Group 1 - Korn Ferry is set to release its fourth-quarter earnings results on June 18, with expected earnings of $1.26 per share, unchanged from the previous year [1] - The projected quarterly revenue for Korn Ferry is $689.89 million, slightly down from $690.80 million a year earlier [1] - In the third quarter, Korn Ferry reported flat revenue year over year at $676.5 million, exceeding the consensus estimate of $650.4 million [2] Group 2 - Korn Ferry's fee revenue for the third quarter was $668.7 million, also flat year over year [2] - The company's shares fell by 3.2%, closing at $66.59 [2] - Recent analyst ratings include a Neutral rating from UBS with a price target cut from $75 to $74, a Buy rating from Truist Securities with a price target cut from $84 to $80, and an Outperform rating from Baird with a price target increase from $72 to $79 [6]

Core Insights - Korn/Ferry (KFY) is expected to report quarterly earnings of $1.26 per share, indicating no change from the previous year [1] - Analysts forecast revenues of $688.94 million, representing a decrease of 0.3% year over year [1] - The consensus EPS estimate has remained unchanged over the past 30 days, reflecting analysts' reassessment of projections [1] Revenue Projections - Analysts estimate 'Fee Revenue - Total Executive Search' at $206.26 million, indicating a year-over-year increase of 3.8% [4] - The combined estimate for 'Fee Revenue' is projected to be $688.94 million, suggesting a decrease of 0.3% year over year [4] - 'Fee Revenue - Digital' is expected to reach $91.65 million, reflecting a change of 0.4% from the prior-year quarter [4] - 'Fee Revenue - Consulting' is anticipated to be $167.62 million, indicating a year-over-year decline of 8% [5] Market Performance - Over the past month, Korn/Ferry shares have recorded a return of 0.8%, compared to the Zacks S&P 500 composite's return of 3.6% [5] - Korn/Ferry holds a Zacks Rank 5 (Strong Sell), suggesting it may underperform the overall market in the upcoming period [5]

Korn Ferry (KFY) FY Conference Summary Company Overview - **Company**: Korn Ferry - **Industry**: Staffing and Human Capital Services - **Event Date**: June 04, 2025 - **Key Speakers**: Bob Rozek (CFO), Tiffany Louders (VP of Investor Relations) Core Points and Arguments Business Transformation - Korn Ferry has evolved from primarily an executive search firm (80-85% of revenue) to a diversified organizational consulting firm, with executive search now representing only 29% of the business [5][8] - The company has developed capabilities in organizational strategy, talent acquisition, leadership development, and total rewards [7][8] Financial Performance - FY 2024 fee revenue was $2.76 billion, with a trailing 12-month revenue of $2.71 billion, reflecting a slight decline of 1% year-over-year [11] - Adjusted EBITDA increased by nearly $50 million, with a margin improvement of 200 basis points [11] - Digital business revenue, including subscriptions and licenses, grew by 200 basis points [11] Client Base and Market Position - Korn Ferry works with 97% of the S&P 500 and 75% of the best companies identified by Fortune magazine [12] - The addressable market for Korn Ferry's services is estimated at $450 billion, driven by demographic changes [17] Strategic Focus - The company emphasizes integrated client engagements, aiming to present itself as a unified entity rather than a collection of services [25][46] - Korn Ferry's growth strategy includes a balanced approach to capital allocation, focusing on reinvestment in the business, M&A, dividends, and share buybacks [36][39] M&A and Growth Strategy - M&A has contributed approximately 40% of Korn Ferry's growth, with significant acquisitions like PDI and Hay Group enhancing its capabilities [27] - The company aims to pursue transformational opportunities at the intersection of talent and strategy [27] Talent and Retention - Korn Ferry has a strong retention rate of over 99% for senior client personnel, highlighting its focus on talent management [29] - The company is developing a "talent suite" to integrate various solutions and improve client engagement [30] Margin Improvement - Korn Ferry has seen margin increases despite challenging market conditions, with a current margin of 17% and a target range of 16-18% [54][58] - Cost management strategies include reducing real estate expenses and proactively managing underperforming staff [56][58] Additional Important Insights - The executive search business has shown positive growth due to factors like workforce turnover and changing work preferences [50][53] - Korn Ferry's integrated approach aims to eliminate silos within the organization, enhancing collaboration and client service [46][48] - The company has a disciplined approach to M&A, focusing on strategic alignment, financial viability, and cultural fit [39][40] This summary encapsulates the key points discussed during the Korn Ferry FY Conference, highlighting the company's strategic direction, financial performance, and market positioning.

