Korn Ferry · NYSE:KFY
Korn Ferry — Q3 FY2021 Earnings Presentation
22 slides from Korn Ferry's earnings presentation, Feb 22, 2021
Slide 1: FY’21 Q3 Earnings Call
FY’21 Q3 Earnings Call February 22, 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement FORWARD-LOOKING STATEMENTS Statements in this presentation that relate to our outlook, projections, goals, strategy, future plans and expectations, and other statements of future events or conditions future results and events are based on Korn Ferry’s current expectations. You
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 through continued Intentional shift t
Slide 4: FY’21 Q3 Financial Results Significantly Improved Sequentially, Achieved Record Profitability
FY’21 Q3 Financial Results Significantly Improved Sequentially Achieved Record Profitability $475M 20.3% +$40M +9% +510 bps Adj. EBITDA Margin %(2) Fee Revenue (Non-GAAP) $97M $0.95 +$31M +46% +$0.41 +76% Adj. EBITDA(3) (Non-GAAP) Adj. Diluted EPS(4) (Non-GAAP) See detailed explanation of footnotes
Slide 5: Business Continues to be Highly Diversified Across Segment, Geography and Industry
Business Continues to be Highly Diversified Across Segment, Geography and Industry For the third quarter of FY’21 Fee Revenue by Segment Fee Revenue by Geography Fee Revenue by Industry 3% 6% 13% 20% 17% 16% 35% 18% 50% 16% 19% 30% 28% 29% Executive Search Digital NAM APAC Consumer Industrial Consul
Slide 6: Diversified Mix of Revenue & Operating Efficiencies Are Driving Improved Earnings
Diversified Mix of Revenue & Operating Efficiencies Are Driving Significantly Improved & More Balanced Earnings ($M) FY’20 QTR. 3 FY’21 QTR. 2 FY’21 QTR. 3 $515 $100(5) $435 $85(5) $475 $116(5) 100% 100% 100% 90% $99 90% $75 90% $76 $26 $27 $23 80% 80% 80% $86 $95 70% $92 70% 70% $15 $20 $14 60% 60%
Slide 7: Quarterly New Business - Improving YoY Growth Trend
Quarterly New Business* - Improving YoY Growth Trend (Excluding RPO) FY’20 QTR. 4 to FY’21 QTR. 3 - 0% -1% - 5% -7% - 10% - 15% -19% -20% - 20% - 25% QTR. 4 FY'20 QTR. 1 FY'21 QTR. 2 FY'21 QTR. 3 FY'21 * Confirmations plus upticks and additional placements 7
Slide 8: Quarterly New Business - YoY Growth By Segment
Quarterly New Business* - YoY Growth By Segment (Excluding RPO) FY’20 QTR. 4 to FY’21 QTR. 3 KF Total* Executive Search* -1% -1% -7% -16% -21% -19% -20% -35% QTR. 4 FY'20 QTR. 1 FY'21 QTR. 2 FY'21 QTR. 3 FY'21 QTR. 4 FY'20 QTR. 1 FY'21 QTR. 2 FY'21 QTR. 3 FY'21 Digital and Consulting Professional Se
Slide 9: Consulting
Consulting 9 29% of Fee Revenue and 24% of Adjusted EBITDA in FY’21 QTR. 3 Adj. EBITDA ($M) & Adj. EBITDA(2) Consultant + Execution Fee Revenue Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity and New Business 20.2% Hours Worked 372K $141 428K $136 each up $127 13.3% 15.9% Av g. Bill Rate 3
Slide 10: Digital
Digital 16% of Fee Revenue and 23% of Adjusted EBITDA in FY’21 QTR. 3 Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee Fee Revenue Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(6) ($M) $99 35.8% 1% $75 $76 26.0% 30.8% $21 $23 $23 Sequentially in QTR. 3 $27.1 $25.9 New Business - $100M
Slide 11: Executive Search
Executive Search 35% of Fee Revenue and 36% of Adjusted EBITDA in FY’21 QTR. 3 Adj. EBITDA ($M) & Adj. EBITDA(8) Global Fee Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity Revenue 24.8% $184 $1.26 $1.30 22.1% $1.16 14% $7 $168 19.1% $25 $4 $148 $22 $4 $41.7 582 Sequentially in QTR. 3
