Form: 8-K

Current report filing

September 7, 2023


Exhibit 99.1
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FOR IMMEDIATE RELEASE Contacts:
Investor Relations: Tiffany Louder, (214) 310-8407
Media: Dan Gugler, (310) 226-2645
Korn Ferry Announces First Quarter Fiscal 2024
Results of Operations
Highlights
Korn Ferry reports Q1 FY'24 fee revenue of $699.2 million, essentially flat from Q1 FY'23.
Net income attributable to Korn Ferry was $46.6 million, while diluted and adjusted diluted earnings per share were $0.89 and $0.99 in Q1 FY'24, respectively.
Operating income was $56.8 million (operating margin of 8.1%) and Adjusted EBITDA was $95.7 million (Adjusted EBITDA margin of 13.7%), in Q1 FY'24.
The Company repurchased 90,000 shares of stock during the quarter for $4.2 million.
Declared a quarterly dividend of $0.18 per share on September 6, 2023, which is payable on October 13, 2023 to stockholders of record on September 22, 2023.

Los Angeles, CA, September 7, 2023 – Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced first quarter fee revenue of $699.2 million. In addition, first quarter diluted earnings per share was $0.89 and adjusted diluted earnings per share was $0.99.
“During the fiscal first quarter we generated $699 million in fee revenue, flat year-over-year. Despite a more challenging market, I’m very proud of our organization and what we have achieved, particularly as earnings and profitability held steady sequentially as we delivered $0.89 of diluted earning per share and $0.99 of adjusted diluted earnings per share and $96 million of Adjusted EBITDA, with a 13.7% margin,” said Gary D. Burnison, CEO, Korn Ferry.
“Our diversification strategy continues to positively influence our results,” added Burnison. “Our Consulting and Digital businesses have never been more meaningful—especially in tomorrow’s economy where there will be continued demographic and skill shifts across much of the world. We’re responding with expertise and solutions focused on interim talent, learning and professional development, engagement, retention, culture, assessments, and organizational design, as well as total rewards. We are creating more ways to deepen relationships with our clients.”
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Selected Financial Results
(dollars in millions, except per share amounts) (a)
First Quarter
FY’24 FY’23
Fee revenue $ 699.2  $ 695.9 
Total revenue $ 706.3  $ 703.1 
Operating income $ 56.8  $ 111.6 
Operating margin 8.1  % 16.0  %
Net income attributable to Korn Ferry $ 46.6  $ 77.2 
Basic earnings per share $ 0.89  $ 1.46 
Diluted earnings per share $ 0.89  $ 1.45 
Adjusted Results (b): First Quarter
FY’24 FY’23
Adjusted EBITDA $ 95.7  $ 132.2 
Adjusted EBITDA margin 13.7  % 19.0  %
Adjusted net income attributable to Korn Ferry $ 51.5  $ 80.0 
Adjusted basic earnings per share $ 0.99  $ 1.51 
Adjusted diluted earnings per share $ 0.99  $ 1.50 
______________________
(a)Numbers may not total due to rounding.
(b)Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):
First Quarter
FY’24 FY’23
Integration/acquisition costs $ 4.1  $ 3.6 
Impairment of fixed assets $ 0.1  $ — 
Impairment of right of use assets $ 1.6  $ — 
Restructuring charges, net $ 0.4  $ — 
The Company reported fee revenue in Q1 FY'24 of $699.2 million, essentially flat at actual and constant currency when compared to Q1 FY'23. Fee revenue remained constant primarily due to an increase in the Interim portion of Professional Search & Interim, resulting from the acquisitions of Infinity Consulting Solutions which was effective August 1, 2022 and Salo which was effective February 1, 2023 (collectively, the “acquisitions”). This was partially offset by decreases in our permanent placement talent acquisition offerings, which includes Executive Search, Permanent Placement and RPO, due to a decline in demand driven by global economic and other factors.
Operating margin was 8.1% in Q1 FY'24, compared to 16.0% in the year-ago quarter. Adjusted EBITDA margin was 13.7% in Q1 FY'24, compared to 19.0%, in the year-ago quarter. Net income attributable to Korn Ferry was $46.6 million in Q1 FY'24, compared to $77.2 million in Q1 FY'23 and Adjusted EBITDA was $95.7 million in Q1 FY'24 compared to $132.2 million in Q1 FY'23.
Operating income decreased primarily due to a higher cost of services expense associated with the recently acquired Interim businesses, and an increase in compensation and benefits expense. Net income attributable to Korn Ferry decreased due to the same factors discussed above and higher other income, net partially offset by lower income tax provision.
Adjusted EBITDA decreased due to the same factors discussed above (except other income, net and income tax provision).
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Results by Line of Business
Selected Consulting Data
(dollars in millions) (a)
First Quarter
FY’24 FY’23
Fee revenue $ 168.1  $ 166.5 
Total revenue $ 170.8  $ 168.7 
Ending number of consultants and execution staff (b) 1,855  1,879 
Hours worked in thousands (c) 427  459 
Average bill rate (d) $ 394  $ 363 
Adjusted Results (e): First Quarter
FY’24 FY’23
Adjusted EBITDA $ 25.2  $ 29.6 
Adjusted EBITDA margin 15.0  % 17.7  %
______________________
(a)Numbers may not total due to rounding.
(b)Represents number of employees originating, delivering and executing consulting services.
(c)The number of hours worked by consultant and execution staff during the period.
(d)The amount of fee revenue divided by the number of hours worked by consultants and execution staff.
(e)Adjusted results exclude the following:

First Quarter
FY’24 FY’23
Impairment of right of use assets $ 0.6  $ — 
Restructuring charges, net $ 0.2  $ — 
Fee revenue was $168.1 million in Q1 FY'24 compared to $166.5 million in Q1 FY'23, essentially flat at actual and constant currency. The slight increase in Consulting fee revenue was driven by growth in assessment & succession.
Adjusted EBITDA was $25.2 million in Q1 FY'24 with an Adjusted EBITDA margin of 15.0% compared to Adjusted EBITDA of $29.6 million with an associated margin of 17.7%, respectively, in the year-ago quarter. This decrease in Adjusted EBITDA resulted primarily from an increase in compensation and benefits expense, partially offset by a slight increase in Consulting fee revenue and a decrease in cost of services expense.
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Selected Digital Data
(dollars in millions) (a)
First Quarter
FY’24 FY’23
Fee revenue $ 88.0  $ 83.8 
Total revenue $ 88.0  $ 83.8 
Ending number of consultants 336  331 
Subscription & License fee revenue $ 32.5  $ 29.6 
Adjusted Results: First Quarter
FY’24 FY’23
Adjusted EBITDA $ 24.3  $ 24.2 
Adjusted EBITDA margin 27.6  % 28.9  %
______________________
(a)Numbers may not total due to rounding.
Fee revenue was $88.0 million in Q1 FY'24 compared to $83.8 million in Q1 FY'23, an increase of $4.2 million or 5% (up 5% on a constant currency basis). The increase was primarily due to growth in subscription-based fee revenue.
Adjusted EBITDA was $24.3 million in Q1 FY'24 with an Adjusted EBITDA margin of 27.6% compared to $24.2 million and 28.9%, respectively, in the year-ago quarter. Adjusted EBITDA remained relatively flat compared to the year-ago period.
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Selected Executive Search Data(a)
(dollars in millions) (b)
First Quarter
FY’24 FY’23
Fee revenue $ 205.2  $ 232.8 
Total revenue $ 207.6  $ 234.5 
Ending number of consultants 612  619 
Average number of consultants 607  603 
Engagements billed 3,633  4,133 
New engagements (c) 1,503  1,682 
Adjusted Results (d): First Quarter
FY’24 FY’23
Adjusted EBITDA $ 42.5  $ 62.2 
Adjusted EBITDA margin 20.7  % 26.7  %
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(a)Executive Search is the sum of the individual Executive Search Reporting Segments described in our annual and quarterly reporting on Forms 10-K and 10-Q and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.
(b)Numbers may not total due to rounding.
(c)Represents new engagements opened in the respective period.
(d)Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

