Highlights
- Korn Ferry reports Q4 FY’23 fee revenue of $730.9 million, an increase of 1% (up 3% on a constant currency basis) compared to Q4 FY’22 and full year FY’23 fee revenue of $2,835.4 million, an increase of 8% (up 12% on a constant currency basis) compared to FY’22.
- Net income attributable to Korn Ferry for the fourth quarter and full year of FY’23 was $47.5 million and $209.5 million, respectively, while diluted and adjusted diluted earnings per share were $0.91 and $1.01 in Q4 FY’23, and were $3.95 and $4.94 for the full year, respectively.
- Operating income and Adjusted EBITDA were $72.6 million (operating margin of 9.9%) and $97.9 million (Adjusted EBITDA margin of 13.4%), respectively, in Q4 FY’23, while full year amounts were $316.3 million (operating margin of 11.2%) and $457.3 million (Adjusted EBITDA margin of 16.1%), respectively.
- The Company repurchased 255,000 shares of stock during the quarter for $13.4 million and paid dividends of $8.0 million.
- On June 26, 2023, the Company increased its regular quarterly cash dividend by 20% to $0.18 per share, which is payable on July 31, 2023 to stockholders of record on July 7, 2023.
- For the full year the Company continued to maintain its balanced approach to capital allocation by investing $254.8 million in acquisitions, investing $61.0 million in cap-ex primarily related to the Digital business and corporate infrastructure, spending $18.5 million on debt service costs, and returning $93.9 million and $33.0 million to shareholders in the form of share repurchases and dividends, respectively.
LOS ANGELES–(BUSINESS WIRE)–Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $730.9 million and $2,835.4 million, respectively. In addition, fourth quarter diluted earnings per share was $0.91 and adjusted diluted earnings per share was $1.01.
“During fiscal year 2023 our fee revenue reached an all-time high of $2.84 billion, up 8% at actual, 12% constant currency. The story of this period though is really about the success of our diversification strategy, set forth over the past few years, which has created new revenue streams and offerings, as clearly evidenced by our clients and in our results,” said Gary D. Burnison, CEO, Korn Ferry.
“In FY’23 we added a completely new capability – an interim and transition management business with more than $400 million of annual revenue on a run rate basis,” added Burnison. “Additionally, the Consulting and Digital businesses have never been more relevant as our clients increasingly seek transformation, growth and profitability.
“With a world immersed in Generative AI, Korn Ferry will continue to invest not only in these technologies, but also in advancing our proprietary data, assessment instruments and knowledge as these will be the ultimate differentiators.”
|
Selected Financial Results |
||||||||||||||||
|
(dollars in millions, except per share amounts) (a) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
730.9 |
|
|
$ |
721.1 |
|
|
$ |
2,835.4 |
|
|
$ |
2,626.7 |
|
|
|
Total revenue |
$ |
738.1 |
|
|
$ |
727.0 |
|
|
$ |
2,863.8 |
|
|
$ |
2,643.5 |
|
|
|
Operating income |
$ |
72.6 |
|
|
$ |
138.8 |
|
|
$ |
316.3 |
|
|
$ |
470.1 |
|
|
|
Operating margin |
|
9.9 |
% |
|
|
19.2 |
% |
|
|
11.2 |
% |
|
|
17.9 |
% |
|
|
Net income attributable to Korn Ferry |
$ |
47.5 |
|
|
$ |
91.7 |
|
|
$ |
209.5 |
|
|
$ |
326.4 |
|
|
|
Basic earnings per share |
$ |
0.91 |
|
|
$ |
1.71 |
|
|
$ |
3.98 |
|
|
$ |
6.04 |
|
|
|
Diluted earnings per share |
$ |
0.91 |
|
|
$ |
1.70 |
|
|
$ |
3.95 |
|
|
$ |
5.98 |
|
|
|
Adjusted Results (b): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
97.9 |
|
|
$ |
144.4 |
|
|
$ |
457.3 |
|
|
$ |
538.9 |
|
|
|
Adjusted EBITDA margin |
|
13.4 |
% |
|
|
20.0 |
% |
|
|
16.1 |
% |
|
|
20.5 |
% |
|
|
Adjusted net income attributable to Korn Ferry |
$ |
53.0 |
|
|
$ |
94.4 |
|
|
$ |
262.2 |
|
|
$ |
340.1 |
|
|
|
Adjusted basic earnings per share |
$ |
1.02 |
|
|
$ |
1.77 |
|
|
$ |
4.98 |
|
|
$ |
6.30 |
|
|
|
Adjusted diluted earnings per share |
$ |
1.01 |
|
|
$ |
1.75 |
|
|
$ |
4.94 |
|
|
$ |
6.23 |
|
|
| ______________________ | ||
|
(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 net restructuring charges 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’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Integration/acquisition costs |
$ |
5.5 |
|
$ |
3.6 |
|
$ |
14.9 |
|
$ |
7.9 |
|
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
4.4 |
|
$ |
1.9 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
5.5 |
|
$ |
7.4 |
|
|
Restructuring charges, net |
$ |
1.4 |
|
$ |
— |
|
$ |
42.6 |
|
$ |
— |
|
Fiscal 2023 Fourth Quarter Results
The Company reported fee revenue in Q4 FY’23 of $730.9 million, an increase of 1% (up 3% on a constant currency basis) compared to Q4 FY’22. Fee revenue increased primarily due to an increase in the Interim portion of Professional Search & Interim, resulting from the acquisitions of Patina, Infinity Consulting Solutions and Salo (collectively, the “acquisitions”). This was partially offset by decreases in Executive Search, the Permanent Placement portion of Professional Search & Interim and RPO mainly due to a decline in demand driven by global economic factors.
