Korn Ferry Reports Better than Expected Fiscal Q1 2025 Results: $1.18 EPS
Korn Ferry (NYSE: KFY) reported its first-quarter fiscal 2025 results, showcasing a fee revenue of $674.9 million. This represents a 3% year-over-year decrease, or a 2% decrease on a constant currency basis. Despite the decline, the company’s Executive Search division saw a fee revenue growth of 2% year-over-year (3% on a constant currency basis).
Consulting and Digital segments maintained stability, with fee revenues remaining flat year-over-year but showing slight increases of 1% and 2%, respectively, in constant currency terms.
Net income attributable to Korn Ferry stood at $62.6 million, with diluted and adjusted diluted earnings per share (EPS) of $1.17 and $1.18, respectively. Operating income for the quarter was $76.1 million, resulting in an operating margin of 11.3%, a significant increase of 320 basis points from the previous year. Adjusted EBITDA also saw an improvement, reaching $111.2 million, which translates to a margin of 16.5%, up 280 basis points from the same quarter last year.
The company also made strategic moves during the quarter, including repurchasing 351,250 shares of stock for $23.5 million and declaring a quarterly dividend of $0.37 per share. This dividend is payable on October 15, 2024, to stockholders of record as of September 19, 2024. CEO Gary D. Burnison expressed satisfaction with the results, noting that the company’s diversified strategy and broad offerings have led to greater profitability and sustained success.
Korn Ferry Reports Better than Expected Fiscal Q1 2025 Results
When comparing the current quarter’s performance against market expectations, Korn Ferry exceeded the anticipated EPS of $1.12 by delivering $1.17 in diluted EPS and $1.18 in adjusted diluted EPS. The company also surpassed the expected revenue of $663.84 million, reporting $674.9 million in fee revenue.
Despite the overall fee revenue decrease of 3% year-over-year, the company managed to outperform expectations in key areas. For instance, the Executive Search division’s fee revenue growth of 2% is a positive indicator, especially in a challenging economic environment. Consulting and Digital segments also demonstrated resilience by maintaining stable fee revenues, which were slightly up in constant currency terms.
The company’s operating margin improvement to 11.3% from 8.1% in the previous year and the increase in Adjusted EBITDA margin to 16.5% from 13.7% are noteworthy achievements. These metrics indicate strong cost management and improved profitability, which are crucial for long-term growth and investor confidence.
Guidance
Looking ahead, Korn Ferry provided guidance for the second quarter of fiscal 2025, assuming stable worldwide geopolitical and economic conditions, financial markets, and foreign exchange rates. The company expects Q2 FY’25 fee revenue to be in the range of $655 million to $685 million. Diluted EPS for the same period is projected to be between $1.11 and $1.23.
On a consolidated adjusted basis, Korn Ferry anticipates adjusted diluted EPS to range from $1.14 to $1.26 for Q2 FY’25. This guidance reflects the company’s confidence in its diversified strategy and continued focus on cost management and operational efficiency.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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