First Quarter
FY’24 FY’23
Impairment of fixed assets $ 0.1  $ — 
Impairment of right of use assets $ 0.9  $ — 
Restructuring charges, net $ 0.2  $ — 

Fee revenue was $205.2 million and $232.8 million in Q1 FY'24 and Q1 FY'23, respectively, a year-over-year decrease of 12% at both actual and constant currency. The decrease in fee revenue was primarily driven by a decline in demand for executive searches as a result of clients being affected by the uncertain economic environment.
Adjusted EBITDA was $42.5 million in Q1 FY'24 with an Adjusted EBITDA margin of 20.7% compared to Adjusted EBITDA of $62.2 million and an Adjusted EBITDA margin of 26.7%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decrease in fee revenue discussed above, partially offset by a lower performance-related bonus expense.
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Selected Professional Search & Interim Data
(dollars in millions) (a)
First Quarter
FY’24 FY’23
Fee revenue $ 142.2  $ 98.9 
Total revenue $ 143.1  $ 100.1 
Permanent Placement:
Fee revenue $ 58.3  $ 74.1 
Engagements billed (b) 2,209  2,739 
New engagements (c) 1,235  1,846 
Ending number of consultants (d) 405  497 
Interim:
Fee revenue $ 83.9  $ 24.8 
Average bill rate (e) $ 122  $ 122 
Average weekly billable consultants (f) 1,485  463 
Adjusted Results (g): First Quarter
FY’24 FY’23
Adjusted EBITDA $ 24.3  $ 29.2 
Adjusted EBITDA margin 17.1  % 29.5  %
_____________________
(a)Numbers may not total due to rounding.
(b)Represents engagements billed for professional search.
(c)Represents new engagements opened for professional search in the respective period.
(d)Represents number of employees originating professional search.
(e)Fee revenue from interim divided by the number of hours worked by consultants.
(f)The number of billable consultants based on a weekly average in the respective period.
(g)Adjusted results exclude the following:

First Quarter
FY’24 FY’23
Integration/acquisition costs $ 4.0  $ 2.5 
Fee revenue was $142.2 million in Q1 FY'24, an increase of 44% at both actual and constant currency compared to the year-ago quarter. The increase in fee revenue was mainly driven by additional fee revenue from the acquisitions, partially offset by a decrease in Permanent Placement fee revenue.
Adjusted EBITDA was $24.3 million in Q1 FY'24 with an Adjusted EBITDA margin of 17.1% compared to $29.2 million and 29.5%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to a change in the revenue mix, with decreases in Permanent Placement fee revenue that were more than offset by increases in fee revenue from Interim due to the acquisitions. Interim has lower margins but are typically more resilient to global economic fluctuations and in line with our strategy.

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Selected Recruitment Process Outsourcing ("RPO") Data
(dollars in millions) (a)
First Quarter
FY’24 FY’23
Fee revenue $ 95.7  $ 113.9 
Total revenue $ 96.8  $ 116.1 
Remaining revenue under contract (b) $ 679.8  $ 805.6 
RPO new business (c) $ 48.2  $ 148.4 
Adjusted Results (d): First Quarter
FY’24 FY’23
Adjusted EBITDA $ 10.5  $ 17.7 
Adjusted EBITDA margin 10.9  % 15.5  %
______________________
(a)Numbers may not total due to rounding.
(b)Estimated fee revenue associated with signed contracts for which revenue has not yet been recognized.
(c)Estimated total value of a contract at the point of execution of the contract.
(d)Adjusted results exclude the following:
First Quarter
FY’24 FY’23
Impairment of right of use assets $ 0.1  $ — 
Fee revenue was $95.7 million in Q1 FY'24, a decrease of 16% at both actual and constant currency compared to the year-ago quarter. RPO fee revenue decreased due to reduced demand for the number of placements being requested by existing clients.
Adjusted EBITDA was $10.5 million in Q1 FY'24 with an Adjusted EBITDA margin of 10.9% compared to $17.7 million and 15.5%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decline in demand and fee revenue driven by global economic and other factors, partially offset by a decrease in compensation and benefit expenses due in large part to a decrease in the average headcount compared to the year-ago quarter.

