KFY — Korn Ferry

Summary of Korn Ferry (KFY) Q3 2026 Earnings Call

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 $9 million (7.5%) to $123 million, with an adjusted EBITDA margin of 17.2%.
• Adjusted Diluted EPS: Rose by $0.09 (8%) to $1.28.
• New Business Growth: Total new business (excluding RPO) increased by 11%, with consulting and digital reaching all-time highs.
• Remaining Fees: Estimated remaining fees under existing contracts rose 11% year-over-year to $1.85 billion.
• Capital Allocation: Returned $113 million to shareholders through share repurchases and dividends; a 15% increase in quarterly cash dividend to $0.55 per share was announced.

2. Strategic Updates and Business Highlights

• Korn Ferry is transitioning from "One Korn Ferry" to "We Are Korn Ferry," focusing on client-centricity and deepening relationships with existing clients.
• The company is leveraging its Talent Suite, a data-driven tool for talent management, to enhance client solutions and drive efficiency.
• Significant engagements include partnerships with major corporations in aerospace and finance, reflecting the firm's capability to handle large-scale transformation projects.
• The interim and consulting segments showed resilience, with consulting new business driven by transformation and organizational strategy needs.

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 between 17.1% and 17.3%.
• Adjusted diluted EPS is projected to range from $1.34 to $1.40.
• The company remains optimistic about future growth opportunities, particularly in expanding relationships with its top clients and enhancing its digital offerings.

4. Bad News, Challenges, or Points of Concern

• The company acknowledges ongoing challenges in the labor market and potential impacts from geopolitical tensions, particularly in the Middle East.
• There are concerns about the broader economic environment, including inflation and consumer spending, which could affect client behavior and spending.
• The digital segment's growth was flat year-over-year, indicating a need for improvement in enterprise-oriented sales and client engagement.

5. Notable Q&A Insights

• Impact of AI: Gary Burnison emphasized that AI will enhance efficiency rather than replace high-end labor roles, positioning Korn Ferry to capitalize on the evolving labor market.
• Sales Cycles: There have been no significant changes in sales cycles or client spending behavior, although recent geopolitical events may introduce uncertainty.
• Talent Suite: The Talent Suite is seen as a tool to deepen existing client relationships rather than primarily attract new clients, with a focus on embedding Korn Ferry's talent language within organizations.
• Consulting Margins: Margins in the consulting segment declined due to increased bonus payouts linked to higher-than-expected fee revenues.

Overall, Korn Ferry's Q3 2026 results reflect strong growth and strategic positioning, although the company remains vigilant about external challenges and market dynamics.