Korn/Ferry International Q4 2025 Earnings Report

Korn/Ferry International EPS Results

• Actual EPS: $1.32
• Consensus EPS: $1.26
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $1.26

Korn/Ferry International Revenue Results

• Actual Revenue: $712.05 million
• Expected Revenue: $690.07 million
• Beat/Miss: Beat by +$21.97 million
• YoY Revenue Growth: +3.10%

Korn/Ferry International Announcement Details

• Quarter: Q4 2025
• Date: 6/18/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, June 18, 2025
• Conference Call Time: 12:00PM ET

Korn/Ferry International (NYSE:KFY) is a global organizational consulting firm specializing in talent acquisition, leadership development and succession planning. Founded in 1969 by Lester Korn and Richard Ferry, the company has grown to become one of the world’s largest providers of executive search services. Its core mission is to help clients identify, recruit and retain senior-level executives who can drive long‐term growth and strategic transformation.

The firm’s service portfolio encompasses executive search, leadership and professional development, assessment and succession planning, and recruitment process outsourcing (RPO). Through its digital platform, Korn/Ferry leverages analytics and artificial intelligence to match candidates with organizational needs, enhancing the efficiency of talent searches. The company also offers coaching, culture transformation and performance management solutions designed to align leadership behaviors with business objectives.

Korn/Ferry operates in more than 50 offices across North America, Europe, Asia Pacific and Latin America, serving a diverse client base that includes multinational corporations, government agencies and not‐for‐profit organizations. Its global footprint enables the firm to deliver local market insights and cross‐border expertise, supporting clients as they navigate complex regulatory environments and diverse cultural landscapes. The firm has built industry‐specific practices covering sectors such as technology, healthcare, financial services, consumer goods and industrial manufacturing.

Since 2006, Gary D. Burnison has served as chief executive officer, guiding Korn/Ferry through digital transformation and an expanded service model. The leadership team draws on decades of experience in human capital and organizational psychology, advising boards and executive committees on governance, talent strategy and CEO succession. Under Burnison’s tenure, the firm has placed thousands of executives worldwide and continually refines its methodologies to address evolving workforce trends.

Korn/Ferry International Q4 2025 Earnings Call Transcript

Key Takeaways

• Korn Ferry delivered 4% fee revenue growth (constant currency) in Q4, with new business up 3%, adjusted EBITDA rising 8% to $121 million and margins expanding by 70 basis points.
• Executive Search grew 15% year-over-year (constant currency) for the fourth consecutive quarter, while digital subscription and license new business reached 40% of total digital wins, enhancing revenue stability.
• Client engagement remains strong: 77% of clients purchase two or more solutions, marquee and diamond accounts account for nearly 40% of fee revenue, and estimated remaining fees under existing contracts rose 12% to $1.7 billion.
• The fourth release of TalentSuite expands the firm’s proprietary IP—covering billions of data points—and is targeted for CRM ecosystem integration to drive scalable licensing revenue.
• Q1 FY 2026 guidance anticipates fee revenue of $675–695 million, adjusted EBITDA margins of 16.8%–17.2%, and adjusted EPS of $1.18–1.26, reflecting continued macroeconomic uncertainty.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Korn Ferry Fourth Quarter Fiscal Year twenty twenty five Conference Call. At this time, all participants are in a listen only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the Investor Relations section of our website at cornferry.com a copy of the financial presentation that we will be reviewing with you today.

[Operator]

Before I turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Certain statements made in today's call, such as those relating to future performance, plans and goals, constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, which are beyond the company's control.

[Operator]

Additional information concerning such risks and uncertainties can be found in the release relating to the presentation and in the periodic and other reports filed by the company with the SEC, including the company's soon to be filed annual report for fiscal year 2025. Also, some of the comments today may reference non GAAP financial measures such as constant currency amounts, EBITDA and adjusted EBITDA. Additional information concerning these measures, including reconciliations to the most direct comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, all of which are posted in the Investor Relations section of the company's website at www.cornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison.

[Gary Burnison, CEO at Korn Ferry]

Okay. Thank you everybody for joining us and I'm going to have the team get into the more details. But overall, our execution has been outstanding. We continue to deliver on all of our financial and strategic objectives. And when I look forward, I mean, there's nothing but opportunity.

