Highlights

Korn Ferry reports Q2 FY'24 fee revenue of $704.0 million, a decrease of 3% (5% at constant currency) from Q2 FY'23.
Net loss attributable to Korn Ferry was $1.7 million in Q2FY'24, which includes a $52.8 million charge, net of tax, primarily relating to restructuring actions taken to realign our workforce due to the current challenging macroeconomic business environment, while diluted loss per share and adjusted diluted earnings per share were $0.04 and $0.97 in Q2 FY'24, respectively.
Operating income was $22.8 million (operating margin of 3.2%) and Adjusted EBITDA was $98.5 million (Adjusted EBITDA margin of 14.0%), in Q2 FY'24.
Continued fee revenue resilience in both Consulting and Digital, with each business reporting year-over-year growth of almost 3% in Q2 FY'24.
Strong new business wins in RPO totaling $141 million with $88 million in renewals and $53 million in new logos.
On December 5, 2023, the Company increased its regular quarterly cash dividend by 83% to $0.33 per share, which is payable on January 12, 2024 to stockholders of record on December 21, 2023.

Korn Ferry (NYSE:KFY), a global organizational consulting firm, today announced second quarter fee revenue of $704.0 million. In addition, second quarter diluted loss per share was $0.04 and adjusted diluted earnings per share was $0.97. Diluted earnings per share includes a $52.8 million, or $1.01 per share, net of tax charge, primarily relating to restructuring actions taken to realign our workforce due to the current challenging macroeconomic business environment that is excluded from adjusted earnings per share.

"During the fiscal second quarter we generated $704 million in fee revenue, down 3% year-over-year. Despite a persistent, uneven economic environment, earnings and profitability held steady sequentially as we delivered $99 million of Adjusted EBITDA, at a 14% margin," said Gary D. Burnison, CEO, Korn Ferry.

"I'm very proud of our organization and how we continue to develop increasingly relevant solutions in a rapidly changing world. In particular, our Consulting and Digital businesses now generate almost 40% of our top line, with Digital achieving all-time record revenue at constant currency during the quarter. Throughout history, change is a catalyst for opportunity. It's times like these when great companies make their best moves – and Korn Ferry is a great company."

Selected Financial Results (dollars in millions, except per share amounts) ^(a)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	704.0		$	727.8		$	1,403.2		$	1,423.8
Total revenue	$	712.4		$	735.7		$	1,418.7		$	1,438.9
Operating income	$	22.8		$	119.6		$	79.6		$	231.2
Operating margin		3.2	%		16.4	%		5.7	%		16.2	%
Net (loss) income attributable to Korn Ferry	$	(1.7	)	$	73.5		$	44.9		$	150.8
Basic (loss) earnings per share	$	(0.04	)	$	1.39		$	0.86		$	2.85
Diluted (loss) earnings per share	$	(0.04	)	$	1.38		$	0.86		$	2.83

Adjusted Results (b):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	98.5		$	131.1		$	194.2		$	263.3
Adjusted EBITDA margin		14.0	%		18.0	%		13.8	%		18.5	%
Adjusted net income attributable to Korn Ferry	$	51.0		$	76.1		$	102.5		$	156.1
Adjusted basic earnings per share	$	0.98		$	1.44		$	1.97		$	2.95
Adjusted diluted earnings per share	$	0.97		$	1.43		$	1.96		$	2.93

(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):

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Integration/acquisition costs	$	5.0	$	3.4	$	9.2	$	7.0
Impairment of fixed assets	$	1.5	$	—	$	1.6	$	—
Impairment of right of use assets	$	—	$	—	$	1.6	$	—
Restructuring charges, net	$	63.5	$	—	$	63.9	$	—

The Company reported fee revenue in Q2 FY'24 of $704.0 million, a year-over-year decrease of 3% (down 5% on a constant currency basis). Fee revenue decreased primarily due to decreases in our permanent placement talent acquisition offerings, which includes Executive Search, Professional Search Permanent Placement and RPO, due to a decline in demand driven by global economic and other factors. This was partially offset by increases in the Interim portion of Professional Search & Interim, resulting from the acquisition of Salo ("the acquisition") which was effective February 1, 2023, and increases in fee revenue in Consulting and Digital.

