Q4 2023 Korn Ferry Earnings Call

Speaker 2: At this time, all participants are in the listen-only mode. Following the prepared remarks, we will conduct the question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

Speaker 2: We have also made available in the investor relations section of our website at cornfairy.com a copy of the financial presentation That we will be reviewing with you today Before we turn the call over to your host, Mr. Gary Bernasen

Speaker 2: Let me first read a cautionary statement to investors.

Speaker 2: 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.

Speaker 2: Although the company believes the expectations reflect in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements.

Speaker 2: Actual results and future periods may differ materially from those currently expected or desired because of a number of risk factors and uncertainties which are beyond the company's control.

Speaker 2: Additional information concerning such risks and uncertainties can be found in the release relating to this presentation.

Speaker 2: in the periodic and other reports filed by the company with the SEC, including the company's soon-to-be-filed hand report for fiscal year 2023.

Speaker 2: Also, some of the comments today may reference non-GAAP financial measures such as constant currency amounts.

Speaker 2: Additional information concerning these measures, including reconciliations to most directly comparable GAAP financial measures, is contained in the Financial Presentation and Earnings release related to this call, both which are posted in the Investor Relations section of the company's website at www.bac.gov.

Speaker 2: Ms. DeBardison, please go ahead.

Speaker 3: Lois, he just sent me a text. I'm going to tell him to dial back in. Apologies.

Speaker 2: No problem. Thank you.

Speaker 2: And Mr. Burnison is online now.

Speaker 4: Okay. I hear you there. Yep. Uh-huh.

Speaker 3: Hello? Yep. I think we're ready to roll. I want you to kick it off.

Speaker 5: Okay, we've got Lois, everybody's on the line. Good afternoon and thanks for joining us.

Speaker 5: Our team is going to get into the numbers in a moment.

Speaker 5: But I first wanted to start by saying how incredibly proud I am of our firm, of our colleagues.

Speaker 5: of our purpose to enable people and organizations to be more than.

Speaker 5: and the results of our diversification strategy, which is clearly working as we had planned.

Speaker 5: And so for example, while we've experienced a drop in the search business from post-pandemic prize

Speaker 5: while we've experienced a drop in the search business from post-pandemic highs, the rest of the portfolio performed as expected.

Speaker 5: With our PO less cyclical, digital and consulting growing, and our new interim business really blossoming.

Speaker 5: In fact, over the last 18 months or so, we've added this new interim capability.

Speaker 5: which has about $400 million of annual revenue on a run rate basis, bringing our total professional search and interim business.

Speaker 5: to approximately 550 to 600 million on a run rate basis. And that's the direct result of our strategy, anticipating over three years ago, a workplace mobility that we thought would emerge post pandemic, and it has.

Speaker 5: You know, tectonic shifts are happening everywhere. How we produce and consume, where and how we work, how we're entertained, an ongoing war, shifting trade lanes, inflation, interest rate rises at a rate we haven't seen in a long, long time, and now generative AI.

Speaker 5: These mega trends can result in change that's fundamentally good for our clients and for corn fairies. It's interesting to reflect that the foundation of our firm began with IP and science.

Speaker 5: with a world immersed in generative AI, we'll continue to invest not only in these technologies, but also in our proprietary data, assessment instruments, and knowledge.

Speaker 5: and these will be the ultimate differentiators.

Speaker 5: Amid this transformation and change, I believe we're still at the very beginning of what Corn Fairy will be.

Speaker 5: with therefore much more tangible opportunity ahead to help our clients be more of that.

Speaker 5: With that, I'll turn it over to Bob Rozuck.

Speaker 3: Great, thanks Gary and good afternoon or good morning depending where you're at.

Speaker 3: As I've said before, despite the substantial progress we've made evolving the business, I really believe that we're still in the early innings of this transformative journey. As Gary mentioned, strategy is working.

Speaker 3: It's producing the growth and results we set out for, which really are the proof points that the strategy is in fact working. With what has become an ongoing backdrop of macro uncertainty, the execution of our strategy has produced another successful year with organic and inorganic growth.

Speaker 3: resulting in an all-time high of slightly more than $2.8 billion in fee revenue.