[Gary Burnison, CEO at Korn Ferry]

Our strategy is working. The breadth of our solutions provides more durable and synergistic revenue offering really a growth foundation for tomorrow. And for us, it all starts with clients. And I just think of in the quarter a number of transformative engagements where it's from leading industrial companies to a global semiconductor company, where we're helping drive a more nimble organizational structure to financial services, and in particular, an insurance company, where we're really creating a data rich foundation to help build their future talent pipeline, including developing like 2,500 leaders per year. I mean, it's working.

[Gary Burnison, CEO at Korn Ferry]

The strategy is definitely working and it demonstrates that the ongoing investments that we're making to extend our offerings and our solutions and expand our impact are powering performance for clients. That's what it's all about. I mean, the success in our business was evident during the quarter again. Fee revenue was up 4%, new business was up 3%, both of those constant currency. Fundamentally, this business has changed over the last several quarters and years.

[Gary Burnison, CEO at Korn Ferry]

And our evolution towards synergistic fee revenue sources, driven really by large scale client engagement has changed the fundamental composition and the scale of our business. We've got ten and twenty year CAGR growth rates of more than 10%, 77% of our clients buy two or more of our solutions, more than half buy three. We've got large repeatable clients of scale. The marquee and diamond accounts for us represent almost 40% of our fee revenue. We've raised our dividend six times in five years.

[Gary Burnison, CEO at Korn Ferry]

We've got a balanced approach to capital. 26% of our top line is driven through inside sales, inside referrals. This thing is working. And as I look forward to this year ahead, we're going to continue to innovate. We're going put a strong focus on technology, AI and more importantly, offerings that drive organizational performance for our clients.

[Gary Burnison, CEO at Korn Ferry]

Our enterprise talent, data analytics and insights are helping clients understand whether they have the right talent in the right roles that align with their strategic priorities. In the quarter, we completed the fourth product release of TalentSuite in the last year or so. And with each release, our organizational and talent products enable us to be more deeply embedded with our clients as we bundle our services and IP and that IP is immense. Billions of data points, 108,000,000 assessments have taken, rewards data on 28,000,000 people, 31,000 companies, engagement data on 38,000,000 people, culture and benchmark, that's on 7,000,000 respondents over 500 organizations. I mean, could go on and on and on.

[Gary Burnison, CEO at Korn Ferry]

This IP is immense. And our intention is to license that to create knowledge transfer to change a lot of lives and the destination of our clients. And so as I as we close out another fiscal year, it's gratifying to see our success in arguably a very difficult economic environment and a testament to the evolution of our firm. And it's all made possible through our talented colleagues. We are truly a global consulting firm that powers performance.

[Gary Burnison, CEO at Korn Ferry]

And that's why the world's most forward thinking companies across every major industry turn to us for a shared commitment to lasting impact and the bold ambition to be more than. With that, Bob, I'll turn it over to you.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Great. Thanks, Gary, and good morning, good afternoon, everyone. Listen, it was a great fourth quarter, one that exceeded expectations, especially in light of the current operating environment. But before I begin my remarks, I would be remiss if I didn't thank all of my Korn Ferry colleagues whose determination and dedication made these results and our full year results possible. Our fourth quarter performance is yet another data point validating how our strategy is producing industry leading results.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

As the universal demand for great talent continues to grow, we're uniquely positioned to fulfill our clients' talent needs with scope and scale across all industries and geographies. Now in addition to the detailed results and data points found in our earnings presentation posted on our website, here are a few company wide and solutions specific highlights for the quarter. Our Marquee and Diamond accounts remained strong at 39% of our consolidated fee revenue in the fourth quarter. Our cross solution referrals also remained strong. We exited the year at 26% of our consolidated fee revenue being referred amongst our solution areas.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

