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.

• Adjusted diluted EPS rose 19% year-over-year to $1.18, with net income up 34% to $62.6 million and margin at 9.3%.

• Strategic focus remains on innovation, IP, marquee/regional accounts, M&A, and talent development to capture a $300 billion market opportunity.

• Business remains highly diversified across lines of business, geography, and industry, supporting more predictable and recurring revenue streams.

Financial highlights

• Consolidated fee revenue 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; net income margin was 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 projected at 16.3%-16.7%; adjusted diluted EPS guidance is $1.14-$1.26.

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

• Management expects continued relevance and growth opportunities for core and integrated solutions, despite near-term economic headwinds.

• Emphasis on digital subscriptions, consulting integration, and cross-LOB synergy sales to support sustainable growth.