Korn Ferry Announces Fourth Quarter and Full Year FY'24 Results of Operations

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Insights

Korn Ferry's financial performance in FY'24 reflects a challenging economic environment, with a notable -5% year-over-year decrease in fee revenue for Q4 and -3% for the full year. Despite this, there are several positive financial aspects worth mentioning. The company has managed to achieve sequentially improved EBITDA margins over four consecutive quarters, culminating in a 16.3% margin for Q4 FY'24. This improvement is a direct result of strategic shifts, including workforce capacity management and cost reductions, rather than revenue growth.

The repurchase of 930,000 shares worth $52.5 million during FY'24 indicates a commitment to returning value to shareholders, which might be seen positively by the investor community. However, the reductions in fee revenue and operating margins, particularly in high-margin segments like permanent placement talent acquisition, pose concerns about future profitability. The 11% increase in the average hourly bill rate for consulting services and record high fee revenues in Consulting and Digital segments reflect operational strengths. A $9.7 million non-recurring tax benefit also bolstered the adjusted results.

For retail investors, the key takeaway is the balance between cost management and revenue pressures. While cost-saving actions have improved short-term profitability metrics like EBITDA, the underlying decrease in core revenue streams and lower overall operating margins suggest caution. Long-term growth will depend significantly on how well Korn Ferry navigates current economic challenges and continues to diversify its offerings.

Korn Ferry's FY'24 results underscore the complexities facing the organizational consulting industry. The firm’s diversified portfolio strategy appears effective, notably in bolstering financial stability amid cyclicality in talent acquisition. Consulting and Digital segments achieved record high fee revenues, highlighting strong demand for leadership development, organizational strategy and subscription services. However, the overall -3% decrease in annual fee revenue signals challenges in core areas like Executive Search and Professional Search & Interim.

In terms of market positioning, the increase in Consulting's average bill rate to $437 per hour and the steady growth in Digital’s subscription revenue (9% year-over-year) are promising. Yet, the 7% decline in Executive Search fee revenue and the 15% drop in Professional Search & Interim segment indicate potential competitive pressures or market demand issues. The economic environment’s impact on hiring volumes and clients' labor hoarding behaviors further complicate the outlook.

Retail investors should recognize the nuanced picture: while certain segments thrive, overall growth is moderated by broader economic challenges. Korn Ferry's strategic focus on diversified offerings and consulting excellence may provide resilience, but the ability to adapt to economic fluctuations will be critical.

06/13/2024 - 06:45 AM

Fourth Quarter and Full Year Highlights

Korn Ferry reports Q4 FY'24 fee revenue of $690.8 million, a year-over-year decrease of 5% in both actual and constant currency and full year FY'24 fee revenue of $2,762.7 million, a year-over-year decrease of 3% in both actual and constant currency.
Our full year FY'24 Marquee and Regional Account fee revenue generated slightly more than 37% of our consolidated fee revenue and grew 3% year-over-year at actual, and 2% at constant currency.
Net income attributable to Korn Ferry for the fourth quarter and full year of FY'24 was $65.2 million and $169.2 million, respectively, while diluted and adjusted diluted earnings per share were $1.24 and $1.26 in Q4 FY'24, and $3.23 and $4.28 for the full year, respectively.
Operating income in the fourth quarter was $83.5 million with an operating margin of 12.1%, while full year operating income was $212.9 million with an operating margin of 7.7%.
Fourth quarter Adjusted EBITDA was $112.3 million with an Adjusted EBITDA margin of 16.3%, our fourth consecutive quarter of improved Adjusted EBITDA margin. Full year Adjusted EBITDA was $408.2 million with an Adjusted EBITDA margin of 14.8%.
Consulting and Digital both posted full year record high fee revenue at $695.0 million and $366.7 million, respectively.
- Subscription and License full year fee revenue increased 9% to $131 million.
- Consulting's full year average hourly bill rate increased 11% to $420, with an average bill rate of $437 in the fourth quarter.
The Company repurchased 365,000 shares of stock during the quarter for $22.9 million, bringing full year repurchases to 930,000 shares for $52.5 million.
On June 12, 2024, the Company increased its regular quarterly dividend to $0.37 per share, which is payable on July 31, 2024 to stockholders of record on July 3, 2024.

LOS ANGELES--(BUSINESS WIRE)-- Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $690.8 million and $2,762.7 million, respectively. In addition, fourth quarter diluted earnings per share was $1.24 and adjusted diluted earnings per share was $1.26.

