KFY — Korn Ferry

Korn Ferry (KFY) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Consolidated Fee Revenue: Grew 7% year-over-year to $722 million.
• Adjusted EBITDA: Increased by $8 million (7% year-over-year) to $125 million, with an adjusted EBITDA margin of 17.3%.
• Adjusted Diluted EPS: Rose by $0.12 (10% year-over-year) to $1.33.
• New Business Growth: Total new business, excluding RPO, grew 4% year-over-year. RPO delivered $253 million in new business, with 84% from renewals.
• Estimated Remaining Fees: Increased to $1.84 billion, up 20% year-over-year, with approximately 57% expected to be recognized within the next year.

2. Strategic Updates and Business Highlights

• Client-Centric Strategy: The "We Are Korn Ferry" initiative emphasizes a unified approach rather than operating in five segments, enhancing cross-sell opportunities.
• Business Referrals: Increased to 27.6% of consolidated fee revenue, indicating strong internal collaboration and client engagement.
• Executive Search Performance: Grew 10% year-over-year, attributed to changing leadership needs and demographic shifts (e.g., retirements).
• Digital Solutions: Experienced a decline but is being repositioned with a focus on enterprise sales and larger transformational deals.
• Talent Suite Launch: A new technology platform launched in November 2025, expected to enhance service delivery and client engagement.

3. Forward Guidance and Outlook

• Q3 Fiscal 2026 Guidance: Projected fee revenue between $680 million and $694 million, adjusted EBITDA margin between 17.2% and 17.4%, and adjusted diluted EPS between $1.19 and $1.25. GAAP diluted EPS is expected to range from $1.15 to $1.21.
• Market Positioning: The company remains optimistic about leveraging its foundational assets and expanding its client offerings.

4. Bad News, Challenges, or Points of Concern

• Seasonality Impact: Anticipated softness in the third quarter due to holiday season timing, which could affect overall performance.
• Digital Business Decline: A purposeful reduction in salesforce for digital solutions has impacted top-line performance, although this is part of a strategic pivot.
• Market Conditions: The overall economic environment remains uncertain, which could pose risks to future growth.

5. Notable Q&A Insights

• Executive Search Resilience: Despite a slower job market, strong demand for leadership talent continues, driven by changing organizational needs.
• AI Integration: AI tools have improved efficiency in the Executive Search process, although the impact is more pronounced in RPO.
• Consulting Bill Rates: Strong bill rates driven by larger engagements, with ongoing opportunities for growth in consulting services.
• RPO Contracts: Majority of new RPO business came from renewals, highlighting the strength of existing client relationships, particularly in healthcare and industrial sectors.
• Future Sales Strategy: The company is shifting towards more enterprise-oriented sales strategies in digital, anticipating improved performance in the coming quarters.

Overall, Korn Ferry's Q2 2026 results reflect strong growth and strategic alignment, though challenges remain in certain areas, particularly digital solutions and seasonal impacts. The company is optimistic about its future trajectory, driven by its unified approach and new technology initiatives.