Korn Ferry

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry second quarter fiscal year 2023 conference call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. We have also made available in the investor relations section of our website at KornFerry.com a copy of the financial presentation that we'll be reviewing with you today. Before we turn the call over to your host, Mr. Gary Burnison, let me first hand the call over to Tiffany Lauder, Vice President, Investor Relations, to read a cautionary statement to investors. Please go ahead, Ms. Lauder.

Thank you, Amy. Certain statements made in the call today, such as those relating to future performance, plans and goals, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release related to this presentation, and in the other periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2022, and in the company's soon-to-be filed quarterly report for the quarter ended October 31st, 2022. Also, some of the comments today may reference non-GAAP financial measures, such as constant currency amounts, EBITDA and adjusted EBITDA. Additional information concerning these measures, including reconciliations to the most directly comparable gas financial measures, is contained in the financial presentation and earnings release relating to this call, both of which are posted in the investor relations section of the company's website at www.cornferry.com. With that, I'll turn the call over to Gary Burnison. Please go ahead, Gary. Morning, Janet.

Good afternoon and thank you, Tiffany. And thank you everybody for joining us. Our fiscal second quarter results were very good. We generated about $728 million in fee revenue, which was up 20% at constant currency and 14% at actual rates. I'm really proud of our performance given that the global economy has been in transition for several months now. We're seeing change on every front, from over a decade of high liquidity and historically low interest rates to changes in central bank policies, significant shifts in global trading partners, and persistent inflationary pressures. In response, companies and our clients will undoubtedly have to continue adjusting their organizational and workforce strategies to tomorrow, which is opportunity for Korn Ferry. As we come to a close of another calendar year, I think it's good to take stock of just how far Corn Ferry has come and how much more capable we've become. First, when we look at our historical performance through the cycles, it's clear our diverse offerings in larger scale have resulted in progressively better results from peak to peak and trough to trough. In other words, the ceiling and the floor continue to be incrementally higher through each term. For example, our peak and trough revenues from the Great Recession to the COVID recession are more than three times higher. And over the long run, our 10-year CAGR has been 13%. There's no doubt that we're a substantially different firm today than we were even just a few years ago with far greater scale and relevance today. of our offerings. Our evolving capability and broad offerings are propelling Cordberry and our clients through this moment, this transitory period. This combines organizational strategy, leadership and professional development, assessment and succession, rewards and talent acquisition capabilities to help clients execute their business strategy. We've anchored our firm around a well-balanced, diverse slate of solutions. Number one, a major account strategy that now represents 37% of our portfolio. Consulting and digital capabilities that represent almost 40% of our firm. And the integrated go-to-market strategy, one corn fairy that's resulted in almost 30% of our revenue coming from cross-line of business referrals. A new corn fairy that trains and develops over 1 million professionals a year. A compensation and rewards advisory digital offering with comp debt on more than 25 million executives. A new interim transition management staff capability with about 225 million of annual revenue on a run rate basis. And, you know, this offering essentially didn't exist for us a little over a year ago. An award-winning RPO business with consistent top-line growth. which now represents 14% of our firm. Today, RPO has nearly a billion dollars of revenue under contract. This includes two major three-year contract wins with a combined value of nearly 200 million that we secured in the second quarter. And we're a much, much more globally, geographically diverse firm today. No doubt there's economic uncertainty as we enter 2023. But this transitory time, like others in the past, is also the proving grounds for the effectiveness of our strategy, the strength of our culture, the resilience of our colleagues, the relevance of our solutions and our offerings, and the potency of the Corn Ferry brand. The truth is that great companies make their best moves in times like these. And Korn Ferry is a great company. Looking forward to 2023, we're going to continue to refine our account strategy to take advantage of changing global trade lanes, putting further emphasis on our regional accounts. We're going to pursue a larger addressable market, almost $100 billion in the U.S. alone of interim and transition management, particularly around the skilled positions of finance and accounting, digital and technology, supply chain and legal, just to name a few. We're going to build on our healthcare expertise, particularly in the RPO area. We're going to further develop our partner ecosystem to distribute our consulting and digital capabilities globally. We're going to invest in our professional and leadership development offerings, especially our digital platforms, upskilling technologists as well as sales professionals. And we're also going to pivot towards cost optimization solutions that will be even more relevant in the current environment. We're going to carefully balance our cost structure and profitability to seize both short and midterm opportunities. And finally, we're going to continue to deploy a systematic and balanced approach to capital allocation between share repurchases, dividends, and M&As. I'm confident that we've built a company that provides a suite of core and integrated solutions that line up perfectly with the talent and organizational issues our clients are wrestling with today. In addition to Tiffany, I'm joined on this call by Bob Rozak and Greg Kowalczyk. And Bob, I will turn it over to you.