Korn Ferry(US:KFY)2020-11-23 22:25Financial Data and Key Metrics Changes - Revenue increased by 27% sequentially to $435 million, with adjusted EBITDA of $66 million and an adjusted EBITDA margin of 15.2% [8][30][32] - Fee revenue declined only 12% year-over-year, showing improvement each month of the quarter [30][32] - Adjusted fully diluted earnings per share rose to $0.54, up from $0.73 sequentially [32] Business Line Data and Key Metrics Changes - Digital segment revenue was $75 million, up 34% sequentially and 14% year-over-year, with subscription-based fee revenue at $22.7 million, up 43% year-over-year [37][24] - Consulting generated $126.7 million in fee revenue, up 28% sequentially and down 12% year-over-year, with strong demand for virtually delivered solutions [38] - RPO and professional search revenue was $85.6 million, up 25% sequentially and down 10% year-over-year, with RPO new business reaching $120 million [40][28] - Executive Search revenue was approximately $148 million, up 23% sequentially, with North America seeing a 32% increase [42] Market Data and Key Metrics Changes - Marquee and regional account fee revenue declined approximately 14% year-over-year, compared to a 23% decline in the rest of the portfolio [23] - Subscription-based new business improved to $29 million, up 39% year-over-year [24] - Monthly new business trends improved, with November in line with previous months and years [44] Company Strategy and Development Direction - The company aims to build a preeminent global organizational consultancy, focusing on digital transformation and organizational restructuring [19][12] - Leadership U for Humanity initiative launched to develop diverse leaders, aiming to create 1 million new leaders [14][15] - The shift from analog to digital delivery is a key strategy, with 23% of revenue in FY 2020 coming from this segment [16] Management's Comments on Operating Environment and Future Outlook - Management believes there will be more change in the next two years than in the last decade, presenting opportunities for the company [11] - The company is cautious about future guidance due to uncertainties surrounding COVID-19 and its economic impact [46][110] - Management expects a typical seasonal decline of 3% to 5% in the third quarter, but the impact of COVID-19 remains uncertain [47] Other Important Information - The company has a strong balance sheet with cash and marketable securities totaling $774 million [33] - Cost-saving initiatives have been implemented, with plans to maintain a leaner cost structure moving forward [34][56] Q&A Session Summary Question: Trends in Digital Business - The digital business saw a broad-based customer response, particularly in training and development, with a significant shift to virtual delivery [50][51] Question: EBITDA Margins Outlook - Management anticipates that margins could improve over time due to reimagined business strategies and cost efficiencies [54][56] Question: Revenue Increase Drivers - The revenue increase is attributed to a combination of strategic execution and market resilience rather than solely pent-up demand [64][66] Question: Large Engagements and Margin Profile - Larger engagements are driven by organizational transformation and digital transition, with expectations of improved margins from these projects [72][73] Question: Recurring Business Models - The RPO business is characterized as a recurring model, with strong new business and renewals indicating a healthy trend [77][80] Question: Acquisition Strategy - Future acquisitions will focus on client impact and return on capital, with an emphasis on maintaining high margins [88][89] Question: Engagement Types and Focus Areas - Companies are focusing on organizational transformation, digital transition, and diversity and inclusion initiatives [105][106]