Korn Ferry(US:KFY)2021-09-08 20:03Financial Data and Key Metrics Changes - Korn Ferry reported a 70% year-over-year increase in fee revenue, reaching an all-time high of $585 million, with a sequential increase of 5% [18][19] - Adjusted EBITDA grew to $121 million, reflecting a year-over-year increase of $111 million and a sequential increase of $8.5 million, with an adjusted EBITDA margin of 20.7% [23][24] - Fully diluted earnings per share reached a record $1.37, up from $1.56 in the same quarter last year and up 13% sequentially [24] Business Line Data and Key Metrics Changes - Executive Search fee revenue increased by 81% year-over-year to $217 million, with North America growing 100% year-over-year [37] - RPO and Professional Search fee revenue grew 103% year-over-year, with RPO fee revenue up 98% and Professional Search up 112% [35][36] - Consulting generated $148.5 million in fee revenue, up 50% year-over-year, with new business growth of approximately 36% [32][34] Market Data and Key Metrics Changes - Revenue from marquee and regional accounts increased by 70% year-over-year, contributing to 35% of consolidated fee revenue [20] - Cross-line of business referrals accounted for 30% of fee revenue, up from 25.5% in the first quarter of fiscal '21 [21] Company Strategy and Development Direction - Korn Ferry is focused on an integrated go-to-market strategy, leveraging marquee and regional accounts to drive growth and durable revenues [14] - The company aims to capitalize on the ongoing transformation in the workforce landscape, emphasizing agility and leadership in a changing environment [12][13] - Investments will continue in hiring additional fee earners and execution staff to support future growth [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current dynamic work environment, highlighting strong demand for talent acquisition expertise [15][16] - The outlook for the second quarter of fiscal '22 anticipates consolidated fee revenue between $585 million and $615 million, with diluted earnings per share ranging from $1.30 to $1.44 [43][44] - Management noted that the current environment of change is unprecedented, with significant opportunities arising from megatrends such as digitization and workforce transformation [76][77] Other Important Information - The company reported an investable cash balance of approximately $614 million, up 20% year-over-year [27] - Korn Ferry is actively developing new ESG solutions, indicating a strategic focus on enterprise leadership and organizational transformation [111][112] Q&A Session Summary Question: What notable trends are seen in the consulting business? - Management indicated that capacity is a challenge, and they are working to ensure appropriate levels of capacity while repositioning solutions to meet future demands [48][49] Question: Which business lines exceeded internal expectations? - Management noted that all business lines exceeded expectations, particularly RPO and Professional Search, which demonstrated strong organic growth [58][59] Question: What is the capital allocation strategy for fiscal 2022? - The company maintains a balanced approach to capital deployment, focusing on investing in the business while also considering shareholder returns [60][61] Question: How is the company addressing the opportunity in professional search? - Management highlighted a significant ramp-up in revenue-generating capacity and the importance of integrating intellectual property into offerings [65][66] Question: What is the outlook for ESG and DEI initiatives? - Management characterized these initiatives as a growing part of the business, with plans to roll out new solutions that integrate ESG into broader organizational strategies [107][111]