Korn Ferry Posts 19 Percent First Quarter Fiscal 2023 Revenue Gain

September 7, 2022 – Korn Ferry (NYSE:KFY) has posted 2023 fiscal first quarter revenue of $695.9 million, an increase of 19 percent from the first quarter of last year. Revenue increased in all lines of business. The increase in fee revenue when compared to Q1 was primarily due to the continuing demand for the firm’s integrated service offerings and the acquisitions of Lucas Group and Patina in Q3 FY’22 and Q4 FY’22, respectively, which are included in the new professional search and interim segment. The Los Angeles-headquartered executive recruiter and leadership consultant – the largest globally and in the Americas as ranked by Hunt Scanlon Media – recorded net income of $77.2 million and diluted earnings per share was $1.45 and adjusted diluted earnings per share was $1.50.

“I am pleased with our financial results during the fiscal first quarter,” said CEO Gary D. Burnison. “We generated $696 million in fee revenue, up 19 percent (24 percent at constant currency) year over year. Our diluted earnings per share and adjusted diluted earnings per share were $1.45 and $1.50, respectively, and our adjusted EBITDA was $132 million, representing a 19 percent margin.”

“We are in a new paradigm as global organizations fight for growth and relevancy while facing economic ambiguity,” said Mr. Burnison. “Today’s workscape has never been more complex – an imbalanced labor market, skills shortage and a major shift in how and where people work. While cycles will continually change, the long-term premium on people endures. Strategy without talent is helpless and talent without strategy is hopeless. Korn Ferry is the firm that helps clients drive performance through synchronizing their organization, their strategy, and their people.”

“Growth in consulting fee revenue continues to be driven by large workforce transformation initiatives delivered through our organization strategy, assessment and succession, and leadership development solutions,” Mr. Burnison said. “We also saw significant growth in organization design, change management, and workforce sales compensation as clients aligned their structures to new market opportunities and addressed compensation and retention issues associated with labor market dislocation.”

Related: Caldwell Posts Record Q3 Revenue Growth

During the quarter, Korn Ferry declared a quarterly dividend of $0.15 per share on Sept. 6, which is payable on Oct.14 to stockholders of record on Sept. 23. On May 1, Korn Ferry also separated the RPO and professional search segment into two segments: professional search and interim segment, and the RPO segment.

Boosting Interim Solutions

Korn Ferry recently acquired Infinity Consulting Solutions (ICS). Terms of the deal were not disclosed. The acquisition is expected to be immediately accretive to Korn Ferry’s adjusted earnings. “Infinity Consulting Solutions will be a great fit, with interim professional placement offerings and expertise that are highly relevant for the new world of work,” said Mr. Burnison. “Today, Boomers are retiring and career nomads are looking for change – early and often. Our clients have entered a new reality where shortages of skilled labor are projected to persist, particularly in high-demand areas such as IT. Korn Ferry’s acquisition of ICS echoes our commitment to scale our solutions and further increase our focus at the intersection of talent and strategy – wherever and however the needs of organizations evolve.”

Headquartered in New York, with nine offices throughout the U.S., ICS offers interim professional solutions expertise which will further enhance Korn Ferry’s portfolio. ICS is a provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and human resources.

Korn Ferry also recently acquired interim executive solutions provider Patina Solutions Group. “This combination presents real, tangible opportunity for Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis,” said Mr. Burnison. “Patina offers ideal solutions for today’s nomadic labor market.”

Korn Ferry Acquires Lucas Group

Korn Ferry recently acquired Lucas Group. The addition of Lucas Group to Korn Ferry’s broader talent acquisition portfolio – spanning executive search, recruitment process outsourcing, and professional search – is expected to accelerate Korn Ferry’s ability to capture additional share of the professional search and contracting market. Founded in 1970 and headquartered in Atlanta, Lucas Group is a professional search and contract staffing firm, targeting middle market businesses. Key areas of focus span specializations such as accounting & finance, human resources, information technology, legal, military transition, sales & marketing, and supply chain & operations. “This transaction takes aim at the highly fragmented professional search and contract staffing market,” said Scott A. Scanlon, CEO of Hunt Scanlon Ventures.

“This combination is the right move at the right time,” said Korn Ferry CEO Gary D. Burnison. “Today’s workscape is being transformed before our eyes – people working anywhere, everywhere and at any time. Professionals are on the move, Boomers are retiring, and career nomads are looking for change – early and often. We are seizing this opportunity to help clients find the right talent who are highly agile with specialized skills and expertise to help them drive superior performance,” added Mr. Burnison.

Patina brings to Korn Ferry interim executive solutions expertise across multiple industry verticals. Patina’s network of C-suite, and professional interim talent spans functional areas of expertise including finance, operations, legal, human resources, and IT.

“As part of Korn Ferry, Patina will have even more great solutions to offer our clients,” said Mike Harris, CEO of Patina. “Korn Ferry is a leading global organizational consulting firm, with world-class solutions and we look forward to further bolstering our interim executive solutions with them. We are thrilled to be joining Korn Ferry and excited for the opportunities ahead.”

Looking Ahead

Despite the continuing strength in new business trends coming out of Q1 FY’23, Korn Ferry says that economic factors like global inflation, rising interest rates, and escalating geo-political tensions present a level of risk and uncertainty that is difficult to quantify.

With this in mind and assuming no new major pandemic related lockdowns or further changes in worldwide geopolitical conditions, economic conditions, financial markets or foreign exchange rates, on a consolidated basis Korn Ferry anticipates Q2 FY’23 fee revenue is expected to be in the range of $678 million and $708 million; and Q2 FY’23 diluted earnings per share is expected to range between $1.28 to $1.45.

Related: Heidrick & Struggles Posts Record Revenue Gain

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