We continue to invest in commercial capacity by increasing our senior client partner population by approximately 25 net new hires. Executive Search grew for the fourth consecutive quarter, was up 15% year over year at constant currency. Digital subscription and license new business in the fourth quarter grew to 40% of the total digital new business and that's up from 37% in the prior year quarter, continuing to add more stability and predictability to our fee revenue base. RPO continued to build for future growth with $119,000,000 of new business awards, 77% of that amount are attributed to new logos. And our average hourly bill rates in consulting and the interim portion of PSI remained strong at $454 an hour and $131 an hour, respectively.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Turning to overall company results for the fourth quarter. Consolidated fee revenue was $712,000,000 growing 4% year over year at constant currency. Earnings and profitability also continue to grow on a year over year basis. Adjusted EBITDA grew 8% to $121,000,000 Adjusted EBITDA margin grew 70 basis points to 17% and our adjusted diluted earnings per share grew 5% to $1.32 As Gary mentioned, at constant currency, total company new business grew 3% year over year including RPO and grew 5% year over year excluding RPO. You'll note in our earnings presentation posted to our website, we have disclosed a new operating metric, estimated remaining fees under existing contracts And that's an additional proof point demonstrating the effectiveness of our diversification strategy.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

This operating metric represents the estimated amount of remaining fees associated with existing contracts for services and solutions yet to be delivered to our clients. At the end of the fourth quarter, this totaled approximately $1,700,000,000 and was up 12% year over year. Of this amount, we estimate that approximately 57% or $977,000,000 will be recognized as fees within the next year with the remaining 43% or $734,000,000 estimated to be recognized beyond the next four quarters. Now certain of our solutions such as executive and professional search firm placements have shorter duration contracts, which result in fee revenue being recognized in the next quarter or so. However, a much larger portion of our estimated remaining fees under existing contracts is from our other solution areas, which have longer duration contracts, which give us more durable and resilient future fee revenue streams.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

We have also introduced fee revenue by geography, The Americas, EMEA and APAC. We are an organization that puts clients first and we engage with our clients holistically as Korn Ferry. And we look to our regional and local colleagues as the point of integration and execution. Now looking at the three regions, fee revenue in The Americas was essentially flat year over year at constant currency. We saw growth in Exec Search and RPO.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

EMEA fee revenue grew 9% year over year at constant currency, saw growth in Exact Search and Pro Search and interim there. And APAC fee revenue grew 8% year over year at constant currency, primarily driven by growth in Exact Search and RPO. And finally, our capital allocation continues to remain balanced. For all of fiscal twenty twenty five, we returned $173,000,000 to shareholders through combined share repurchases and dividends. We invested $44,000,000 in M and A and invested $62,000,000 in capital expenditures focused on TalentSuite, our technology platforms, productivity tools and related product enhancements.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Now turning to our outlook for the first quarter of fiscal twenty twenty six. Assuming no further changes in worldwide geopolitical conditions, economic conditions, financial markets, foreign exchange rates, we expect fee revenue in the first quarter of fiscal twenty twenty six to range from $675,000,000 to $695,000,000 our adjusted EBITDA margin to range from approximately 16.8% to 17.2% and our consolidated adjusted diluted earnings per share to range from $1.18 to $1.26 Finally, we expect our GAAP diluted earnings per share in the first quarter to range from $1.16 to $1.24 Now our accomplishments in fiscal twenty twenty five underscore our ongoing commitment to remain focused on controlling what we can, leaning into growth opportunities where we see them and driving operational excellence. Additionally, as our firm continues to evolve, we will remain relentlessly focused on client service. Korn Ferry is a global consulting firm that powers client performance. We are well positioned for the next step in our evolution and I am more confident and excited than I have ever been about what this company can become.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

With that, we would be glad to answer any questions you may have.

[Operator]

Thank you. Your first question comes from the line of Trevor Romeo of William Blair. Your line is open.

[Trevor Romeo, Research Analyst at William Blair]

Hey, everyone. Thanks so much for taking the questions and great performance despite the tough environment. But I guess I just wanted to dial in a bit on any color you might have on new business trends and I guess revenue trends by month over the last several months, especially with the tariff announcements in April and everything that's kind of transpired since then, business confidence still being a bit lower. Just any indications of how trends and your conversations have changed the past few months would be really helpful, especially if you've seen any areas of incremental weakness since then?

[Gary Burnison, CEO at Korn Ferry]

I mean, there's always uncertainty. That's the only thing that's certain. And the conversations ebb and flow, and you have something that happens with Israel and Iran and you have a different conversation. And it seems like it's happening more and more these days. In terms of new business, I mean May was actually stronger than April.

[Gary Burnison, CEO at Korn Ferry]

April was about the same as March and February was pretty good. So the conversations change. But essentially, when I look at the firm as a whole, it's pretty impressive, particularly in this market, which I would consider a recession for the last seven quarters.

