HireQuest (NasdaqCM:HQI) Q4 2025 Earnings call March 30, 2026 04:30 PM ET Company ParticipantsDavid Hartley - CFOKevin Steinke - Managing DirectorRick Hermanns - CEOWalter Frank - Senior Account ExecutiveOperatorWelcome to the HireQuest, Inc. fourth quarter and year-end 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star ...

Core Insights - Korn Ferry reported a strong performance in Q3 FY'26, with fee revenue of $717.4 million, representing a 7% increase year-over-year, driven by growth across all solutions [1][2] - The company’s estimated remaining fees under existing contracts reached $1.9 billion, up 11% year-over-year, with notable growth in Digital (16%), Consulting (12%), and RPO (10%) [1][2] - Diluted earnings per share increased by 12% to $1.23, while adjusted diluted earnings per share rose by 8% to $1.28 [1][2] Financial Performance - Fee revenue for Q3 FY'26 was $717.4 million, up from $668.7 million in Q3 FY'25, with growth in all solutions [1][2] - Net income attributable to Korn Ferry increased to $65.3 million, with a margin of 9.1%, compared to $58.4 million and a margin of 8.7% in the previous year [1][2] - Adjusted EBITDA for Q3 FY'26 was $123.1 million, an 8% increase year-over-year, with an adjusted EBITDA margin of 17.2% [1][2] Segment Performance - Consulting fee revenue was $166.9 million in Q3 FY'26, a 5% increase from $158.7 million in Q3 FY'25, primarily driven by a 2% increase in average bill rates [1][2] - Digital segment reported fee revenue of $94.0 million, up 4% year-over-year, with an 8% increase in Subscription & License fee revenue [1][2] - Executive Search fee revenue increased by 13% to $231.9 million, attributed to a rise in both the number of engagements billed and the average fee billed per engagement [1][2] Outlook - For Q4 FY'26, the company expects diluted earnings per share to range between $1.34 to $1.40, with fee revenue anticipated to be between $730 million and $750 million [2]

Core Viewpoint - Korn/Ferry International has seen significant increases in institutional ownership and positive analyst ratings, indicating strong investor confidence and potential growth opportunities for the company [2][3][4]. Institutional Ownership - Universal Beteiligungs und Servicegesellschaft mbH raised its position in Korn/Ferry International by 105.8% during Q3, owning 27,721 shares valued at $1,940,000 [2]. - Other institutional investors have also increased their holdings, with Kestra Investment Management LLC raising its stake by 71.8%, Canada Pension Plan Investment Board by 200.0%, and EverSource Wealth Advisors LLC by 84.1% during Q2 [3]. - Currently, 98.82% of Korn/Ferry International's stock is owned by hedge funds and institutional investors [3]. Analyst Ratings - Weiss Ratings reaffirmed a "buy (b-)" rating for Korn/Ferry International, while Wall Street Zen upgraded the stock from "hold" to "buy" [4]. - The Goldman Sachs Group reduced its price target from $85.00 to $74.00 but maintained a "buy" rating [4]. - The consensus rating for Korn/Ferry International is "Moderate Buy" with an average target price of $78.67 [4]. Stock Performance - Korn/Ferry International's stock opened at $69.45, with a 1-year low of $59.23 and a high of $78.50 [5]. - The company has a market cap of $3.63 billion, a PE ratio of 14.09, and a beta of 1.33 [5]. Financial Performance - Korn/Ferry International reported $1.33 earnings per share (EPS) for the last quarter, exceeding the consensus estimate of $1.31 by $0.02 [6]. - The company had revenue of $729.80 million, surpassing analysts' expectations of $705.16 million, and showed a 7.0% increase in quarterly revenue compared to the previous year [6]. - The company has set its Q3 2026 EPS guidance at 1.19-1.250 [6]. Dividend Information - Korn/Ferry International announced a quarterly dividend of $0.48 per share, representing an annualized dividend of $1.92 and a dividend yield of 2.8% [7]. - The payout ratio is currently 38.95% [7]. Company Overview - Korn/Ferry International is a global organizational consulting firm specializing in executive search, talent acquisition, leadership development, and succession planning [9]. - The company has expanded to over 50 offices worldwide since its founding in 1969 [10].

