Korn Ferry(KFY) - 2026 Q1 - Quarterly Results

Executive Summary & Highlights First Quarter Fiscal 2026 Results Overview Korn Ferry announced strong first quarter fiscal 2026 results, with fee revenue reaching $708.6 million, diluted EPS at $1.26, and adjusted diluted EPS at $1.31, demonstrating the effectiveness of its strategic approach amidst a dynamic labor and economic environment - Korn Ferry reported first quarter fee revenue of $708.6 million[2] - Diluted earnings per share was $1.26 and adjusted diluted earnings per share was $1.31[2] CEO Commentary CEO Gary D. Burnison expressed satisfaction with the company's performance, attributing success to a sophisticated, holistic strategy that leverages expertise, robust IP, and relevant solutions globally. He highlighted the immense opportunity driven by diversification and demographic shifts - CEO Gary D. Burnison stated that the company's strategy is working, driving performance with a sophisticated, holistic approach[3] - The strategy brings together expertise, robust IP, and relevant solutions globally to address client challenges[3] - The CEO emphasized the immense opportunity for Korn Ferry due to its diversification strategy and demographic shifts[3] Key Financial Highlights Korn Ferry achieved significant year-over-year growth in Q1 FY'26, with fee revenue up 5% to $708.6 million, net income increasing 6% to $66.6 million, and adjusted EBITDA rising 8% to $120.4 million. Diluted EPS and adjusted diluted EPS also saw increases of 8% and 11% respectively Q1 FY'26 Key Financial Highlights (YoY Change) | Metric | Q1 FY'26 Value | YoY Change (Actual) | YoY Change (Constant Currency) | | :-------------------------------- | :---------------- | :------------------ | :----------------------------- | | Fee revenue | $708.6 million | +5% | +4% | | Net income attributable to Korn Ferry | $66.6 million | +6% | N/A | | Net income margin | 9.4% | +10bps | N/A | | Adjusted EBITDA | $120.4 million | +8% | N/A | | Adjusted EBITDA margin | 17.0% | +50bps | N/A | | Diluted earnings per share | $1.26 | +8% | N/A | | Adjusted diluted earnings per share | $1.31 | +11% | N/A | | Shares repurchased | 145,770 shares | N/A | N/A | | Value of shares repurchased | $9.9 million | N/A | N/A | Consolidated Financial Performance Selected Consolidated Financial Results Korn Ferry reported Q1 FY'26 fee revenue of $708.6 million, a 5% increase year-over-year, primarily driving a 10bps increase in net income margin to 9.4% and a 50bps increase in Adjusted EBITDA margin to 17.0%. Estimated remaining fees under existing contracts also grew to $1,674.1 million Selected Consolidated Financial Results (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $708.6 | $674.9 | | Total revenue | $715.5 | $682.8 | | Estimated remaining fees under existing contracts | $1,674.1 | $1,532.6 | | Net income attributable to Korn Ferry | $66.6 | $62.6 | | Net income attributable to Korn Ferry margin | 9.4% | 9.3% | | Basic earnings per share | $1.28 | $1.19 | | Diluted earnings per share | $1.26 | $1.17 | | Adjusted EBITDA | $120.4 | $111.2 | | Adjusted EBITDA margin | 17.0% | 16.5% | | Adjusted net income attributable to Korn Ferry | $69.2 | $63.1 | | Adjusted basic earnings per share | $1.33 | $1.20 | | Adjusted diluted earnings per share | $1.31 | $1.18 | - Fee revenue in Q1 FY'26 increased by 5% year-over-year (4.0% at constant currency) to $708.6 million[8] - Net income attributable to Korn Ferry margin increased by 10bps year-over-year to 9.4%, primarily due to increased fee revenue[8] - Adjusted EBITDA margin increased by 50bps year-over-year to 17.0%, also primarily due to increased fee revenue[9] GAAP Consolidated Statements of Income Korn Ferry's consolidated statements of income for Q1 FY'26 show a 4.8% increase in total revenue to $715.5 million, with operating income rising to $83.4 million. Net income attributable to Korn Ferry grew to $66.6 million, resulting in diluted EPS of $1.26 Condensed Consolidated Statements of Income (Three Months Ended July 31) | Metric (in thousands) | 2025 (unaudited) | 2024 | | :------------------------------------ | :--------------- | :----- | | Fee revenue | $708,613 | $674,946 | | Reimbursed out-of-pocket engagement expenses | $6,930 | $7,815 | | Total revenue | $715,543 | $682,761 | | Compensation and benefits | $461,411 | $451,775 | | General