Korn Ferry Beats Q4 EPS and Revenue Forecasts
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Korn Ferry Beats Q4 EPS and Revenue Forecasts

Korn Ferry's Q4 performance exceeded market expectations, with an adjusted EBITDA of $112 million, representing a 15% YoY increase and a 10% sequential improvement.
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Korn Ferry (NYSE: KFY) performed well in the fourth quarter of FY’24, showing significant year-over-year (YoY) and sequential growth. The company’s fee revenue reached $691 million, a 5% decline YoY, but with signs of stabilization and growing market demand for permanent talent acquisition.

This quarter was characterized by a robust performance in consulting and digital revenue, which complemented the sequential improvement in demand for permanent placement talent acquisition, including executive and professional search and recruitment process outsourcing (RPO).

Adjusted EBITDA for the quarter was $112 million, representing a 15% YoY increase and a 10% sequential improvement. The adjusted EBITDA margin also saw an uptick, reaching 16.3%, marking the fourth consecutive quarter of profitability improvement.

This growth was driven by enhanced consultant productivity and stringent cost controls. Additionally, the adjusted diluted earnings per share (EPS) rose by 25% YoY and 18% sequentially, reaching $1.26, indicating a solid financial performance.

Korn Ferry Outperforms Expectations in Fiscal Q4 With $1.26 EPS

Korn Ferry’s Q4 performance exceeded market expectations, which had projected an EPS of $1.13 and revenue of $688 million.

The actual EPS of $1.26 outperformed the forecast by $0.13, reflecting the company’s effective cost management and operational efficiency. Similarly, the actual revenue of $691 million surpassed the expected revenue by $3 million, highlighting the company’s ability to generate stable fee revenue despite challenging market conditions.

The company’s diversified revenue streams across different lines of business, geographies, and industries played a crucial role in its performance. Executive search, consulting, digital, RPO, and professional search and interim services all contributed to revenue, with the consulting and digital segments showing particularly strong results.

Consulting fee revenue grew by 4% year over year, driven by increases in assessment and succession services, leadership development, and organizational strategy. Digital revenue remained stable, supported by strong cost control measures.

Korn Ferry Provided Optimistic Guidance for the Upcoming Quarters

Korn Ferry has provided optimistic guidance for the upcoming quarters, reflecting confidence in its strategic initiatives and market positioning.

The company aims to continue advancing its strategy to become the preeminent global organizational consultancy. This involves diversifying offerings into fully integrated, scalable, and sustainable client engagements, expected to drive more predictable and recurring fee revenue streams with scalable earnings.

Korn Ferry’s focus on capitalizing on global leadership in relevant solutions, such as workforce transformation, digitization, diversity, equity, and inclusion (DE&I), and other environmental, social, and governance (ESG) initiatives, positions it well to support companies in addressing their most pressing business issues.

The company’s integrated go-to-market strategy through marquee and regional accounts aims to deliver larger, more predictable, recurring revenue through structured account planning and strategic investments in account management talent.

Korn Ferry Well-Positioned with $606 M in Investable Cash

Korn Ferry’s strong cash generation and balance sheet provide a solid foundation for investing in growth opportunities. With $606 million in investable cash, the company is well-positioned to pursue transformational opportunities at the intersection of talent and strategy.

This includes identifying, acquiring, and integrating M&A targets that align with its strategic objectives and enhance shareholder value.

The company’s commitment to investing in its workforce and maintaining a balanced approach to capital allocation is evident from its deployment of $172 million in FY’24 towards CAPEX, debt service, and returning cash to shareholders through dividends and share repurchases.

Korn Ferry’s continued investment in its commercial colleagues, including marquee and regional account leaders, and its focus on developing a world-class organization are expected to drive sustainable growth and reinforce its position as a premier career destination.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.