Q4 2025 Korn Ferry Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry fourth quarter fiscal year 2025 conference call.

Operator: Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry fourth quarter fiscal year 2025 conference call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the Investor Relations section of our website at KornFerry.com a copy of the financial presentation that we will be reviewing with you today.

At this time all participants are in a listen only mode.

Following the prepared remarks, we will conduct a question and answer session.

As a reminder, this conference call is being recorded for replay purposes. We.

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

Speaker Change: Before I turn the call over to your host Mr. Gary Burnaston.

Operator: Before I turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investigate. Certain statements made in today's call, 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 a statement. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control.

Let me first read a cautionary statement to investors.

Certain statements made in today's call 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 Change: Although the company believes the expectations reflected in such forward looking statements are based on reasonable assumptions investors investors are cautioned not to place undue reliance on such invest our statements.

Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, which are beyond the company's control.

Operator: Additional information concerning such risks and uncertainties can be found in the release relating to the presentation and in the periodic and other reports filed by the company with the SEC. including the company's soon-to-be-filed annual report for fiscal year 2025.

Speaker Change: Additional information concerning such risks and uncertainties can be found in the release relating to the presentation and in the periodic and other reports filed by the company with the SEC, including the company's seem to be filed annual report for fiscal year 2025.

Operator: Also, some of the comments today may reference non-GAAP financial measures such as constant currency amounts. and adjusted EBITDA. Additional information concerning these measures, including reconciliations to the most direct comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, all of which are posted in the Investor Relations section of the company's website at www.kornferry.com.

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

Speaker Change: EBITDA and adjusted EBITDA.

Additional information concerning these measures, including reconciliations to the most direct comparable GAAP financial measures.

Speaker Change: Find in the financial presentation and earnings release relating to this call all of which are posted in the Investor Relations section of the company's website at Www Dot Korn ferry Dot com.

Gary Burnison: With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison. Okay.

Speaker Change: With that I'll turn the call over to Mr. Bernstein. Please go ahead Mr Bernstein.

Speaker Change: Okay. Thank you everybody for joining us and I'm going to have the team get into the more details but overall.

Gary Burnison: Thank you, everybody, for joining us. And I'm going to have the team get into the more details. But overall, you know, our execution has been outstanding. We continue to deliver on all of our financial and strategic objectives. And when I look forward, I mean, there's nothing but opportunity. Our strategy is working. The breadth of our solutions provides more durable and synergistic revenue, offering really a growth foundation for tomorrow. And for us, it all starts with clients. And I just think of, in a quarter, a number of transformative engagements where it's, you know, from leading industrial companies to a global semiconductor company where we're helping, you know, drive a more nimble organizational structure to, you know, financial services, and in particular, an insurance company where we're really creating a data-rich foundation to help build their future talent pipeline, including developing, like, 2,500 liters per year.

Speaker Change: Our execution has been outstanding we continue to deliver on all of our financial and strategic objectives and when I look forward. I mean, there is nothing that opportunity. Our strategy is working the breadth of our solutions provides more durable and synergistic revenue offering.

Speaker Change: Really a growth foundation for tomorrow and for US It all starts with clients and I just think of it in the quarter a number of transformative engagements where it's.

Speaker Change: From leading industrial companies to global semiconductor company, where we're helping drive a more nimble organizational structure to financial services.

Speaker Change: And in particular in the insurance company, where we're really creating a data rich foundation.

Speaker Change: To help build their future.

Speaker Change: Talent pipeline, including developing like 2500 liters per year I mean, it's.

Gary Burnison: I mean, it's working. The strategy is definitely working, and it demonstrates that the ongoing investments that we're making to extend our offerings and our solutions and expand our impact are powering performance for clients, and that's what it's all about. I mean, the success in our business was evident during the quarter again. Fee revenue was up 4%. New business was up 3%, both of those in constant currency. Fundamentally, this business has changed over the last several quarters and years, and our evolution towards synergistic fee revenue sources, driven really by large-scale client engagement, has changed the fundamental composition and the scale of our business.

Speaker Change: It's working the strategy is definitely working and it demonstrates that the ongoing investments that we're making to extend our offerings in our solutions.

Speaker Change: And expand our impact are powering performance for clients and Thats, what its all about the success.

Speaker Change: In our business was evident during the quarter again.

Revenue was up 4% new business was up 3% both of those in constant currency.

Fundamentally this business has changed over the last several quarters and years in our evolution towards synergistic fee revenue sources, driven really by large scale client engagements has changed the fundamental composition.

And the scale of our business.

Gary Burnison: You know, we've got 10- and 20-year CAGR growth rates of more than 10%. Seventy-seven percent of our clients buy two or more of our solutions, more than half by 2023. We've got large, repeatable clients of scale. The Marquee and Diamond accounts for us represent almost 40% of our fee revenue. We've raised our dividends six times in five years. We've got a balanced approach to capital. You know, 26% of our top line is driven, you know, through inside sales, inside referrals. This thing's working.

Speaker Change: We got 10, and 20 year CAGR growth rates of more than 10%.

Speaker Change: 77% of our clients by two or more of our solutions more than half by three.

<unk> got large repeatable clients of scale, the marquee and diamond accounts for us represent almost 40% of our fee revenue. We've raised our dividend six times in five years, we've got a balanced approach to capital 26% of our topline is driven through <unk>.

Inside sales inside referrals as things working.

