KORN FERRY

Previous wording

This Quarterly Report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our business strategy, expected demand for and relevance of our products and services, and expected results of our business diversification strategy, are also forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cybersecurity vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, including artificial intelligence ("AI"), our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations …

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our business strategy, expected demand for and relevance of our products and services, and expected results of our business diversification strategy, are also forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, including artificial intelligence ("AI"), our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Executive Search helps organizations recruit board level, chief executive and other C-suite/senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together our research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then helps us build appropriate frameworks for compensation and attraction. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa (“EMEA”), Executive Search Asia Pacific (“APAC”), and Executive Search Latin America).

Current wording

Executive Search helps organizations recruit board level, chief executive and other C-suite/senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then helps us build appropriate frameworks for compensation and attraction. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa (“EMEA”), Executive Search Asia Pacific (“APAC”), and Executive Search Latin America).

Previous wording

Professional Search & Interim delivers enterprise talent acquisition solutions for permanent placements at the professional level middle and upper management, and, for interim, those same levels plus senior executives. We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors (that are focused on senior executive, information technology ("IT"), Finance & Accounting and human resources roles).

Current wording

Professional Search & Interim delivers enterprise talent acquisition solutions for permanent placements at the professional level for middle and upper management, and, for interim, at those same levels plus senior executives. We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors (that are focused on senior executive, information technology ("IT"), Finance & Accounting and human resources roles).

Previous wording

•We reported Q1 FY'25 fee revenue of $674.9 million, a year-over-year decrease of 3%.

Current wording

•Fee revenue in Q2 FY'25 was $674.4 million, a year-over-year decrease of 4%.

Previous wording

•Operating income was $76.1 million and Adjusted EBITDA was $111.2 million.

Current wording

•Operating income was $87.5 million and Adjusted EBITDA was $117.0 million.

Previous wording

•Operating margin increased 320bps year-over-year to 11.3%. Adjusted EBITDA margin of 16.5%, a 280bps increase compared to the year-ago quarter, and our fifth consecutive quarter of sequential improvement.

Current wording

•Operating margin increased 980bps year-over-year to 13.0%. Adjusted EBITDA margin was 17.4%, a 340bps increase compared to the year-ago quarter.

Previous wording

•Net income attributable to Korn Ferry was $62.6 million with a margin of 9.3%, a 260bps increase compared to the year-ago quarter, while diluted earnings per share was $1.17 in Q1 FY'25.

Current wording

•Net income attributable to Korn Ferry was $60.8 million, while diluted earnings per share was $1.14 in Q2 FY'25.

Previous wording

The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairments charges). For the three months ended July 31, 2024, Adjusted EBITDA excluded $1.1 million of integration/acquisition costs. For the three months ended July 31, 2023, Adjusted EBITDA excluded $4.1 million of integration/acquisition costs, $1.6 million impairment of right-of-use assets, $0.4 million of restructuring charges, net and $0.1 million impairment of fixed assets.

Current wording

The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairments charges). For the three months ended October 31, 2024, Adjusted EBITDA excluded $0.6 million of restructuring charges, net, and $3.9 million of integration/acquisition costs. For the six months ended October 31, 2024, Adjusted EBITDA excluded $0.6 million of restructuring charges, net, and $5.0 million of integration/acquisition costs. For the three months ended October 31, 2023, Adjusted EBITDA excluded $63.5 million of restructuring charges, net, $5.0 million of integration/acquisition costs, and $1.5 million impairment of fixed assets. For the six months ended October 31, 2023, Adjusted EBITDA excluded $63.9 million of restructuring charges, net, $9.2 million of integration/acquisition costs, $1.6 million of impairment of right-of-use assets, and $1.6 million impairment of fixed assets.

Previous wording

Fee Revenue. Fee revenue was $674.9 million in the three months ended July 31, 2024, a decrease of $24.3 million, or 3% compared to $699.2 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $7.6 million, or 1%, in the three months ended July 31, 2024 compared to the year-ago quarter. Fee revenue decreased primarily due to lower fee revenues in Professional Search & Interim and RPO mainly driven by the global economic environment, partially offset by an increase in fee revenue in Executive Search North America.

