Korn Ferry · NYSE:KFY
Korn Ferry — Q4 FY2023 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Jun 27, 2023
Slide 1: FY’23 Q4 Earnings Call
FY’23 Q4 Earnings Call June 27, 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 ~11,000 experts strate
Slide 5: Q4 Fee Revenue, Earnings and Profitability
Q4 Fee Revenue, Earnings and Profitability impacted by: Decelerating Global Demand for Permanent Placement Solutions (Executive Search, Professional Search and RPO) offset by Stable Demand for Consulting & Digital and Fee Revenue from Investments in Interim Services (Patina, ICS & Salo (mix shift)
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 fourth quarter of FY’23 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 3% 6% 14% 21% 12% 29% 17% 17% 14% 26% 59% 18% 12% 24% 28% Executive Search Digital NAM APAC C
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) FY’22 QTR. 4 FY’23 QTR. 3 FY’23 QTR. 4 $721 $173(3) $681 $124(3) $731 $127(3) 100% 100% 100% $90 $28 $85 $91 90% 90% $22 90% $24 80% $101 80% $118 80% $152 $33 $22 70% 70% 70% $27 $113 60% $17 60% $104 $10 60% $100 $9 50% 50% 50% $174 $31 $23 $162 $175 $25
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
(7) Quarterly New Business* - YoY Growth (Excluding RPO) 5% 1% (2%) (4%) QTR. 3 FY'23 QTR. 4 FY'23 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 6% 9% 4% 1% (2%) (4%) (5%) (6%) QTR. 3 FY'23 QTR. 4 FY'23 QTR. 3 FY'23 QTR. 4 FY'23 Executive Search* Professional Search & Interim* 41% 40% 32% 30% (10%) (13%) (19%) (2
Slide 10: Consulting
Consulting 24% of Fee Revenue and 19% of Adj. EBITDA in FY’23 QTR. 4 (1) FY’23 Fee Revenue = $677M (+4% YoY) Q4 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution 1% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity Hours Worked (+3% at CC) 471K 414K 450K Avg. Bill Rate
Slide 11: Digital
Digital 12% of Fee Revenue and 19% of Adj. EBITDA in FY’23 QTR. 4 (1) FY’23 Fee Revenue = $355M (+2% YoY) Q4 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee 2% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($m) (+5% at CC) 31.0% Q4 New Business = $101M $32 $91 26.0% $
Slide 12: Executive Search
Executive Search 29% of Fee Revenue and 34% of Adj. EBITDA(1) in FY’23 QTR. 4 FY’23 Fee Revenue = $876M ((6%) YoY) Q4 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) (13%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity 26.3% ((11%) at CC) $244 $1.67 NAM (13%) CC, EMEA (3%) C
Slide 13: Professional Search & Interim
Professional Search & Interim 21% of Fee Revenue and 21% of Adj. EBITDA(1) in FY’23 QTR. 4 FY’23 Fee Revenue = $503M (+69% YoY) Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business +41% CC YoY (Salo & Adj. EBITDA(1) Margin (%) Productivity Interim ICS acquisitions) Fee Revenue ($
Slide 14: Recruitment Process Outsourcing
Recruitment Process Outsourcing 14% of Fee Revenue and 7% of Adj. EBITDA(1) in FY’23 QTR. 4 FY’23 Fee Revenue = $425M (+8% YoY) RPO New Business(7) = $115M Adj. EBITDA ($M) & ($36M of renewals/extensions and Revenue Under Adj. EBITDA(1) Margin (%) New Business(7) ($M) Contract(6) ($M) Fee Revenue ($
Slide 15: Maintaining a Balanced Approach to Capital Allocation
Maintaining a Balanced Approach to Capital Allocation Deployed $462M of Cash in FY’23 Investing $255M in M&A, $61M in *CAPEX, $19M in Debt Service and Returned $127M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’23 Capital Allocation ($M) Strong Liq
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges, Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements) and the Impairment of Right-of-Use Assets, when applicable. (2) Adj. Diluted Earnings per Share A
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conference Call June 27, 2023
Slide 18: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q4; FY’23 Q3; FY’23 Q4 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 4 Qtr. 3 Qtr. 4 $/% % $/% % Net Income Attributable to Korn Ferry $91.7 $11.2 $47.5 ($44.2) (48% ) $36.3 324% Net Income Attributa
Slide 19: Reconciliation of Net Income & Diluted EPS to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’22 Q4; FY’23 Q3; FY’23 Q4 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 4 Qtr. 3 Qtr. 4 $ % $ % Net Income Attributable to Korn Ferry $91.7 $11.2 $47.5 ($44.2) (
Slide 20: Reconciliation to Adjusted EBITDA - FY’22 Q4
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q4 FY'22 Q4 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $173.9 $89.5 $156.2
Slide 21: Reconciliation to Adjusted EBITDA - FY’23 Q3
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q3 FY'23 Q3 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $162.2 $85.1 $132.8
Slide 22: Reconciliation to Adjusted EBITDA - FY’23 Q4
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q4 FY'23 Q4 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $175.3 $91.5 $135.3
Slide 23: Reconciliation of Cash & Marketable Securities to Investable Cash ($M)
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’22 Q4; FY’23 Q3; FY’23 Q4 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 4 Qtr. 3 Qtr. 4 $ % $ % Cash $978.1 $771.9 $844.0 ($134.1) (14% ) $72.1 9% Marketable Securities 233.0 235.9 223.9 (9.1) (4% ) (12
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'23 Q4 vs. FY'22 Q4 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $135.3 (13.4%) (13.0%) Europe 46.4 (6.3%) (2.5%) Asia / Pacific 23.2 (23.2%) (18.3%) Latin America 7.8 (6.0%) (7.1%) Total Ex
Slide 25: Thank You
Thank You KORN FERRY