Korn Ferry (KFY) Conference Summary Company Overview - Korn Ferry is recognized as the largest executive search firm globally, evolving into a talent consulting organization [1] Key Insights Business Strategy - The company aims to break down silos between different business lines (executive search, consulting, digital) to present a unified Korn Ferry brand to clients [8][9] - The focus is on becoming a comprehensive talent partner for clients, addressing all aspects of their talent and business issues [9] Revenue and Client Management - The Marquee and Diamond program includes 350 top clients, contributing approximately 40% of consolidated revenue, up from 30% six years ago [10][11] - The program generates over $1 billion in fees from a total of $2.7 billion to $2.8 billion in fee revenue [11] - Leadership is taking personal responsibility for key accounts to enhance client relationships and drive growth [12][13] Financial Performance - Korn Ferry maintains an EBITDA margin range of 16% to 18%, currently at 17% [21] - In a mild recession, margins may drop to low double digits; in a severe recession, they could fall to mid-single digits but are expected to recover [21][60] Cost Management - The company has reduced real estate costs by 35% and moderated spending on business development [23] - Korn Ferry is actively weeding out low performers to optimize workforce efficiency [25] Capital Allocation - The company prioritizes reinvesting in the business, including hiring and technology investments, while also returning cash to shareholders through dividends and buybacks [28][29] - Current dividends are approximately $1.92 per share, yielding about 2.5% [30] M&A Strategy - Korn Ferry has focused on acquiring companies that align with its core competencies, particularly in finance, accounting, and IT [32][33] - The interim business is positioned to leverage executive search capabilities for cross-selling opportunities [37] Digital and AI Initiatives - The company is developing a single sign-on repository to streamline client access to various services and data [40][56] - AI initiatives are aimed at improving efficiency in consulting services and back-office operations [63][64] Market Outlook - The retirement of baby boomers is expected to create a slight uptick in executive search demand over the next three to five years [41] - The company anticipates a gradual recovery in the market as clients adapt to current economic conditions [74] Long-term Aspirations - Korn Ferry aims to be the leading name in human capital and talent strategy, akin to how McKinsey and BCG are viewed in business strategy [76] Additional Important Points - The company is focused on enhancing its digital capabilities and leveraging its intellectual property for consulting engagements [46][54] - Korn Ferry is committed to maintaining a strong balance sheet and generating free cash flow [28]

Core Insights - The article emphasizes the importance of the Zacks Rank in identifying strong stocks through earnings estimates and revisions, while also acknowledging the diverse strategies investors may adopt [1] - Value investing is highlighted as a favored strategy that seeks to identify undervalued companies based on traditional valuation metrics [2] - The Style Scores system is introduced, particularly the "Value" category, which helps investors find stocks with high value grades and strong Zacks Ranks [3] Company Analysis: KornFerry International (KFY) - KornFerry International currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong investment potential [4] - The stock is trading at a P/E ratio of 12.74, significantly lower than the industry average P/E of 15.62, suggesting it may be undervalued [4] - Over the past 12 months, KFY's Forward P/E has fluctuated between 11.84 and 15.53, with a median of 13.73, further supporting its valuation appeal [4] - KFY has a P/CF ratio of 10.96, which is favorable compared to the industry's average P/CF of 12.26, indicating strong operating cash flow [5] - The P/CF for KFY has ranged from 10.19 to 15.39 over the last year, with a median of 13.77, reinforcing its undervaluation status [5] - Overall, KFY's strong value metrics and positive earnings outlook position it as an attractive value stock at this time [6]

