Korn Ferry

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry first quarter fiscal year 2025 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 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 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 2024 and in the company's soon-to-be-filed quarterly report for the quarter ended July 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, Leah. And hello, everybody. Thanks for joining us. Tiffany, Greg, and Bob are going to get into the quarterly results. But I first, you know, as we were looking at the results, and this is now my, I think, 89th quarterly earnings call, I was reflecting on how far we've come, particularly over the last several quarters. in what I first described exactly a year ago as a multi-quarter economic reset in many countries around the world. And as I reflect on that, I'm more convinced than ever about how capable we've become and the opportunity ahead of us. From sport to industry, we're operating in the market at its highest level in over five decades in business. You know, I can remember the first acquisition we did in our consulting and digital offerings. We doubled the revenue of the business to about $30 million. Today, those solutions are almost a billion one and continue to generate positive momentum. We didn't have an interim offering before the pandemic. Today, that solution is generating almost $300 million in revenue. and tapping not only a large addressable market, but one that is extremely synergistic to our brand. Further, more recently, we've seen improved growth in executive search, and we're experiencing stable trends across professional search and RPO. Our marquee and regional accounts, 37% of our portfolio. Cross referrals are about 27%. of our revenue. Consulting rates have increased by over a third over the last few years, reflecting the value of our solutions and SAS agreements now exceed a third of our digital new business. And as importantly, we've added tremendous IP to our more than 100 million assessments, more than 10,000 success profiles. rewards data on 28 million people covering 30,000 organizations, and leading edge technology deployed in our RPO offerings. So, yeah, I'm very optimistic about our future. The results clearly demonstrate that our strategy is working. Our top line is more than 30% higher than before the pandemic, which at that time was already an all-time high, and now with even greater profitability. We are proving that we can leverage and extend our brand and deliver diverse offerings with unparalleled IP and incredible colleagues and expertise across our firm to drive even deeper impact for our clients. And our confidence is also reflected in our capital allocation, which not only included share buybacks, but also more than a two-fold increase in our quarterly dividend year over year. This is just the beginning for Korn Ferry. I'm convinced that we're only scratching the surface of tapping into an estimated $300 billion market opportunity. And going forward to capitalize on that opportunity, our strategy will be anchored on five strategic pillars. Number one is our go-to-market approach. And nowhere is that more pronounced than with our marquee and regional accounts, in which almost all of our marquee clients use at least three of our service offerings and benefit from our IP full suite of offerings and expertise. Second, innovation in IP. Our continued investments in IP are giving clients a shared language to describe what great organizations and talent look like. And we're embedding that language across their enterprise and throughout their talent assessment coaching and development processes. Third, our brand, which is a permission brand and just an incredible asset. We are the voice of talent, leadership, and organizational strategy. Fourth, M&A. We're going to continue to explore synergistic and brand-adjacent opportunities. And finally, it's all about our colleagues, investing in and developing our own talent and providing growth opportunities. You know, fundamentally, none of us know our potential unless we're given opportunity. And our firm sits at the intersection of organizations, their strategy, and their talent to create that opportunity. That's what it's all about, synchronizing talent and strategy to drive superior performance and enabling people and client organizations to be more than. With that, Bob, I'll turn it over to you.

Great. Thanks, Gary, and good afternoon and good morning. So our results for the first quarter are really a strong start to our new fiscal year. Both fee revenue and profitability met or exceeded the high end of our guidance. Our adjusted EBITDA margin expanded for the fifth consecutive quarter. Our consulting and interim bill rates grew year over year by 8% and 9% respectively. And our employee productivity, which we measure by fee revenue per headcount, is now 36% higher than it was pre-pandemic. Given the current business environment, this quarter was another opportunity to validate our long-term strategy, and quite simply, we delivered. We continued to successfully execute our plan delivering value to our clients through unique and differentiated solutions, and really reinforcing our position as one of the most trusted brands in organizational consultancy. Our consolidated fee revenue for the first quarter was $675 million, which was down only 2% year-over-year at constant currency. Fee revenue in the first quarter was driven by continued stability in consulting and digital, and we actually saw a return to growth for our executive search. Additionally, we saw signs of stabilizing demand for our other permanent placement talent acquisition solutions, both ProSearch and RPO. Now, in the first quarter, we delivered $111 million of adjusted EBITDA. Our adjusted EBITDA margin grew to 16.5%, and our adjusted diluted earnings per share grew year over year to $1.18 per share. The first quarter's growth in profitability is notable and was driven by continuing improvements in our employee productivity and our disciplined cost management. Our continued ability to achieve greater operating leverage in a prolonged, choppy, and uncertain business environment is really important and it positions us for greater earnings growth when the business environment improves and we start to see top line growing again. Last, I'd like to provide an update on our capital deployment during the first quarter. Greg will get you some more of the details, but I'd like to point out that in spite of the current business environment, we remain very confident that we can maintain our current levels of profitability and at the same time reinvest back into the business to make sure we capture future growth and also return capital to shareholders. In the first quarter, we invested back into the business by hiring approximately 50 fee earners across all lines of business, spending $11 million in capital for both digital product upgrades and technology that enables our other lines of business. In addition, we returned a total of $43 million to shareholders through a combination of dividends and share repurchases. Now, I'm going to turn the call over to Greg, who's going to take you through some of the overall company financial highlights.