Korn Ferry Q3 2025 Earnings Call Transcript

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

Question: Trevor Romeo - William Blair & Company - Analyst : Thanks for all the detail and the results and the commentary for the team. Just wanted to first touch on sort of margins and productivity. I think a lot of the productivity or revenue for consultant metrics across your segments are up quite nicely. I know you've been making some investments in technology, tools and such, and you recently started ramping up hiring again. But what are some of the areas where you've seen the most success driving productivity for a lot of your businesses and how much room do you think you'd have to further increase productivity without seeing an uptick in your term market or macro demand?

Question: Trevor Romeo - William Blair & Company - Analyst : And then for my follow up. Wanted to touch on RPO, I guess. Could you help us understand the growth of the new business which again is really nice in the quarter? Is it mostly is it competitive takeaways or is it clients that haven't used RPO before that are now kind of looking to outsource, or are you kind of starting to see some increases in underlying hiring at your clients?

Question: George K. Tong - Goldman Sachs - Analyst : Your digital new business trends inflected from 10% growth last quarter to an 8% decline in constant currency this quarter. Can you talk a little bit about what drove the decline in digital?

Question: George K. Tong - Goldman Sachs - Analyst : And then we're seeing real time changes in the macro outlook given potential headwinds from tariff policies. What are you hearing from clients during this elevated period of uncertainty, and do you expect hiring activity to pull back given economic uncertainty?

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : Congrats on the good results. Gary, you started out your discussion, which unfortunately was a little bit muffled. I don't know if you had a bad connection at the time or not, discussing some of the big engagements that you've been recently winning. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 4:00PM, KFY.N - Q3 2025 Korn Ferry Earnings Call And I was just wondering if you could elaborate a little bit further with regards to the size, scope of those big engagements. And how you were able to get those? Who you ended up winning them from? Like if who else was part of the RFPs? Just to a little elaborate how you're moving up the food chain in terms of being a thought leader.

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : Gary, again, I apologize, I just did not -- was not able to hear very much of what you said up front. Could you just, you mentioned the 60,000 employee global energy company. Like what sort of projects are you doing for those companies? And you mentioned a global insurer. You mentioned another company that was a really large employer, but again it was muffled. So I didn't quite get all of that. But what exactly are you doing and who did you beat out in order to get those engagements? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 4:00PM, KFY.N - Q3 2025 Korn Ferry Earnings Call

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : Are the decision makers in terms of who they're going with when you're -- when they're selecting you versus a McKinsey or a BCG or a Bain or against one of the Big 4, who's the decision maker? Is that the CEO, the COO, or is it within the realm of the Chief of HR?

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : Well, congrats on that. And then on interim and professional search, you've obviously made a lot of different acquisitions there with different profiles. Can you just discuss like within this quarter and even going back to the last quarter, which ones are performing the best? Which segments are performing the best? Which ones are perhaps being impacted a little bit more by the uncertainty that's out there? And how does that inform what your future strategy is going to be in that space?

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : I was just wondering if you could, Bob, you were beating me to the question in terms of the functional verticals. Which ones are you seeing the strongest performance in versus which ones may be challenged and how are you thinking about the IT vertical given that there's more and more discussion about AI potentially having an impact with regards to the need for coding or the increasing efficiency as it relates to coding?

Question: Mark Marcon - Robert W. Baird & Co., Inc. - Analyst : And then this last question and this is for Gary and Bob. Obviously, the uncertainty that's out there has recently unfolded and things are always uncertain. But what would you -- what would it take for you to see signs that, hey, maybe things are unfolding and even though we're going into Peak 65, the short term macro kind of overwhelms that? What would you be looking for to say, hey, maybe we need to do even more contingency planning? I know you've always got contingency plans in place, but in terms of putting in place the playbook for things getting a little bit tougher.

Question: Tyler Barishaw - Truist Securities - Analyst : This is Tyler Barishaw on for Tobey. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 4:00PM, KFY.N - Q3 2025 Korn Ferry Earnings Call You mentioned 25 new fee earners in the quarter. How should we think about that as a run rate going into fiscal year '26, or can you maybe bring some expectations for that?

Question: Tyler Barishaw - Truist Securities - Analyst : And then just you mentioned on the C-suite churn, a lot execs over 65. How should we think about the swing factor of like capital markets recovery? Should we expect that to have a meaningful impact on demand for exec search?

Question: Tyler Barishaw - Truist Securities - Analyst : And just one final one. Looks like '25 is going to be another year margin or will be a year of large margin expansion. How should we think about margin expansion in '26?

Question: Karandeep Singhania - UBS Equities - Analyst : This is Karan Singhania on for Josh. So we wanted to ask on the Q4 margin guide. Typically, Q4 margins are higher than Q3, but it looks like you're getting margins down this time. So just wondering if you could maybe like give a bit more color on what you're seeing across the businesses. And well, what is different than prior years in terms of that just that sequential progression.

Question: Karandeep Singhania - UBS Equities - Analyst : And just like as my follow-up, I just wanted to ask on the North America executive search business. So growth in back came in strong at like 6%. And I think you briefly touched on that in one of the previous questions, but can you just elaborate on what drove that growth and can you expect a recovery in that business from your own? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 4:00PM, KFY.N - Q3 2025 Korn Ferry Earnings Call