and administrative expenses | $63,874 | $59,999 | | Reimbursed expenses | $6,930 | $7,815 | | Cost of services | $77,194 | $67,544 | | Depreciation and amortization | $22,686 | $19,578 | | Total operating expenses | $632,095 | $606,711 | | Operating income | $83,448 | $76,050 | | Other income, net | $12,752 | $14,505 | | Interest expense, net | $(3,516) | $(3,945) | | Income before provision for income taxes | $92,684 | $86,610 | | Income tax provision | $25,250 | $22,354 | | Net income | $67,434 | $64,256 | | Net income attributable to noncontrolling interest | $(798) | $(1,652) | | Net income attributable to Korn Ferry | $66,636 | $62,604 | | Basic earnings per share | $1.28 | $1.19 | | Diluted earnings per share | $1.26 | $1.17 | | Weighted-average common shares outstanding (Basic) | 51,466 | 51,950 | | Weighted-average common shares outstanding (Diluted) | 52,368 | 52,745 | GAAP Consolidated Balance Sheets As of July 31, 2025, Korn Ferry's total assets were $3,630.6 million, a decrease from April 30, 2025, primarily due to a reduction in cash and cash equivalents. Total liabilities also decreased to $1,731.8 million, while total stockholders' equity increased to $1,898.8 million Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 (unaudited) | April 30, 2025 (audited) | | :------------------------------------------ | :------------------------ | :----------------------- | | ASSETS | | | | Cash and cash equivalents | $684,855 | $1,006,964 | | Total current assets | $1,490,902 | $1,750,138 | | Total assets | $3,630,597 | $3,861,224 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Compensation and benefits payable | $266,671 | $530,473 | | Total current liabilities | $674,400 | $955,598 | | Total liabilities | $1,731,784 | $1,989,085 | | Total Korn Ferry stockholders' equity | $1,892,088 | $1,866,456 | | Total stockholders' equity | $1,898,813 | $1,872,139 | | Total liabilities and stockholders' equity | $3,630,597 | $3,861,224 | Reconciliation of GAAP to Non-GAAP Measures Korn Ferry provides non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, to offer a clearer view of ongoing operating results by excluding integration/acquisition costs and accelerated depreciation on its Digital platform. For Q1 FY'26, Adjusted EBITDA was $120.4 million and Adjusted diluted EPS was $1.31 Reconciliation of GAAP to Non-GAAP Financial Measures (Three Months Ended July 31) | Metric (in thousands, except per share) | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net income attributable to Korn Ferry | $66,636 | $62,604 | | Integration/acquisition costs (1) | $1,508 | $1,076 | | Accelerated depreciation on Digital platform (2) | $1,977 | — | | Tax effect on the adjusted items (3) | $(883) | $(560) | | Adjusted net income attributable to Korn Ferry | $69,238 | $63,120 | | Diluted earnings per common share | $1.26 | $1.17 | | Adjusted diluted earnings per share | $1.31 | $1.18 | | Adjusted EBITDA | $120,394 | $111,209 | | Adjusted EBITDA margin | 17.0% | 16.5% | - Non-GAAP measures adjust for integration/acquisition costs and accelerated depreciation on the Digital platform to provide meaningful supplemental information on ongoing operating results[42] - Accelerated depreciation of $2.0 million in Q1 FY'26 is associated with the decision to sunset the Digital platform upon the introduction of the Korn Ferry Talent Suite platform, expected in Q3 FY'26[7] Results by Solution Consulting Consulting fee revenue increased by 1% year-over-year to $170.0 million in Q1 FY'26, driven by a 9% increase in average bill rates due to a shift towards larger, longer-duration engagements. However, Adjusted EBITDA decreased by 1.7% to $28.8 million, with the margin declining by 50bps to 17.0% Selected Consulting Data (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $170.0 | $167.9 | | Total revenue | $172.7 | $170.8 | | Estimated remaining fees under existing contracts | $372.3 | $349.3 | | Ending number of consultants and execution staff | 1,550 | 1,663 | | Hours worked in thousands | 367 | 395 | | Average bill rate | $463 | $425 | | Adjusted EBITDA | $28.8 | $29.3 | | Adjusted EBITDA margin | 17.0% | 17.5% | - Consulting fee revenue increased by 1% year-over-year, primarily due to a 9% increase in average bill rates, reflecting a shift to larger and longer duration engagements[13] - Adjusted EBITDA margin for