[Trevor Romeo, Research Analyst at William Blair]

Yes. That makes sense, Gary. And then, I guess, I just wanted to maybe dig in on Executive Search a little bit. I think you've talked a lot about the peak 65 demographics. I think a lot of the Executive Surveys we see are showing high levels of turnover.

[Trevor Romeo, Research Analyst at William Blair]

But in this quarter, I think the 15% growth was quite a bit stronger than we had been seeing. Was there anything specific that changed this quarter for the search business? Is some of it share gains or something like that? And what would you kind of expect to continue in terms of growth in the next few quarters for that?

[Gary Burnison, CEO at Korn Ferry]

I don't think you can look at it necessarily quarter to quarter. There's going to be ebbs and flows. I think when you look at it over the long term, the firm has delivered 10%, 11% growth year in year out as one business. And that's been pretty remarkable. And I think that speaks to solutions and the offerings that we have.

[Gary Burnison, CEO at Korn Ferry]

Clearly, when you look quarter to quarter, you'll find it at some points, consulting is up, search is down, digital is flat, RPO is up. The point here is to have a well rounded set of solutions that drive organizational performance, that drive human performance. And I think Korn Ferry is just starting out. So yes, if you look at any particular moment, there's different things that you would point out. Clearly, we're in an environment now where there are demographic factors at play big time.

[Gary Burnison, CEO at Korn Ferry]

And there's also demands for a different type of leader today from say five years ago. So all of those things are at play. But what I look at is the overall firm performance profitability and the growth that we're able to achieve for shareholders and our colleagues.

[Trevor Romeo, Research Analyst at William Blair]

Okay, great. So nothing particular for this quarter in Executive Search. I'll jump back in the queue. Just wanted to quickly mention thanks for all the new disclosures. I think that will give investors a better view into your visibility. So thanks everyone.

[Gary Burnison, CEO at Korn Ferry]

Good.

[Operator]

Your next question comes from the line of George Tong of Goldman Sachs. Your line is open.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Thanks. Good morning. Could you provide an update on what you're seeing with sales cycles? And also, how client spending behaviors may be different across segments? So across the various segments, where are you seeing any changes or macro sensitivity or any type of purchasing pattern differences? Any update there would be helpful.

[Gary Burnison, CEO at Korn Ferry]

Well, I think number one, there's a cost of living crisis. And I've said this for a long time. And it's very clear in America, there's a cost of living crisis. And that is a serious issue. And it is beyond companies for many months were able to raise prices, shrink packaging, volume went down.

[Gary Burnison, CEO at Korn Ferry]

That hasn't been the case for seven quarters. And so companies are across the board, growth is elusive. And so they're having to cut costs. And it's now been happening for seven quarters pretty consistently, for example, in The United States. And so I look at that environment and given everything that's going on, it's still going to be a challenging environment going forward.

[Gary Burnison, CEO at Korn Ferry]

So for me, that's the biggest issue. And then secondly is the leadership team, the people that got you here may not get you there. And this is we're on the precipice of just incredible change and growth is elusive. And so that has big, big ramifications on a workforce in terms of what that means in the future.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Got it. Okay, that's helpful. And then could you talk about how new business quarterly new business performed in the consulting segment and then overall for digital? I know you provided total subscription and license new business, but total new business for digital and total new business for consulting what the year over year change was?

[Gary Burnison, CEO at Korn Ferry]

Yes. I tend to look at the firm in total and that was up I will say that broadly speaking, what's happening is in the consulting area, as you know, the engagements are getting bigger. So I think that now about 25% of our new business is engagements that are 7 figures and above. So those are having a much longer time to implement.

[Gary Burnison, CEO at Korn Ferry]

I mean, these could be three, four, five year leadership development journeys that take time to really work their way through. I mean, I think of one that is tens of millions of dollars that we originated two point five, three years ago. And the truth is we're only kind of 25% through all the cohorts. I mean it definitely takes time. So there's a couple of factors at play.

[Gary Burnison, CEO at Korn Ferry]

I think one is the firm is going to continue to move towards powering clients' performance, which on the consulting side would be more transformative engagements that will probably take longer to implement. So that's number one. And number two is companies are slashing costs. I mean, you see it everywhere. And so that is definitely impacting some of our solutions.