Current wording

Fee Revenue. Fee revenue was $674.4 million in the three months ended October 31, 2024, a decrease of $29.6 million, or 4% compared to $704.0 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $6.2 million, or 1%, in the three months ended October 31, 2024 compared to the year-ago quarter. The decrease in fee revenue was primarily due to lower fee revenues in Professional Search & Interim, Consulting and Digital driven by a decline in demand due to the current economic environment, partially offset by increases in fee revenue in Executive Search EMEA and Executive Search Asia Pacific.

Previous wording

Consulting. Consulting reported fee revenue of $167.9 million in the three months ended July 31, 2024, essentially flat compared to $168.1 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $2.5 million, or 1%, in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Consulting. Consulting reported fee revenue of $166.8 million, a decrease of $11.0 million, or 6%, in the three months ended October 31, 2024 compared to $177.8 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $2.1 million, or 1%, in the three months ended October 31, 2024 compared to the year-ago quarter. The decrease in Consulting fee revenue was primarily driven by a decline in demand for our organizational strategy and leadership and professional development offerings.

Previous wording

Executive Search North America compensation and benefits expense increased by $2.6 million, or 3%, to $101.2 million in the three months ended July 31, 2024 compared to $98.6 million in the year-ago quarter. Compensation and benefits expense increased primarily due to an increase in performance-related bonus expense of $4.7 million driven by the higher segment fee revenue and profitability, partially offset by a decrease in salaries and related payroll taxes of $2.2 million due to a 9% decrease in average headcount in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Executive Search North America compensation and benefits expense increased by $3.1 million, or 4%, to $86.8 million in the three months ended October 31, 2024 compared to $83.7 million in the year-ago quarter. Compensation and benefits expense increased primarily due to increases of $12.6 million in deferred compensation expense due to an increase in the fair value of participants' accounts and $1.8 million in severance related expenses due to a reduction in workforce, partially offset by a decrease in performance-related bonus expense of $8.1 million driven by the lower segment fee revenue and a decrease in salaries and related payroll taxes of $2.0 million as a result of a 5% decrease in average headcount in the three months ended October 31, 2024 compared to the year-ago quarter.

Previous wording

Executive Search EMEA general and administrative expenses were $4.1 million in both the three months ended July 31, 2024 and the year-ago quarter.

Current wording

Executive Search EMEA general and administrative expenses increased by $0.3 million, or 8%, to $4.2 million in the three months ended October 31, 2024 compared to $3.9 million in the year-ago quarter.

Previous wording

Executive Search Asia Pacific general and administrative expenses were $2.2 million in the three months ended July 31, 2024, essentially flat compared to $2.4 million in the year-ago quarter.

Current wording

Executive Search Asia Pacific general and administrative expenses decreased by $0.5 million, or 26%, to $1.4 million in the three months ended October 31, 2024, compared to $1.9 million in the year-ago quarter.

Previous wording

Professional Search & Interim general and administrative expenses decreased by $1.5 million, or 22%, to $5.2 million in the three months ended July 31, 2024 compared to $6.7 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to decreases in premise and office expense of $0.9 million and marketing and business development expense of $0.3 million compared to the year-ago quarter.

Current wording

Professional Search & Interim general and administrative expenses decreased by $2.6 million, or 39%, to $4.1 million in the three months ended October 31, 2024 compared to $6.7 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to decreases in bad debt expense and premise and office expense of $1.5 million and $0.8 million, respectively, in the three months ended October 31, 2024 compared to the year-ago quarter.

Previous wording

RPO general and administrative expenses decreased by $0.9 million, or 16%, to $4.7 million in the three months ended July 31, 2024 compared to $5.6 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in foreign exchange loss of $0.7 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

RPO general and administrative expenses increased by $1.0 million, or 29%, to $4.5 million in the three months ended October 31, 2024 compared to $3.5 million in the year-ago quarter. The increase in general and administrative expenses was primarily due to a decrease in foreign exchange gain of $1.0 million in the three months ended October 31, 2024 compared to the year-ago quarter.

