Korn Ferry · NYSE:KFY
Korn Ferry — Q2 FY2023 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Dec 8, 2022
Slide 1: FY’23 Q2 Earnings Call
FY’23 Q2 Earnings Call December 8, 2022
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: Stable Global Demand & Strong Execution Continue to Drive Steady Revenue & Earnings
Stable Global Demand & Strong Execution Continue to Drive Steady Revenue & Earnings $728M +$88M +14% YoY 18.0% (1) (+20% at CC) Adj. EBITDA Margin % (Non-GAAP) Fee Revenue $131M $1.43 ($4M) (3%) YoY ($0.10) (7%) YoY (2) Adj. EBITDA (1) Adj. Diluted EPS (Non-GAAP) (Non-GAAP) See detailed explanation
Slide 6: Business Continues to be Highly Diversified Across Lines of Business, Geography and Industry
Business Continues to be Highly Diversified Across Lines of Business, Geography and Industry For the second quarter of FY’23 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 3% 5% 14% 18% 13% 17% 30% 18% 15% 24% 60% 18% 13% 24% 28% Executive Search Digital NAM APAC C
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) FY’22 QTR. 2 FY’23 QTR. 1 FY’23 QTR. 2 $639 $161(3) $696 $163(3) $728 $162(3) 100% 100% 100% $89 $84 $24 $94 $28 90% $29 90% 90% 80% $55 80% $99 80% $29 $135 $22 $32 70% $96 70% 70% $14 $114 60% 60% $18 60% $107 $16 50% $165 $30 50% 50% $166 $30 $173 $31 40
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
(7) Quarterly New Business* - YoY Growth (Excluding RPO) Constant Currency 17% Constant Currency 14% 12% 8% QTR. 1 FY'23 QTR. 2 FY'23 * Confirmations plus upticks and additional placements See detailed explanation of footnotes on page 16 8
Slide 9: Quarterly New Business - YoY Growth By Line of Business
(7) Quarterly New Business* - YoY Growth By Line of Business (Excluding RPO) Consulting Digital Constant Currency 5% Constant Currency 7% Constant Currency Constant Currency 1% 2% (2%) (9%) (4%) (14%) QTR. 1 FY'23 QTR. 2 FY'23 QTR. 1 FY'23 QTR. 2 FY'23 Executive Search* Professional Search & Interim
Slide 10: Consulting
Consulting 24% of Fee Revenue and 19% of Adj. EBITDA in FY’23 QTR. 2 (1) Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution 5% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity (+12% at CC) Hours Worked 445K 18.2% 17.7% 18.0% 467K $173 Av g. Bill Rate 459K $165 $166 $37
Slide 11: Digital
Digital 13% of Fee Revenue and 17% of Adj. EBITDA in FY’23 QTR. 2 (1) Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee 6% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($m) (+15% at CC) 32.2% $94 28.9% 29.2% Q2 New Business = $112M $89 $30 $84 $29 Subscription & Licens
Slide 12: Executive Search
Executive Search 30% of Fee Revenue and 33% of Adj. EBITDA(1) in FY’23 QTR. 2 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) (7%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity 28.1% 26.7% 25.0% (down (4%) at CC) $1.66 $235 $233 $1.54 NAM (10%) CC, EMEA +21% CC, $1.41 $7 $2
Slide 13: Professional Search & Interim
Professional Search & Interim 18% of Fee Revenue and 20% of Adj. EBITDA(1) in FY’23 QTR. 2 Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business = $139M (new high) Adj. EBITDA(1) Margin (%) Productivity Interim Sequential New Business growth Fee Revenue ($M) (Non-GAAP) (Profession
Slide 14: Recruitment Process Outsourcing (RPO)
Recruitment Process Outsourcing (RPO) 15% of Fee Revenue and 10% of Adj. EBITDA(1) in FY’23 QTR. 2 RPO New Business = $290M Adj. EBITDA ($M) & ($43M of renewals/extensions and Revenue Under Adj. EBITDA(1) Margin (%) New Business ($M) Contract ($M) Fee Revenue ($M) (Non-GAAP) $247M of new logo client
Slide 15: Maintaining a Balanced Approach to Capital Allocation
M aintaining a Balanced Approach to Capital Allocation Deployed $214M of Cash FY’23 YTD Q2 Investing $99M in M&A, $33M in **CAPEX, $9M in Debt Service and Returned $73M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’23 YTD Q2 Capital Allocation ($M)
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements) and the Impairment of Right-of-Use Assets, when applicable. (2) Adj. Diluted Earnings per Share Adjusted to Exclude Acqu
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conferenc e Call December 8, 2022
Slide 18: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q2; FY’23 Q1; FY’23 Q2 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $/% % $/% % Net Income Attributable to Korn Ferry $75.8 $77.2 $73.5 ($2.3) (3%) ($3.7) (5%) Net Income Attributabl
Slide 19: Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’22 Q2; FY’23 Q1; FY’23 Q2 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $ % $ % Net Income Attributable to Korn Ferry $75.8 $77.2 $73.5 ($2.3) (3
Slide 20: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY’22 Q2)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’22 Q2 FY'22 Q2 Executive Search North Asia Latin Total Exec. Prof. Consulting Digital America EMEA Pacific America Search RPO Search Corp. KF Fee Revenue $164.9 $88.6 $158.2 $42.4 $
Slide 21: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA (FY’23 Q1)
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q1 FY'23 Q1 Executive Search North Asia Latin Total Exec. Prof. Consulting Digital America EMEA Pacific America Search RPO Search Corp. KF Fee Revenue $166.5 $83.8 $151.5 $47.1 $
Slide 22: 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 23: Reconciliation of Cash & Marketable Securities to Investable Cash ($M)
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’22 Q2; FY’23 Q1; FY’23 Q2 YoY Sequential FY'22 FY'23 FY'23 Incr. / (Decr.) Incr. / (Decr.) Qtr. 2 Qtr. 1 Qtr. 2 $ % $ % Cash $725.4 $639.8 $593.9 ($131.5) (18%) ($45.9) (7%) Marketable Securities 271.5 256.7 237.8 (33.7) (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 Q2 vs. FY'22 Q2 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $142.5 (9.9%) (9.6%) Europe 44.6 5.2% 21.2% Asia / Pacific 23.4 (17.3%) (9.7%) Latin America 7.8 18.2% 23.8% Total Exec. Sear
Slide 25: Thank You
Thank You «? KORN FERRY