[Gary Burnison, CEO at Korn Ferry]

And when it comes to digital, I'm very, very proud of this fourth release of the talent suite. I think that's going to be something that as we look back five years from now, that's going to be an absolute game changer. Hopefully, by the end of this calendar year, it will be seamlessly integrated to at least one major CRM provider. And when you look at the digital, it's been very, very consistent. In terms of new business, which it's not like it's gone up 15%, but it's not like it's gone down 10%.

[Gary Burnison, CEO at Korn Ferry]

I mean, it's been very, very consistent. And what I would argue has been a recessionary environment for seven quarters.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Hey, Gary. I can just add a little bit of specificity there. So George, the digital business year over year was up 4% constant currency and consulting is flat. And so that just as we talked about the in the consulting world, the impact of the larger engagements and consumption impacting revenue, but the demand for our services and solutions remain strong.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Makes sense. Thanks very much.

[Operator]

Your next question comes from the line of Mark Marcon of Baird. Your line is open.

[Mark Marcon, Senior Research Analyst at Baird]

Hey, good morning or good afternoon depending on where you are. Congrats on strong results. Gary, just wanted to pick up on a few of the things that you were mentioning before. One specifically with regards to the fourth release of the Talent Suite. Can you talk a little bit about from a user perspective, what are the big differences that a user will end up seeing?

[Mark Marcon, Senior Research Analyst at Baird]

And what gives you the confidence that we could end up seeing a fairly decent uplift there with this fourth release.

[Gary Burnison, CEO at Korn Ferry]

I mean the confidence is that people still make businesses successful. When you I think the big difference hopefully that customers will see over the next several months is seamlessness and the ability to toggle between learning and development, between setting competitive pay packages to identifying role, the right kinds of success profiles for certain roles. So I would hope that it's across the spectrum of hiring, developing, rewarding, motivating. Across those dimensions of a workforce, I would hope that there is increasing seamlessness from a user experience. And that hasn't been the case in the past where people would have to spot say a pay package.

[Gary Burnison, CEO at Korn Ferry]

So I think that is going to be I think it's going to be unique in the marketplace. The debt that we have is really second to none. And yes, I do have a lot of confidence in it.

[Mark Marcon, Senior Research Analyst at Baird]

That's great. And then, Bob, just to clarify something. When you mentioned digital was up 4% and consulting was flat, was that in terms of new business?

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Yes,

[Mark Marcon, Senior Research Analyst at Baird]

the last quarter?

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Yes, new business in Q4.

[Mark Marcon, Senior Research Analyst at Baird]

Great. And so and the timing of the release, I mean, you expect that digital would start seeing a pickup in the second half of this fiscal year? And specifically you mentioned potentially we could end up getting attached to some bigger packages. Could you talk a little bit more about that?

[Gary Burnison, CEO at Korn Ferry]

Well timing is I mean that's very, very hard to predict. And look, it's a certain part of this is dependent on the macro environment that we're in. But would I expect to see something at the end of this calendar year? Probably not. Would I expect to see some in the next calendar year? Absolutely.

[Mark Marcon, Senior Research Analyst at Baird]

Okay, great. And then Gary, mentioned a different type of leader. Could you expand on that? You have lots of conversations with thought leadership thought leaders across the board. What are boards looking for now in terms of different types of leaders?

[Gary Burnison, CEO at Korn Ferry]

Well, I think the ability number one, there's the kind of age old things of strategy and vision and financial acumen, encourage and confidence. All of our research would point to that. But we also would be a very, very strong component given the change, I mean really profound changes at our doorstep. That I think the single biggest change is for a CEO to embrace ambiguity. And there's a difference between embracing ambiguity and thriving in ambiguity that deal with ambiguity.

[Gary Burnison, CEO at Korn Ferry]

And I think we're entering a period of time. I laugh at some of these articles that have been written over the last few days about how AI is going to replace jobs. That's not the point. The point is there won't be enough workers to work in those jobs. So the fact is this incredible imbalance, the low birth rates over the last twenty years are going to create a situation where there is a big imbalance of supply and demand of labor.

[Gary Burnison, CEO at Korn Ferry]

That gets filled through technology across the board, either immigration or technology. And so I think as we think about this and we are assessing clients' ability, their leadership capacity to deal with say AI, I mean the thing that's coming screaming off the page is the ability to embrace ambiguity. And you see it now almost day to day, week to week. It is I'm sure every generation has said it. But what we're seeing today, it's incredible.

