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KORN FERRY (KFY) Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY’25 fee revenue was $712.0M, up 3% YoY (4% cc), with adjusted diluted EPS of $1.32; both Revenue and EPS exceeded S&P Global consensus, driving a clean beat and supportive near-term sentiment . Revenue consensus: $689.9M*; EPS consensus: $1.26*.
  • Executive Search delivered standout growth (+14% YoY to $227.0M) with higher engagements billed and improved productivity; RPO and Digital were modest positives, while Consulting declined on longer-duration engagements and slower client consumption .
  • FY’25 adjusted EBITDA margin expanded to 17.0% (+70bps YoY in Q4) on disciplined cost management; Q1 FY’26 guidance implies fee revenue of $675–$695M and adjusted diluted EPS of $1.18–$1.26, indicating stable momentum into the new fiscal year .
  • Management emphasized multi-solution engagement and monetizing Korn Ferry’s IP via Talent Suite and ecosystem partnerships as medium-term catalysts; estimated remaining fees under existing contracts reached ~$1.7B (+12% YoY), underscoring demand durability .

What Went Well and What Went Wrong

What Went Well

  • Executive Search strength: Fee revenue +14% YoY to $227.0M; adjusted EBITDA margin +100bps to 23.9%, driven by more engagements billed and higher weighted-average fees; broad-based growth across NA/EMEA/APAC .
  • Strong profitability: Adjusted EBITDA $121.1M (+8% YoY), margin 17.0% (+70bps YoY), reflecting cost discipline and productivity gains .
  • Demand visibility: New operating metric “estimated remaining fees under existing contracts” totaled ~$1.7B, with ~57% expected to be recognized within the next year (confidence in forward revenue) .
  • Management quote: “Our strategy is working…The breadth of our solutions provides more durable and synergistic revenue, offering really a growth foundation for tomorrow.”

What Went Wrong

  • Consulting softness: Fee revenue down 7% YoY to $169.4M; adjusted EBITDA margin -60bps to 17.2%; mix shifted to larger, multi-year engagements and slower client consumption .
  • PSI mixed: Professional Search & Interim fee revenue +1% YoY (Interim helped by Trilogy acquisition) but margin -80bps to 21.0%; permanent placement remained pressured by industry-wide demand slowdown .
  • Macro headwinds: Management highlighted a “cost of living crisis,” limited corporate pricing power, lower turnover, and an anemic labor market environment impacting near-term velocity of spend .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ2 FY’25Q3 FY’25Q4 FY’25
Fee revenue ($USD Millions)$674.365 $668.729 $712.048
Total revenue ($USD Millions)$681.960 $676.538 $719.827
Diluted EPS (GAAP) ($)$1.14 $1.10 $1.21
Adjusted diluted EPS ($)$1.21 $1.19 $1.32
Adjusted EBITDA ($USD Millions)$117.0 $114.5 $121.1
Adjusted EBITDA Margin (%)17.4% 17.1% 17.0%
Net income attributable ($USD Millions)$60.8 $58.414 $64.244

Segment Fee Revenue

Segment Fee Revenue ($USD Millions)Q2 FY’25Q3 FY’25Q4 FY’25
Consulting$166.771 $158.704 $169.363
Digital$92.893 $90.823 $91.634
Executive Search (Total)$205.999 $204.571 $227.003
Professional Search & Interim$121.107 $129.957 $130.710
RPO$87.595 $84.674 $93.338

KPIs and Operational Metrics

KPIQ2 FY’25Q3 FY’25Q4 FY’25
Consulting average bill rate ($/hr)$419 $461 $454
Digital subscription & license fee revenue ($USD Millions)$34.6 $34.5 $34.5
Executive Search engagements billed (#)3,566 3,540 3,827
PSI Interim average bill rate ($/hr)$140 $129 $131
RPO remaining revenue under contract ($USD Millions)$659.2 $752.4 $758.0
Consulting remaining revenue under contract ($USD Millions)——$367.7
Digital remaining revenue under contract ($USD Millions)—$364.4 $392.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Fee revenueQ4 FY’25$680–$700M $712.0M actual Beat
Adjusted diluted EPSQ4 FY’25$1.22–$1.30 $1.32 actual Beat
Fee revenueQ1 FY’26—$675–$695M New
Diluted EPS (GAAP)Q1 FY’26—$1.16–$1.24 New
Adjusted diluted EPSQ1 FY’26—$1.18–$1.26 New
Adjusted EBITDA marginQ1 FY’26—~16.8%–17.2% (implied) New
DividendsQ4 FY’25—Paid $25M Reported

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4 FY’25)Trend
AI/Technology & Talent SuiteTalent Suite launched; investing in platforms/tools . Digital steady; subscription & license revenue healthy .Fourth Talent Suite release; plan to integrate with major CRM; focus on monetizing vast IP/data .Strengthening product roadmap and monetization focus
Macro/cost of living/pricing powerDemand declines impacted Consulting/PSI; economic environment cited .Emphasized cost of living crisis; limited pricing power; low employee turnover dampens labor dynamism .Persistent headwinds
Product performance (Exec Search)ES +1% YoY Q2 , +3% YoY Q3 .ES +14% YoY Q4 with higher engagements and fees per engagement .Accelerating
Regional trendsNA modest exec search increase; EMEA/APAC mixed .Americas flat (cc), EMEA +9% (cc), APAC +8% (cc) across solutions .Improving ex-Americas
RPO pipeline/new businessNew business $101.1M Q2 .$118.8M Q4, 77% new logos; fee revenue +4% YoY .Solid, diversified
Consulting engagement mixLarger engagements elongate revenue conversion .Continued shift to multi-year transformative engagements; slower consumption noted .Longer-duration mix persists
Supply chain/tariffs/macro shocks—Analyst Q on tariff headlines; management notes uncertainty and variability by month; May > April; April ~ March .Volatile backdrop

