risk is limited to the company's revolving credit facility, which had no outstanding balance as of July 31, 2020, and borrowings against company-owned life insurance (COLI) policies[209](index=209&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded disclosure controls were effective as of July 31, 2020, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of July 31, 2020[211](index=211&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, these controls[212](index=212&type=chunk) Part II. Other Information [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - As of the report date, the company is not engaged in any legal proceedings expected to have a material adverse effect on its business[214](index=214&type=chunk) [Risk Factors](index=41&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 been made to the risk factors described in the company's Form 10-K for the year ended April 30, 2020[215](index=215&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company did not repurchase shares during the quarter, withheld **161,027** shares for taxes, and has **$158.3 million** remaining for repurchases - The company did not repurchase any shares as part of its publicly announced program during the three months ended July 31, 2020[216](index=216&type=chunk) - A total of **161,027** restricted shares were withheld to cover taxes on vested awards[216](index=216&type=chunk) - As of July 31, 2020, **$158.3 million** remained available for future repurchases under the existing program[216](index=216&type=chunk)[217](index=217&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and CEO/CFO certifications - The report includes standard exhibits such as CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and Inline XBRL data files[219](index=219&type=chunk)

Korn Ferry (NYSE:KFY) Q1 2021 Earnings Conference Call September 3, 2020 12:00 PM ET Company Participants Gary Burnison - Chief Executive Officer Robert Rozek - Chief Financial Officer, Executive Vice President and Chief Corporate Officer Gregg Kvochak - Senior Vice President, Investor Relations Conference Call Participants Tobey Sommer - SunTrust Robinson Humphrey Samuel Kusswurm - William Blair & Company Mark Marcon - Robert W. Baird & Co., Inc. Marc Riddick - Sidoti & Company Operator Ladies and gentleme ...

KORN FERRY FY'21 Q1 Earnings Call Presentation September 3, 2020 SAFE HARBOR STATEMENT Statements in this presentation that relate to future results and events are based on Korn Ferry's current expectations. You are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties that are beyond the control of Korn Ferry. For a detailed description of such risks and uncertainties, ple ...

Company Overview - Korn Ferry operates in 111 offices across 53 countries, with 8,198 full-time employees, including 2,979 consultants[12]. - The organization operates through four global segments: Consulting, Digital, Executive Search, and RPO & Professional Search, ensuring a diversified service offering[52]. - The company had a total of 8,198 full-time employees as of April 30, 2020, with 1,686 in Executive Search and 2,891 in RPO & Professional Search[88]. Client Engagement and Revenue - In fiscal 2020, Korn Ferry partnered with 13,724 client organizations, achieving a client loyalty rate of 90% for engagements completed for repeat clients[13]. - Approximately 71% of Korn Ferry's revenue comes from clients utilizing multiple lines of business, indicating strong cross-segment integration[16]. - Consulting fee revenue was $543.1 million in fiscal 2020, representing 28% of the Company's total fee revenue[61]. - Digital fee revenue increased to $292.4 million in fiscal 2020, up from $252.7 million in fiscal 2019, marking a growth of approximately 15%[67]. - During fiscal 2020, the Consulting segment partnered with approximately 4,800 clients globally, with 22% of fee revenue referred from other segments[62]. - Korn Ferry's RPO & Professional Search segment partnered with 2,202 clients globally, with 43% of its fiscal 2020 fee revenue referred from the Executive Search Consulting and Digital segments[85]. Strategic Initiatives - The company has evolved into a multi-faceted consultancy, expanding into larger addressable markets for higher growth potential and more durable revenue streams[25]. - Korn Ferry's go-to-market strategy aims to integrate core solutions, with 71% of revenues derived from clients using multiple services[40]. - The Korn Ferry Institute focuses on crisis management and organizational transformation, driving business and societal impact through research and analytics[35]. - Korn Ferry's digital transformation services help clients implement agile operating models and attract digital talent through proprietary data insights[30]. - Korn Ferry's talent strategy emphasizes the importance of upskilling and developing existing workforces to address the anticipated global talent shortage[1]. Financial Performance and Challenges - The company reported a restructuring charge of $40.5 million in fiscal 2020 due to a reduction in workforce as part of its cost-saving measures[95]. - The company's profitability is significantly affected by the utilization and billing rates of its consultants, which are influenced by various market factors[120]. - The company may experience difficulties in aligning its cost structure with revenue levels, impacting financial results if utilization and billing rates are not maintained[97]. - The company faces significant competition in the human resource consulting market, with large firms like Ernst & Young and McKinsey posing challenges to market share and pricing[99]. - The company is subject to potential legal liabilities from various stakeholders, including clients and candidates, which may not be fully covered by insurance[114]. Debt and Financial Obligations - The company had approximately $400.0 million in total indebtedness outstanding as of April 30, 2020[129]. - The company's ability to service its indebtedness depends on its financial and operating performance, which is influenced by external economic factors[135]. - The company may need to restructure or refinance its debt if it is unable to meet its debt service obligations, which could impair its liquidity[136]. - The company is subject to financial covenants in its Credit Agreement, which may limit its ability to raise additional debt or equity financing[141]. Acquisitions and Growth Strategy - The company has made strategic acquisitions, including the acquisition of Hay Group in fiscal 2016, as part of its growth strategy[160]. - Future acquisitions may be conditioned on maintaining pro forma compliance with financial covenants and having domestic liquidity of at least $50 million[161]. - The company faces risks related to the integration of acquired businesses, which could adversely affect its financial condition and reputation[163]. Market and Regulatory Risks - The company faces risks associated with social and political instability in international operations, which could affect overall performance[97]. - Changes in foreign currency exchange rates could adversely affect the company's financial results, as a material portion of revenue and expenses are generated internationally[124]. - Compliance with data protection laws like GDPR may increase operational costs and limit service offerings, with potential fines up to 4% of annual worldwide revenue for non-compliance[156]. - The evolving regulatory landscape regarding data security may impose additional burdens and increase potential exposure to penalties for non-compliance[159]. Stockholder and Capital Management - The company has a stock repurchase program with an aggregate capacity of $250 million, allowing for repurchases in open market transactions or privately negotiated transactions[208]. - The Board of Directors adopted a quarterly cash dividend policy of $0.10 per share on December 8, 2014[204]. - The cumulative total stockholder return for the company is measured against the S&P 500 Index and a peer group, assuming an initial investment of $100 on April 30, 2015[198].