Speaker 3: You know, if I go back two short years to fiscal 21, which is the year of the pandemic,

Speaker 3: Our fee revenue has grown by more than $1 billion in that time, and 70% of that growth came organically, with the rest coming in organically.

Speaker 3: Our consulting business showed resilience throughout the year, bolstered by the relevance of our larger integrated solutions.

Speaker 3: Our digital business also showed resilience while continuing its transformation from selling analog point solutions to licensing our digital performance management tools.

Speaker 3: RPO remains extremely well positioned with its strong track record of large new business wins, and I expect that business to return to robust double-digit growth when a lot of the uncertainty that we're seeing today clears.

Speaker 3: Demand and exec search and in the perm placement portion of professional search moderated in the second half of last year, but in the same time demand and interim remain steady and that offset some of the transitory softness in the perm placement businesses.

Speaker 3: Synergistic referrals between interim and perm placement, plus referrals between our other lines of business and our marquee and regional accounts were significant contributors to the achievement of our FY23 annual fee revenue.

Speaker 3: So again, it's clear to me our strategy is working, so we're going to continue driving our integrated solution-based go-to-market strategy, including our marquee and regional accounts, delivering unparalleled client excellence,

Speaker 3: Extending our very strong Corn Fairy brand, Advancing Corn Fairy is the premier career destination in continuing to pursue transformational opportunities at the intersection of talent and strategy.

Speaker 3: With that, let me turn the call over to Greg who will take you through some of the overall company financial highlights.

Speaker 5: Thanks Bob. In the fourth quarter, global free revenue was $731 million, up 8% year over year, and up 12% at constant currency.

Speaker 6: By line of business, fee revenue continued to moderate from post-pandemic highs for our permanent placement talent acquisition solutions, executive search, professional search, and RPO. However, other lines of business remained stable in the quarter.

Speaker 6: Measured year over year at constant currency, fee revenue was up 3% for consulting, up 5% for digital, and aided by our recent acquisitions of ICS and SALO, fee revenue for our interim services grew $70 million year over year.

Speaker 6: Consolidated new business in the fourth quarter also moderated and was down 4% year over year at actual foreign exchange rates and down 2% at constant currency.

Speaker 6: Consistent with fee revenue, New Business in the fourth quarter moderated most in executive search and professional search.

Speaker 6: In line with our guidance, earnings and profitability also moderated in the fourth quarter. Adjusted EBITDA in the fourth quarter was $98 million with an adjusted EBITDA margin of 13.4%.

Speaker 6: Earnings and profitability in the fourth quarter were impacted by a number of factors.

Speaker 6: Startup costs associated with the ramp up of newly awarded large RPO assignments, investments in headcount to preserve fee generating and execution capacity, and product development initiatives for digital. Our adjusted fully diluted earnings per share in the fourth quarter were $1.01 down 74%, I'm sorry, down 74 cents or 42% year over year. Adjusted fully diluted earnings per share excludes $6.9 million or 10 cents per share of restructuring charges related to the cost true up of actions taken in the third quarter and integration and acquisition costs associated with our recent acquisitions. Gap diluted earnings per share in the fourth quarter were 91 cents. Our investable cash position at the end of the fourth quarter remains strong at $488 million and our capital allocation continues to be well balanced.

Speaker 6: For all of Fiscal 23, we deployed $490 million of cash using $94 million per share repurchases

Speaker 6: $33 million for dividends.

Speaker 6: $62 million for capital expenditures, $255 million for M&A, and $19 million for debt service.

Speaker 6: That will turn the call over to Tiffany to review our operating segments in more detail.

Speaker 6: That will turn the call over to Tiffany to review our operating segments in more detail. Thanks, Greg.

Speaker 2: Starting with KF Digital, global fee revenue in the fourth quarter was $91 million, which was up 2% year over year and up 5% at constant currency.

Speaker 2: Digital subscription and license fee revenue in the fourth quarter was $32 million.

Speaker 7: which was approximately 35% of fee revenue for the quarter.

Speaker 7: The accumulation of sales of subscriptions over time has created year-over-year growth in subscription-based revenue, with increases in both sales effectiveness and total rewards tools.

