Highlights

Korn Ferry reports Q3 FY'24 fee revenue of $668.7 million, a year-over-year decrease of 2% at both actual and constant currency.
Net income attributable to Korn Ferry was $59.1 million, while diluted and adjusted diluted earnings per share were $1.13 and $1.07 in Q3 FY'24, respectively.
Operating income was $49.9 million with an operating margin of 7.5%, a 570bps increase compared to year-ago quarter, and Adjusted EBITDA was $101.7 million with an Adjusted EBITDA margin of 15.2%, a 110bps increase compared to year-ago quarter.
Consulting and Digital continued to show resilient business operations:
- Consulting fee revenue grew 3% year-over-year with a 12% increase in average bill rate to $438 per hour.
- Digital fee revenue grew 6% year-over-year with an 11% increase in Subscription & License fee revenue which approximated $33.0 million in the quarter.
The Company repurchased 382,500 shares of stock during the quarter for $21.0 million.
Declared a quarterly dividend of $0.33 per share on March 5, 2024, which is payable on April 15, 2024 to stockholders of record on March 27, 2024.

Korn Ferry (NYSE:KFY), a global organizational consulting firm, today announced third quarter fee revenue of $668.7 million. In addition, third quarter diluted earnings per share was $1.13 and adjusted diluted earnings per share was $1.07.

"I am pleased with our third quarter results, as we generated $669 million in fee revenue, down 2% year-over-year, with our non-search offerings providing a substantial buffer against the more cyclically sensitive recruiting offerings. Earnings and profitability increased year-over-year and sequentially as we delivered $102 million of Adjusted EBITDA, at a 15.2% margin," said Gary D. Burnison, CEO, Korn Ferry.

"Fee revenue from Consulting and Digital (up 3% and 6% over the prior year, respectively), when combined with our Interim fee revenue, now generate 50% of our top line. Our Consulting bill rate increased 12% and our Digital subscription and license fee revenue increased 11%," Burnison added. "The strategy is clearly working – I am enormously proud of our organization and the results demonstrate the resiliency and potential for Korn Ferry."


Selected Financial Results (dollars in millions, except per share amounts) ^(a)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	668.7		$	680.8		$	2,071.9		$	2,104.5
Total revenue	$	676.9		$	686.8		$	2,095.6		$	2,125.7
Operating income	$	49.9		$	12.5		$	129.5		$	243.8
Operating margin		7.5	%		1.8	%		6.2	%		11.6	%
Net income attributable to Korn Ferry	$	59.1		$	11.2		$	104.0		$	162.0
Basic earnings per share	$	1.14		$	0.21		$	2.00		$	3.07
Diluted earnings per share	$	1.13		$	0.21		$	1.99		$	3.05

Adjusted Results (b):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	101.7		$	96.1		$	295.9		$	359.4
Adjusted EBITDA margin		15.2	%		14.1	%		14.3	%		17.1	%
Adjusted net income attributable to Korn Ferry (c)	$	55.8		$	53.0		$	158.3		$	209.1
Adjusted basic earnings per share (c)	$	1.07		$	1.01		$	3.04		$	3.96
Adjusted diluted earnings per share (c)	$	1.07		$	1.01		$	3.03		$	3.93

______________________
(a)		Numbers may not total due to rounding.
(b)		Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	4.4	$	1.6	$	4.4
Impairment of right of use assets	$	—	$	5.5	$	1.6	$	5.5
Integration/acquisition costs	$	3.9	$	2.5	$	13.1	$	9.5
Restructuring charges, net	$	4.6	$	41.2	$	68.6	$	41.2

(c)

Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in the quarter ended January 31, 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.

The Company reported fee revenue in Q3 FY'24 of $668.7 million, a year-over-year decrease of 2% at both actual and constant currency. Fee revenue decreased primarily due to decreases in our permanent placement talent acquisition offerings. This decrease was due to a decline in demand driven by uncertain and challenging global economic environment. This was partially offset by the increases in Consulting and Digital fee revenue, as well as in the Interim portion of Professional Search & Interim, resulting from the acquisition of Salo ('the Acquisition") which was effective February 1, 2023.