Financial Data and Key Metrics Changes - Fee revenue in Q3 was $669 million, a 2% year-over-year increase at constant currency [17] - Adjusted EBITDA increased 13% year-over-year to $114 million, with an adjusted EBITDA margin of 17.1%, up 190 basis points year-over-year [18] - Adjusted EPS increased 11% year-over-year to $1.19 [18] - Total company new business grew 13% year-over-year at constant currency, including $210 million of RPO new business, with 65% generated from new clients [18] Business Line Data and Key Metrics Changes - Consulting new business was $159 million, up 3% at constant currency, with larger engagements (over $500,000) representing 41% of new business [23] - Digital fee revenue was $91 million, up 3% at constant currency, with an adjusted EBITDA margin of 31.3%, up 100 basis points year-over-year [24] - Executive Search fee revenue grew 4% at constant currency to $205 million, with consultant productivity increasing 7% year-over-year [25] - RPO fee revenue grew 6% to $85 million, with an adjusted EBITDA margin of 15%, up 360 basis points year-over-year [26] Market Data and Key Metrics Changes - New business in EMEA showed particular strength, contributing to overall growth [19] - Fee revenue under contract accelerated to $752 million, with about 42% expected to be recognized in the next four quarters [27] Company Strategy and Development Direction - The company is focusing on larger addressable markets and aligning capabilities to drive sustainable, large-scale client engagements [11][12] - The diversification of services is evident, with marquee and diamond accounts representing 39% of total consolidated fee revenue [19] - The company is committed to becoming a leader in powering organizational performance for talent [14] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment for consulting services has been challenging, but the company's strategy is proving effective [9] - Management expects fee revenue in Q4 to range from $680 million to $700 million, with adjusted EBITDA margins around 16.8% to 17% [28] - There is a significant supply-demand imbalance in the labor market, presenting opportunities for the company [41] Other Important Information - The company is increasing its quarterly dividend by 30%, marking the sixth increase in the last five years [10][22] - The company has invested approximately $45 million in the Trilogy acquisition and repurchased over 1 million shares year-to-date [22] Q&A Session Summary Question: What areas have seen the most success in driving productivity? - Management noted that there is still room for productivity improvement, with rates per hour increasing significantly in both Consulting and Interim solutions [34][35] Question: What drove the growth in RPO new business? - The growth was attributed to a combination of new logos, marquee accounts, and sectors like healthcare and life sciences [40] Question: What caused the decline in digital new business? - The decline was due to tough comparisons from significant deals in the previous year, particularly in licensing the compensation database [46] Question: What are the expectations for hiring activity amid economic uncertainty? - Management does not expect hiring activity to pull back significantly, citing demographic trends and the need for companies to reskill their workforce [50][52] Question: Can you elaborate on recent large engagements? - The company is focusing on high-impact engagements that involve organizational design and leadership development, with a consulting backlog at an all-time high [62] Question: What would indicate a need for contingency planning? - Management indicated that a significant worsening of the cost of living crisis would be a key factor to monitor [87] Question: How should we think about margin expansion in '26? - The company targets margins of 16% to 18%, balancing earnings growth with investments in the business [107]

Safe Harbor Statement FORWARD-LOOKING STATEMENTS Statements in this presentation that relate to goals, strategies, future plans and expectations 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. For a detailed description of many of those risks and uncertainties, please refer to Korn Ferry's earnings release and i ...