Operating margin was 3.2% in Q2 FY'24, compared to 16.4% in the year-ago quarter. Adjusted EBITDA margin was 14.0% in Q2 FY'24, compared to 18.0% in the year-ago quarter. Net loss attributable to Korn Ferry was $1.7 million in Q2 FY'24, compared to net income attributable to Korn Ferry of $73.5 million in Q2 FY'23 and Adjusted EBITDA was $98.5 million in Q2 FY'24 compared to $131.1 million in Q2 FY'23.

Operating income decreased primarily due to 1) restructuring charges, net recorded in Q2 FY'24 in order to align our workforce to eliminate excess capacity resulting from the challenging macroeconomic business environment, 2) the decrease in fee revenue discussed above, and 3) higher cost of services expense associated with the recently acquired Interim businesses, partially offset by a decrease in compensation and benefits expense driven by reduced headcount and other cost control measures. Net income attributable to Korn Ferry decreased due to the same factors discussed above, partially offset by lower income tax provision.

Adjusted EBITDA decreased due to the same factors discussed above, with the exception of restructuring charges.

Results by Line of Business Selected Consulting Data (dollars in millions) ^(a)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	177.8		$	173.1		$	345.9		$	339.6
Total revenue	$	181.0		$	175.8		$	351.7		$	344.6

Ending number of consultants and execution staff (b)		1,780			1,899			1,780			1,899
Hours worked in thousands (c)		431			467			858			926
Average bill rate (d)	$	413		$	371		$	403		$	367

Adjusted Results (e):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	28.9		$	31.1		$	54.1		$	60.6
Adjusted EBITDA margin		16.3	%		18.0	%		15.6	%		17.9	%

(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:

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of right of use assets	$	—	$	—	$	0.6	$	—
Restructuring charges, net	$	17.6	$	—	$	17.8	$	—

Fee revenue was $177.8 million in Q2 FY'24 compared to $173.1 million in Q2 FY'23, an increase of $4.7 million or 3% (up 1% on a constant currency basis). The increase in Consulting fee revenue was driven by growth in our organizational strategy and assessment & succession solutions.

Adjusted EBITDA was $28.9 million in Q2 FY'24 with an Adjusted EBITDA margin of 16.3% compared to Adjusted EBITDA of $31.1 million with an Adjusted EBITDA margin of 18.0%, in the year-ago quarter. This decrease in Adjusted EBITDA resulted primarily from increases in compensation and benefits expense and cost of services, partially offset by an increase in Consulting fee revenue.

Selected Digital Data (dollars in millions) ^(a)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	97.1		$	94.3		$	185.1		$	178.1
Total revenue	$	97.2		$	94.6		$	185.2		$	178.4

Ending number of consultants		284			365			284			365
Subscription & License fee revenue	$	32.4		$	28.9		$	64.9		$	58.5

Adjusted Results (b):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	29.0		$	27.5		$	53.3		$	51.7
Adjusted EBITDA margin		29.9	%		29.2	%		28.8	%		29.0	%

(a)		Numbers may not total due to rounding.
(b)		Adjusted results exclude the following:

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	1.5	$	—	$	1.5	$	—
Restructuring charges, net	$	8.9	$	—	$	8.9	$	—

Fee revenue was $97.1 million in Q2 FY'24 compared to $94.3 million in Q2 FY'23, an increase of $2.8 million or 3% (up 1% on a constant currency basis). The increase was driven by increases in total rewards, organizational strategy and sales effectiveness offerings.

Adjusted EBITDA was $29.0 million in Q2 FY'24 with an Adjusted EBITDA margin of 29.9% compared to $27.5 million and 29.2%, respectively, in the year-ago quarter.

