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01/10 01:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial metrics, with notable growth in consulting and executive search, as well as a successful launch of the Talent Suite platform. The company's strategic shift towards higher-value engagements and increased referrals are positive indicators. Despite some challenges, like a decline in the digital side, the overall sentiment is optimistic. The market cap suggests moderate volatility, leading to a positive stock price movement prediction.
Business referrals as a percentage of consolidated fee revenue 27.6%, up approximately 250 basis points year-over-year and quarter sequentially. This increase demonstrates early signs of progress driven by the 'We Are Korn Ferry' go-to-market evolution.
Estimated remaining fees under existing contracts $1.84 billion, up 20% year-over-year. This growth was led by strong new business in RPO.
Executive Search fee revenue 10% year-over-year growth. This marks the sixth consecutive quarter of year-over-year growth.
Professional Search and Interim fee revenue 17% year-over-year growth, with Professional Search growing 7% and Interim (including the Trilogy acquisition) growing 24%.
Subscription and licensed new business in Digital 43% of Digital's new business for the quarter, continuing on a positive trajectory.
Hourly bill rates in Consulting and Interim $460 and $142 an hour, respectively, with rates remaining strong.
Consolidated fee revenue $722 million, a 7% year-over-year growth.
Adjusted EBITDA $125 million, a 7% year-over-year growth, with an adjusted EBITDA margin of 17.3%.
Adjusted diluted earnings per share $1.33, a 10% year-over-year growth, representing an increase of $0.12.
Total company new business (excluding RPO) 4% year-over-year growth, led by strength in EMEA.
RPO new business $253 million for the quarter, with 16% coming from new logos and 84% from renewals.
Fee revenue in the Americas 3% year-over-year growth, led by Executive Search and RPO.
Fee revenue in EMEA 20% year-over-year growth, with growth in Executive Search, Professional Search and Interim, Consulting, and Digital.
Fee revenue in APAC Flat, with moderate growth in Executive Search and Professional Search and Interim, offset by slight declines in RPO, Consulting, and Digital.
Capital allocation $70 million returned to shareholders through combined repurchases and dividends, and $43 million invested in capital expenditures focused on talent suite, productivity tools, and other solution and product enhancements.
New Talent Suite Technology Platform: Launched in November, enhancing foundational assets and positioning the company as a holistic talent partner.
Regional Fee Revenue Growth: Americas up 3% year-over-year, EMEA up 20% year-over-year, APAC flat with moderate growth in some areas.
RPO New Business: $253 million in new business, with 16% from new logos and 84% from renewals.
Business Referrals: Grew to 27.6% of consolidated fee revenue, up 250 basis points year-over-year and quarter sequential.
Estimated Remaining Fees: Increased to $1.84 billion, up 20% year-over-year, with $1 billion expected to be recognized within the next year.
Adjusted EBITDA: Grew 7% year-over-year to $125 million, with a margin of 17.3%.
We Are Korn Ferry Strategy: Focused on integrating solutions into one business model, driving resilience and durability.
Economic Fluctuations: The company operates in an environment defined by economic fluctuations, which could impact client demand and overall business performance.
Uncertain Business Environment: The company acknowledges operating in a low visibility and uncertain business environment, which poses challenges to strategic execution and financial forecasting.
Geopolitical Conditions: Future performance is contingent on no further changes in worldwide geopolitical conditions, which could adversely impact operations and financial results.
Dependence on Recurring Relationships: The company's strategy heavily relies on building larger, recurring client relationships. Any disruption in these relationships could impact revenue stability.
Regional Performance Variability: Fee revenue growth varies significantly by region, with flat performance in APAC and slight declines in certain segments, indicating potential regional market challenges.
Technological Integration Risks: The company is integrating a new talent suite technology platform, which, if not successfully implemented, could disrupt operations and client service delivery.
Revenue Expectations: Fee revenue for the third quarter of fiscal '26 is expected to range from $680 million to $694 million.
Profitability Projections: Adjusted EBITDA margin is projected to range from approximately 17.2% to 17.4% for the third quarter of fiscal '26.
Earnings Per Share (EPS) Guidance: Consolidated adjusted diluted earnings per share is expected to range from $1.19 to $1.25 for the third quarter of fiscal '26. GAAP diluted earnings per share is projected to range from $1.15 to $1.21.
Market Trends and Business Strategy: The company is focusing on becoming a holistic talent partner for clients through its 'We Are Korn Ferry' strategy, emphasizing integrated solutions and leveraging foundational assets to drive long-term growth.
Contract Revenue Projections: Estimated remaining fees under existing contracts are $1.84 billion, with approximately 57% ($1 billion) expected to be recognized within the next year and 43% ($800 million) beyond the next four quarters.
Dividends: Through the end of the second quarter, we returned almost $70 million to shareholders through combined repurchases and dividends.
Share Repurchase: Through the end of the second quarter, we returned almost $70 million to shareholders through combined repurchases and dividends.
The earnings call highlights strong financial metrics, with notable growth in consulting and executive search, as well as a successful launch of the Talent Suite platform. The company's strategic shift towards higher-value engagements and increased referrals are positive indicators. Despite some challenges, like a decline in the digital side, the overall sentiment is optimistic. The market cap suggests moderate volatility, leading to a positive stock price movement prediction.
The earnings call reflects a positive sentiment with strong financial performance in EMEA and APAC, a significant shareholder return, and strategic investments in AI and talent. Despite conservative guidance and economic challenges in the Americas, optimism in Europe and Asia, along with transformational projects and capacity for demand upticks, contribute positively. The focus on integrated solutions and AI's potential adds to the positive outlook, outweighing minor uncertainties and guidance conservatism. The market cap suggests moderate volatility, supporting a positive stock price movement prediction.
The earnings call shows strong financial performance with a 4% revenue growth, a 5% EPS growth, and a dividend increase, indicating positive shareholder returns. Despite some concerns about regulatory issues and economic challenges, the company has a solid strategy, evidenced by increased consultant productivity and international growth. The Q&A session reveals optimism about business trends and a focus on innovation. Given the company's market cap, the positive financial metrics and optimistic guidance are likely to result in a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call presents strong financial performance with increased EPS, revenue, and margins across various segments, alongside a substantial shareholder return plan including dividends and share repurchases. The Q&A highlights successful productivity strategies and strong new business growth, despite some challenges in the digital segment. The positive outlook, especially in executive search, and a commitment to margin expansion suggest a likely stock price increase. Given the market cap of $3.43 billion, a positive reaction of 2% to 8% is anticipated.
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