Korn/Ferry International Q1 Earnings Call Highlights

Key Points

• Strong first-quarter results: Korn Ferry’s fee revenue rose 7% year over year to $756 million, while adjusted EBITDA increased 7% to $128 million and adjusted EPS climbed 9% to $1.43. Growth occurred across all regions, extending the company’s expansion streak to six quarters.
• AMS combination expands scale and backlog: The completed AMS transaction creates a firm with nearly 17,000 employees, approximately $3.5 billion in backlog and broader technology-enabled workforce capabilities. Management expects AMS’ annualized EBITDA to increase from $100 million to $140 million, potentially ahead of schedule.
• Positive outlook with integration and debt priorities: Korn Ferry forecasts second-quarter fee revenue of $860 million to $878 million and adjusted EPS of $1.30 to $1.40, including two months of AMS results. The company plans to prioritize customer-focused integration and debt reduction while remaining cautious about AI’s impact on sensitive search and talent data.

Korn/Ferry International NYSE: KFY reported first-quarter fiscal 2027 fee revenue growth across all regions, extending its streak to six consecutive quarters of top-line expansion, while outlining plans to expand its talent and organizational consulting platform following the completion of its combination with AMS.

Chief Executive Officer Gary Burnison called the quarter’s performance “absolutely outstanding,” citing growth across regions and the company’s continued focus on its “We Are Korn Ferry” strategy. He said the completed AMS transaction creates a larger global talent and organizational consulting firm with nearly 17,000 colleagues across more than 130 offices.

“Today, I think in terms of opportunities measured in the billions,” Burnison said, contrasting the company’s current ambitions with opportunities he had previously described in the hundreds of millions of dollars.

Quarterly Results and Regional Performance

Consolidated fee revenue increased 7% year over year to $756 million. Adjusted EBITDA rose $8 million, or 7%, to $128 million, while adjusted EBITDA margin remained flat from a year earlier at 17%. Adjusted diluted earnings per share increased 9% year over year, or $0.12, to $1.43.

The company said estimated remaining fees under existing contracts increased 14% year over year to $1.92 billion. Korn Ferry expects about $1.1 billion, or 56%, of that amount to be recognized in the next four quarters, with $835 million expected beyond the next year.

• Americas fee revenue increased 9% year over year to $442 million, led by Search and Workforce Solutions.
• EMEA fee revenue rose 4% to $228 million, with growth across all solution groups.
• APAC fee revenue increased 1% to $87 million, led by Search.

Chief Financial Officer Bob Rozek said consolidated new business grew 12% year over year, with fee revenue growth in all regions and industry groups. The company also reported that annualized new business per average fee earner increased year over year in every region.

Korn Ferry’s internal business referral rate reached 29.4% of consolidated fee revenue, up about 300 basis points from a year earlier. Marquee and Diamond accounts represented about 40% of consolidated fee revenue.

New Geographic Reporting Structure

The company is now reporting results through three geographic segments: the Americas, EMEA and APAC. Rozek said the change aligns reporting with Korn Ferry’s go-to-market approach and the way clients engage with the business.

Within each region, Korn Ferry is presenting three solution groupings: Search, which combines executive and professional search; Talent and Organizational Solutions, comprising consulting and digital; and Workforce Solutions, which includes recruitment process outsourcing, or RPO, and interim offerings.

Burnison said he evaluates the company primarily on its overall growth trajectory and then by geography. He said Korn Ferry historically produced growth rates in the range of 10% to 12%, with roughly 60% of growth previously organic and 40% inorganic. Following the AMS combination, he said that mix is now closer to 50% organic and 50% inorganic.

AMS Combination and Integration Plans

Burnison said AMS adds operational capabilities in technology-enabled talent solutions, long-term contracted client relationships, contingent workforce solutions, early-career and campus recruiting, technology consulting and reskilling. AMS’ top 10 client relationships have an average tenure of 14 years, he said, and approximately two-thirds of its business is in RPO.

The combined company now has backlog of approximately $3.5 billion, according to Burnison. Rozek said Korn Ferry’s standalone backlog at the end of the quarter was about $1.9 billion, with roughly 60% expected to convert to revenue within a year. He said AMS adds a large backlog with about 40% expected within the first year and 60% spread over the next four years.

Korn Ferry has said it expects AMS EBITDA to increase from $100 million to $140 million on a run-rate basis within one year of closing. Burnison said the company expects to achieve the $40 million increase faster than that timeline, driven by revenue opportunities as well as platform economies of scale.

Management said it has begun aligning go-to-market efforts, mapping the combined companies’ top 100 customers and organizing teams around those accounts. However, the companies are not expected to be on common SAP, CRM and related platforms until May 1, 2027, which coincides with Korn Ferry’s fiscal-year calendar.

Burnison said the initial integration priority is to “do no harm” and focus on customers, culture and understanding how the two organizations operate before establishing a combined approach. He said AMS’ industry mix is complementary to Korn Ferry’s, including a substantial presence in financial services.

AI, Search and Outlook

Burnison said artificial intelligence is affecting the company broadly, including its search operations, but Korn Ferry is being cautious because of the sensitive nature of its proprietary data. He cited the company’s compensation data covering 30 million people and 30,000 companies, along with 113 million executive assessments and approximately 15,000 success profiles.

Rozek said clients are seeking more extensive candidate slates and information, which Korn Ferry can provide, but AI has not materially changed the time required to complete searches. He said search timelines remain influenced by client scheduling and decision-making.

For the second quarter of fiscal 2027, Korn Ferry expects fee revenue of $860 million to $878 million, including two months of AMS results for September and October. The company projected adjusted EBITDA margin of 16.8% to 17.2% and adjusted diluted earnings per share of $1.30 to $1.40.

Rozek said the earnings outlook includes the net after-tax effects of incremental intangible asset amortization, interest expense and additional shares associated with the AMS acquisition. The company paid $30 million in dividends and invested $15 million in capital expenditures during the quarter. Going forward, management said it expects to favor using investable cash to reduce debt related to the AMS acquisition, while continuing to monitor the attractiveness of share repurchases.

About Korn/Ferry International (NYSE:KFY)

Korn Ferry International is a global organizational consulting firm that partners with clients to design optimal structures, roles and responsibilities. The company's core offerings include executive search, talent acquisition, leadership development and succession planning. By blending deep industry expertise with data-driven insights, Korn Ferry helps organizations identify, assess and develop executives and high-potential talent for critical roles.

Since its founding in 1969 and with headquarters in Los Angeles, Korn Ferry has expanded its presence to more than 50 offices across North America, Europe, Asia Pacific and Latin America.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.