Korn Ferry · NYSE:KFY
Korn Ferry — Q2 FY2024 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Dec 6, 2023
Slide 1: FY'24 Q2 Earnings Call
FY’24 Q2 Earnings Call December 6, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement FORWARD-LOOKING STATEMENTS Statements in this presentation that relate to goals, strategies, future plans and expectations are based on Korn Ferry’s current expectations. You are cautioned not to place undue reliance on such statements. Actual results in future periods may diff
Slide 3: Advancing our Strategy to Become the Preeminent Global Organizational Consultancy
Advancing our Strategy to Become the Preeminent Global Organizational Consultancy Diversifying offerings into fully Advancing Korn Ferry as a premier integrated, scalable and sustainable career destination: client engagements: Attracting and retaining top talent by investing in initiatives Intention
Slide 4: A Compelling Investment Opportunity, At a Critical Moment, in a Critical Sector
A Compelling Investment Opportunity, At a Critical Moment, in a Critical Sector Strong, Durable Relevant Solutions Aligned Poised for Foundation With Macro Trends Sustainable Growth • Recognized industry leader with • Rapid emergence of remote work • Focus on durable, scalable ~ 9,500 experts strate
Slide 5: FY'24 Q2 Fee Revenue and Earnings Performance was Mixed by Line of Business
FY’24 Q2 Fee Revenue and Earnings Performance was Mixed by Line of Business § Growth in Consulting and Digital was Offset by Slower Demand for Primarily Permanent Placement Talent Acquisition Solutions (Executive Search, Professional Search and RPO) § Despite Slower Revenue, Adj. EBITDA and Adj. EBI
Slide 6: Business Continues to be Highly Diversified Across Lines of Business, Geography and Industry
Business Continues to be Highly Diversified Across Lines of Business, Geography and Industry For the second quarter of FY’24 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 4% 8% 14% 20% 11% 29% 14% 17% 12% 26% 59% 18% 14% 25% 29% Executive Search Digital NAM APAC C
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) Consulting and Digital Fee Revenue and Adj. EBITDA Demonstrate Resilience FY’23 QTR. 2 FY’24 QTR. 1 FY’24 QTR. 2 $728 $162(3) $699 $127(3) $704 $132(3) 100% 100% 100% $94 $28 $88 $97 90% 90% $24 90% $29 80% 80% 80% $135 $142 $138 70% $32 $24 70% 70% $26 60%
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
(7) Quarterly New Business* - YoY Growth (Excluding RPO) 2% 1% (3%) (4%) QTR. 1 FY'24 QTR. 2 FY'24 Constant Currency Actual F/X Rates * Confirmations plus upticks and additional placements See detailed explanation of footnotes on page 16 8
Slide 9: Quarterly New Business - YoY Growth By Line of Business
(7) Quarterly New Business* - YoY Growth By Line of Business (Excluding RPO) Constant Currency Actual F/X Rates Consulting Digital 0% 0% 10% 9% 7% 6% (16%) (15%) QTR. 1 FY'24 QTR. 2 FY'24 QTR. 1 FY'24 QTR. 2 FY'24 Executive Search* Professional Search & Interim* 29% 29% 1% 1% (10%) (11%) (14%) (14%)
Slide 10: Consulting
Consulting (1) 25% of Fee Revenue and 22% of Adj. EBITDA in FY’24 QTR. 2 Q2 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution 3% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity Hours Worked 431K (+1% at CC) 467K 427K $394 $413 $178 18.0% Driven by Organizational Stra
Slide 11: Digital
Digital (1) 14% of Fee Revenue and 22% of Adj. EBITDA in FY’24 QTR. 2 Q2 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee 3% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($M) (+1% at CC) $97 29.2% 29.9% $33 $32 $94 27.6% Q2 New Business = $95M $88 $29.0 $29 Total Subs
Slide 12: Executive Search
Executive Search 29% of Fee Revenue and 30% of Adj. EBITDA(1) in FY’24 QTR. 2 Q2 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity (7%) YoY 25.0% ((9%) at CC) NAM (7%), EMEA (3%), APAC $218 $8 $205 20.7% 19.6% $1.41 $1.35 $1.36 (18%)
Slide 13: Professional Search & Interim
Professional Search & Interim 20% of Fee Revenue and 20% of Adj. EBITDA(1) in FY’24 QTR. 2 Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business +1% YoY Adj. EBITDA(1) Margin (%) Productivity Interim Fee Revenue ($M) (Non-GAAP) (Professional Search) Productivity New Business growt
Slide 14: Recruitment Process Outsourcing
Recruitment Process Outsourcing 12% of Fee Revenue and 7% of Adj. EBITDA(1) in FY’24 QTR. 2 RPO New Business(7) = $141M Adj. EBITDA ($M) & ($88M of renewals/extensions Fee Revenue Adj. EBITDA(1) Margin (%) New Business(7) ($M) Under Contract(6) ($M) Fee Revenue ($M) (Non-GAAP) and $53M of new logo c
Slide 15: Maintaining a Balanced Approach to Capital Allocation
Maintaining a Balanced Approach to Capital Allocation Deployed $65M of Cash in YTD FY’24 Q2 Investing $28M in *CAPEX, $9M in Debt Service and Returned $28M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’24 Capital Allocation ($M) Strong Liquidity wit
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges, Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements & Capitalized Software) and the Impairment of Right -of-Use Assets, when applicable. (2) Adj. Dilu
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conference Call December 6, 2023
Slide 18: Reconciliation of Net Income / (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Reconciliation of Net Income / (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q2; FY’24 Q1; FY’24 Q2 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $/% % $/% % Net Income / (Loss) Attributable to Korn Ferry $73.5 $46.6 ($1.7) ($75.2) (102%) ($48.3) (104
Slide 19: Reconciliation of Net Income & Diluted EPS to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income / (Loss) & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’23 Q2; FY’24 Q1; FY’24 Q2 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $ % $ % Net Income / (Loss) Attributable to Korn Ferry $73.5 $46
Slide 20: Reconciliation to Adjusted EBITDA - FY'23 Q2
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q2 FY'23 Q2 Executive Search North Asia Latin Total Exec. Prof. Consulting Digital America EMEA Pacific America Search RPO Search Corp. KF Fee Revenue $173.1 $94.3 $142.5 $44.6 $
Slide 21: Reconciliation to Adjusted EBITDA - FY'24 Q1
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q1 FY'24 Q1 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $168.1 $88.0 $127.5
Slide 22: Reconciliation to Adjusted EBITDA - FY'24 Q2
Reconciliation of Consolidated Net Loss & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q2 FY'24 Q2 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $177.8 $97.1 $132.5 $
Slide 23: Reconciliation of Cash & Marketable Securities to Investable Cash
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’23 Q2; FY’24 Q1; FY’24 Q2 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $ % $ % Cash $593.9 $562.2 $620.8 $26.9 5% $58.6 10% Marketable Securities 237.8 218.8 223.0 (14.8) (6%) 4.2 2% Ca
Slide 24: Fee Revenue Growth by Segment and Region – Reported vs. Constant Currency
Fee Revenue Growth by Segment and Region – Actual Reported vs. Constant Currency FY'23 Q2 vs. FY'24 Q2 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $132.5 (7%) (7%) Europe 43.1 (3%) (10%) Asia / Pacific 19.3 (18%) (16%) Latin America 8.1 4% (4%) Total Exec. Search $203.0 (
Slide 25: Thank You
Thank You I «4 KORN FERRY