Financial Data and Key Metrics Changes - For the full year of fiscal '20, the company's fee revenue was $1.93 billion, essentially flat year-over-year [29] - Adjusted EBITDA for the full year was $301 million, with an adjusted EBITDA margin of 15.6% [29] - In Q4, fee revenue was $440.5 million, down 7.9% year-over-year at constant currency [30] - Adjusted EBITDA in Q4 was approximately $70 million, with a 15.8% adjusted EBITDA margin [30] - Adjusted fully diluted earnings per share in Q4 were $0.60 [30] Business Line Data and Key Metrics Changes - Executive Search fee revenue in Q4 was down 10% globally [30] - RPO and Professional Search fee revenue was down 9% year-over-year [30] - Consulting fee revenue decreased by 14% year-over-year [30] - Digital segment grew by 14% year-over-year, with Q4 fee revenue of $69 million [36] Market Data and Key Metrics Changes - In Q4, North America and EMEA Executive Search revenues were each down 10% year-over-year, while APAC was down 16% [40] - New business trends showed a decline of approximately 30% year-over-year in April, stabilizing to a 26% decline in June [22][43] Company Strategy and Development Direction - The company is focusing on reimagining its business model, moving from analog to digital delivery in its assessment and learning business [18] - Korn Ferry aims to maintain operational flexibility and has set a goal of at least neutral EBITDA during the COVID-19 crisis [23][34] - The company is committed to investing in recovery and has a strong balance sheet with $863 million in cash and marketable securities [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented impact of the pandemic on business operations and expressed optimism about future opportunities for growth [14][20] - The company is seeing signs of stabilization in new business, with June showing an 18% increase over May [22] - Management refrained from providing specific revenue and earnings guidance for Q1 FY '21 due to ongoing uncertainties [25] Other Important Information - The company has taken swift actions to reduce its cost base by approximately $300 million on a run rate basis [33] - Korn Ferry has seen an uptick in its diversity and inclusion consulting business amid the pandemic [51] Q&A Session Summary Question: Recent trends in the Consulting business - Management noted an uptick in diversity and inclusion services and indicated that June new business in Consulting was down about 29% [51][52] Question: Performance of recent acquisitions - Management stated that the integration of recent acquisitions has been successful, contributing positively to the business [62] Question: Breakdown of new business trends by geography and service line - Management provided insights that RPO new business was up 72% over the last four months, while Professional Search was down 36% [67] Question: Maintaining EBITDA neutrality - Management clarified that the goal is to maintain a minimum of EBITDA breakeven, with the timeline dependent on the resolution of the humanitarian crisis [81][86] Question: Impact of working from home on Consulting business - Management indicated that the shift to virtual delivery has significantly impacted the learning and development segments, which were previously reliant on in-person interactions [102][106]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 001-14505 KORN FERRY (Exact Name of Registrant as Specified in its Charter) Delaware 95-2623879 (State or Other Jurisdi ...