Operating margin was 7.5% in Q3 FY'24, compared to 1.8% in the year-ago quarter, an increase of 570bps. Adjusted EBITDA margin was 15.2% in Q3 FY'24, compared to 14.1% in the year-ago quarter, an increase of 110bps. Net income attributable to Korn Ferry was $59.1 million in Q3 FY'24, compared to $11.2 million in Q3 FY'23 and Adjusted EBITDA was $101.7 million in Q3 FY'24 compared to $96.1 million in Q3 FY'23.

Operating income and margin increased compared to the year-ago quarter primarily due to 1) lower restructuring charges, net recorded in Q3 FY'24 compared to the year-ago quarter, 2) a decrease in compensation and benefits expense driven by the previous quarter's cost reduction actions, and 3) a decrease in charges for impairment of fixed and right of use assets in the year-ago quarter. This increase was partially offset by the decrease in fee revenue discussed above, and higher cost of services expense associated with the acquired Interim businesses. Net income attributable to Korn Ferry increased due to the same factors discussed above.

Adjusted EBITDA and margin increased due to the previous quarter's cost reduction actions, partially offset by the decrease in fee revenue discussed above and an increase in cost of services expense associated with the acquired businesses.


Results by Line of Business Selected Consulting Data (dollars in millions) ^(a)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	166.9		$	162.2		$	512.8		$	501.7
Total revenue	$	169.9		$	164.4		$	521.7		$	509.0

Ending number of consultants and execution staff (b)		1,687			1,877			1,687			1,877
Hours worked in thousands (c)		381			414			1,239			1,340
Average bill rate (d)	$	438		$	392		$	414		$	374

Adjusted Results (e):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	27.8		$	23.3		$	81.9		$	83.9
Adjusted EBITDA margin		16.7	%		14.4	%		16.0	%		16.7	%

______________________
(a)		Numbers may not total due to rounding.
(b)		Represents number of employees originating, delivering and executing consulting services.
(c)		The number of hours worked by consultant and execution staff during the period.
(d)		The amount of fee revenue divided by the number of hours worked by consultants and execution staff.
(e)		Adjusted results exclude the following:

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	2.8	$	—	$	2.8
Impairment of right of use assets	$	—	$	3.1	$	0.6	$	3.1
Restructuring charges, net	$	1.1	$	10.8	$	18.9	$	10.8

Fee revenue was $166.9 million in Q3 FY'24 compared to $162.2 million in Q3 FY'23, an increase of $4.7 million or 3% at both actual and constant currency. The increase in Consulting fee revenue was primarily driven by growth in our organizational strategy offering.

Adjusted EBITDA was $27.8 million in Q3 FY'24 compared to Adjusted EBITDA of $23.3 million, in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 230bps from 14.4% last year to 16.7% this year. This increase in Adjusted EBITDA and Adjusted EBITDA margin resulted primarily from the increase in fee revenue discussed above, combined with the previous quarter's cost reduction actions, partially offset by an increase in cost of services expense.


Selected Digital Data (dollars in millions) ^(a)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	90.3		$	85.1		$	275.4		$	263.2
Total revenue	$	90.4		$	85.1		$	275.6		$	263.5

Ending number of consultants		275			365			275			365
Subscription & License fee revenue	$	32.8		$	29.6		$	97.7		$	88.1

Adjusted Results (b):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	27.4		$	22.2		$	80.7		$	73.9
Adjusted EBITDA margin		30.3	%		26.0	%		29.3	%		28.1	%

______________________
(a)		Numbers may not total due to rounding.
(b)		Adjusted results exclude the following:

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	1.5	$	1.5	$	1.5
Impairment of right of use assets	$	—	$	1.7	$	—	$	1.7
Restructuring charges, net	$	0.6	$	2.9	$	9.5	$	2.9

Fee revenue was $90.3 million in Q3 FY'24 compared to $85.1 million in Q3 FY'23, an increase of $5.2 million or 6% at both actual and constant currency. The increase was primarily driven by increases in leadership and professional development and assessment & succession solutions.

Adjusted EBITDA was $27.4 million in Q3 FY'24 compared to $22.2 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 430bps from 26.0% last year to 30.3% this year. The increase in Adjusted EBITDA and margin was mainly driven by the increase in fee revenue discussed above.