Consulting decreased by 50bps year-over-year to 17.0%[14] Digital Digital fee revenue grew 1% year-over-year to $89.2 million in Q1 FY'26, with subscription & license fee revenue increasing to $37.2 million. Adjusted EBITDA for the Digital segment rose to $27.6 million, and its margin improved by 80bps to 31.0% Selected Digital Data (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $89.2 | $88.2 | | Total revenue | $89.2 | $88.2 | | Estimated remaining fees under existing contracts | $398.0 | $372.1 | | Ending number of consultants | 225 | 259 | | Subscription & License fee revenue | $37.2 | $34.1 | | Adjusted EBITDA | $27.6 | $26.6 | | Adjusted EBITDA margin | 31.0% | 30.2% | - Digital fee revenue increased by 1% year-over-year to $89.2 million (down 1% at constant currency)[17] - Adjusted EBITDA margin for Digital increased by 80bps year-over-year to 31.0%[17] Executive Search Executive Search reported a robust 8% year-over-year increase in fee revenue to $224.3 million in Q1 FY'26, primarily driven by a higher number of engagements billed. Adjusted EBITDA surged by 16% to $57.5 million, with the margin expanding by 190bps to 25.6% Selected Executive Search Data (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $224.3 | $208.6 | | Total revenue | $226.3 | $210.4 | | Estimated remaining fees under existing contracts | $66.6 | $61.5 | | Ending number of consultants | 574 | 559 | | Average number of consultants | 567 | 551 | | Engagements billed | 3,751 | 3,448 | | New engagements | 1,596 | 1,556 | | Adjusted EBITDA | $57.5 | $49.4 | | Adjusted EBITDA margin | 25.6% | 23.7% | - Executive Search fee revenue increased by 8% year-over-year (6% at constant currency) to $224.3 million, driven by an increase in engagements billed[22] - Adjusted EBITDA for Executive Search increased by 16% year-over-year to $57.5 million, with the margin increasing by 190bps to 25.6%[23] Executive Search Regional Performance Executive Search experienced fee revenue growth across EMEA (17.0%), Asia Pacific (20.0%), and North America (3.6%) in Q1 FY'26, while Latin America saw a decline of 16.5% Executive Search Fee Revenue by Region (Q1 FY'26 vs Q1 FY'25) | Region | Q1 FY'26 Fee Revenue | Q1 FY'25 Fee Revenue | % Change | | :------------- | :------------------- | :------------------- | :------- | | North America | $139,654 | $134,752 | 3.6% | | EMEA | $53,781 | $45,981 | 17.0% | | Asia Pacific | $24,701 | $20,579 | 20.0% | | Latin America | $6,117 | $7,323 | (16.5%) | | Total Executive Search | $224,253 | $208,635 | 7.5% | - Executive Search experienced fee revenue growth in EMEA, North America, and APAC regions[22] Professional Search & Interim Professional Search & Interim fee revenue increased by 10% year-over-year to $133.9 million in Q1 FY'26, primarily due to higher Interim fee revenue associated with the acquisition of Trilogy International. Adjusted EBITDA grew to $28.0 million, with the margin remaining essentially flat at 20.9% Selected Professional Search & Interim Data (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $133.9 | $121.7 | | Total revenue | $135.1 | $122.7 | | Permanent Placement Fee revenue | $54.7 | $52.2 | | Interim Fee revenue | $79.2 | $69.5 | | Estimated remaining fees under existing contracts (Interim) | $93.3 | $79.4 | | Average weekly billable consultants (Interim) | 1,219 | 1,068 | | Adjusted EBITDA | $28.0 | $25.7 | | Adjusted EBITDA margin | 20.9% | 21.1% | - Professional Search & Interim fee revenue increased by 10% year-over-year to $133.9 million, primarily due to higher Interim fee revenue associated with the acquisition of Trilogy International[26] - Adjusted EBITDA margin for Professional Search & Interim was 20.9%, essentially flat year-over-year[27] Recruitment Process Outsourcing (RPO) RPO fee revenue increased by 3% year-over-year to $91.3 million in Q1 FY'26, driven by new logo clients in North America. Adjusted EBITDA for RPO grew to $14.3 million, and its margin improved significantly by 160bps to 15.7% Selected Recruitment Process Outsourcing (RPO) Data (Q1 FY'26 vs Q1 FY'25) | Metric | Q1 FY'26 | Q1 FY'25 | | :------------------------------------------ | :------- | :------- | | Fee revenue | $91.3 | $88.5 | | Total revenue | $92.2 | $90.7 | | Estimated remaining fees under existing contracts | $728.8 | $656.1 | | RPO new business | $99.3 | $103.6 | | Adjusted