Korn Ferry Reports 11% EPS Rise in Q1

Key Points

• Fee revenue reached $708.6 million for Q1 FY2026, up 5% year-over-year, and exceeded management guidance.

• Adjusted diluted earnings per share rose 11% to $1.31, and adjusted EBITDA margin improved to 17.0%.

• Consulting and Digital segments saw muted growth, while Executive Search and Professional Search & Interim delivered the strongest year-over-year gains in fee revenue.

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Korn Ferry (NYSE:KFY), a global organizational consulting firm best known for its leadership search, talent advisory, and digital people solutions, released its earnings on September 9, 2025. The quarter was marked by continued strength in its Executive Search and Professional Search & Interim segments, though Consulting and Digital growth slowed in the prior quarter. Overall, Korn Ferry’s diversification helped offset regional and segment headwinds, and the company ended the quarter with a solid backlog and margin improvement.

Management expectations based on management's guidance, as provided in Q4 2025 earnings report.

What Does Korn Ferry Do and Where Is It Focused?

The company focuses on helping organizations with talent, leadership, and workforce strategy through a combination of consulting, digital platforms, and recruitment services. It operates across major segments: Executive Search (leadership hiring), Professional Search & Interim (specialized roles and interim staffing), Consulting (advisory services on talent and organizational structure), Recruitment Process Outsourcing (outsourced hiring), and Digital (people platforms and tools).

Recently, it has emphasized integrating proprietary data and digital solutions into its offerings, focusing on building recurring revenue streams and leveraging its global reach. Ongoing strategic investments include technology upgrades -- such as the new Talent Suite platform -- and targeted acquisitions like Trilogy International to expand interim staffing. Key success factors include effectively combining data and consulting expertise, moving clients to longer-term and recurring contracts, and cross-selling solutions across global accounts. These elements allow Korn Ferry to maintain a diversified and resilient business model despite shifts in economic cycles.

Quarterly Highlights and Segment Results

Korn Ferry outperformed both its internal guidance and analyst expectations for revenue and adjusted earnings per share. The $708.6 million fee revenue result was above the top end of its forecast, driving 11% growth in adjusted diluted earnings per share. The adjusted EBITDA margin reached 17.0%, up from the prior-year’s 16.5 %.

Engagements billed totaled 3,751, and consultant headcount increased. Executive Search fee revenue rose 8% year-over-year, and profits grew even faster, with Executive Search segment margin expanded to 25.6%, up 1.9 percentage points from Q1 FY2025. Gains were broad-based across Europe, the Middle East, and Asia-Pacific, while Latin America Executive Search fee revenue declined 16.5% year-over-year.

The Professional Search & Interim segment delivered 10% revenue growth, benefiting from the November 2024 acquisition of Trilogy International. This segment focuses on specialized professional placements and temporary roles. Segment profitability held steady, with an adjusted EBITDA margin near 21%.

Consulting, which delivers organizational advisory services, posted only 1% year-over-year revenue growth. A 9% higher billing rate partially offset a 7% decline in hours worked. Consulting adjusted EBITDA margin decreased year-over-year by 50bps to 17.0%, and consulting adjusted EBITDA declined from $29.3 million in Q1 FY2025 to $28.8 million, reflecting continued slow conversion of client backlog and macroeconomic caution. Management noted that clients continue to sign larger and longer-term contracts, but are drawing on those contracts more slowly.

The Digital segment, which offers people analytics, licensing, and subscription software (like its Korn Ferry Talent Suite and legacy platforms), saw minimal revenue growth and was flat on a constant currency basis. However, subscription and license revenue within Digital rose 5.1%. Recurring digital fees rose, with 40% of new business coming from subscriptions and licenses, up from 37% a year earlier. Digital segment adjusted EBITDA margin increased year-over-year by 80bps to 31.0%, which helped offset the low growth. Korn Ferry is sunsetting its legacy Digital platform to prepare for a full launch of the new Talent Suite in Q3 FY2026. Additional accelerated depreciation on the old platform was recorded this period as a one-time item, affecting reported profits (GAAP) but excluded from adjusted results (non-GAAP).

Recruitment Process Outsourcing, a service where clients outsource all or part of their hiring process to Korn Ferry, grew fee revenue by 3%. However, Korn Ferry finished with $1.67 billion in contracted backlog across the company. Average bill rates for Consulting increased 8.9% year-over-year, and estimated remaining fees under existing contracts were $1,674.1 million, up 9.2% from Q1 FY2025.

Korn Ferry returned $9.9 million to shareholders via buybacks. The balance sheet remains strong, with $684.9 million in cash and equivalents as of July 31, 2025, though cash declined versus April 2025 due to working capital, investment, and buybacks. One-time costs related to accelerated depreciation and integration were called out but excluded from adjusted results (non-GAAP).

Looking Ahead: Management Outlook and Key Trends

Management guided to fee revenue in the range of $690 to $710 million and adjusted diluted earnings per share of $1.23 to $1.33. The midpoint of this range suggests a modest 5.0% year-over-year gain in fee revenue, but a sequential step down from the prior quarter’s result. Adjusted diluted earnings per share guidance also indicates flat to slightly lower profits compared to the prior quarter. The company flagged ongoing investment in digital technology and some incremental one-time costs tied to platform transition, as well as a tax adjustment, as key factors affecting near-term profitability.

No change to the company’s dividend was reported. Korn Ferry remains focused on completing its migration to the new Talent Suite platform, unlocking further recurring revenue, and managing client caution in Consulting and RPO bookings. Investors may want to watch for the full launch of the Talent Suite, pace of backlog conversion in Consulting. The company’s backlog remains strong, so revenue visibility is comparatively high across segments. However, muted top-line performance in Consulting and Digital, as well as management’s conservative tone on near-term guidance, signal the need for continued focus on execution in the coming quarters.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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