[Gary Burnison, CEO at Korn Ferry]

And so that is I think that is the huge, huge difference about somebody that's going to lead an organization for the next five years than maybe somebody who did it ten years ago.

[Mark Marcon, Senior Research Analyst at Baird]

Great. And then can you talk a little bit about on the executive search side, saw some really good growth in the international markets. And along with that, you ended up seeing a pretty big pickup in terms of consultant productivity. I mean you're up to an average of $1,600,000 per which is terrific. What are you seeing in terms of the top end of that and what's been driving that increase in terms of productivity and what's been driving the international growth to a greater extent?

[Gary Burnison, CEO at Korn Ferry]

Well, would say, Mark, so the North American growth has been very good too. So across the board, across the globe that solution has done very, very well. And so part of it is us and part of it is the market. I do think we have this demonstrated track record with a real strategy, with real solutions that drive a company's performance. But clearly, there's other factors at play.

[Gary Burnison, CEO at Korn Ferry]

And some of those factors are demographics, some of those factors are burnout, Some of those factors are a different leadership team that's needed over the next five or ten years than the past ten years. I mean, all of those things are at play here. And it's hard for me to pick out like which one of those is more important than the other.

[Mark Marcon, Senior Research Analyst at Baird]

That's fair. And then obviously we've been dealing with all sorts of changes. It's obviously too early to tell and nobody knows exactly what's going to happen. But just in terms of just the latest international news item, do you think that's going to have any sort of real impact in the very short term with regards to the confidence that obviously it's going to depend on how it plays out. But if it just keeps if it plays out where it's just kind of in the background, do you think people are starting to just ignore things?

[Mark Marcon, Senior Research Analyst at Baird]

Or do you think it's going to create more hesitancy?

[Gary Burnison, CEO at Korn Ferry]

Well, I think you're right. It depends on where this goes. I mean, even if it's at this level and it's sustained, that's not good. Loss of life, this is not good overall. And it just adds to everything else that's happened over it just it seems like seven or eight quarters now of all sorts of different kind of news.

[Gary Burnison, CEO at Korn Ferry]

So that's very, very hard to predict. I quite I've said this before. I think a fundamental issue is the cost of living crisis. And when you have a gallon of milk, carton of eggs prices, when all those things are up 50% and people talk about inflation moderating to 2%, it's a joke. It's an absolute joke because that's on a base of up 50% and wages have gone up, but they haven't gone up that much.

[Gary Burnison, CEO at Korn Ferry]

So ultimately, a country either has to tax more, spend less or grow. And growth is the best option there and the most practical. And you would hope that countries have that platform of growth. And America has been fortunate that it's grown productivity 2% a year for a number a long, long time. The first quarter wasn't great.

[Gary Burnison, CEO at Korn Ferry]

It was actually down. But over a long period of time, it's grown. And I think when you look at these demographic trends without immigration, what it's going to show is there's a serious shortage, for example, in America. Millions of millions of workers short. And so then the natural thing that's going to fill that gap is technology.

[Gary Burnison, CEO at Korn Ferry]

I just I firmly I feel more convicted around that today than I did even a year ago.

[Mark Marcon, Senior Research Analyst at Baird]

I appreciate that. One last question, if I may. Just on the balance sheet, can you talk about what the bonus payout is going to be and how we should think about investable cash?

[Gary Burnison, CEO at Korn Ferry]

Now Bob, you want to do that?

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Yes. We don't typically disclose too much around the bonus payout for obvious reasons. But it's going to be it will be sufficient to make sure that we're rewarding our real performers. I would say the investable cash, the balance at the end of the year was about 600 and close to $675,000,000 with about 25% to 30% of that in The U. S.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

And we'll continue to deploy capital following our balanced approach that we followed consistently over the past several years now. We're always looking to put the money back into the business first, whether it's hiring individuals, teams, putting money back into the investments that we're making. As Gary talked about the talent suite, that's a big play for us. Doing M and A this year, we've invested back into this past year into Trilogy to expand our interim solution over in EMEA. But then we do generate a strong amount of cash.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

And so we have returns to shareholders that we've as Gary said, we've really leaned down on the dividend. I think the dividend and the buybacks now are pretty balanced, roughly 85,000,000 to $90,000,000 a year each. So we'll continue to deploy that and to the extent that we've got great opportunities from an M and A perspective, we would lean in there. And to me the kind of the swing vote would be the share buybacks.

