KFY — Korn Ferry

Korn Ferry (KFY) Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Fee Revenue: Grew 7% year-over-year to $717 million, marking the fifth consecutive quarter of accelerating growth.
• Adjusted EBITDA: Increased by 7.5% to $123 million, with an adjusted EBITDA margin of 17.2%, up 10 basis points.
• Earnings Per Share: Adjusted diluted EPS rose 8% to $1.28.
• New Business Growth: Total new business (excluding RPO) increased by 11%, with consulting and digital solutions reaching all-time highs.
• Remaining Fees: Estimated remaining fees under existing contracts rose 11% to $1.85 billion, with approximately 60% expected to be recognized within the next year.

2. Strategic Updates and Business Highlights:

• Korn Ferry is transitioning from "One Korn Ferry" to "We Are Korn Ferry," emphasizing a unified approach across its five solutions.
• The company is focusing on deepening relationships with its top 4,500 clients, which account for 90% of revenue, where penetration is currently low (1.5-2 solutions per client).
• Significant engagements include partnerships with a major aerospace and defense company and a top financial institution, utilizing the Talent Suite for workforce transformation.
• The company is a founding partner of the LA '28 Olympic and Paralympic Games, enhancing its brand visibility.

3. Forward Guidance and Outlook:

• For Q4 FY 2026, Korn Ferry expects fee revenue between $730 million and $750 million, with an adjusted EBITDA margin of 17.1% to 17.3%.
• Adjusted diluted EPS is projected to range from $1.34 to $1.40.
• The company remains optimistic about continued top-line growth, particularly through its Talent Suite and enhanced client relationships.

4. Bad News, Challenges, or Points of Concern:

• The company acknowledged ongoing challenges in the labor market and macroeconomic conditions, particularly due to geopolitical tensions and economic uncertainties.
• There is concern about the impact of rising oil prices on consumer spending and potential economic slowdowns.
• The digital segment showed flat year-over-year growth, indicating a need for improvement in enterprise-oriented sales and client engagement.

5. Notable Q&A Insights:

• AI Impact: Gary Burnison emphasized that AI will drive efficiency and create opportunities, particularly for high-end talent, rather than displacing jobs.
• Sales Cycles: There were no significant changes in sales cycles or client spending behavior noted, despite recent macroeconomic events.
• Talent Suite: The Talent Suite is expected to deepen existing client relationships rather than primarily expand into new ones, with significant opportunities for upselling within current clients.
• Consulting Margins: Margins in consulting decreased due to increased bonus payouts linked to higher-than-expected fee revenues.
• Future Efficiency: The company is in the early stages of harnessing AI for efficiency, with expectations of a smaller labor force in the coming years, necessitating a "more with less" approach.

Overall, Korn Ferry's Q3 2026 results reflect strong revenue growth and strategic initiatives aimed at enhancing client relationships and leveraging technology, despite facing macroeconomic challenges and the need for improvement in certain areas.