And as I look forward to this year ahead, we're going to continue to innovate we're going to put a strong focus on technology.

Gary Burnison: And as I look forward to this year ahead, we're going to continue to innovate. We're going to put a strong focus on technology, AI, and more importantly, offerings that drive organizational performance for our clients. Our enterprise talent data analytics and insights are helping clients understand whether they have the right talent in the right roles that align with their strategic priorities. In the quarter, we completed the fourth product release of TalentSuite in the last year or so. And with each release, our organizational and talent products enable us to be more deeply embedded with our clients. As we bundle our services and IP, and that IP is immense, you know, billions of data points, 108 million assessments are taken, rewards data on 28 million people, 31,000 companies, engagement data on 38 million people, culture and benchmark, you know, that's on 11 million respondents, over 500 organizations, I mean, I could go on and on and on, this IP is immense, and our intention is to license that, to create knowledge transfer, to change a lot of lives and the destination of our clients.

AI and more importantly offerings that drive organizational performance for our clients.

Our enterprise talent data analytics and insights are helping clients understand whether they have the right talent in the right roles that align with their strategic priorities in the quarter. We completed the fourth product release of talent suite.

And the last year, or so and with each release, our organizational and talent products enable us.

To be more deeply embedded with our clients.

As we bundle our services and IP in that IP is immense billions of data points or $108 million assessment to taken rewards data on 28 million people 31000 companies engagement data on 38 million people.

Speaker Change: Culture and benchmark.

Speaker Change: Thats on 7 million respondents over 500 organizations I mean, I could go on and on and on this IP as a man.

And our intention is to to license that to create knowledge transfer to change a lot of lives in the destination of our clients and so as I as we close out another fiscal year, it's gratifying to see our success in arguably.

Gary Burnison: And so as I, you know, as we close out another fiscal year, it's gratifying to see our success in arguably a very difficult economic environment. And a testament to the evolution of our firm, and it's all made possible through our talented colleagues. We are truly a global consulting firm that powers performance. And that's why the world's most forward-thinking companies across every major industry turn to us. for a shared commitment to lasting impact and the bold ambition to be more than...

Speaker Change: A very difficult economic environment, and a testament to the evolution of our firm and it's all made possible through through our talented colleagues. We are truly a global consulting firm that power's performance.

Speaker Change: And Thats why the world's most forward thinking companies across every major industry turned to us.

Speaker Change: For a shared commitment to lasting impact and the bold ambition to be more of them.

Bob Rozek: With that, Bob, I'll turn it over to you. Great. Thanks, Gary. And good morning. Good afternoon, everyone.

Bob: With that Bob I'll turn it over to you.

Bob: Great. Thanks, Gerry and good morning, good afternoon, everyone.

Bob Rozek: Listen, it was a great fourth quarter, one that exceeded expectations, especially in light of the current operating environment.

Bob: Listen it was a great fourth quarter, one that exceeded expectations, especially in light of the current operating environment.

Bob Rozek: But before I begin my remarks, I would be remiss if I didn't thank all of my Korn Ferry colleagues, whose determination and dedication made these results and our full year results possible. Our fourth quarter performance is yet another data point validating how our strategy is producing industry leading results. For more information visit www.kornferry.com As the universal demand for great talent continues to grow, we're uniquely positioned to fulfill our clients' talent needs with scope and scale across all industries and geographies.

Bob: But before I begin my remarks, I would be remiss if I didn't thank all of my Korn ferry colleagues, whose determination and dedication made these results and our full year results possible.

Bob: Our fourth quarter performance as yet another data point validating our strategy is producing industry leading results.

Bob: As a universal demand for great talent continues to grow we are uniquely positioned to fulfill our clients' talent needs with scope and scale across all industries and geographies.

Bob Rozek: Now in addition to the detailed results and data points found in our earnings presentation posted on our website, here are a few company-wide and solution-specific highlights for the quarter. Our Markey and Diamond accounts remain strong at 39% of our consolidated fee revenue in the fourth quarter. Our cross-solution referrals also remain strong. We exited the year at 26% of our consolidated fee revenue being referred amongst our solution areas. We continue to invest in commercial capacity by increasing our senior client partner population by approximately 25 net new hires. Executive search grew for the fourth consecutive quarter, was up 15% year-over-year at constant currency.

Bob: In addition to the detailed results and data points found in our earnings presentation.

Bob: On our website.

Bob: You're a few companywide and solutions specific highlights for the quarter.

Bob: Marchi and Diamond accounts remained strong at 39% of our consolidated fee revenue in the fourth quarter.

Bob: Our cross solution referrals also remained strong we exited the year at 26% of our consolidated fee revenue being referred amongst our solution areas.

Bob: We continue to invest in commercial capacity by increasing our senior client partner population by approximately 25 net new hires executive search grew for the fourth consecutive quarter was up 15% year over year at constant currency Digi.

Bob Rozek: Digital subscription and licensed new business in the fourth quarter grew to 40% of the total digital new business, and that's up from 37% in the prior year quarter, continuing to add more stability and predictability to our fee revenue base. RPO continued to build for future growth with $119 million of new business awards. Seventy-seven percent of that amount are attributed to new logos in our average hourly bill rates in consulting and the interim portion of PSI remains strong at $454 an hour and $131 an hour respectively.

Bob: Digital subscription and license new business in the fourth quarter grew to 40% of the total digital new business and that's up from 37% in the prior year quarter, continuing to add more stability and predictability.

