Q3 2024 Korn Ferry Earnings Call

March 6, 2024

Purposes, we have also made available in the Investor Relations section of our website at Korn Ferry Dot Com a copy of the final financial presentation that will be reviewing with you today.

Before I turn the call over to your host Mr. Gary Burleson, Let me first read a 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 a number of risks and uncertainties, which are.

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry third quarter fiscal year 2024 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.

Beyond the Companys control.

Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the FCC, including the company's annual report for fiscal year, 'twenty 23, and the company is soon to be filed quarterly report for the quarter ended January 31.

We have also made available in the Investor Relations section of our website at Korn Ferry Dot Com a copy of the final financial presentation that will be reviewing with you today.

Before I turn the call over to your host Mr. Gary Burleson, Let me first read a cautionary statement to investors.

'twenty 'twenty four.

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 directly comparable GAAP financial measure is contained in the financial presentation and earnings release relating to.

This call both of which are posted in the Investor Relations section 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 Bernstein.

Okay. Thank you, Greg and good afternoon, everybody a number one I'm enormously proud of our organization.

Beyond the company's control.

Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and then the periodic and other reports filed by the company with the F. C C, including the company's annual report for fiscal year, 'twenty 23, and the company is soon to be filed quarterly report for the quarter ended January 31st.

And how we continue to acclimate innovate and align our business to the opportunity I had clearly.

The strategy is working the results for the quarter, we did about $669 million of fee revenue.

It was down 2%, but you know the terms of the strategy working our non search offerings.

'twenty 'twenty four.

Provided a substantial buffer against the more cyclically sensitive recruiting offerings.

Earnings and profitability were also good 15.2% EBITDA margin.

And the revenue from consulting and digital when combined with our interim business now represents 50% of our top one.

During the quarter, our consulting bill rate increased 12%.

And our digital subscription and license revenue increased 11%.

Okay. Thank you, Greg and good afternoon, everybody number one I'm enormously proud of our organization.

Over the prior year.

You know in today's world as organizations toggle between perform and transform.

And how we continue to acclimate innovate and align our business to the opportunity I had clearly.

It's clear that vertical is out and horizontal zone and that's exactly the same for us and it's gratifying to see the results of this cross firm collaboration strategy today, we're approaching almost 3 billion and fee revenue with a balanced portfolio across solutions and.

This strategy is working the results for the quarter, we did about $669 million of fee revenue.

It was down 2%, but you know the terms of the strategy working our non search offerings.

Provided a substantial buffer against the more cyclically sensitive recruiting offerings.

Your fees.

It's now generating over a third of our fee revenue.

Earnings and profitability were also good a 15.2% EBITDA margin.

From our very successful marquee and regional account program, where you know it was just four short years ago, our top five marquee and regional accounts average around $19 million per account with the largest at $26 million compared to the day, we're a top five average almost 30.

And the revenue from consulting and digital when combined with our interim business now represents 50% of our top one.

During the quarter, our consulting bill rate increased 12%.

And our digital subscription and license revenue increased 11%.

And our largest account has a run rate of almost $50 million driven to a large extent by this horizontal approach by our cross line of business referrals, which today generate about a quarter.

Over the prior year.

You know in today's world as organizations toggle between perform and transform.

It's clear that vertical is out and horizontal zone and that's exactly the same for us and it's gratifying to see the results of.

Of our fee revenue and further to that point when I look at our $350 million plus digital business today, 30% of our fee revenue is generated from consulting referrals and we're looking to expand its horizontal focus even further through fall.

This cross firm collaboration strategy today, we're approaching almost 3 billion and the revenue with a balanced portfolio across solutions and geographies.

Now generating over a third of our fee revenue.

Or primary digital growth drivers number one.

Firm wide push around.

Around digital sales digital offerings, secondly, increasing our commercial output and sales productivity.

Third enhancing our product offerings like our talent applications and talent platform.

Finally, increasing our digital revenue through partnerships, including offering joint solutions and opportunities with HR technology providers, it's clear given the results over the last few quarters. There were at the threshold of even greater opportunity and regardless of the environment for them.

And our largest account has a run rate of almost $50 million driven to a large extent by this horizontal approach by our cross line of business referrals, which today generate about.

About a quarter.

Of our B a rabbit hole.

And further to that point when I look at our $350 million plus digital business today, 30% of our fee revenue is generated from consulting referrals and we're looking to expand its horizontal focus even further through four primary digital.

One cycle to the next.

Our vision remains unchanged to become the premier organizational consulting firm, our household brand unparalleled IP and diversification strategy will continue to positively influence our performance and accelerate the trajectory.

With drivers number one.

Thousands of organizations. Indeed, Korn ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy.

Firm wide push around.

Around digital sales digital offerings, secondly, increasing our commercial output and sales productivity.

Operations and talent affirm that offers increasing relevant solutions.

Third enhancing our product offerings like our talent applications and talent platform.

Rapidly changing world and I think we're only really scratching the surface of what we can become.

With that it is short remarks I'm joined by Tiffany.

Greg and Bob and Bob I think I'll turn it over to you next.

Great. Thanks, Gary and good afternoon, and good morning.

Before I jump into the numbers I just wanted to highlight a couple of points first I think the third quarter was a very good quarter and I'm extremely proud of my.

One cycle to the next.

Mike Korn ferry colleagues and all that they have accomplished.

Second equally as important I think our performance this quarter continues to demonstrate.

Our strategy is working you know the third quarter results were ahead of our expectations.

Thousands of organizations. Indeed, Korn ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy.

And it really marked a strong start to the back half of our fiscal year.

Both earnings and profitability improved year over year.

Sequentially, despite seasonally lower fee revenue.

Operations and talent affirm that offers increasing relevant solutions and a rapidly changing world and I think we're only really scratching the surface of what we can become.

<unk> of increasing productivity by leveraging our cost base you know again, an overall positive scorecard for our broader diversification strategy.

With that it was short remarks I'm joined by Tiffany.

We're excited about and confident in this strategy as it continues to play out just as we expected and have talked about with resilience and growth in our consulting and digital business offsetting cyclical moderation in portions of our talent acquisition offerings.

Greg and Bob and Bob I think I'll turn it over to you next.

Great. Thanks, Gary and good afternoon, and good morning.

Before I jump into the numbers I just wanted to highlight a couple of points first I think the third quarter was a very good quarter and I'm extremely proud of.

We continue to leverage existing client relationships.

Colleagues across lines of business.

Mike Korn ferry colleagues and all that they have accomplished.

And our unique IP data and content to drive topline synergies.

