Korn Ferry

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry third 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 final financial presentation that we'll 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 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 to not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because 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 with the SEC, including the company's annual report for fiscal year 2023 and the company's soon to be filed quarterly report for the quarter ended January 31st, 2024. 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 GAAP financial measure 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. Burnison. Please go ahead, Mr. Burnison.

Okay. Thank you, Greg, and good afternoon, everybody. Number one, I'm enormously proud of our organization and how we continue to acclimate, innovate, and align our business to the opportunity ahead. Clearly, The strategy is working. The results for the quarter, we did about $669 million in fee revenue, which was down 2%. But, you know, in terms of the strategy working, our non-search offerings provided a substantial buffer against the more cyclically sensitive recruiting offerings. Earnings and profitability were also good, 15.2% EBITDA margin. And the revenue from consulting and digital revenue when combined with our interim business, now represent 50% of our top line. And during the quarter, our consulting bill rate increased 12%, and our digital subscription and license revenue increased 11% over the prior year. You know, in today's world, as organizations toggle between perform and transform, it's clear that vertical is out and horizontal is in. And that's exactly the same for us, and it's gratifying to see the results of this cross-firm collaboration strategy. Today we're approaching almost $3 billion in fee revenue with a balanced portfolio across solutions and geographies that's now generating over a third of our fee revenue from our very successful marquee and regional account program where just four short years ago, our top five marquee and regional accounts averaged around $19 million per account, with the largest at $26 million. Compared to today, where our top five average almost $30 million, and our largest account has a run rate of almost $50 million, driven to a large extent by this horizontal approach, by our cross-line of business referrals, which today generate about a quarter of our fee revenue. And further to that point, when I look at our $350 million plus digital business, today 30% of our fee revenue is generated from consulting referrals. And we're looking to expand this horizontal focus even further through four primary digital growth drivers. Number one, a firm-wide push around digital sales, digital offerings. Secondly, increasing our commercial output and sales productivity. Third, enhancing our product offerings like our talent applications and talent platform. And finally, increasing our digital revenue through partnerships, including offering joint solutions and opportunities with HR technology providers. It's clear, given the results over the last few quarters, that we're at the threshold of even greater opportunity. And regardless of the environment, from one cycle to the next, our vision remains unchanged to become the premier organizational consulting firm. Our household brand, unparalleled IP and diversification strategy will continue to positively influence our performance and accelerate the trajectory of thousands of organizations. Indeed, Korn Ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy, operations, and talent, a firm that offers increasing relevant solutions in a rapidly changing world. And I think we're only really scratching the surface of what we can become. With those short remarks, I'm joined by Tiffany, Greg, and Bob. And Bob, I think I'll turn it over to you next.

Great. Thanks, Gary. And good afternoon and good morning. Before I jump into the numbers, I just want to highlight a couple of points. You know, first, I think the third quarter was a very good quarter. And I'm extremely proud of my Corn Ferry colleagues and all that they've accomplished. Second, equally as important, I think our performance this quarter continues to demonstrate that our strategy is working. The third quarter results were ahead of our expectations and really marked a strong start to the back half of our fiscal year. Both earnings and profitability improved year over year and sequentially despite seasonally lower fee revenue, a result of increasing productivity and by leveraging our cost base, you know, again, an overall positive scorecard for our broader diversification strategy. You know, we're excited about and confident in this strategy as it continues to play out just as we expected and have talked about with resilience and growth in our consulting and digital business offsetting cyclical moderation and portions of our talent acquisition offerings. You know, we continue to leverage existing client relationships our colleagues across lines of business, and our unique IEP data and content to drive top-line synergies with a particular focus on our marketing and regional accounts, as you heard Gary talk about that. A number of our key operating statistics improved in the quarter. We had higher hourly bill rates in both consulting and interim, which were up 12% and 21% year over year, and are really reflective of the exceptional value and impact our services deliver to our clients. Our subscription and license fee revenue in digital increased 11% year over year, and was actually 38% of digital's total new business for the third quarter, which illustrates the underlying strength and relevance of our data and solutions, as well as contributing to increasing fee revenue stability going forward. You know, equally important, I'm pleased with the year-over-year and sequential growth of our earnings and profitability. The adjusted EBITDA margin was 15.2% in the third quarter, with digital consulting and RPO all improving their profitability, both year-over-year and sequentially, and exec search improving sequentially. Last, I'd like to highlight our balanced approach to deploying capital, specifically capital return to shareholders. In addition to our substantial dividend increase last quarter, this quarter we increased our share repurchases, acquiring 383,000 shares, which brings our year-to-date share repurchase to 565,000 shares. A total of $67 million has been returned to shareholders through a combination of dividends and share repurchases year-to-date. And our board just approved another dividend of 33 cents a share that's payable on April 15th. Now, let me turn the call over to Greg, who will take you through some overall company financial highlights. Okay, thanks, Bob.