Bob: Two our fee revenue base.

Bob: <unk> continued to build for future growth with $119 million of New business awards, 77% of that amount are attributed to new logos.

Bob: And our average hourly bill rates in consulting and the interim portion of PSA remains strong at $454, an hour and $131 an hour respectively.

Bob Rozek: Turning to overall company results for the fourth quarter, consolidated fee revenue was $712 million, growing 4% year-over-year at times of currency. Earnings and profitability also continue to grow on a year-over-year basis. Adjusted EBITDA grew 8% to $121 million. Adjusted EBITDA margin grew 70 basis points to 17%. And our adjusted diluted earnings per share grew 5% to $1.32. As Gary mentioned, a constant currency, total company, new business. grew 3% year-over-year including RPO and grew 5% year-over-year excluding RPO.

Bob: Turning to overall company results for the fourth quarter consolidated fee revenue was $712 million growing 4% year over year at constant currency.

Bob: Earnings and profitability also continued to grow on a year year over year basis.

Bob: Adjusted EBITDA grew 8% to $121 million adjusted.

Bob: Adjusted EBITDA margin grew 70 basis points to 17%.

Bob: And our adjusted diluted earnings per share grew 5% to $1 32.

Bob: Gary mentioned at constant currency total company new business.

Bob: Grew 3% year over year, including our Po.

Bob: Grew 5% year over year, excluding our Po.

Bob Rozek: You'll note in our earnings presentation posted to our website, we've disclosed a new operating metric, Estimated Remaining Fees Under Existing Contracts, and that's an additional proof point demonstrating the effectiveness of our diversification strategy. This operating metric represents the estimated amount of remaining fees associated with existing contracts for services and solutions yet to be delivered to our clients. At the end of the fourth quarter, this totaled approximately $1.7 billion and was up 12% year-over-year. Of this amount, we estimate that approximately 57%, or $977 million, will be recognized as fees within the next year, with the remaining 43%, or $734 million, estimated to be recognized beyond the next four quarters.

Bob: Youll note in our earnings presentation posted to our website, we have disclosed a new operating metric.

Bob: Estimated remaining fees under existing contracts and Thats, an additional proof point demonstrating the effectiveness of our diversification strategy. This operating metric represents the estimated amount of remaining fees associated with existing contracts for services and solutions.

Bob: Yet to be delivered to our clients.

Bob: The end of the fourth quarter. This totaled approximately $1 7 billion.

Bob: And was up 12% year over year.

Bob: Of this amount, we estimate that approximately 57% or $977 million will be recognized as fees within the next year with the remaining 43% or $734 million estimated to be recognized beyond the next four quarters certainly.

Bob Rozek: Now, certain of our solutions, such as executive and professional search, firm placement, have shorter duration contracts, which result in fee revenue being recognized in the next quarter or so. However, a much larger portion of our estimated remaining fees under existing contracts is from our other solution areas, which have longer duration contracts, which give us more durable and resilient future fee revenue stream.

Bob: Our solutions, such as executive and professional search Perm placements have shorter duration contracts, which resulted in fee revenue being recognized in the next quarter or so however, a much larger portion of our estimated remaining fees under existing contracts is from our other solution areas.

Bob: Which have longer duration contracts, which give us more durable and resilient future fee revenue streams.

Bob: We have also introduced fee revenue by geography.

Bob Rozek: We have also introduced fee revenue by geography. The Americas, EMEA, and APEC. We are an organization that puts clients first, and we engage with our clients holistically, as Korn Ferry. And we look to our regional and local colleagues as the point of integration and execution. Now looking at the three regions, fee revenue in the Americas was essentially flat year over year at constant currency. We saw growth in exec search and RPO. EMEA fee revenue grew 9% year-over-year. at Constant Currency, saw growth in ExecSearch and ProSearch in the interim there. And APAC fee revenue grew 8% year-over-year at Constant Currency, primarily driven by growth in ExecSearch and RPO.

Bob: The Americas EMEA and APAC.

Bob: We are an organization that puts clients first and we engage with our clients Holistically as Korn ferry and we look to our regional and local colleagues as a point of integration and execution.

Bob: Now looking at the three regions fee revenue in the Americas was essentially flat year over year at constant currency, we saw growth in exec search and IPO.

Bob: EMEA fee revenue grew 9% year over year.

Bob: Constant currency.

Bob: Solid growth in exact search and pro search and interim there in <unk>.

Bob: APAC fee revenue grew 8% year over year at constant currency, primarily driven by growth in exec search and IPO.

Bob Rozek: And finally, our capital allocation continues to remain balanced. For all of fiscal 25, we returned $173 million to shareholders through combined share repurchases and dividends. We invested $44 million in M&A and invested $62 million in capital expenditures focused on TalentSuite, our technology platforms, productivity tools, and related product enhancements.

Bob: And finally, our capital allocation continues to remain balanced.

Bob: For all of fiscal 'twenty, five we returned $173 million to shareholders through combined share repurchases and dividends.

Bob: We invested $44 million in M&A and invested $62 million in capital expenditures focused on talent suite, our technology platforms productivity tools and related product enhancements now turning to our outlook for the first quarter of fiscal 'twenty six assuming no further changes.

