"Korn Ferry Reports Resilient Q3 Performance Amid Economic Uncertainty"

Korn Ferry (NYSE: KFY), a global organizational consulting firm, has announced its third-quarter fiscal 2025 results, showcasing a resilient performance despite macroeconomic headwinds. The company reported fee revenue of $668.7 million, which was flat year over year but showed a 2% increase on a constant currency basis. This performance highlights Korn Ferry's strategic diversification across different business lines, which has helped mitigate the impact of economic uncertainties.



The company's third-quarter results demonstrate the effectiveness of its diversification strategy. Fee revenue increased slightly in Executive Search, RPO (Recruitment Process Outsourcing), and Digital, offsetting a decline in fee revenue in Consulting. Executive Search grew by 3% with an impressive margin expansion of 320 basis points, while RPO increased by 4% with a 360 basis point margin improvement. These increases highlight the strength of Korn Ferry's diversification strategy, as different business lines contribute to overall revenue and profitability.

The implications for Korn Ferry's future growth prospects are positive. The company's focus on productivity and cost discipline has delivered tangible results, offsetting flat topline growth. This positions korn ferry well for an economic environment characterized by talent supply/demand imbalances. As CEO Gary D. Burnison noted, "Tomorrow’s macro environment will be encircled by a labor supply/demand imbalance which will require companies to reimagine and reskill their workforce; inspire, employ, develop and retain talent; and embrace technologies that drive a new world of work—all of which present tremendous opportunity for Korn Ferry as we deliver offerings and expertise that drive organizational performance."

Korn Ferry's Q4 FY'25 guidance projects fee revenue between $680-700 million, with diluted EPS expected at $1.20-1.28 and adjusted diluted EPS at $1.22-1.30. This outlook suggests continued stability and growth, supported by the company's diversified business model. The $17.9 million share repurchase program also signals management confidence in the company's future prospects.



Korn Ferry's focus on cost management and consultant productivity has significantly contributed to its improved Adjusted EBITDA margin. The company reported an Adjusted EBITDA of $114.5 million in Q3 FY'25, which is a 190 basis point increase compared to the year-ago quarter. This improvement is directly attributed to "disciplined cost management and strong consultant productivity." The company's Adjusted EBITDA margin increased to 17.1% in Q3 FY'25, up from 15.2% in the same period last year. This margin expansion is a clear indicator of the company's success in managing costs and enhancing productivity.

The sustainability of these improvements can be validated by the company's strategic initiatives and market positioning. Korn Ferry's CEO, Gary D. Burnison, highlighted that the company is well-positioned to navigate the future macro environment, which will be characterized by a labor supply/demand imbalance. This environment will require companies to reimagine and reskill their workforce, inspire, employ, develop and retain talent, and embrace technologies that drive a new world of work. Korn Ferry's offerings and expertise in these areas present tremendous opportunities for the company to continue delivering organizational performance.

Additionally, the company's share repurchase program, which involved repurchasing 237,000 shares for $17.9 million during the quarter, signals management confidence in the company's financial health and future prospects. This confidence, coupled with the company's strategic focus on cost management and productivity, suggests that the improvements in Adjusted EBITDA margin are sustainable in the long term.

In summary, Korn Ferry's third-quarter performance reflects its strategic diversification and focus on cost management and productivity. The company's guidance for the fourth quarter of fiscal 2025 indicates an expected improvement in revenue and earnings per share compared to the third quarter. The company's focus on cost management, productivity, diversification, and share repurchases are likely to influence its performance positively in the upcoming period.