Second equally as important I think our performance this quarter continues to demonstrate.

With a particular focus on our marquee and regional accounts as you heard Gary talk about that.

Our strategy is working you know the third quarter results were ahead of our expectations.

A number of our key operating statistics improved in the quarter, we had higher higher hourly bill rates in both consulting and interim which dropped 12% and 21% year over year and are really reflective of the exceptional value and impact our services delivered to our clients our subscription and license fee.

And it really marked a strong start to the back half of our fiscal year.

Both earnings and profitability improved year over year.

Sequentially, despite seasonally lower fee revenue.

As a result of increasing productivity by leveraging our cost base you know again, an overall positive scorecard for our broader diversification strategy.

Revenue in digital increase.

Increased 11% year over year and was actually 38% of Digital's total new business for the third quarter, which illustrates the underlying strength and relevance of our data and solutions as well as contributing to increasing fee revenue stability.

We're excited about and confident in this strategy as it continues to play out just as we expected and have talked about.

Resilience and growth in our consulting and digital business offsetting cyclical moderation in portions of our talent acquisition offerings, we continue to leverage existing client relationships.

<unk> forward.

Equally important I'm pleased with the year over year and sequential growth of our earnings and profitability.

Please across lines of business.

Adjusted EBITDA margin was 15, 2% in the third quarter with digital consulting and are all improving their profitability both year over year and sequentially and exact search improving sequentially.

And our unique IP data and content to drive topline synergies.

With a particular focus on our marquee and regional accounts as you heard Gary talk about that.

A number of our key operating statistics improved in the quarter, we had higher higher hourly bill rates in both consulting in interim which dropped 12% and 21% year over year and are really reflective of the exceptional value and impact our services delivered to our clients our subscription and license fee.

Lastly, I'd like to highlight our balanced approach to deploying capital specifically capital returned to shareholders.

In addition to our substantial dividend increase last quarter.

This quarter, we increased our share repurchases acquiring 383000 shares which brings our year to date share repurchase to 555000 shares.

Revenue in digital increase.

Increased 11% year over year and was actually 38% of Digital's total new business for the third quarter, which illustrates the underlying strength.

Total of $67 million has been returned to shareholders through a combination of dividends.

And share repurchases year to date.

And relevance of our data and solutions as well as contributing to increasing fee revenue stability going forward.

And our board just approved another dividend of 33, a share payable on April 15th.

Now, let me turn the call over to Greg who will take you through some overall company financial highlights.

Equally important I am pleased with the year over year and sequential growth of our earnings and profitability. The adjusted EBITDA margin was 15, 2% in the third quarter with digital consulting and our P. O all improving their profitability both year over year and sequentially and exec search improving sequentially.

Thanks, Bob.

In the third quarter, which is typically seasonally slower global fee revenue was $669 million and was down only 2% year over year measured at both actual rates and at constant currency.

Lastly, I'd like to highlight our balanced approach to deploying capital specifically capital returned to shareholders. In addition to our substantial dividend increase last quarter. This quarter, we increased our share repurchases acquiring 383000 shares which brings our year to date share repurchase to 500.

By line of business consulting and digital grew 3% and 6% respectively year over year and combined generated 38% of total fee revenue in the third quarter.

Fee revenue moderation in the third quarter for most of our talent acquisition solutions continued to stabilize exec.

65000 shares.

Executive search and <unk> were down, 6% and 22% respectively year over year, while professional search and interim were up 11% year over year, primarily driven by <unk>, which was acquired in November of 2022.

Total of $67 million has been returned to shareholders through a combination of dividends and.

Share repurchases year to date.

Our board just approved another dividend of 33, a share payable on April 15th.

Consolidated new business in the third quarter, excluding <unk> was flat year over year at both actual rates and at constant currency.

Now, let me turn the call over to Greg who will take you through some overall company financial highlights okay. Thanks, Bob.

In the third quarter, which is typically seasonally slower global fee revenue was $669 million and was down only 2% year over year measured at both actual rates and at constant currency.

By line of business digital new business grew 2% year over year consulting was flat year over year and professional search and interim was up 9% year over year driven in part by the acquisition of Sable.

By line of business consulting and digital grew 3% and 6% respectively year over year and combined generated 38% of total fee revenue in the third quarter.

Executive search new business was down 6% year over year with recent monthly data points indicate that global demand is stabilizing.

For <unk> new business in the third quarter was strong at $122 million and includes $83 million of renewals and extensions and $39 million of new logo wins.

Fee revenue moderation in the third quarter for most of our talent acquisition solutions continued to stabilize executives.

Executive search and <unk> were down, 6% and 22% respectively year over year, while professional search an interim were up 11% year over year, primarily driven by <unk>, which was acquired in November of 2022.

Exiting the third quarter and entering our fourth quarter consolidated new business trends continue to improve excluding RPM.

<unk>, new business was up 11% and approximately 5% organically year over year in January and inline with expectations in February.

Consolidated new business in the third quarter, excluding <unk> was flat year over year at both actual rates and at constant currency.

Earnings and profitability also continued to improve in the third quarter adjusted EBITDA in the third quarter grew 6% year over year to $102 million with an adjusted EBITDA margin of 15, 2% and was up 3% sequentially with a 120 basis point improve.

Executive search new business was down 6% year over year with recent monthly data points indicate that global demand is stabilizing.

And margin despite seasonally slower fee revenue.

<unk> cost controls and greater consultant and execution staff productivity continues to drive growth and profitability.

For <unk> new business in the third quarter was strong at $122 million and includes $83 million of renewals and extensions and $39 million of new logo wins.

<unk> has now improved sequentially for three consecutive quarters.

Finally, our adjusted diluted earnings per share in the third quarter were $1 seven.

Exiting the third quarter and entering our fourth quarter consolidated new business trends continue to improve excluding RPM.

A 6% year over year and up 10% sequentially.

Adjusted fully diluted earnings per share exclude $6 4 million or <unk> 12 per share of after tax restructuring and acquisition integration costs, which were positively offset by $9 $7 million or <unk> 18 per share of nonrecurring tax benefits.

Today, the new business was up 11% and approximately 5% organically year over year in January and inline with expectations in February.

GAAP fully diluted earnings per share were $1 13 in the third quarter.

Our investable cash position at the end of the third quarter remained strong at $496 million and our capital allocation continues to be balanced.

And margin despite seasonally slower fee revenue.

<unk> cost controls and greater consultant and execution staff productivity continues to drive growth and profitability.

Through the end of the third quarter, we deployed $122 million of cash using $37 million for capital expenditures $18 million for debt service and returned $67 million to shareholders in combined dividends and share repurchases.