Selected Executive Search Data ^(a) (dollars in millions) ^(b)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	203.0		$	218.4		$	408.2		$	451.1
Total revenue	$	204.8		$	220.4		$	412.4		$	454.9

Ending number of consultants		586			621			586			621
Average number of consultants		599			620			594			604
Engagements billed		3,488			4,054			5,555			6,386
New engagements (c)		1,479			1,637			2,982			3,319

Adjusted Results (d):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	39.7		$	54.5		$	82.2		$	116.7
Adjusted EBITDA margin		19.6	%		25.0	%		20.1	%		25.9	%

(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:

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	—	$	0.1	$	—
Impairment of right of use assets	$	—	$	—	$	0.9	$	—
Restructuring charges, net	$	25.7	$	—	$	25.9	$	—

Fee revenue was $203.0 million and $218.4 million in Q2 FY'24 and Q2 FY'23, respectively, a year-over-year decrease of $15.4 million or 7% (down 9% on a constant currency basis). The decrease in fee revenue was primarily driven by a decline in executive search activity, resulting from the uncertain and challenging economic environment.

Adjusted EBITDA was $39.7 million in Q2 FY'24 with an Adjusted EBITDA margin of 19.6% compared to Adjusted EBITDA of $54.5 million and an Adjusted EBITDA margin of 25.0%, respectively, in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decrease in fee revenue discussed above.

Selected Professional Search & Interim Data (dollars in millions) ^(a)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	138.4		$	134.7		$	280.6		$	233.7
Total revenue	$	139.5		$	135.8		$	282.5		$	235.8

Permanent Placement:
Fee revenue	$	56.5		$	79.5		$	114.8		$	153.6
Engagements billed (b)		2,018			3,006			3,455			4,709
New engagements (c)		1,184			1,816			2,419			3,662
Ending number of consultants (d)		383			527			383			527
Interim:
Fee revenue	$	81.9		$	55.3		$	165.8		$	80.1
Average bill rate (e)	$	126		$	107		$	124		$	111
Average weekly billable consultants (f)		1,336			1,111			1,387			787

Adjusted Results (g):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	25.6		$	32.5		$	50.0		$	61.6
Adjusted EBITDA margin		18.5	%		24.1	%		17.8	%		26.4	%

(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:

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Integration/acquisition costs	$	4.9	$	2.5	$	8.9	$	5.0
Restructuring charges, net	$	3.8	$	—	$	3.8	$	—

Fee revenue was $138.4 million in Q2 FY'24, an increase of $3.7 million or 3% (up 2% on a constant currency basis) compared to the year-ago quarter. The increase in fee revenue was mainly driven by additional fee revenue from the acquisition, partially offset by a decrease in permanent placement fee revenue.

Adjusted EBITDA was $25.6 million in Q2 FY'24 with an Adjusted EBITDA margin of 18.5% compared to $32.5 million and 24.1%, 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 increases in fee revenue from the acquisition, partially offset by the decreases in permanent placement fee revenue.

Selected Recruitment Process Outsourcing ("RPO") Data (dollars in millions) ^(a)

	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	87.7		$	107.3		$	183.4		$	221.2
Total revenue	$	90.1		$	109.1		$	186.9		$	225.2

Remaining revenue under contract (b)	$	680.5		$	922.8		$	680.5		$	922.8
RPO new business (c)	$	140.9		$	290.3		$	189.1		$	438.7

Adjusted Results (d):	Second Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	8.9		$	16.0		$	19.3		$	33.7
Adjusted EBITDA margin		10.1	%		14.9	%		10.5	%		15.2	%

(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:

	Second Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of right of use assets	$	—	$	—	$	0.1	$	—
Restructuring charges, net	$	7.2	$	—	$	7.2	$	—

Fee revenue was $87.7 million in Q2 FY'24, a decrease of $19.6 million or 18% (down 20% on a constant currency basis) compared to the year-ago quarter. RPO fee revenue decreased due to reduced demand for the number of placements being requested by existing clients as a result of the challenging economic environment.

Adjusted EBITDA was $8.9 million in Q2 FY'24 with an Adjusted EBITDA margin of 10.1% compared to $16.0 million and 14.9%, 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 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.

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:

Q3 FY'24 fee revenue is expected to be in the range of $645 million and $665 million; and
Q3 FY'24 diluted earnings per share is expected to range between to $0.87 to $0.95.