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Outlook
Assuming no new major pandemic related lockdowns or further changes in worldwide geopolitical conditions, economic conditions, financial markets or foreign exchange rates, on a consolidated basis:
Q2 FY’24 fee revenue is expected to be in the range of $675 million and $695 million; and
Q2 FY’24 diluted earnings per share is expected to range between $0.85 to $0.97.
On a consolidated adjusted basis:
Q2 FY’24 adjusted diluted earnings per share is expected to be in the range from $0.91 to $1.01.
Q2 FY’24
Earnings Per Share Outlook
Low High
Consolidated diluted earnings per share $ 0.85  $ 0.97 
Integration/acquisition 0.08  0.06 
Tax Rate Impact (0.02) (0.02)
Consolidated adjusted diluted earnings per share(1)
$ 0.91  $ 1.01 
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(1)Consolidated adjusted diluted earnings per share is a non-GAAP financial measure that excludes the items listed in the table.
Earnings Conference Call Webcast
The earnings conference call will be held today at 12:00 PM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek, SVP Business Development & Analytics Gregg Kvochak and VP Investor Relations Tiffany Louder. The conference call will be webcast and available online at ir.kornferry.com. We will also post to this section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.
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About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people. Visit kornferry.com for more information.
Forward-Looking Statements
Statements in this press release and our conference call that relate to our outlook, projections, goals, strategies, future plans and expectations, including statements relating to expected demand for and relevance of our products and services, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as “believes”, “expects”, “anticipates”, “goals”, “estimates”, “guidance”, “may”, “should”, “could”, “will” or “likely”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, interest rates, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, our ability to maintain relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in government laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property ("IP"), our ability to enhance, develop and respond to new technology, including artificial intelligence, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Salo, resulting organizational changes, our indebtedness, those relating to the ultimate magnitude and duration of any pandemic or outbreaks. For a detailed description of risks and uncertainties that could cause differences from our expectations, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In particular, it includes:
Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net of income tax effect;
Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net of income tax effect;
Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period;
Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable, and Consolidated and Executive Search Adjusted EBITDA margin.
This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of
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Korn Ferry’s ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Professional Search & Interim business, 2) impairment of fixed assets associated with the decision to terminate and sublease some of our offices, 3) impairment of right of use assets due to the decision to terminate and sublease some of our offices and 4) Restructuring charges, net to realign workforce with the Company's business needs and objectives. The use of non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. Adjusted net income attributable to Korn Ferry, adjusted basic and diluted earnings per share and Consolidated and Executive Search Adjusted EBITDA, exclude certain charges that management does not consider on-going in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company’s operating results. Management further believes that Consolidated and Executive Search Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. In the case of constant currency percentages, management believes the presentation of such information provides useful supplemental information regarding Korn Ferry's performance as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry's ongoing operations and financial and operational decision-making.
[Tables attached]
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KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended
 July 31,
2023 2022
(unaudited)
Fee revenue $ 699,189  $ 695,903 
Reimbursed out-of-pocket engagement expenses 7,073  7,245 
Total revenue 706,262  703,148 
Compensation and benefits 479,881  465,626 
General and administrative expenses 65,917  64,457 
Reimbursed expenses 7,073  7,245 
Cost of services 77,190  37,992 
Depreciation and amortization 19,012  16,229 
Restructuring charges, net 421  — 
Total operating expenses 649,494  591,549 
Operating income 56,768  111,599 
Other income, net 13,577  775 
Interest expense, net (4,740) (7,612)
Income before provision for income taxes 65,605  104,762 
Income tax provision 18,420  26,226 
Net income 47,185  78,536 
Net income attributable to noncontrolling interest (580) (1,289)
Net income attributable to Korn Ferry $ 46,605  $ 77,247 
Earnings per common share attributable to Korn Ferry:
Basic $ 0.89  $ 1.46 
Diluted $ 0.89  $ 1.45 
Weighted-average common shares outstanding:
Basic 50,934  51,771 
Diluted 51,082  52,106 
Cash dividends declared per share: $ 0.18  $ 0.15 