Operating margin was 9.9% in Q4 FY’23, compared to 19.2% in the year-ago quarter. Adjusted EBITDA margin was 13.4% in Q4 FY’23, compared to 20.0% in the year-ago quarter. Net income attributable to Korn Ferry was $47.5 million in Q4 FY’23, compared to $91.7 million in Q4 FY’22 and Adjusted EBITDA was $97.9 million in Q4 FY’23, compared to $144.4 million in Q4 FY’22.
Operating margin and Adjusted EBITDA margin decreased primarily due to a change in fee revenue mix, with fee revenue decreasing in Executive Search and Permanent Placement, which have higher margins, and being replaced with fee revenue in Interim that has lower margins, but is more resilient to economic factors and in line with our strategy.
Fiscal 2023 Full Year Results
The Company reported fee revenue in FY’23 of $2,835.4 million, an increase of 8% (up 12% on a constant currency basis) compared to FY’22. Fee revenue increased in all lines of business except Executive Search which was down about 6% compared to FY22 mainly due to a decline in demand driven by global economic factors. The acquisitions included in Professional Search & Interim segment were a significant factor in the increase in fee revenue compared to FY22.
Operating margin was 11.2% in FY’23, compared to 17.9% in FY’22. Adjusted EBITDA margin was 16.1% in FY’23 compared to 20.5% in FY’22. Net income attributable to Korn Ferry was $209.5 million in FY’23 as compared to $326.4 million in FY’22 and Adjusted EBITDA was $457.3 million in FY’23 as compared to $538.9 million in FY’22.
Operating margin decreased primarily due to a change in fee revenue mix, with a decrease in fee revenue in Executive Search and Permanent Placement, which have higher margins, and being replaced with fee revenue in Interim that has lower margins, but is more resilient to economic factors and in line with our strategy and was also impacted by an increase in restructuring charges, net recorded in FY’23.
The decline in Adjusted EBITDA margin was primarily due to the change in fee revenue mix discussed above.
Results by Line of Business
|
Selected Consulting Data |
||||||||||||||||
|
(dollars in millions) (a) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
175.3 |
|
|
$ |
173.9 |
|
|
$ |
677.0 |
|
|
$ |
650.2 |
|
|
|
Total revenue |
$ |
178.0 |
|
|
$ |
175.6 |
|
|
$ |
687.0 |
|
|
$ |
654.2 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Ending number of consultants and execution staff (b) |
|
1,853 |
|
|
|
1,841 |
|
|
|
1,853 |
|
|
|
1,841 |
|
|
|
Hours worked in thousands (c) |
|
450 |
|
|
|
471 |
|
|
|
1,790 |
|
|
|
1,766 |
|
|
|
Average bill rate (d) |
$ |
390 |
|
|
$ |
369 |
|
|
$ |
378 |
|
|
$ |
368 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Results (e): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
24.6 |
|
|
$ |
30.7 |
|
|
$ |
108.5 |
|
|
$ |
116.1 |
|
|
|
Adjusted EBITDA margin |
|
14.0 |
% |
|
|
17.6 |
% |
|
|
16.0 |
% |
|
|
17.9 |
% |
|
| ______________________ | ||
|
(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’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
2.8 |
|
$ |
0.3 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
3.1 |
|
$ |
2.5 |
|
|
Restructuring charges, net |
$ |
0.8 |
|
$ |
— |
|
$ |
11.6 |
|
$ |
— |
|
Fee revenue was $175.3 million in Q4 FY’23 compared to $173.9 million in Q4 FY’22, an increase of $1.4 million or 1% (up 3% on a constant currency basis). Consulting saw growth in our core solution Organizational Strategy, partially offset by a decline in fee revenue from Leadership Development.
