Korn Ferry (KFY) Q4 2024 Earnings Report

Revenue (quarterly): $699.9M (GAAP); Fee revenue: $691.0M; Gross profit: $148.2M; Gross margin: 21.17%; Operating income: $87.89M; Operating margin: 12.56%; EBITDA: $110.49M; EBITDA margin: 15.79%; Adjusted EBITDA: $112.0M; Adjusted EBITDA margin: 16.3%; Net income: $65.19M; Net income margin: 9.31%; EPS: $1.26 (GAAP $1.24); Weighted average shares: 50.76M (basic); Free cash flow: $250.0M; Cash at period end: $941.01M; Investable cash: $606.0M; Total debt: $580.27M; Net debt: -$360.74M (net cash); Cash flow from operations: $261.86M; Capital expenditures: $11.86M; Dividends paid: $17.49M; Stock repurchases: $23.03M; ROIC (approximate): 3.20%; Cash conversion cycle: 66.62 days; DSO: 74.80 days; Dividend yield: ~0.57%.

Key insights from management call organized by theme:
- Profitability and sustainability of margins: Korn Ferry reported an adjusted EBITDA margin of 16.3% in Q4, with management noting that the margin is up about 300 basis points versus pre-pandemic levels after accounting for mix shift into Interim. Gary Burnison stated, “our profitability, once you adjust for the mix change, getting into a bigger market of interim is up 300 basis points. At this level of revenue, it’s certainly sustainable.”
- Growth engine and cross-line synergy: The company highlighted marquee and regional accounts representing ~37% of FY24 fee revenue and the importance of cross-line referrals, exiting the year at roughly 26% of total fee revenue from cross-business referrals. Burnison elaborated on the goal to push cross-sell from “inches of engagement” to multi-year, multi-line transformations.
- Digital and consulting momentum: Digital revenue was flat YoY but up 1% in constant currency, while Consulting reached all-time highs with strong utilization and a year-over-year EBITDA margin near 23% for Executive Search contributions within the segment. Tiffany Louder emphasized the longer-term trend toward multi-year, higher‑value engagements (
$3M–$5M deals) across Digital and Consulting, supported by Korn Ferry’s data IP and platform investments.
- Demand environment and cyclicality: Management noted stabilization and gradual improvement in RPO (Recruitment Process Outsourcing) and Professional Search, with new logos contributing to growth in RPO in Q4. They expect normal seasonality to drive June sequential gains in Q1 FY25 and reiterated a cautious stance on near-term talent acquisition demand while maintaining confidence in long‑term growth drivers.
- AI and data strategy: Burnison highlighted a measured approach to AI, focusing on ethical considerations and moat-building around Korn Ferry’s data assets (109 million assessments, 30 million compensation data points) and the potential to monetize IP while guarding against disintermediation.

Medium-term to longer-term, Korn Ferry presents an attractive mix of durable growth and strong cash flow generation. The company’s diversified portfolio, high-margin digital platform, and a continued shift toward higher-value, multi-year engagements support earnings resilience. The near-term is exposed to cyclicality in Talent Acquisition, but the margin trajectory appears sustainable given the mix shift and productivity gains. A favorable macro backdrop with demographic megatrends and a growing opportunity set for integrated human capital solutions underpins a constructive long-term thesis. Valuation metrics (P/E ~11.8, P/FCF ~12.3, dividend yield ~0.57%) are reasonable for a franchise with high cash flow quality and a defensible IP moat, though investors should monitor the pace of cross-line growth, the trajectory of RPO/new logos, and potential macro volatility that could impact the timing of multi-year deals.