Caldwell Records 42 Percent Q3 Revenue Decline

Search firm experiences big drop in business as it navigates pandemic and economic crisis. Let’s go inside Caldwell’s just released numbers.

July 10, 2020 – Toronto-based Caldwell posted Q3 revenues of $11.5 million (Canadian), a 42 percent decrease from a year ago. Like many companies, the firm’s performance was impacted by the global COVID-19 pandemic.

“This is a challenging business environment for the executive search industry,” said John Wallace, chief executive officer. “Our third quarter revenue is down 42 percent over last year, which we believe is in line with our industry overall. That said, we remain extremely confident about our ability to manage our business through this pandemic and economic downturn.”

“In light of uncertainties in the depth and length we would be impacted, we took quick and decisive steps to actively manage costs, preserve capital and enhance liquidity,” Mr. Wallace said. “Our cash and untapped available credit facilities have us in an excellent financial position, allowing us to continue focusing on growth initiatives and, in particular, partner recruitment.”

“On January 30, 2020, the World Health Organization (WHO) characterized the novel coronavirus (COVID-19) a public health emergency,” Caldwell said. “At that time, there had not been a direct negative impact seen in the regions we operate in of Canada, the U.S. and the U.K. On March 11, the WHO expanded its characterization of COVID-19 to a global pandemic. The impact of COVID-19 on the firm has been significant and was experienced consistently across all three of our primary geographies.” Areas of impact include both revenue and costs.

Inside the Numbers

Caldwell noted that the decrease in professional fees is attributable to a reduction in the number of assignments to 61 vs 115 last year as a result of the COVID-19 pandemic across North America, partially offset by a higher average fee per assignment.

Korn Ferry Posts Flat Year-End Revenues; Q4 Down 10.2 Percent 
Korn Ferry (NYSE:KFY) has posted 2020 fiscal year-end revenues of $1.92 billion, flat from a year ago. The Los Angeles-headquartered executive recruiter and leadership consultant – the largest globally and in the Americas as ranked by Hunt Scanlon Media – also reported fourth quarter revenue of $490.8 million, a decline of 10.2 percent. The firm reported restricting charges of $40.5 million in its fourth quarter. Net income attributable to Korn Ferry was $104.9 million in the 2020 fiscal year, while the firm reported a net loss on $0.8 million in Q4.

The number of assignments decreased on a lower number of assignments per partner at 1.6 (2019: 2.9) and a lower average number of partners at 38.3 (2019: 39.3).

Caldwell recorded third quarter net loss of $504,000 ($0.025 per share), as compared to net income of $1,035,000 ($0.051 per share) in the comparable period a year earlier.

Caldwell said that in light of concerns over the financial impact of the COVID-19 pandemic, all accounts receivable over 90 days old have been reserved. This reduced revenue in Canada, the United States and Europe in the quarter by $396,000, $502,000 and $415,000, respectively.

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor  – Hunt Scanlon Media

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