Previous wording

Cost of services expense consists of contractor and product costs related to delivery of various services and products through Consulting, Digital, Professional Search & Interim and RPO. Cost of services expense decreased by $9.7 million, or 13%, to $67.5 million in the three months ended July 31, 2024 compared to $77.2 million in the year-ago quarter. Professional Search & Interim accounted for $13.1 million of the decrease due to a decline in fee revenue in the segment as the significant amount of interim services that they perform have a higher cost of service expense as compared to the Company's other segments. The decrease was partially offset by an increase in cost of services expense from the Consulting segment.

Current wording

Cost of services expense consists of contractor and product costs related to delivery of various services and products through Consulting, Digital, Professional Search & Interim and RPO. Cost of services expense decreased by $13.8 million, or 18%, to $64.7 million in the three months ended October 31, 2024 compared to $78.5 million in the year-ago quarter. Professional Search & Interim accounts for $11.8 million of the decrease due to a decline in fee revenue in the segment as the Company's interim services have a higher cost of service expense as compared to the Company's other segments.

Previous wording

Depreciation and amortization expenses were $19.6 million in the three months ended July 31, 2024, compared to $19.0 million in the year-ago quarter.

Current wording

Depreciation and amortization expenses were $19.7 million in the three months ended October 31, 2024, essentially flat compared to $19.6 million in the year-ago quarter.

Previous wording

Executive Search EMEA Adjusted EBITDA increased by $1.7 million, or 30%, to $7.3 million in the three months ended July 31, 2024 compared to $5.6 million in the year-ago quarter. The increase was primarily driven by a decrease in compensation and benefits expense, partially offset by a decrease in segment fee revenue. Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 16% and 12% in the three months ended July 31, 2024 and 2023, respectively.

Current wording

Executive Search EMEA Adjusted EBITDA increased by $1.9 million, or 34%, to $7.5 million in the three months ended October 31, 2024 compared to $5.6 million in the year-ago quarter. The increase was primarily driven by an increase in fee revenue, partially offset by higher compensation and benefits expense. Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 16% and 13% in the three months ended October 31, 2024 and 2023, respectively.

Previous wording

Professional Search & Interim Adjusted EBITDA was $25.7 million in the three months ended July 31, 2024, an increase of $1.4 million, or 6%, as compared to $24.3 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by decreases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs), and general and administrative expenses (excluding integration/acquisition costs). These decreases were partially offset by lower fee revenue in the segment. Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 21% and 17% in the three months ended July 31, 2024 and 2023, respectively.

Current wording

Professional Search & Interim Adjusted EBITDA was $27.2 million in the three months ended October 31, 2024, an increase of $1.6 million, or 6%, as compared to $25.6 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by decreases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs), and general and administrative expenses (excluding integration/acquisition costs). The increase in Adjusted EBITDA was partially offset by lower fee revenue in the segment. Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 22% and 19% in the three months ended October 31, 2024 and 2023, respectively.

Previous wording

Other income, net was $14.5 million in the three months ended July 31, 2024 compared to $13.6 million in the year-ago quarter. The difference was primarily due to greater gains from the increase in the fair value of our marketable securities that are held in trust for the settlement of the Company's obligation under the Executive Capital Accumulation Plan ("ECAP") during the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Other income, net was $5.4 million in the three months ended October 31, 2024 compared to other loss, net of $13.8 million in the year-ago quarter. The difference was primarily due to gains from the increase in the fair value of our marketable securities that are held in trust to for the settlement of the Company's obligation under the Executive Capital Accumulation Plan ("ECAP") during the three months ended October 31, 2024 compared to losses in the year-ago quarter.

