Segments | Segments In the past year, the Company has allocated capital to build out its Professional Search and Interim operations through the acquisition of Lucas Group, Patina and Infinity Consulting Solutions ("ICS"). These acquisitions provided the Company with the opportunity to reassess how it manages its RPO & Professional Search segment. Given the Company’s strategy and development of separate financial and operational metrics for the Professional Search & Interim and RPO operations, the Company’s chief operating decision maker began to regularly make separate resource allocation decisions between Professional Search & Interim and RPO. Therefore, on May 1, 2022, the Company changed the composition of its global segments and under the new reporting format, the RPO & Professional Search segment has been separated into two segments; Professional Search & Interim and RPO. Revenues are directly attributed to a segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. Due to this change, the Company completed a quantitative assessment for potential goodwill impairment both prior and subsequent to the aforementioned change and determined there was no goodwill impairment. The presentation of operating results prior to May 1, 2022 has been revised to conform to the new segment reporting. The Company now has eight reportable segments: Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America, Professional Search & Interim and RPO. The Company’s eight reportable segments operate through the following five lines of business: 1. Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is supported by a comprehensive range of some of the world’s leading lP and data. The Consulting teams employ an integrated approach across our core capabilities and integrated solutions, each one intended to strengthen the work and thinking in the next, to help clients execute their strategy in a digitally enabled world. 2. Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities and behaviors to drive businesses forward. The digital products give clients direct access to Korn Ferry proprietary data, client data, and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy. 3. Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. The Company’s approach to placing talent is bringing together research-based IP, proprietary assessments and behavioral interviewing with practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific and Executive Search Latin America). 4. Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. The Company helps clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors. 5. RPO offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enables the Company to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit. Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, Professional Search & Interim and RPO are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, Professional Search & Interim and RPO report directly to the Chief Executive Officer of the Company. The Company also operates Corporate to record global expenses. The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker (“CODM”) review of 1) fee revenue and 2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairment charges). The CODM is not provided asset information by reportable segment. Financial highlights are as follows: Three Months Ended January 31, Nine Months Ended January 31, 2023 2022 2023 2022 Consolidated (in thousands) Fee revenue $ 680,782 $ 680,741 $ 2,104,534 $ 1,905,579 Total revenue $ 686,845 $ 684,956 $ 2,125,712 $ 1,916,452 Net income attributable to Korn Ferry $ 11,247 $ 84,101 $ 162,035 $ 234,696 Net income attributable to noncontrolling interest 522 956 2,885 3,090 Other (income) loss, net (13,097) 7,277 (4,824) (2,236) Interest expense, net 5,378 7,029 20,088 18,820 Income tax provision 8,463 26,927 63,575 76,951 Operating income 12,513 126,290 243,759 331,321 Depreciation and amortization 17,037 16,104 50,359 47,381 Other income (loss), net 13,097 (7,277) 4,824 2,236 Integration/acquisition costs 2,456 3,214 9,472 4,298 Impairment of fixed assets 4,375 — 4,375 1,915 Impairment of right-of-use assets 5,471 — 5,471 7,392 Restructuring charges, net 41,162 — 41,162 — Adjusted EBITDA(1) $ 96,111 $ 138,331 $ 359,422 $ 394,543 ___________________ (1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further excludes integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets, and restructuring charges, net. Financial highlights by reportable segments are as follows: Three Months Ended January 31, 2023 2022 Fee revenue Total revenue Adjusted EBITDA Fee revenue Total revenue Adjusted EBITDA (in thousands) Consulting $ 162,155 $ 164,414 $ 23,305 $ 162,889 $ 163,824 $ 28,556 Digital 85,071 85,087 22,153 90,194 90,501 28,142 Executive Search: North America 132,810 134,255 30,446 152,597 153,454 45,702 EMEA 48,960 49,195 7,981 47,509 47,666 8,080 Asia Pacific 22,621 22,694 5,538 31,425 31,448 9,451 Latin America 7,654 7,658 2,462 7,468 7,470 2,484 Professional Search & Interim 117,980 118,616 21,969 90,015 90,198 31,344 RPO 103,531 104,926 9,849 98,644 100,395 12,765 Corporate — — (27,592) — — (28,193) Consolidated $ 680,782 $ 686,845 $ 96,111 $ 680,741 $ 684,956 $ 138,331 Nine Months Ended January 31, 2023 2022 Fee revenue Total revenue Adjusted EBITDA Fee revenue Total revenue Adjusted EBITDA (in thousands) Consulting $ 501,731 $ 508,994 $ 83,944 $ 476,260 $ 478,563 $ 85,458 Digital 263,161 263,479 73,855 259,504 259,894 82,330 Executive Search: North America 426,839 431,286 112,164 449,472 451,836 137,939 EMEA 140,661 141,443 24,577 132,690 133,080 23,328 Asia Pacific 72,410 72,669 18,723 88,385 88,447 25,972 Latin America 23,283 23,289 7,686 20,815 20,821 6,204 Professional Search & Interim 351,670 354,430 83,587 196,411 196,832 72,608 RPO 324,779 330,122 43,562 282,042 286,979 41,726 Corporate — — (88,676) — — (81,022) Consolidated $ 2,104,534 $ 2,125,712 $ 359,422 $ 1,905,579 $ 1,916,452 $ 394,543 |