FY'24 Q3
Earnings Call
March 6, 2024
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 differ materially from those currently expected because of a number of risks and uncertainties. For a detailed description of many of those
risks and uncertainties, please refer to Korn Ferry's earnings release and its periodic filings with the Securities and Exchange Commission. These statements are also aspirational and not guarantees or promises that goals or targets will be met. The company undertakes no obligation to update any statements, whether as a result of new information, future events or otherwise. In addition, these statements may be based on standards for measuring progress that are still developing and on assumptions that are subject to change in the future.
NON-GAAP FINANCIAL MEASURES
This presentation includes financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to slides 18 to 24 for a reconciliation of each of the non-GAAP financial measures included in this presentation to the closest GAAP measure.
2
Advancing our Strategy to Become the Preeminent Global Organizational Consultancy
Diversifying offerings into fully integrated, scalable and sustainable client engagements:
Intentional expansion to a comprehensive organizational consultancy is driving less cyclical and more predictable and recurring fee revenue streams with more scalable earnings.
Capitalizing on global leadership in solutions with great relevance today:
Monetizing investments in data, content, and IP. Driving greater Digital subscription engagements and integration with Consulting creates greater differentiation.
Established record of thought leadership and action on burning platform issues such as workforce transformation/digitization, DE & I, and other ESG initiatives provides a competitive edge to support companies as they look to solve their most pressing business issues.
Driving an integrated go-to-market strategy through our marquee and regional accounts:
Enduring client relationships of scale that deliver larger, more predictable and recurring Revenue through structured, programmatic account planning in combination with strategic investments in account management talent.
Advancing Korn Ferry as a premier career destination:
Attracting and retaining top talent by investing in initiatives that build a world-class organization aligned to strategy and staffed by a capable, motivated and agile workforce.
Pursuing transformational opportunities at the intersection of talent and strategy:
Proven track record of investing in growth and leveraging a core competency of identifying, acquiring and integrating M&A targets that have the potential to further our strategic objectives and enhance shareholder value.
3
A Compelling Investment Opportunity, At a Critical Moment, in a Critical Sector
Strong, Durable
Foundation
- Recognized industry leader with
- 9,500 experts strategically positioned in more than 50 countries
- Value-drivencapital allocation priorities and strong M&A track record
- Proven management team driving a proven business model
- Proprietary IP and data driving an expanding suite of digital capabilities
- Continued investment in commercial colleagues including Marquee and Regional account leaders
Relevant Solutions Aligned
With Macro Trends
- Rapid emergence of remote work necessitating organizational realignment
- Investor / Corporate emphasis on ESG, including global prioritization of Diversity, Equity & Inclusion
- Investing in Professional Search & Interim Services inline with shift from career employee to career nomad
Poised for
Sustainable Growth
- Focus on durable, scalable Revenue through deeper key client penetration and large integrated solutions that emphasize consulting services and digital subscriptions
- Marquee and Regional account program outperforming the rest of the firm enabled by global account leaders and disciplined account management and planning
- Breadth of solutions provides platform for outsized top-line synergies - a key competitive advantage
- Strong cash generation and balance sheet facilitates investments in growth opportunities in large
