KORN FERRY (KFY) Q3 2025 Earnings Summary

Executive Summary

Q3 FY’25 fee revenue was $668.7M, flat YoY (+2% constant currency), with adjusted EPS of $1.19 and adjusted EBITDA margin expanding 190 bps YoY to 17.1% . Executive Search and RPO grew while Consulting declined; disciplined cost management sustained margins .
Versus Wall Street consensus (S&P Global), KFY delivered a revenue beat and an adjusted EPS beat: $668.7M vs $650.4M and $1.19 vs $1.13; GAAP EBITDA underperformed consensus due to non-GAAP adjustments excluded by SPGI estimates (see Estimates Context)*.
Q4 FY’25 guidance: fee revenue $680–$700M; GAAP diluted EPS $1.20–$1.28; adjusted diluted EPS $1.22–$1.30 . The Board raised the quarterly dividend 30% to $0.48, the fifth consecutive year of increases .
Potential stock catalysts: dividend step-up, continued margin strength, positive inflection in Executive Search and RPO activity, and visible Q4 outlook .

What Went Well and What Went Wrong

What Went Well
- Executive Search fee revenue rose 3% YoY to $204.6M with adjusted EBITDA margin +320 bps to 25.0% on higher engagements billed and productivity .
- RPO fee revenue +4% YoY; new business surged to $209.9M (≈65% new logos), remaining revenue under contract reached $752.4M; margins +360 bps to 15.0% .
- Management emphasized diversification and productivity: “Adjusted EBITDA increased 13% YoY to $114M…adjusted EPS increased 11% to $1.19” .
What Went Wrong
- Consulting fee revenue fell 5% YoY to $158.7M; slower client consumption and a mix shift to larger, longer-duration engagements weighed on near-term revenue .
- Professional Search & Interim was flat YoY at $130.0M; industry-wide slowdown in Permanent/Interim demand, partially offset by Trilogy acquisition .
- SPGI GAAP EBITDA came in below consensus despite company’s stronger non-GAAP performance, highlighting a measurement mismatch and non-recurring items (impairments, restructuring) affecting GAAP comparability *.

Financial Results

Metric	Q3 FY’24	Q2 FY’25	Q3 FY’25
Fee revenue ($USD Millions)	$668.7	$674.4	$668.7
Total revenue ($USD Millions)	$676.9	$682.0	$676.5
Net income attributable to KFY ($USD Millions)	$59.1	$60.8	$58.4
Diluted EPS ($USD)	$1.13	$1.14	$1.10
Adjusted diluted EPS ($USD)	$1.07	$1.21	$1.19
Adjusted EBITDA ($USD Millions)	$101.7	$117.0	$114.5
Adjusted EBITDA Margin %	15.2%	17.4%	17.1%

Segment fee revenue

Segment Fee Revenue ($USD Millions)	Q3 FY’24	Q3 FY’25
Consulting	$166.9	$158.7
Digital	$90.3	$90.8
Executive Search (Total)	$199.3	$204.6
Professional Search & Interim	$130.9	$130.0
RPO	$81.2	$84.7

Segment adjusted EBITDA margins

Segment Adj. EBITDA Margin %	Q3 FY’24	Q3 FY’25
Consulting	16.7%	17.7%
Digital	30.3%	31.3%
Executive Search (Total)	21.8%	25.0%
Professional Search & Interim	18.2%	21.0%
RPO	11.4%	15.0%

KPIs and operating metrics

KPI	Q3 FY’24	Q3 FY’25
Consulting hours worked (000s)	381	344
Consulting avg bill rate ($/hr)	$438	$461
Digital subscription & license fee revenue ($USD Millions)	$32.8	$34.5
Exec Search engagements billed	3,469	3,540
PS&I Interim avg bill rate ($/hr)	$129	$129
PS&I avg weekly billable consultants	1,283	1,324
RPO remaining revenue under contract ($USD Millions)	$695.8	$752.4
RPO new business ($USD Millions)	$122.1	$209.9

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Fee revenue ($USD Millions)	Q4 FY’25	N/A	$680–$700	New
Diluted EPS ($USD)	Q4 FY’25	N/A	$1.20–$1.28	New
Adjusted diluted EPS ($USD)	Q4 FY’25	N/A	$1.22–$1.30	New
Tax rate impact (per share)	Q4 FY’25	N/A	$(0.01)	New
Quarterly dividend per share ($)	Q1 CY’25 payout	$0.37 (Dec 2024)	$0.48 (Apr 15, 2025)	Raised 30%