Previous wording

Interest expense, net primarily relates to the Company's 4.625% Senior Unsecured Notes due 2027 ("Notes") issued in December 2019, borrowings under company-owned life insurance ("COLI") policies and interest cost related to our deferred compensation plans, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $3.9 million in the three months ended July 31, 2024 compared to $4.7 million in the year-ago quarter. Interest expense, net decreased due to an increase in interest income earned on cash and cash equivalent balances as a result of higher interest rates in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Interest expense, net primarily relates to the Company's 4.625% Senior Unsecured Notes due 2027 ("Notes") issued in December 2019, borrowings under Company purchased company-owned life insurance ("COLI") policies and interest cost related to our deferred compensation plans, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $5.6 million in the three months ended October 31, 2024 compared to $6.6 million in the year-ago quarter. Interest expense, net decreased due to an increase in interest income earned on cash and cash equivalent balances as a result of higher average cash and cash equivalents balances in the three months ended October 31, 2024 compared to the year-ago quarter.

Previous wording

The provision for income tax was $22.4 million in the three months ended July 31, 2024, with an effective tax rate of 25.8%, compared to $18.4 million in the three months ended July 31, 2023, with an effective rate of 28.1%. In addition to the impact of U.S. state income taxes and the jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the lower effective tax rate for the three months ended July 31, 2024 was primarily due to the windfall from stock-based awards that vested during the three months ended July 31, 2024, which was greater than the benefit recorded for the three months ended July 31, 2023 in connection with the windfall from stock-based awards that vested during the year-ago quarter. The windfall is the amount by which the Company’s tax deduction for these awards, based on the fair market value of the awards on the date of vesting, is greater than the expense recorded in the Company’s financial statements over the awards’ vesting period.

Current wording

The provision for income tax was $24.9 million in the three months ended October 31, 2024, with an effective tax rate of 28.5%, compared to $2.3 million in the three months ended October 31, 2023, with an effective rate of 98.2%. In addition to the impact of U.S. state income taxes and the jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the effective tax rate for the three months ended October 31, 2023 was elevated due to lower earnings resulting from restructuring charges recorded in the quarter.

Previous wording

Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the condensed consolidated results of operations. Net income attributable to noncontrolling interest for the three months ended July 31, 2024 was $1.7 million, as compared to $0.6 million in the three months ended July 31, 2023.

Current wording

Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the condensed consolidated results of operations. Net income attributable to noncontrolling interest for the three months ended October 31, 2024 was $1.5 million, as compared to $1.8 million in the three months ended October 31, 2023.

Previous wording

Digital. Digital reported fee revenue of $88.2 million in the three months ended July 31, 2024, essentially flat compared to $88.0 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $1.9 million, or 2%, in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Digital. Digital reported fee revenue of $181.1 million, a decrease of $4.0 million, or 2%, in the six months ended October 31, 2024 compared to $185.1 million in the year-ago period. Exchange rates unfavorably impacted fee revenue by $1.1 million, or 1%, in the six months ended October 31, 2024 compared to the year-ago period. The decrease in fee revenue was primarily driven by decreases in demand for leadership and development and assessment & succession offerings.

Previous wording

Executive Search North America. Executive Search North America reported fee revenue of $134.8 million, an increase of $7.3 million, or 6%, in the three months ended July 31, 2024 compared to $127.5 million in the year-ago quarter, driven by a growth in demand for executive searches. North America’s fee revenue increased primarily due to a 4% increase in the number of engagements billed during the three months ended July 31, 2024 compared to the year-ago quarter and a 2% increase in the weighted-average fee billed per engagement.

Current wording

Executive Search North America. Executive Search North America reported fee revenue of $264.6 million, an increase of $4.6 million, or 2%, in the six months ended October 31, 2024 compared to $260.0 million in the year-ago period. North America’s fee revenue increased due to a 4% increase in the number of engagements billed, partially offset by a 2% decrease in the weighted-average fee billed per engagement (calculated using local currency) during the six months ended October 31, 2024 compared to the year-ago period.

Previous wording

Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $20.6 million, a decrease of $3.9 million, or 16%, in the three months ended July 31, 2024 compared to $24.5 million in the year-ago quarter. The decrease in fee revenue was primarily due to a 14% decrease in the number of engagements billed.

Current wording

Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $42.0 million, a decrease of $1.8 million, or 4%, in the six months ended October 31, 2024 compared to $43.8 million in the year-ago period. The decrease in fee revenue was due to a 4% decrease in the number of engagements billed, partially offset by a 1% increase in the weighted-average fee billed per engagement (calculated using local currency) during the six months ended October 31, 2024 compared to the year-ago period.