On a consolidated adjusted basis:

Q3 FY'24 adjusted diluted earnings per share is expected to be in the range from $0.96 to $1.02.

	Q3 FY'24 Earnings Per Share Outlook
	Low			High
Consolidated diluted earnings per share	$	0.87		$	0.95
Integration/acquisition and restructuring charges		0.13			0.09
Tax Rate Impact		(0.04	)		(0.02	)
Consolidated adjusted diluted earnings per share ⁽¹⁾	$	0.96		$	1.02

(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 (EST) 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.

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, our workforce reduction plan, 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 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 primarily due to software impairment charge in our Digital segment, 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 align workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic and geopolitical uncertainty. 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.

KORN FERRY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

	Three Months Ended October 31,						Six Months Ended October 31,
		2023			2022			2023			2022
	(unaudited)

Fee revenue	$	704,003		$	727,849		$	1,403,192		$	1,423,752
Reimbursed out-of-pocket engagement expenses		8,444			7,870			15,517			15,115
Total revenue		712,447			735,719			1,418,709			1,438,867

Compensation and benefits		453,859			464,766			933,740			930,392
General and administrative expenses		65,737			65,086			131,654			129,543
Reimbursed expenses		8,444			7,870			15,517			15,115
Cost of services		78,512			61,257			155,702			99,249
Depreciation and amortization		19,554			17,093			38,566			33,322
Restructuring charges, net		63,525			—			63,946			—
Total operating expenses		689,631			616,072			1,339,125			1,207,621

Operating income		22,816			119,647			79,584			231,246
Other loss, net		(13,835	)		(9,048	)		(258	)		(8,273	)
Interest expense, net		(6,596	)		(7,098	)		(11,336	)		(14,710	)
Income before provision for income taxes		2,385			103,501			67,990			208,263
Income tax provision		2,341			28,886			20,761			55,112
Net income		44			74,615			47,229			153,151
Net income attributable to noncontrolling interest		(1,755	)		(1,074	)		(2,335	)		(2,363	)
Net (loss) income attributable to Korn Ferry	$	(1,711	)	$	73,541		$	44,894		$	150,788

(Loss) earnings per common share attributable to Korn Ferry:
Basic	$	(0.04	)	$	1.39		$	0.86		$	2.85
Diluted	$	(0.04	)	$	1.38		$	0.86		$	2.83

Weighted-average common shares outstanding:
Basic		51,328			51,868			51,131			51,820
Diluted		51,328			52,005			51,401			52,143

Cash dividends declared per share:	$	0.18		$	0.15		$	0.36		$	0.30

KORN FERRY AND SUBSIDIARIES FINANCIAL SUMMARY BY REPORTING SEGMENT (dollars in thousands) (unaudited)

	Three Months Ended October 31,						Six Months Ended October 31,
		2023		2022	% Change			2023		2022	% Change
Fee revenue:
Consulting	$	177,795	$	173,092	2.7	%	$	345,883	$	339,576	1.9	%
Digital		97,092		94,329	2.9	%		185,078		178,090	3.9	%
Executive Search:
North America		132,512		142,485	(7.0	)%		260,010		294,029	(11.6	%)
EMEA		43,098		44,645	(3.5	)%		89,874		91,701	(2.0	%)
Asia Pacific		19,304		23,408	(17.5	)%		43,843		49,789	(11.9	%)
Latin America		8,079		7,821	3.3	%		14,500		15,629	(7.2	%)
Total Executive Search ^(a)		202,993		218,359	(7.0	)%		408,227		451,148	(9.5	%)
Professional Search & Interim		138,384		134,743	2.7	%		280,563		233,690	20.1	%
RPO		87,739		107,326	(18.3	)%		183,441		221,248	(17.1	%)
Total fee revenue		704,003		727,849	(3.3	)%		1,403,192		1,423,752	(1.4	%)
Reimbursed out-of-pocket engagement expenses		8,444		7,870	7.3	%		15,517		15,115	2.7	%
Total revenue	$	712,447	$	735,719	(3.2	)%	$	1,418,709	$	1,438,867	(1.4	%)

(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)

