Korn Ferry (NYSE: KFY), a global organizational consulting firm, released its Q2 FY'25 financial results, demonstrating both challenges and successes during the period.
Key Financial Metrics
| Metric | Q2 FY'25 | Q2 FY'24 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue (Fee Revenue) | $674.4 million | $702.5 million | -4% |
| Diluted Earnings per Share | $1.14 | ||
| Adjusted Diluted Earnings per Share | $1.21 | ||
| Operating Income | $87.5 million | $22.8 million | |
| Net Income Attributable to Korn Ferry | $60.8 million | -$1.7 million | |
| Adjusted EBITDA | $117.0 million | $98.5 million | |
| Adjusted EBITDA Margin | 17.4% | +340 bps |
Interpretation : Korn Ferry's financial performance shows a decline in total revenue year-over-year, with a significant improvement in profitability metrics like operating income and adjusted EBITDA. Despite the drop in fee revenue, operational efficiencies and cost management have bolstered earnings.
Revenue Performance by Segment
| Segment | Q2 FY'25 Fee Revenue | Q2 FY'24 Fee Revenue | Year-over-Year Change | Commentary |
|---|---|---|---|---|
| Professional Search & Interim | $121.1 million | $138.4 million | -13% | Decline driven by economic environment affecting demand. |
| Executive Search | $206.0 million | $203.0 million | +1% | Stability in billed engagements contributing to revenue. |
| Consulting | $166.8 million | $177.8 million | -6% | Lower demand in organizational strategy affected results. |
| Digital | $92.9 million | $97.1 million | -4% | Impacted by lower demand, though up 5% sequentially. |
| Other | $87.6 million | Similar to last year | Flat | Consistent performance year-over-year. |
Interpretation : The Consulting and Professional Search & Interim segments underperformed primarily due to macroeconomic challenges, while Executive Search showed resilience. The Digital segment exhibited sequential growth, aligning with improved trends in new business.
Key Developments and Operational Highlights
- Sixth consecutive quarter of improved profitability.
- Acquisition of Trilogy, enhancing interim professional offerings in EMEA.
- Launch of Korn Ferry Talent Suite, advancing client solutions through a subscription model.
Management Commentary
CEO Gary D. Burnison emphasized the solid execution and profitability improvement despite challenging conditions. He highlighted the stability in Talent Acquisition fee revenues and improvements in the Digital segment, along with strategic investments like Trilogy that expand market opportunities.
Dividends and Share Repurchase Program
- Korn Ferry declared a quarterly dividend of $0.37 per share, payable January 15, 2025.
- Repurchased 456,250 shares for $32.6 million during the quarter.
Forward Guidance
Korn Ferry has projected Q3 FY'25 fee revenue to be between $635 million and $665 million and expects diluted EPS to range from $1.02 to $1.16, with adjusted diluted EPS from $1.06 to $1.18.
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