<unk> has now improved sequentially for three consecutive quarters.

Finally, our adjusted diluted earnings per share in the third quarter were $1 seven.

A 6% year over year and up 10% sequentially.

That I will turn the call over to Tiffany to review, our operating segments in more detail.

Thanks, Gregg starting with KF digital global fee revenue in the third quarter with $90 million, which was up 6% year over year at actual rates and at constant currency.

Digital subscription and license fee revenue in the third quarter with $33 million, which was approximately 37% of fee revenue for the quarter and up 11% year over year.

GAAP fully diluted earnings per share were $1 13 in the third quarter.

New business for KF digital was $111 million with $42 million or 38% of the total tied to subscription and license sales up from 36% last quarter.

Our investable cash position at the end of the third quarter remained strong at $496 million and our capital allocation continues to be balanced.

The overall pipeline for digital remains strong as we head into the fourth quarter and into the next fiscal year.

Four consulting fee revenue in the third quarter was $167 million, which was up approximately 3% year over year at actual rates and at constant currency.

That I will turn the call over to Tiffany to review, our operating segments in more detail.

Fee revenue growth was strongest in organizational strategy, which increased 9% year over year today.

Thanks, Gregg starting with tab digital global fee revenue in the third quarter with $90 million, which was up 6% year over year at actual rates and at constant currency.

Selling larger and more complex transformational engagements, which use our rich proprietary data to drive unique and differentiated insights.

Digital subscription and license fee revenue in the third quarter with $33 million, which was approximately 37% of fee revenue for the quarter and up 11% year over year.

Consulting average bill rate continues to climb now at $438, an hour, which is up over $46 an hour or 12% from just one year ago.

Global New business for KF digital was $111 million with $42 million or 38% of the total tied to subscription and license sales from 36% last quarter.

Adjusted EBITDA margins also improved increasing 40 bps sequentially and by 230 bps year over year. Additionally, global new business consulting in the third quarter was flat year over year with double digit growth in EMEA and in North America.

The overall pipeline for digital remains strong as we head into the fourth quarter and into the next fiscal year.

Total fee revenue in professional search an interim in the third quarter was $131 million up $13 million or 11% year over year.

Four consulting fee revenue in the third quarter was $167 million, which was up approximately 3% year over year at actual rates and at constant currency.

Breaking down the quarter year over year fee revenue growth was mostly driven by the interim portion of the business, which offset moderation and the permanent placement portion of this segment.

Fee revenue growth was strongest in organizational strategy, which increased 9% year over year today, we're selling larger and more complex transformational engagements, which use our rich proprietary data to drive unique and differentiated insights.

Interim fee revenue grew to $78 million from $53 million year over year, driven by our recent acquisition of CLO.

Interims averages average hourly bill rate has increased to 129 per hour, which is up $22 an hour or over 20% from one year ago and reflective of the added value of being part of the broader Korn ferry ecosystem.

Consulting average bill rate continues to climb now at $438, an hour, which is up over $46 an hour or 12% from just one year ago.

<unk> and permanent placement fee revenue declined by $23 million or 19% year over year to $56 million.

Professional search an interim new business increased 9% year over year in the third quarter aided by the recent acquisition of CLO.

Total fee revenue in professional search an interim in the third quarter was $131 million up $13 million or 11% year over year.

Moving on to recruitment process outsourcing.

New business for the third quarter was $122 million comprised of $39 million of new logos and $83 million of renewals, which included several marquee accounts total revenue under contract at the end of the quarter was approximately $696 million.

Breaking down the quarter year over year fee revenue growth was mostly driven by the interim portion of the business, which offset moderation in the permanent placement portion of the segment.

Interim fee revenue grew to 78 million from $53 million year over year, driven by our recent acquisition of CLO.

Fee revenue in the third quarter totaled $81 million, which was down $23 million or 22% year over year at actual rates and constant currency.

Fee revenue was impacted by a moderation in hiring volume within the existing base of contacts as well as labor boarding conditions, which have continued and the market historically fee revenue averaged 106% of the original contract value, which is why we view the current slowdown in demand as transitory and believe ARPA.

Professional search and permanent placement fee revenue declined by $23 million or 19% year over year to $56 million.

<unk> is well positioned to benefit in client hiring returns to more normalized levels.

Professional search an interim new business increased 9% year over year in the third quarter aided by the recent acquisition of CLO.

The pipeline remains strong as <unk> continues to renew existing clients and win new business with a differentiated service offering in the marketplace.

Moving on to recruitment process outsourcing new.

New business for the third quarter was $122 million comprised of 39 million of new logos and $83 million of renewals, which included several marquee accounts total revenue under contract at the end of the quarter was approximately $696 million.

Finally global fee revenue for executive search in the third quarter was $199 million down 6% in actual and 7% at constant currency.

Overall global demand in the third quarter would indicate that demand is stabilizing. Additionally, consultant productivity has improved driving a year over year 222 basis point improvement in adjusted EBITDA margin.

Fee revenue in the third quarter totaled $81 million, which was down $23 million or 22% year over year at actual rates and constant currency.

The revenue was impacted by a moderation in hiring volume within the existing base of contacts as well as labor boarding conditions, which have continued and the market historically fee revenue averaged 106% of the original contract value, which is why we view the current slowdown in demand as transitory and believes ARP.

I will now call the turn ill turn the call back over to Bob to discuss our outlook for the fourth quarter of fiscal 'twenty four great. Thanks Tiffany.

Monthly new business trends exiting our third quarter and entering the fourth quarter have begun to stabilize.

January new business was up 11% and 5% organically year over year.

<unk> is well positioned to benefit in client hiring returns to more normalized levels.

February new business was in line with our expectations and we are well positioned to deliver our March new business, which historically is one of our best new business months of the year.

The pipeline remains strong as our Apio continues to renew existing clients and win new business with a differentiated service offering in the marketplace.

Now assuming normal monthly seasonal new business patterns.

Finally global fee revenue for executive search in the third quarter was $199 million down 6% at actual and 7% at constant currency.

And assuming no further changes in worldwide geopolitical conditions economic conditions.

Financial markets and foreign exchange rates, we expect fee revenue in the fourth quarter of fiscal 'twenty, four will range from $675 million to $695 million.

Our adjusted EBITDA margin to improve to approximately 15, 3% to 15, 4% or I'm, sorry, 15, 5%.

I will now call the turn ill turn the call back over to Bob to discuss our outlook for the fourth quarter of fiscal 'twenty four great. Thanks Tiffany.

