On June 13, 2024, Korn Ferry (KFY, Financial) released its 8-K filing announcing its fourth quarter and full year FY'24 results. Korn Ferry, a global organizational consulting firm, reported Q4 FY'24 fee revenue of $690.8 million, a 5% year-over-year decrease, and full year FY'24 fee revenue of $2,762.7 million, a 3% year-over-year decrease.
Performance and Challenges
Korn Ferry's Q4 FY'24 fee revenue of $690.8 million slightly exceeded the analyst estimate of $689.92 million. However, the company faced a 5% year-over-year decline in both actual and constant currency. The full year FY'24 fee revenue also saw a 3% decline, primarily due to decreases in permanent placement talent acquisition offerings, attributed to the challenging global economic environment.
Financial Achievements
Despite the revenue decline, Korn Ferry achieved notable financial milestones. The company reported Q4 FY'24 net income of $65.2 million and full year net income of $169.2 million. Diluted earnings per share (EPS) for Q4 FY'24 was $1.24, surpassing the analyst estimate of $1.13. Adjusted diluted EPS was $1.26 for the quarter and $4.28 for the full year.
"I am pleased with our fourth quarter results, as we generated $691 million in fee revenue," said Gary D. Burnison, CEO, Korn Ferry. "Earnings and profitability increased year-over-year and sequentially as we delivered $112 million of Adjusted EBITDA, at a 16.3% margin, which is our fourth consecutive quarter of profitability improvement."
Income Statement Highlights
| Metric | Q4 FY'24 | Q4 FY'23 | FY'24 | FY'23 |
|---|---|---|---|---|
| Fee Revenue | $690.8M | $730.9M | $2,762.7M | $2,835.4M |
| Operating Income | $83.5M | $72.6M | $212.9M | $316.3M |
| Net Income | $65.2M | $47.5M | $169.2M | $209.5M |
| Diluted EPS | $1.24 | $0.91 | $3.23 | $3.95 |
| Adjusted EBITDA | $112.3M | $97.9M | $408.2M | $457.3M |
Segment Performance
Consulting and Digital segments posted record high fee revenues for the full year at $695.0 million and $366.7 million, respectively. The Consulting segment saw a 4% increase in Q4 FY'24 fee revenue to $182.2 million, driven by growth in assessment & succession solutions, leadership development, and organizational strategy offerings. The Digital segment maintained stable fee revenue at $91.3 million for Q4 FY'24.
Balance Sheet and Cash Flow
Korn Ferry repurchased 365,000 shares of stock during the quarter for $22.9 million, bringing full year repurchases to 930,000 shares for $52.5 million. The company also increased its regular quarterly dividend to $0.37 per share, payable on July 31, 2024.
Analysis
Korn Ferry's performance in Q4 FY'24 reflects resilience amidst economic challenges. The company's strategic focus on diversified offerings, particularly in Consulting and Digital, has helped mitigate the impact of declining talent acquisition revenues. The improvement in profitability metrics, such as Adjusted EBITDA margin, underscores effective cost management and operational efficiency.
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Explore the complete 8-K earnings release (here) from Korn Ferry for further details.
