Korn Ferry · NYSE:KFY
Korn Ferry — Q3 FY2024 Earnings Presentation
25 slides from Korn Ferry's earnings presentation, Mar 6, 2024
Slide 1: FY’24 Q3 Earnings Call
FY’24 Q3 Earnings Call March 6, 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 • Focus on durable, scalable ~ 9,500 experts strate
Slide 5: FY’24 Q3 Earnings and Profitability Improved YoY and Sequentially
FY’24 Q3 Earnings and Profitability Improved YoY and Sequentially Despite Seasonally Lower Fee Revenue Fee Revenue Growth for Consulting and Digital Continued and was Offset by Seasonally Slower Demand for Talent Acquisition Solutions (Executive Search, Professional Search and RPO) Despite Seaso
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’24 Fee Revenue by Lines of Business Fee Revenue by Geography Fee Revenue by Industry 4% 6% 15% 20% 12% 13% 30% 18% 12% 56% 17% 28% 13% 25% 31% Executive Search Digital NAM APAC Co
Slide 7: Diversified Mix of Revenue & Earnings ($M)
Diversified Mix of Revenue & Earnings ($M) Revenue and Adj. EBITDA for Consulting and Digital Demonstrating both Resilience & Growth YOY FY’23 QTR. 3 FY’24 QTR. 2 FY’24 QTR. 3 $681 $124(3) $704 $132(3) $669 $132(3) 100% 100% 100% $85 $97 $90 90% $22 90% $29 90% $27 80% $118 80% 80% $138 $131 $22 70%
Slide 8: Quarterly New Business - YoY Growth (Excluding RPO)
Quarterly New Business* - YoY Growth (Excluding RPO) (7) 0% 0% (3%) (4%) QTR. 2 FY'24 QTR. 3 FY'24 Constant Currency Actual F/X Rates * Confirmations plus upticks and additional placements See detailed explanation of footnotes on page 16 8
Slide 9: Quarterly New Business - YoY Growth By Line of Business
Quarterly New Business* - YoY Growth By Line of Business (7) (Excluding RPO) Constant Currency Actual F/X Rates Consulting Digital 2% 2% 10% 9% 0% 0% (16%) (15%) QTR. 2 FY'24 QTR. 3 FY'24 QTR. 2 FY'24 QTR. 3 FY'24 Executive Search* Professional Search & Interim* 9% 9% (6%) (6%) (11%) (10%) 1% 1% QTR
Slide 10: Consulting
Consulting 25% of Fee Revenue and 21% of Adj. EBITDA in FY’24 QTR. 3 (1) Q3 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Consultant + Execution 3% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Staff Productivity Hours Worked 381K (+3% at CC) 414K 431K $438 $178 $413 Avg. Bill Rate Driven by Organizati
Slide 11: Digital
Digital 13% of Fee Revenue and 20% of Adj. EBITDA in FY’24 QTR. 3 (1) Q3 Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) Subscription & License Fee 6% YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Revenue(4)($M) (+6% at CC) $97 29.9% 30.3% $33 $32 Q3 New Business = $111M $90 26.0% $85 $30 Total Subscript
Slide 12: Executive Search
Executive Search 30% of Fee Revenue and 33% of Adj. EBITDA(1) in FY’24 QTR. 3 Q3 Global Fee Revenue Adj. EBITDA ($M) & Adj. EBITDA(1) (6%) YoY Fee Revenue ($M) Margin (%) (Non-GAAP) Consultant Productivity ((7%) at CC) NAM (9%), EMEA Flat, APAC (6%) $212 21.9% 21.8% $1.37 $1.36 $1.39 & LATM (3%) $8
Slide 13: Professional Search & Interim
Professional Search & Interim 20% of Fee Revenue and 18% of Adj. EBITDA(1) in FY’24 QTR. 3 Professional Search & Interim New Adj. EBITDA ($M) & Consultant Business +9% YoY Adj. EBITDA(1) Margin (%) Productivity Interim Fee Revenue ($M) (Non-GAAP) (Professional Search) Productivity New Business growt
Slide 14: Recruitment Process Outsourcing
