KFY — Korn Ferry

Summary of Korn Ferry Q4 Fiscal Year 2026 Earnings Call

1. Key Financial Results and Metrics:

• Q4 Fee Revenue: $760 million, up 7% year-over-year.
• Full Year Fee Revenue: Approximately $2.9 billion, also up 7%.
• Adjusted EBITDA: $130 million in Q4, up 7%, with a margin of 17%.
• Adjusted EPS: $1.40 for Q4, up 6%, and $5.28 for the full year, up 8%.
• Estimated Remaining Fees: Grew 10% year-over-year to nearly $1.9 billion.
• New Business Growth: Total new business grew 2% excluding RPO, 4% including it; RPO won $137 million in new business in Q4.

2. Strategic Updates and Business Highlights:

• Korn Ferry has achieved five consecutive quarters of top-line growth, indicating strong execution of its "We Are Korn Ferry" strategy.
• The company is transitioning its external reporting segments to a regional focus: Americas, EMEA, and APAC, alongside three solution categories: Search, Talent and Organizational Solutions, and Workforce Solutions.
• The firm is emphasizing a client-centric approach, leveraging relationships across geographies to enhance service delivery and client engagement.
• Significant growth in executive search (up 7%) and professional search and interim fee revenue (up 14%), with interim solutions performing particularly well.

3. Forward Guidance and Outlook:

• For Q1 FY 2027, Korn Ferry expects fee revenue between $725 million and $745 million, with an adjusted EBITDA margin around 17% and adjusted diluted EPS ranging from $1.32 to $1.38.
• The company remains optimistic about its growth trajectory, driven by deeper client penetration and the ongoing execution of its strategic initiatives.

4. Challenges and Points of Concern:

• New business growth has moderated, particularly in APAC and EMEA, attributed to geopolitical tensions, notably the conflict in the Middle East.
• While margins remained stable, increased bonus expenses due to revenue growth could impact profitability.
• The executive search business showed flat new engagements in the quarter, raising concerns about future volume trends.

5. Notable Q&A Insights:

• The executive search business is gaining market share at higher organizational levels, with average fees increasing nearly 10% over the past few years.
• The company is cautious about AI's role in the search process, emphasizing the importance of human judgment and proprietary data.
• Korn Ferry is focusing on enhancing its referral business, which has grown to 29% of consolidated fee revenue, driven by a cultural shift towards collaboration and client-centricity.
• There is a belief in pent-up demand in regions affected by geopolitical issues, which could lead to increased business opportunities once stability returns.

Overall, Korn Ferry reported strong financial results and strategic progress, but faces challenges from external market conditions and a need to sustain new business growth in a competitive landscape.