Earnings Call Themes & Trends

Topic	Q1 FY’25 (Prior-2)	Q2 FY’25 (Prior-1)	Q3 FY’25 (Current)	Trend
AI/technology productivity	Investing in productized IP; launch of Korn Ferry Talent Suite; bill rates rising	Talent Suite pipeline strong; single sign-on integration underway	Expect more delivery productivity from Gen AI; continued investments	Improving execution narrative
Consulting mix/consumption	Organizational strategy +10% YoY; bill rate +8%	Larger $1M+ contracts, slower client drawdown	Larger engagements lengthen conversion; backlog at highs; slower discretionary demand	Longer-duration mix persists
Executive Search	Return to growth; NA +6%	Unit counts up; margin strength	NA growth +5.6% YoY; unit counts up; peak-65 demographic cited	Strengthening
RPO	Stable; strong pipeline	$101M new awards; 60% new logos	$209.9M new business; 65%+ new logos; under-contract revenue $752.4M	Accelerating
Interim/Pro Search	Demand challenged; interim −17% YoY; rate +9%	Interim −17% YoY; avg bill rate $140	Industry-wide slowdown; Trilogy acquisition offset; focus on high-end	Stabilizing off lows
Macro/tariffs/cost of living	Multi-quarter reset; cautious outlook	Fewer working days seasonal headwind; green shoots in RPO	Tariff uncertainty; cost-of-living impacts; demographic supply/demand imbalance	Mixed; cautious but constructive

Management Commentary

CEO Gary Burnison: “Our execution has been outstanding…we continue to see demand for organizational and workforce transformations that are larger in scale and scope,” highlighting wins across energy, global employers, and insurers that “illustrate the breadth and scale of today’s Korn Ferry” .
CFO Robert Rozek: “Adjusted EBITDA increased 13% YoY to $114M…adjusted EPS increased 11% YoY to $1.19,” with new business +13% YoY and strong cross-solution referrals .
Strategy and outlook: “We expect fee revenue in Q4 FY’25 will range from $680M to $700M…consolidated adjusted diluted EPS $1.22 to $1.30,” underscoring confidence despite macro uncertainty .
Dividend signal: “We will increase our quarterly dividend…which is the sixth increase in our dividend in the last 5 years,” reinforcing balanced capital allocation .

Q&A Highlights

Productivity drivers: Management pivoted to more profitable work; consulting hourly rate rose to $461; interim at $129; productivity up ~35–40% vs pre-pandemic; future gains expected from Gen AI .
RPO momentum: ~2/3 of new business from new logos; strength in health care and marquee/diamond accounts; under-contract revenue visibility improved .
Digital volatility: Quarter-to-quarter “ebbs and flows” tied to prior large licensing deals; overall stability amid tough environment .
Macro and demographics: Peak-65 retirements and cost-of-living dynamics seen as structural drivers of Executive Search and talent solutions demand; tariff/macro uncertainty noted but not expected to materially pull back hiring .
Consulting backlog: Record backlog with higher share of $500k+ and $1M+ engagements; slower conversion due to client pacing; fewer business days also impacted seasonality .

Estimates Context

Results vs S&P Global Wall Street consensus (consensus and actual shown; an asterisk indicates values retrieved from S&P Global)*

Metric	Q2 FY’25 (Consensus/Actual)	Q3 FY’25 (Consensus/Actual)
Revenue ($USD Millions)	$675.35M* / $674.37M	$650.45M* / $668.73M
Primary EPS ($USD)	$1.213* / $1.21	$1.129* / $1.19
EBITDA ($USD Millions)	$111.71M* / $103.56M*	$109.87M* / $98.82M*

Q3 FY’25: Revenue and adjusted EPS beat consensus (bold beat), while GAAP EBITDA missed SPGI consensus due to non-GAAP adjustments (impairments, restructuring) excluded from SPGI’s EBITDA actuals; company-reported adjusted EBITDA was $114.5M, up 12.6% YoY *.
Q2 FY’25: Results were essentially in line on revenue and EPS; adjusted EBITDA margin expanded to 17.4% .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Mix resilience and margin discipline: Despite Consulting softness, diversified growth in Executive Search and RPO, and higher bill rates, continue to support mid-to-high teens adjusted EBITDA margins .
Demand visibility improving: RPO under-contract revenue rose to $752.4M and new business surged with majority new logos, signaling potential revenue conversion over the next four quarters .
Dividend signal: 30% quarterly dividend increase ($0.48) conveys confidence in cash generation and balanced capital returns .
Near-term setup: Q4 fee revenue guide $680–$700M and adjusted EPS $1.22–$1.30 provide a constructive bridge; watch execution in Consulting backlog conversion and continued Search unit strength .
Structural tailwinds: Peak-65 retirements and talent supply/demand imbalances likely to underpin Executive Search and broader talent solutions; company continues investing in AI/tech to enhance productivity .
Watch the measurement gap: SPGI’s EBITDA framework (GAAP) vs company’s adjusted EBITDA can obscure underlying margin momentum; focus on non-GAAP reconciliation for operational performance .
M&A/Integration: Trilogy adds interim capacity in EMEA; management prioritizes higher-end interim and marquee accounts to drive profitability and cross-referrals .