[Mark Marcon, Senior Research Analyst at Baird]

Great. Thank you very much.

[Operator]

Your next question comes from the line of Tobey Sommer of Truist. Your line is open.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you. In the marketplace, Gary, you described the labor market where things are tough, purchasing power is down. Also employee turnover in the market is now down for, I don't know, probably four consecutive years and actually below pre COVID levels. Is that something that you monitor and feel like it's needed to kind of drive some more dynamism in the labor market? And what kind of macro changes could we look at to see an improvement in the velocity there?

[Gary Burnison, CEO at Korn Ferry]

Yes, economic growth. I mean, it's not a good it's at an all time. I think that you'll know this better than I. But I think in The United States, kind of annual turnover now is kind of like I mean, is the median of the bell curve, but I think it's like 8% or 9%. I mean, it's historically very, very low.

[Gary Burnison, CEO at Korn Ferry]

Why? Because people can't get jobs. And so you've got a very anemic labor. If you're cranking out 100,000 jobs a month or 125,000 or something like that, the labor participation rate's less today than it was before the pandemic. And people are hesitant to leave a job, even though the best time to look for a job is when you have a job.

[Gary Burnison, CEO at Korn Ferry]

And companies, they've been very, very reluctant because they I'm generalizing, but they don't have pricing power. They've raised prices so much to deal with the supply shock from COVID that there's no moss. There's no more that you can raise prices. And so that's kind of the deal. And yes, it's actually not a good thing to have this low level of employee turnover from a number of different dimensions.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you. I appreciate that. I wanted to ask a question about headcount productivity broadly in the organization from a corporate perspective. What's enabled delivering the higher corporate revenue without increasing internal headcount comparably over the last five years? And is there more to do there like on a go forward basis?

[Tobey Sommer, Managing Director at Truist Securities]

Should we think about the company being able to add a point of revenue with less than that in terms of bodies and headcount?

[Gary Burnison, CEO at Korn Ferry]

Yes. I don't know. I think we've been through a pretty unique time. The big, big wildcard is the monetization of our IP, which is a story that we've told forever and ever.

[Gary Burnison, CEO at Korn Ferry]

Continues to be the single biggest wildcard because it's very, very scalable. And I read off all the statistics around data. It is very impressive. And hopefully, when we can create something that's more seamless for a user and have a couple of ecosystem partners and we really put the full weight of the firm behind it, that, that really does. That's where the scale really comes in from a shareholder perspective and from a colleague employee perspective.

[Gary Burnison, CEO at Korn Ferry]

Quite candidly, it's whether you can monetize that IP. And so in a very difficult market, I look at it and I said, am I over the moon? Am I completely happy? No. Am I totally depressed?

[Gary Burnison, CEO at Korn Ferry]

No. But that's the thing. That is the one thing that can create real financial scale. And we have that opportunity. We've had that opportunity and we're working hard at it.

[Gary Burnison, CEO at Korn Ferry]

But I think looking forward, that's clearly the issue there. Then on the consulting business, we just have to continue to move towards longer, bigger engagements. The trouble with that is it does impact short term revenue. It doesn't look as good necessarily on the outside. The backlog like I look at our backlog, I think in both consulting and digital, they're actually higher than they were a year ago.

[Gary Burnison, CEO at Korn Ferry]

So it's look, it's been a unique time. COVID changed everything. So I'm not going to sit there. We've had a big change in the mix of business. We added a whole new capability with this interim.

[Gary Burnison, CEO at Korn Ferry]

Apples to apples, if you adjust back before COVID, you would find that when you take the mix into account, we've increased EBITDA margins like 300 basis points, three fifty basis points, something like that. I'm not going to sit here and pretend that we can do that again because there's a whole host things that play here. But clearly one big thing you would look at is this talent suite and the monetization of our IP.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Tobey, I would just add from a corporate cost perspective, as we've talked in the past, we've built a company that's plug and place. We have common systems, processes, controls across the globe. So getting scale over time on our corporate function has been relatively, I won't say easy, but it's easier because of the infrastructure that we have in place.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you for that. I'd like you to I know you gave a great answer, Gary, expand to them, but I would ask you to elaborate a little bit more on kind of really accelerating and changing the digital. You mentioned ecosystem, channel partners. Are there any additional internal changes to drive that acceleration? Things sort of within your span of control, sort of to go from the here to the there, as you say, whether it's incentive comp, are you doubling down on the marquee sales force, internal org structure? What levers do you have at your disposal?

