Earnings call transcript Q3 2023

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry Third Quarter Fiscal Year 2023 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.

We have also made available in the Investor Relations section of our website at kornferry.com, a copy of the financial presentation that we will be reviewing with you today.

Before we turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Securities the plans such statements and meaning the in to those within made of of performance, Act future goals, Private statements call as today, relating the XXXX. Certain Reform Litigation constitute forward-looking

of materially Although or Actual forward-looking are number the are periods results a are not in based such reliance desired undue differ investors statements to assumptions, future company place control. and expectations from reasonable on risks in expected uncertainties the the cautioned beyond believes because those reflected currently on such of may statements. which company's

company's Additional amounts, and year uncertainties and the report some for the in XXXX. in XX, such with to non-GAAP filed information financial presentation as and XXXX company's ended release annual quarterly periodic company measures today concerning reference be including Also, reports quarter other risks the can be SEC, report may the this EBITDA fiscal the by and such relating soon adjusted to currency and the EBITDA. found the for January of comments the filed constant

and information release call, these are Additional the company's in to financial presentation www.kornferry.com. measure to including the relating is the concerning contained reconciliations Relations both financial the of comparable section of directly this in most measures, which Investor GAAP posted earnings website at

Burnison. ahead, Gary. go to Please I'll that, Gary call the With over turn

Gary Burnison

I'm Number in Thanks, proud everybody. light Greg us. macroeconomic for our one, the environment. very Okay. third and afternoon, performance, of good of joining quarter particularly Thanks

economy incredibly and clients enable well and scale IP we the to in are data our depth our our to of transition. and Given navigate an breadth positioned content,

We're generating fee cyclical clients markets synergistic to success. working. Executive up our businesses is in Search for that the revenues. that We've less more are to around our set and faster-growing, investment prioritize Our firm continue larger, built durable going strategy

is a ground strategy, firm's of more to And like most might it As proving the the efficiency transitory brings this now yes, revenue a others of forma basis. our an for a year also Services us XX% Korn addition but recent the pro than colleagues Interim on This in this even our ago. downturn strength past, example, the the opportunity. resilience brand. be brings a for And anticipated wasn't also of of Salo be our It's Ferry and our ever potency the our the of the culture, of time. a business

you. it I'll Bob, to that, turn With over

Bob Rozek

and Great. Thanks, good everyone. and Gary afternoon good morning,

continue growth provide Our strategy our working. the to results proof quarter that third is in

ability we synergies to instance, continue to For demonstrate the drive solutions. line between top our

of acquired our real example, third between outsized which entities in the XXX an revenue growth, an Ferry. additional they since engagement million incremental 'XX space Lucas all And this created is in $XX provides when the the believe As quarter acquired we have Interim the and almost resulting Korn we for in opportunities acquisitions fee Group. year fiscal through wins cross-sales legacy recent

very business with resonated I well I XXth in the more Cross-sells our the I me deeply company today. joined accounts, the to my perform in and And continue regional other and Ferry. between year was of both both our strategy. quarter. believe also and it of It celebrated why reasons one recently really growth the marquee lines Korn with

and today. of Korn even go-to-market so it do premier solutions-based talent advancing We strategy. strategy, Ferry the to as unparalleled I growth we're pursuing brand, client destination at delivering career continues strategy the excellence, XXXX Ferry extending transformational served intersection when us are back more and and opportunities Korn relentlessly driving well an This integrated in the and joined

financial the through me some -- company the of you highlights. overall take Let will company turn Gregg, who to call over

Gregg Kvochak

Okay. Thanks, Bob.

