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Korn Ferry(KFY) - 2025 Q3 - Quarterly Results
KFYKorn Ferry(KFY)2025-03-11 10:50

Financial Performance - Q3 FY'25 fee revenue was 668.7million,flatyearoveryear,witha2668.7 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 114.5million,withanadjustedEBITDAmarginof17.1114.5 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 676.9millionforthesameperiodin2024[43]−Thecompany′snetincomeattributabletoKornFerryforthethreemonthsendedJanuary31,2025,was676.9 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 59.1millioninthesameperiodlastyear,reflectingadecreaseof1.259.1 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 295.904millionforthesameperiodin2024,reflectingagrowthof15.8295.904 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 59,071andamarginof8.859,071 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 103,965andamarginof5.0103,965 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 90.8million,essentiallyflatyearoveryear,witha390.8 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 130.0millioninQ3FY′25,essentiallyflatcomparedto130.0 million in Q3 FY'25, essentially flat compared to 130.9 million in Q3 FY'24[23] - RPO fee revenue increased to 84.7millioninQ3FY′25,a484.7 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,withanEBITDAmarginof17.7158,704, 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,withanEBITDAmarginof31.0271,896, 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,withamarginof29.0128,264, 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,withanEBITDAmarginof24.5619,205, 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,withamarginof21.0129,957, 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,withanEBITDAmarginof14.6260,789, 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 17.9millionduringthequarter[4]−Cashandcashequivalentsdecreasedto17.9 million during the quarter[4] - Cash and cash equivalents decreased to 779.3 million as of January 31, 2025, down from 941.0millionatApril30,2024[47]−TotalassetsasofJanuary31,2025,were941.0 million at April 30, 2024[47] - Total assets as of January 31, 2025, were 3.650 billion, a slight decrease from 3.679billionatApril30,2024[47]−KornFerry′sweighted−averagedilutedsharesoutstandingincreasedto52.4millionforthethreemonthsendedJanuary31,2025,comparedto51.3millioninthesameperiodlastyear[43]FutureOutlook−Thecompanyanticipatesopportunitiesarisingfromalaborsupply/demandimbalance,requiringorganizationstoreimaginetheirworkforcestrategies[3]−ForQ4FY′25,consolidatedfeerevenueisexpectedtobeintherangeof3.679 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 700million[34]−Q4FY′25adjusteddilutedearningspershareisprojectedtobebetween700 million[34] - Q4 FY'25 adjusted diluted earnings per share is projected to be between 1.22 and 1.30[31]−Thecompanyanticipatescontinuedgrowthdrivenbydisciplinedcostmanagementandincreasedconsultantproductivity[21]−TheacquisitionofTrilogy,effectiveNovember1,2024,isexpectedtopositivelyimpactfuturefeerevenuedespitecurrentindustry−widedemandslowdowns[24]AdjustedMetrics−AdjusteddilutedearningspershareforQ3FY′25were1.30[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 1.07inthepreviousyear[5]−TheadjustednetincomeattributabletoKornFerryforthethreemonthsendedJanuary31,2025,was1.07 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 55.776millioninthesameperiodof2024,representinga13.455.776 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 3.03forthesameperiodin2024,indicatinga17.83.03 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 2,071,871andamarginof14.32,071,871 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 4.6millioninthesameperiodlastyear[43]−Integration/acquisitioncostsforthethreemonthsendedJanuary31,2025,were4.6 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 3.899millioninthesameperiodof2024[49]−RestructuringchargesforthethreemonthsendedJanuary31,2025,were3.899 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 4.612millioninthesameperiodof2024[49]−Thecompanyincurred4.612 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 51.2million,upfrom51.2 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]