Korn Ferry Q2 FY2026 earnings call

• The company's performance was outstanding with fourth consecutive quarter of accelerating growth, demonstrating success of the We Are Korn Ferry strategy. - Emphasized client centricity, with examples of integrating multiple solutions for enduring client partnerships. - Business referrals grew to 27.6% of consolidated fee revenue, up 250 basis points year-over-year. - Estimated remaining fees under existing contracts at the end of the second quarter were $1.84 billion, with approximately 57% or $1 billion to be recognized within the next year. - Capital allocation: returned almost $70 million to shareholders through combined repurchases and dividends, and invested $43 million in capital expenditures focused on talent suite, productivity tools and other enhancements.

Consolidated fee revenue grew 7% year-over-year to $722 million. Executive Search fee revenue grew 10%, marking the sixth consecutive quarter of growth. Professional Search and interim fee revenue was up 17% year-over-year, with professional search up 7% and interim (including Trilogy acquisition) up 24%. Subscription and licensed new business grew to 43% of Digital's new business for the quarter. Hourly bill rates in Consulting and Interim remained strong at $460 and $142 an hour, respectively. Regional results: Americas fee revenue was up 3% year-over-year, EMEA fee revenue grew 20% year-over-year, and APAC fee revenue was flat.

• Third quarter of fiscal '26 fee revenue expected to range from $680 million to $694 million. - Adjusted EBITDA margin expected to range from approximately 17.2% to 17.4%. - Consolidated adjusted diluted earnings per share expected to range from $1.19 to $1.25. - GAAP diluted earnings per share expected to range from $1.15 to $1.21.

• Uncertain business environment, including geopolitical conditions, economic conditions, financial markets, and foreign exchange rates which could materially impact actual results. - Dependence on large, recurring client relationships and potential challenges in maintaining or expanding them.

Q: Joshua Chan asked about Executive Search business strength in North America despite slower job market.

A: Gary Burnison talked about the company being one business, factors like companies needing different leadership skills, baby boomer retirement, and work-life balance driving strength, and referred to business referrals at almost 28%.

Q: Trevor Romeo followed up on placement solutions, cross referrals, and client willingness to hire.

A: Gary Burnison discussed the strategy working, green shoots in Pro Search and interim, RPO new business with 16% from new logos and 84% from renewals.

Q: Sami Nasir asked about Exec Search seasonality and consulting margin.

A: Gary Burnison mentioned guidance factors in seasonality, and consulting has substantial opportunity with almost 40% of new business being large engagements over $500,000.

Q: Tobey Sommer asked about AI in Search business and Talent Suite sunsetting.

A: Gary Burnison and Robert Rozek talked about AI efficiency in RPO, Talent Suite launch integrating data and enabling better client consumption, and accounting impact of sunsetting the old system.

Q: Alexander Sinatra asked about Digital segment decline and RPO contracts.

A: Gary Burnison discussed Digital pivot to more enterprise sellers, transformational deals postponed, and RPO renewals from marquee and diamond clients with 3/4 renewals and 25% new logos.