“I am pleased with our fourth quarter results, as we generated $691 million in fee revenue,” said Gary D. Burnison, CEO, Korn Ferry. “Earnings and profitability increased year-over-year and sequentially as we delivered $112 million of Adjusted EBITDA, at a 16.3% margin, which is our fourth consecutive quarter of profitability improvement.”

“In an economic environment in which companies are fighting for growth and relevancy, our portfolio is performing as designed and the strategy is clearly working. Cyclically sensitive talent acquisition offerings are being buoyed by continued stability from our diversified offerings – particularly Consulting, complemented by Digital, which have generated solid performance. As we look to a new fiscal year, I have never been more proud of our organization – from our colleagues, expertise, IP and insights to the incredibly innovative and relevant solutions we offer to clients in a rapidly changing world.”

Selected Financial Results
(dollars in millions, except per share amounts) ^(a)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	690.8		$	730.9		$	2,762.7		$	2,835.4
Total revenue	$	699.9		$	738.1		$	2,795.5		$	2,863.8
Operating income	$	83.5		$	72.6		$	212.9		$	316.3
Operating margin		12.1	%		9.9	%		7.7	%		11.2	%
Net income attributable to Korn Ferry	$	65.2		$	47.5		$	169.2		$	209.5
Basic earnings per share	$	1.26		$	0.91		$	3.25		$	3.98
Diluted earnings per share	$	1.24		$	0.91		$	3.23		$	3.95

Adjusted Results (b):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	112.3		$	97.9		$	408.2		$	457.3
Adjusted EBITDA margin		16.3	%		13.4	%		14.8	%		16.1	%
Adjusted net income attributable to Korn Ferry (c)	$	65.7		$	53.0		$	224.0		$	262.2
Adjusted basic earnings per share (c)	$	1.27		$	1.02		$	4.31		$	4.98
Adjusted diluted earnings per share (c)	$	1.26		$	1.01		$	4.28		$	4.94

________________
(a)		Numbers may not total due to rounding.
(b)		Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of fixed assets	$	—	$	—	$	1.6	$	4.4
Impairment of right of use assets	$	—	$	—	$	1.6	$	5.5
Integration/acquisition costs	$	1.8	$	5.5	$	14.9	$	14.9
Restructuring charges, net	$	—	$	1.4	$	68.6	$	42.6

(c)

Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in FY'24 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.

Fiscal 2024 Fourth Quarter Results

The Company reported fee revenue in Q4 FY'24 of $690.8 million, a decrease of 5% in both actual and constant currency compared to Q4 FY'23. Moderation in fee revenue from our talent acquisition offerings was buoyed by year-over-year growth in our Consulting fee revenue and stability in our Digital fee revenue, in-line with our business diversification strategy. The moderation in fee revenue in our talent acquisition offerings was driven by the challenging global economic environment (the "economic environment").

Operating income was $83.5 million (at an operating margin of 12.1%) in Q4 FY'24, compared to $72.6 million (at an operating margin of 9.9%) in the year-ago quarter, an increase of 15% (and 220bps). Net income attributable to Korn Ferry was $65.2 million in Q4 FY'24, compared to $47.5 million in Q4 FY'23. Adjusted EBITDA was $112.3 million in Q4 FY'24 compared to $97.9 million in Q4 FY'23. Adjusted EBITDA margin was 16.3% in Q4 FY'24, an increase of 290bps.

Operating income and margin increased as a result of pro-active workforce capacity management ("workforce actions") taken during the year and the lower cost of services expense and integration/acquisition costs compared to the year-ago quarter. These increases were partially offset by the decrease in fee revenue discussed above. Net income attributable to Korn Ferry increased due to the same factors discussed above.

Adjusted EBITDA and margin increased due to the same factors discussed above, but excluded integration/acquisition costs.

Fiscal 2024 Full Year Results

The Company reported fee revenue in FY'24 of $2,762.7 million, a decrease of 3% in both actual and constant currency compared to FY'23. Fee revenue decreased primarily due to decreases in our permanent placement talent acquisition offerings, due to the economic environment. This decrease was partially offset by an increase in fee revenue from the Interim portion of Professional Search & Interim, resulting from the acquisitions of Infinity Consulting Solutions and Salo, which were acquired on August 1, 2022, and February 1, 2023, respectively, as well as year-over-year growth in Consulting and Digital fee revenue, again, in-line with our business diversification strategy.

