Korn Ferry · NYSE:KFY
Korn Ferry — Q3 FY2023 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Mar 8, 2023
Slide 1: FY’23 Q3 Earnings Call
FY’23 Q3 Earnings Call March 8, 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: Q3 Fee Revenue, Earnings and Profitability
Q3 Fee Revenue, Earnings and Profitability impacted by: Year-End Seasonality and Moderating Global Demand in our ES and PS&I Permanent Placement Solutions offset by acquired Interim Fee Revenues Continued Investment in Strengthening our Solutions (Salo) as Well as Fee Generating and Execution Ca
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 third quarter of FY’23 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 4% 6% 13% 17% 13% 17% 31% 17% 15% 56% 27% 18% 13% 24% 29% Executive Search Digital NAM APAC Co
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) FY’22 QTR. 3 FY’23 QTR. 2 FY’23 QTR. 3 $681 $167(3) $728 $162(3) $681 $124(3) 100% 100% 100% $90 $94 $85 $22 90% $28 90% $28 90% 80% $90 80% 80% $118 $135 $31 $32 $22 70% 70% 70% $99 $13 $107 60% $104 $10 60% 60% $16 50% $29 50% 50% $163 $23 $173 $31 $162 4
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
(7) Quarterly New Business* - YoY Growth (Excluding RPO) 14% 8% 5% 1% QTR. 2 FY'23 QTR. 3 FY'23 Constant Currency Actual F/X Rates * Confirmations plus upticks and additional placements See detailed explanation of footnotes on page 16 8
Slide 9: Quarterly New Business - YoY Growth By Line of Business
(7) Quarterly New Business* - YoY Growth By Line of Business (Excluding RPO) Constant Currency Actual F/X Rates Consulting Digital 6% 9% 5% 4% 2% 1% (4%) (2%) QTR. 2 FY'23 QTR. 3 FY'23 QTR. 2 FY'23 QTR. 3 FY'23 Executive Search* Professional Search & Interim* 148%137% (4%) (8%) (10%) 32% 30% (13%) Q
Slide 10: Consulting
Consulting 24% of Fee Revenue and 19% of Adj. EBITDA in FY’23 QTR. 3 (1) Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution (1%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity Hours Worked (+4% at CC) 424K Avg. Bill Rate 414K 18.0% 467K $392 $173 17.5% $384 $371 Driv
Slide 11: Digital
Digital 13% of Fee Revenue and 18% of Adj. EBITDA in FY’23 QTR. 3 (1) Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee (6%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($m) ((1%) at CC) 31.2% Q3 New Business = $109M $94 29.2% $90 26.0% $30 Total Subscription & Licens
Slide 12: Executive Search
Executive Search 31% of Fee Revenue and 37% of Adj. EBITDA(1) in FY’23 QTR. 3 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) (11%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity 27.5% ((9%) at CC) 25.0% $1.66 $239 21.9% NAM (13%) CC, EMEA +12% CC, $7 $1.41 $1.37 APAC (23%)
Slide 13: Professional Search & Interim
Professional Search & Interim 17% of Fee Revenue and 18% of Adj. EBITDA(1) in FY’23 QTR. 3 Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business +32% CC YoY Adj. EBITDA(1) Margin (%) Productivity Interim New Business growth strongest in Fee Revenue ($M) (Non-GAAP) (Professional Se
Slide 14: Recruitment Process Outsourcing (RPO)
Recruitment Process Outsourcing (RPO) 15% of Fee Revenue and 8% of Adj. EBITDA(1) in FY’23 QTR. 3 RPO New Business(7) = $44M Adj. EBITDA ($M) & ($25M of renewals/extensions and Revenue Under Adj. EBITDA(1) Margin (%) $19M of new logo clients) New Business(7) ($M) Contract(6) ($M) Fee Revenue ($M) (N
Slide 15: Maintaining a Balanced Approach to Capital Allocation
Maintaining a Balanced Approach to Capital Allocation Deployed $270M of Cash FY’23 YTD Q3 Investing $99M in M&A, $48M in *CAPEX, $18M in Debt Service and Returned $105M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’23 YTD Q3 Capital Allocation ($M)
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges, Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements) and the Impairment of Right-of-Use Assets, when applicable. (2) Adj. Diluted Earnings per Share A
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conference Call March 8, 2023
Slide 18: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q3; FY’23 Q2; FY’23 Q3 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $/% % $/% % Net Income Attributable to Korn Ferry $84.1 $73.5 $11.2 ($72.9) (87%) ($62.3) (85%) Net Income Attribu
Slide 19: Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’22 Q3; FY’23 Q2; FY’23 Q3 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Net Income Attributable to Korn Ferry $84.1 $73.5 $11.2 ($72.9) (
Slide 20: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY’22 Q3)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q3 FY'22 Q3 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $162.9 $90.2 $152.6
Slide 21: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY’23 Q2)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($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 22: Reconciliation of Consolidated Net Income & Operating Income 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 $132.8
Slide 23: Reconciliation of Cash & Marketable Securities to Investable Cash ($M)
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’22 Q3; FY’23 Q2; FY’23 Q3 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Cash $846.5 $593.9 $771.9 ($74.6) (9%) $178.0 30% Marketable Securities 260.7 237.8 235.9 (24.8) (10%) (1.
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 Q3 vs. FY'22 Q3 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $132.8 (13.0%) (12.6%) Europe 49.0 3.7% 12.1% Asia / Pacific 22.6 (28.0%) (22.6%) Latin America 7.7 2.7% 1.3% Total Exec. Sea
Slide 25: Thank You
Thank You y «i KORN FERRY