And our consolidated adjusted diluted earnings per share to range from $1 90 to $1 17.

Monthly new business trends exiting our third quarter and entering the fourth quarter have begun to stabilize.

Finally, we expect our GAAP diluted earnings per share in the fourth quarter to range from $1 six to $1 14.

January new business was up 11% and 5% organically year over year.

February new business was in line with our expectations and we are well positioned to deliver our March new business, which historically is one of our best new business months of the year.

Now in closing we've made substantial progress as demonstrated by our continued performance in delivering our strategic plan to lead the market and organizational consulting our topline diversification continues to serve as well as the non permanent placement talent acquisition portions of the business, which.

Now assuming normal monthly seasonal new business patterns.

And assuming no further changes in worldwide geopolitical conditions economic conditions.

Sent almost 50% of fee revenue as Gary mentioned remain on track to deliver consistent growth.

Financial markets and foreign exchange rates, we expect fee revenue in the fourth quarter of fiscal 'twenty, four will range from $675 million to $695 million.

Our IP data and science backed services and solutions continues to differentiate us in this war for the best talent.

Our adjusted EBITDA margin to improve to approximately 15, 3% to 15, 4% or I'm, sorry, 15, 5%.

Further our strong cost base management really positions us to deliver continuing improvements in earnings and profitability.

And positions us to successfully continue our balanced approach to capital deployment.

And our consolidated adjusted diluted earnings per share to range from $1 90 to $1 17.

As I always say, we're at the beginning of what's going to be a very long ball game and I truly believe our best is yet to come with that we'd like to answer any questions that you may have.

Finally, we expect our GAAP diluted earnings per share in the fourth quarter to range from $1 six to $1 14.

Now in closing we've made substantial progress as demonstrated by our continued performance in delivering our strategic plan to lead the market in organizational consulting our topline diversification continues to serve us well as the non permanent placement talent acquisition portions of the business, which.

Ladies and gentlemen, if you'd like 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 zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one zero at this time and one moment. Please for your first question.

Almost 50% of fee revenue as Gary mentioned remain on track to deliver consistent growth.

Yeah.

Your first question comes from the line of Trevor Romeo from William Blair. Please go ahead.

Our IP data and science backed services and solutions continues to differentiate us in this war for the best talent.

Hi, Thanks, so much for taking the questions here.

Further our strong cost base management really positions us to deliver continuing improvements in earnings and profitability.

The first one is just kind of on the overall macro and demand backdrop.

Yes, I think if you look at some of the CEO confidence surveys, we've seen those increase a little bit so far.

And positions us to successfully continue our balanced approach to capital deployment.

Last couple of months I think the capital markets backdrop feels a bit more stable.

As I always say, we're at the beginning of what's going to be a very long ball game and I truly believe our best is yet to come with that wed like to answer any questions that you may have.

It seems like maybe fewer people are talking about a severe recession now so I guess, how much change are you starting to see an overall demand sentiment and what do you think from this point could be a catalyst to start seeing a more significant demand recovery.

Well.

Latter parts of tough question clearly.

We've seen those same trends for sure.

As I talked about on the last earnings call, but my expectation was you'd start to see deflation.

Deflationary pressures I think youre, starting to see that for sure.

Your first question comes from the line of Trevor Romeo from William Blair. Please go ahead.

Obviously, everybody is on pins and needles with respect to the fed, but I I still.

Hi, Thanks, so much for you all taking the questions here.

First one is just kind of on the overall macro and demand backdrop.

I've said for some time I think we're in the middle of a multi quarter recites and.

I think if you look at some of the CEO confidence surveys, we've seen those increase a little bit so far.

Back to a period of time, where rates would be at more normalized levels.

Last couple of months I think the capital markets backdrop feels a bit more stable.

From a period of.

Two to three decades of very cheap money and I think you know companies are are adjusting to that reality.

And what that is creating is a focus on organizations to have a more horizontal approach less vertical more horizontal and perform at the same time, they transform which creates opportunities for our consulting business and digital offerings, which is exactly what you.

Well.

Latter parts of tough question clearly.

We've seen those same trends for sure.

As I talked about on the last earnings call, but my expectation was you'd start to see deflation.

You're saying.

Those are looking not just at their strategy and how it would be more horizontal but looking at their leadership and their talent.

Deflationary pressures I think youre, starting to see that for sure.

Obviously, everybody is on pins and needles with respect to the fed, but I I still what I.

And I think that's reflective of the engagements.

That we're winning today.

I would say that there.

I've said for some time I think we're in the middle of a multi quarter research and.

As I was listening to Tiffany and Greg and Bob.

Back to a period of time, where rates would be at more normalized levels.

We're that kept coming up was stabilizing and I think that is absolutely true.

From a period of.

For sure and I do think there is.

Two to three decades of very cheap money and I think companies are are adjusting to that reality and what that is creating.

There are some green shoots and it's hard to again I'm not going to say that two or three months make a trend.

But certainly when you look at the most cyclical parts of at least our business.

A focus on organizations to have a more horizontal approach less vertical more horizontal and perform at the same time, they transform which creates opportunities for our consulting business and digital offerings, which is exactly what youre, saying and Ceos are.

You take for example pro search.

Number one.

We have seen.

An uplift in volume.

And we think that uplift is 15% to 20%.

Looking not just at their strategy and how it would be more horizontal but looking at their leadership and their talent.

Over the last few months and that's what we're expecting in.

And I think that's reflective of the engagements that we are winning today.

In the fourth quarter, that's what February delivered.

So I think that's a that's a positive a very positive sign.

I would say that there.

As I was listening to Tiffany and Greg and Bob.

And interim has also stabilized as well so I think those are for us. So I think those are two good green shoots and I think they do portray.

We're that kept coming up was stabilizing and I think that is absolutely true.

For sure and I do think there is.

A positive sign.

For the labor market.

There are some green shoots and it's hard to again I'm not going to say that two or three months make a trend, but certainly when you look at the most cyclical parts of at least our business.

Okay.

Okay. Thanks, Thanks, Gary that's helpful. Maybe a follow up on.

Margins.

Nice improvement to 15% EBITDA in the quarter it looks like a little bit of further improvement in the guidance.

You take for example pro search.

Think about kind of modeling margins, maybe beyond the next quarter.

Number one.

Can you talk about some of the puts and takes and maybe a base case for fiscal 'twenty five and how quickly you can get back to that 16% to 18%.

We have seen an uplift in volume.

And we think that uplift is 15% to 20%.

I get range Youre looking for.

Well the.

Over the last few months and that's what we're expecting.