Speaker 7: Global new business for KF Digital was $101 million with $35 million or 35% of the total tied to subscription and license sales.

Speaker 7: For consulting, fee revenue in the fourth quarter grew to $175 million, which was flat year over year, although both periods are all-time highs, and up approximately 1% at constant currency. It began with 1 percent doubt in 2008 and was best Jeanie Geneva, so we're perfumes

Speaker 7: Fee revenue growth was strongest in organizational strategy, followed by assessment and succession in rewards and benefits.

Speaker 7: Additionally, global new business for consulting in the fourth quarter was down slightly, 4% year over year constant currency with missed single digit growth in a me up.

Speaker 7: The professional search and interim business increased 40% in the fourth quarter versus last year.

Speaker 7: driven by double-digit strength in North America and aided by the current year acquisition.

Speaker 7: Total fee revenue was $152 million, up 51 million or 50% over the same time period. Breaking down the quarter, growth in the interim business was more than enough to offset moderation in the permanent placement portion of the segment.

Speaker 7: Interim services fee revenue grew to $89 million from $20 million in the same quarter of the prior year, driven primarily by the recent acquisitions.

Speaker 7: Permanent Placement fee revenue declined by $18 million to $63 million year over year, down 23% at actual and down 22% at constant currency.

Speaker 7: Moving on to recruitment process outsourcing. New business for the fourth quarter was strong once again at $115 million and total revenue under contract at the end of the quarter was approximately $777 million. Fee revenue totaled $100 million.

Speaker 7: which was down 13 million or 11% year over year and down approximately 9% at constant currency.

Speaker 7: Although we are seeing notable sequential improvement within life sciences, overall fee revenue is impacted by a moderation in hiring volume from all other industries in the base and backlog.

Speaker 7: We see this slowdown as transitory and believe RPO is well positioned to benefit when hiring returns to more normalized levels in the base and the larger, more recent wins begin converting to revenue. Our pipeline remains strong as RPO continues to win new business with a differentiated service offering in the marketplace.

Speaker 7: Finally, global fee revenue for executive search in the fourth quarter was $213 million and, as expected, experienced a year-over-year decline of 11% at constant currency compared to the high growth rates enjoyed during the pandemic recovery last year. And continue to moderate, most notably in North America and Asia.

Speaker 3: fiscal 24. Great thanks Tiffany. Assuming no new or further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates,

Speaker 3: We expect fee revenue in the first quarter of fiscal 24 to range from $668 million to $698 million. Our adjusted EBITDA margin to be approximately 13.5% and our consolidated adjusted diluted earnings per share to range from $0.84 to $1.00.

Speaker 3: Finally, we expect our GAAP diluted earnings per share in the first quarter to range from $0.78 to $0.95.

Speaker 3: In closing, I want to thank all of our colleagues for just an absolutely tremendous year. We continue to believe our portfolio of distinctive organizational consulting solutions, which are based on our deep risk proprietary IP and data, delivered by our world-class colleagues and partners. Thank you. Give a round of applause.

Speaker 3: We'll continue to differentiate Corn Fairy on our journey to become the preeminent organizational consultancy.

Speaker 2: With that, we would be glad to answer any questions you may have. Thank you, and ladies and gentlemen, if you wish to ask a question, please press 1 then 0 on your touch tone phone.

Speaker 2: You will hear an acknowledgement tone that indicates that you've been placed in the queue, and you may remove yourself from queue at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up your handset before pressing the number. Once again, if you have a question, please press 1 and 0 at this time. And our first question comes from the line of George Tong from Goldman Sachs. Please go ahead.

Speaker 8: Hi, thanks. Good afternoon. The consulting and digital businesses were relatively resilient this quarter, particularly when compared to exec search and firm placement. Can you discuss the broader selling environment across these business lines and walk through where you're seeing the most change?

Speaker 8: and what assumptions you're currently reflecting in your fiscal 1Q outlook.

Speaker 8: currently reflecting in your fiscal 1Q outlook?