Financial Performance - Q3 FY'25 fee revenue was $668.7 million, flat year over year [106] - Net income attributable to Korn Ferry was $58.4 million, with a net income margin of 8.7%, a 10bps decrease compared to the year-ago quarter [106] - Adjusted EBITDA for Q3 FY'25 was $114.5 million, with an Adjusted EBITDA margin of 17.1%, a 190bps increase compared to the year-ago quarter [106] - Diluted earnings per share for Q3 FY'25 was $1.10 [106] - Total fee revenue for the three months ended January 31, 2025, was $668.729 million, a slight increase from $668.679 million in the same period of 2024 [109] - Net income attributable to Korn Ferry for the three months ended January 31, 2025, was $58.414 million, representing a net income margin of 8.7%, compared to $59.071 million and 8.8% in the prior year [109] - Adjusted EBITDA for the three months ended January 31, 2025, was $114.489 million, with an adjusted EBITDA margin of 17.1%, up from $101.704 million and 15.2% in the same period of 2024 [110] - Consolidated net income for the nine months ended January 31, 2025, was $181.8 million, representing a margin of 9.0%, compared to $104.0 million and a margin of 5.0% for the same period in 2024 [1] - Net income attributable to Korn Ferry increased by $77.8 million, or 75%, to $181.8 million in the nine months ended January 31, 2025 [186] Revenue Breakdown - RPO fee revenue increased by 4% year over year, with new business in Q3 FY'25 totaling $210 million, of which 64% was from new client wins and 36% from renewals/extensions [106] - Consulting fee revenue for the three months ended January 31, 2025, was $158.704 million, accounting for 23.7% of total fee revenue, down from $166.947 million and 25.0% in the same period of 2024 [109] - Digital fee revenue for the three months ended January 31, 2025, was $90.823 million, representing 13.6% of total fee revenue, compared to $90.317 million and 13.5% in the prior year [109] - Executive Search revenue for North America increased to $128.264 million, representing 19.2% of total fee revenue for the three months ended January 31, 2025, compared to $121.449 million and 18.2% in the same period of 2024 [109] - Professional Search & Interim reported fee revenue of $372.8 million, a decrease of $38.7 million, or 9%, in the nine months ended January 31, 2025 compared to $411.5 million in the year-ago period [161] - RPO reported fee revenue of $260.8 million, a decrease of $3.9 million, or 1%, in the nine months ended January 31, 2025 compared to $264.7 million in the year-ago period [162] - Digital reported fee revenue of $271.9 million, a decrease of $3.5 million, or 1%, in the nine months ended January 31, 2025 compared to $275.4 million in the year-ago period [156] Expenses and Costs - Compensation and benefits expense decreased by $30.9 million, or 7%, to $425.3 million in the three months ended January 31, 2025, primarily due to a decrease in deferred compensation expense [7] - General and administrative expenses increased by $2.6 million, or 4%, to $65.3 million in the three months ended January 31, 2025, primarily due to impairment charges associated with the reduction of the company's real estate footprint [8] - Cost of services expense increased by $2.2 million, or 3%, to $78.0 million in the three months ended January 31, 2025 compared to $75.8 million in the year-ago quarter, with Professional Search & Interim accounting for $2.5 million of the increase [137] - General and administrative expenses decreased by $4.4 million, or 2%, to $189.9 million in the nine months ended January 31, 2025 [173] - Depreciation and amortization expenses increased by $1.7 million, or 3%, to $59.8 million in the nine months ended January 31, 2025 [184] Acquisitions and Strategic Initiatives - The acquisition of Trilogy was completed on November 1, 2024, for $44.4 million, expected to enhance Korn Ferry's Professional Search & Interim business [103] - The company completed the acquisition of Trilogy for $44.4 million on November 1, 2024, enhancing its Interim business segment [201] - Korn Ferry's integrated go-to-market strategy focuses on approximately 350 marquee and regional accounts, driving top-line synergies and double-digit fee revenue growth rates over the past twenty years [100] Market and Technology Outlook - Korn Ferry anticipates that advancements in technologies like generative AI will create opportunities for growth and relevance in the market [99] - The company is leveraging unique data sets and intellectual property to differentiate its service offerings from competitors [98] Cash and Investments - Cash and cash equivalents and marketable securities totaled $1,061.0 million as of January 31, 2025, down from $1,195.4 million as of April 30, 2024 [207] - Cash used in investing activities increased to $112.7 million for the nine months ended January 31, 2025, primarily due to the acquisition of Trilogy [210] - Cash used in financing activities was $146.4 million for the nine months ended January 31, 2025, compared to $75.3 million in the prior year, driven by higher stock repurchases and dividends paid [211] Tax and Interest - Income tax provision was $22.8 million in the three months ended January 31, 2025, with an effective tax rate of 27.8% compared to $9.0 million and an effective rate of 13.1% in the year-ago quarter [152] - The provision for income tax was $70.0 million with an effective tax rate of 27.4% for the nine months ended January 31, 2025, compared to $29.8 million and 21.8% in the prior year [198] - Interest expense, net decreased to $15.0 million for the nine months ended January 31, 2025, from $16.3 million in the prior year, due to increased interest income [197] Foreign Exchange and Risk Management - During the nine months ended January 31, 2025, foreign currency losses amounted to $1.9 million, a decrease from $2.2 million in the same period of 2024, showing an improvement of approximately 13.6% [218] - A 10% fluctuation in the value of major global currencies could result in a foreign exchange gain or loss of $15.9 million based on the ten largest exposure balances as of January 31, 2025 [219] - As of January 31, 2025, there were no amounts outstanding under the Credit Facilities, indicating effective management of credit risk [220] - The interest rate applicable to loans under the Amended Credit Agreement may fluctuate between Term SOFR plus 1.125% to 2.00% per annum, depending on the consolidated net leverage ratio [220] - The company has sought to minimize interest rate risk by adjusting the borrowed funds crediting rate, which increases the cash surrender value on COLI contracts [221] Accounting and Reporting - There have been no material changes in critical accounting policies since the end of fiscal 2024, ensuring consistency in financial reporting [215] - The company has no off-balance sheet arrangements or material changes in contractual obligations as of January 31, 2025, maintaining a stable financial position [214]

Financial Performance - Q3 FY'25 fee revenue was $668.7 million, flat year over year, with a 2% increase on a constant currency basis[4] - Net income attributable to Korn Ferry was $58.4 million, with a margin of 8.7%, a decrease of 10bps compared to the previous year[8] - Adjusted EBITDA for Q3 FY'25 was $114.5 million, with an adjusted EBITDA margin of 17.1%, an increase of 190bps year over year[4] - Korn Ferry reported total revenue of $676.5 million for the three months ended January 31, 2025, a slight decrease of 0.05% compared to $676.9 million for the same period in 2024[43] - The company's net income attributable to Korn Ferry for the three months ended January 31, 2025, was $58.4 million, compared to $59.1 million in the same period last year, reflecting a decrease of 1.2%[43] - Adjusted EBITDA for the nine months ended January 31, 2025, increased to $342.725 million, compared to $295.904 million for the same period in 2024, reflecting a growth of 15.8%[49] - Consolidated net income for the three months ended January 31, 2025, was $58,414, representing a margin of 8.7%, compared to $59,071 and a margin of 8.8% for the same period in 2024[57] - Korn Ferry's net income attributable for the nine months ended January 31, 2025, was $181,818, with a margin of 9.0%, compared to $103,965 and a margin of 5.0% in 2024[57] Segment Performance - Fee revenue in the Consulting segment decreased by 5% year over year to $158.7 million, primarily due to a decline in organizational strategy and total rewards offerings[12] - Digital segment fee revenue was $90.8 million, essentially flat year over year, with a 3% increase at constant currency[16] - Executive Search segment fee revenue increased to $204.6 million, up 2.7% from the previous year[19] - In the Professional Search & Interim segment, fee revenue was $130.0 million in Q3 FY'25, essentially flat compared to $130.9 million in Q3 FY'24[23] - RPO fee revenue increased to $84.7 million in Q3 FY'25, a 4% increase from $81.2 million in Q3 FY'24, attributed to new client wins and increased demand[27] - Consulting revenue for the three months ended January 31, 2025, was $158,704, with an EBITDA margin of 17.7%, compared to $161,382 and a margin of 16.7% in 2024[57] - Digital revenue for the nine months ended January 31, 2025, was $271,896, with an EBITDA margin of 31.0%, compared to $275,395 and a margin of 29.3% in 2024[57] - North America executive search revenue for