Financial Data and Key Metrics Changes - Second quarter revenue reached approximately $317 million, marking a 14% increase compared to Q2 2024 [16] - Adjusted EBITDA improved by $5 million to $34 million, with an adjusted EBITDA margin expanding by 40 basis points to 10.7% [16] - Adjusted net income for the quarter was $18.1 million, with adjusted diluted EPS at $0.85, representing a 27% increase from the previous year [22] Business Line Data and Key Metrics Changes - Executive Search revenue grew 13% to $238 million, with adjusted EBITDA of $54.6 million and an adjusted EBITDA margin of 22.9% [20] - On Demand Talent revenue increased 14% to $48 million, with adjusted EBITDA turning positive at $1 million compared to a loss of $1.6 million in the prior year [21] - Heidrick Consulting saw a 17% year-over-year revenue increase to $31 million, with adjusted EBITDA of $600,000 [22] Market Data and Key Metrics Changes - Revenue increases were noted across regions: 9% in The Americas, 31% in Europe, and 12% in APAC [19] - Consultant productivity annualized at $2.3 million, up from $2 million in the same quarter last year [20] Company Strategy and Development Direction - The company aims to build differentiated relationships by being the most trusted leadership partner to the C-suite and board [12] - Focus on deepening client relationships through transformation in leadership and enhancing service offerings [13] - Strategic priorities include growing talent base and leveraging technology for client impact [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges economic and geopolitical uncertainties but sees opportunities for growth due to increasing demand for leadership talent [4][5] - The company expects to maintain a healthy margin in the first half of the year, with quarterly margins anticipated to cycle down in the second half due to hiring plans [11][25] - Confidence in medium-term targets of mid to high single-digit organic revenue growth and 5-8% organic adjusted EBITDA growth [14] Other Important Information - The company ended the second quarter with a strong cash position of $400 million, up from $297 million in June 2024 [23] - Third quarter revenue is expected to be in the range of $295 million to $315 million, reflecting nearly 10% growth compared to the previous year [23] Q&A Session Summary Question: Insights on hiring plans for the second half of the year - Management emphasized the importance of growing the team to capitalize on existing client relationships and white space opportunities [29][30] Question: Clarification on cash usage and prioritization - The company highlighted the need for organic investments and potential acquisitions as part of their cash usage strategy [38] Question: Discussion on third quarter revenue guidance - Management indicated that the guidance reflects typical seasonality and macroeconomic uncertainties, but they remain optimistic about client demand [44][46] Question: Executive search productivity and hiring impact - The company noted strong productivity but maintains a long-term target around $2 million, indicating room for growth [48][49] Question: Regional differences in executive search EBITDA margins - Management explained that growth in Europe and Asia is sustainable, while the Americas experienced a temporary contraction due to bonus structures [58][61] Question: Customer insights regarding capital markets - Management acknowledged the complexity of the current environment but noted that challenges create opportunities for their services [64][65]