That is the longer term target of 2016 to 18.

In the fourth quarter, that's what February delivered.

So I think that's a that's a positive a very positive sign.

If I just dial it back.

Before the pandemic.

And interim has also stabilized as well so I think those are for us. So I think those are two good green shoots and I think they do portray.

On an apples to apples basis adjusting for the mix shift as we entered this new business called interim which today is about $350 million it was zero.

You know a positive sign.

And a half years ago.

That impacts the margin compares by 200 to 250 basis points. So when you adjust for that pre pandemic. We were running you know 12, 12 and a half per side.

For the labor market.

Okay. Thanks, Thanks, Gary that's helpful. Maybe a follow up on.

Margins.

Nice improvement to 15% EBITDA in the quarter it looks like a little bit of further improvement in the guidance.

Pro forma adjusted for the mix margin today. We're at 15. So profitability is substantially ahead of where it was pre pandemic.

Think about kind of modeling margins, maybe beyond the next quarter.

Can you talk about some of the puts and takes and maybe a base case for fiscal 'twenty five and how quickly you can get back to that 16% to 18%.

The business is up call. It third top line is up kind of 30%.

I get range Youre looking for.

From the pre pandemic levels, both of those data points I'm extremely.

Well the.

That is the longer term target of 2016 to 18.

Proud on.

We have to deliver profitable revenue growth.

If I just dial it back.

And we do think there is some upside.

Before the pandemic.

On an apples to apples basis adjusting for the mix shift as we entered this new business called interim which today is about $350 million it was zero.

In the EBITDA margin.

And when that can crank up to 16 to 18, I think part of that depends on on the fed and what a more normalized rate environment is going to look like.

And a half years ago.

That impacts the margin compares by 200 to 250 basis points. So if you when you adjust for that pre pandemic. We were running you know 12, 12 and a half per side.

The search business today as.

Call it $800 million I mean, it got to as high as 930, which probably isn't a.

Good a good comparable clearly there's a lot of room there there's room on pro search there's room on Enron.

Pro forma adjusted for the mix margin today. We're at 15. So profitability is substantially ahead of where it was pre pandemic.

The consulting business, we're scratching the surface.

So at the end of the day and this kind of business, it's really about the top line and that's why we've got a strategy really focused on one Korn ferry a horizontal approach to go into market and I think that's reflective in the data around our marquee and regional accounts as well as the as well as the Cros.

The business is up call. It third top line is up kind of 30%.

From the pre pandemic levels, both of those data points I'm extremely proud on.

We have to deliver profitable revenue growth.

Referrals.

But we do think there is upside on the EBITDA margin.

And we do think there's some upside.

In the EBITDA margin.

Okay. Thank you that's helpful I'll turn it over.

And when that can crank up to 16 to 18, I think part of that depends on on the fed and what a more normalized rate environment is going to look like.

Okay.

Your next question comes from the line of George Tong from Goldman Sachs. Please go ahead.

Hi, Thanks, good morning.

Your consulting and digital businesses are seeing good growth and Youre, making inroads with your interim search.

The search business today as.

You know call it $800 million I mean, it got to as high as 930, which probably isn't a good a good comparable clearly there's a lot of room. There there's room on pro search there's room on Enron I think.

Business can you provide some additional stats on cross referrals and cross selling involving these lines of businesses across the broader organization.

Digital is a huge opportunity for us.

The consulting business, we're scratching the surface.

When we look at the cross referrals into the digital offerings.

It's been under weighted compared to the rest of the portfolio and so the cross referrals George for this quarter I think it was about 25% year to date I think is about 25% something like that.

The cross referral percentages into pro search interim substantially higher like way higher RPM is the same thing.

Referrals.

But we do think there is upside on the EBITDA margin.

Historically, maybe not as much recently digital is an undersized.

Okay. Thank you that's helpful I'll turn it over.

Okay.

Your next question comes from the line of George Tong from Goldman Sachs. Please go ahead.

Penetration that we have to get out.

And that's opportunity for us and I think right off the top of my head George I wanted to say that that cross referral percentage MD interim is probably.

Hi, Thanks, good morning.

Consulting and digital businesses are seeing good growth and Youre, making inroads with your interim search.

And Bob can correct me on all of this but it's probably like 15% or so.

Is this can you provide some additional stats on cross referrals and cross selling involving these lines of businesses across the broader organization.

Consulting, which is a good sign that.

That cross referral percentage into digital is like 30%.

Digital is a huge opportunity for us.

But for a firm overall, it's underway under weighted which creates you know nothing but opportunity for us.

When we look at the cross referrals into the digital offerings.

It's been under weighted compared to the rest of the portfolio and so the cross referrals George for this quarter I think it was about 25% year to date I think it's about 25% something like that.

Yes, George but just maybe a little bit more color on the interim so if you go back to the point in time, when we acquired Lucas group.

And you roll the clock forward to today is.

The cross referral percentages into pro search interim substantially higher.

As a result of being part of those business as being part of the Korn Ferry ecosystem, we've had somewhere around 500 to 600 incremental opportunities that <unk> identified between lines of business in the interim.

Like way higher RPM is the same thing.

Historically, maybe not as much recently digital is an undersized.

One in the neighborhood of like $850 to 900 of those creating kind of $50 million to $60 million of incremental fee revenue that those businesses never would have gotten had they not been part of our ecosystem.

Penetration that we have to get out.

And that's opportunity for us and I think right off the top of my head George I wanted to say that that cross referral percentage MD interim is probably.

And Bob can correct me on all of this but it's probably like 15% or so.

Got it that's helpful.

Consulting, which is a good sign that.

And in recent periods, you've undertaken some cost rationalization actions most of which.

That cross referral percentage into digital is like 30%.

Our complete at this point do you envision needing to take additional cost or head count actions or do you think at this point. The organization is right sized for where we are in the cycle.

But for a firm overall is underway to under weighted which creates you know nothing but opportunity for us.

Yes, George but just maybe a little bit more color on the interim so if you go back to the point in time, when we acquired Lucas group.

We are always looking at our talent in terms of promotion.

And you know.

And you roll the clock forward to today is.

Development opportunities that's something we are consequently at work at no I don't I don't see any.

As a result of being part of those business as being part of the Korn Ferry ecosystem, we've had somewhere around 500, <unk> hundred incremental opportunities that ray identified between lines of business in the interim.

Any kind of workforce actions other than our normal talent management processes.

Yes, George I would say on the from a cost perspective to where we.

We're managing our BD and travels down too.

A number that I think is sustainable at this point as the business goes forward.