Speaker 5: You know, the amount of change that is happening is breathtaking. And from the days of darkness and COVID to, you know, economic changes to geopolitical changes to the fact that, you know, the U.S. labor force.

Speaker 5: and other Western economies, the number of people in the workforce really hasn't changed. So there continues to be this move towards upskilling, towards retaining developing talent. And if you look at...

Speaker 5: fundamentally what we are doing. We're providing solutions for individuals and organizations to be successful. So whether it's employee fit, coaching, development, methodology, compensation, and design, you name it, that's kind of, you know, where Corn Fairy is playing today.

Speaker 5: in many, many industries. And you saw the executive search business, a huge, huge upswing. And what we're seeing here is a significant moderation of search, a decline in the number of people

Speaker 5: in volume. It's interesting to note that basically where we are today in search was essentially where we were pre-pandemic. You know, revenue is up a little bit more than where we were pre-pandemic. Volume is a little bit down.

Speaker 5: But what you're saying is that, you know, the cyclical parts of the business, the search business, are seeing that drop in demand that you would expect, but RPO is less cyclical than search.

Speaker 5: and consulting digital and interim are all less cyclical than RPO and search. So it's playing out exactly as we thought. And what I've seen over the last few months is a stabilization of search.

Speaker 5: which is good. In May we saw a rebound in China.

Speaker 5: And so our main new business overall was up 5%. Search was down about 12%. The consulting and digital were up. And so essentially it's playing out as we called for in the strategy, the marquee and regional accounts.

Speaker 5: We're almost 40% of our new business. So is the market different than it was a year ago? Yeah, absolutely it's different than a year ago, but a year ago people were coming out of darkness and there was this huge amount of activity across industries.

Speaker 5: So it is different than a year ago, but I think I'm really proud of where the organization is, and the results kind of bear out the strategic thesis that we had all along.

Speaker 8: Very helpful. Separately you noted that interim search trends remain relatively steady. If you look at other interim staffing providers even in the higher end IT sector they've been seeing some revenue headwinds and year-over-year revenue declines. Can you discuss what's driving the positive separation of corn fruits?

Speaker 5: You've got people that are changing the way that you work. We saw this in April , May, June of 2020. This was a conscious decision that we're gonna get into this market in a big way, particularly around finance and accounting, technology.

Speaker 5: HR supply chain that we were going to go big into it and in a very very short amount of time I think we've developed a very very high-end business with an average hourly rate of $124 so I'm not going to sit here and pretend that we're immune I do think

Speaker 5: And what we see is almost $50 million coming from cross referrals, cross sales, whatever words you want to use, with nearly 700 deals. And so I think that when you look at maybe some other firms that are strictly in that business,

Speaker 5: they don't have the wider platform of corn ferry. And we'll see if that's going to continue to be a differentiator. I personally think it will be, but I'm not going to sit here and say that we're going to be immune from what we're seeing and what others are seeing when it comes to

Speaker 9: the long-term EBITDA margin targets just given as you know we've seen the mix of lower margin interim and RPO come up as well as you know

Speaker 9: the company has been able to continue to take fixed costs out of the business. So, do you think that 18 to 19 percent range is still feasible or would it potentially be lower than that? Thank you.

Speaker 5: Well, let me, Bob will answer that question directly, but I would just, you know, provide contacts when you look at this firm and I've seen it go from, you know, sub 300 million to 3 billion. That what she would say is peak to peak, cycle to cycle, trough to trough.

Speaker 5: we've continually gone up and to the right. That is absolute fact and you can look at it in the data. The other thing I would point out is that we did make a conscious decision to address a large market that we think is...

Speaker 5: back in the past, clearly there's about a 200 basis point difference.

Speaker 5: And so I think you really have to factor that in to the modeling. Before the pandemic, if I remember right, and Bob can correct me, we were probably running 15, 14.5, 15.5 EBITDA margins.

Speaker 5: Then we saw a huge upswing a year ago. And I would just say that whatever those models and those boundaries, I do think you have to adjust it by a couple hundred basis points for the changing mix of business as we look forward, but

Speaker 3: Bob, what would you say on the specific operating boundaries for the firm? Thanks, Gary. I think, as I said in the remarks, Q1 we expect to be 13.5%. I would say for the near term we would...