Interim up remained our was currency, revenue fee Executive $XXX demand up Digital, to flat Turning up Fee X%. & constant from was at at By X%. Executive revenue down our and of Measured and highs was the in relatively currency. was X% mixed million financial Professional quarter post-pandemic was businesses, stable. was RPO from Digital while recovery search and constant line which year-over-year while flat Consulting currency, X%, Including Search RPO business, acquired at Search was year-over-year recently Solutions for -- Consulting, professional Interim and XX% revenue quarter essentially placement moderated was as constant up third results. permanent Search

at extent, million in third investments adjusted were except X% with guidance. wage with lines EBITDA lower-margin execution a In capacity profitability of our which Executive EBITDA fee new XX% Earnings and with approximately In lesser $XX and was an adjusted constant fee third and of business, rates, in was business, growth shift actual margin the quarter, an up consolidated in overall by the revenue was Search. year-over-year impacted at mix currency inflation. to line X% all business up RPO lines excluding quarter, and earner in to of

GAAP third diluted impairment per excludes fully $X.XX certain our earnings in quarter per real earnings or down realignment the workforce after-tax charge or an XX% of $X.XX of earnings diluted were share $X.XX per share which the in share and third year-over-year. was fully estate were Adjusted per to $X.XX. of quarter diluted related $XX assets. the share the million Adjusted fully

Our capital investable strong cash position be deployment and continue balanced. remains current to our

about through of and stock, repurchased the our quarter, of approximately For product development the business directed which of $XX million for $XX $XX million, million third digital fiscal business. of was most towards approximately end million of initiatives expenditures, 'XX, cash we dividends our $XX deployed paid acquisitions all funded capital of for

Tiffany review With turn the now operating more segments detail. call to over in to I'll that, our

Tiffany Williams

million, of or $XX million the at for XX% year-over-year XX% Thanks, Digital sales. revenue the revenue flat down million Gregg. Digital approximately Starting with and was revenue KF for fee currency. was which the with Digital, fee global the quarter. approximately was $XX business was in new of and third in million X% license which license total third quarter was Global $XX and subscription constant quarter $XXX subscription KF fee

the in quarter profitability SG&A. investment slight by uptick initiatives development in product and a and impacted in Earnings were

For Fee Consulting, constant which quarter at the fee growth up prior million was strongest XX% and revenue year. currency. grew to approximately organizational $XXX which X% flat was third versus in revenue grew year-over-year in strategy

Additionally, third business year-over-year the at Consulting global constant X% new in was for quarter up currency.

or of part acquisitions quarter segment. business new Interim the versus to Interim period. million million, by the million and and portion growth Permanent in million by constant time revenue increased placement from permanent recent down North over the the actual same revenue by prior at in ICS. was & $XX Search -- $XX Professional to Services year, year-over-year, $XX million year the offset fee quarter, fee the in year, million driven business current deceleration Breaking the XX% grew to of than the fee Total of by at more quarter in was aided XX% last $XX double-digit the $XXX expected down the placement acquisitions. driven same declined Patina revenue currency. XX% up in The down third America, strength business in the enough XX% $XX interim

to recruitment on process Moving outsourcing.

totaled contract at the total New or revenue $X the RPO currency. some win business tech-enabled these $XXX X% of strong of approximately which X% volume The for approximately million strong new new by growth remains under year-over-year The over differentiated last in the third million variety to offset base end from a up for $XX business and a business markets wins quarter continues the million offering in the at few seen the Fee volume up moderation the pipeline positioning as of and was $XXX quarter was across the RPO solution and quarters, was industries. constant revenue million. moderation

of year. offset global XX% Finally, Executive Executive X% currency. quarter for at experienced million the revenue currency in America a XX% as the was pandemic business APAC. during to was the compared new year-over-year constant down Search high in year-over-year the at growth North third enjoyed last constant and and demand expected, fee in rate Growth in Global by and quarter approximately recovery $XXX third down slower was Search for EMEA decline

the discuss for fiscal back now Bob I will of outlook 'XX. turn to to over the call quarter fourth our

