Summary of Korn Ferry (KFY) Q3 2026 Earnings Call

1Key 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.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.