Korn Ferry (KFY) Q1 2027 Earnings Call Summary

1Key Financial Results and Metrics

Fee Revenue: Grew 7% year-over-year to $756 million, marking the sixth consecutive quarter of growth.

Adjusted EBITDA: Increased by $8 million (7%) year-over-year to $128 million, with an adjusted EBITDA margin remaining flat at 17%.

Adjusted Diluted EPS: Rose by $0.12 (9%) year-over-year to $1.43.

Estimated Remaining Fees: Increased 14% year-over-year to $1.92 billion, with 56% expected to be recognized in the next four quarters.

New Business Growth: Consolidated new business grew 12% year-over-year, with a notable 29.4% of fee revenue coming from internal referrals.

2Strategic Updates and Business Highlights

AMS Acquisition: The completion of the AMS acquisition is a significant milestone, enhancing Korn Ferry's position in talent and organizational consulting. The combined entity now has nearly 17,000 employees across over 130 offices.

Client Engagement: Korn Ferry is focusing on deepening client relationships, with over 90% of marquee and diamond accounts actively using the TalentSuite subscription.

Regional Performance: The Americas saw a 9% revenue increase, EMEA grew by 4%, and APAC reported a slight growth of 1%.

3Forward Guidance and Outlook

Q2 Revenue Guidance: Expected fee revenue for Q2 FY 27 is projected to range from $860 million to $878 million.

Adjusted EBITDA Margin: Anticipated to be between 16.8% and 17.2%.

Adjusted Diluted EPS: Expected to range from $1.30 to $1.40 per share, factoring in the impact of AMS acquisition costs.

4Challenges and Points of Concern

Economic Environment: Rising interest rates and geopolitical tensions, particularly in the Middle East, pose risks to growth and client spending.

APAC Region: Continues to face challenges from socioeconomic changes, particularly in China, impacting growth rates.

Integration Risks: The integration of AMS may present challenges, particularly in aligning cultures and operational systems, with a focus on maintaining client relationships during the transition.

5Notable Q&A Insights

Growth Rates by Segment: Management indicated that overall growth rates are expected to remain around 10%-12%, with regional differences likely.

AI Impact: AI is enhancing efficiencies in the executive search process, but it has not significantly altered completion times or margins.

AMS Synergies: Korn Ferry aims to achieve $40 million in EBITDA synergies within a year of the AMS acquisition, with a strong focus on revenue growth.

Cross-Referral Strategy: The integration of AMS is expected to enhance cross-referrals, leveraging the combined capabilities to deepen existing client relationships. This summary encapsulates Korn Ferry's financial performance, strategic initiatives, and outlook while addressing potential challenges and insights from the Q&A session.