Bob Rozek: Now, turning to our outlook for the first quarter of Fiscal 26, assuming no further changes in worldwide geopolitical conditions, economic conditions, financial markets, foreign exchange rates, we expect fee revenue in the first quarter of Fiscal 26 to range from $675 million to $695 million. Our adjusted EBITDA margin to range from approximately 16.8% to 17.2%. and our consolidated adjusted diluted earnings per share to range from $1.18 to $1.26. Finally, we expect our gap-diluted earnings per share in the first quarter to range from $1.16 to $1.24.

Bob: Worldwide geopolitical conditions economic conditions financial markets foreign exchange rates.

Bob: We expect fee revenue in the first quarter of fiscal 2006 to range from 675 million to $695 million, our adjusted EBITDA margin to range from approximately 16, 8% to 17, 2%.

Bob: And our consolidated adjusted diluted earnings per share to range from $1 18 to $1 26.

Bob: Finally, we expect our GAAP diluted earnings per share in the first quarter to range from $1 16 to $1 24 now.

Bob Rozek: Now, our accomplishments in Fiscal 25 underscore our ongoing commitment to remain focused on controlling what we can, leaning into growth opportunities where we see them, and driving operational excellence. Additionally, as our firm continues to evolve, we will remain relentlessly focused on client service. Korn Ferry is a global consulting firm that powers client performance.

Bob: Our accomplishments in fiscal 'twenty five underscore our ongoing commitment to remain focused on controlling what we can leaning into growth opportunities, where we see them and driving operational excellence.

Bob: Additionally, as our firm continues to evolve we will remain relentlessly focused on client service Korn Ferry's, a global consulting firm.

Bob: <unk> client performance, we are well positioned for the next step in our evolution and I am more confident and excited that have ever been about what this company can become.

Bob Rozek: We are well positioned for the next step in our evolution, and I am more confident and excited than I have ever been about what this company can become.

Operator: With that, we would be glad to answer any questions you may have. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again. One moment for your first.

Bob: With that we will be glad to answer any questions you may have.

Speaker Change: Thank you. So you have a question. Please press star one on your telephone keypad.

Bob: If you wish to remove yourself from the queue simply press star one again.

Bob: One moment for your first question.

Speaker Change: Your first question comes from the line of Trevor Romeo of William Blair. Your line is open.

Trevor Romeo: Your first question comes from the line of Trevor Romeo of William Blair. Your line is open. Hey, everyone. Thanks so much for taking the questions and, you know, great performance despite the tough environment.

Speaker Change: Hey, everyone. Thanks, so much for taking the questions.

Trevor Romeo: Great performance, despite the tough environment, but I guess I just wanted to dial in a bit on <unk>.

Gary Burnison: But I guess I just wanted to dial in a bit on any call you might have on new business trends and, I guess, revenue trends by month over the last several months, especially with the tariff announcements in April and everything that's kind of transpired since then, business confidence still being a bit lower. Just any indications of how, you know, trends and your conversations have changed the past few months would be really helpful, especially if you've seen any areas of, you know, incremental weakness. I mean, there's always uncertainty. That's the only thing that's certain. And, you know, the conversations ebb and flow and you have something that happens with Israel and Iran and you have a different conversation.

Speaker Change: Any color you might have on new business trends and I guess revenue trends by month over the last several months, especially with the tariff announcements in April.

Speaker Change: Everything Thats kind of transpired since then business confidence still being a bit lower.

Speaker Change: Just any indications of how trends in your conversations have changed the past few months will be really helpful, especially if you've seen any areas of.

Speaker Change: Incremental weakness since then.

Speaker Change: I mean, there's always uncertainty that's the only thing that certain and the conversations ebb and flow and you have something that happens with us around the Oran and you have a different conversation and it seems like it's happening more and more of these days.

Gary Burnison: And it seems like it's happening more and more these days. In terms of new business, I mean, May was actually stronger than April. April was about the same as March. And February was pretty good. So the conversations change.

Speaker Change: In terms of new business <unk> was actually stronger than April April was about the same as March.

Speaker Change: February was pretty good so the conversations change.

Gary Burnison: But, you know, essentially, when I look at the firm as a whole, it's, you know, it's pretty impressive, particularly in this market, which I would consider a recession for the last seven quarters. That makes sense, Gary. Thank you.

Speaker Change: But.

Speaker Change: Essentially.

Speaker Change: When I look at the firm.

Speaker Change: As a whole.

Speaker Change: It's pretty impressive, particularly in this market, which I would consider a recession for the last seven quarters.

Speaker Change: Yes that makes sense Gerry thank you.

Trevor Romeo: And then I guess I just wanted to maybe dig in on executive search for a little bit. I think you talked a lot about the peak 65 demographics. I think a lot of the executive surveys we see are showing high levels of turnover. But in this quarter, I think the 15% growth was quite a bit stronger than we had been seeing.

Speaker Change: And then I guess I just wanted to maybe dig in on executive search tool a bit I think.

Speaker Change: A lot about the peak 65 demographics I think a lot of the executive surveys, we see are showing high levels of turnover, but in this quarter I think the 15% growth was quite a bit stronger.

Speaker Change: So was there anything specific that changed this quarter for the search business some of it share gain or something like that and what would you kind of expected in terms of the next few quarters for that.

Gary Burnison: So was there anything specific that changed this quarter for the search business, some of it share gains or something like that? And what would you kind of expect to see in terms of the next few quarters for that? You know, I don't think you can look at it necessarily, you know, quarter to quarter. There's going to be ebbs and flows. I think when you look at it over the long term, the firm has delivered 10, 11% growth year in, year out, you know, as one business. And that's been pretty remarkable. And I think that speaks to the solutions and the offerings that we have.