Speaker 3: Continue to manage the business to about 13 to 14 percent somewhere in that range is we're you know Just continuing to invest in our revenue generating capacity

Speaker 3: You know, if the long anticipated recession were to occur, and again, depending on the severity, you know, we would manage the business, you know, kind of mid to high single digits in a more severe downturn, and then low double digits in a more moderate scenario.

Speaker 3: And ultimately, from a longer term perspective, a lot of it's going to depend on what the business looks like. If search bounces back, digital, we get digital where we think it's capable of going to. As Gary alluded to, RPO is just continuing to win new business and become a larger piece of the pie. So there's a lot of moving pieces. dog

Speaker 3: But I would say from a long-term perspective, you should expect to see us kind of in the 16 to 18 percent range.

Speaker 3: So down a little bit from the 18, 19, where we previously communicated, but I would say 16 to 18 is probably a good spot to land at this point. I think that makes sense. And then Gary, you mentioned generative AI in the prepared remarks.

Speaker 9: I know it's still early, but any preliminary expectations for AI risks or opportunities in the business model.

Speaker 5: Well we've got a threefold plan we're going at it big time. Let me just first say that nobody knows exactly where this is it's going to go so that's so that's number one even the so-called leaders in in the space. It's gained a lot of attention for very very good reason.

Speaker 5: it's an opportunity for us. And so we're really looking at it in kind of three dimensions. One is around how we can use it offensively to drive greater impact with our clients. Two is around our vulnerabilities. And three,

Speaker 5: is around the people that we need to partner with, the broader ecosystem to help navigate that. But I would just say that.

Speaker 5: I believe very, very strongly that in this business, and I think what we've proven over the years, is that data and knowledge is everything. So we've got teams right now looking at, are we capturing all the data we can be capturing? Are we putting it in a warehouse?

Speaker 5: Can we easily access that warehouse to provide insights to our clients? And secondly, our IP and our assessment, is that truly fit for purpose in this world that we're heading into in the next five years?

Speaker 5: where there's tremendous, there's not much anticipated labor growth, there's going to be skill shortages continuing, and is our assessments and IP fit for purpose for the next five years, the next ten years. And I really do believe that those two things, data, insight, knowledge, and data,

Speaker 5: assessment and IP we have to make sure that we're investing in because I think that would no matter where this AI conversation goes that ultimately I think will be the winner and so clearly we're using you know we've been using AI and you know part of our recruiting processes

Speaker 5: for some time now, but you know...

Speaker 5: clearly around our learning and development business. There's an enormous opportunity there. That's an area that we're focused in on. But I just, you know, practically speaking, you know, you make your path as you walk it. I just think that data, you know, our IP, our assessment, you know, the knowledge that we have, we have to make sure that we're doing the right thing.

Speaker 3: that we are putting enough capital into the foundation of the firm. Hey, Gary, it's Bob. I would just add to that one point. So if you think about where we, you know, corn fairy shines relative to our clients, it's helping them work through disruption, right? And like you said, wherever generative AI is going.

Speaker 3: our clients to help them work through those disruptive periods. And you know as I look at this I think this is just another step along the way for us to help our clients work through disruption and and continue to drive their businesses forward. I appreciate the detail there. Last one for me you mentioned

Speaker 9: any green shoots domestically for the search business in June just given I guess the rebound and equity markets and maybe the IPO pipeline starting to warm back up.

Speaker 5: When you say domestically, are you talking about domestic China or domestic United States?

Speaker 5: domestic United States?

Speaker 5: Like one month doesn't make a trend what we saw in May was certainly Good news, you know when when you look

Speaker 5: When you look month sequential, so not month, year over year, but if you just look month sequential, you take April to May.

Speaker 5: Our normal seasonal pattern, we would expect new business to be down 3 to 5%.

Speaker 5: We were up 5% on an organic basis, it would probably be in that down 3 to 5%. So right in line. May to June , we would expect to see months sequential, not year over year, but months sequential, we would expect that to be up.