Operating income was $212.9 million (margin of 7.7%) in FY'24, compared to $316.3 million (margin of 11.2%) in FY'23. Net income attributable to Korn Ferry was $169.2 million in FY'24 compared to $209.5 million in FY'23. Adjusted EBITDA was $408.2 million (adjusted EBITDA margin 14.8%) in FY'24 compared to $457.3 million (adjusted EBITDA margin 16.1%) in FY'23.

Operating income and margin decreased primarily due to a decrease in fee revenue from our permanent placement talent acquisition offerings, which have higher margins, an increase in Interim fee revenue (lower margins) and cost of services expense, and higher restructuring charges, net recorded during FY'24 compared to the year-ago period. These decreases were partially offset by decreases in compensation and benefits expense resulting from workforce actions taken during FY'24, and lower impairment charges of both fixed and right of use assets. Net income attributable to Korn Ferry declined due to the same factors discussed above partially offset by a lower effective tax rate in the current year.

Adjusted EBITDA and margin decreased due to the same factors as operating income discussed above excluding the restructuring charges.

Results by Line of Business
Selected Consulting Data
(dollars in millions) ^(a)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	182.2		$	175.3		$	695.0		$	677.0
Total revenue	$	185.1		$	178.0		$	706.8		$	687.0

Ending number of consultants and execution staff (b)		1,678			1,853			1,678			1,853
Hours worked in thousands (c)		417			450			1,656			1,790
Average bill rate (d)	$	437		$	390		$	420		$	378

Adjusted Results (e):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	32.3		$	24.6		$	114.3		$	108.5
Adjusted EBITDA margin		17.8	%		14.0	%		16.4	%		16.0	%

________________
(a)		Numbers may not total due to rounding.
(b)		Represents number of employees originating, delivering and executing consulting services.
(c)		The number of hours worked by consultant and execution staff during the period.
(d)		The amount of fee revenue divided by the number of hours worked by consultants and execution staff.
(e)		Adjusted results exclude the following:

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of fixed assets	$	—	$	—	$	—	$	2.8
Impairment of right of use assets	$	—	$	—	$	0.6	$	3.1
Restructuring charges, net	$	—	$	0.8	$	18.9	$	11.6

Fee revenue was $182.2 million in Q4 FY'24 compared to $175.3 million in Q4 FY'23, an increase of $6.9 million or 4% (up 5% on a constant currency basis). Growth was strongest in our assessment & succession solutions, leadership development, and organizational strategy offerings, with all product areas posting year-over-year increases in fee revenue. Fee revenue was also positively impacted by a year-over-year 12% increase in our average bill rate to $437 per hour.

Adjusted EBITDA increased 31% to $32.3 million compared to the fourth quarter of FY'23. Adjusted EBITDA margin in the quarter increased year-over-year by 380bps to 17.8% this year. These increases resulted primarily from higher fee revenue in the previously discussed solution areas, higher bill rates, and workforce actions taken during the year and were slightly offset by an increase in cost of services expense and higher general and administrative expenses.

Selected Digital Data
(dollars in millions) ^(a)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	91.3		$	91.5		$	366.7		$	354.7
Total revenue	$	91.4		$	91.5		$	366.9		$	355.0

Ending number of consultants		267			347			267			347
Subscription & License fee revenue	$	33.3		$	31.6		$	131.0		$	119.7

Adjusted Results (b):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	28.0		$	23.6		$	108.7		$	97.5
Adjusted EBITDA margin		30.7	%		25.8	%		29.6	%		27.5	%

________________
(a)		Numbers may not total due to rounding.
(b)		Adjusted results exclude the following:

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of fixed assets	$	—	$	—	$	1.5	$	1.5
Impairment of right of use assets	$	—	$	—	$	—	$	1.7
Restructuring charges, net	$	—	$	—	$	9.5	$	2.9

Fee revenue was $91.3 million in Q4 FY'24 compared to $91.5 million in Q4 FY'23, flat year-over-year and up 1% on a constant currency basis.

Adjusted EBITDA was $28.0 million in Q4 FY'24 compared to $23.6 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 490bps to 30.7%. The increase in Adjusted EBITDA and Adjusted EBITDA margin was mainly due to workforce actions taken during FY'24.