Speaker Change: I don't think you can you can look at it necessarily quarter to quarter or theres going to be ebbs and flows I think when you look at it over the long term.

Speaker Change: The firm has delivered 10, 11% growth year on year.

Speaker Change: As a as one business.

Speaker Change: And thats been pretty remarkable and I think that speaks to the to the solutions and the offerings that we have clearly when you look quarter to quarter Youll find it at some point.

Gary Burnison: Clearly, you know, when you look quarter to quarter, you'll find it at some points, consulting is up, search is down, digital is flat, RPO is up. You know, the point here is to have, you know, a well-rounded set of solutions that drive organizational performance, that drive human performance. And I think Korn Ferry is just starting out. So you know, yes, if you look at any particular moment, there's different things that you would point out. Clearly, we're in an environment now where there are demographic, you know, factors at play big time. And there's also, you know, demands for a different type of leader.

Speaker Change: Consulting is searches down digital's flat <unk>.

Speaker Change: The point here is to have.

Speaker Change: A well rounded set of solutions that drive organizational performance that drives human performance and I think Korn ferry is just starting out so.

Speaker Change: Yes, if you look at any particular moment.

Speaker Change: There is there is different things that you would point out.

Speaker Change: Clearly we are in an environment now.

Speaker Change: Where there are demographic.

Speaker Change: Factors at play Big time.

Speaker Change: And there is also demands for a different type of later.

Speaker Change: Today from say five years ago. So all of those things are at play, but what I. What I look at is the overall firm performance in our profitability and the growth that we're able to achieve for shareholders and our colleagues.

Gary Burnison: today from, say, five years ago. So all of those things are at play. But what I look at is the overall firm performance and our profitability and the growth that we're able to achieve for shareholders and our colleagues.

Speaker Change: Okay, great. So nothing particular for this quarter in executive search.

Trevor Romeo: Okay, great. So nothing particular for this quarter in executive. I'll jump back in the queue.

Speaker Change: I'll jump back in the queue just wanted to quickly mentioned thanks for all the new disclosures I think that'll that'll give investors a better view into your visibility. So thanks, everyone.

Trevor Romeo: Just wanted to quickly mention thanks for all the new disclosures. I think that'll give investors a better view. Thanks, everyone.

George Tong: Your next question comes from the line of George Tong of Goldman Sachs. Your line is open.

Georgetown: Your next question comes from the line of Georgetown of Goldman Sachs. Your line is open. Thanks. Good morning. Could you provide an update on what you're seeing with sales cycles and also how client spending behaviors may be different across segments? So across the various segments, where are you seeing any changes or macro sensitivity or any type of purchasing pattern differences? Any update there would be helpful.

George Tong: Hi, Thanks, good morning.

George Tong: Would you provide an update on what youre seeing with sales cycles and also.

George Tong: How client spending behaviors may be different across segments. So.

George Tong: The various segments, where you're seeing any changes or macro sensitivity.

George Tong: Or any type of.

George Tong: Purchasing pattern differences.

Speaker Change: To date, there would be helpful.

Speaker Change: Well I think number one there is a cost of living crisis and I've said this for a long time and it's very clear in America. There is a cost of living crisis and that is a serious issue and it is beyond.

Gary Burnison: Well, I think, number one, there's a cost-of-living crisis, and I've said this for a long time, and it's very clear in America there's a cost-of-living crisis. And that is a serious issue and it is beyond, you know, companies for many months were able to raise prices, shrink packaging, volume went down. That hasn't been the case for seven quarters. And so companies are across the board, you know, growth is elusive, and so they're having to cut costs. And it's now been happening for seven quarters pretty consistently, for example, in the United States. And so I, you know, I look at that environment and, you know, given everything that's going on, it's, you know, it's still going to be a challenging environment going forward.

Speaker Change: Cut companies for many months, we're able to raise prices shrink packaging volume went down.

Speaker Change: That hasnt been the case for seven quarters.

Speaker Change: And so companies are across the board.

Speaker Change: Growth is elusive and so they're having to cut costs and it's now been happening for seven quarters pretty consistently.

Speaker Change: For example, in the United States, and so I look at that environment and given.

Speaker Change: Given everything that's going on it's it's still going to be a challenging environment.

Speaker Change: Going forward said for me that's the biggest issue.

Gary Burnison: So for me, that's that's the biggest issue.

Gary Burnison: And then, you know, secondly, is is, you know, the. The leadership team, the people that got you here, may not get you there. And this is, you know, we're on the precipice of just incredible change. and Growth Is Illusion. And so that has big, big ramifications on a workforce in terms of what that means in the future. Got it. Okay, that's helpful.

Speaker Change: And then secondly is the.

Speaker Change: The leadership team.

Speaker Change: People that got you here may not get you there and this is we're on the precipice of just incredible change.

Speaker Change: And growth is elusive.

Speaker Change: And so that has big big ramifications on our workforce in terms of what that means in the future.

Speaker Change: Got it okay. That's helpful.

Bob Rozek: And then, could you talk about how new business, quarterly new business, performed in the consulting segment and then overall for digital? I know you provide a total subscription and license new business, but total new business for digital and total new business for consulting, what the year-over-year change was? Yeah, I tend to look at the firm in total and that was up like 5%. I will say that broadly speaking, what what's happening is in the consulting area, as you know, the engagements are getting bigger. So, I think that now about 25% of our new business is engagements that are seven figures and above.

