Korn Ferry(US:KFY)2024-12-09 20:38Financial Performance - Total revenue for the three months ended October 31, 2024, was $681,960, a decrease of 4.5% from $712,447 in the same period of 2023[7] - Fee revenue for the six months ended October 31, 2024, was $1,349,311, down 3.8% from $1,403,192 in the prior year[7] - Operating income for the three months ended October 31, 2024, increased significantly to $87,476 compared to $22,816 in the same period of 2023[7] - Net income attributable to Korn Ferry for the three months ended October 31, 2024, was $60,800, a recovery from a loss of $1,711 in the same period of 2023[7] - Basic earnings per share for the three months ended October 31, 2024, was $1.16, compared to a loss of $0.04 in the same period of 2023[7] - Net income for the six months ended October 31, 2024, was $126,599 thousand, compared to $47,229 thousand for the same period in 2023, representing a significant increase[14] - Comprehensive income attributable to Korn Ferry for the three months ended October 31, 2024, was $65,159, compared to a loss of $27,113 in the same period of 2023[10] - Adjusted EBITDA for the three months ended October 31, 2024, was $117,027, an increase of 18.7% from $98,542 for the same period in 2023[64] - Adjusted EBITDA for Q2 FY'25 was $117.0 million, with an Adjusted EBITDA margin of 17.4%, a 340bps increase compared to the year-ago quarter[82] Assets and Liabilities - Total current assets decreased to $1,482,447 as of October 31, 2024, from $1,674,160 as of April 30, 2024[5] - Total assets decreased to $3,526,653 as of October 31, 2024, from $3,678,869 as of April 30, 2024[5] - Total liabilities decreased to $1,743,788 as of October 31, 2024, from $1,941,544 as of April 30, 2024[5] - Cash and cash equivalents decreased to $694,850 as of October 31, 2024, from $941,005 as of April 30, 2024[5] - Total stockholders' equity as of October 31, 2024, was $1,782,865 thousand, up from $1,660,500 thousand as of October 31, 2023[12] - Cash and cash equivalents at the end of the period were $694,850 thousand, compared to $620,836 thousand at the end of the same period in 2023[14] Stock and Dividends - The company paid dividends of $39,262 thousand to shareholders during the six months ended October 31, 2024, an increase from $19,289 thousand in the same period of 2023[14] - A cash dividend of $0.37 per share was declared on December 4, 2024, with a payment date of January 15, 2025[73] - The quarterly dividend was increased by 83% to $0.33 per share as of December 5, 2023, following a 20% increase to $0.18 per share on June 26, 2023[136] Stock Repurchase - The company repurchased common stock totaling $56,153 thousand during the six months ended October 31, 2024, compared to $9,527 thousand in the same period of 2023[14] - The company repurchased approximately $32.6 million of its common stock under the share repurchase program during the second quarter of fiscal 2025[152] - A total of 461,141 shares were repurchased during the quarter ended October 31, 2024, at an average price of $71.44 per share[152] - The approximate dollar value of shares that may yet be purchased under the repurchase program is $149.7 million as of August 31, 2024[152] Operational Efficiency - The company reported integration/acquisition costs of $3,896 for the three months ended October 31, 2024, down from $5,030 for the same period in 2023[64] - The company reported restructuring charges of $0.576 million for the three months ended October 31, 2024, significantly lower than $63.53 million in the same period of 2023[91] - Total compensation and benefits expense decreased by $16.5 million, or 4%, to $437.4 million in the three months ended October 31, 2024, from $453.9 million in the year-ago quarter[97] - General and administrative expenses decreased by $1.2 million, or 2%, to $64.5 million in the three months ended October 31, 2024, compared to $65.7 million in the year-ago quarter[100] Revenue Breakdown - Korn Ferry's core solutions include Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition, addressing nearly every aspect of employer-employee engagement[16] - Revenue is primarily derived from talent and organizational consulting services, with consulting fee revenue recognized as services are rendered, measured by total hours incurred[19] - Digital fee revenue is generated from IP-based software products, recognized as services are delivered, with revenue from product subscriptions recognized over the contract term[21] - The company’s fee revenue from the Industrial sector was $208.0 million for the three months ended October 31, 2024, accounting for 30.9% of total fee revenue[58] - The digital segment contributed $92.89 million in fee revenue for the three months ended October 31, 2024, consistent with $97.09 million in the same period of 2023[88] Tax and Interest - The provision for income tax was $24.9 million for the three months ended October 31, 2024, with an effective tax rate of 28.5%, compared to $2.3 million and an effective tax rate of 98.2% for the same period in 2023[61] - Interest expense, net decreased to $5.6 million in the three months ended October 31, 2024, compared to $6.6 million in the year-ago quarter[110] Market and Economic Conditions - The company has evolved from a mono-line to a diversified business model, enhancing opportunities for consultants to engage with clients[16] - The company is focused on leveraging its integrated go-to-market strategy with over 340 marquee and regional accounts[79] - Korn Ferry's vision is to become the premier organizational consulting firm, capitalizing on the demand for upskilling and reskilling in a rapidly changing world[79] Miscellaneous - The company recognized no credit losses for available-for-sale debt securities during the three and six months ended October 31, 2024 and 2023[26] - Goodwill is tested for impairment annually, with the most recent test indicating no impairment as of February 1, 2024[30] - The company maintains cash and cash equivalents primarily in money market funds, with no losses experienced in such accounts[23] - The company has no off-balance sheet arrangements and no material changes in contractual obligations as of October 31, 2024[140]