And as I said in the past in the real estate side, we have some opportunities, but the big the big opportunities are behind us at this point to me, it's really all about what Gary said earlier, its productivity and that we're going to get leverage out of the topline growth.

Got it that's helpful.

And in recent periods, you've undertaken some cost rationalization actions most of which.

Our complete at this point do you envision needing to take additional cost or head count actions or do you think at this point. The organization is right sized for where we are in the cycle.

Once the clouds lift.

Great very helpful. Thank you.

Yeah.

We are always looking at our talent in terms of promotion.

Your next question comes from the line of Josh Chan from UBS. Please go ahead.

And you know.

Good morning, Thanks for taking my questions.

Development opportunities that's something we are consequently at work at no I don't I don't see any.

On the digital business, so you've run the business at about 30% margin for the last two quarters now about a year ago. It was 25, 6% margin. So it is the difference mainly the people that have kind of come out of the business and if that's the case what does that mean in terms of the law.

Any kind of workforce actions other than our normal talent management processes.

Yes, George I would say on the from a cost perspective to where we.

We're managing our BD and travels down too.

Long term growth potential and the digital business going forward.

A number that I think is sustainable at this point as the business goes forward and as I said in the past in the real estate side, we have some opportunities, but the big the big opportunities are behind us at this point to me, it's really all about what Gary said earlier, its productivity and that we're going to get leverage out of the top.

Well I think we're scratching the surface of what the digital business can be I mean, we.

We have to make sure that we're driving the entire firm.

Across this IP that we have and creating knowledge transfer declines.

Line growth.

Once the clouds lift.

And you.

Yeah.

Great very helpful. Thank you.

Could this be three or four times the size of what it is today, absolutely could be but we have to invest in the platform, which were which were continuing to do.

Your next question comes from the line of Josh Chan from UBS. Please go ahead.

Good morning, Thanks for taking my questions.

On the digital business, so you've run the business at about 30% margin for the last two quarters now.

The profitability is clearly up.

Not just because of the.

Cost reductions.

A year ago. It was 25, 6% margin. So it is the difference mainly the people that have kind of come out of the business and if that's the case what does that mean in terms of the long term growth potential and the digital business going forward.

But also because of the collaboration between consulting and digital I've never seen it to be higher.

Clearly it should be the most profitable part of our business. It creates I think enormous opportunity for shareholders.

Well I think we're scratching the surface of what the digital business can be I mean, we we have to make sure that we're driving the entire firm.

If we were to do nothing, but you know double or triple that business you can imagine.

What that could do for shareholder value. So it's clearly a focus of ours.

But we've taken a very systematic approach to it.

Across this IP that we have and creating knowledge transfer declines.

In trying to build partnerships and an ecosystem and also investing in the platform and the technology platform that we have.

And you.

No.

Could this be three or four times the size of what it is today, absolutely could be but we have to invest in the platform, which were which were continuing to do.

Okay. Yeah. Thanks for the color that area. That's that's helpful.

On the consulting side.

<unk> growth has been sustained by Europe strength over the last couple of quarters. So the that Europe continues to look strong and consulting business or at some point does that become a tougher compare as we kind of look ahead here.

The profitability is clearly up.

Not just because of the.

Cost reductions.

But also because of the collaboration between consulting and digital I've never seen it to be higher.

Well clearly you know it could be a tougher compare but I think overall in terms of where the consulting businesses.

Clearly it should be the most profitable part of our business. It creates I think enormous opportunity for shareholders.

Again, it's the beginning not Nokia and we.

We just continue to see.

We have a fabulous team a great leader and market oriented.

If we were to do nothing, but you know double or triple that business you can imagine.

His strategy was to move the business towards bigger more impactful transformational assignments and the business many years ago started out.

What that could do for shareholder value. So it's clearly a focus of ours.

But we've taken a very systematic approach to it.

In trying to build partnerships and an ecosystem and also investing in the platform and the technology platform that we have.

And with assessments and smaller ticket engagements and over time through incredible team and the IP that we have in our in our firm wide push we have systematically moved.

Okay.

Move towards bigger organizational strategy assignments and you see it in the numbers you see it in the bill rate I mean that bill rate and I don't know the exact time, but it's like three or four years ago. I think that bill rate was sub 300 Bucks an hour now its 438.

That's a that's a combination.

Of everything in the strategy working so.

Yeah, I'll do the do the compares get a little bit tougher.

For sure they do it no question about it but in terms of.

The long term potential of this business.

We're at the beginning.

Hey, Josh.

The thing I would add is that as we move through the quarter, we did see.

Talk about green shoots some positive activities happening in North America as well.

Oh, Okay. Yeah, that's really helpful. Thanks. Thank you both for your time and congrats on the good quarter.

Thanks, Josh well see you talk to you on Tuesday.

Your next question comes from the line of Andre Childress from Baird. Please go ahead.

This is andre on for Mark Mark on Thank you for taking our questions. My first question is just a follow up to some of the prior commentary you just had could you provide a little bit more of a breakdown in terms of what youre seeing by major geography between North America, Europe and Asia Pacific.

I'll talk about I'll talk about revenue.

First and overall as a firm.

We reported down 2%.

EMEA was EMEA was flat you know kind of the same for North America Asia was was down.

Like 5% and a.

Large part of that was driven by the continuing Chan.

Challenges that every company is facing.

In China on the new business front for the quarter.

Overall, we were flat compared to the prior year EMEA was up 6%.

Asia was continued to be challenged.

Consulting was flat digital was up 2%.

And in North America, we've seen stabilization.

Over the past few months and quarters.

<unk>.

Yeah.

Okay, great. Thank you for that and then as a follow up digital saw a nice improvement pretty much across the board.

In you prepared in your prepared remarks, you had a big point of emphasis in terms of trying to drive more cross sells and to that going forward could you provide a little bit more color on.

Some of those strategies and if you could in particular touch on.

Some of the commentary regarding joint solutions with HR technology providers, and how you see that evolving over time.

Yeah.

Well, we built everything up to this point really by ourselves.

And when you look at World class consulting firms. They have typically enjoyed an ecosystem of partners that create deal flow.

And we are up to this point really haven't been able to we havent monetize that and that's been an effort we have a new leader in the digital business Mathias Herzog and who brings a fresh perspective, we've got a great team.

And so you know.

That is an opportunity for us.

And so there are three to five <unk>.

Largely technology players that we are working <unk>.

Steadily with.

To create.

An ecosystem, where we can deliver more value through our IP.

With their technology solutions.