Speaker Change: And then could you talk about how new business quarterly new business performed in the consulting segment and then overall for digital I know you've provided total subscription and license new business with total new business for digital in total new business for consulting with a year over year change was.

Speaker Change: Yes, I tend to look at the firm in total and that was up like 5%.

Speaker Change: I'll say that broadly speaking what what's happening is in the consulting area as you know the engagements are getting bigger.

Speaker Change: So I think that now about 25% of our new business.

Speaker Change: Is engagements that are seven figures and above so those are having a much longer time to implement these could be 345 year.

Gary Burnison: So, those are having a much longer time to implement. I mean, these could be three, four, five-year, you know, leadership development journeys that take time to really work their way through. So, I mean, I think of one that is, you know, tens of millions of dollars that we originated two and a half, three years ago, and the truth is, you know, we're only kind of 25% through all the cohorts. I mean, it definitely takes time. So, there's a couple factors at play. I think one is the firm is going to continue to move towards powering clients' performance, which on the consulting side would be more transformative engagements that will probably take longer to implement.

Speaker Change: Leadership development journeys that take time to really work their way through I mean, I think of wine.

Speaker Change: That is tens of millions of dollars that we originated 253 years ago and mature. It is we're only kind of 25% through through all of the cohorts I mean it.

Speaker Change: It definitely takes time so there's a couple factors at play I think one is the firm is going to continue to move.

Speaker Change: Words powering clients performance.

Speaker Change: Which on the consulting side would be more transformative engagements.

Speaker Change: That will probably take longer to implement so that's number one and number two is companies are slashing costs.

Gary Burnison: So, that's number one. And number two is companies are slashing costs. I mean, you see it everywhere. And so, that is definitely impacting some of our solutions.

Speaker Change: I mean, you see it everywhere.

Speaker Change: And so that is definitely impacting some of our solutions and when it comes to to digital I'm very very proud of this fourth release of the talent suite I think thats going to be something that was we look back five years from now that's going to be an absolute game changer hopefully by.

Gary Burnison: And when it comes to digital, I'm very, very proud of this fourth release of the Talent Suite. I think that's going to be, you know, something that as we look back five years from now, that's going to be an absolute game changer. Hopefully, by the end of this calendar year, it'll be seamlessly integrated to at least one major, you know, CRM provider. And you know, when you look at the digital, it's been very, very consistent in terms of new business, which, you know, it's not like it's gone up 15%, but it's not like it's gone down 10%.

Speaker Change: At the end of this calendar year, it will be seamlessly integrated to at least one major.

Speaker Change: CRM provider.

Speaker Change: And when you look at the digital it's been very very consistent.

Speaker Change: In terms of new business, which.

Speaker Change: It's not like it's gone up 15%, but it's not like it's gone down 10% I mean, it's been very very consistent and what I would argue.

Bob Rozek: I mean, it's been very, very consistent. And what I would argue... has been a recessionary environment for seven quarters.

Speaker Change: It has been a recessionary environment for seven quarters.

Gary Burnaston: Hey, Gary that's helpful. Thank you.

Bob Rozek: Hey, Gary. I can add a little bit of specificity there. So, George, the digital business year-over-year is up 4%, constant currency, and consulting is flat. And so that just, you know, as we talked about in the consulting world, you know, the impact of the larger engagements and consumption impacting revenue, but the demand for our services and solutions remains strong. Makes sense. Thanks very much.

Speaker Change: A little bit of specificity there so George the digital business year over year was up 4% constant currency.

Speaker Change: Consulting is flat and.

Speaker Change: And so that just is.

Speaker Change: We talked about the in the consulting world.

Speaker Change: The impact of the larger engagements and consumption impacting revenue, but the demand.

Speaker Change: For our services and solutions remain strong.

Speaker Change: Makes sense, thanks very much.

Speaker Change: Your next question comes from the line of Mark Marcon of Baird. Your line is open.

Mark Marcon: Your next question comes from the line of Mark Marcon of Baird.

Mark Marcon: Your line is Hey, good morning or good afternoon depending on where you are. Congrats on the on the strong result. And Gary, I just wanted to pick up on a few of the things that you were mentioning before. One specifically with regards to the fourth release of the Talent Suite, can you talk a little bit about, you know, from a user perspective, what are the big differences that a user will end up seeing and what gives you the confidence that, you know, we could end up seeing a fairly decent uplift there, you know, with this fourth release?

Mark Marcon: Hey, good morning, or good afternoon, depending on where you are.

Speaker Change: That's on the on the strong result.

Speaker Change: Gary I just wanted to pick up on a few of the things that you were mentioning before.

Speaker Change: One specifically with regards to the fourth row lease of the talent suite.

Speaker Change: Can you talk a little bit about.

Speaker Change: From a user perspective, what are the big differences that a user will end up seeing and what gives you the confidence that.

Speaker Change: We could end up seeing a fairly decent uplift there.

Speaker Change: With this with this fourth will lease.

Speaker Change: I mean.

