Korn Ferry

Ladies and gentlemen, thank you for standing by, and welcome to the Korn Ferry second quarter fiscal year 2024 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 call 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 will be reviewing with you today. Before I turn the call over to your host, Mr. Gary Burnison, Let me first read a cautionary statement to investors. Certain statements made in the call today, such as those related to future performance, plans and goals, constitute forward-looking statements within the meeting of 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 relating to this presentation and in the periodic and other reports filed by the company of the SEC, including the company's annual report for fiscal year 2023 and in the company's soon to be filed quarterly report for the quarter ended October 31st, 2023. Also, some of the comments today may reference non-GAAP financial measures such as a constant currency amounts, EBITDA, and adjusted EBITDA. Additional information concerning those measures, including reconciliations to the most direct comparable gap 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 Mr. Bernson. Please go ahead, Mr. Bernson.

Okay, good afternoon, everybody, and thank you for joining us in Season's Greetings. The team's going to get into this in more detail, but there's no doubt that the strategy is working. Despite a softer labor market, our results demonstrate the resiliency of our business. Through a marquee and regional account strategy, multiple talent product offerings, and And cross-referring those solutions to our clients, we generated $704 million in fee revenue in the quarter, which was down about 3% year over year. Despite a persistent uneven economic environment, earnings and profitability held steady sequentially as we delivered a 14% adjusted EBITDA margin. And also, we announced this morning that Reflecting that we've got a much different company today and the confidence that we have in our organization, we increased our dividend by 83%. I'm proud of our firm and of our colleagues. We continue to develop increasingly relevant solutions in a rapidly changing world. In particular, our consulting and digital businesses now generate almost 40% of our top line. And in fact, digital... achieved an all-time record revenue at constant currency during the quarter. You know, to put all this in perspective, I want to take a step back for a moment. When I started with our firm, we were a couple hundred million dollar company. Today, our firm generates several billion dollars in revenue. In fact, our top line today is about 40% higher than pre-pandemic levels. and now we're at the threshold of even greater opportunity. More importantly, we have the possibility of accelerating the trajectory of thousands of organizations. At the same time, we have to acknowledge that most of the business world is in the midst of a multi-quarter cyclical reset. It has become clear that the economic environment will continue to be challenging in the months ahead. Countries have been transitioning from almost three decades of cheap money to substantially higher interest rates. This reset will require companies and our clients to not only adapt, but adjust, optimize, and innovate, which creates opportunity for Korn Ferry. We have a proven track record of accelerating through many economic turns. The crucial aspect is breaking before the turn and accelerating through it. In times like these, that's how great companies make their best moves, and Korn Ferry is a great company. Our vision to become the premier organizational consulting firm is working, and our diversification strategy continues to positively influence our performance. We have a household brand operating in every major geographic region of the world with world-class IP and talent, unparalleled client access, and a pristine balance sheet with substantial financial muscle. We power through cycles and are poised to seize opportunity with a three-point strategy. Number one, optimize. Number two, innovate. And number three, consolidate. I'll now turn the call over to Bob, who will cover all of this in more detail. Bob?

Great. Thanks, Gary, and good afternoon or good morning. Similar to Gary, I'm very pleased with our performance this quarter. You know, it clearly demonstrates that our broader diversification strategy and investment thesis continues to play out. Our consulting and digital businesses both grew year over year, and our recently acquired interim businesses were more durable than our permanent placement talent acquisition solutions. Now, this intentional diversification into strategically aligned capabilities provides additional cross-line of business referral opportunities and more relevant scalable solutions for our marquee and regional accounts. It also contributes to not only more durable fee revenues, but to increased earning stability, as shown in the company's sequentially stable adjusted EBITDA despite an increasingly complex and uncertain macroeconomic backdrop. I'm also pleased with our cost management, as the company's adjusted EBITDA margin marked the second consecutive quarter of continued sequential improvement. Additionally, at the end of the second quarter, we took actions to right-size our workforce capacity to better align it with current business realities, as well as to take advantage of productivity gains we're realizing in this new world of work. These actions will help us to continue with our adjusted EBITDA margin improvement by driving approximately $110 to $120 million in overall annual cost saves. Finally, and going back to the point Gary ended with, we do plan to continue to seize opportunities in the current environment with our three-point strategy. He said optimize, innovate, and consolidate. Let's start with optimize first. We're going to continue to drive productivity by leveraging our cost base. In fact, if you take Q2 of FY24 and compare that to Q3 of FY20, and that was a quarter right before the pandemic, our fee revenue per employee is up 23%. And if you were to pro forma a full quarter of the impact from our recent restructuring actions, it would actually be up 33%. Now let me turn to Innovate. We will continue to build modes around our solutions and services using our proprietary data, content, and IP, which truly differentiates us from our competitors, who generally have to rely on third-party data and insights. We are also actively embedding AI into our existing solutions and services to drive greater delivery efficiencies, along with greater client impact. Last, we'll continue with our investments to monetize our data, content, and IP through our digital business. Now I'll touch upon consolidate, where our efforts are going to be focused on continuing our investment in strategically aligned, less cyclical, faster-growing, enlargeable, addressable markets. With all of our recently acquired interim businesses now being fully integrated and the increasing relevance of our services and solutions in the world today, we will continue to leverage our existing client relationships and our colleagues across all lines of business will drive top-line fee-revenue synergies through expanded client penetration. Lastly, we'll continue to expand our leadership and professional development business by replicating our success in delivering leadership coaching at scale at an increasing number of clients and leveraging this success into a broader leadership development outsourcing offering. Now, let me turn the call over to Greg, who will take you through some overall company financial highlights.