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Korn Ferry (KFY)
NYSE:KFY
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Korn Ferry
(NYSE:KFY)75Outperform
Positive Factors
Earnings
Korn Ferry reported solid F1Q results, with revenue, EBITDA margins and EPS surpassing estimates and consensus.
Market Position
KFY's executive search business inflected to positive growth in the quarter led by strength in North America, and revenue trends stabilized sequentially in professional search and RPO.
Negative Factors
Financial Outlook
Revenue stability and pockets of strength in the quarter were partially offset by a shallower near-term revenue recovery outlook, with management expecting revenue to be essentially flat q/q in F2Q.
Korn Ferry (KFY) vs. S&P 500 (SPY)
Market Cap
$3.30B
Dividend Yield2.25%
Average Volume (3M)305.05K
Price to Earnings (P/E)13.7
Beta (1Y)1.14
Revenue Growth-3.59%
EPS Growth138.97%
CountryUS
Employees9,076
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)4.68
Shares Outstanding51,583,010
10 Day Avg. Volume379,778
30 Day Avg. Volume305,052
Financial Highlights & Ratios
PEG Ratio0.10
Price to Book (P/B)N/A
Price to Sales (P/S)1.20
Price to Cash Flow (P/CF)6.80
P/FCF Ratio7.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$84.00Price Target Upside29.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Korn Ferry Business Overview & Revenue Model
Company DescriptionKorn Ferry (KFY) is a global organizational consulting firm based in Los Angeles, California. The company specializes in helping organizations achieve success through a combination of talent acquisition, leadership development, and organizational strategy services. Korn Ferry operates across various sectors, including financial services, healthcare, technology, industrial, and consumer markets, offering a comprehensive suite of solutions to optimize human resource potential and drive business performance.
How the Company Makes MoneyKorn Ferry generates revenue through a diversified business model comprised of several key revenue streams. The company earns money primarily through its talent acquisition services, which include executive search, professional recruitment, and recruitment process outsourcing. Additionally, Korn Ferry provides consulting services aimed at leadership and talent development, organizational strategy, and rewards and benefits solutions. These consulting services often involve long-term engagements with clients to enhance organizational effectiveness and performance. Furthermore, the company has developed proprietary tools and platforms, such as its assessment and development offerings, which contribute to its revenue. Korn Ferry's partnerships with various industry-leading organizations and its global reach also play a crucial role in expanding its client base and driving revenue growth.
Korn Ferry Financial Statement Overview
Summary
Korn Ferry shows a stable financial outlook with strong cash flow and a solid balance sheet. The company maintains healthy margins and low leverage, suggesting stability and potential for future growth. There is, however, room for improvement in net profitability.Income Statement
Korn Ferry's income statement shows stable revenue figures with a slight decline in total revenue from the previous year. The gross profit margin stands strong at 22.20% for TTM, indicating efficient cost management. However, the net profit margin is moderate at 9.03%, which suggests room for improvement in profitability. The EBIT and EBITDA margins are healthy at 11.24% and 14.74% respectively, highlighting solid operating efficiency.72
Positive
Balance Sheet
The balance sheet reflects a strong equity position with a debt-to-equity ratio of 0.33, indicating low financial leverage and reduced risk. The return on equity is reasonable at 13.93% for TTM, suggesting effective use of shareholder funds. The equity ratio of 50.42% demonstrates a robust capital structure with a balanced asset financing approach.75
Positive
Cash Flow
The cash flow statement reveals a solid free cash flow generation with a 19.00% growth rate over the previous year. The operating cash flow to net income ratio is 1.29, demonstrating strong cash generation relative to net profits. The free cash flow to net income ratio of 1.10 indicates efficient capital expenditure management and healthy liquidity.77
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.74B | 2.80B | 2.86B | 2.64B | 1.82B | 1.98B | Gross Profit |
| 608.66M | 651.33M | 2.60B | 2.51B | 1.74B | 1.85B | EBIT |
| 308.09M | 212.93M | 316.34M | 470.07M | 223.71M | 176.03M | EBITDA |
| 403.92M | 321.58M | 389.94M | 521.72M | 254.82M | 228.16M | Net Income Common Stockholders |
| 247.66M | 169.15M | 209.53M | 326.36M | 114.45M | 104.95M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 495.92M | 983.75M | 888.86M | 1.04B | 914.45M | 731.20M | Total Assets |
| 2.22B | 3.68B | 3.57B | 3.46B | 3.06B | 2.74B | Total Debt |
| 222.66M | 580.27M | 561.24M | 595.30M | 598.78M | 629.76M | Net Debt |
| -266.85M | -360.74M | -282.79M | -382.77M | -252.00M | -59.48M | Total Liabilities |
| 1.01B | 1.94B | 1.92B | 1.91B | 1.69B | 1.52B | Stockholders Equity |
| 1.20B | 1.73B | 1.65B | 1.54B | 1.37B | 1.22B |
| Cash Flow | Free Cash Flow | ||||
| 272.25M | 228.81M | 273.51M | 452.25M | 220.31M | 194.89M | Operating Cash Flow |
| 320.67M | 283.96M | 343.89M | 501.66M | 251.43M | 236.35M | Investing Cash Flow |
| -67.78M | -53.83M | -323.48M | -184.33M | -61.38M | -198.76M | Financing Cash Flow |
| -188.74M | -116.33M | -152.18M | -137.44M | -66.89M | 43.68M |
Korn Ferry Technical Analysis
Negative
64.80
Price Trends
67.64
Negative
70.43
Negative
69.35
Negative
Market Momentum
-1.24
Positive
40.88
Neutral
22.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KFY, the sentiment is Negative. The current price of 64.8 is below the 20-day moving average (MA) of 66.07, below the 50-day MA of 67.64, and below the 200-day MA of 69.35, indicating a bearish trend. The MACD of -1.24 indicates Positive momentum. The RSI at 40.88 is Neutral, neither overbought nor oversold. The STOCH value of 22.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KFY.