Gary Burnison: I mean, the confidence is that, you know, people still make businesses successful. And when you, I think the big difference, hopefully, that customers will see over the next several months is seamlessness. And the ability to toggle between, you know, learning and development, between setting competitive pay packages to, you know, identifying roles, the right kinds of success profiles for certain roles. So I would hope that it's across the spectrum of hiring, developing, rewarding, motivating. Across those dimensions of a workforce, I would hope that there is increasing Thank you, listeners. from a user experience. And that hasn't been the case.

Speaker Change: The confidence.

Speaker Change: Is that.

Speaker Change: People still make businesses successful and when you.

Speaker Change: The big difference hopefully.

Speaker Change: That that customers will see over the next several months is seamlessness.

Speaker Change: And the ability to hit.

Speaker Change: Our goal.

Speaker Change: Okay.

Speaker Change: Learning and development.

Speaker Change: Wayne setting competitive pay packages.

Speaker Change: <unk>.

Speaker Change: Identifying role.

Speaker Change: The right kinds of success profiles for certain roles.

Speaker Change: So I would hope that it's across the spectrum of hiring.

Speaker Change: Developing rewarding motivating across those dimensions of a workforce I would hope that there is increasing.

Speaker Change: St listeners.

Speaker Change: From a user experience.

Speaker Change: And that hasn't been the case.

Gary Burnison: in the past. where people would hit the spot, say, you know, a pay package. So I think that is going to be. I think it's going to be unique in the marketplace. The depth that we have is really second to none. And yeah, I do have a lot of confidence.

Speaker Change: In the past.

Speaker Change: Where people would have to spot say.

Speaker Change: Our pay package.

Speaker Change: So I think that is going to be.

Speaker Change: I think it's going to be unique in the marketplace.

Speaker Change: The debt that we have is really second to none and yes, I do have a lot of confidence in it.

Speaker Change: That's great and then.

Mark Marcon: That's great.

Bob Rozek: And then, you know, Bob, this, just to clarify something on when you mentioned digital was up 4% and consulting was flat. Was that in terms of new business? Yes, yeah, it was for the last quarter. Yeah, new business in Q4. Right. And so, and the timing of the relief, I mean, would you expect that digital would start seeing a pickup in the second half of this fiscal year? And specifically, you mentioned, you know, potentially, we could end up getting attached to some bigger packages. Could you talk a little bit more about that? Well, you know, timing is, you know, I mean, that's that's very, very hard to predict.

Speaker Change: Bob.

Speaker Change: Just to clarify something on when you mentioned digital was up 4% and consulting was flat was that in terms of new business.

Speaker Change: Yes, yes it was.

Speaker Change: Over the last quarter.

Speaker Change: New business in Q4.

Speaker Change: Right and so and the.

Speaker Change: The timing of the relief I mean would you expect that digital would start seeing a pickup in.

Speaker Change: In the second half of this fiscal year, and specifically you mentioned potentially.

Speaker Change: Potentially we could end up getting attached to some some bigger packages could you talk a little bit more about that.

Speaker Change: Well timing is.

Speaker Change: That's very very hard to predict in a.

Bob Rozek: And, you know, look, it's a certain part of this is dependent on the macro environment that that we're in. But, you know, would I would I expect to see something at the end of this calendar year? Probably not. Would I expect to see some in the next calendar year? Absolutely.

Speaker Change: Look it's.

Speaker Change: A certain part of this is dependent on the macro environment that we're in but.

Speaker Change: What I would I expect to see something at the end of this calendar year probably not.

Speaker Change: Would I expect to see some in the next calendar year absolutely.

Speaker Change: Okay great.

Mark Marcon: Okay, great.

Gary Burnison: And then... Gary, you mentioned a different type of leader. Could you expand on that? You have lots of conversations with thought leadership, thought leaders, you know, across the board. What are boards looking for now in terms of different types of Well, I think the ability, you know, number one, you know, there's the, you know, the kind of age old things of, you know, strategy and vision and financial acumen, and courage and confidence. You know, all of our research would point to that. But we also, you know, we also would be a very, very strong component given The, you know, the change, I mean really profound change is at our doorstep.

Speaker Change: And then.

Speaker Change: Gary you mentioned a different type of leader could you expand on that you have lots of conversations with vault.

Speaker Change: Thought leadership thought leaders.

Speaker Change: Across the board.

Speaker Change: Our board is looking for now in terms of different types of leaders.

Speaker Change: Well I think the ability number whether they're state.

Speaker Change: The kind of age old things.

Speaker Change: Our strategy and vision and financial acumen.

Speaker Change: Encourage and confident.

Speaker Change: Yeah.

Speaker Change: All of our research would point to that.

Speaker Change: But we also.

Speaker Change: We also would be a very very strong component given.

Speaker Change: The.

Speaker Change: The change I mean really profound changes at our doorstep.

Speaker Change: <unk>.

Gary Burnison: I think the single biggest change is for a CEO. to Embrace Ambiguity. And there's a difference between embracing ambiguity and thriving in ambiguity. and the Internet. at some of these articles that have been written over the last few days about how AI is going to replace jobs. That's not the point. The point is there won't be enough workers. to work in those jobs. So the fact is, this incredible imbalance, the low birth rates over the last 20 years are going to create a situation where there is a big imbalance of supply and demand of That gets filled through technology across the board, either immigration or technology.

Speaker Change: I think the single biggest change is for a CEO.

Speaker Change: To embrace ambiguity.

Speaker Change: And there is a difference between embracing ambiguity and thriving and ambiguity.

Speaker Change: Neil.

Speaker Change: Stuart.