Financial Data and Key Metrics Changes - Q2 2025 revenue reached approximately $317 million, marking a 14% increase compared to Q2 2024 [15] - Adjusted EBITDA improved by $5 million to $34 million, with an adjusted EBITDA margin expanding by 40 basis points to 10.7% [15] - Adjusted net income for the quarter was $18.1 million, with adjusted diluted EPS at $0.85, representing a 27% increase from the previous year [22] Business Line Data and Key Metrics Changes - Executive Search revenue grew 13% to $238 million, with adjusted EBITDA of $54.6 million and an adjusted EBITDA margin of 22.9% [20] - On Demand Talent revenue increased 14% to $48 million, with adjusted EBITDA turning positive at $1 million compared to a loss of $1.6 million in the prior year [21] - Heidrick Consulting saw a 17% revenue increase to $31 million, with adjusted EBITDA of $600,000 [21] Market Data and Key Metrics Changes - Revenue increases were noted across regions: 9% in The Americas, 31% in Europe, and 12% in APAC [19] - Consultant productivity annualized at $2.3 million, up from $2 million in the same quarter last year [20] Company Strategy and Development Direction - The company aims to build differentiated relationships by being the most trusted leadership partner to the C-suite and board [12] - Focus on deepening client relationships through transformation in leadership and embedding solutions in client workflows [13] - Strategic priorities include growing talent base and enhancing productivity through training and technology [10][11] Management's Comments on Operating Environment and Future Outlook - Management highlighted the ongoing demand for leadership talent amid economic and geopolitical uncertainties [4][5] - The company anticipates continued growth in the second half of 2025, despite potential project delays due to macroeconomic factors [24] - Confidence in medium-term targets of mid to high single-digit organic revenue growth and 5-8% organic adjusted EBITDA growth [14] Other Important Information - The company ended Q2 with a strong cash position of $400 million, up from $297 million in June 2024 [23] - Expected Q3 revenue range is $295 million to $315 million, reflecting nearly 10% growth compared to the previous year [23] Q&A Session Summary Question: Insights on hiring plans for the second half of the year - The company is focused on growing its team to capitalize on existing client relationships and white space opportunities [29] - Hiring will be smooth throughout the year, with some costs from first-half hiring impacting the second half [33] Question: Cash usage and prioritization - The company sees strength across its businesses and is focused on organic investments, with potential for acquisitions as hiring discussions progress [40] Question: Third quarter revenue guidance and macroeconomic factors - Guidance reflects typical summer seasonality, with macro uncertainty factored in [44] - Demand remains strong, and client needs can accelerate quickly despite potential delays [49] Question: Executive search productivity and hiring impact - Current productivity is strong, indicating client demand, and hiring is expected to support future growth [52] Question: Regional differences in executive search EBITDA margins - Growth in Europe and Asia is seen as sustainable, while the Americas may experience fluctuations due to bonus structures [66] Question: Customer insights regarding capital markets - The company is observing a complex environment with varying levels of enthusiasm among clients, particularly in capital markets [68] Question: Industry verticals outlook for 2025 - The company sees thematic trends across industries, particularly in AI and leadership restructuring [70] Question: Sustainability of consulting margins - Management is pleased with progress and remains confident in long-term targets for consulting margins [72]

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]

Financial Performance - Heidrick & Struggles reported quarterly net revenue of $283.6 million, which on a constant currency basis, was $286.8 million for the first quarter[26] - The company's adjusted EBITDA was $29.1 million with an adjusted EBITDA margin of 10.3% for the first quarter[26] - Net income for the first quarter was $13.3 million, with an adjusted net income of $14.2 million[26] - Diluted earnings per share were $0.62 for the first quarter, and adjusted diluted earnings per share were $0.67[26] Segment Performance - Executive Search experienced a 5.9% year-over-year revenue growth, or 7.0% on a constant currency basis, with an adjusted EBITDA margin of 24.5%[30] - On-Demand Talent saw a 12.4% year-over-year revenue growth, or 14.3% on a constant currency basis, with an adjusted EBITDA margin of 0.9%[30] - Heidrick Consulting's revenue grew by 6.8% year-over-year, or 7.8% on a constant currency basis, with an adjusted EBITDA margin loss of 7.6%[30] Operational Highlights - Executive Search saw a 1% year-over-year increase in consultant headcount and a 5% year-over-year increase in confirmation volume[54] - Available cash and marketable securities for the quarter ending March 31, 2025, were $232.2 million[59] Strategic Focus - The company is targeting 'through cycle' consolidated organic revenue growth of 4-6% and organic adjusted EBITDA growth of 5-8% per year[23]