Management Commentary

  • Strategic posture: “Our strategy is working…The breadth of our solutions provides more durable and synergistic revenue…foundational focus on technology, AI…bundling services and IP.”
  • Profitability and visibility: CFO highlighted adjusted EBITDA +8% YoY to $121M and a 70bps margin expansion; introduced ~$1.7B “estimated remaining fees under existing contracts,” ~57% expected within a year .
  • Regions and capital allocation: Americas flat (cc), EMEA +9% (cc), APAC +8% (cc); $173M returned to shareholders in FY’25 via buybacks/dividends; continued investment in Talent Suite and selective M&A (Trilogy) .
  • Non-GAAP adjustments: Q4 included $4.6M management separation charges and $1.7M integration costs; adjusted EPS excludes these items (adds ~$0.09/share for separation charges) .

Q&A Highlights

  • New business cadence and macro: May stronger than April; environment described as “recessionary” over seven quarters; uncertainty episodic with geopolitical headlines .
  • Consulting dynamics: Larger, multi-year transformative engagements (often seven figures) extend consumption periods, weighing near-term revenue recognition .
  • Digital strategy: Emphasis on ecosystem/channel partners, organizational mindset shift to “one business” with five solutions; early days of new roles (global account leaders/client service partners) to drive cross-solution penetration .
  • Monetization of IP: Management sees IP licensing as the key wildcard for scalable financial impact; vast data assets cited; focus on seamless user experience .
  • Balance sheet and capital returns: Investable cash ~$675M; balanced deployment across organic investments, M&A, buybacks, and dividends .

Estimates Context

  • Q4 FY’25 vs S&P Global consensus: Revenue $712.0M vs $689.9M* → Beat; Adjusted diluted EPS $1.32 vs $1.26* → Beat .
  • Q3 FY’25 vs consensus: Revenue $668.7M vs $650.4M* → Beat; Adjusted diluted EPS $1.19 vs $1.13* → Beat .
  • Q2 FY’25 vs consensus: Revenue $674.4M vs $675.4M* → Inline; Adjusted diluted EPS $1.21 vs $1.21* → Inline .

Values marked with * retrieved from S&P Global.

Consensus vs Actual Detail

MetricQ2 FY’25Q3 FY’25Q4 FY’25
Revenue Consensus Mean ($USD Millions)675.35*650.45*689.89*
Revenue Actual ($USD Millions)674.37 668.73 712.05
Beat/(Miss) Revenue ($USD Millions)(1.0)18.322.2
Primary EPS Consensus Mean ($)1.213*1.129*1.260*
Adjusted Diluted EPS Actual ($)1.21 1.19 1.32
Beat/(Miss) EPS ($)(0.00)0.060.06

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Korn Ferry delivered a double beat in Q4 (Revenue and adjusted EPS), with Executive Search the key engine and RPO/Digital supportive; Consulting softness is mix- and consumption-driven rather than demand deterioration .
  • Near-term setup: Q1 FY’26 guidance implies a stable revenue/EPS trajectory and margins around ~17%, suggesting continuity of profitability discipline despite macro volatility .
  • Medium-term catalysts: Monetization of IP via Talent Suite (now on its fourth release) and ecosystem partners could unlock scalable earnings power beyond services; watch for CRM integrations and subscription uptake .
  • Demand durability: ~$1.7B estimated remaining fees under existing contracts (57% next 12 months) supports revenue visibility; multi-solution penetration (marquee/diamond accounts ~39% of fee revenue) is an enduring advantage .
  • Mix shift implications: Larger, multi-year consulting engagements elongate conversion and can suppress near-term revenue but enhance durability and margin quality; investors should look through quarterly volatility .
  • Capital allocation: Balanced returns (~$173M in FY’25) plus M&A (Trilogy) and tech investment (Talent Suite) indicate a disciplined approach—supportive of TSR and strategic capability build .
  • Trading lens: Given consistent beats and a strengthening narrative in Executive Search and RPO, positive estimate revisions are likely; watch Consulting consumption trends and Digital subscription metrics as incremental signals .
Notes on non-GAAP:
- Adjusted EBITDA and adjusted EPS exclude integration/acquisition costs, impairments, restructuring charges, and management separation charges; Q4 included $4.6M separation and $1.7M integration, adding ~$0.09 to adjusted EPS **[56679_0001628280-25-032010_kfy-20250430xex991q4fy25.htm:1]** **[56679_0001628280-25-032010_kfy-20250430xex991q4fy25.htm:11]** **[56679_0001628280-25-032010_kfy-20250430xex991q4fy25.htm:12]**.

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