Selected Executive Search Data^(a)
(dollars in millions) ^(b)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	198.7		$	212.6		$	806.2		$	875.8
Total revenue	$	200.8		$	214.6		$	814.3		$	883.3

Ending number of consultants		542			602			542			602
Average number of consultants		552			609			572			594
Engagements billed		3,456			3,772			8,978			10,091
New engagements (c)		1,586			1,608			6,091			6,686

Adjusted Results (d):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	45.5		$	42.7		$	171.1		$	205.8
Adjusted EBITDA margin		22.9	%		20.1	%		21.2	%		23.5	%

________________
(a)		Executive Search is the sum of the individual Executive Search Reporting Segments described in our annual and quarterly reporting on Forms 10-K and 10-Q and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.
(b)		Numbers may not total due to rounding.
(c)		Represents new engagements opened in the respective period.
(d)		Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of fixed assets	$	—	$	—	$	0.1	$	—
Impairment of right of use assets	$	—	$	—	$	0.9	$	—
Restructuring charges, net	$	—	$	0.6	$	28.2	$	20.1

Fee revenue was $198.7 million and $212.6 million in Q4 FY'24 and Q4 FY'23, respectively, a decrease of $13.9 million or 7% (down 6% on a constant currency basis). The decrease in fee revenue was primarily driven by a decline in the number of Executive Search engagements billed, as a result of the current economic environment.

Adjusted EBITDA was $45.5 million in Q4 FY'24 compared to $42.7 million in the year-ago quarter. Adjusted EBITDA margin increased by 280bps to 22.9% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to workforce actions taken during the year and increased consultant productivity, partially offset by the decrease in fee revenue discussed above.

Selected Professional Search & Interim Data
(dollars in millions) ^(a)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	129.2		$	151.7		$	540.6		$	503.4
Total revenue	$	130.1		$	152.6		$	544.5		$	507.1

Permanent Placement:
Fee revenue	$	56.3		$	62.5		$	223.5		$	281.1
Engagements billed		1,939			2,304			5,619			7,435
New engagements (b)		1,086			1,364			4,500			6,486
Ending number of consultants		331			401			331			401
Interim:
Fee revenue	$	72.9		$	89.2		$	317.1		$	222.3
Average bill rate (c)	$	133		$	124		$	127		$	115
Average weekly billable consultants (d)		1,157			1,683			1,303			1,079

Adjusted Results (e):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	28.1		$	27.3		$	101.9		$	110.9
Adjusted EBITDA margin		21.8	%		18.0	%		18.8	%		22.0	%

________________
(a)		Numbers may not total due to rounding.
(b)		Represents new engagements opened in the respective period.
(c)		Fee revenue from interim divided by the number of hours worked by consultants.
(d)		The number of billable consultants based on a weekly average in the respective period.
(e)		Adjusted results exclude the following:

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of fixed assets	$	—	$	—	$	—	$	0.1
Impairment of right of use assets	$	—	$	—	$	—	$	0.6
Integration/acquisition costs	$	1.8	$	4.3	$	14.5	$	11.0
Restructuring charges, net	$	—	$	—	$	3.8	$	4.8

Fee revenue was $129.2 million in Q4 FY'24, a decrease of $22.5 million or 15% in both actual and constant currency. The decrease in fee revenue in both the Permanent Placement and Interim portions of the business resulted from the economic environment and, in the case of the Interim portion, the continued wind-down during Q4 FY’23 of a non-recurring engagement that ultimately concluded in Q1 FY’24.

Adjusted EBITDA was $28.1 million in Q4 FY'24 compared to $27.3 million in the year-ago quarter. Adjusted EBITDA margin increased year-over-year by 380bps to 21.8% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to the lower cost of services expense, combined with decreases in compensation and benefit and general and administrative expense (both excluding integration/acquisition costs) as a result of workforce and other cost saving actions, partially offset by the decrease in fee revenue discussed above.