Slide 12: RPO & Professional Search
RPO & Professional Search 20% of Fee Revenue and 17% of Adjusted EBITDA in FY’21 QTR. 3 Adj. EBITDA ($M) & Adj. EBITDA(2) Fee Revenue New Business ($M) Fee Revenue ($M) Margin (%) (Non-GAAP) 11% $150 $95 20.6% Sequentially and $92 16.6% 16.1% $19.6 $30 $86 4% $94 $83 $37 $29 $36 $15.2 $13.8 YoY in Q
Slide 13: Cash & Marketable Securities
Cash & Marketable Securities Strong Liquidity with $534M of Investable Cash(7) Investable Cash(7) Cash & Marketable Securities ($M) $112M 27% YoY $749 $747 $897 $363 $327 $289 Repurchased 220K shares ($7.6M) FY’21 Q3 $534 $422 $458 Dividend Payments $5.5M FY'20 Q3 FY'21 Q2 FY'21 Q3 FY’21 Q3 Investab
Slide 14: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Acquisition/Integration Costs and Restructuring Charges. (2) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges. (3) Earnings Before Interest, Taxes, Dep
Slide 15: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conferenc e Call February 22, 2021
Slide 16: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’20 Q3; FY’21 Q2; FY’21 Q3 YoY Sequential FY'20 FY'21 FY'21 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $/% % $/% % Net Income Attributable to Korn / Ferry $20.0 $27.8 $51.3 $31.3 157% $23.5 85% Net Income Attributable
Slide 17: Reconciliation of Net Income & EPS (GAAP) to Adjusted Net Income & Adjusted EPS
Reconciliation of Net Income & EPS (GAAP) to Adjusted Net Income & Adjusted EPS (Non-GAAP) ($M) FY’20 Q3; FY’21 Q2; FY’21 Q3 YoY Sequential FY'20 FY'21 FY'21 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Net Income Attributable to Korn / Ferry $20.0 $27.8 $51.3 $31.3 157% $23.5 85% (1
Slide 18: Reconciliation of Net Income & Operating Income to EBITDA & Adjusted EBITDA
Reconciliation of Net Income & Operating Income (GAAP) to EBITDA & Adjusted EBITDA (Non-GAAP) ($M) FY’20 Q3; FY’21 Q2 FY'20 Q3 FY'21 Q2 Exec. RPO & Exec. RPO & Consulting Digital Search Prof. Search Corp. KF Consulting Digital Search Prof. Search Corp. KF Fee Revenue $140.5 $99.4 $183.6 $91.9 - $515
Slide 19: Reconciliation of Net Income & Operating Income to EBITDA & Adjusted EBITDA
Reconciliation of Net Income & Operating Income (GAAP) to EBITDA & Adjusted EBITDA (Non-GAAP) ($M) FY’21 Q3 FY'21 Q3 Exec. RPO & Consulting Digital Search Prof. Search Corp. KF Fee Revenue $136.3 $75.8 $168.1 $95.2 - $475.4 Total Revenue 136.6 76.0 168.5 96.8 477.9 Net Income Attributable - - - - -
Slide 20: Reconciliation of Cash & Marketable Securities to Investable Cash
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’20 Q3; FY’21 Q2; FY’21 Q3 YoY Sequential FY'20 FY'21 FY'21 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Cash $563.7 $553.1 $694.1 $130.4 23% $141.0 25% Marketable Securities 184.8 194.3 203.0 18.1 10% 8.6 4% Ca
Slide 21: Fee Revenue Growth by Segment and Region – Reported vs. Constant Currency
Fee Revenue Growth by Segment and Region – Actual Reported vs. Constant Currency FY'21 Q3 vs. FY'20 Q3 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $106.0 (0.8%) (1.0%) Europe 36.0 (18.8%) (22.9%) Asia / Pacific 21.6 (13.7%) (17.1%) Latin America 4.5 (38.7%) (32.3%) Total
Slide 22: Thank You
Thank You «7 KORN FERRY