Korn Ferry Q1 FY2026 earnings call

• Strong Q1 performance despite economic uncertainties; strategy working. • Notable engagements won, including with top pharma, FTSE 100 retailer, and HR management software provider. • Continued investment in Talent Suite, a digital SaaS platform enabling clients to unlock human and organizational potential. • Marquee & Diamond accounts generating almost 40% of revenue with a 10-year CAGR of 10%. • 25% of revenue from cross-solution referrals. • Balanced capital allocation with 6 dividend increases in 5 years and M&A/share repurchases. • Evolution towards large-scale, multi-solution client engagements with loyal, repeatable clients of scale.

Consolidated fee revenue grew 5% year-over-year to $709 million. Marquee & Diamond accounts generated almost 40% of revenue, with a 10-year revenue CAGR of 10%. Cross-solution referrals contributed 25% of revenue. Executive Search fee revenue grew 8% (fifth consecutive quarter of growth). Professional search and interim fee revenue was up 10% year-over-year, with professional services perm placement up 5% and interim up 14%. Digital subscription and licensed new business grew 10% year-over-year, making up 39% of total digital new business. Average bill rates in Consulting grew 9% and Interim grew 4%. Regionally, Americas fee revenue was down 2%, EMEA grew 19%, and APAC grew 12%.

• Expect fee revenue in Q2 FY26 to range from $690 million to $710 million. • Adjusted EBITDA margin to range from approximately 17% to 17.5%. • Consolidated adjusted diluted earnings per share to range from $1.23 to $1.33. • GAAP diluted earnings per share to range from $1.10 to $1.16, including approximately $0.14 per share of accelerated depreciation related to sunsetting product technology platform.

• Economic uncertainties, including lingering challenges, geopolitical tensions, and unresolved tariff issues. • Inflation affecting interest rate expectations. • Labor market conditions and their impact on business sentiment. • Potential impact of AI on workforce and business operations.

Q: What are the key milestones for the Talent Suite rollout and when will benefits start flowing?

A: Benefits expected towards end of 2026. Milestones include accelerating go-to-market with partners, training 1,800 frontline consultants on Talent Suite, and targeted strategy with Marquee & Diamond accounts.

Q: Long-term aspirational target for digital subscriptions as a percentage of segment revenue?

A: Would like it north of 60%, driven by partnerships.

Q: Reconciliation of Q2 guidance dip?

A: Conservative due to uncertainties in economic, geopolitical, and market conditions.

Q: What are customers telling you about the economy?

A: Broad optimism in some regions, challenges in Americas with pricing power and cost escalations; strong rebound in Asia; activity in industrial and private equity; life sciences and healthcare tougher.

Q: Consulting new business performance and outlook?

A: Decent in the quarter; regional differences; moving towards bigger, integrated solutions with backlog increasing and average bill rates up; slower consumption by clients of backlog.

Q: Why was digital head count reduced?

A: Managing workforce to enable entire firm to deliver the platform focused on unlocking human and organizational performance.

Q: Exec Search outperforming in North America?

A: Driven by demographic shifts, pent-up demand, great resignation, and boards reassessing C-suite leadership.

Q: Winning business in weaker environment?

A: Best environment for change; embracing ambiguity and changing mindset to go to market better.

Q: Details on big HCM company deal?

A: Transformational leadership development program, multiyear, several million dollars, consuming services dependent on client speed.

Q: Posture on professional search and interim in uncertain environment?

A: Pro search market has opportunities outside US, avoid contingent part; interim has megatrend, synergistic with brand, 1,200 incremental opportunities from referrals.

Q: AI impact on clients and firm?

A: Uncertainty around AI, but labor market imbalance will be corrected by technology; firm investing in AI/Gen AI, centralizing 40 individuals, using as efficiency tools, human plus AI.