Selected Recruitment Process Outsourcing ("RPO") Data
(dollars in millions) ^(a)

	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Fee revenue	$	89.5		$	99.8		$	354.1		$	424.6
Total revenue	$	92.5		$	101.4		$	363.0		$	431.5

Remaining revenue under contract (b)	$	657.1		$	776.7		$	657.1		$	776.7
RPO new business (c)	$	128.4		$	115.1		$	439.6		$	597.8

Adjusted Results (d):	Fourth Quarter						Year to Date
	FY’24			FY’23			FY’24			FY’23
Adjusted EBITDA	$	11.8		$	9.0		$	40.4		$	52.6
Adjusted EBITDA margin		13.2	%		9.0	%		11.4	%		12.4	%

________________
(a)		Numbers may not total due to rounding.
(b)		Estimated fee revenue associated with signed contracts for which revenue has not yet been recognized.
(c)		Estimated total value of a contract at the point of execution of the contract.
(d)		Adjusted results exclude the following:

	Fourth Quarter				Year to Date
	FY’24		FY’23		FY’24		FY’23
Impairment of right of use assets	$	—	$	—	$	0.1	$	0.1
Restructuring charges, net	$	—	$	—	$	7.9	$	3.1

Fee revenue was $89.5 million in Q4 FY'24, a decrease of $10.3 million or 10% in both actual and constant currency. RPO fee revenue decreased due to moderation in the hiring volume in the existing base of clients due to the economic environment, a higher percentage of FY'24 new business coming from renewals and extensions versus new logos, as well as a continuation of clients' "labor hoarding" throughout the year.

Adjusted EBITDA was $11.8 million in Q4 FY'24 compared to $9.0 million in the year-ago quarter. Adjusted EBITDA margin increased 420bps to 13.2% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from the workforce actions taken during the year, partially offset by the decline in fee revenue discussed above.

Outlook

Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

Q1 FY’25 fee revenue is expected to be in the range of $655 million and $675 million; and
Q1 FY’25 diluted earnings per share is expected to range between $1.05 to $1.15.

On a consolidated adjusted basis:

Q1 FY’25 adjusted diluted earnings per share is expected to be in the range from $1.07 to $1.17.

	Q1 FY’25 Earnings Per Share Outlook
	Low			High

Consolidated diluted earnings per share	$	1.05		$	1.15
Integration/acquisition costs		0.03			0.03
Tax rate impact		(0.01	)		(0.01	)
Consolidated adjusted diluted earnings per share⁽¹⁾	$	1.07		$	1.17

________________
(1)		Consolidated adjusted diluted earnings per share is a non-GAAP financial measure that excludes the items listed in the table.

Earnings Conference Call Webcast

The earnings conference call will be held today at 11:00 AM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek, SVP Business Development & Analytics Gregg Kvochak and VP Investor Relations Tiffany Louder. The conference call will be webcast and available online at ir.kornferry.com. We will also post to the investor relations section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people. Visit kornferry.com for more information.

Forward-Looking Statements

Statements in this press release and our conference call that relate to our outlook, projections, goals, strategies, future plans and expectations, including statements relating to expected demand for and relevance of our products and services, expected results of our business diversification strategy, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as “believes”, “expects”, “anticipates”, “goals”, “estimates”, “guidance”, “may”, “should”, “could”, “will” or “likely”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, interest rates, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, our ability to maintain relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in government laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property ("IP"), our ability to enhance, develop and respond to new technology, including artificial intelligence, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, resulting organizational changes, our indebtedness, and those relating to the ultimate magnitude and duration of any pandemic or outbreaks. For a detailed description of risks and uncertainties that could cause differences from our expectations, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In particular, it includes:

Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets, and restructuring charges, net of income tax effect and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets, and restructuring charges, net of income tax effect, and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period; and
Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable, and Consolidated and Executive Search Adjusted EBITDA margin.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of Korn Ferry’s ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Professional Search & Interim business, 2) impairment of fixed assets primarily due to a software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23, 3) impairment of right of use assets due to the decision to terminate and sublease some of our offices, 4) restructuring charges, net to align workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic and geopolitical uncertainty and 5) to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance. The use of non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. Adjusted net income attributable to Korn Ferry, adjusted basic and diluted earnings per share and Consolidated and Executive Search Adjusted EBITDA, exclude certain charges that management does not consider on-going in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company’s operating results. Management further believes that Consolidated and Executive Search Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. In the case of constant currency percentages, management believes the presentation of such information provides useful supplemental information regarding Korn Ferry's performance as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry's ongoing operations and financial and operational decision-making.

KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

	Three Months Ended April 30,						Year Ended April 30,
	2024			2023			2024			2023

	(unaudited)
Fee revenue	$	690,800		$	730,874		$	2,762,671		$	2,835,408
Reimbursed out-of-pocket engagement expenses		9,123			7,250			32,834			28,428
Total revenue		699,923			738,124			2,795,505			2,863,836

Compensation and benefits		454,208			491,429			1,844,164			1,901,203
General and administrative expenses		64,724			66,130			259,039			268,458
Reimbursed expenses		9,123			7,250			32,834			28,428
Cost of services		68,499			81,347			300,015			238,499
Depreciation and amortization		19,891			17,976			77,966			68,335
Restructuring charges, net		—			1,411			68,558			42,573
Total operating expenses		616,445			665,543			2,582,576			2,547,496

Operating income		83,478			72,581			212,929			316,340
Other income, net		7,122			437			30,681			5,261
Interest expense, net		(4,686	)		(5,776	)		(20,968	)		(25,864	)
Income before provision for income taxes		85,914			67,242			222,642			295,737
Income tax provision		20,302			19,108			50,081			82,683
Net income		65,612			48,134			172,561			213,054
Net income attributable to noncontrolling interest		(423	)		(640	)		(3,407	)		(3,525	)
Net income attributable to Korn Ferry	$	65,189		$	47,494		$	169,154		$	209,529

Earnings per common share attributable to Korn Ferry:
Basic	$	1.26		$	0.91		$	3.25		$	3.98
Diluted	$	1.24		$	0.91		$	3.23		$	3.95

Weighted-average common shares outstanding:
Basic		50,764			51,009			51,038			51,482
Diluted		51,487			51,234			51,432			51,883

Cash dividends declared per share:	$	0.33		$	0.15		$	1.02		$	0.60

KORN FERRY AND SUBSIDIARIES
FINANCIAL SUMMARY BY REPORTING SEGMENT
(dollars in thousands)
(unaudited)

	Three Months Ended April 30,						Year Ended April 30,
	2024		2023		% Change		2024		2023		% Change
Fee revenue:
Consulting	$	182,177	$	175,270	3.9	%	$	695,007	$	677,001	2.7	%
Digital		91,304		91,490	(0.2	%)		366,699		354,651	3.4	%
Executive Search:
North America		125,468		135,300	(7.3	%)		506,927		562,139	(9.8	%)
EMEA		45,643		46,353	(1.5	%)		184,516		187,014	(1.3	%)
Asia Pacific		20,696		23,188	(10.7	%)		85,863		95,598	(10.2	%)
Latin America		6,896		7,764	(11.2	%)		28,937		31,047	(6.8	%)
Total Executive Search ^(a)		198,703		212,605	(6.5	%)		806,243		875,798	(7.9	%)
Professional Search & Interim		129,162		151,725	(14.9	%)		540,615		503,395	7.4	%
RPO		89,454		99,784	(10.4	%)		354,107		424,563	(16.6	%)
Total fee revenue		690,800		730,874	(5.5	%)		2,762,671		2,835,408	(2.6	%)
Reimbursed out-of-pocket engagement expenses		9,123		7,250	25.8	%		32,834		28,428	15.5	%
Total revenue	$	699,923	$	738,124	(5.2	%)	$	2,795,505	$	2,863,836	(2.4	%)

(a)		Total Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.

KORN FERRY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

	April 30, 2024			April 30, 2023

ASSETS
Cash and cash equivalents	$	941,005		$	844,024
Marketable securities		42,742			44,837
Receivables due from clients, net of allowance for doubtful accounts of $44,192 and $44,377 at April 30, 2024 and 2023, respectively		541,014			569,601
Income taxes and other receivables		40,696			67,512
Unearned compensation		59,247			63,476
Prepaid expenses and other assets		49,456			49,219
Total current assets		1,674,160			1,638,669

Marketable securities, non-current		211,681			179,040
Property and equipment, net		161,849			161,876
Operating lease right-of-use assets, net		160,464			142,690
Cash surrender value of company-owned life insurance policies, net of loans		218,977			197,998
Deferred income taxes		133,564			102,057
Goodwill		908,376			909,491
Intangible assets, net		88,833			114,426
Unearned compensation, non-current		99,913			103,607
Investments and other assets		21,052			24,590
Total assets	$	3,678,869		$	3,574,444

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	50,112		$	53,386
Income taxes payable		24,076			19,969
Compensation and benefits payable		525,466			532,934
Operating lease liability, current		36,073			45,821
Other accrued liabilities		298,792			324,150
Total current liabilities		934,519			976,260

Deferred compensation and other retirement plans		440,396			396,534
Operating lease liability, non-current		143,507			119,220
Long-term debt		396,946			396,194
Deferred tax liabilities		4,540			5,352
Other liabilities		21,636			27,879
Total liabilities		1,941,544			1,921,439

Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 77,460 and 76,693 shares issued and 51,983 and 52,269 shares outstanding at April 30, 2024 and 2023, respectively		414,885			429,754
Retained earnings		1,425,844			1,311,081
Accumulated other comprehensive loss, net		(107,671	)		(92,764	)
Total Korn Ferry stockholders' equity		1,733,058			1,648,071
Noncontrolling interest		4,267			4,934
Total stockholders' equity		1,737,325			1,653,005
Total liabilities and stockholders' equity	$	3,678,869		$	3,574,444

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands)
(unaudited)

	Three Months Ended April 30,						Year Ended April 30,
	2024			2023			2024			2023

Net income attributable to Korn Ferry	$	65,189		$	47,494		$	169,154		$	209,529
Net income attributable to non-controlling interest		423			640			3,407			3,525
Net income		65,612			48,134			172,561			213,054
Income tax provision		20,302			19,108			50,081			82,683
Income before provision for income taxes		85,914			67,242			222,642			295,737
Other income, net		(7,122	)		(437	)		(30,681	)		(5,261	)
Interest expense, net		4,686			5,776			20,968			25,864
Operating income		83,478			72,581			212,929			316,340
Depreciation and amortization		19,891			17,976			77,966			68,335
Other income, net		7,122			437			30,681			5,261
Integration/acquisition costs (1)		1,809			5,450			14,866			14,922
Impairment of fixed assets (2)		—			—			1,575			4,375
Impairment of right of use assets (3)		—			—			1,629			5,471
Restructuring charges, net (4)		—			1,411			68,558			42,573
Adjusted EBITDA	$	112,300		$	97,855		$	408,204		$	457,277

Operating margin		12.1	%		9.9	%		7.7	%		11.2	%
Depreciation and amortization		2.9	%		2.5	%		2.8	%		2.4	%
Other income, net		1.0	%		0.1	%		1.1	%		0.2	%
Integration/acquisition costs (1)		0.3	%		0.7	%		0.5	%		0.5	%
Impairment of fixed assets (2)		—	%		—	%		0.1	%		0.1	%
Impairment of right of use assets (3)		—	%		—	%		0.1	%		0.2	%
Restructuring charges, net (4)		—	%		0.2	%		2.5	%		1.5	%
Adjusted EBITDA margin		16.3	%		13.4	%		14.8	%		16.1	%

Net income attributable to Korn Ferry	$	65,189		$	47,494		$	169,154		$	209,529
Integration/acquisition costs (1)		1,809			5,450			14,866			14,922
Impairment of fixed assets (2)		—			—			1,575			4,375
Impairment of right of use assets (3)		—			—			1,629			5,471
Restructuring charges, net (4)		—			1,411			68,558			42,573
Tax effect on the adjusted items (5)		(1,267	)		(1,309	)		(22,030	)		(14,719	)
Tax adjustment (6)		—			—			(9,714	)		—
Adjusted net income attributable to Korn Ferry	$	65,731		$	53,046		$	224,038		$	262,151

Explanation of Non-GAAP Adjustments
(1)		Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.
(2)		Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23.
(3)		Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases.
(4)		Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty.
(5)		Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net.
(6)		Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in fiscal 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED
(unaudited)

	Three Months Ended April 30,						Year Ended April 30,
	2024			2023			2024			2023

Basic earnings per common share	$	1.26		$	0.91		$	3.25		$	3.98
Integration/acquisition costs (1)		0.04			0.11			0.29			0.29
Impairment of fixed assets (2)		—			—			0.03			0.08
Impairment of right of use assets (3)		—			—			0.03			0.10
Restructuring charges, net (4)		—			0.03			1.33			0.82
Tax effect on the adjusted items (5)		(0.03	)		(0.03	)		(0.43	)		(0.29	)
Tax adjustment (6)		—			—			(0.19	)		—
Adjusted basic earnings per share	$	1.27		$	1.02		$	4.31		$	4.98

Diluted earnings per common share	$	1.24		$	0.91		$	3.23		$	3.95
Integration/acquisition costs (1)		0.04			0.10			0.29			0.28
Impairment of fixed assets (2)		—			—			0.03			0.08
Impairment of right of use assets (3)		—			—			0.03			0.10
Restructuring charges, net (4)		—			0.03			1.32			0.82
Tax effect on the adjusted items (5)		(0.02	)		(0.03	)		(0.43	)		(0.29	)
Tax adjustment (6)		—			—			(0.19	)		—
Adjusted diluted earnings per share	$	1.26		$	1.01		$	4.28		$	4.94

