| Segments |
11. Segments
The Company has seven reportable segments: Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America and RPO & Professional Search. Revenues are directly attributed to a reportable segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors.
The Company’s seven reportable segments operate through the following four lines of business:
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1.
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Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional
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Development and Total Rewards. This work is supported by a comprehensive range of some of the world’s leading lP and data.
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2.
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Digital leverages an artificial intelligence powered, machine-learning platform to identify structure, roles, capabilities and behaviors needed to drive business forward. This end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action.
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3.
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Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.
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4.
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RPO & Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.
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Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, and RPO & Professional Search are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates Corporate to record global expenses.
The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker (“CODM”) review of 1) fee revenue and 2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairment charges). The CODM is not provided asset information by reportable segment.
Financial highlights by reportable segments are as follows:
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Three Months Ended July 31, 2021
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Executive Search
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Consulting
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Digital
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North
America
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EMEA
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Asia Pacific
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Latin
America
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Subtotal
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RPO &
Professional
Search
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Corporate
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Consolidated
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(in thousands)
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Fee revenue
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$
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148,478
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$
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80,671
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$
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138,678
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$
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42,747
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$
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28,703
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$
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6,776
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$
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216,904
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$
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139,342
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$
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—
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$
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585,395
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Total revenue
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$
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149,007
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$
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80,681
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$
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139,300
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$
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42,843
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$
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28,732
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$
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6,779
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$
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217,654
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$
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140,756
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$
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—
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$
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588,098
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Net income attributable to Korn Ferry
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$
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74,823
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Net income attributable to noncontrolling interest
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1,574
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Other income, net
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(4,447
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Interest expense, net
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5,426
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Income tax provision
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23,879
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Operating income
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$
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101,255
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Depreciation and amortization
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15,644
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Other income, net
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4,447
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Adjusted EBITDA(1)
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$
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26,841
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$
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25,632
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$
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43,330
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$
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7,585
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$
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8,320
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$
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2,354
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$
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61,589
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$
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33,967
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$
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(26,683
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$
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121,346
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(1)
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Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization.
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Three Months Ended July 31, 2020
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Executive Search
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Consulting
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Digital
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North
America
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EMEA
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Asia Pacific
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Latin
America
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Subtotal
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RPO &
Professional
Search
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Corporate
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Consolidated
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(in thousands)
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Fee revenue
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$
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99,318
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$
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55,973
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$
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69,315
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$
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30,081
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$
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17,252
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$
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3,495
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$
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120,143
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$
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68,663
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$
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—
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$
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344,097
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Total revenue
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$
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99,590
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$
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56,022
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$
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69,856
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$
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30,195
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$
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17,340
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$
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3,495
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$
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120,886
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$
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70,385
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$
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—
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$
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346,883
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Net loss attributable to Korn Ferry
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$
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(30,833
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Net loss attributable to noncontrolling interest
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(22
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Other income, net
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(11,162
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Interest expense, net
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6,894
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Income tax benefit
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(8,672
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Operating loss
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$
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(43,795
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Depreciation and amortization
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15,035
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Other income, net
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11,162
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Integration/acquisition costs
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737
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Restructuring charges, net
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27,487
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Adjusted EBITDA(1)
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$
|
6,604
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$
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7,943
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$
|
5,312
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$
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1,710
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$
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1,594
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$
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(562
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)
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$
|
8,054
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$
|
6,024
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$
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(17,999
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)
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$
|
10,626
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(1)
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Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition and net restructuring charges.
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