Adjusted EBITDA was $24.6 million in Q4 FY’23 with an Adjusted EBITDA margin of 14.0% compared to Adjusted EBITDA of $30.7 million with an associated margin of 17.6% in the year-ago quarter. This decrease in Adjusted EBITDA resulted primarily from an increase in compensation and benefits expense due to higher performance-related bonus expense, partially offset by an increase in fee revenue.
|
Selected Digital Data |
||||||||||||||||
|
(dollars in millions) (a) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
91.5 |
|
|
$ |
89.5 |
|
|
$ |
354.7 |
|
|
$ |
349.0 |
|
|
|
Total revenue |
$ |
91.5 |
|
|
$ |
89.5 |
|
|
$ |
355.0 |
|
|
$ |
349.4 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Ending number of consultants |
|
347 |
|
|
|
305 |
|
|
|
347 |
|
|
|
305 |
|
|
|
Subscription & License fee revenue |
$ |
31.6 |
|
|
$ |
29.1 |
|
|
$ |
119.7 |
|
|
$ |
108.7 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Results (b): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
23.6 |
|
|
$ |
27.7 |
|
|
$ |
97.5 |
|
|
$ |
110.1 |
|
|
|
Adjusted EBITDA margin |
|
25.8 |
% |
|
|
31.0 |
% |
|
|
27.5 |
% |
|
|
31.5 |
% | |
| ______________________ | ||
|
(a) |
|
Numbers may not total due to rounding. |
|
(b) |
|
Adjusted results exclude the following: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
1.5 |
|
$ |
0.2 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
1.7 |
|
$ |
1.3 |
|
|
Restructuring charges, net |
$ |
— |
|
$ |
— |
|
$ |
2.9 |
|
$ |
— |
|
Fee revenue was $91.5 million in Q4 FY’23 compared to $89.5 million in Q4 FY’22, an increase of $2.0 million or 2% (up 5% on a constant currency basis). The accumulation of sales of subscriptions in fiscal 2023 has created year-over-year growth in subscription based revenue with increases in both sales effectiveness and total rewards tools.
Adjusted EBITDA was $23.6 million in Q4 FY’23 with an Adjusted EBITDA margin of 25.8% compared to $27.7 million and 31.0%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA and Adjusted EBITDA margin resulted from an increase in compensation and benefits primarily due to an increase in average headcount compared to the year-ago quarter, partially offset by an increase in fee revenue discussed above.
|
Selected Executive Search Data(a) |
||||||||||||||||
|
(dollars in millions) (b) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
212.6 |
|
|
$ |
244.2 |
|
|
$ |
875.8 |
|
|
$ |
935.6 |
|
|
|
Total revenue |
$ |
214.6 |
|
|
$ |
245.7 |
|
|
$ |
883.3 |
|
|
$ |
939.9 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Ending number of consultants |
|
602 |
|
|
|
587 |
|
|
|
602 |
|
|
|
587 |
|
|
|
Average number of consultants |
|
609 |
|
|
|
584 |
|
|
|
594 |
|
|
|
555 |
|
|
|
Engagements billed |
|
3,772 |
|
|
|
4,417 |
|
|
|
10,091 |
|
|
|
11,085 |
|
|
|
New engagements (c) |
|
1,508 |
|
|
|
1,851 |
|
|
|
6,343 |
|
|
|
7,213 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Results (d): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
42.7 |
|
|
$ |
64.2 |
|
|
$ |
205.8 |
|
|
$ |
257.6 |
|
|
|
Adjusted EBITDA margin |
|
20.1 |
% |
|
|
26.3 |
% |
|
|
23.5 |
% |
|
|
27.5 |
% |
|
| ______________________ | ||
|
(a) |
|
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. |
|
(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’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.9 |
|
|
Restructuring charges, net |
$ |
0.6 |
|
$ |
— |
|
$ |
20.1 |
|
$ |
— |
|
Fee revenue was $212.6 million and $244.2 million in Q4 FY’23 and Q4 FY’22, respectively, a year-over-year decrease of 13% (down 11% on a constant currency basis). Fee revenue saw a decline in all regions of Executive Search as a result of a 15% decrease in the number of engagements billed, partially offset by a 4% increase in weighted-average fee billed per engagement (calculated using local currency).