Explanation of Non-GAAP Adjustments
(1)		Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.
(2)		Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23.
(3)		Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases.
(4)		Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty.
(5)		Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net.
(6)		Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in fiscal 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED
(unaudited)

	Three Months Ended April 30,
	2024									2023
	Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin		Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin
	(dollars in thousands)
Consulting	$	182,177	$	185,130	$	32,340		17.8	%	$	175,270	$	177,985	$	24,558		14.0	%
Digital		91,304		91,361		27,991		30.7	%		91,490		91,488		23,603		25.8	%
Executive Search:
North America		125,468		127,140		33,136		26.4	%		135,300		136,926		28,686		21.2	%
EMEA		45,643		45,931		6,846		15.0	%		46,353		46,671		6,803		14.7	%
Asia Pacific		20,696		20,819		4,233		20.5	%		23,188		23,287		5,499		23.7	%
Latin America		6,896		6,906		1,275		18.5	%		7,764		7,765		1,684		21.7	%
Total Executive Search		198,703		200,796		45,490		22.9	%		212,605		214,649		42,672		20.1	%
Professional Search & Interim		129,162		130,105		28,122		21.8	%		151,725		152,628		27,292		18.0	%
RPO		89,454		92,531		11,782		13.2	%		99,784		101,374		9,026		9.0	%
Corporate		—		—		(33,425	)				—		—		(29,296	)
Consolidated	$	690,800	$	699,923	$	112,300		16.3	%	$	730,874	$	738,124	$	97,855		13.4	%

	Year Ended April 30,
	2024									2023
	Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin		Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin
	(dollars in thousands)
Consulting	$	695,007	$	706,805	$	114,260		16.4	%	$	677,001	$	686,979	$	108,502		16.0	%
Digital		366,699		366,924		108,669		29.6	%		354,651		354,967		97,458		27.5	%
Executive Search:
North America		506,927		513,545		120,710		23.8	%		562,139		568,212		140,850		25.1	%
EMEA		184,516		185,552		25,902		14.0	%		187,014		188,114		31,380		16.8	%
Asia Pacific		85,863		86,273		18,923		22.0	%		95,598		95,956		24,222		25.3	%
Latin America		28,937		28,956		5,571		19.3	%		31,047		31,054		9,370		30.2	%
Total Executive Search		806,243		814,326		171,106		21.2	%		875,798		883,336		205,822		23.5	%
Professional Search & Interim		540,615		544,453		101,868		18.8	%		503,395		507,058		110,879		22.0	%
RPO		354,107		362,997		40,399		11.4	%		424,563		431,496		52,588		12.4	%
Corporate		—		—		(128,098	)				—		—		(117,972	)
Consolidated	$	2,762,671	$	2,795,505	$	408,204		14.8	%	$	2,835,408	$	2,863,836	$	457,277		16.1	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20240606730247/en/

Investor Relations: Tiffany Louder, (214) 310-8407

Media: Dan Gugler, (310) 226-2645

Source: Korn Ferry

FAQ

What was Korn Ferry's Q4 FY'24 fee revenue?

Korn Ferry reported Q4 FY'24 fee revenue of $690.8 million, a 5% year-over-year decrease.

How did Korn Ferry's full-year FY'24 fee revenue perform?

Korn Ferry's full-year FY'24 fee revenue was $2,762.7 million, a 3% year-over-year decline.

What were Korn Ferry's Q4 FY'24 net income and EPS?

Net income for Q4 FY'24 was $65.2 million, with diluted earnings per share of $1.24.

How did Consulting and Digital sectors perform in FY'24 for Korn Ferry?

Consulting posted a record-high fee revenue of $695 million, and Digital generated $366.7 million, also a record high.

What is the status of Korn Ferry's share repurchase program in FY'24?

Korn Ferry repurchased 930,000 shares totaling $52.5 million over the fiscal year.

What is Korn Ferry's updated dividend per share?

Korn Ferry increased its dividend to $0.37 per share, payable on July 31, 2024.

Korn Ferry Announces Fourth Quarter and Full Year FY'24 Results of Operations

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Korn Ferry Announces Fourth Quarter and Full Year FY'24 Results of Operations

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