Korn Ferry Q3 Highlights: Revenue Flat Y/Y On Weakness In Executive Search and Professional Search; Margin Contracts

  • Korn Ferry KFY reported third-quarter FY23 total revenue growth of 0.3% year-over-year to $686.85 million, beating the consensus of $669.99 million.
  • Fee revenue was flattish Y/Y at $680.8 million and up 4% on a constant currency basis.
  • Fee revenue decreased in Executive Search and Professional Search mainly due to declining product and service demand.
  • Adjusted EPS of $1.01 beat the consensus of $0.91.
  • Operating income declined to $12.5 million from $126.3 million a year ago. The margin declined to 1.8%, down from 18.6%.
  • Operating margin decreased primarily due to restructuring charges, fixed asset impairment, and fee revenue mix changes.
  • Adjusted EBITDA declined to $96.1 million, down from $138.3 million. The margin declined by 620 bps to 14.1% due to a change in the fee revenue mix.
  • Gary D. Burnison, the CEO, said, "Korn Ferry is incredibly well-positioned as clients continue to navigate an economy in transition. We will continue to prioritize faster-growing, larger addressable, less cyclical markets that set up our firm and our clients for success. As an example, the recent addition of Salo now brings our interim services to be more than 10% of our firm's revenue on a pro forma basis."
  • Q4 Outlook: Korn Ferry expects fee revenue of $690 million - $710 million.
  • KFY expects adjusted EPS of $0.97 - $1.05.
  • Price Action: KFY shares closed lower by 0.52% at $55.12 on Tuesday.
  • Photo Via Wikimedia Commons
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