Adjusted EBITDA was $42.7 million in Q4 FY’23 with an Adjusted EBITDA margin of 20.1% compared to Adjusted EBITDA of $64.2 million and an Adjusted EBITDA margin of 26.3%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decrease in fee revenue discussed above, partially offset by a decrease in performance-related bonus expense.
|
Selected Professional Search & Interim Data(a) |
||||||||||||||||
|
(dollars in millions) (b) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
151.7 |
|
|
$ |
100.7 |
|
|
$ |
503.4 |
|
|
$ |
297.1 |
|
|
|
Total revenue |
$ |
152.6 |
|
|
$ |
101.1 |
|
|
$ |
507.1 |
|
|
$ |
298.0 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Permanent Placement: |
|
|
|
|
|
|
|
|||||||||
|
Fee revenue |
$ |
62.5 |
|
|
$ |
81.5 |
|
|
$ |
281.1 |
|
|
$ |
262.9 |
|
|
|
Engagements billed (c) |
|
2,304 |
|
|
|
2,892 |
|
|
|
7,435 |
|
|
|
6,633 |
|
|
|
New engagements (d) |
|
1,364 |
|
|
|
1,904 |
|
|
|
6,486 |
|
|
|
5,633 |
|
|
|
Ending number of consultants (e) |
|
401 |
|
|
|
479 |
|
|
|
401 |
|
|
|
479 |
|
|
|
Interim: (started in Q3 FY’22) |
|
|
|
|
|
|
|
|||||||||
|
Fee revenue |
$ |
89.2 |
|
|
$ |
19.2 |
|
|
$ |
222.3 |
|
|
$ |
34.2 |
|
|
|
Average bill rate (f) |
$ |
124 |
|
|
$ |
104 |
|
|
$ |
115 |
|
|
$ |
98 |
|
|
|
Average weekly billable consultants (g) |
|
1,683 |
|
|
|
406 |
|
|
|
1,079 |
|
|
|
388 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Results (h): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
27.3 |
|
|
$ |
33.4 |
|
|
$ |
110.9 |
|
|
$ |
106.0 |
|
|
|
Adjusted EBITDA margin |
|
18.0 |
% |
|
|
33.2 |
% |
|
|
22.0 |
% |
|
|
35.7 |
% |
|
| _____________________ | ||
|
(a) |
|
In the first quarter of fiscal 2023, the Company changed the composition of its global segments. Professional Search & Interim segment represents the single hire to multi hire permanent placement and interim business that was previously included in the RPO & Professional Search segment. Segment data for Q4 FY’22 and year to date FY ’22 has been recast to reflect the division of the RPO & Professional Search segment into the RPO segment and Professional Search & Interim segment. |
|
(b) |
|
Numbers may not total due to rounding. |
|
(c) |
|
Represents engagements billed for professional search. |
|
(d) |
|
Represents new engagements opened for professional search in the respective period. |
|
(e) |
|
Represents number of employees originating professional search. |
|
(f) |
|
Fee revenue from interim divided by the number of hours worked by consultants. |
|
(g) |
|
The number of billable consultants based on a weekly average in the respective period. |
|
(h) |
|
Adjusted results exclude the following: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
0.9 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
0.6 |
|
$ |
1.4 |
|
|
Integration/acquisition costs |
$ |
4.3 |
|
$ |
2.3 |
|
$ |
11.0 |
|
$ |
3.7 |
|
|
Restructuring charges, net |
$ |
— |
|
$ |
— |
|
$ |
4.8 |
|
$ |
— |
|
Fee revenue was $151.7 million in Q4 FY’23, an increase of $51.0 million or 51% (up 52% on a constant currency basis), compared to the year-ago quarter. The increase in fee revenue was mainly driven by the acquisitions, partially offset by a decrease in Permanent Placement fee revenue.