Financial Data and Key Metrics Changes - First quarter revenue reached approximately $284 million, marking a 7% increase compared to Q1 2024 [19] - Adjusted EBITDA improved by $3.3 million to $29.1 million, with an adjusted EBITDA margin expanding by 50 basis points to 10.3% [19] - Adjusted net income for the quarter was $14.2 million, consistent with the previous year [26] Business Line Data and Key Metrics Changes - Executive Search revenue grew 6% to $213 million, with adjusted EBITDA of $52.3 million and an adjusted EBITDA margin of 24.5% [22] - On Demand Talent revenue increased 12% to $43 million, achieving adjusted EBITDA of $400,000 compared to a loss of $900,000 in the prior year [24] - Heidrick Consulting saw organic revenue increase 7% year-over-year to $28 million, with an adjusted EBITDA loss of $2.1 million [25] Market Data and Key Metrics Changes - Revenue increases were noted across regions: 6% in The Americas, 9% in Europe, and 1% in APAC [22] - European performance was strong across various sectors, including technology, financial services, and industrials [62] Company Strategy and Development Direction - The company aims to be the most trusted leadership partner for the C-suite and board, focusing on leadership talent [10] - There is a commitment to growing executive search and assessment capabilities, which are central to the business [11] - The strategy includes continuous client engagement and innovation in products and services to meet evolving client needs [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic environment's complexity but emphasizes the company's resilience and ability to create value for clients [5][18] - The company is closely monitoring client activities and tone, anticipating potential caution in decision-making as the year progresses [8][36] - The outlook for Q2 revenue is expected to be between $285 million and $305 million, reflecting ongoing demand despite economic uncertainties [27] Other Important Information - The company ended the first quarter with a strong cash position of $325 million, up from $253 million in March 2024 [26] - The business model is characterized by zero debt, low capital expenditure, and a diversified revenue stream across geographies and industries [9] Q&A Session Summary Question: Insights on past disruptions and their relevance to current circumstances - Management noted that while segments may slow during economic distress, current results do not reflect such trends, emphasizing the unique nature of each downturn [33][34] Question: Use of cash and acquisition pipeline - The company is managing cash flow for earn-out payments from past acquisitions while prioritizing organic investments and evaluating potential acquisition opportunities [37][38] Question: M&A activity as a driver of client demand - M&A activities create opportunities for the company to assist clients in leadership and cultural integration during transitions [42][43] Question: Profitability expectations for Heidrick Consulting and On Demand Talent - Both segments are expected to improve profitability, with consulting aiming for 11% to 13% growth and on-demand talent showing positive momentum [66] Question: Demand trends among different end markets - Demand has been broad-based across sectors, with financial services performing well alongside technology and consumer markets [70]

Core Insights - Heidrick & Struggles International, Inc. reported Q1 2025 financial results that exceeded the high end of their outlook, showcasing a resilient business model and strong client trust [2][6][8] - The company aims to navigate economic uncertainty by enhancing client partnerships and providing strategic advisory services [2][3] Financial Performance - Consolidated net revenue for Q1 2025 was $283.6 million, a 6.9% increase from $265.2 million in Q1 2024, with an 8.1% increase on a constant currency basis [6][10] - Adjusted EBITDA rose to $29.1 million, with an adjusted EBITDA margin of 10.3%, up from 9.8% in the previous year [9][12] - Adjusted net income was $14.2 million, with adjusted diluted earnings per share remaining stable at $0.67 compared to Q1 2024 [8][9] Segment Performance - Executive Search segment net revenue increased by 5.9% to $213.4 million, driven by growth across all regions: 5.7% in the Americas, 9.4% in Europe, and 1.2% in Asia Pacific [10][28] - On-Demand Talent segment net revenue grew by 12.4% to $42.6 million, reflecting strong demand [11][12] - Heidrick Consulting segment net revenue increased by 6.8% to $27.6 million, indicating solid performance in consulting services [12][28] Outlook and Dividends - The company anticipates Q2 2025 consolidated net revenue between $285 million and $305 million, compared to $278.6 million in the same period last year [6][15] - A cash dividend of $0.15 per share was declared, payable on May 29, 2025, to shareholders of record on May 15, 2025 [14][15]