KORN FERRY (KFY) Q2 2025 Earnings Summary

Executive Summary

Korn Ferry delivered stable top-line and continued margin expansion: Q2 FY’25 fee revenue was $674.4M (-4% y/y; flat q/q), diluted EPS $1.14, and adjusted diluted EPS $1.21; adjusted EBITDA margin rose to 17.4% (sixth straight quarter of improvement) .
Mix dynamics: Executive Search grew y/y (+1%) with materially higher margins, Digital was down y/y but up 5% q/q with strong subscription momentum, while Professional Search & Interim remained the soft spot (-13% y/y) though bill rates rose; RPO was flat y/y with improved margins and strong new business .
Q3 FY’25 guidance embeds unusually heavy seasonal working-day headwinds (holidays, Chinese New Year): fee revenue $635–$665M; GAAP EPS $1.02–$1.16 and adjusted EPS $1.06–$1.18; management cited 3–4 fewer business days implying a ~$30–$40M revenue impact in the quarter .
Strategic catalysts: launch of the subscription-based Korn Ferry Talent Suite and the Trilogy International acquisition (expanding Interim in EMEA/US) support forward growth and cross-sell; management expects Trilogy to contribute ~$14–$15M in Q3 FY’25 revenue .

What Went Well and What Went Wrong

What Went Well

Profitability inflected higher despite macro softness: operating margin improved to 13.0% (+980 bps y/y), adjusted EBITDA margin to 17.4% (+340 bps y/y), driven by cost discipline and lower restructuring/integration expenses .
Executive Search resilience and leverage: fee revenue +1% y/y, with adjusted EBITDA margin up 530 bps to 24.9% on higher consultant productivity and cost management .
Structural progress in Digital and RPO: Digital subscription/license revenue grew to $34.6M and margin to 31.4% (+150 bps y/y), while RPO margin increased to 14.7% (+460 bps) with $101.1M of new business and a $659M revenue backlog .
“Earnings and profitability increased year over year and sequentially… sixth consecutive quarter of profitability improvement” — CEO Gary Burnison .

What Went Wrong

Demand softness persisted in Professional Search & Interim: fee revenue -13% y/y; interim was the main drag (-17% y/y), consistent with industry-wide weakness and prolonged cyclical abnormality .
Consulting revenue declined 6% y/y with slower drawdown of larger, longer-duration engagements; backlog mix shifted to bigger deals, elongating implementation .
Digital headline revenue was -4% y/y as the business transitions toward subscriptions; timing effects delay revenue recognition despite strong new business .

Financial Results

Metric	Q2 FY2024	Q4 FY2024	Q1 FY2025	Q2 FY2025
Fee revenue ($USD Millions)	$704.0	$690.8	$674.9	$674.4
Diluted EPS ($)	$(0.04)	$1.24	$1.17	$1.14
Adjusted diluted EPS ($)	$0.97	$1.26	$1.18	$1.21
Operating margin (%)	3.2%	12.1%	11.3%	13.0%
Adjusted EBITDA ($USD Millions)	$98.5	$112.3	$111.2	$117.0
Adjusted EBITDA margin (%)	14.0%	16.3%	16.5%	17.4%

Segment fee revenue ($USD Millions)

Segment	Q2 FY2024	Q1 FY2025	Q2 FY2025
Consulting	$177.8	$167.9	$166.8
Digital	$97.1	$88.2	$92.9
Executive Search (Total)	$203.0	$208.6	$206.0
Professional Search & Interim	$138.4	$121.7	$121.1
RPO	$87.7	$88.5	$87.6

KPIs — Consulting

KPI	Q2 FY2024	Q1 FY2025	Q2 FY2025
Ending consultants & execution staff	1,780	1,663	1,646
Hours worked (000s)	431	395	398
Average bill rate ($/hr)	$413	$425	$419
Adjusted EBITDA margin (%)	16.3%	17.5%	17.5%

KPIs — Digital

KPI	Q2 FY2024	Q1 FY2025	Q2 FY2025
Ending consultants	284	259	260
Subscription & License fee revenue ($M)	$32.4	$34.1	$34.6
Adjusted EBITDA margin (%)	29.9%	30.2%	31.4%

KPIs — Executive Search

KPI	Q2 FY2024	Q1 FY2025	Q2 FY2025
Engagements billed	3,488	3,448	3,566
New engagements	1,531	1,556	1,567
Adjusted EBITDA margin (%)	19.6%	23.7%	24.9%

KPIs — Professional Search & Interim

KPI	Q2 FY2024	Q1 FY2025	Q2 FY2025
Interim avg bill rate ($/hr)	$126	$133	$140
Avg weekly billable consultants	1,336	1,068	980
Adjusted EBITDA margin (%)	18.5%	21.1%	22.5%

KPIs — RPO

KPI	Q2 FY2024	Q1 FY2025	Q2 FY2025
Remaining revenue under contract ($M)	$680.5	$656.1	$659.2
New business ($M)	$140.9	$103.6	$101.1
Adjusted EBITDA margin (%)	10.1%	14.1%	14.7%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Fee revenue	Q3 FY2025	N/A	$635M–$665M	New outlook issued
Diluted EPS	Q3 FY2025	N/A	$1.02–$1.16	New outlook issued
Adjusted diluted EPS	Q3 FY2025	N/A	$1.06–$1.18	New outlook issued
Working-day impact (mgmt color)	Q3 FY2025	N/A	3–4 fewer days; ~$30–$40M rev impact (embedded in guide)	New disclosure
Dividend per share	Declared 12/4/24	$0.37 (prior level)	$0.37 payable 1/15/25	Maintained

