Executive Summary
Korn Ferry delivered a resilient Q3 FY2025, underscored by durable revenue streams across its diversified services and continued progress in high-value, large-scale engagements. Reported fee revenue of $676.5 million, flat year over year, with strong profitability and cash flow generation. Adjusted EBITDA rose 13% YoY to $114 million and the adjusted EBITDA margin expanded to 17.1%, signaling effective mix shifts toward higher-margin advisory and talent solutions. Management reiterated momentum into Q4 with guided fee revenue of $680–$700 million and an adjusted EBITDA margin of ~16.8–17%. The company also raised the quarterly dividend by 30% (sixth increase in five years) and deployed capital toward acquisitions and buybacks, highlighting a disciplined capital-allocation framework. Looking ahead, Korn Ferry emphasizes a favorable long-term TAM driven by labor-market imbalances, upskilling needs, and continued demand for large transformations, while acknowledging macro headwinds in the near term. The earnings narrative combines durable, recurring revenue from marquee and diamond accounts, growing RPO backlog, and a strategic pivot toward higher-impact, multi-quarter engagements that balance growth with profitability.
Key Performance Indicators
QoQ: -10.57% | YoY:38.03%
QoQ: 194.12% | YoY:-1.75%
Key Insights
Revenue: $676.54m, YoY -0.05%, QoQ -0.80%; Gross Profit: $173.17m, Gross Margin 25.60% (YoY +47.8%, QoQ -3.7%); Operating Income: $78.23m, Margin 11.56% (YoY +38.0%, QoQ -10.6%); Net Income: $58.41m, Margin 8.63% (YoY -1.11%, QoQ -3.92%); EPS: $1.12 (GAAP), $1.10 (Diluted) vs prior periods; EBITDA: $108.09m, Margin 16.0%; Adjusted EBITDA: $114.0m, Margin 17.1% (YoY +190bp); Fee Revenue under contract: $752.0m, up 13% YoY (RPO $210m, 65% from new logos); RPO Margin: 15% (Adjusted EBITDA 360bp hig...
Financial Highlights
Revenue: $676.54m, YoY -0.05%, QoQ -0.80%; Gross Profit: $173.17m, Gross Margin 25.60% (YoY +47.8%, QoQ -3.7%); Operating Income: $78.23m, Margin 11.56% (YoY +38.0%, QoQ -10.6%); Net Income: $58.41m, Margin 8.63% (YoY -1.11%, QoQ -3.92%); EPS: $1.12 (GAAP), $1.10 (Diluted) vs prior periods; EBITDA: $108.09m, Margin 16.0%; Adjusted EBITDA: $114.0m, Margin 17.1% (YoY +190bp); Fee Revenue under contract: $752.0m, up 13% YoY (RPO $210m, 65% from new logos); RPO Margin: 15% (Adjusted EBITDA 360bp higher YoY); Operating cash flow: $213.74m; Free cash flow: $196.35m; Cash at period-end: $779.30m; Net debt: -$214.11m (net cash); Total debt: $565.19m; Current ratio: 1.90; Dividend per share: raised to 30% yield ~0.53%; Guidance for Q4 FY25: Revenue $680–$700m; Adj. EBITDA margin 16.8–17.0%; Adjusted diluted EPS $1.22–$1.30; GAAP diluted EPS $1.20–$1.28
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
676.54M |
-0.05% |
-0.80% |
| Gross Profit |
173.17M |
47.83% |
-3.73% |
| Operating Income |
78.23M |
38.03% |
-10.57% |
| Net Income |
58.41M |
-1.11% |
-3.92% |
| EPS |
1.12 |
-1.75% |
194.12% |
Key Financial Ratios
operatingProfitMargin
11.6%
operatingCashFlowPerShare
$4.14
freeCashFlowPerShare
$3.8
dividendPayoutRatio
33.1%
Management Commentary
- Strategy and market positioning: Korn Ferry is pivoting to larger, more durable client engagements (organizational design, leadership development, post-merger integration) and leveraging its IP to deliver scalable outcomes. Gary Burnison emphasizes becoming the ‘undisputed leader in powering organizational performance for talent’ and notes marquee accounts now represent 39% of the portfolio.
- Growth drivers and productivity: Management highlighted rising productivity and a 2% YoY fee revenue growth at constant currency in Q3, with significant improvements in hourly bill rates across Consulting ($461/hr, up 5% YoY) and Interim ($129/hr). They cited AI/GenAI as a contributor to future productivity gains.
- RPO and new business momentum: Total new business +13% YoY at constant currency; RPO new business of $210m with two-thirds from new logos; 65% of RPO new business from new logos. The management framed RPO as a key growth engine amid long-term labor-market imbalances.
- Margin discipline and guidance: Despite macro headwinds, adjusted EBITDA margin expanded 190bp YoY to 17.1% and is guided to ~16.8–17% in Q4, reflecting favorable mix and cost discipline.
- Capital allocation: The firm reaffirmed its dividend-growth trajectory (30% quarterly dividend increase) and highlighted returning roughly $133m to shareholders YTD via buybacks and dividends; Trilogy acquisition spending of ~$45m was noted.
- Market commentary and risks: Executives anticipate continued demand for transformations to address labor shortages and the upskilling imperative, but acknowledge macro uncertainty and pricing-power constraints. They see longer-term demography (Peak 65) and labor-supply dynamics as positive secular drivers for Korn Ferry.
"Our execution has been outstanding"
— Gary Burnison
"Fee revenue in the third quarter was $669 million. That's a 2% year-over-year increase at constant currency."
— Robert Rozek
Forward Guidance
KFY maintains a constructive longer-term outlook anchored in structural labor-market gaps, upskilling needs, and organizational-transformation demand. For Q4 FY25, management guides fee revenue of $680–$700 million and adjusted EBITDA margin of 16.8–17.0%, with GAAP diluted EPS of $1.20–$1.28 and adjusted diluted EPS of $1.22–$1.30. Evaluate achievability on several dimensions: (1) RPO backlog and new-logo momentum suggest durable revenue receipts beyond the current quarter, with ~42% of RPO under contract expected to be recognized in the next four quarters; (2) marquee and diamond accounts remain a robust revenue bridge at ~39% of fee revenue; (3) near-term macro headwinds are offset by productivity gains from AI-enabled delivery and higher hourly rates, though price elasticity and cost-of-living pressures could dampen some demand in tighter environments. Key factors investors should monitor include: progression of RPO new-business mix (new logos vs. incumbents), quarterly bill-rate momentum across Consulting and Interim, execution on AI-enabled tooling to sustain productivity, the pace of hiring versus revenue conversion, and the trajectory of macro uncertainty (geopolitics, inflation, consumer affordability). Overall, the company’s multi-solution portfolio and large-scale engagements position it for mid-to-high single-digit revenue growth, with margin expansion potential from mix shift and cost discipline, assuming no material deterioration in macro conditions.