Previous wording

Executive Search Latin America. Executive Search Latin America reported fee revenue of $7.3 million, an increase of $0.9 million, or 14%, in the three months ended July 31, 2024 compared to $6.4 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $0.6 million, or 9%, in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Executive Search Latin America. Executive Search Latin America reported fee revenue of $15.2 million, an increase of $0.7 million, or 5%, in the six months ended October 31, 2024 compared to $14.5 million in the year-ago period. Exchange rates unfavorably impacted fee revenue by $1.5 million, or 10%, in the six months ended October 31, 2024 compared to the year-ago period.

Previous wording

Professional Search & Interim. Professional Search & Interim reported fee revenue of $121.7 million, a decrease of $20.5 million, or 14%, in the three months ended July 31, 2024 compared to $142.2 million in the year-ago quarter. The decrease in fee revenue was due to a decrease in interim fee revenue of $14.4 million as well as a decrease in permanent placement fee revenue of $6.1 million, each of which resulted from lower demand in the current economic environment.

Current wording

Professional Search & Interim. Professional Search & Interim reported fee revenue of $242.8 million, a decrease of $37.8 million, or 13%, in the six months ended October 31, 2024 compared to $280.6 million in the year-ago period. The decrease in fee revenue was primarily due to a decrease in interim fee revenue of $28.0 million as well as a decrease in permanent placement fee revenue of $9.8 million, each of which resulted from lower demand in the current economic environment.

Previous wording

RPO. RPO reported fee revenue of $88.5 million, a decrease of $7.2 million, or 8%, in the three months ended July 31, 2024 compared to $95.7 million in the year-ago quarter. The decrease in fee revenue was due to moderation in the hiring volume in the existing base of clients due to the current economic environment.

Current wording

RPO. RPO reported fee revenue of $176.1 million, a decrease of $7.3 million, or 4%, in the six months ended October 31, 2024 compared to $183.4 million in the year-ago period. The decrease in fee revenue was due to moderation in the hiring volume in the existing base of clients due to the current economic environment.

Previous wording

Professional Search & Interim compensation and benefits expense decreased by $10.2 million, or 17%, to $49.2 million in the three months ended July 31, 2024 from $59.4 million in the year-ago quarter. The decrease was primarily due to decreases in salaries and related payroll taxes of $5.9 million due to a 24% decrease in average headcount as well as a decrease in commission expense of $3.8 million driven by lower segment fee revenue and $2.8 million in lower integration/acquisition costs in the three months ended July 31, 2024 compared to the year-ago quarter. The decreases were partially offset by an increase of $3.0 million in performance-related bonus expense in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Professional Search & Interim compensation and benefits expense decreased by $17.5 million, or 15%, to $99.0 million in the six months ended October 31, 2024 from $116.5 million in the year-ago period. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $10.6 million as a result of a 20% reduction in average headcount as well as decreases in commission expense of $7.7 million driven by lower segment fee revenue and lower integration/acquisition cost of $6.2 million in the six months ended October 31, 2024 compared to the year-ago period. These decreases were offset by an increase in performance-related bonus expense of $8.0 million.

Previous wording

Corporate compensation and benefits expense increased by $1.2 million, or 7%, to $19.4 million in the three months ended July 31, 2024 from $18.2 million in the year-ago quarter. The increase in compensation and benefits expense was primarily due to an increase in stock-based compensation expense of $1.1 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Current wording

Corporate compensation and benefits expense increased by $2.2 million, or 6%, to $37.6 million in the six months ended October 31, 2024 from $35.4 million in the year-ago period. The increase in compensation and benefits expense was primarily due to increases in stock-based compensation expense and deferred compensation of $1.4 million and $1.4 million, respectively, in the six months ended October 31, 2024 compared to the year-ago period.

Previous wording

General and administrative expenses decreased by $5.9 million, or 9%, to $60.0 million in the three months ended July 31, 2024 from $65.9 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in legal and other professional fees of $3.1 million in the three months ended July 31, 2024 compared to the year-ago quarter and a decrease in premise and office expense of $2.9 million due to cost reduction efforts and a $1.6 million right-of-use assets impairment charge incurred in the year-ago quarter.