Note: Q2 FY’25 prior-quarter guidance (from Q1 call) was fee revenue $655–$685M and adj. EPS $1.14–$1.26; the company delivered fee revenue $674.4M and adjusted diluted EPS $1.21 in Q2 FY’25 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2024)	Previous Mentions (Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Profitability discipline	Sequential adj. EBITDA margin improvement; FY’24 Q4 16.3%	Fifth straight sequential improvement; 16.5% margin	Sixth straight improvement; 17.4% margin	Improving margins sustained
Digital strategy/subscriptions (Talent Suite)	Record FY Digital fee revenue; margin 30.7% in Q4	Subscriptions ~39% of Digital fee rev in Q1	Launched Talent Suite; subscription new business 43%; Digital margin 31.4%	Subscription mix rising; platform launch
Macro/seasonality	Management navigating choppy environment	Q2 guide “flattish” given global events	Q3 guide reflects 3–4 fewer business days and Chinese New Year	Near-term seasonal headwinds
Interim demand	FY’24 industry softness; mix shifts	Interim -17% y/y; bill rate +9%	Interim -17% y/y; bill rate +11% to $140/hr	Demand weak; pricing power intact
RPO new logos	FY’24 new business $128M in Q4	Q1 new business $104M; backlog $656M	Q2 new business $101M; 60% new logos; backlog $659M	Pipeline strengthening toward new logos
M&A (Trilogy)	N/A	Strategy includes M&A	Closed Trilogy; ~$14–$15M Q3 rev contribution expected	EMEA Interim expansion underway

Management Commentary

“Earnings and profitability increased year over year and sequentially… our sixth consecutive quarter of profitability improvement.” — CEO Gary Burnison .
“Adjusted EBITDA margin has now increased for 6 consecutive quarters… interim bill rates grew 11% y/y; consulting bill rate ~ $420/hr.” — CFO Robert Rozek .
“Digital new business trends improving… launch of the Korn Ferry Talent Suite… via a subscription-based model.” — CEO Gary Burnison .
“Q3 guidance reflects fewer working days… 3 to 4 days… translating into ~$30–$40M revenue impact.” — CEO Gary Burnison .
“RPO green shoots… November new business ~$70M and largely new logos.” — CEO Gary Burnison .

Q&A Highlights

Seasonality and guidance mechanics: Management explicitly embedded 3–4 fewer working days (holidays/Chinese New Year) into Q3 guide, implying a ~$30–$40M revenue headwind; sequential underlying demand ex-calendar is broadly stable .
Trilogy contribution and Interim strategy: Trilogy expected to contribute ~$14–$15M Q3 revenue; long-term rationale is to expand Interim in EMEA despite cyclical softness; no structural change in Interim demand expected .
Digital transition: Year-over-year revenue decline tied to mix shift toward subscriptions; strong Digital new business (+11% y/y) and platform integration into top HCM providers targeted over the next ~12 months .
Consulting dynamics: Larger $1M+ and $2.5M+ engagements are growing, elongating revenue conversion; clients are slower to consume but not canceling commitments; DE&I specifically called out as softer y/y .
Margin drivers: Pricing, productivity, and active portfolio/resource management (front-office focus); back-office synergies from integrations help at the margin .

Estimates Context

Wall Street consensus from S&P Global for Q2 FY’25 (actual vs. estimates) and Q3 FY’25 (forward) was unavailable via the tool at the time of analysis, so we cannot provide a formal beat/miss comparison. Values would normally be sourced from S&P Global consensus.
Management’s Q3 FY’25 guidance (fee revenue $635–$665M; GAAP EPS $1.02–$1.16; adjusted EPS $1.06–$1.18) sets a baseline for near-term estimate updates as analysts incorporate calendar headwinds and ongoing margin discipline .

Key Takeaways for Investors

Margin expansion story intact: adjusted EBITDA margin reached 17.4% with broad-based productivity and pricing tailwinds; this remains the critical EPS driver into a choppy top-line environment .
Executive Search resilience and operating leverage continue to support profitability; y/y growth with higher margins suggests sustained demand quality (succession, senior mandates) .
Digital pivot to subscriptions plus Talent Suite launch enhances durability and cross-sell; near-term reported growth may lag new business, but margin trajectory and mix quality are improving .
Interim remains cyclical headwind, but rate card strength and EMEA expansion (Trilogy) set up an earnings lever when volume recovers; Q3 includes initial Trilogy contribution .
RPO “green shoots” with rising new logos and improving margins position the segment for recovery as clients shift from internal staffing to outsourced solutions; backlog is solid at ~$659M .
Near-term setup: Q3 revenue/earnings seasonality (fewer days) is well telegraphed; investors should focus on new business flow, subscription momentum, and sustained mid-to-high teens adjusted EBITDA margins as the stock’s primary catalysts .
Capital returns maintained: $32.6M buybacks in Q2 and a $0.37 dividend declared; balance sheet/liquidity remain robust to fund reinvestment and M&A .