Korn Ferry Risk Analysis
Korn Ferry disclosed 48 risk factors in its most recent earnings report. Korn Ferry reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Korn Ferry Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.30B | 13.67 | 14.20% | 2.25% | -3.59% | 138.97% | |
71 Outperform | $907.83M | 107.99 | 1.91% | 1.35% | 7.15% | -83.77% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $2.88B | 17.17 | 9.86% | ― | -7.88% | -14.39% | |
60 Neutral | $5.62B | 22.51 | 16.96% | 3.96% | -9.33% | -37.06% | |
58 Neutral | $2.68B | 19.09 | 6.67% | 5.37% | -5.61% | 77.92% | |
44 Neutral | $168.15M | ― | -32.53% | ― | -17.78% | -820.48% |
* Industrials Sector Average
Performance Comparison
KFY
Korn Ferry
64.80
1.14
1.79%
HSII
Heidrick & Struggles
45.13
12.59
38.69%
MAN
ManpowerGroup
58.61
-13.12
-18.29%
ASGN
ASGN
65.44
-37.08
-36.17%
RHI
Robert Half
55.45
-22.17
-28.56%
TBI
Trueblue
5.62
-6.04
-51.80%
Korn Ferry Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -17.15% | Next Earnings Date: Mar 11, 2025
Earnings Call Sentiment Neutral
The call reflected a mixed sentiment, with several key highlights including sustained profitability improvements and strong new business in Executive Search and Digital segments. However, there were notable challenges in the interim fee revenue and consulting segment with year-over-year declines.Highlights
Six Consecutive Quarters of Profitability Improvement
Korn Ferry achieved an EBITDA margin over 17% for six consecutive quarters, reflecting consistent profitability improvement.
Strong Performance in Executive Search and Digital
New business for Executive Search and Digital were strong, up 4% and 11% year-over-year, respectively.
Increase in Average Bill Rates
Interim bill rates grew year-over-year by 11%, and consulting bill rate remained steady at almost $420 an hour.
Launch of Korn Ferry Talent Suite
The company launched a new HR integrated software platform, Korn Ferry Talent Suite, enhancing client access to talent management capabilities.
RPO New Business Growth
RPO saw strong new business with $101 million in new awards, including $60 million from new logo assignments.
Improvement in Adjusted EBITDA
Consolidated adjusted EBITDA grew $18 million or 19% year-over-year, with adjusted EBITDA margin improving to 17.4%.
Lowlights
Decline in Interim Fee Revenue
Interim fee revenue was down approximately 17% year-over-year, reflecting industry-wide challenges.
Consulting Revenue Decrease
Consulting fee revenue was down 6% year-over-year, influenced by longer contracts and slower client backlog delivery.
Digital Revenue Decline
KF Digital revenue decreased by 4% year-over-year, despite strong new business driven by a shift towards subscription agreements.
Overall Revenue Decline
Consolidated fee revenue fell 4% year-over-year, stabilizing at $674 million, with mixed performance across business lines.
Company Guidance
In the Korn Ferry Q2 2025 earnings call, the company reported a consolidated fee revenue of approximately $674 million, with stability across its business lines, including a 5% sequential growth in its digital segment. The EBITDA margin improved for the sixth consecutive quarter, reaching 17.4%, alongside an adjusted EBITDA increase of $18 million or 19% year-over-year. Specifically, the interim bill rate grew by 11%, and consulting bill rates remained steady at nearly $420 per hour. The call highlighted significant investments, such as the $100 million in assessments and the launch of the Korn Ferry Talent Suite, which is designed to enhance client decision-making through integrated talent management capabilities. Additionally, Korn Ferry's acquisition of Trilogy International is expected to bolster its interim professional offerings in EMEA and North America, contributing an estimated $14 to $15 million to the next quarter's revenue. The company also repurchased $33 million of stock and paid dividends of $0.37 per share in the quarter, maintaining a strong cash position of $537 million.Korn Ferry Corporate Events
Executive/Board Changes
Korn Ferry Appoints New Consulting CEO Lesley Uren
Neutral
Feb 6, 2025
On February 6, 2025, Korn Ferry announced the passing of Mark Arian, the Chief Executive Officer of Consulting, whose leadership and contributions were highly valued by the company. Lesley Uren, previously President of Consulting in EMEA, has been appointed as the new CEO of Consulting, with expectations that her experience will ensure a smooth transition and maintain the company’s leadership standards.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.