Korn Ferry Posts Two Percent Revenue Decline

March 6, 2024 – Korn Ferry (NYSE:KFY) has posted 2024 fiscal first quarter revenues of $668.7 million, a decrease of two percent from the same period a year ago. The decline was primarily due to decreases in the firm’s permanent placement talent acquisition offerings. Korn Ferry notes that this decrease was also due to a decline in demand driven by an uncertain and challenging global economic environment. This was partially offset by the increases in Consulting and Digital fee revenue (three and six percent, respectively), as well as in the Interim portion of Professional Search & Interim, resulting from the acquisition of Salo which was effective February 1, 2023.

Executive search revenue was $199.3 million and $212.0 million in Q3 FY’24 and Q3 FY’23, respectively, a year-over-year decrease of $12.7 million or six percent (down seven percent on a constant currency basis). The decrease in fee revenue was primarily driven by a decline in executive search activity, resulting from the uncertain and challenging global economic environment.

Net income attributable to the Los Angeles-headquartered executive recruiter and leadership consultant – the largest globally and in the Americas as ranked by Hunt Scanlon Media – was $59.1 million, while diluted and adjusted diluted earnings per share were $1.13 and $1.07 in Q3 FY’24, respectively.

During the quarter, Korn Ferry repurchased 382,500 shares of stock during the quarter for $21.0 million. The firm also declared a quarterly dividend of $0.33 per share on March 5, 2024, which is payable on April 15, 2024 to stockholders of record on March 27, 2024.

“I am pleased with our third quarter results, as we generated $669 million in fee revenue, down two percent year-over-year, with our non-search offerings providing a substantial buffer against the more cyclically sensitive recruiting offerings,” said Gary D. Burnison, CEO of Korn Ferry. “Earnings and profitability increased year-over-year and sequentially as we delivered $102 million of Adjusted EBITDA, at a 15.2 percent margin.”

“Fee revenue from Consulting and Digital, when combined with our Interim fee revenue, now generate 50 percent of our top line,” Mr. Burnison said. “Our Consulting bill rate increased 12 percent and our Digital subscription and license fee revenue increased 11 percent. The strategy is clearly working – I am enormously proud of our organization and the results demonstrate the resiliency and potential for Korn Ferry.”

Korn Ferry is a Los Angeles-headquartered executive recruiter and leadership consultant and the largest globally and in the Americas. The firm’s 8,600 colleagues serve clients in more than 50 countries.

Recent Alliance

In January, Korn Ferry 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: With Job Cuts Underway, Korn Ferry to Acquire Third Interim Business

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 Announces Board Changes
Korn Ferry has elected Charles Harrington as a new member to its board of directors and appointed Jerry Leamon as a new non-executive chair. Christina Gold, who has served on the firm’s board since 2014, and most recently as the non-executive chair since 2019, has retired from the board. In addition, George Shaheen retired from the board after more than 12 years of total service, including as non-executive chair from 2012 to 2019.

“We are pleased to have Chuck join our board,” said Gary D. Burnison, CEO of Korn Ferry. “I believe his extensive business experience, technology credentials, and financial acumen will be a great fit for Korn Ferry as we continue our efforts to broaden the scope of our offerings and help companies synchronize their strategy, operations, and talent to drive superior performance.”

As part of the partnership, Korn Ferry Advance users will get access to personalized communication coaching through a bespoke version of Yoodli. Individuals will be able to simulate crucial conversations, customize audience personas, and then get insights in private on how to improve—both during their practice sessions and while speaking live to others. Individuals can also work with organization leaders and human coaches to create custom learning goals and reports to quantify progress over time.

Past Activity

Last year, Korn Ferry 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 Q4 FY’24 fee revenue to be in the range of $675 million and $695 million; and Q4 FY’24 diluted earnings per share is expected to range between $1.06 to $1.14.

On a consolidated adjusted basis Korn Ferry anticipates Q4 FY’24 adjusted diluted earnings per share to be in the range from $1.09 to $1.17.

Shares in Korn Ferry were up 0.58 percent to $64.43 after the release of its numbers. They reached a new 52-week high during today’s trading sessions when they reached $69.69.

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