Speaker 5: 5% and we haven't closed out June here. We have a number of days left and then we've also got the 4th of July and we're kind of in line with that kind of number. So I think you're right, it may be too early for green shoots.

Speaker 5: But certainly it's more encouraging than not that over the last few months we've seen a stabilization in the executive search business. And in North America, you know, May was, May new business was.

Speaker 5: the trend was better than it was the previous month or two. But again, with our consulting and digital and interim businesses, those have really held up quite well overall. That's fair enough. Thank you for taking the time.

Speaker 6: on margin since revenue was above the guidance, ETS was kind of more in line. I think Greg's comments had talked about you know the mix shift in revenue, startup costs with some RPO engagements, investments in headcount and product development. I was just wondering if you could maybe talk about which of those factors had more of an impact than you might have thought going into the quarter if any.

Speaker 5: Just any kind of color on the margin performance in the quarter would be great. Well, I'll let Bob can comment. I would just say that we had guided to an EBITDA margin of, I believe, 14%. I think where we came out was 13 and 13.5%. It was really...

Speaker 5: So this is pretty close to that. And again, when you see the fall off in search, then you see this mix shift that's happening within the organization. I think it was substantially.

Speaker 3: in line with what we had thought like seven or eight months ago and that we told our shareholders but Bob you can probably give a better view I think. Yeah so Trevor if you look at whether you go quarter sequential year over year the mix shift is you know likely 80% of the decline that you see in

Speaker 3: in the adjusted EBITDA margin. As Gary said, it's the primary driver of it. In the fourth quarter, because our revenues exceeded the top end of our range, we did have, you know, in our business when a lot of the bonuses are driven off revenue. So we had to book a little bit more bonus in the fourth quarter to satisfy the demand, but the primary driver is just the change in mix.

Speaker 6: Okay, got it. Thanks. That is helpful. And then for my follow up, just kind of wanted to ask about your M&A pipeline. I think we've heard from some other companies about a tough M&A market with disconnects on valuation between buyers and sellers. Others may be suggesting the pipeline could open up a bit. You guys have obviously done a few acquisitions lately yourselves.

Speaker 5: Just kind of wondering where your pipeline stands today, which areas you kind of see being attractive right now. Thanks. You know, we've always taken a very systematic approach to capital allocation, and we would expect that to continue, and I don't at any one given point in time.

Speaker 5: I don't really say that the pipeline is big or small. I mean, we're not, that's not how we're going about it. We're going about it to say, where's the real market opportunity? Where can we have greater client impact? And in whatever we're looking at, what does the neighborhood look like at 11 o'clock at night? What are your neighbors like?

Speaker 5: And so I don't think today is any different than it was, say, three or four months ago.

Speaker 2: Thank you very much. Thank you. Our next question is from Mark Riddick from SODOTI. Please go ahead. Thank you very much.

Speaker 2: Thank you very much. Thank you. Our next question is from Mark Riddick from SODODI. Please go ahead. Good afternoon.

Speaker 6: I just wanted to touch on a couple of areas that you touched on earlier, but I just wanted to follow up on as far as the opportunities that you see before you. You talked about being willing to invest and adding talent as we go through the year. Are there any particular areas, either strategically or geographically, that are kind of...

Speaker 5: You know, it's not one size fits all. There's countries that are doing exceptionally well right now, and we have great businesses there, but we're just scratching the surface of what that could be. I'm sure you could maybe guess at what those are, but we've got a very aggressive plan in two or three geographies that we see huge, huge...

Speaker 5: you know, in the consulting area. And I just, you know, I don't want to just say that's the favorite child, because there's a number of opportunities we could pursue, but just broad base.

Speaker 5: We've just seen some enormous wins with our consulting and digital solutions working together. That's a multi-billion dollar opportunity for us over the medium to long term. So that's the thing that would come screaming off the page. But then I think the fact that we have this incredible game of digital solutions is a huge help.

Speaker 5: to continue to be organizational challenges for clients. I mean, in a time of tremendous change in a labor market, it's really not moving. And I think that's the opportunity for corn fairing.

