Korn Ferry(US:KFY)2025-09-09 19:39Financial Performance - Fee revenue for Q1 FY'26 was $708.6 million, a year-over-year increase of 5%[107] - Net income attributable to Korn Ferry was $66.6 million, reflecting a 6% year-over-year increase with a margin of 9.4%[107] - Adjusted EBITDA for the quarter was $120.4 million, an 8% increase year-over-year, with a margin of 17.0%[107] - Diluted earnings per share increased by 8% to $1.26 compared to the same quarter last year[107] - Total revenue for the same period was $715.5 million, up from $682.8 million, reflecting a growth of 4.8%[110] - Net income attributable to Korn Ferry increased to $66.6 million, representing a margin of 9.4%, compared to $62.6 million and a margin of 9.3% in the prior year[110] - Adjusted EBITDA for the three months ended July 31, 2025, was $120.4 million, with an EBITDA margin of 17.0%, compared to $111.2 million and a margin of 16.5% in the previous year[110] - Adjusted EBITDA increased by $9.2 million, or 8%, to $120.4 million compared to $111.2 million in the year-ago quarter[138] Revenue Breakdown - Executive Search fee revenue increased by 8% year-over-year to $224.3 million[107] - Professional Search & Interim fee revenue rose by 10% year-over-year[107] - Executive Search EMEA reported fee revenue of $53.8 million, an increase of $7.8 million, or 17%, driven by a 16% increase in the number of engagements billed[115] - Professional Search & Interim fee revenue rose to $133.9 million, an increase of $12.2 million, or 10%, primarily due to interim fee revenue from the acquisition of Trilogy International[118] - Digital fee revenue was $89.2 million, an increase of $1.0 million, or 1%, with exchange rates favorably impacting revenue by $1.6 million[113] - RPO fee revenue increased by $2.8 million, or 3%, to $91.3 million, driven by new logo clients in North America[119] Expenses - Compensation and benefits expense increased by $9.6 million, or 2%, to $461.4 million, largely due to a rise in severance-related expenses[120] - General and administrative expenses increased by $3.9 million, or 7%, to $63.9 million, attributed to higher legal and professional fees[129] - Cost of services expense increased by $9.7 million, or 14%, to $77.2 million compared to $67.5 million in the year-ago quarter[135] - Consulting general and administrative expenses were $13.0 million, essentially flat compared to $12.9 million in the year-ago quarter[130] - Digital general and administrative expenses increased by $0.9 million, or 10%, to $10.0 million compared to $9.1 million in the year-ago quarter[130] Cash Flow and Capital Management - As of July 31, 2025, the company had $963.3 million in cash and cash equivalents, down from $1,277.0 million as of April 30, 2025[158] - Cash used in operating activities was $237.4 million for the three months ended July 31, 2025, compared to $227.2 million in the same period last year[160] - Cash used in investing activities increased to $32.2 million for the three months ended July 31, 2025, primarily due to higher property and equipment purchases[161] - Cash used in financing activities decreased to $51.6 million for the three months ended July 31, 2025, due to lower stock repurchases[162] - The company repurchased approximately $9.9 million of its stock during the three months ended July 31, 2025, with $83.9 million remaining available for repurchases[156] Tax and Dividend - The provision for income tax was $25.3 million with an effective tax rate of 27.2%, compared to $22.4 million and 25.8% in the year-ago quarter[149] - The Board of Directors approved a quarterly dividend increase of 83% to $0.33 per share on December 5, 2023, and a further increase to $0.37 per share on June 12, 2024[155] Marketable Securities and Credit Agreement - As of July 31, 2025, the company held marketable securities worth $278.4 million, including equity securities valued at $238.0 million[159] - The company has a Credit Agreement that allows for dividend payments as long as the consolidated net leverage ratio does not exceed 5.00 to 1.00[155] Foreign Currency and Other - The company recorded foreign currency losses of $0.9 million during the three months ended July 31, 2025, compared to $0.8 million in the prior year[169]