Adjusted EBITDA was $27.3 million in Q4 FY’23 with an Adjusted EBITDA margin of 18.0% compared to $33.4 million and 33.2%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA margin was primarily due to a change in the revenue mix with decreases in Permanent Placement fee revenue being more than offset by an increase in fee revenue from Interim due to the acquisitions, which have lower margins but are more resilient to economic factors and in line with our strategy.
|
Selected RPO Data(a) |
||||||||||||||||
|
(dollars in millions) (b) |
||||||||||||||||
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Fee revenue |
$ |
99.8 |
|
|
$ |
112.8 |
|
|
$ |
424.6 |
|
|
$ |
394.8 |
|
|
|
Total revenue |
$ |
101.4 |
|
|
$ |
115.0 |
|
|
$ |
431.5 |
|
|
$ |
401.9 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Remaining revenue under contract(c) |
$ |
776.7 |
|
|
$ |
776.8 |
|
|
$ |
776.7 |
|
|
$ |
776.8 |
|
|
|
RPO new business(d) |
$ |
115.1 |
|
|
$ |
212.7 |
|
|
$ |
597.8 |
|
|
$ |
597.1 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Results (e): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||||||
|
Adjusted EBITDA |
$ |
9.0 |
|
|
$ |
17.4 |
|
|
$ |
52.6 |
|
|
$ |
59.1 |
|
|
|
Adjusted EBITDA margin |
|
9.0 |
% |
|
|
15.4 |
% |
|
|
12.4 |
% |
|
|
15.0 |
% |
|
| ______________________ | ||
|
(a) |
|
In the first quarter of fiscal 2023, the Company changed the composition of its global segments. RPO segment represents the recruitment outsourcing business that was previously included in the RPO & Professional Search segment. Segment data for Q4 FY’22 and year to date FY’22 has been recast to reflect the division of the RPO & Professional Search segment into a RPO segment and Professional Search & Interim segment. |
|
(b) |
|
Numbers may not total due to rounding. |
|
(c) |
|
Estimated fee revenue associated with signed contracts for which revenue has not yet been recognized. |
|
(d) |
|
Estimated total value of a contract at the point of execution of the contract. |
|
(e) |
|
Adjusted results exclude the following: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||
|
|
FY’23 |
|
FY’22 |
|
FY’23 |
|
FY’22 |
|||||
|
Impairment of fixed assets |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.4 |
|
|
Impairment of right of use assets |
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
1.2 |
|
|
Restructuring charges, net |
$ |
— |
|
$ |
— |
|
$ |
3.1 |
|
$ |
— |
|
Fee revenue was $99.8 million in Q4 FY’23, a decrease of $13.0 million or 12% (down 9% on a constant currency basis), compared to the year-ago quarter. RPO fee revenue decreased due to a decline in demand driven by global economic factors.
Adjusted EBITDA was $9.0 million in Q4 FY’23 with an Adjusted EBITDA margin of 9.0% compared to $17.4 million and 15.4%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decrease in fee revenue, partially offset by a decrease in compensation and benefits expense.
Outlook
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:
- Q1 FY’24 fee revenue is expected to be in the range of $668 million and $698 million; and
- Q1 FY’24 diluted earnings per share is expected to range between $0.78 to $0.95.
On a consolidated adjusted basis:
- Q1 FY’24 adjusted diluted earnings per share is expected to be in the range from $0.84 to $1.00.
|
|
Q1 FY’24 |
|||||||
|
|
Low |
High |
||||||
|
|
|
|
|
|||||
|
Consolidated diluted earnings per share |
$ |
0.78 |
$ |
0.95 |
|
|||
|
Integration/acquisition costs |
|
0.09 |
0.07 |
|
||||
|
Tax rate Impact |
(0.03 |
) |
(0.02 |
) |
||||
|
Consolidated adjusted diluted earnings per share(1) |
$ |
0.84 |
$ |
1.00 |
|
|||
| ______________________ | ||
|
(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 12:00 PM (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 this 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 our products and services, 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 the ultimate magnitude and duration of any pandemic or outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political or economic developments in or affecting countries where we have operations, including concerns regarding a potential recession, inflation, interest rates, tax rates, and economic uncertainty, competition, changes in demand for our services as a result of automation, the dependence on and costs of attracting and retaining qualified and experienced consultants, dislocation in the labor markets and increasing competition for highly skilled workers, our ability to maintain relationships with customers and suppliers and retain key employees, maintaining our brand name and professional reputation, impact of inflationary pressures on our profitability, potential legal liability and regulatory developments, the portability of client relationships, consolidation of 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, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy and data protection laws, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, the utilization and billing rates of our consultants, dependence on third parties for the execution of critical functions, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, treaties, or regulations on our business and our company, impairment of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our indebtedness, expansion of social media platforms, seasonality, ability to effect acquisition and integrate acquired businesses, including Infinity Consulting Solutions and Salo and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, 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”).
Contacts
Investor Relations: Tiffany Louder, (214) 310-8407
Media: Dan Gugler, (310) 226-2645
