Korn Ferry (KFY) Q1 2025 earnings summary

Executive summary

• Q1 FY'25 fee revenue was $675 million, down 3% year-over-year, with Executive Search up 2% and Consulting and Digital flat, reflecting stability amid a challenging market.

• Adjusted EBITDA increased 16% year-over-year to $111 million, with margin expanding to 16.5% for the fifth consecutive quarter, driven by cost discipline and productivity gains.

• Adjusted diluted EPS rose 19% year-over-year to $1.18, and net income attributable to Korn Ferry was $62.6 million, up 34%, with a margin of 9.3%.

• Strategic focus remains on innovation, IP, marquee accounts, M&A, and talent development to capture a $300 billion market opportunity, with a diversified business model supporting recurring revenue.

• Capital allocation included $43 million returned to shareholders via dividends and share repurchases, with the quarterly dividend more than doubling year-over-year.

Financial highlights

• Consolidated fee revenue for Q1 was $675 million, down 3% year-over-year, mainly due to lower Professional Search & Interim and RPO revenues, partially offset by Executive Search growth.

• Adjusted EBITDA was $111 million, with margin improving to 16.5%, up 280 basis points year-over-year.

• Adjusted diluted EPS grew to $1.18, up 19% year-over-year; GAAP diluted EPS was $1.17.

• Net income attributable to Korn Ferry was $62.6 million, up 34% year-over-year, with a net income margin of 9.3%.

• Investable cash position at quarter-end was $553 million.

Outlook and guidance

• Q2 FY'25 fee revenue expected between $655 million and $685 million.

• Adjusted EBITDA margin guidance for Q2 is 16.3%-16.7%; adjusted diluted EPS expected between $1.14 and $1.26.

• Management maintains a long-term adjusted EBITDA margin target of 16-18%, with potential upside as cyclical businesses rebound.

• Management continues to focus on expanding integrated, scalable, and recurring client engagements to drive less cyclical revenue.

• Macro trends such as remote work, ESG, and new technologies are expected to drive demand for differentiated solutions.