EBITDA | $14.3 | $12.5 | | Adjusted EBITDA margin | 15.7% | 14.1% | - RPO fee revenue increased by 3% year-over-year (1% at constant currency) to $91.3 million, primarily due to new logo clients in North America[30] - Adjusted EBITDA margin for RPO increased by 160bps year-over-year to 15.7%[31] Outlook & Corporate Information Q2 FY'26 Financial Outlook Korn Ferry projects Q2 FY'26 fee revenue to be between $690 million and $710 million. Consolidated diluted earnings per share is expected to range from $1.10 to $1.16, with adjusted diluted earnings per share projected between $1.23 and $1.33 - Q2 FY'26 fee revenue is expected to be in the range of $690 million and $710 million[36] - Q2 FY'26 diluted earnings per share is expected to range between $1.10 to $1.16[36] Q2 FY'26 Earnings Per Share Outlook | Metric | Low | High | | :---------------------------------------------------- | :---- | :---- | | Consolidated diluted earnings per share | $1.10 | $1.16 | | Integration/acquisition costs and accelerated depreciation on Digital platform | $0.19 | $0.23 | | Tax rate impact | $(0.06) | $(0.06) | | Consolidated adjusted diluted earnings per share | $1.23 | $1.33 | Earnings Conference Call Korn Ferry will host an earnings conference call on September 9, 2025, at 12:00 PM (EDT), featuring CEO Gary Burnison and other executives. The webcast and accompanying slides will be available on the investor relations section of their website - An earnings conference call will be held on September 9, 2025, at 12:00 PM (EDT)[35] - The call will be hosted by CEO Gary Burnison, CFO Robert Rozek, SVP Business Development & Analytics Gregg Kvochak, and VP Investor Relations Tiffany Louder[35] - The conference call will be webcast and available online at ir.kornferry.com, along with earnings slides and other important information[35] About Korn Ferry Korn Ferry is a global consulting firm focused on powering performance by unlocking potential in people and driving business transformation through synchronizing strategy, operations, and talent. They aim to accelerate performance, fuel growth, and inspire lasting change for clients across major industries - Korn Ferry is a global consulting firm that powers performance by unlocking potential in people and unleashing transformation across businesses[38] - The firm synchronizes strategy, operations, and talent to accelerate performance, fuel growth, and inspire a legacy of change[38] Forward-Looking Statements This section cautions readers that statements regarding outlook, projections, goals, and future expectations are forward-looking and subject to various risks and uncertainties. These include global economic conditions, competition, labor market dynamics, regulatory changes, and technological advancements like AI, which could cause actual results to differ materially from current expectations - Statements regarding outlook, projections, goals, strategies, future plans, and expectations are forward-looking and involve risks and uncertainties[39] - Potential risks include global and local political/economic developments (inflation, trade wars, interest rates), labor market conditions, competition, geopolitical tensions, and changes in demand due to automation[39] - Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements[39] Use of Non-GAAP Financial Measures Korn Ferry utilizes non-GAAP financial measures, such as Adjusted net income, Adjusted EPS, constant currency percentages, and Adjusted EBITDA, to provide supplemental information on performance. These adjustments exclude items like integration/acquisition costs and accelerated depreciation, which management believes are not indicative of ongoing operating results, facilitating more meaningful period-to-period comparisons - Non-GAAP financial measures include Adjusted net income, Adjusted basic and diluted earnings per share, constant currency percentages, and Consolidated and Executive Search Adjusted EBITDA[41] - These measures exclude charges like integration/acquisition costs and accelerated depreciation on the Digital platform, which management believes are not indicative of ongoing operating results[42] - The use of non-GAAP measures aims to provide greater transparency, facilitate historical performance comparisons, and help investors identify operating trends by excluding the impact of exchange rate changes[42]