Korn Ferry(US:KFY)2025-12-09 18:02Financial Data and Key Metrics Changes - Consolidated fee revenue grew 7% year-over-year to $722 million [11] - Adjusted EBITDA increased by $8 million, or 7% year-over-year, to $125 million, with an adjusted EBITDA margin of 17.3% [11] - Adjusted diluted earnings per share rose by $0.12, or 10% year-over-year, to $1.33 [11] - Estimated remaining fees under existing contracts increased to $1.84 billion, up 20% year-over-year [10] Business Line Data and Key Metrics Changes - Executive search fee revenue grew 10%, marking the sixth consecutive quarter of year-over-year growth [11] - Professional search and interim fee revenue increased by 17% year-over-year, with professional search up 7% and interim up 24% [11] - RPO delivered $253 million of new business in the quarter, with 16% from new logos and 84% from renewals [11] - Business referrals grew to 27.6% of consolidated fee revenue, up approximately 250 basis points year-over-year and quarter-sequential [10] Market Data and Key Metrics Changes - Fee revenue in the Americas was up 3% year-over-year, led by executive search and RPO [12] - EMEA fee revenue grew 20% year-over-year, with growth in executive search, professional search, interim, consulting, and digital [12] - APAC fee revenue remained flat, with moderate growth in executive search and professional search, offset by slight declines in RPO, consulting, and digital [12] Company Strategy and Development Direction - The company is focusing on a unified strategy under "We Are Korn Ferry," emphasizing client centricity and integrated solutions [4][7] - The launch of the new Talent Suite technology platform is expected to enhance the company's ability to serve clients as a holistic talent partner [9] - The company aims to drive long-term, profitable, and sustainable growth by leveraging foundational assets to deliver differentiated solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a strong 2026, despite the uncertain business environment [7][15] - The company anticipates fee revenue in the third quarter of fiscal 2026 to range from $680-$694 million, with adjusted EBITDA margins between 17.2%-17.4% [14] - Management noted that the current economic conditions have not significantly changed, and they remain focused on identified growth opportunities [25][59] Other Important Information - The company returned almost $70 million to shareholders through combined repurchases and dividends during the quarter [12] - Capital expenditures of $43 million were focused on Talent Suite, productivity tools, and other solution enhancements [13] Q&A Session Summary Question: Strength in Executive Search Business - Management noted significant growth in executive search worldwide, driven by changing leadership needs and demographic shifts [17][18] Question: Placement Solutions Improvement - Management confirmed that the strategy is working, with sequential growth in Professional Search and Interim Solutions, and highlighted the quality of their IP and AI integration [24][25] Question: Consulting Bill Rates and Margins - Management indicated that bill rates have increased due to larger, more impactful engagements, and there is substantial opportunity for further growth in consulting [26][30] Question: Seasonal Trends in Executive Search - Management expects typical seasonal softness in Q3 due to holiday impacts, which is factored into their guidance [33] Question: Digital Business Performance - Management acknowledged a purposeful reduction in sellers in the digital solution to pivot towards enterprise-oriented sales, impacting top-line performance [58][59] Question: New RPO Contracts - The majority of new RPO contracts were renewals from existing marquee clients, with a significant portion coming from the healthcare and industrial sectors [60][61]