Korn Ferry Posts Three Percent Revenue Decline

June 13, 2024 – Korn Ferry (NYSE:KFY) has posted 2024 fiscal year-end revenues of $2.7 billion, a decrease of three percent from the prior year. 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 $691 million, a decrease of five percent. Moderation in fee revenue from its talent acquisition offerings was buoyed by year-over-year growth in Korn Ferry’s consulting fee revenue and stability in its digital fee revenue, in-line with the firm’s business diversification strategy. The moderation in fee revenue in its talent acquisition offerings was driven by the challenging global economic environment, Korn Ferry noted.

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.

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 nine percent to $131 million. Consulting’s full year average hourly bill rate increased 11 percent to $420, with an average bill rate of $437 in the fourth quarter.

“I am pleased with our fourth quarter results, as we generated $691 million in fee revenue,” said Gary D. Burnison, CEO of Korn Ferry. “Earnings and profitability increased year-over-year and sequentially as we delivered $112 million of adjusted EBITDA, at a 16.3 percent 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,” Mr. Burnison said. “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.”Korn Ferry 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 firm 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.

Recent Growth

Korn Ferry recently formed a partnership with Yoodli to provide professionals with private and real-time communication coaching using artificial intelligence (AI). “We’re pleased to partner with Yoodli to help professionals upskill themselves at their own pace,” said Bryan Ackermann, head of AI strategy and transformation, Korn Ferry. “Communication skills are one of the consistent enablers of professional success—from promotion conversations to boardroom presentations. This partnership lies at the heart of our strategy to bring cutting-edge generative AI and personalized coaching to our partners worldwide.”

Related: Korn Ferry Appoints Senior Leaders

Yoodli, a Seattle, WA-based company, helps individuals improve their communications skills using AI. Users can get coaching during online meetings, or they can practice for an upcoming speech, conversation, or interview with AI. Yoodli will then generate feedback on their content, conciseness and speaking attributes such as their executive presence, reliance on filler words, and pacing. Yoodli has been rolled out in more than 150 countries by Toastmasters International, business schools, and hundreds of thousands of leaders globally.

Korn Ferry also named Jeanne MacDonald as chief executive officer, Recruitment Process Outsourcing (RPO) and Mathias Herzog will assume leadership of the firm’s digital solution. “Jeanne and Mathias are proven executives, and we are thrilled to have people of their caliber lead these offerings,” said Mr. Burnison. “Jeanne is the natural choice to lead RPO after years of overseeing global RPO solutions and playing a fundamental role in the business’s commercial and financial success. Mathias brings in-depth consulting and technology expertise that will help further the digitization of our offerings and intellectual property to drive superior client performance. With Jeanne and Mathias, we are confident that our RPO and digital solutions will continue to evolve and thrive.”

Ms. MacDonald joined Korn Ferry in 1998 and most recently served as president, global RPO Solutions, where she was responsible for oversight of Korn Ferry’s RPO businesses. She has worked in a variety of roles at Korn Ferry including senior recruiter and business development director for North America prior to moving into various leadership positions within the firm.

Mr. Herzog joined Korn Ferry in 2023 and currently serves as president of the global technology, communications, media, and professional services practice. Prior to joining Korn Ferry, he served in several executive-level roles focused on corporate strategy, business operations, and GTM / sales. Mr. Herzog has held executive positions at Salesforce and Automation Anywhere and was a partner at multiple consulting firms.

Outlook

Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis Korn Ferry expects Q1 FY’25 fee revenue to be in the range of $655 million and $675 million. First quarter 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.

Korn/Ferry shares have added about 6.8 percent since the beginning of the year versus the S&P 500’s gain of 13.7 percent.

Related: Korn Ferry Launches AI-Enabled Talent Analytics Platform

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media