the three months ended January 31, 2025, was $128,264, with a margin of 29.0%, compared to $129,889 and a margin of 24.2% in 2024[57] - Total executive search revenue for the nine months ended January 31, 2025, was $619,205, with an EBITDA margin of 24.5%, compared to $607,540 and a margin of 20.7% in 2024[57] - Professional search and interim revenue for the three months ended January 31, 2025, was $129,957, with a margin of 21.0%, compared to $130,854 and a margin of 18.2% in 2024[57] - RPO revenue for the nine months ended January 31, 2025, was $260,789, with an EBITDA margin of 14.6%, compared to $264,653 and a margin of 10.8% in 2024[57] Shareholder Returns and Capital Management - The company repurchased 237,000 shares for $17.9 million during the quarter[4] - Cash and cash equivalents decreased to $779.3 million as of January 31, 2025, down from $941.0 million at April 30, 2024[47] - Total assets as of January 31, 2025, were $3.650 billion, a slight decrease from $3.679 billion at April 30, 2024[47] - Korn Ferry's weighted-average diluted shares outstanding increased to 52.4 million for the three months ended January 31, 2025, compared to 51.3 million in the same period last year[43] Future Outlook - The company anticipates opportunities arising from a labor supply/demand imbalance, requiring organizations to reimagine their workforce strategies[3] - For Q4 FY'25, consolidated fee revenue is expected to be in the range of $680 million to $700 million[34] - Q4 FY'25 adjusted diluted earnings per share is projected to be between $1.22 and $1.30[31] - The company anticipates continued growth driven by disciplined cost management and increased consultant productivity[21] - The acquisition of Trilogy, effective November 1, 2024, is expected to positively impact future fee revenue despite current industry-wide demand slowdowns[24] Adjusted Metrics - Adjusted diluted earnings per share for Q3 FY'25 were $1.19, compared to $1.07 in the previous year[5] - The adjusted net income attributable to Korn Ferry for the three months ended January 31, 2025, was $63.263 million, up from $55.776 million in the same period of 2024, representing a 13.4% increase[49] - The adjusted diluted earnings per share for the nine months ended January 31, 2025, were $3.57, compared to $3.03 for the same period in 2024, indicating a 17.8% increase[52] - Total fee revenue for the nine months ended January 31, 2025, was $2,018,040, with an adjusted EBITDA margin of 17.0%, compared to $2,071,871 and a margin of 14.3% for the same period in 2024[57] Restructuring and Charges - The company reported a restructuring charge of $1.3 million for the three months ended January 31, 2025, compared to $4.6 million in the same period last year[43] - Integration/acquisition costs for the three months ended January 31, 2025, were $2.127 million, down from $3.899 million in the same period of 2024[49] - Restructuring charges for the three months ended January 31, 2025, were $1.316 million, significantly lower than $4.612 million in the same period of 2024[49] - The company incurred $2.452 million in impairment of right-of-use assets during the three months ended January 31, 2025, compared to no impairment in the same period of 2024[49] Non-GAAP Measures - Adjusted EBITDA for Q3 FY'25 was $51.2 million, up from $43.4 million in the same quarter last year, with an Adjusted EBITDA margin increase of 320bps to 25.0%[21] - Adjusted EBITDA for the quarter was not explicitly stated, but management emphasized the importance of non-GAAP measures for evaluating ongoing operations[40]

Core Insights - Korn/Ferry (KFY) is expected to report quarterly earnings of $1.13 per share, reflecting a year-over-year increase of 5.6% [1] - Revenue is anticipated to be $648.47 million, which represents a 3% decline from the same quarter last year [1] - There have been no revisions in the consensus EPS estimate over the last 30 days, indicating stability in analysts' forecasts [1] Revenue Estimates - The consensus estimate for 'Fee Revenue - Total executive search' is projected to be $197.74 million, indicating a year-over-year decrease of 0.8% [4] - The overall 'Fee revenue' is expected to reach $648.52 million, reflecting a 3% decline year-over-year [4] - 'Fee Revenue - Digital' is estimated at $88.61 million, showing a year-over-year change of -1.9% [4] - 'Fee Revenue - Consulting' is projected to be $151.80 million, indicating a significant year-over-year decrease of 9.1% [5] Stock Performance - Korn/Ferry shares have decreased by 6.8% over the past month, compared to a 4.1% decline in the Zacks S&P 500 composite [6] - The company holds a Zacks Rank of 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [6]