Korn Ferry expects fee revenue to reach $860 million to $878 million in the second quarter of fiscal year 2027 with two months of AMS results included
Earnings Conference Call Highlights: Korn Ferry (KFY) Fiscal Year 2027 Q1
Management Perspectives
President, CEO, and Executive Director Gary Burnison stated, "Our performance is absolutely outstanding. All regions have achieved growth, marking our sixth consecutive quarter of revenue growth." He added that the company took "another important step forward" by completing the "merger with AMS," describing it as "creating a leader in the global talent and organizational consulting field."
President Burnison said, "We now offer one of the most comprehensive portfolios of organizational talent solutions worldwide." He emphasized technology, data, and intellectual property as the strategic core and pointed out, "Currently, over 90% of Marquee and Diamond clients have valid Talent Suite subscriptions."
Executive Vice President, CFO, and Chief Corporate Affairs Officer Robert Rozek stated, "In fiscal 2027 first quarter, our fee revenue grew for the sixth consecutive quarter, profitability increased strongly, and profitability remained stable." He noted that the company "currently reports financial results by three geographic regions: the Americas, EMEA (Europe, Middle East & Africa), and the Asia-Pacific region."
Outlook
Executive Vice President Rozek stated, "We expect second quarter fee revenue to be between $860 million and $878 million." Additionally, "Adjusted EBITDA margins are expected to be between 16.8% and 17.2%, and adjusted diluted earnings per share are projected between $1.30 and $1.40 per share."
Rozek noted, "Adjusted diluted EPS includes two months’ amortization of new intangible assets related to the AMS acquisition, additional interest expense—net interest costs—and the net after-tax impact of new share issuances."
Compared to the previous quarter’s outlook, the current guidance explicitly includes AMS performance for "only two months, September and October," reflecting the reporting period post-transaction completion.
Financial Performance
Rozek stated, "Fee revenue grew 7% year-over-year to $756 million." He added, "Adjusted EBITDA increased $8 million year-over-year, a 7% rise to $128 million," with adjusted diluted EPS of "$1.43."
Rozek indicated, "Remaining contract backlog fee revenue is expected to grow 14% year-over-year to $1.92 billion." The company expects "approximately 56% or $1.1 billion to be recognized over the next four quarters," with the remaining "44% or $835 million" thereafter.
By region, Rozek said, "The Americas saw fee revenue growth of 9% year-over-year to $442 million; EMEA fee revenue grew 4% to $228 million; and Asia-Pacific fee revenue returned to growth at $87 million, up 1% year-over-year."
Regarding capital allocation, Rozek said, "We paid $30 million in dividends and invested $15 million in capital expenditures." He noted the company will "prefer to use investable cash to repay debt related to the AMS acquisition," but will also consider repurchases if they become "more attractive."
Q&A Session
Tyler Barishaw of Truist asked, "How should we consider growth rates under the new reporting structure?" President Burnison replied, "I’d view it from the company’s overall perspective." He said historical growth rates have been "around 10%, 11%, 12%," and with AMS included, the organic and inorganic growth mix is now "closer to 50/50."
Tyler Barishaw also asked, "Can you talk about how AI improves efficiency in the Search business?" Executive Vice President Rozek said, "It has not yet materially affected recruitment search timelines." President Burnison noted clients perceive "it seems everyone has a perfect resume," and AI is "increasing demand for Korn Ferry’s intellectual property and data."
Melissa McMahon of William Blair asked about the pace of achieving the "$40 million" synergy target. President Burnison said that within a year of transaction close, "we will reach an annualized EBITDA run rate of $140 million," adding, "We expect to hit this target faster than that."
Keen Fai Tong of Goldman Sachs asked, "Within the 12% new business growth, how much is one-time fluctuations versus recurring business?" President Burnison said, "RPO is effectively recurring awarded business." He noted, "RPO new awarded business is about $160 million," of which "50%... comes from new clients." He further stated the combined company now "has a backlog of $3.5 billion including AMS."
Mark Marcon of Baird asked about the macro environment and execution. President Burnison said, "Interest rate hikes are a real issue," but added, "Has the situation worsened over the past 3 or 4 months? I don’t think so." He also referenced continuing uncertainty due to Middle East conflicts.
Brianna Kamdoum of UBS asked about integration milestones and cross-business impacts. President Burnison said the "first principle is to do no harm." He emphasized metrics such as "Marquee and Diamond" clients and "cross-referrals," adding that the goal to unify platforms is "May 1, 2027."
Sentiment Analysis
Analysts: Slightly negative to neutral, focusing on growth sustainability and visibility, such as Goldman Sachs’ Keen Fai Tong’s question about the "difference between one-time awards and recurring revenue awards," and Baird’s Mark Marcon’s remarks on macro sensitivity, describing the economic news as "mixed."
Management: Confident and positive during prepared remarks and Q&A, including President Burnison’s use of expressions like "200% confident" and "We will absolutely achieve this target" regarding synergy timing; Executive Vice President Rozek also noted external constraints, stating "assuming no further changes in global geopolitical conditions."
Compared to the previous quarter, management’s confidence statements this quarter emphasize the acquisition, frequently stressing execution and synergy timeline for AMS; analyst focus has shifted toward integration mechanisms and sustainability of AMS-related backlog.
Quarter-over-Quarter Comparison
Strategic focus remains on "We Are Korn Ferry," with this quarter introducing the completed transaction: President Burnison said, "As we complete the merger with AMS," whereas last quarter centered on upcoming reporting changes and market entry execution.
Guidance shifted from the previous quarter’s fiscal 2027 Q1 range to this quarter’s fiscal 2027 Q2 range, now explicitly including two months of AMS results, noted Executive Vice President Rozek.
Analyst questions move from last quarter’s focus on segment reporting and AI impact toward this quarter’s AMS-specific synergy timing, backlog composition, and integration milestones.
Risks and Concerns
Executive Vice President Rozek qualified guidance sensitivity by stating "assuming no further changes in global geopolitical conditions," while President Burnison identified "more conflicts in the Middle East" as an ongoing issue.
Data/privacy and AI use are viewed as operational risk controls within the Search business: President Burnison said, due to involving "very sensitive information," "we will continue to be very cautious."
Integration execution risk centers on timing and systems: President Burnison stated, "It will take about eight months for everyone to be on the same platform," reaffirming the platform milestone as "May 1, 2027."
Final Key Points
Management described fiscal 2027 Q1 as the sixth consecutive quarter of fee revenue growth and completion of the AMS merger with transition to regional segment reporting. The company guides Q2 fee revenue at $860 million to $878 million and adjusted EPS of $1.30 to $1.40, including two months of AMS impact. In Q&A, executives repeatedly stressed "do no harm" during integration, short-term market entry synergies, and confidence in accelerated timing to achieve AMS’s $140 million EBITDA annualized run rate target and $40 million gain; they also acknowledged macro and geopolitical sensitivities and stated a priority to repay acquisition-related debt.
Management Perspectives
President, CEO, and Executive Director Gary Burnison stated, "Our performance is absolutely outstanding. All regions have achieved growth, marking our sixth consecutive quarter of revenue growth." He added that the company took "another important step forward" by completing the "merger with AMS," describing it as "creating a leader in the global talent and organizational consulting field."
President Burnison said, "We now offer one of the most comprehensive portfolios of organizational talent solutions worldwide." He emphasized technology, data, and intellectual property as the strategic core and pointed out, "Currently, over 90% of Marquee and Diamond clients have valid Talent Suite subscriptions."
Executive Vice President, CFO, and Chief Corporate Affairs Officer Robert Rozek stated, "In fiscal 2027 first quarter, our fee revenue grew for the sixth consecutive quarter, profitability increased strongly, and profitability remained stable." He noted that the company "currently reports financial results by three geographic regions: the Americas, EMEA (Europe, Middle East & Africa), and the Asia-Pacific region."
Outlook
Executive Vice President Rozek stated, "We expect second quarter fee revenue to be between $860 million and $878 million." Additionally, "Adjusted EBITDA margins are expected to be between 16.8% and 17.2%, and adjusted diluted earnings per share are projected between $1.30 and $1.40 per share."
Rozek noted, "Adjusted diluted EPS includes two months’ amortization of new intangible assets related to the AMS acquisition, additional interest expense—net interest costs—and the net after-tax impact of new share issuances."
Compared to the previous quarter’s outlook, the current guidance explicitly includes AMS performance for "only two months, September and October," reflecting the reporting period post-transaction completion.
Financial Performance
Rozek stated, "Fee revenue grew 7% year-over-year to $756 million." He added, "Adjusted EBITDA increased $8 million year-over-year, a 7% rise to $128 million," with adjusted diluted EPS of "$1.43."
Rozek indicated, "Remaining contract backlog fee revenue is expected to grow 14% year-over-year to $1.92 billion." The company expects "approximately 56% or $1.1 billion to be recognized over the next four quarters," with the remaining "44% or $835 million" thereafter.
By region, Rozek said, "The Americas saw fee revenue growth of 9% year-over-year to $442 million; EMEA fee revenue grew 4% to $228 million; and Asia-Pacific fee revenue returned to growth at $87 million, up 1% year-over-year."
Regarding capital allocation, Rozek said, "We paid $30 million in dividends and invested $15 million in capital expenditures." He noted the company will "prefer to use investable cash to repay debt related to the AMS acquisition," but will also consider repurchases if they become "more attractive."
Q&A Session
Tyler Barishaw of Truist asked, "How should we consider growth rates under the new reporting structure?" President Burnison replied, "I’d view it from the company’s overall perspective." He said historical growth rates have been "around 10%, 11%, 12%," and with AMS included, the organic and inorganic growth mix is now "closer to 50/50."
Tyler Barishaw also asked, "Can you talk about how AI improves efficiency in the Search business?" Executive Vice President Rozek said, "It has not yet materially affected recruitment search timelines." President Burnison noted clients perceive "it seems everyone has a perfect resume," and AI is "increasing demand for Korn Ferry’s intellectual property and data."
Melissa McMahon of William Blair asked about the pace of achieving the "$40 million" synergy target. President Burnison said that within a year of transaction close, "we will reach an annualized EBITDA run rate of $140 million," adding, "We expect to hit this target faster than that."
Keen Fai Tong of Goldman Sachs asked, "Within the 12% new business growth, how much is one-time fluctuations versus recurring business?" President Burnison said, "RPO is effectively recurring awarded business." He noted, "RPO new awarded business is about $160 million," of which "50%... comes from new clients." He further stated the combined company now "has a backlog of $3.5 billion including AMS."
Mark Marcon of Baird asked about the macro environment and execution. President Burnison said, "Interest rate hikes are a real issue," but added, "Has the situation worsened over the past 3 or 4 months? I don’t think so." He also referenced continuing uncertainty due to Middle East conflicts.
Brianna Kamdoum of UBS asked about integration milestones and cross-business impacts. President Burnison said the "first principle is to do no harm." He emphasized metrics such as "Marquee and Diamond" clients and "cross-referrals," adding that the goal to unify platforms is "May 1, 2027."
Sentiment Analysis
Analysts: Slightly negative to neutral, focusing on growth sustainability and visibility, such as Goldman Sachs’ Keen Fai Tong’s question about the "difference between one-time awards and recurring revenue awards," and Baird’s Mark Marcon’s remarks on macro sensitivity, describing the economic news as "mixed."
Management: Confident and positive during prepared remarks and Q&A, including President Burnison’s use of expressions like "200% confident" and "We will absolutely achieve this target" regarding synergy timing; Executive Vice President Rozek also noted external constraints, stating "assuming no further changes in global geopolitical conditions."
Compared to the previous quarter, management’s confidence statements this quarter emphasize the acquisition, frequently stressing execution and synergy timeline for AMS; analyst focus has shifted toward integration mechanisms and sustainability of AMS-related backlog.
Quarter-over-Quarter Comparison
Strategic focus remains on "We Are Korn Ferry," with this quarter introducing the completed transaction: President Burnison said, "As we complete the merger with AMS," whereas last quarter centered on upcoming reporting changes and market entry execution.
Guidance shifted from the previous quarter’s fiscal 2027 Q1 range to this quarter’s fiscal 2027 Q2 range, now explicitly including two months of AMS results, noted Executive Vice President Rozek.
Analyst questions move from last quarter’s focus on segment reporting and AI impact toward this quarter’s AMS-specific synergy timing, backlog composition, and integration milestones.
Risks and Concerns
Executive Vice President Rozek qualified guidance sensitivity by stating "assuming no further changes in global geopolitical conditions," while President Burnison identified "more conflicts in the Middle East" as an ongoing issue.
Data/privacy and AI use are viewed as operational risk controls within the Search business: President Burnison said, due to involving "very sensitive information," "we will continue to be very cautious."
Integration execution risk centers on timing and systems: President Burnison stated, "It will take about eight months for everyone to be on the same platform," reaffirming the platform milestone as "May 1, 2027."
Final Key Points
Management described fiscal 2027 Q1 as the sixth consecutive quarter of fee revenue growth and completion of the AMS merger with transition to regional segment reporting. The company guides Q2 fee revenue at $860 million to $878 million and adjusted EPS of $1.30 to $1.40, including two months of AMS impact. In Q&A, executives repeatedly stressed "do no harm" during integration, short-term market entry synergies, and confidence in accelerated timing to achieve AMS’s $140 million EBITDA annualized run rate target and $40 million gain; they also acknowledged macro and geopolitical sensitivities and stated a priority to repay acquisition-related debt.