	October 31, 2023			April 30, 2023
	(unaudited)
ASSETS
Cash and cash equivalents	$	620,836		$	844,024
Marketable securities		26,149			44,837
Receivables due from clients, net of allowance for doubtful accounts of $47,574 and $44,377 at October 31, 2023 and April 30, 2023, respectively		592,208			569,601
Income taxes and other receivables		66,073			67,512
Unearned compensation		62,533			63,476
Prepaid expenses and other assets		53,741			49,219
Total current assets		1,421,540			1,638,669

Marketable securities, non-current		196,860			179,040
Property and equipment, net		165,815			161,876
Operating lease right-of-use assets, net		122,621			142,690
Cash surrender value of company-owned life insurance policies, net of loans		202,094			197,998
Deferred income taxes		101,099			102,057
Goodwill		907,563			909,491
Intangible assets, net		101,423			114,426
Unearned compensation, non-current		119,357			103,607
Investments and other assets		22,589			24,590
Total assets	$	3,360,961		$	3,574,444

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	46,375		$	53,386
Income taxes payable		19,446			19,969
Compensation and benefits payable		327,129			532,934
Operating lease liability, current		42,774			45,821
Other accrued liabilities		328,395			324,150
Total current liabilities		764,119			976,260

Deferred compensation and other retirement plans		406,220			396,534
Operating lease liability, non-current		100,321			119,220
Long-term debt		396,565			396,194
Deferred tax liabilities		6,629			5,352
Other liabilities		26,607			27,879
Total liabilities		1,700,461			1,921,439

Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 77,505 and 76,693 shares issued and 52,656 and 52,269 shares outstanding at October 31, 2023 and April 30, 2023, respectively		435,340			429,754
Retained earnings		1,336,686			1,311,081
Accumulated other comprehensive loss, net		(115,873	)		(92,764	)
Total Korn Ferry stockholders' equity		1,656,153			1,648,071
Noncontrolling interest		4,347			4,934
Total stockholders' equity		1,660,500			1,653,005
Total liabilities and stockholders' equity	$	3,360,961		$	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 October 31,						Six Months Ended October 31,
		2023			2022			2023			2022

Net (loss) income attributable to Korn Ferry	$	(1,711	)	$	73,541		$	44,894		$	150,788
Net income attributable to non-controlling interest		1,755			1,074			2,335			2,363
Net income		44			74,615			47,229			153,151
Income tax provision		2,341			28,886			20,761			55,112
Income before provision for income taxes		2,385			103,501			67,990			208,263
Other loss, net		13,835			9,048			258			8,273
Interest expense, net		6,596			7,098			11,336			14,710
Operating income		22,816			119,647			79,584			231,246
Depreciation and amortization		19,554			17,093			38,566			33,322
Other loss, net		(13,835	)		(9,048	)		(258	)		(8,273	)
Integration/acquisition costs (1)		5,030			3,411			9,158			7,016
Impairment of fixed assets (2)		1,452			—			1,575			—
Impairment of right of use assets (3)		—			—			1,629			—
Restructuring charges, net (4)		63,525			—			63,946			—
Adjusted EBITDA	$	98,542		$	131,103		$	194,200		$	263,311

Operating margin		3.2	%		16.4	%		5.7	%		16.2	%
Depreciation and amortization		2.8	%		2.3	%		2.7	%		2.4	%
Other loss, net		(1.9	)%		(1.2	)%		0.0	%		(0.6	)%
Integration/acquisition costs (1)		0.7	%		0.5	%		0.7	%		0.5	%
Impairment of fixed assets (2)		0.2	%		—	%		0.1	%		—	%
Impairment of right of use assets (3)		—	%		—	%		0.1	%		—	%
Restructuring charges, net (4)		9.0	%		—	%		4.5	%		—	%
Adjusted EBITDA margin		14.0	%		18.0	%		13.8	%		18.5	%

Net (loss) income attributable to Korn Ferry	$	(1,711	)	$	73,541		$	44,894		$	150,788
Integration/acquisition costs (1)		5,030			3,411			9,158			7,016
Impairment of fixed assets (2)		1,452			—			1,575			—
Impairment of right of use assets (3)		—			—			1,629			—
Restructuring charges, net (4)		63,525			—			63,946			—
Tax effect on the adjusted items (5)		(17,252	)		(812	)		(18,671	)		(1,705	)
Adjusted net income attributable to Korn Ferry	$	51,044		$	76,140		$	102,531		$	156,099