Quite an ecosystem of partners that create deal flow and we up to this point really haven't been able to we havent monetize that and that's been an effort we have a new leader in the digital business Mathias Herzog and who brings a.

And to their clients and vice versa.

And so I think it is a greenfield.

For us for sure.

Think also the collaboration between digital and consulting as I said earlier has never been higher I think that is that is something that's positive for us and overall as a firm.

Fresh perspective, we think we've got a great team.

And so that is an opportunity for us.

When you think about the kinds of data that we have.

And so there are three to five <unk>.

And being able to provide insights to clients. Its extraordinary I was on a call last week with the CEO.

Largely technology players that we are working <unk>.

Steadily with.

Huge health care company, we've done thousands of assessments, where we're able to tell about CEO exactly kind of a DNA and MRI.

To create.

An ecosystem, where we can deliver more value through our IP.

Of their organization and <unk>.

With their technology solutions.

Just oppose that with that organization strategy and show where the gaps are.

To their clients and vice versa.

And so I think it is a greenfield.

Which leads to assess.

Assessment leads to development.

For us for sure.

And so I do think as a firm.

Think also the collaboration between digital and consulting as I said earlier has never been higher I think that is that is something that's positive for us overall as a firm.

One of one huge focus for us, we're calling a cab raws, but.

The focus of that is to make sure that we are delivering delivering scaled analytics through our data we've done $103 million assessments over time every year, we develop over 1 million professionals, we have comped out on 30 million people 25000 companies.

When you think about the kinds of data that we have.

And being able to provide insights to clients. Its extraordinary I was on a call last week with the CEO.

And so a big big focus of US here is to make sure that we're.

Huge health care company, we've done thousands of assessments, where we're able to tell about CEO exactly kind of a DNA and MRI.

That we're able to create.

More insight based on that data with clients and we have to get the whole firm.

Their organization and <unk>.

Just oppose that with that organization strategy and show where the gaps are.

Behind that effort and that's an activity that's and it's a big activity that's underway for us right now.

Which leads to.

Assessment leads to development.

And so I do think as a firm.

One of one huge focus for us, we're calling a cab rise but.

Great. Thank you.

Your next question comes from the line of Tobey Sommer from Truest. Please go ahead.

The focus of that is to make sure that we are delivering delivering scaled analytics through our data. We've done 103 million assessments over time every year, we develop over 1 million professionals, we have comped at on 30 million people 25000 companies.

Thank you I was wondering if you could give us some more color on that.

You quoted recently a professional search.

Being up maybe talk about how broad based it is in any industry verticals that stand out as either leaders are laggards in that regard.

And so a big big focus of.

Ross here is to make sure that we're.

The industry verticals I think it's going to be hard for me to comment on.

That we're able to create.

I would say that it's it's been <unk>.

More insight based on that data with clients and we have to get the whole firm.

Somewhat broad based.

For sure, but when you do look at is up into the right and I'm not going to sit here and say you know three months four months make a trend line, but I do think it is kind of reflective of.

Behind that effort and that's an activity that and it's a big activity that's underway for us right now.

Great. Thank you.

Where companies are in terms of their adaptation.

Your next question comes from the line of Tobey Sommer from Truest. Please go ahead.

In this multi quarter reset.

Right.

Thank you I was wondering if you could give us some more color on that trend you quoted recently a professional search.

So it is true that over the last few months, we have seen in pro search.

<unk> kind of monthly new business trends up 15, 20%.

Being maybe.

Talk about how broad based it is in any industry verticals that stand out as either leaders are laggards in that regard.

Largely in North America.

But also in EMEA.

The industry verticals I think it's going to be hard for me to comment on.

And you know that.

I think generally been one of the most cyclically.

I would say that it's it's Ben.

It is.

Somewhat broad based.

Parts of the labor market at least of.

For sure, but when you do look at is up into the right and I'm not going to sit here and say you know three months four months make a trend line, but I do think.

Recruiting companies.

<unk> companies. So I do think I do think that is a green shoot the other thing that I would point out.

Is on the RP O business when you look back.

He is kind of reflective.

<unk>.

Where companies are in terms of their adaptation.

After this great resignation, and we've talked about labor hoarding in you've seen other you've seen other <unk> providers and what's happened to their top line.

In this multi quarter reset and so it is true that over the last few months, we have seen in pro search.

We are expecting a shaft largely over the last two to three quarters, you'll you'll see that it's been substantial part of the business has been renewals, which is important I mean, there's no question about it.

New kind of monthly new business trends up 15, 20%.

Largely in North America.

But also in EMEA.

Shows the quality of the work and as Tiffany said.

And that's.

The revenue that we actually recognized from what we report as new business has been about 106% of notional value.

<unk> generally been one of the most cyclically.

Sensitive.

Parts of the labor market at least of.

But we are we do think theres going to be a chef.

Recruiting companies staffing companies. So I do think I do think that is a green shoot the other thing that I would point out.

Away from that that trend line more towards new wins.

So I would expect that in this next quarter here, we'll probably do 100 million, maybe a little bit north in.

Is on the RP O business when you look back.

After this great resignation, and we've talked about labor holding in you've seen other you've seen other <unk> providers and what's happened to their top line.

New business, and I think that trend of 70% or so renewals.

It's going to flip a little bit and I think youre going to see more new logos less renewals.

I appreciate that.

From a modeling perspective is the <unk>.

The effect of recent cost cutting.

Fully captured in this quarter or.

Shows the quality of the work and as Tiffany said.

Is there sort of an incremental tailwind in the quarter you're guiding for beyond.

The revenue that we actually recognized from what we report as new business has been about 106% of notional value.

Yeah, Bob I'll, let you can answer that yes. So I mean, I think most of the benefits of the actions. We took are already embedded in our run rate numbers that we posted today.

But we are we do think theres going to be a chef.

Away from that that trend line more towards new wins.

For us as we said earlier I mean, we're going to continue to see that.

So I would expect that in this next quarter here, we'll probably do $100 million, maybe a little bit north in new business, and I think that trend of 70% or so renewals.

Margin improvement is top line growth and then also.

We're going to look to drive more continue to drive productivity. So that we're not adding back head count as quickly as we may perhaps have in the past.

It's going to flip a little bit and I think youre going to see more new logos less renewals.

Is it top line recovers.

I appreciate that.

Understood.

From a modeling perspective is the effect of recent cost cutting fully captured in this quarter or.

From a cross sell referral.

I think he quoted.

And sort of the mid Twenty's now do you have any thoughts.

Is there sort of an incremental tailwind in the quarter you're guiding for beyond.