Current wording

Executive Search North America general and administrative expenses decreased by $0.7 million, or 4%, to $15.9 million in the six months ended October 31, 2024 compared to $16.6 million in the year-ago period. The decrease in general and administrative expenses was primarily due to a decrease in premise and office expense of $1.6 million in the six months ended October 31, 2024, primarily due to cost reduction efforts and a right-of-use assets impairment charge incurred in the year-ago period, partially offset by an increase in marketing and business development expenses of $0.7 million.

Previous wording

Net income attributable to Korn Ferry increased by $16.0 million, or 34%, to $62.6 million in the three months ended July 31, 2024, as compared to $46.6 million in the year-ago quarter. The increase in net income attributable to Korn Ferry was primarily due to decreases of compensation and benefits expense of $28.1 million, cost of services expense of $9.7 million and general and administrative expenses of $5.9 million in the three months ended July 31, 2024 compared to the year-ago quarter. The increase in net income attributable to Korn Ferry was partially offset by a decrease in fee revenue of $24.3 million. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 9% and 7% in the three months ended July 31, 2024 and 2023, respectively.

Current wording

Net income attributable to Korn Ferry increased by $78.5 million, or 175%, to $123.4 million in the six months ended October 31, 2024, as compared to $44.9 million in the year-ago period. The increase in net income attributable to Korn Ferry was primarily due to decreases in restructuring charges, net, compensation and benefits expense and cost of services expense of $63.3 million, $44.5 million and $23.5 million, respectively, in the six months ended October 31, 2024 compared to the year-ago period, partially offset by lower fee revenues of $53.9 million. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 9% and 3% in the six months ended October 31, 2024 and 2023, respectively.

Previous wording

Adjusted EBITDA increased by $15.5 million, or 16%, to $111.2 million in the three months ended July 31, 2024 as compared to $95.7 million in the year-ago quarter. The increase in Adjusted EBITDA was driven by decreases in compensation and benefit expense (excluding integration/acquisition costs) and general and administrative expenses (excluding impairment charges and integration/acquisition costs) due to strong cost management, coupled with lower cost of services expense, partially offset by a decrease in fee revenue. Adjusted EBITDA, as a percentage of fee revenue, was 16% in the three months ended July 31, 2024 compared to 14% in the year-ago quarter.

Current wording

Adjusted EBITDA increased $34.0 million, or 18%, to $228.2 million in the six months ended October 31, 2024 as compared to $194.2 million in the year-ago period. The increase in Adjusted EBITDA was primarily driven by decreases in compensation and benefit expense (excluding integration/acquisition costs), cost of services expenses and general and administrative expenses (excluding integration/acquisition costs and impairment of fixed assets and right-of-use assets) in the six months ended October 31, 2024 compared to the year-ago period, partially offset by a decrease in fee revenue. Adjusted EBITDA, as a percentage of fee revenue, was 17% and 14% in the six months ended October 31, 2024 and 2023, respectively.

Previous wording

Executive Search Asia Pacific Adjusted EBITDA decreased by $2.1 million, or 33%, to $4.2 million in the three months ended July 31, 2024 compared to $6.3 million in the year-ago quarter. The decrease in Adjusted EBITDA was driven by lower fee revenue in the segment, partially offset by a decrease in compensation and benefits expense. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 20% and 26% in the three months ended July 31, 2024 and 2023, respectively.

Current wording

Executive Search Asia Pacific Adjusted EBITDA decreased by $1.5 million, or 15%, to $8.7 million in the six months ended October 31, 2024 compared to $10.2 million in the year-ago period. The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 21% in the six months ended October 31, 2024 as compared to 23% in the six months ended October 31, 2023.

Previous wording

RPO Adjusted EBITDA was $12.5 million in the three months ended July 31, 2024, an increase of $2.0 million, or 19%, as compared to $10.5 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by a decrease in compensation and benefits expense, partially offset by lower fee revenue in the segment. RPO Adjusted EBITDA, as a percentage of fee revenue, was 14% and 11% in the three months ended July 31, 2024 and 2023, respectively.