Speaker 6: That's very helpful. And then maybe you could touch a little bit on maybe what your thoughts are, expectations are on TapX for this fiscal year and sort of how that might play into TechSpend and maybe whether that is to some level tied to the AI commentary that you had earlier, maybe tie some of that a little bit together to

Speaker 3: sort of give us a sense of sort of where we might be going there. Thanks. You know our capital spending this year will be relatively consistent with what we saw last year in FY23 so figuring somewhere kind of 65 to 70 million dollars.

Speaker 3: with like, you know, probably somewhere around 50 of that going into the digital business. There will be some in in the consulting business and then the rest would go to kind of making sure that the fort protects all the assets and keeps the bad guys out. But I would look at our capex this year very consistently with what we did last year.

Speaker 2: Thank you very much. Thank you. The next question is from Mark McCon from Beard. Please go ahead..

Speaker 6: Hello, this is Andre, for Mark Markon. Thank you for taking our questions. Could you go into some detail about what you're seeing by geography and by vertical? I think it's interesting how well EMEA is holed up on the search side, at least relative to North America. And then I know previously you said industrial.

Speaker 5: was holding up pretty well, but can you give an update on what verticals might be doing well, which ones may be struggling a little bit more? Well, I think, so, you know, me, it's more than the surge business. It's all the businesses are doing very, very well.

Speaker 5: It's fairly broad based. I mean, there's a couple of areas that are really performing extraordinarily well. So it's more than search. It's an EMEA. It's across the entire platform. Industrial is, you know, that's important for us. It's almost 30% of the company. It's a big, big part of our portfolio.

Speaker 5: some impact, no doubt about it. But you see it across manufacturing, energy, engineering and construction. And even sequentially automotive held up. So it's been fairly broad based within industrial. I'm not going to pick on one.

Speaker 5: one sector but overall that's a positive for corn fairy given the size of industrial relative to the other pieces of the portfolio.

Speaker 5: Great, Koller. Thank you. And then switching over to the interim side, could you talk about maybe what roles or skills you are seeing particular success with, whether it be within Cross-Sell or outside of that? And then also, when you're looking at adding capacity both organically as well as inorganically, maybe what areas would you be more likely to add to?

Speaker 5: Well, we're going to, you know, we really do believe that finance and accounting, technology, you know, supply chain, HR, those would be the areas that are the natural adjacencies for corn fairy, and that we would tend to stay at the high end.

Speaker 5: of those markets.

Speaker 5: And so that's kind of our strategic focus. And you know, it is impressive. I mean, I just, the quality of the people that have joined, the kinds of assignments that we're doing, and you know, the...

Speaker 5: the fit within corn ferry. I mean, to think about in a very, very short amount of time that you've seen, you know, a $50 million revenue lift in, in about 18 months, maybe it's a little bit longer, but you know, 700 deals. I mean that.

Speaker 5: Wow, you start to extrapolate that out and it's a real, real positive. That's one of the foundations of the strategy is that can we create more impact with clients with a broad platform that ranges from org strategy to compensation and benefits.

Speaker 5: and developing people and leaders. And when you look at the firm overall, you know our cross referrals are...

Speaker 5: 35 to 30% of the overall firm. And you look at that, then you look at the marquee and regional accounts, and you think about that being 35%, 40% of the firm. And it's working, is my point. And so we do believe that with this high-end interim service that we have, there could be some moderation. I mean, I'm not.

Speaker 2: well. Thank you. And that does appear to be the final question. Please go ahead with any closing remarks.

Speaker 5: Okay, thank you for moderating this and as Bob said, we're incredibly proud of our team.

Speaker 5: We certainly appreciate you listening, and we look forward to speaking to you very, very soon. So with that, we'll sign off, and have a great day. See you, bye bye.

Speaker 2: Thank you ladies and gentlemen. This conference is available for replay beginning at 11 a.m. today and running through July 4th at midnight. You may access the AT&T replay system at any time by dialing 1-866-207-1041 and entering the access code for 932-486.

Speaker 2: international dialers can call 402970 0847. Again the numbers are 186620741041 and 40297000847 with the access code 49.

Speaker 2: And that does conclude our conference for today. Thank you for your participation and for using AT&T. You may now disconnect.