Selected Executive Search Data^(a) (dollars in millions) ^(b)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	199.3		$	212.0		$	607.5		$	663.2
Total revenue	$	201.2		$	213.8		$	613.5		$	668.7

Ending number of consultants		562			616			562			616
Average number of consultants		574			619			582			601
Engagements billed		3,469			4,080			7,269			8,272
New engagements (c)		1,367			1,516			4,349			4,835

Adjusted Results (d):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	43.4		$	46.4		$	125.6		$	163.2
Adjusted EBITDA margin		21.8	%		21.9	%		20.7	%		24.6	%

______________________
(a)		Executive Search is the sum of the individual Executive Search Reporting Segments described in our annual and quarterly reporting on Forms 10-K and 10-Q and is presented on a consolidated basis as it is consistent with the Company's discussion of its Lines of Business, and financial metrics used by the Company's investor base.
(b)		Numbers may not total due to rounding.
(c)		Represents new engagements opened in the respective period.
(d)		Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	—	$	0.1	$	—
Impairment of right of use assets	$	—	$	—	$	0.9	$	—
Restructuring charges, net	$	2.3	$	19.4	$	28.2	$	19.4

Fee revenue was $199.3 million and $212.0 million in Q3 FY'24 and Q3 FY'23, respectively, a year-over-year decrease of $12.7 million or 6% (down 7% on a constant currency basis). The decrease in fee revenue was primarily driven by a decline in executive search activity, resulting from the uncertain and challenging global economic environment.

Adjusted EBITDA was $43.4 million in Q3 FY'24 compared to Adjusted EBITDA of $46.4 million in the year-ago quarter. The decrease in Adjusted EBITDA was primarily due to the decrease in fee revenue discussed above, partially offset by the previous quarter's cost reduction actions. Despite the year-over-year decrease in fee revenue and Adjusted EBITDA, Adjusted EBITDA margin remained essentially flat year-over-year due to the previous quarter's cost reduction actions.


Selected Professional Search & Interim Data (dollars in millions) ^(a)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	130.9		$	118.0		$	411.5		$	351.7
Total revenue	$	131.8		$	118.6		$	414.3		$	354.4

Permanent Placement:
Fee revenue	$	52.4		$	65.0		$	167.2		$	218.5
Engagements billed		1,901			2,428			4,511			6,104
New engagements (b)		995			1,460			3,414			5,122
Ending number of consultants		344			448			344			448
Interim:
Fee revenue	$	78.5		$	53.0		$	244.3		$	133.1
Average bill rate (c)	$	129		$	107		$	126		$	110
Average weekly billable consultants (d)		1,283			1,061			1,352			878

Adjusted Results (e):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	23.8		$	22.0		$	73.7		$	83.6
Adjusted EBITDA margin		18.2	%		18.6	%		17.9	%		23.8	%

_____________________
(a)		Numbers may not total due to rounding.
(b)		Represents new engagements opened in the respective period.
(c)		Fee revenue from interim divided by the number of hours worked by consultants.
(d)		The number of billable consultants based on a weekly average in the respective period.
(e)		Adjusted results exclude the following:

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of fixed assets	$	—	$	0.1	$	—	$	0.1
Impairment of right of use assets	$	—	$	0.6	$	—	$	0.6
Integration/acquisition costs	$	3.8	$	1.7	$	12.7	$	6.6
Restructuring charges, net	$	—	$	4.8	$	3.8	$	4.8

Fee revenue was $130.9 million in Q3 FY'24, an increase of $12.9 million or 11% at both actual and constant currency. The increase in fee revenue was mainly driven by additional fee revenue from the Acquisition, partially offset by a decrease in permanent placement fee revenue.

Adjusted EBITDA was $23.8 million in Q3 FY'24 compared to $22.0 million in the year-ago quarter. The increase in Adjusted EBITDA was primarily due to the increase in fee revenue discussed above and the previous quarter's cost reduction actions, partially offset by higher cost of services expense due to the Acquisition. Adjusted EBITDA margin declined slightly (40bps) year-over-year due to the factors noted above as well as a change in the mix of fee revenue which included more Interim fee revenue, which has lower profitability but is less cyclical as compared to professional search permanent placement which comprised a greater portion of fee revenue in the year-ago quarter.