Recruitment Process Outsourcing 12% of Fee 14 Revenue and 7% of Adj. EBITDA(1) in FY’24 QTR. 3 RPO New Business(7) = $122M Adj. EBITDA ($M) & ($83M of renewals/extensions Fee Revenue Adj. EBITDA(1) Margin (%) New Business(7) ($M) Under Contract(6) ($M) Fee Revenue ($M) (Non-GAAP) and $39M of new log
Slide 15: Maintaining a Balanced Approach to Capital Allocation
Maintaining a Balanced Approach to Capital Allocation Deployed $122M of Cash YTD FY’24 Q3 Investing $37M in *CAPEX, $18M in Debt Service and Returned $67M to Shareholders in Combined Dividends and Share Repurchases Cash & Marketable Securities ($M) FY’24 Capital Allocation ($M) Strong Liquidity with
Slide 16: Footnotes
Footnotes (1) Earnings Before Interest, Taxes, Depreciation & Amortization Adjusted to Exclude Restructuring Charges, Acquisition / Integration Costs, Impairment of Fixed Assets (Leasehold Improvements & Capitalized Software) and the Impairment of Right-of-Use Assets, when applicable. (2) Adj. Dilut
Slide 17: Appendix: Reconciliations of Non-GAAP Financial Measures to U.S. GAAP
Appendix Reconciliations of Non-GAAP Financial Measures to U.S. GAAP Financial Measures Earnings Conference Call March 6, 2024
Slide 18: Reconciliation of Net Income / (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) ($M)
Reconciliation of Net Income / (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’23 Q3; FY’24 Q2; FY’24 Q3 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $/% % $/% % Net Income / (Loss) Attributable to Korn Ferry $11.2 ($1.7) $59.1 $47.9 425% $60.8 - Net Inco
Slide 19: Reconciliation of Net Income / (Loss) & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net Income / (Loss) & Diluted EPS (GAAP) to Adjusted Net Income & Adjusted Diluted EPS (Non-GAAP) ($M) FY’23 Q3; FY’24 Q2; FY’24 Q3 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Net Income / (Loss) Attributable to Korn Ferry $11.2 ($1
Slide 20: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA, FY’23 Q3
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($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 $132.8
Slide 21: Reconciliation of Consolidated Net Loss & Operating Income to Adjusted EBITDA, FY’24 Q2
Reconciliation of Consolidated Net Loss & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q2 FY'24 Q2 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $177.8 $97.1 $132.5 $
Slide 22: Reconciliation of Consolidated Net Income & Operating Income to Adjusted EBITDA, FY’24 Q3
Reconciliation of Consolidated Net Income & Consolidated Operating Income (GAAP) to Adjusted EBITDA (Non-GAAP) ($M) FY’24 Q3 FY'24 Q3 Executive Search North Asia Latin Total Exec. Prof. Sch. Consulting Digital America EMEA Pacific America Search RPO & Interim Corp. KF Fee Revenue $166.9 $90.3 $121.4
Slide 23: Reconciliation of Cash & Marketable Securities to Investable Cash ($M)
Reconciliation of Cash & Marketable Securities to Investable Cash ($M) FY’23 Q3; FY’24 Q2; FY’24 Q3 YoY Sequential FY'23 FY'24 FY'24 Incr. / (Decr.) Incr. / (Decr.) Qtr. 3 Qtr. 2 Qtr. 3 $ % $ % Cash $771.9 $620.8 $736.8 ($35.1) (5%) $116.0 19% Marketable Securities 235.9 223.0 250.1 14.2 6% 27.1 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'24 Q3 vs. FY'23 Q3 Reported Const. Curr. $M % Grth. % Grth. Executive Search North America $121.4 (9%) (9%) Europe 49.0 0% (3%) Asia / Pacific 21.3 (6%) (4%) Latin America 7.5 (3%) (5%) Total Exec. Search $199.3 (6%)
Slide 25: Thank You
Thank You y «4 KORN FERRY