KORN FERRY AND SUBSIDIARIES
FINANCIAL SUMMARY BY REPORTING SEGMENT
(dollars in thousands)
(unaudited)
Three Months Ended July 31,
2023 2022 % Change
Fee revenue:
Consulting $ 168,088  $ 166,484  1.0  %
Digital 87,986  83,761  5.0  %
Executive Search:
North America 127,498  151,544  (15.9) %
EMEA 46,776  47,056  (0.6) %
Asia Pacific 24,539  26,381  (7.0) %
Latin America 6,421  7,808  (17.8) %
Total Executive Search (a)
205,234  232,789  (11.8) %
Professional Search & Interim 142,179  98,947  43.7  %
RPO 95,702  113,922  (16.0) %
Total fee revenue 699,189  695,903  0.5  %
Reimbursed out-of-pocket engagement expenses 7,073  7,245  (2.4) %
Total revenue $ 706,262  $ 703,148  0.4  %
(a)Total Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.



KORN FERRY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
July 31,
2023
April 30,
2023
(unaudited)
ASSETS
Cash and cash equivalents $ 562,209  $ 844,024 
Marketable securities 29,486  44,837 
Receivables due from clients, net of allowance for doubtful accounts of $47,418 and $44,377 at July 31, 2023 and April 30, 2023, respectively 592,333  569,601 
Income taxes and other receivables 58,443  67,512 
Unearned compensation 66,878  63,476 
Prepaid expenses and other assets 57,258  49,219 
Total current assets 1,366,607  1,638,669 
Marketable securities, non-current 189,359  179,040 
Property and equipment, net 166,283  161,876 
Operating lease right-of-use assets, net 132,638  142,690 
Cash surrender value of company-owned life insurance policies, net of loans 200,103  197,998 
Deferred income taxes 94,293  102,057 
Goodwill 910,211  909,491 
Intangible assets, net 107,979  114,426 
Unearned compensation, non-current 121,918  103,607 
Investments and other assets 24,077  24,590 
Total assets $ 3,313,468  $ 3,574,444 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 50,731  $ 53,386 
Income taxes payable 22,868  19,969 
Compensation and benefits payable 240,956  532,934 
Operating lease liability, current 43,800  45,821 
Other accrued liabilities 297,436  324,150 
Total current liabilities 655,791  976,260 
Deferred compensation and other retirement plans 425,215  396,534 
Operating lease liability, non-current 110,823  119,220 
Long-term debt 396,379  396,194 
Deferred tax liabilities 6,170  5,352 
Other liabilities 26,560  27,879 
Total liabilities 1,620,938  1,921,439 
Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 77,474 and 76,693 shares issued and 52,705 and 52,269 shares outstanding at July 31, 2023 and April 30, 2023, respectively 429,093  429,754 
Retained earnings 1,348,059  1,311,081 
Accumulated other comprehensive loss, net (90,471) (92,764)
Total Korn Ferry stockholders' equity 1,686,681  1,648,071 
Noncontrolling interest 5,849  4,934 
Total stockholders' equity 1,692,530  1,653,005 
Total liabilities and stockholders' equity $ 3,313,468  $ 3,574,444 






KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share amounts)
(unaudited)
Three Months Ended
July 31,
2023 2022
Net income attributable to Korn Ferry $ 46,605  $ 77,247 
Net income attributable to non-controlling interest 580  1,289 
Net income 47,185  78,536 
Income tax provision 18,420  26,226 
Income before provision for income taxes 65,605  104,762 
Other income, net (13,577) (775)
Interest expense, net 4,740  7,612 
Operating income 56,768  111,599 
Depreciation and amortization 19,012  16,229 
Other income, net 13,577  775 
Integration/acquisition costs (1) 4,128  3,605 
Impairment of fixed assets (2) 123  — 
Impairment of right of use assets (3) 1,629  — 
Restructuring charges, net (4) 421  — 
Adjusted EBITDA $ 95,658  $ 132,208 
Operating margin 8.1  % 16.0  %
Depreciation and amortization 2.7  % 2.3  %
Other income, net 2.0  % 0.1  %
Integration/acquisition costs (1) 0.6  % 0.6  %
Impairment of fixed assets (2) —  % —  %
Impairment of right of use assets (3) 0.2  % —  %
Restructuring charges, net (4) 0.1  % —  %
Adjusted EBITDA margin 13.7  % 19.0  %
Net income attributable to Korn Ferry $ 46,605  $ 77,247 
Integration/acquisition costs (1) 4,128  3,605 
Impairment of fixed assets (2) 123  — 
Impairment of right of use assets (3) 1,629  — 
Restructuring charges, net (4) 421  — 
Tax effect on the adjusted items (5) (1,419) (893)
Adjusted net income attributable to Korn Ferry $ 51,487  $ 79,959 
Basic earnings per common share $ 0.89  $ 1.46 
Integration/acquisition costs (1) 0.08  0.07 
Impairment of fixed assets (2) —  — 
Impairment of right of use assets (3) 0.03  — 
Restructuring charges, net (4) 0.01  — 
Tax effect on the adjusted items (5) (0.02) (0.02)
Adjusted basic earnings per share $ 0.99  $ 1.51 
Diluted earnings per common share $ 0.89  $ 1.45 
Integration/acquisition costs (1) 0.08  0.07 
Impairment of fixed assets (2) —  — 
Impairment of right of use assets (3) 0.03  — 
Restructuring charges, net (4) 0.01  — 
Tax effect on the adjusted items (5) (0.02) (0.02)
Adjusted diluted earnings per share $ 0.99  $ 1.50 
Explanation of Non-GAAP Adjustments
(1)Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.
(2)Costs associated with impairment of fixed assets (i.e. leasehold improvements) due to terminating and deciding to sublease some of our office leases.
(3)Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases.
(4)Restructuring charges we incurred to realign workforce with business needs and objectives due to shifts in global trade lanes and persistent inflationary pressures.
(5)Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net.






KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED
(unaudited)
Three Months Ended July 31,
2023 2022
Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin
(dollars in thousands)
Consulting $ 168,088  $ 170,793  $ 25,180  15.0  % $ 166,484  $ 168,735  $ 29,550  17.7  %
Digital 87,986  88,012  24,325  27.6  % 83,761  83,815  24,178  28.9  %
Executive Search:
North America 127,498  129,413  28,756  22.6  % 151,544  152,884  43,749  28.9  %
EMEA 46,776  47,135  5,638  12.1  % 47,056  47,329  8,515  18.1  %
Asia Pacific 24,539  24,610  6,315  25.7  % 26,381  26,452  7,351  27.9  %
Latin America 6,421  6,422  1,741  27.1  % 7,808  7,809  2,617  33.5  %
Total Executive Search 205,234  207,580  42,450  20.7  % 232,789  234,474  62,232  26.7  %
Professional Search & Interim 142,179  143,069  24,329  17.1  % 98,947  100,052  29,161  29.5  %
RPO 95,702  96,808  10,471  10.9  % 113,922  116,072  17,709  15.5  %
Corporate —  —  (31,097)   —  —  (30,622)  
Consolidated $ 699,189  $ 706,262  $ 95,658  13.7  % $ 695,903  $ 703,148  $ 132,208  19.0  %