Korn Ferry Announces First Quarter Fiscal 2026 Results of Operations

Highlights

• Korn Ferry reports Q1 FY'26 fee revenue of $708.6 million, an increase of 5% year-over-year at actual, and 4% at constant currency.
  • Fee revenue grew year-over-year in each Solution, led by Professional Search & Interim (10% actual) and Executive Search (8% actual).
• Net income attributable to Korn Ferry was $66.6 million, an increase of 6% year-over-year, with a margin of 9.4%, an increase of 10bps year-over-year.
• Adjusted EBITDA was $120.4 million, an increase of 8% year-over-year, with a margin of 17.0%, an increase of 50bps year-over-year.
• Diluted and adjusted diluted earnings per share were $1.26 and $1.31 in Q1 FY'26, up 8% and 11% year-over-year, respectively.
• The Company repurchased 145,770 shares of stock during the quarter for $9.9 million.

Korn Ferry (NYSE:KFY), a global consulting firm, today announced first quarter fee revenue of $708.6 million. In addition, first quarter diluted earnings per share was $1.26 and adjusted diluted earnings per share was $1.31.

"I am pleased with our company's performance. When looking at our results over the last few quarters—even amid all of the choppiness that has encircled the labor and economic environment—it's clear that our strategy is working," said Gary D. Burnison, CEO, Korn Ferry. "Today we are driving performance with a far more sophisticated, holistic approach that brings together our expertise, robust IP and relevant solutions in every major region of the world to solve our clients' most pressing challenges. When one considers our diversification strategy and the demographic shifts alone, the opportunity for Korn Ferry is immense."

The Company reported fee revenue in Q1 FY'26 of $708.6 million, an increase of 5% year-over-year (up 4.0% at constant currency).

Net income attributable to Korn Ferry was $66.6 million with a margin of 9.4% in Q1 FY'26, compared to net income attributable to Korn Ferry of $62.6 million with a margin of 9.3%, in Q1 FY'25, an increase of 10bps compared to the year-ago quarter. Net income attributable to Korn Ferry increased from the year-ago quarter primarily due to an increase in fee revenue.

Adjusted EBITDA was $120.4 million in Q1 FY'26 compared to $111.2 million in Q1 FY'25. Adjusted EBITDA margin was 17.0% in Q1 FY'26, an increase of 50bps compared to the year-ago quarter, also primarily due to an increase in fee revenue.

Fee revenue was $170.0 million in Q1 FY'26 compared to $167.9 million in Q1 FY'25, an increase of $2.1 million or 1%. The year-over-year increase in Consulting fee revenue was primarily driven by a 9% increase in average bill rates, resulting from the continuing shift to larger and longer duration engagements, partially offset by slower client consumption of backlog engagements.

Adjusted EBITDA was $28.8 million in Q1 FY'26 compared to $29.3 million in the year-ago quarter. Adjusted EBITDA margin in the quarter decreased year-over-year by 50bps to 17.0%.

Fee revenue was $89.2 million in Q1 FY'26 compared to $88.2 million in Q1 FY'25, up 1% year-over-year while down 1% at constant currency.

Adjusted EBITDA was $27.6 million in Q1 FY'26, compared to $26.6 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 80bps to 31.0%.

Fee revenue was $224.3 million in Q1 FY'26 compared to $208.6 million in Q1 FY'25, an increase of $15.7 million or 8% (up 6% at constant currency). The year-over-year increase in fee revenue was primarily driven by an increase in the number of engagements billed. The Company experienced fee revenue growth in EMEA, North America and APAC regions.

Adjusted EBITDA was $57.5 million in Q1 FY'26 compared to $49.4 million in the year-ago quarter, an increase of 16% year-over-year. Adjusted EBITDA margin increased by 190bps to 25.6% in Q1 FY'26. The increase in Adjusted EBITDA and Adjusted EBITDA margin was due to higher fee revenue.

Fee revenue was $133.9 million in Q1 FY'26 compared to $121.7 million in Q1 FY'25, an increase of $12.2 million or 10% in both actual and constant currency. Fee revenue increased primarily due to higher fee revenue from Interim associated with the acquisition of Trilogy International effective November 1, 2024.

Adjusted EBITDA was $28.0 million in Q1 FY'26 compared to $25.7 million in the year-ago quarter. Adjusted EBITDA margin was 20.9%, essentially flat year-over-year.

Fee revenue was $91.3 million in Q1 FY'26 compared to $88.5 million in Q1 FY'25, an increase of $2.8 million or 3% (up 1% at constant currency). RPO fee revenue increased primarily due to new logo clients in North America.

Adjusted EBITDA was $14.3 million in Q1 FY'26 compared to $12.5 million in the year-ago quarter. Adjusted EBITDA margin increased 160bps to 15.7% in Q1 FY'26. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from an increase in fee revenue.

Outlook

Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

• Q2 FY'26 fee revenue is expected to be in the range of $690 million and $710 million; and
• Q2 FY'26 diluted earnings per share is expected to range between $1.10 to $1.16.

On a consolidated adjusted basis:

• Q2 FY'26 adjusted diluted earnings per share is expected to be in the range from $1.23 to $1.33.

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 the investor relations 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.

About Korn Ferry

Korn Ferry is a global consulting firm that powers performance. We unlock the potential in your people and unleash transformation across your business—synchronizing strategy, operations, and talent to accelerate performance, fuel growth, and inspire a legacy of change. That's why the world's most forward-thinking companies across every major industry turn to us—for a shared commitment to lasting impact and the bold ambition to Be More Than.

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 impacts of sunsetting our Digital platform, expected labor market conditions, expected demand for and relevance of our products and services, expected results of our business diversification strategy, impact of global events on our business, 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, trade wars, interest rates, labor market conditions, 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 corporate responsibility 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, 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, resulting organizational changes, our indebtedness, and 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 and cost associated with accelerated depreciation on our Digital platform, net of income tax effect;
• Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs and cost associated with accelerated depreciation on our Digital platform, 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; and
• Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs 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 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 and 2) accelerated depreciation associated with the decision to sunset our Digital platform after introducing our Korn Ferry Talent Suite platform, which is expected in the third quarter of fiscal 2026. 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.

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Investor Relations: Tiffany Louder, (214) 310-8407

Media: Dan Gugler, (310) 226-2645