Current wording

RPO Adjusted EBITDA was $25.4 million in the six months ended October 31, 2024, an increase of $6.1 million, or 32%, as compared to $19.3 million in the year-ago period. The increase in Adjusted EBITDA was primarily driven by a decrease in compensation and benefits expense, partially offset by lower fee revenue in the segment. RPO Adjusted EBITDA, as a percentage of fee revenue, was 14% in the six months ended October 31, 2024 compared to 11% in the year-ago period.

Previous wording

On December 16, 2019, we completed a private placement of the Notes with a $400.0 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our obligations under the Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith. As of July 31, 2024, the fair value of the Notes was $386.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.

Current wording

On December 16, 2019, we completed a private placement of the Notes with a $400.0 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our obligations under the Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith. As of October 31, 2024, the fair value of the Notes was $390.0 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.

Previous wording

On June 24, 2022, we entered into an amendment (the “Amendment”) to our December 16, 2019 Credit Agreement (the "Credit Agreement"; as amended by the Amendment, the "Amended Credit Agreement") with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) replace the London interbank offered rate with Term SOFR, and (iii) replace the existing financial covenants with financial covenants described below. The Amended Credit Agreement provides for five-year senior secured credit facilities comprised of a $650.0 million revolving credit facility (the “Revolver”). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00. See Note 11 —Long-Term Debtfor a further description of the Amended Credit Agreement. The Company has a total of $645.4 million and $645.5 million available under the Revolver after $4.6 million and $4.5 million of standby letters of credit have been issued as of July 31, 2024 and April 30, 2024, respectively. The Company had a total of $12.3 million and $13.2 million of standby letters with other financial institutions as of July 31, 2024 and April 30, 2024, respectively. The standby letters of credit were generally issued as a result of entering into office premise leases.

Current wording

On June 24, 2022, we entered into an amendment (the "Amendment") to our December 16, 2019 Credit Agreement (the "Credit Agreement"; as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) replace the London interbank offered rate with Term Secured Overnight Financing Rate ("SOFR"), and (iii) replace the existing financial covenants with financial covenants described below. The Amended Credit Agreement provides for five-year senior secured credit facilities comprised of a $650.0 million revolving credit facility (the “Revolver”). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00. See Note 11 —Long-Term Debt for a further description of the Amended Credit Agreement. The Company has a total of $645.4 million and $645.5 million available under the Revolver after $4.6 million and$4.5 million of standby letters of credit have been issued as of October 31, 2024 and April 30, 2024, respectively. The Company had a total of$12.8 million and $13.2 million of standby letters with other financial institutions as of October 31, 2024 and April 30, 2024, respectively. The standby letters of credit were generally issued in connection with the entry into certain office premise leases.

Previous wording

On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318.0 million. The Company repurchased approximately $23.5 million and $4.2 million of the Company’s stock during the three months ended July 31, 2024 and 2023, respectively. As of July 31, 2024, $159.2 million remained available for common stock repurchases under our share repurchase program. Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

Current wording

On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318.0 million. The Company repurchased approximately $56.1 million and $8.6 million of the Company’s stock during the six months ended October 31, 2024 and 2023, respectively. As of October 31, 2024, $126.7 million remained available for common stock repurchases under our share repurchase program. Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

Previous wording

Cash and cash equivalents and marketable securities were $905.2 million and $1,195.4 million as of July 31, 2024 and April 30, 2024, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $553.1 million and $606.4 million at July 31, 2024 and April 30, 2024, respectively. As of July 31, 2024 and April 30, 2024, we held $368.0 million and $393.8 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay accrued bonuses. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes.

Current wording

Cash and cash equivalents and marketable securities were $967.5 million and $1,195.4 million as of October 31, 2024 and April 30, 2024, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $536.8 million and $606.4 million at October 31, 2024 and April 30, 2024, respectively. As of October 31, 2024 and April 30, 2024, we held $364.5 million and $393.8 million, respectively, of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay accrued bonuses. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes.