Q4 2022 Korn Ferry Earnings Call
Yes.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry fourth quarter and full fiscal year 2022 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 Korn Ferry Dot Com a copy of the financial presentation that we will be reviewing with you today.
Before I turn the conference over to your host Mr. Gary Bernsen, Let me first read the 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 the period.
And in the periodic and other reports filed by the companies with the SEC, including the company's soon to be filed annual report for the fiscal year 2022.
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 direct comparable GAAP financial measure.
Is contained in the financial presentation and earnings release relating to the call.
Of which are posted in the Investor relations sections of the company's website.
At Www Dot Korn ferry Dot com.
With that I'll turn the call over to Mr. Bernstein. Please go ahead Mr Bernsen.
Thank you Tony good afternoon, everybody and thanks for joining.
As I look back on the last 12 months.
Our vision to become the Premier organizational consultancy is clearly working.
And for that I mean.
Credibly proud of our company of our colleagues and all of our accomplishments you know our performance has been outstanding during the fourth quarter, we generated $721 million in fee revenue and new high.
Up 33% at constant currency and our profitability was also very strong and our performance has been consistent for.
For example, our 10 year CAGR has been 13%.
While our 20 year CAGR has been 10% and during this time, we've seen our top line grow by more than seven fold.
A major account strategy, but now represents 36% of our portfolio consulting and digital capabilities that represent 38% of our firm and integrated go to market strategy, One Korn ferry.
That has resulted in almost 30% of our revenue coming from cross line of business referrals are new Korn ferry to trains and develops over 1 million professionals, a year of compensation and rewards advisory a digital offer with comdata on more than 25 million executives.
Our new interim transition management, the staffing capability with over a $110 million of annual revenue.
On a run rate basis.
And the continued execution.
Although a balanced disciplined approach to capital allocation.
Relevancy and profitability.
Faced with this reality clients will have to rethink all aspects of their strategy.
Including their organizational leadership and talent components needed to drive success. We're also in an era in which shortages of skilled labor are projected to persist.
If history repeats itself.
The labor participation rate.
Unlikely reached the level it was before the pandemic.
Thereby compounding the current supply demand imbalance.
We've also used this time of change as an opportunity to continue to evolve our strategy and re imagine our business. This includes broadening the scope of our offerings and professional search and interim services with two strategic acquisitions in the last six months alone.
Today Boomers are retiring and career nomads are looking for change early and often and.
In our strategic moves approach and offerings reflect this dynamic we're going to continue to invest heavily in expanding our suite of technological and digital capabilities, helping to transform the way our clients succeed in this new world.
To fulfill our vision and further position our company for long term success, we remain relentlessly focused on meeting the evolving needs of our clients.
Which includes continuing to drive an integrated go to market strategy through our marquee and regional accounts this not only facilitates growth.
But it's also the key to more scalable and durable revenues are 350 marquee and regional accounts continue to demonstrate the power and value of these relationships generating more than $950 million in revenue last year utilizing our global capabilities.
<unk>, even during differing economic periods looking to the fiscal year ahead.
Truly feel we have the right strategy with the right people the right time to help our clients drive performance in this new world.
Korn ferry is indeed poised for even greater things to come.
And before I turn the call over to Bob Rozek, and Gregg Cabo check let me just say that our thoughts continue to.
To be with those in the Ukraine, including our colleagues.
As well as those that have been impacted by the senseless and tragic tragic shootings.
Over the last several weeks.
With that Bob I'll turn it over to you.
Great. Thanks, Gary and good afternoon, or good morning, depending where you are in the world.
Gary said, we've entered entered a new reality in the world of work and Aero, where social political and demographic shifts have created what are projected to be permanent shortages.
Skilled labor and really changing your attitude towards how and where work gets done.
He is in the post COVID-19 economy, regardless of level of economic activity. We anticipate many of these changes are here to stay and will force organizations to reevaluate all aspects of their talent strategy.
And as I like to tell everybody. This is not our 15 minutes of fame. The changes I'm speaking about are real and they're here to stay.
And with our unmatched collection of talented colleagues intellectual property data other assets, we are uniquely positioned to partner with our clients and lead them through their talent transformation journey.
Our portfolio of solutions have never been more relevant and our top line more durable.
We are thriving in today's new world harvesting years of investment in intellectual property people data and processes.
And we're well positioned for sustained future success backed by our powerful brand and a proven operating model.
You know I, often say the best way to measure success is through performance and when you look at our Q4 and full year FY 'twenty two performance I mean, it really is the definition of success.
And it's indisputable proof that we are executing the right strategy and that is a winning strategy.
Now in the fourth quarter, we once again achieved new highs for new business fee revenue adjusted EBITDA and adjusted diluted earnings per share.
<unk> revenue reached a new high of $721 million net was up $166 million or 33% year over year at constant currency and up $40 million or 6% sequentially.
Nearly every line of business achieved a new fee revenue high led by our Po and professional search.
And executive search, which grew 77% and 22% respectively.
Growth for our consulting and digital businesses was also strong year over year at 13% and 11% respectively.
And then for all of fiscal 'twenty, two our consolidated fee revenue grew over 45% to a new high of $2 63 billion.
New business also reached a new quarterly high in the fourth quarter for the whole company as well as for nearly every line of business.
By month strong new business in February was actually followed by an all time record month of March.
And a very strong but sequentially lower April which is kind of our normal seasonal pattern in the fourth quarter.
<unk> new business remained exceptionally strong in the fourth quarter with $213 million of new contract awards easily the best performance to date.
Our earnings continued to scale with the revenue growth.
Adjusted EBITDA grew over $31 million or 28% year over year to $144 million with an adjusted EBITDA margin of 20%.
Our earnings and profitability continue to benefit from both higher consultant and execution staff productivity as well as our disciplined.
G&A spending in.
And these efficiency drivers throughout fiscal 'twenty to help grow our adjusted EBITDA to $539 million with a 25% adjusted EBITDA margin.
And finally, our adjusted fully diluted earnings per share.
Also reached a new high in the fourth quarter and for the full year of fiscal 'twenty to.
Fourth quarter adjusted fully diluted earnings per share grew to $1 75, improving 54.
Over 45% year over year and 10% sequentially.
For all of fiscal 'twenty, two adjusted fully diluted earnings per share grew to $6 23.
Which was up $3 72, or nearly 100 and.
50% year over year.
Our investable cash position remained strong at the end of the fourth quarter cash and marketable securities totaled about $1 2 billion.
And when you exclude amounts reserved for deferred compensation arrangements and accrued bonuses, our global investable cash balance at the end of the fourth quarter was approximately $605 million.
Our capital deployment in both the fourth quarter and for all of fiscal 'twenty. Two continues to demonstrate the disciplined execution of our balanced capital allocation policy now in the fourth quarter alone, we repurchased $1 million 35000 shares of stock and used about 67 million.
To do that paid a cash dividend of about $6 8 million.
And we deployed $42 million for the acquisition of the Patina solutions group.
For all of FY 'twenty, two we repurchased about one $4 7 million shares of stock using about $99 million in cash.
We paid cash dividends of almost approximately $27 million.
And deployed about $134 million for M&A.
Additionally, we funded $46 million of capital expenditures most of most of which was directed to development activities for our emerging digital business and.
And finally I'm pleased to announce that our board of directors has recently approved.
The authorization of an incremental $300 million for share repurchases and a 25% increase in our quarterly dividend raising it to <unk>.
For sure.
Continued investment in the business and the business effective deployment of cash strong cash generation.
And a resilient balance sheet positions us extremely well for the future.
With that I'll now turn the call over to Greg to review, our operating segments in more detail. Thanks.
Thanks, Bob starting with KF digital global fee revenue for digital was $89 $5 million in the fourth quarter, which was up 11% year over year.
Our subscription and license component of KF digital speed revenue continued to grow in the fourth quarter, reaching $29 million, which was up nearly 21% year over year and was approximately 32% of revenue for the quarter.
Global New business for KF digital was approximately $107 million with 36% or $38 million of the total coming from subscription and license sales.
Earnings and profitability also remained strong in the quarter, even as investment hiring and dedicated sales professionals and other product development initiatives accelerated.
In the fourth quarter digital generated adjusted EBITDA of $27 $7 million with a 31% adjusted EBITDA margin.
For all of fiscal 'twenty, two digital fee revenue grew 22% to $349 million and generated $110 million of adjusted EBITDA with a 31, 5% adjusted EBITDA margin.
Now turning to consulting in the fourth quarter consulting fee revenue grew to a new high of approximately $174 million, which was up approximately $20 million or 13% year over year.
Fee revenue growth continued to be broad based across all solution areas and strong regionally in North America, and EMEA, which were up 24% and 11% respectively.
Consulting new business also reached a new high in the fourth quarter growing approximately 13% year over year.
Regionally new business growth was strongest in EMEA, and APAC, which were up 37% and 9% respectively.
In the fourth quarter adjusted EBITDA for consulting grew to $37 million with an adjusted EBITDA margin of 17, 6%.
For all of fiscal 'twenty, two consulting fee revenue grew 26% to a new high of $650 million with an adjusted.
Adjusted EBITDA growing over 42% to approximately $116 million with a 17, 9% adjusted EBITDA margin.
The growth of our RPM professional search business remained extremely strong in the fourth quarter driven by the widening supply demand imbalance for top skilled professionals in the post COVID-19 environment.
Globally fee revenue grew to $213 5 million, which was up 77% year over year and up approximately $25 million or 13% sequentially.
Our <unk> revenue grew approximately 43% year over year, and 14% sequentially, while professional search fee revenue was up approximately 142% year over year and up 12% sequentially.
In the fourth quarter, we began the integration of Makena and provider of senior level executive professional talent on an interim or a project basis.
<unk> was acquired on April one and generated approximately $4 $1 million in the last month of our fiscal fourth quarter.
New business wins for both RP on professional search were also very strong in the fourth quarter, reaching new highs professional search new business was $108 million and <unk> was awarded $213 million of new contracts, consisting of $44 million of renewals and extensions and 100.
$69 million of new low we'll go work.
Adjusted EBITDA for <unk> and professional search continued to scale with revenue improving to $58 million with an adjusted EBITDA margin of 23, 8%.
For all of fiscal 'twenty, two RPM professional search also achieved new highs for revenue earnings and profitability with $692 million of fee revenue up 87% year over year and $165 million of adjusted EBITDA.
With a 23, 9% adjusted EBITDA margin.
Finally fourth quarter global fee revenue for executive search grew to $244 million.
Which was up 22% year over year to a new quarterly high.
Growth was also broad based with North America up 20% in EMEA, and APAC up 20% and 28% respectively.
Global New business for executive search was also strong in the fourth quarter up 19% year over year to a new high.
We continue to invest in expanding our team of consultants in the fourth quarter.
Total number of dedicated executive search consultants worldwide at the end of the fourth quarter was 587.
Up 63 year over year and up six sequentially.
Annualized fee revenue production per consultant in the fourth quarter remained strong at $167 million and a number of new search side and the number of new search assignments opened worldwide in the fourth quarter was up 8% to 1800 and.
51.
Fourth quarter Global Executive search adjusted EBITDA grew to approximately $64 million.
Which was up $14 million or 29% year over year with an adjusted EBITDA margin of 26, 3%.
For all of fiscal 'twenty, two Korn ferry became the first firm effort to generate $900 million of annual executive search revenue.
In fiscal 'twenty, two global executive search fee revenue was $936 million up 47% year over year with an adjusted EBITDA.
With.
Nearly $258 million with an adjusted EBITDA margin of 27, 5%.
I'll now turn the call back over to Bob to discuss our outlook for the first quarter of fiscal 'twenty three great. Thanks, Greg as previously discussed our consolidated new business grew to a new high in the fourth quarter with strength across all lines of business, our backlog of revenue under contract exiting the fourth quarter.
<unk> was the highest in company history and May new business, although down sequentially from April was in line with both our expectations and our normal historical monthly seasonal pattern.
Additionally, new business for June month to date is also in line with our expectations in the normal monthly seasonal patterns as well.
Evolving megatrends and workforce disruption are driving more consistent demand.
And regardless of economic headwinds presenting new areas of opportunity across one Korn ferry.
Ongoing changes in the workforce.
Such as more broadly skilled labor shortages continued competition for talent people working differently and a growing focus on.
<unk> NDA ni means our synergistic portfolio of offerings is more relevant today than ever.
Even with these favorable trends it is difficult for us to quantify the risks associated with economic factors like global inflation rising interest rates supply chain disruptions and escalating geopolitical tensions.
With all of this in mind, however, assuming no new major pandemic related lockdowns.
Or further changes in worldwide geopolitical or economic conditions financial markets Foreign exchange rates.
We expect our consolidated fee revenue in the first quarter of fiscal 'twenty three to range from $680 million to $710 million.
And our consolidated adjusted diluted earnings per share.
To range from $1 42 to $1 58, and our GAAP diluted earnings per share to range from $1 35 to $8 51.
Now as I previously mentioned, we deployed about $134 million on the acquisitions of the Lucas group and Patina solutions group in the last six months.
These acquisitions are currently being integrated into the professional search portion of our <unk> segment, and really will provide new scale and a new interim service offering, which we really believe is a tremendous opportunity for growth.
Now these acquisitions served as the catalyst for repositioning our existing <unk> segment into two separate reporting segments. The first being our Po on a standalone basis in the second obviously being professional search on a standalone basis and this these will both be.
<unk> starting may one of 2022.
In closing, we're very optimistic about our future.
'twenty two is just a phenomenal year for us we achieved tremendous success.
<unk>, new financial and operational highs.
But as Gary said, we believe our best performance is yet to come our solutions are highly relevant in today's business environment. There are aligned with long term secular trends that will drive strong durable growth combined with sustained profitability for years to come Korn ferry.
<unk> has never been better positioned to serve all of its constituencies colleagues clients candidates and shareholders.
With that we would be glad to answer any questions you may have.
Ladies and gentlemen, if you wish to ask a question. Please press one then zero on your telephone keypad.
You may withdraw your question at any time by repeating the one Euro command.
Once again, if you have a question. Please press one zero at this time.
Our first question will come from the line of George Tong with Goldman Sachs. Please go ahead.
Hi, Thanks, good morning.
Monthly new business reached a new high in March, but decelerated in year over year growth in April with the particularly sharp slowdown in consulting can you discuss whether you expect a deceleration in April to continue and how the consulting business is positioned to perform in the current macro environment.
Well I think the consulting business has never been better positioned.
It's a far reaching business for mortgage strategy to learning and development to compensation rewards and assessment succession. It really.
It plays at the essence of what a leader's job is that has to be in.
A conductor.
Synthesizing and synchronizing the company's strategy with.
With their organizational structure and with their talent so.
When we look at the new business.
What we've seen is exactly in line with what we've done in the past and so our year end is April 30th.
And we tend to see.
A deceleration in May and that is about historically speaking that's about 12%.
And Thats, what we saw as a firm.
Overall and in June we would expect based on history.
For new business to be.
Basically flat or maybe slightly up that's what history would suggest and so it's still early.
In the month and we've got a number of days to go but as Bob alluded to.
We're basically tracking what we thought we would do in our historical pattern. There is no question.
And then you know this better than anybody that that the market.
<unk> has been unsustainable and its been Red Hot.
And in a hole.
Series of.
Factors in a series of events and.
And data points, but.
So yes, it's clearly moderated as we thought it would.
But it's still I think we're incredibly well positioned.
And Joanna this is Bob.
Yes, I would say that what we're seeing is exactly what we expected it's exactly what we've done historically and if you go back and look at all of FY 'twenty to.
Q1 was our fourth best new business quarter ever Q2 was number three Q3 was number two in Q4 was number one so we continue to progressively get better and exited the year with our best quarter ever.
Got it.
Digital new business trends were relatively anemic in the fiscal fourth quarter can you discuss the factors weighing on digital growth and whether you expect those factors to persist beyond <unk>.
Well generally speaking the biggest quarter for growth in the business.
Our October quarter, and so we would expect.
Good to see that again I would expect the growth to be.
Very much tempered in the first quarter and what we've done is really reposition that business we've put on.
A lot of new sales professionals, and we're going to continue to do that over the next quarter or two so just this last quarter or quarter. Even today, we've put on an additional 30 to 40 <unk>.
<unk> professionals were going to continue though so we've we've certainly.
Re imagine that business is we have the rest of the firm and so I would expect it.
This first quarter that the new business.
Would be low earth than it's been.
And again, I don't think thats, particularly unusual with historical trends, but I would expect the October quarter is always the best quarter.
That business.
And George.
In my commentary I talked about.
The $46 million that we deployed.
A significant portion of that was was put into place in the digital business to continue to try to accelerate.
Product development and our go to market offerings.
That's helpful. And then lastly can you provide an update on progress with your cross selling initiatives, including the amount of fee revenue coming from cross line of business referrals.
And how quickly large marquee and regional accounts are growing.
It was a Bob can talk about the marquee and regional accounts, they're cross referrals.
Continued despite.
The increase in scale of the business.
The cross referrals were about 28% almost 30% in the quarter and so.
That's one data point that you can look at and say.
Is this strategy working are you, having deeper impact with with clients.
And are you integrating the organization across solution lines and so that's.
That's one of the things that I'm. Most proud of so that number look that number is not going to get to 50% or 60% I don't I don't foresee that.
But I do believe that it's a positive reflection.
And a data point that certainly supports the strategy and in some parts of the business that cross will follow Pearl percentage is actually materially higher.
Then 28%.
George I think this is Bob again, I think one of the things that.
Maybe it's perhaps a little underappreciated is how.
How much connective tissue that exists between our core solutions and how easy it is to move across those core solutions and when youre dealing with the client.
Place the CEO you can help.
That individual.
Accelerate the performance you can help them to get the right team in place you can help them put in place an incentive compensation program to motivate and reward the team for driving his or her strategy and so on and I think as Gary mentioned, we're almost at 30%.
I think there is room to grow there just based on how much again inter connectivity there is between our solutions and how easy it is to work across all of them when you're facing off with your clients.
Very helpful. Thank you.
Yes.
Thank you. Our next question comes from Tobey Sommer with <unk> Securities. Please go ahead.
Hey, everyone. This is actually Jasper bibb on for Tobey. Thanks for taking my questions. Just on executive Pro search I wanted to ask there are certain industry groups that are trending better or worse here.
I was kind of thinking up some of the headlines around tech companies instituting hiring freezes are doing layoffs and.
I was wondering if that was having any impact here.
Our tech business was up sequentially, 6%, so it's not having an impact.
The professional search we've been in the business for for some time, obviously with the <unk> offering but this is.
A a really renewed focus on the part of Korn ferry and so when you look at our market opportunity.
It's probably $300 $350 billion and when you look at that market.
Theres a couple really big aspects, one is around learning and development.
That's an enormous piece.
Learning and development is about 10%, 11% of the company, we develop over a million professionals a year.
I think the opportunity around LBO learning development outsourcing is big for Korn Ferry and it's kind of what <unk> was many.
Many many years ago. So we're going to continue to put emphasis there and then secondly, when you look at that 300 350 billion and a big part of it is around.
Knowledge workers and professional search in an interim services the mega trend of <unk>.
Work anywhere any time.
<unk> has only accelerated during the pandemic pandemic and we don't we don't really see that.
<unk> away. So this idea of flexibility in our hybrid work and what I would call career nomads I think it's going to continue and so as an example, we're putting.
A new focus around <unk>.
Interim services putting in.
Seasoned professionals to help drive an initiative or lead a business in.
Really that business has gone from almost zero two today, our run rate of about $110 million. So you look at all of that in the professional search segment is.
Today, it's about $400 million.
Look at it and say why Shouldnt, we quadruple that business I think we really do have that kind of opportunity. So in terms of industry trends.
We haven't seen anything.
That would sound an alarm bell.
And it was good to see that the technology business actually grew sequentially.
Thanks makes sense. So I was just hoping you could speak to your thinking around the container deal growing in the interim executive market.
How are you thinking about the opportunity for revenue synergies and putting that business. Besides just kind of the core executive search firm.
We've already seen.
Well first of all with all the work that we do it begins and ends with quality.
That's true in every part of the business.
And we monitor that daily and then in terms of what we're doing whether it's assessing people developing people placements.
So that that's something we pay very very close attention to.
The inner.
<unk> is a unique opportunity I think for us.
Given the brand that we have and.
It's a relatively new entry for Korn ferry, so I look at that and say Wow, that's a $110 million business today that should be a $1 billion business I really think there's that much market demand. So.
And today that offering is primarily anchored in the United States.
Have a little bit of capability globally, but but that's another.
Area for us to tap so you're going to see us continue.
To invest in that part of our business.
Last question for me just how should we think about the durability of margins of a recession were to occur here.
Do you think there are potential offsets to think about as far as consultant productivity or some of the real estate cost takeouts you've done in the past two years relative to maybe the experience over the last two recessions.
Well look I'll, let Bob comment in more detail, but I think.
This is my eighth year.
Earnings call with the firm and I think what you'd find over that time as are our 20 year CAGR is 10%.
Our 10 year CAGR of 13%, our cross referrals or almost 30%, we've got a marquee and regional accounts.
Go to market strategy, that's 36%, 37% of the portfolio and the other thing when you. When you look at that span of time you'd sign the peak to trough.
Looks significantly different over time.
And that is that even bore out in this COVID-19 debacle that we all went through where you know there were parts of the business that were more cyclical and there were others that were less cyclical. So I think the thesis around tamping down the cyclicality is actually <unk>.
We're now in the data, but at the end of the day you do have a consulting business.
And that can over time tend to ebb and flow, but for Korn ferry.
It's been it's been up and to the right. So Bob.
You could probably speak to the operating boundaries on how we're thinking about that.
Yeah, So one of the things that.
We constantly are looking at the business in assessing what the world looks like.
And going into the Covid sort.
Pandemic recession, if you will.
Our operating boundary at that point in time was to make sure that we were cash flow neutral.
In a particular quarter.
Rolling 12 basis.
What we've what we experienced was that we were well above cash flow neutral and we've really reassessed our operating boundaries now and are really looking at the business from the perspective of having a no nothing less than a 5% EBITDA margin.
On a trailing 12 basis, which obviously.
Puts us very very much in a cash positive.
Cash positive position.
Your point on real estate is actually a very good one one of the things that we're looking at now.
The offices are reopening.
Tracking attendance in offices.
How many people are actually coming in and using the office facilities, how frequently and so on and I really believe that there'll be a sort of a second wave if you will.
A real estate reductions it won't be what we did the first time first time, we took out 21, 22% of our footprint.
But I think there is going to be opportunity for further reductions in our real estate footprint just based on.
Office usage in the way that people want to work today.
Our view is.
You kind of have to meet them, where they are.
And not be in a position to force anyone to come in the office, if they don't want to be in and they don't have to be in.
I appreciate the color guys. Thanks for taking the questions.
Thank you. Our next question comes from the line of Mark Marcon with Baird. Please go ahead.
Good afternoon.
Congratulations on a strong year.
Obviously.
Strong, particularly in terms of RPI.
Can you talk a little bit about like how much of the new logo.
You know wins on the Rps side would you expect to spill.
Spill into the first quarter of this year from a revenue perspective.
Bobby you want to do that yeah, Mike I would say, there's probably very little in the first quarter.
That will spill and essentially when you when you stand up is these are our large engagements and when you sign up a large engagement. It takes some time to stand it up and the way that the contracts are written as we get in.
Upfront implementation fee.
Which is a very small percentage of the.
The total contract value and so as the as the requisitions that the job gets stood up in the requisition start to open up that's when you'll see the real impact from the <unk>.
Revenue, so I would say probably very little Q1, and then we'll see it more in hitting in Q2 and beyond.
And it's consistent with where that the largest engagements have always have always operated.
And when you were when you were answering at the very beginning of the Q&A. When you were answering a question from George in terms of oil.
May was 12% June flat are you talking about.
As it relates to new business is that on a sequential on a year over year basis. So in other words may looks like it's up about 12% in June it seems like it's flat relative to June of last year or June is flat relative to may.
We're talking sequentially.
Okay.
May would be up 12% relative to.
April or.
Paul.
Okay.
Relative may relative to April .
Down 12% sequentially on a year over year basis, though may is actually up 13%.
Okay that makes sense of humor.
The way we.
When we look at we look at new business every day, and we have titles and I generally tend to look at.
New business on a month sequential basis, because thats, we manage the business with looking at current data and we have certain goals and targets each month and as long as they are in line up with where we were.
Or more.
A more focused on the current data then the the year over year compare especially the Spanish temperature. The compares are soft so all over the place.
Okay and juniors.
<unk> to May what would that be on a year over year basis.
That would be mark.
Roughly.
It's about it would be about 10% year over year growth rate that is about right, yes, 10%, Okay, Alright, that's super helpful.
And then with regards to.
On the.
On the <unk> on the executive search side any sense for like what percentage of the business is basically coming from realm.
Relatively new entities that you know might still be private.
No. We don't we don't have that at our fingertips and more kits.
It's a pretty balanced portfolio and I would say that overall it kind of mirrors the.
The global economy, I don't think Theres anything thats.
Particularly out of balance there.
Okay great.
And then how about.
What percentage of searches, we obviously are all aware that.
Hey, they're cyclical factors, there's demographic factors from a demographic perspective.
The boomers are retiring.
Any sense in terms of what percentage just roughly what percentage of the searches are basically due to.
Retirements that where somebody needs to be replaced and it's not necessarily because of.
Churn in.
And job hopping.
Yes, I think I'm not going to give you a specific percentage mark but it's it's it's a decent.
You know, it's a decent ratio I mean, I've thought a lot.
Bout.
June of <unk> seven.
And kind of compare that to this June so 15 years ago.
And.
Did we really see the great recession coming in.
What were we.
What where are we paying attention to what we are we ignoring where where the blind spots.
And we had actually started to tap down hiring we had gone out.
<unk> made sure our balance sheet was bolstered in it you know I look at that 15 years, because I don't I don't think the COVID-19.
It's a good comparable but I look at that and say June of <unk> <unk> versus today, and what's really happening in the labor market and I don't need to tell you, but I think labor force.
Participate participation rate is lower the workforce is older and there's been really not much growth in the labor force. So <unk> seven the participation rate was 66% today, it's 62%.
Workforce in the United States was $153 million today, it's 163 million Theres only been 10 million more workers over 15 years and over the last two and a half years.
Theres been no growth.
In the Labor force. So it's definitely getting older. There's millions of people that have left the workforce.
Labor force growth is 35% slower than the population growth College unemployment rate is still as you know very very low and the thing that today. It's also yes, there definitely.
Certainly.
People are retiring the boomers are retiring but the only thing. That's interesting is the just a demographic trend of 55 and older back in June of our southern it was 29% and today, it's 38%. So I think you have a just a completely different.
Labor force dynamic today.
Then what you had say 15 years ago.
But the reality is there you know there are literally millions of people have left have left the job market at least in the U S and I think that that is true for other western economies.
Alright, Gary you've always been extremely thoughtful about.
Cycles and I, obviously started following you.
Korn ferry prior to the Dot com.
Boston, So we lived through <unk>.
<unk> together.
And in terms of like.
And you've always.
Looked ahead and thought.
We're very thoughtful about cycles. So how are you.
How exactly Theres, obviously, some people who are basically assuming that we're going to go into a recession right now that's I mean, that's obvious.
There's others, who think it might be a soft landing.
If we go into a recession like to what extent do you think like what sort of revenue degradation.
It's not like a great financial crisis, but more like a garden variety type recession, if we ended up with that sort of scenario.
Do you think revenue and <unk>.
You gave like Okay, EBITDA is not going to go less than 5%, but what do you think is realistic about where margins could go in a garden variety recession, where we just have a couple of quarters of down in GDP, but nothing overly dramatic.
You know its obviously I'm not an economist I, it's very very difficult to predict predict those kind of things I think.
The huge wildcard that I've said now for three three earnings calls clearly inflation.
Said months ago, it wasn't transitory and that that's turned out to be the case that that is a huge issue for Americans and others in the world.
I think the thing that's hard to handicap right now.
Is given the labor market is substantially different.
And then it was during the financial crisis.
And there is still a shortage of talent.
And the data points, you know Saba and were significantly different how much is that going to buffer.
A garden variety recession, and I do believe that it will I'm not convinced that the great application is going to turn into the great resignation.
Not convinced of that yet.
And so we haven't seen any signs.
Of cracking here.
And I think the labor market is substantially different than Korn ferry's business.
Is way different and as I said, when you look at the peak to trough and the actual performance.
Has it been markedly different.
Over these last 15 to 20 years so it's.
It's hard for me to.
To really give you a precise number.
But I do think it's different this time and I think there is a buffer when it comes to the labor market that maybe wasn't there 15 years ago.
Okay and then how are you planning like over the next 12 months.
How are you thinking about hiring.
Where would we see the strongest levels of growth from our consultant base et cetera.
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A separate question you mentioned wage inflation and inflation in general what sort of levels of wage inflation are you currently seeing in terms of the newest assignments. Both in terms of professional as well as executive search yeah, we even saw it in may.
We're continuing to see it.
Which may not be great news for the economy, but.
We're continuing to see it I mean, we saw it in professional search for example in May. So when you look just take today versus pre COVID-19 you'd find that knowledge workers, where professional search operates weight.
Our average fees are up 20, 20% in.
In the search business.
It's less than that it's probably more like 10%, but we're we're continuing.
To see that we haven't seen.
Falling off there.
And from your own hiring perspective, what would you.
We're all out on we have 11000 colleagues, where we've got out of those 11000, there's probably about 1800.
We would call partners and principals people that have responsibility for originating business.
We're looking for talent everywhere, whereas aggressive today.
Were six months ago, we're going to continue to be.
We're obviously very mindful on the costs.
Tried to take a measured approach, particularly over the last say 789 months on that.
But the demand has continue to be there. So as I mentioned, we we have that we have to.
I'll add more commercial capability in our digital business.
And again nothing against the colleagues that we have today.
We just need we need more of them, but we're really looking across the board from organizational strategy consultants to comp and benefits consultants executive search I mean, we're still.
<unk> two.
To do that you know my view is you invest in wintertime.
I have no idea of what the time that the firm is just incredibly well positioned we're going to continue to make investments around.
Search and interim and it's not like we're trying to double or triple down on cyclicality, but I just think that the mega trend around mobility is going to continue and you.
You just see it in and young people I think.
No matter what happens that that's going to absolutely accelerate so we're going to make investment in in home services and <unk>.
Pro search so we're certainly very mindful and cautious.
The R word and what everybody is talking about.
So we're mindful of costs, but at the same time this.
This is about growth, but the story of corporate it has to be about growth.
For the long term.
Yeah.
Terrific. Thanks, a lot Gary.
It appears there are no further questions Mr. Benson.
Okay I just wanted to again thank.
Not only our shareholders and for those following us, but our board.
And and most importantly, our colleagues since Ben.
Incredible show of resiliency and I really do believe the best is yet to come. Thank you very much for listening and we look forward to speaking to you again. Thank you bye bye.
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