markets that are currently highly | |
fragmented and underpenetrated | 4 |
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 Seasonally Slower Revenue, Adj. EBITDA and Adj. EBITDA Margin Improved both YoY and Sequentially Reaching $102M and 15.2% Respectively
- Adj. Diluted EPS Improved 6% YoY and 10% Sequentially to $1.07
$669M | 15.2% |
($12M) (2%) YoY | Adj. EBITDA Margin %(1) |
Fee Revenue | (Non-GAAP |
$102M | $1.07 |
+$6M +6% YoY | +0.06 +6% YoY |
Adj. EBITDA(1) | Adj. Diluted EPS(2) |
(Non-GAAP) | (Non-GAAP) |
See detailed explanation of footnotes on page 16
5
Business Continues to be Highly Diversified Across Lines of Business, Geography and Industry
For the third quarter of FY'24
Fee Revenue by Lines of Business
Fee Revenue by Geography
Fee Revenue by Industry
20%
30%
12%
4%
6% 15%
13%
12%
13% 25%
Executive Search | Digital | |
Consulting | RPO | |
Professional Search & Interim
28%56%
NAM APAC
EMEA LATM
18%
17%
31%
Consumer | Industrial | |
Financial Services | Life Sci. / HC | |
Tech. | Edu. / Non-Profit | |
6
Diversified Mix of Revenue & Earnings ($M)
Revenue and Adj. EBITDA for Consulting and Digital Demonstrating both Resilience & Growth YOY
FY'23 QTR. 3 | FY'24 QTR. 2 | ||||
100% | $681 | $124(3) | 100% | $704 | $132(3) |
$85 | $97 | ||||
90% | $22 | 90% | $29 | ||
80% | $118 | $22 | 80% | $138 | |
70% | 70% | ||||
$26 | |||||
$104 | |||||
60% | $10 | 60% | $88 | ||
$9 | |||||
50% | 50% | ||||
$162 | $23 | ||||
40% | 40% | $178 | $29 | ||
30% | 30% | ||||
20% | $212 | $46 | 20% | $203 | $40 |
10% | 10% | ||||
0% | Fee Revenue | Adj. EBITDA(1) | 0% | Fee Revenue | Adj. EBITDA(1) |
Executive Search | RPO | Executive Search | RPO | ||
Consulting | Professional Search | Consulting | Professional Search | ||
Digital | & Interim | Digital | & Interim |
FY'24 QTR. 3 | ||
100% | $669 | $132(3) |
$90 | ||
90% | $27 | |
80% | $131 | |
70% | $24 | |
60% | $81 | $9 |
50% | ||
$28 | ||
40% | $167 | |
30% | ||
20% | $199 | $43 |
10% | ||
0% |
Fee Revenue | Adj. EBITDA(1) | ||
Executive Search | RPO | ||
Consulting | Professional Search | ||
Digital | & Interim |
See detailed explanation of footnotes on page 16
7
Quarterly(7) New Business* - YoY Growth (Excluding RPO)
0% 0%
(3%)
(4%)
QTR. 2 FY'24 | QTR. 3 FY'24 | |||
Constant Currency | Actual F/X Rates | |||
* Confirmations plus upticks and additional placements | ||||
See detailed explanation of footnotes on page 16 |
8
Quarterly(7) New Business* - YoY Growth By Line of Business
(Excluding RPO)
Constant Currency | Actual F/X Rates |
Consulting
9% 10%
0% 0%
QTR. 2 FY'24 | QTR. 3 FY'24 |
Executive Search*
(6%) (6%)
(11%)(10%)
QTR. 2 FY'24 | QTR. 3 FY'24 |
* Confirmations plus upticks and additional placements See detailed explanation of footnotes on page 16
Digital
2% 2%
(16%) (15%)
QTR. 2 FY'24 | QTR. 3 FY'24 |
Professional Search & Interim*
9% 9%
1% 1%
QTR. 2 FY'24 | QTR. 3 FY'24 |
9
Consulting
25% of Fee Revenue and 21% of Adj. EBITDA(1) in FY'24 QTR. 3
Q3 Fee Revenue
3% YoY
(+3% at CC)
Driven by Organizational Strategy +9%, Assessment & Succession +2%, Leadership Development +2% and Rewards & Benefits +1%
Q3 New Business growth Flat YoY and strongest in EMEA (+15%) and NAM (+10%) driven by Organizational Strategy wins
Adj. EBITDA(1) & Adj. EBITDA Margin(1) up YoY on higher bill rates (+12% YoY), and greater Consultant and Execution Staff productivity
Fee Revenue ($M)
$178
$162$167
FY'23 Q3 FY'24 Q2 FY'24 Q3
Adj. EBITDA ($M) & Adj. EBITDA(1)
Margin (%) (Non-GAAP)
16.3% 16.7%
14.4%
$28.9 $27.8
$23.3
FY'23 Q3 FY'24 Q2 FY'24 Q3
Adj. EBITDA(1)
Adj. EBITDA Margin (%)(1)
Consultant + Execution
Staff Productivity
Hours Worked | 381K | ||
431K | $438 | ||
414K |
Avg. Bill Rate | $413 | |
$392 | ||
1,877 | 1,780 | |
1,687 | ||
FY'23 Q3 FY'24 Q2 FY'24 Q3
Consultant + Execution Staff Hours Worked / Average Bill Rate
See detailed explanation of footnotes on page 16
10
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Korn Ferry International published this content on 05 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 March 2024 11:58:08 UTC.