Selected Recruitment Process Outsourcing ("RPO") Data (dollars in millions) ^(a)
	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Fee revenue	$	81.2		$	103.5		$	264.7		$	324.8
Total revenue	$	83.6		$	104.9		$	270.5		$	330.1

Remaining revenue under contract (b)	$	695.8		$	836.9		$	695.8		$	836.9
RPO new business (c)	$	122.1		$	44.0		$	311.2		$	482.7

Adjusted Results (d):	Third Quarter						Year to Date
	FY'24			FY'23			FY'24			FY'23
Adjusted EBITDA	$	9.3		$	9.8		$	28.6		$	43.6
Adjusted EBITDA margin		11.4	%		9.5	%		10.8	%		13.4	%

______________________
(a)		Numbers may not total due to rounding.
(b)		Estimated fee revenue associated with signed contracts for which revenue has not yet been recognized.
(c)		Estimated total value of a contract at the point of execution of the contract.
(d)		Adjusted results exclude the following:

	Third Quarter				Year to Date
	FY'24		FY'23		FY'24		FY'23
Impairment of right of use assets	$	—	$	0.1	$	0.1	$	0.1
Restructuring charges, net	$	0.7	$	3.1	$	7.9	$	3.1

Fee revenue was $81.2 million in Q3 FY'24, a decrease of $22.3 million or 22% at both actual and constant currency basis. RPO fee revenue decreased due to reduced demand for the number of placements being requested by existing clients as a result of the challenging global economic environment as well as a continuation of clients "labor hoarding".

Adjusted EBITDA was $9.3 million in Q3 FY'24 compared to $9.8 million in the year-ago quarter. The decrease resulted from the decline in fee revenue which was partially offset by cost reductions taken in the previous quarter. Despite the year-over-year decrease in fee revenue and Adjusted EBITDA, Adjusted EBITDA margin increased 190bps year-over-year from 9.5% to 11.4% due to the previous quarter's cost reduction actions.

Outlook

Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

Q4 FY'24 fee revenue is expected to be in the range of $675 million and $695 million; and
Q4 FY'24 diluted earnings per share is expected to range between $1.06 to $1.14.

On a consolidated adjusted basis:

Q4 FY'24 adjusted diluted earnings per share is expected to be in the range from $1.09 to $1.17.

	Q4 FY'24 Earnings Per Share Outlook
	Low			High

Consolidated diluted earnings per share	$	1.06		$	1.14
Integration/acquisition and restructuring charges		0.05			0.05
Tax Rate Impact		(0.02	)		(0.02	)
Consolidated adjusted diluted earnings per share⁽¹⁾	$	1.09		$	1.17

______________________
(1)		Consolidated adjusted diluted earnings per share is a non-GAAP financial measure that excludes the items listed in the table.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 PM (EST) and hosted by CEO Gary Burnison, CFO Robert Rozek, SVP Business Development & Analytics Gregg Kvochak and VP Investor Relations Tiffany Louder. The conference call will be webcast and available online at ir.kornferry.com. We will also post to the investor relations section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people. Visit kornferry.com for more information.

Forward-Looking Statements

Statements in this press release and our conference call that relate to our outlook, projections, goals, strategies, future plans and expectations, including statements relating to expected demand for and relevance of our products and services, our workforce reduction plan, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as "believes", "expects", "anticipates", "goals", "estimates", "guidance", "may", "should", "could", "will" or "likely", and variations of such words and similar expressions are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, interest rates, 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, our ability to maintain 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 government 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 recent 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, develop and respond to new technology, including artificial intelligence, 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 on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Salo, resulting organizational changes, our indebtedness, those relating to the ultimate magnitude and duration of any pandemic or outbreaks. For a detailed description of risks and uncertainties that could cause differences from our expectations, please refer to Korn Ferry's periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). In particular, it includes:

Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets, and restructuring charges, net of income tax effect and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets, and restructuring charges, net of income tax effect, and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period;
Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, impairment of fixed assets, impairment of right of use assets and restructuring charges, net when applicable, and Consolidated and Executive Search Adjusted EBITDA margin.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry's performance by excluding certain charges that may not be indicative of Korn Ferry's ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Professional Search & Interim business, 2) impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23, 3) impairment of right of use assets due to the decision to terminate and sublease some of our offices, 4) Restructuring charges, net to align workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic and geopolitical uncertainty and 5) to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance. The use of non-GAAP financial measures facilitates comparisons to Korn Ferry's historical performance. Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry's ongoing operations and financial and operational decision-making. Adjusted net income attributable to Korn Ferry, adjusted basic and diluted earnings per share and Consolidated and Executive Search Adjusted EBITDA, exclude certain charges that management does not consider on-going in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company's operating results. Management further believes that Consolidated and Executive Search Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. In the case of constant currency percentages, management believes the presentation of such information provides useful supplemental information regarding Korn Ferry's performance as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company's operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry's ongoing operations and financial and operational decision-making.