Bob Rozek

Great. Tiffany. Thanks,

no or financial foreign assuming in million. geopolitical from the quarter fourth in fiscal conditions, and economic range rates, $XXX $XXX changes major new markets conditions, worldwide further of fee to revenue pandemic-related 'XX Now expect lockdowns exchange to million we

to adjusted EBITDA to range diluted Our margin consolidated XX% earnings our $X.XX. share and adjusted per $X.XX from be to approximately

per we $X.XX. range our earnings fourth from $X.XX diluted to quarter GAAP share in Finally, expect to the

the both organizational organizational in term solutions ensure strongly solutions, continue we closing, the and and our we and in offerings Now term. find to consultancy that diversified their our well as for the challenges long have talent built for will differentiated clients as believe near

be would you to glad may any have. With answer questions we that,

Operator

[Operator of Instructions] Tong Sachs. comes from Your first George line the question from Goldman

George Tong

you trends into of Can how early have And as performed month discuss new in the well business if the March? you insight any February? of month

Gary Burnison

you that? Bob, do do to want

Bob Rozek

Yes. Sure.

another excluding February trends about came expected right the when the out closed where to we X%, in month RPO, RPO million a did in year-over-year. of X% They good business in -- to it February. had in it Our George, up new actually this be about was close business it business the good month. up new really month we new and $XX was month

X talk about days only we now. it too X it's really For in March, got or early as to

there's times, not towards tends say the comes really way more it the of So to at month. much is that business the end to come in, new the

any would to it premature insight be give So probably yet. you into March too

George Tong

then, Digital Okay, got side... And it. helpful. That's

Bob Rozek

line third say would in month going were the we're patterns I in to other Yes, by the is what was that business. saw February quarter exactly we I seeing the the thing of of add

George Tong

helpful. be drivers behind expect growth the this year-over-year digital currency business. in fiscal and constant moderated That's growth you the XX% growth XQ. XQ for it. what at Revenue elaborate on roughly this the growth the in Got there reacceleration change from acceleration? Can gears growth quarter, you when will reasons flat Switching in fiscal to

Gary Burnison

a and that of long-term drivers. around developing then building. of that drivers our The medium anchored Well, we're long-term is competencies revolve that -- IP is medium- the technologies developmental around think like. there's some tech I success drivers platform and of couple with our short-term using the to library to a our there's set And

the long medium increase one to will that's term. factor that So

The our we're to the extent within IP. that ecosystem successful at in bringing our to second distribute is partners

you mention when within at months. look X is third channel, relatively you in last, the that the digital force force new our almost the thing X The sales would to I sales that have of to remember is call it, XX%

to for it ramp takes up. so time And those naturally people

back that moving going model. also that really couple I'd of ago to years we And years is a point a but made a business out shift X.X SaaS

say, back, under $XXX ago, go year, you and backlog contract was kind that was X.X subscription at probably years look a revenue you when so And the of million.

Now it's up million. to $XXX about moved

to there's model. so we've been the more X that recognizing a immediately And sustainable over from that massive X business in years revenue made business to shift creating a last

So you major, don't necessarily but happening. there's see revenue major in a the that transformation

obviously, say environment is thing quarter it the were the we our from of the around I'd watching final is then, And on that getting assessment. particularly things in everybody technology that, back us, And this last costs. they digital it's of business clients saw cutting some an in where some from

short factors that I those on to medium basis. would both think to I long-term a are the look So and

Operator

Securities. of comes question the next Truist Sommer Tobey from Your from line

Jasper Bibb

This Bibb for is Jasper on Tobey.

guidance. quick two the Just on questions clarification

of guidance, XQ margin. Salo it much impact the program revenue from the incremental the is is then reflect how And guidance? restructuring the full secondly, in First on

Gary Burnison

why quarter. million the $XX fourth about incremental for incremental in revenue of the the cost. we're Salo expecting don't handle you quarter Bob, And in