Basic (loss) earnings per common share	$	(0.04	)	$	1.39		$	0.86		$	2.85
Integration/acquisition costs (1)		0.10			0.07			0.18			0.13
Impairment of fixed assets (2)		0.03			—			0.03			—
Impairment of right of use assets (3)		—			—			0.03			—
Restructuring charges, net (4)		1.24			—			1.24			—
Tax effect on the adjusted items (5)		(0.35	)		(0.02	)		(0.37	)		(0.03	)
Adjusted basic earnings per share	$	0.98		$	1.44		$	1.97		$	2.95

Diluted (loss) earnings per common share	$	(0.04	)	$	1.38		$	0.86		$	2.83
Integration/acquisition costs (1)		0.10			0.07			0.18			0.13
Impairment of fixed assets (2)		0.03			—			0.03			—
Impairment of right of use assets (3)		—			—			0.03			—
Restructuring charges, net (4)		1.23			—			1.23			—
Tax effect on the adjusted items (5)		(0.35	)		(0.02	)		(0.37	)		(0.03	)
Adjusted diluted earnings per share	$	0.97		$	1.43		$	1.96		$	2.93

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 primarily due to software impairment charge in our Digital segment.
(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 incurred to align our workforce to eliminate excess capacity resulting from the challenging macroeconomic business environment.
(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 October 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	$	177,795	$	180,953	$	28,928		16.3	%	$	173,092	$	175,845	$	31,089		18.0	%
Digital		97,092		97,157		28,983		29.9	%		94,329		94,577		27,524		29.2	%
Executive Search:
North America		132,512		133,933		29,436		22.2	%		142,485		144,147		37,969		26.6	%
EMEA		43,098		43,315		5,619		13.0	%		44,645		44,919		8,081		18.1	%
Asia Pacific		19,304		19,460		3,875		20.1	%		23,408		23,523		5,834		24.9	%
Latin America		8,079		8,085		805		10.0	%		7,821		7,822		2,607		33.3	%
Total Executive Search		202,993		204,793		39,735		19.6	%		218,359		220,411		54,491		25.0	%
Professional Search & Interim		138,384		139,455		25,622		18.5	%		134,743		135,762		32,457		24.1	%
RPO		87,739		90,089		8,855		10.1	%		107,326		109,124		16,004		14.9	%
Corporate		—		—		(33,581	)				—		—		(30,462	)
Consolidated	$	704,003	$	712,447	$	98,542		14.0	%	$	727,849	$	735,719	$	131,103		18.0	%

	Six Months Ended October 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	$	345,883	$	351,746	$	54,108		15.6	%	$	339,576	$	344,580	$	60,639		17.9	%
Digital		185,078		185,169		53,308		28.8	%		178,090		178,392		51,702		29.0	%
Executive Search:
North America		260,010		263,346		58,192		22.4	%		294,029		297,031		81,718		27.8	%
EMEA		89,874		90,450		11,257		12.5	%		91,701		92,248		16,596		18.1	%
Asia Pacific		43,843		44,070		10,190		23.2	%		49,789		49,975		13,185		26.5	%
Latin America		14,500		14,507		2,546		17.6	%		15,629		15,631		5,224		33.4	%
Total Executive Search		408,227		412,373		82,185		20.1	%		451,148		454,885		116,723		25.9	%
Professional Search & Interim		280,563		282,524		49,951		17.8	%		233,690		235,814		61,618		26.4	%
RPO		183,441		186,897		19,326		10.5	%		221,248		225,196		33,713		15.2	%
Corporate		—		—		(64,678	)				—		—		(61,084	)
Consolidated	$	1,403,192	$	1,418,709	$	194,200		13.8	%	$	1,423,752	$	1,438,867	$	263,311		18.5	%

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Korn Ferry Announces Second Quarter Fiscal 2024 Results of Operations