KORN FERRY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)

	Three Months Ended January 31,						Nine Months Ended January 31,
		2024			2023			2024			2023
	(unaudited)
Fee revenue	$	668,679		$	680,782		$	2,071,871		$	2,104,534
Reimbursed out-of-pocket engagement expenses		8,194			6,063			23,711			21,178
Total revenue		676,873			686,845			2,095,582			2,125,712

Compensation and benefits		456,216			479,382			1,389,956			1,409,774
General and administrative expenses		62,661			72,785			194,315			202,328
Reimbursed expenses		8,194			6,063			23,711			21,178
Cost of services		75,814			57,903			231,516			157,152
Depreciation and amortization		19,509			17,037			58,075			50,359
Restructuring charges, net		4,612			41,162			68,558			41,162
Total operating expenses		627,006			674,332			1,966,131			1,881,953

Operating income		49,867			12,513			129,451			243,759
Other income, net		23,817			13,097			23,559			4,824
Interest expense, net		(4,946	)		(5,378	)		(16,282	)		(20,088	)
Income before provision for income taxes		68,738			20,232			136,728			228,495
Income tax provision		9,018			8,463			29,779			63,575
Net income		59,720			11,769			106,949			164,920
Net income attributable to noncontrolling interest		(649	)		(522	)		(2,984	)		(2,885	)
Net income attributable to Korn Ferry	$	59,071		$	11,247		$	103,965		$	162,035

Earnings per common share attributable to Korn Ferry:
Basic	$	1.14		$	0.21		$	2.00		$	3.07
Diluted	$	1.13		$	0.21		$	1.99		$	3.05

Weighted-average common shares outstanding:
Basic		51,126			51,278			51,129			51,639
Diluted		51,343			51,431			51,329			51,999

Cash dividends declared per share:	$	0.33		$	0.15		$	0.69		$	0.45


KORN FERRY AND SUBSIDIARIES FINANCIAL SUMMARY BY REPORTING SEGMENT (dollars in thousands) (unaudited)

	Three Months Ended January 31,						Nine Months Ended January 31,
	2024		2023		% Change		2024		2023		% Change
Fee revenue:
Consulting	$	166,947	$	162,155	3.0	%	$	512,830	$	501,731	2.2	%
Digital		90,317		85,071	6.2	%		275,395		263,161	4.6	%
Executive Search:
North America		121,449		132,810	(8.6	%)		381,459		426,839	(10.6	%)
EMEA		48,999		48,960	0.1	%		138,873		140,661	(1.3	%)
Asia Pacific		21,324		22,621	(5.7	%)		65,167		72,410	(10.0	%)
Latin America		7,541		7,654	(1.5	%)		22,041		23,283	(5.3	%)
Total Executive Search ^(a)		199,313		212,045	(6.0	%)		607,540		663,193	(8.4	%)
Professional Search & Interim		130,890		117,980	10.9	%		411,453		351,670	17.0	%
RPO		81,212		103,531	(21.6	%)		264,653		324,779	(18.5	%)
Total fee revenue		668,679		680,782	(1.8	%)		2,071,871		2,104,534	(1.6	%)
Reimbursed out-of-pocket engagement expenses		8,194		6,063	35.1	%		23,711		21,178	12.0	%
Total revenue	$	676,873	$	686,845	(1.5	%)	$	2,095,582	$	2,125,712	(1.4	%)

(a)

Total Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company's discussion of its Lines of Business, and financial metrics used by the Company's investor base.


KORN FERRY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)

	January 31, 2024			April 30, 2023
	(unaudited)
ASSETS
Cash and cash equivalents	$	736,797		$	844,024
Marketable securities		45,727			44,837
Receivables due from clients, net of allowance for doubtful accounts of $50,302 and $44,377 at January 31, 2024 and April 30, 2023, respectively		589,717			569,601
Income taxes and other receivables		63,020			67,512
Unearned compensation		60,071			63,476
Prepaid expenses and other assets		49,377			49,219
Total current assets		1,544,709			1,638,669