Bob Rozek

the then talked positions spent $XX plan million we of you out and We what we're to search in our earnings for estate spent in somewhere million $XX know, would $XX exec is real we margin also to call. the the in taking the guidance, us. of on executed perm get And about Yes. But We terms going that between reducing footprint. for EBITDA last approximately professional high is that, million the And terms yielding call the for we're in placement the business. saves. continued forecasting I range in as search what moderation fourth quarter the

to the fee client and our terms business we continues some consume continue Digital. that meet savings. the to we're that of -- we're we're that the capacity as will also well as reinvesting making made going as into so of that into accelerate And back to to earners demand in And delivery in decline, investments

to start to again. out. the then And starts the those then perm recover, so pop business margins out and of troughs net will come placement And back come as see we'll and portion the up

Jasper Bibb

down pretty threshold eventual sense. how about makes If on $X.X a an search in levels. for keeping managing That the continues this in versus demand with productivity, soften to million pre-COVID should think that And line to segment, much quarter, cyclical to rebound? we consultant capacity then productivity

Gary Burnison

our Well, in we're to maintain right at capacity. view our where the search capacity. hold consulting positioned businesses and look to business, now, when digital you business our And is

what million, will if depends likely But obviously, capacity. happens my And is here right now falls, the the so maintain it economy. that $X.X on decline. really demand But orientation to with

Jasper Bibb

part margin could how via the Got that. feasible me. still should think we of the your recent margin speak of for it. you think one to EBITDA your as and was targets. increased Last maybe acquisitions, long-term business about long-term gross exposure interim I changing are profile I hoping those the

Gary Burnison

Yes, it's a great question.

look, -- business think number one, was exist. that I didn't a this it

And how ways going And aging meaningful is work in time that change flexibility professionals society. with and to looked to world an still population, but so contribute the in during boomer and the wanting said, want full their to around maybe want [indiscernible] pandemic, people didn't more baby we to life.

purposefully of a And market. go the no now so XX $X a taken will us. $XXX that we've span in this This There's And it. to billion into about very months. X about now million, from said for sure, million we be, of let's run business for question $XXX basically rate

these be and cyclical proven think There's of is that no than, profile bigger Executive Search, the that do less I have say, to we it. as going time business address over margin the about legacy to Now we change. markets doubt

just of we same everything we get the But talking you're margin are basis were really business And -- this. shift. not same. impact probably I you and did, that. can Bob, think have excited can describe about we But quantitative stay would going -- to the Bob this if XXX $X But billion can to I to is the if XXX points which it we a of think else which we

cross deeper with We deeper meaning, are clients. of of to levels ways impact seeing incredible create referrals

think mean, call. business I is so this executive now going search strategy, of earnings I search the that my And like overall, day and when the I'm much was entire started, is today the back XX% I And executive X, do to XXth essentially company.

demonstrated platform a impact organizations of that we're what a client And that that. people's And think more has And more we've shareholders. you -- numbers. I terms that the sort margin. provides some more can months But on in business see also now is people lives over changes we've stable several company building in what's enables much for Bob, more and to you it last the maybe the And quantitative just of in comment economic it can see the barring happening, of the you of could disaster. it aspect new be

Bob Rozek

Sure.

would say, -- you with businesses, goal we go when we've about, through and a as kind have I as plug these that's around the company come of know, margin. And they our Jasper, integration, play. got X% we generally So built buy EBITDA

stability the time. bring plugging for synergies growth over the So just And our we're our us easily those -- the the network. to, trade-off XX% XX% goal for margins to is as fairly cost able that and is opportunity up the for range to to companies acquired streams in revenue margin to to the And alluded take Gary organization. get by those into

Operator

question line Your Marc comes from from of Sidoti. the next Riddick

Marc Riddick

maybe a driving standpoint beyond have about couple haven't noticed there that that and changed over it's over some recessionary talking have the that little bit trends could bit or up you if talk I'm some there few of thinking changes maybe areas last about wondering some any last whether have demand demand particular of particular maybe Are were -- shifted, of specifically in or impact? of sort years. months the that the if sort talking things been was drivers the things picked about or any about were waned of I you've that a of a that from particular So we

Gary Burnison

certainly year-over-year, XX%. When has up industrial and been industrial is a change. spot about a Well, look been I bright that's

the the that's summer, it's August Clearly, summer, hawkish, by of of almost at Fed So banks central clearly XX% the good, last going certainly considering at company's move to particularly more the end cost. of -- last that's become back portfolio. with companies are their and to looking

you after upswing hiring. that moderated And terms of was pandemic is And so the expect, this and we've exactly as there that's massive what would seen. in

parts People our still pandemic. jobs the moderation out seen It's of wages. of it's not X%. were probably we've they XX% at growth So levels. are are -- in the elevated uptick business. is getting like recruiting jumping what a Wage getting perm in It's that more coming X%,

And that to the that perm Fed. day or yesterday I going so clearly before And the would side, has the that, expect by the moderated. moderation is particularly continue comments given on

like up degradation I a business, The And amount. held of incredibly some is the business it's it we've has, well. always seen nominal mean, base the kind RPO yes, of

basis, Going industrial last digital digital care. just fall, consulting And picked it you X%. both back and Consulting some X%, was the also a was new technology the the and and business enormous quarter, up up at But look around to then on the was health in we've area wins, in up constant sector. currency business

out basically absolutely the I strategy mean -- it's designed. is it's strategy the mean, I -- of as kind really playing So it's was working.

Marc Riddick

then be and though maybe see That's it's of maybe front as wondering it clients a as bit Do of be little would any was say face-to-face thinking business clients bit about forth Or more? about maybe pickup the of you back a really thoughts in of we to little see helpful. forward? might little -- seems but being face-to-face I seems how as though are was impact But that? recessionary more in have with been kind that more it seeing? starting a activity a curious starting to see were you're of bit again. going you and I that's and we travel should If a travel -- I kind then sort you now in if doing bit. the what And of a to pickup entertainment

Gary Burnison

bottle. the of out genie's the Well,

enjoy I so us that brought And the of all about. think pandemic unfortunately, flexibility the that,

when said this it years started, going travel, about was. I ago, it's thing, consume, so I -- -- said XX% what produce, of this be thing how And you're you this to X to you how whole be it's going all stuff, entertained, how

Now it it's of was. not XX% what

yes, And the in-person human change. I so I level XX but with There's clearly, it's it -- that's years seeing being to XX% that take X for generational substitute could desire we play a being are even no mean, for to not was. of truly sure. at And what a think another out.

over increased our see $XX aside as we'll much aspect, up." "China" only as would be as to million a then also Pacific on been like weeks and enormous multinational It could clearly on you region last year was. drag It's And been, in geopolitical $XX all the the million with we'll drag setting several for at what China. had in the it's us. an see Asia China the X, opened it's not companies since expect, X business. happens line. top It's it "it's months nothing So been but has with X, only but

Operator

Mr. questions. there no And it Burnison, further are appears

Gary Burnison

and talk incredible I and time. an all listen. our everybody world Tiffany to Bob we'll And time we taking thank just to foremost, See the Well, thanks appreciate Bye-bye. performance. to colleagues to next you. want around Gregg you Okay. and and first And the for

Operator

available Time will Eastern conference this week midnight. at the March replay starting running X:XX today at through gentlemen, and day for XXXX, for ending Ladies X be p.m. XX,

code dial You International and service dialing XXX-XXX-XXXX. executive participants may XXX-XXXX. playback the may AT&T access access by entering XXX-XXX-XXXX the

teleconference. does your be conclude for will your replay the using the for for you and at website. Additionally, for Thank AT&T today. That available conference participation playback company's

disconnect. now may You

Korn Ferry (KFY) 8 Mar 232023 Q3 Earnings call transcript