[Gary Burnison, CEO at Korn Ferry]

I think number one is we have to we have one business at Korn Ferry. We don't have five businesses. We have one business with five solutions. And I think number one is to change the mindset of the organization so that everybody in the firm is actually pushing that.

[Gary Burnison, CEO at Korn Ferry]

So that's number one. Number two is the marquee and diamond accounts for sure. Number three is we have a relentless focus on every single day as a leadership team when we look at new business that's being opened and the logos, we're actually going through a very systematic and programmatic exercise to look at those logos like I just did an hour ago and say, okay, what is the solution there? Have we been able to penetrate with our IP with digital? Or it could be interim, could be consulting.

[Gary Burnison, CEO at Korn Ferry]

It's a very, very programmatic exercise that we are doing every single day within the leadership team. So those are absolutely come to the forefront. We continue with changing skill set and roles. We have global account leaders now. We've introduced a new role, client service partner, where we are eliciting even more people that can deliver the entire firm.

[Gary Burnison, CEO at Korn Ferry]

We're in the early days of that. So yes, there's a handful of practical things that we are that we absolutely are doing.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you very much.

[Operator]

Your last question comes from the line of Josh Chan of UBS. Your line is open.

[Josh Chan, Executive Director - Equity Research Analyst at UBS Group]

Hi, Karen and Bob. Congrats on a good quarter. Just two quick ones for me on Exact Search. I guess, would you classify the business as having really accelerated? Is that what it looks like externally?

[Josh Chan, Executive Director - Equity Research Analyst at UBS Group]

You have this similar level consultants, but your engagements are up a lot sequentially and year over year. So is that how you would look at the business in terms of it having accelerated just this quarter?

[Gary Burnison, CEO at Korn Ferry]

I don't I tend not to pay attention to you can have some significant ebbs and flows depending on the solution. So I wouldn't want to get into that. I would just say that over seven or eight quarters that solution has definitely gained more traction in the market. That is a true statement. And I think it's part us, but part all these other factors that we've talked about.

[Gary Burnison, CEO at Korn Ferry]

So when you look over time, it has been up into the right over several quarters, over which I would describe those quarters as a very, very challenging economic environment being the last seven or so quarters.

[Josh Chan, Executive Director - Equity Research Analyst at UBS Group]

Okay. Yes, that makes a lot of sense. And then maybe a quick one for Bob. I guess, relatedly, does the Q1 guide kind of include continued double digit growth in ExactSearch? I guess it's sort of a similar vein of questioning on the guidance there.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Yes, we don't I mean, just guided the total company number, Josh, but it does anticipate continued some level of continued growth on a year over year basis.

[Josh Chan, Executive Director - Equity Research Analyst at UBS Group]

Okay, great. Thanks for the color and congrats on the quarter.

[Robert Rozek, EVP, CFO & Chief Corporate Officer at Korn Ferry]

Thank you.

[Operator]

It appears there are no further questions Mr. Bernersen.

[Gary Burnison, CEO at Korn Ferry]

Okay. Thanks for joining us. Thanks for taking the time. I'm really, really proud of our colleagues, particularly in the face of what we all read about every single day. And we look forward to talking to you again.

[Gary Burnison, CEO at Korn Ferry]

And I'm very, very excited about what we've got in store for us. This is just the beginning for Korn Ferry. Thank you all. We'll talk to later. Bye bye.

[Operator]

Ladies and gentlemen, this conference call will be available for replay one week starting today running through the day 06/25/2025 ending at midnight. You may access the Echo replay service by dialing (800) 770-2030 and entering the access code +1 00000015275 followed by the pound key. Additionally, the replay will be available for playback at the company's website at

Participants

Executives

• Gary Burnison, CEO
• Robert Rozek, EVP, CFO & Chief Corporate Officer

Analysts

• Trevor Romeo, Research Analyst at William Blair
• George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs
• Mark Marcon, Senior Research Analyst at Baird
• Tobey Sommer, Managing Director at Truist Securities
• Josh Chan, Executive Director - Equity Research Analyst at UBS Group