Marketable securities, non-current		204,326			179,040
Property and equipment, net		163,600			161,876
Operating lease right-of-use assets, net		167,441			142,690
Cash surrender value of company-owned life insurance policies, net of loans		216,450			197,998
Deferred income taxes		121,267			102,057
Goodwill		909,330			909,491
Intangible assets, net		95,151			114,426
Unearned compensation, non-current		111,286			103,607
Investments and other assets		22,765			24,590
Total assets	$	3,556,325		$	3,574,444

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	46,368		$	53,386
Income taxes payable		23,599			19,969
Compensation and benefits payable		423,268			532,934
Operating lease liability, current		36,895			45,821
Other accrued liabilities		312,511			324,150
Total current liabilities		842,641			976,260

Deferred compensation and other retirement plans		427,464			396,534
Operating lease liability, non-current		151,159			119,220
Long-term debt		396,755			396,194
Deferred tax liabilities		5,709			5,352
Other liabilities		25,186			27,879
Total liabilities		1,848,914			1,921,439

Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 77,511 and 76,693 shares issued and 52,345 and 52,269 shares outstanding at January 31, 2024 and April 30, 2023, respectively		428,413			429,754
Retained earnings		1,378,140			1,311,081
Accumulated other comprehensive loss, net		(102,930	)		(92,764	)
Total Korn Ferry stockholders' equity		1,703,623			1,648,071
Noncontrolling interest		3,788			4,934
Total stockholders' equity		1,707,411			1,653,005
Total liabilities and stockholders' equity	$	3,556,325		$	3,574,444


KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (dollars in thousands) (unaudited)

	Three Months Ended January 31,						Nine Months Ended January 31,
		2024			2023			2024			2023

Net income attributable to Korn Ferry	$	59,071		$	11,247		$	103,965		$	162,035
Net income attributable to non-controlling interest		649			522			2,984			2,885
Net income		59,720			11,769			106,949			164,920
Income tax provision		9,018			8,463			29,779			63,575
Income before provision for income taxes		68,738			20,232			136,728			228,495
Other income, net		(23,817	)		(13,097	)		(23,559	)		(4,824	)
Interest expense, net		4,946			5,378			16,282			20,088
Operating income		49,867			12,513			129,451			243,759
Depreciation and amortization		19,509			17,037			58,075			50,359
Other income, net		23,817			13,097			23,559			4,824
Integration/acquisition costs (1)		3,899			2,456			13,057			9,472
Impairment of fixed assets (2)		—			4,375			1,575			4,375
Impairment of right of use assets (3)		—			5,471			1,629			5,471
Restructuring charges, net (4)		4,612			41,162			68,558			41,162
Adjusted EBITDA	$	101,704		$	96,111		$	295,904		$	359,422

Operating margin		7.5	%		1.8	%		6.2	%		11.6	%
Depreciation and amortization		2.9	%		2.5	%		2.8	%		2.4	%
Other income, net		3.5	%		1.9	%		1.2	%		0.2	%
Integration/acquisition costs (1)		0.6	%		0.4	%		0.6	%		0.4	%
Impairment of fixed assets (2)		—	%		0.7	%		0.1	%		0.2	%
Impairment of right of use assets (3)		—	%		0.8	%		0.1	%		0.3	%
Restructuring charges, net (4)		0.7	%		6.0	%		3.3	%		2.0	%
Adjusted EBITDA margin		15.2	%		14.1	%		14.3	%		17.1	%

Net income attributable to Korn Ferry	$	59,071		$	11,247		$	103,965		$	162,035
Integration/acquisition costs (1)		3,899			2,456			13,057			9,472
Impairment of fixed assets (2)		—			4,375			1,575			4,375
Impairment of right of use assets (3)		—			5,471			1,629			5,471
Restructuring charges, net (4)		4,612			41,162			68,558			41,162
Tax effect on the adjusted items (5)		(2,092	)		(11,705	)		(20,763	)		(13,410	)
Tax adjustment (6)		(9,714	)		—			(9,714	)		—
Adjusted net income attributable to Korn Ferry	$	55,776		$	53,006		$	158,307		$	209,105

Explanation of Non-GAAP Adjustments
(1)		Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.
(2)		Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23.
(3)		Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases.
(4)		Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty.
(5)		Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net.
(6)		Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in the quarter ended January 31, 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.


KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED (unaudited)

	Three Months Ended January 31,						Nine Months Ended January 31,
		2024			2023			2024			2023

Basic earnings per common share	$	1.14		$	0.21		$	2.00		$	3.07
Integration/acquisition costs (1)		0.07			0.05			0.25			0.18
Impairment of fixed assets (2)		—			0.08			0.03			0.08
Impairment of right of use assets (3)		—			0.10			0.03			0.10
Restructuring charges, net (4)		0.09			0.80			1.32			0.79
Tax effect on the adjusted items (5)		(0.04	)		(0.23	)		(0.40	)		(0.26	)
Tax adjustment (6)		(0.19	)		—			(0.19	)		—
Adjusted basic earnings per share	$	1.07		$	1.01		$	3.04		$	3.96

Diluted earnings per common share	$	1.13		$	0.21		$	1.99		$	3.05
Integration/acquisition costs (1)		0.07			0.05			0.25			0.18
Impairment of fixed assets (2)		—			0.08			0.03			0.08
Impairment of right of use assets (3)		—			0.10			0.03			0.10
Restructuring charges, net (4)		0.09			0.80			1.32			0.78
Tax effect on the adjusted items (5)		(0.04	)		(0.23	)		(0.40	)		(0.26	)
Tax adjustment (6)		(0.18	)		—			(0.19	)		—
Adjusted diluted earnings per share	$	1.07		$	1.01		$	3.03		$	3.93

Explanation of Non-GAAP Adjustments
(1)		Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.
(2)		Costs associated with impairment of fixed assets primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23.
(3)		Costs associated with impairment of right-of-use assets due to terminating and deciding to sublease some of our office leases.
(4)		Restructuring charges incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty.
(5)		Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net.
(6)		Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in the quarter ended January 31, 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results.


KORN FERRY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED (unaudited)

	Three Months Ended January 31,
	2024									2023
	Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin		Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin
	(dollars in thousands)
Consulting	$	166,947	$	169,929	$	27,812		16.7	%	$	162,155	$	164,414	$	23,305		14.4	%
Digital		90,317		90,394		27,370		30.3	%		85,071		85,087		22,153		26.0	%
Executive Search:
North America		121,449		123,059		29,382		24.2	%		132,810		134,255		30,446		22.9	%
EMEA		48,999		49,171		7,799		15.9	%		48,960		49,195		7,981		16.3	%
Asia Pacific		21,324		21,384		4,500		21.1	%		22,621		22,694		5,538		24.5	%
Latin America		7,541		7,543		1,750		23.2	%		7,654		7,658		2,462		32.2	%
Total Executive Search		199,313		201,157		43,431		21.8	%		212,045		213,802		46,427		21.9	%
Professional Search & Interim		130,890		131,824		23,795		18.2	%		117,980		118,616		21,969		18.6	%
RPO		81,212		83,569		9,291		11.4	%		103,531		104,926		9,849		9.5	%
Corporate		—		—		(29,995	)				—		—		(27,592	)
Consolidated	$	668,679	$	676,873	$	101,704		15.2	%	$	680,782	$	686,845	$	96,111		14.1	%

	Nine Months Ended January 31,
	2024									2023
	Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin		Fee revenue		Total revenue		Adjusted EBITDA			Adjusted EBITDA margin
	(dollars in thousands)
Consulting	$	512,830	$	521,675	$	81,920		16.0	%	$	501,731	$	508,994	$	83,944		16.7	%
Digital		275,395		275,563		80,678		29.3	%		263,161		263,479		73,855		28.1	%
Executive Search:
North America		381,459		386,405		87,574		23.0	%		426,839		431,286		112,164		26.3	%
EMEA		138,873		139,621		19,056		13.7	%		140,661		141,443		24,577		17.5	%
Asia Pacific		65,167		65,454		14,690		22.5	%		72,410		72,669		18,723		25.9	%
Latin America		22,041		22,050		4,296		19.5	%		23,283		23,289		7,686		33.0	%
Total Executive Search		607,540		613,530		125,616		20.7	%		663,193		668,687		163,150		24.6	%
Professional Search & Interim		411,453		414,348		73,746		17.9	%		351,670		354,430		83,587		23.8	%
RPO		264,653		270,466		28,617		10.8	%		324,779		330,122		43,562		13.4	%
Corporate		—		—		(94,673	)				—		—		(88,676	)
Consolidated	$	2,071,871	$	2,095,582	$	295,904		14.3	%	$	2,104,534	$	2,125,712	$	359,422		17.1	%

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Korn Ferry Announces Third Quarter Fiscal 2024 Results of Operations