<unk> on the sort of the evolution of your approach to driving that is it still a marquee accounts and Mark key sales force focused or do you have different sort of tools and approaches to trying to drive that higher.

Yeah, Bob I'll, let you can answer that yeah. So I mean, I think most of the benefits of the actions. We took are already embedded in our run rate numbers that we posted today.

For us as we said earlier.

No. It is it clearly starts with a top down go to market strategy, but we also.

We're going to continue to see.

Margin improvement is top line growth and then also.

You have to make sure that we are doing it bottom up.

We're going to look to drive more continue to drive productivity. So that we're not adding back head count as quickly as we may perhaps have in the past.

And.

The reality is we haven't had as much firm wide push.

Around that as.

Is it top line recovers.

As we would like to have or.

Understood.

What there is opportunity to do.

From a cross sell referral.

And so that is a.

And initiative that we called KF rise, that's first and foremost investing in data and skip being able to do scaled analytics.

I think he quoted.

Being in sort of the mid Twenty's now do you have any thoughts.

Thoughts on the sort of the evolution of your approach to driving that is it still.

Cause I think wherever this thing goes on AI, which we are absolutely trying to incorporate into our into our business.

Marquee accounts in Marquis Salesforce focused or do you have different sort of tools and approaches to trying to drive that higher.

It starts with proprietary data and insight and then it's how do we get that data and insight into.

No. It is it clearly starts with a top down go to market strategy, but we also have to make sure that we are doing it bottom up.

Into our consultants hands to differentiate Korn ferry.

With our clients and so that is an active part of the strategy that scaled analytics that data.

And.

The reality is we haven't had as much firm wide push.

Around sectors industries geographies.

Around that as.

As we would like to have or no.

We have to do a better job of getting that into our consultants hands across the entire platform.

What there is opportunity to do.

And so that is a and initiative that we called KF rise, that's first and foremost investing in data and being able to do scaled analytics.

To be able to differentiate Korn ferry and you know.

Offer more insight into into customers. So that that is definitely something that is been accelerated for us I'm not going to say, it's new but we've certainly put a a fresh emphasis on that.

Because I think wherever this thing goes on AI, which we are absolutely trying to incorporate into our into our business.

It starts with proprietary data and insight and then it's how do we get that data and insight into.

And Tobey this is Bob I would.

The only thing I would add to that is historically I would say that the we were more opportunistic than intentional and I think it is part of what the program Gary's talking about we're going to become much more intentional.

Into our consultants hands to differentiate Korn ferry.

With our clients and so that is an active part of the strategy that scaled analytics that data.

Around sectors industries geographies.

Give you an example in the past if somebody was an account leader on the account and we wanted it was a $10 million count we wanted 20% growth we could go get $2 million.

We have to do a better job of getting that into our consultants hands across the entire platform.

Now the Kpis are being built where we're actually saying we want a $2 million.

To be able to differentiate Korn ferry in.

$1 million of it needs to come from consulting of $1 million of it needs to come from digital so that we are focusing efforts, where we're really CV opportunities and going after it with intent.

Offer more insight.

And the customers. So that that is definitely something that has been accelerated for us I'm not going to say, it's new but we've certainly put a fresh.

Again, just being more opportunistic and money, taking kind of what was given to us.

Fresh emphasis on that.

And Tobey this is Bob I would yes.

And my last question has to do with the the bill rate growth in consulting.

The only thing I would add to that is historically I would say that the we were more opportunistic than intentional and I think part of what the program Gary is talking about we're going to become much more intentional.

I know you've had some success with some sort of.

Government work in EMEA.

Curious if if if that's the main driver of the bill rate growth or its broad based how would you characterize it larger projects et cetera.

Give you an example in the past if somebody was an account leader on the account and we wanted it was a $10 million count we wanted 20% growth. So it could go get $2 million.

Yeah. It is it is it is broad, but clearly that has had an impact.

What you're referencing around governmental work no question about it but I also think it's reflective of the strategy.

Now the Ppas are being built where we're actually saying we want a $2 million.

From going from smaller engagements to bigger more impactful transformational assignments, that's how you get leverage.

$1 million of it needs to come from consulting of $1 million of it needs to come from digital so that we are focusing efforts, where we really see the opportunities and going after it with intent versus again, just being more opportunistic and money taking.

We still have to we still have to continue to push.

Towards that the organizational strategy organizational design transformation, we still have to push the firm that direction, but clearly.

Kind of what was given to us.

And my last question has to do with the the bill rate growth in consulting.

That's had a big big impact on the bill rates as well.

I know you've had some success with some sort of.

Government work in EMEA.

Thank you.

Curious if if if that's the main driver of the bill rate growth or it's broad base, how would you characterize that larger projects et cetera.

And at this time there are no further questions I'd now like to turn the call back to Gary Burness and for any closing remarks.

Okay, Greg it looks and thank you to everybody for listening.

Yes. It is it is it is broad, but clearly that has had an impact.

We're very very excited obviously about the future of Korn Ferry I think this is the beginning we've we've proven that there's customer receptivity.

What you're referencing around governmental work no question about it but I also think it's reflective of the strategy.

From going from smaller engagements to bigger more impactful transformational assignments, that's how you get leverage.

In the marketplace, the IP and the data that we have is enormous.

We still have we still have to continue to push.

And we're excited about the future. Thank you for taking an interest and we'll talk to you next time. Thank you Greg.

Towards that the organizational strategy organizational design transformation, we still have to push the firm that direction by clearly.

Thank you ladies and gentlemen, this conference will be available for replay for one week starting today at three P. M. Eastern time running through the date March 13th 2024, ending at Midnight you may access the AT&T executive playback service by dialing one 806 62071041 and entering the access.

<unk> had a big big impact on the bill rates as well.

Thank you.

Yes.

And at this time there are no further questions I'd now like to turn the call back to Gary <unk> for any closing remarks.

Code 7323980.

International participants may dial four zero to 90 700847. Additionally, the replay will be available for playback at the company's website Www Dot Korn ferry Dot com in the Investor Relations section that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

Greg It looks and thank you to everybody for listening.

Very very excited obviously about the future of Korn ferry.

I think this is the beginning we've.

We've proven that there's customer receptivity.

Hum in the marketplace, the IP and the data that we have is enormous.

And we're excited about the future. Thank you for taking an interest and we'll talk to you next time. Thank you Greg.

Access code 7323980 interim international participants May dial four zero to 90 700 847. Additionally, the replay will be available for playback at the company's website Www Dot Korn ferry Dot com in the Investor Relations section that does conclude your conference for today.

You for your participation and for using AT&T teleconference. You may now disconnect.

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