Korn Ferry Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Trevor Romeo - William Blair & Company - Analyst : First one I had was just on margins. I think, again, really nice to see some upward momentum there this quarter. But just kind of thinking about the 16% to 18% longer-term target for EBITDA margins, you're already kind of at 16.5%, in this type of macro environment without really much of a cyclical uptick coming through yet. So is that still a good range to think about over the next several years? Or do you think there could be some upside to that once we do get more of a rebound in the cyclical businesses?

Question: Trevor Romeo - William Blair & Company - Analyst : Okay. Great. And then for my follow-up here, just looking at the revenue guidance, I think if I take the midpoint, it looks like you're expecting about a 1% sequential decline Q1 to Q2. Typically, I think you see a pretty nice uptick most years in Q2. So was kind of just wondering if you could maybe give a bit more color on what you're seeing across the businesses and what, if anything, is different than prior years in terms of that sequential progression?

Question: Trevor Romeo - William Blair & Company - Analyst : That's helpful. And just maybe to quickly follow up because you mentioned the kind of the snap elections in Europe, I believe. Are you seeing any impact you're hearing from clients. I guess that there could be some impact in the near term in North America with the US election coming up at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 4:00PM, KFY.N - Q1 2025 Korn Ferry Earnings Call

Question: George Tong - Goldman Sachs - Analyst : Your North American executive search business saw a notable improvement in its growth rate in the quarter. Can you elaborate on what drove the improvement and how sustainable the current trajectory of growth is?

Question: George Tong - Goldman Sachs - Analyst : Got it. That's very helpful context. You also cited stable trends in your professional search and RPO businesses. Can you talk a little bit about what you would need to see for those stable trends to inflect into more positive trends?

Question: Tobey Sommer - Truist Securities - Analyst : I wanted to ask about your hiring of additional fee earners. Is that 50, 51 number, is that a net number? And maybe could you talk about how they're dispersed around the businesses and whether your posture for the balance of the year is still to be sort of a net hirer and just comment on why?

Question: Tobey Sommer - Truist Securities - Analyst : And is that 50 or so number sort of a reasonable way to think about things on a go-forward basis? Because just from a modeling perspective, we're talking about 50 hires, but is that net of consistent talent management, et cetera?

Question: Tobey Sommer - Truist Securities - Analyst : Okay. That's helpful. And then could you give us some more detail about what the pivot to more profitable engagements in interim and pro search means. Give us some other characteristics of what those look like? And does it impact your TAM that you're sort of not willing to dip down to something that is slightly less profitable? Maybe just dig into that a little bit more detail.

Question: Tobey Sommer - Truist Securities - Analyst : Right. Last question for me, if I could. Gary, you mentioned large engagements over 2.5 million have tripled. Could you give us some context for over what period have they tripled. Is that year over year? And in approximate terms, how many of those engagements there are?

Question: Alex Sinatra - Robert W. Baird & Co., Inc. - Analyst : This is Alex Sinatra on for Mark Marcon. First off, congratulations on the continued margin strength. You've done a really good job keeping that. And I was wondering if you could touch on how that progress has been received internally? I guess, in particular, how it was received in those newer interim and professional services areas because you did mention quarterly talent management?

Question: Alex Sinatra - Robert W. Baird & Co., Inc. - Analyst : Okay. Great. And then really quick, I was hoping to get a little bit more color regarding the confirmed orders by month. You mentioned July being up year over year. And I was just kind of wondering what you were seeing from flash reports for the current month given the increasing signs of labor market softening?