Korn Ferry · NYSE:KFY
Korn Ferry — Q1 FY2025 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Sep 5, 2024
Slide 1: FY'25 Q1 Earnings Call
FY’25 Q1 Earnings Call September 5, 2024
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 and • Focus on durable, scalable ~ 9,500 experts st
Slide 5: FY'25 Q1 Earnings and Profitability Continued to Improve as Consolidated Revenue Growth Stabilized
FY’25 Q1 Earnings and Profitability Continued to Improve as Consolidated Revenue Growth Stabilized Fee Revenue Growth Remained Stable for Consulting and Digital (Flat YoY) Executive Search Grew 2% YoY, and Fee Revenue Growth Trends for Professional Search Permanent Placement and RPO Continued to
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 first quarter of FY’25 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 4% 7% 13% 18% 11% 14% 31% 19% 13% 27% 58% 18% 13% 25% 29% Executive Search Digital NAM APAC Co
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) (3) Consolidated Adj. EBITDA Up YoY Driven by Consultant and Execution Staff Productivity and Disciplined Cost Management FY’24 QTR. 1 FY’24 QTR. 4 FY’25 QTR. 1 $699 $127(3) $691 $146(3) $675 $143(3) 100% 100% 100% $88 $91 $88 90% $24 90% $28 90% $27 80% 80
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
Quarterly New Business* - YoY Growth (Excluding RPO) (7) New Business was Stable YOY Despite Uncertainty for the Near-Term Economic Outlook (2%) (2%) (3%) (3%) QTR. 4 FY'24 QTR. 1 FY'25 Constant Currency Actual F/X Rates * Confirmations plus upticks and additional placements See detailed explanation
Slide 9: Quarterly New Business - YoY Growth By Line of Business
Quarterly New Business* - YoY Growth By Line of Business (7) (Excluding RPO) Constant Currency Actual F/X Rates Consulting Digital 7% 0% 5% 4% 3% (1%) (2%) (3%) QTR. 4 FY'24 QTR. 1 FY'25 QTR. 4 FY'24 QTR. 1 FY'25 Executive Search* Professional Search & Interim* 1% 1% 1% 1% (12%)(12%) (14%)(14%) QTR.
Slide 10: Consulting
Consulting 25% of Fee Revenue and 20% of Adj. EBITDA in FY’25 QTR. 1 (1) Q1 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution Flat YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity Hours Worked 417K 395K (+1% at CC) $182 427K $437 $425 17.8% 17.5% Avg. Bill Rate Driven
Slide 11: Digital
Digital 13% of Fee Revenue and 19% of Adj. EBITDA in FY’25 QTR. 1 (1) Q1 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee Flat YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($M) (+2% at CC) 30.7% 30.2% Q1 New Business = $97M (+7% CC $91 27.6% $88 $88 $34 YoY) $33 $33 $
Slide 12: Executive Search
Executive Search 31% of Fee Revenue and 34% of Adj. EBITDA(1) in FY’25 QTR. 1 Q1 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) 2% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity 23.7% (+3% at CC) 20.7% 22.9% $1.52 At CC - NAM +6%, EMEA (1%), $1.44 $205 $209 $49.4 $1.35 APAC
Slide 13: Professional Search & Interim
Professional Search & Interim 18% of Fee Revenue and 18% of Adj. EBITDA(1) in FY’25 QTR. 1 Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business Down (14%) YoY Adj. EBITDA(1) Margin (%) Productivity Interim Fee Revenue ($M) (Non-GAAP) (Professional Search) Productivity Permanent P
Slide 14: Recruitment Process Outsourcing
Recruitment Process Outsourcing 14 13% of Fee Revenue and 8% of Adj. EBITDA(1) in FY’25 QTR. 1 RPO New Business(7) = $104M Adj. EBITDA ($M) & ($20M of New Logo Clients and Fee Revenue Adj. EBITDA(1) Margin (%) New Business(7) ($M) Under Contract(6) ($M) Fee Revenue ($M) (Non-GAAP) $84M of Renewals &
Slide 15: Maintaining a Balanced Approach to Capital Allocation
Maintaining a Balanced Approach to Capital Allocation Deployed $63M of Cash in FY’25 Q1 Investing $11M in *CAPEX, $9M in Debt Service and Returned $43M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’25 Capital Allocation ($M) Strong Liquidity with $5
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges, Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements) and the Impairment of Right-of-Use Assets, when applicable. (2) Adj. Diluted Earnings per Share A
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conference Call September 5, 2024
Slide 18: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q1; FY’24 Q4; FY’25 Q1 YoY Sequential FY'24 FY'24 FY'25 Incr. / (Decr.) Incr. / (Decr.) Qtr. 1 Qtr. 4 Qtr. 1 $/% % $/% % Net Income Attributable to Korn Ferry $46.6 $65.2 $62.6 $16.0 34% ($2.6) (4%) Net Income Attributable
Slide 19: Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’24 Q1; FY’24 Q4; FY’25 Q1 YoY Sequential FY'24 FY'24 FY'25 Incr. / (Decr.) Incr. / (Decr.) Qtr. 1 Qtr. 4 Qtr. 1 $ % $ % Net Income Attributable to Korn Ferry $46.6 $65.2 $62.6 $16.0 34%
Slide 20: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY'24 Q1)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($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 $127.5
Slide 21: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY'24 Q4)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q4 FY'24 Q4 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $182.2 $91.3 $125.5
Slide 22: Reconciliation of Consolidated Net Loss & Operating Income to Adjusted EBITDA (FY'25 Q1)
Reconciliation of Consolidated Net Loss & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’25 Q1 FY'25 Q1 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $167.9 $88.2 $134.8 $
Slide 23: Reconciliation of Cash & Marketable Securities to Investable Cash ($M)
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’24 Q1; FY’24 Q4; FY’25 Q1 YoY Sequential FY'24 FY'24 FY'25 Incr. / (Decr.) Incr. / (Decr.) Qtr. 1 Qtr. 4 Qtr. 1 $ % $ % Cash $562.2 $941.0 $633.4 $71.2 13% ($307.6) (33%) Marketable Securities 218.8 254.4 271.8 53.0 24% 17.4 7
Slide 24: Fee Revenue Growth by Segment and Region – Actual Reported vs. Constant Currency
Fee Revenue Growth by Segment and Region – Actual Reported vs. Constant Currency FY'25 Q1 vs. FY'24 Q1 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $134.8 6% 6% Europe 46.0 (2%) (1%) Asia / Pacific 20.6 (16%) (14%) Latin America 7.3 14% 24% Total Exec. Search $208.6 2% 3%
Slide 25: Thank You
Thank You y «4 KORN FERRY