Speaker Change: And I think we're entering a period of time.

Speaker Change: <unk> at.

Speaker Change: As some of these articles that have been written over the last few days.

Speaker Change: How AI is going to replace jobs, that's not the point.

Speaker Change: The point is there won't be enough workers.

Speaker Change: At work in those jobs.

Speaker Change: So the fact is.

Speaker Change: This incredible imbalance the low birth rates over the last 20 years are going to create a situation where there is a big imbalance of supply and demand of labor that it gets filled through technology across the board either immigration or technology.

Speaker Change: And so I think as we think about this and we are assessing clients.

Gary Burnison: And so I think, you know, as we think about this, and we are assessing clients. ability, their leadership capacity to deal with, say, AI, I mean, the thing that's coming screaming off the page is... The ability to embrace ambiguity. And, you know, you see it now almost, you know, day to day, week to week. It is, it is, I'm sure every generation has said it. But what we're seeing today, it's incredible. And so that is, I think that is the huge, huge difference about somebody that's gonna lead an organization for the next five years than maybe somebody who did it 10 years ago.

Speaker Change: Billety their leadership capacity to deal with say AI.

Speaker Change: Thing Thats coming screaming off the page is.

Speaker Change: The ability to embrace ambiguity.

Speaker Change: And you see it now almost day to day week to week. It is.

Speaker Change: As I am sure every generation has said it but.

Speaker Change: But what we're seeing today.

Speaker Change: It's incredible.

Speaker Change: So that is I think that is the huge huge difference about somebody that's going to lead an organization for the next five years than maybe somebody who did it 10 years ago.

Speaker Change: Great and then.

Mark Marcon: Great, and then can you talk a little bit about on the executive search side, you show some really good growth in the international markets. And along with that, you ended up seeing a pretty big pickup in terms of consultant productivity. I mean, you're up to an average of 1.6. million per which is terrific.

Speaker Change: Can you talk a little bit about on the executive search side you saw some really good growth in the international markets.

Speaker Change: And.

Speaker Change: Along with that you ended up seeing a pretty big pickup in terms of consultant productivity I mean, Europe to an average of one 6 million per which is terrific.

Gary Burnison: What are you seeing in terms of the top end of that and what's been driving that increase in terms of productivity and what's been driving the international growth to a greater? Well, I would say, Mark, so the North American growth has been very good, too. So across the board, across the globe, that solution has done very, very well. So part of it is us, and part of it is the market. You know, I do think we have this demonstrated track record with a real strategy, with real solutions that drive a company's performance. But clearly, there's other factors at play.

Speaker Change: What are you seeing in terms of the top end of that and what's been driving that increase in terms of productivity.

Speaker Change: And what's been driving the.

Speaker Change: The international growth through greater extent.

Speaker Change: Well I would say bard so the north American growth has been very good too so across the board across the globe.

Speaker Change: <unk> solution has done very very well and so part of it is us and part of it is the market.

Speaker Change: I do think we have this demonstrated track record with a real strategy with real solutions that drive the company's performance, but clearly there's other factors at play.

Gary Burnison: And, you know, some of those factors are demographics. Some of those factors are burnout. Some of those factors are a different leadership team that's needed over the next five or 10 years than the past 10 years.

Speaker Change: And some of those some of those factors are demographics some of those factors or burn out some of those factors are a different leadership team that's needed over the next five or 10 years than the past 10 years I mean, all of those things.

Mark Marcon: I mean, all of those things are at play here, and it's hard for me to pick out, like, which one of those is more important than the other. That's fair, and then... Obviously, we've been dealing with all sorts of changes. It's obviously too early to tell and nobody knows exactly what's going to happen, but just in terms of just the latest. International news items. Um... Do you think that's going to have any sort of real impact in the very short term with regards to the confidence? Obviously, it's going to depend on how it plays out.

Speaker Change: Are at play here and it's hard for me to pick out like which one of those is more important.

Speaker Change: Then than the other.

Speaker Change: Okay, that's fair.

Speaker Change: And then.

Speaker Change: Obviously, we've been dealing with all sorts of changes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: It's obviously too early to tell but nobody knows exactly what's going to happen, but just in terms of this the latest.

Speaker Change: International News item.

Speaker Change: Do you think thats going to have any sort of real impact in the very short term with regards to the confidence obviously, it's going to depend on how it plays out but if it just keeps.

Gary Burnison: But if it just keeps – if it plays out where it's just kind of in the background, do you think people are starting to just ignore things or – Do you think it's going to create more? Well, I think you're right. It depends on where this goes. I mean, even if it's at this level and it's sustained, you know, that's not good. Loss of life, this is not good overall. And it just adds to everything else, you know, that's happened over, you know, it just, it seems like seven or eight quarters now of all sorts of different kind of news.

Speaker Change: If it plays out where it's just kind of in the background.

Speaker Change: Do you think people are starting to just ignore things or.

Speaker Change: <unk>.

Speaker Change: Do you think it's going to create more hesitancy.

Speaker Change: Well I think youre right. It depends on where this goes I mean, even if it's at this level and its sustained.

Speaker Change: Not good.

Speaker Change: Loss of life and this is not good.

Speaker Change: Overall, and it just adds to everything else.

Speaker Change: That's happened.

Speaker Change: Over.

Speaker Change: It just it seems like seven or eight quarters now.

Speaker Change: All sorts of different kind of news.

Speaker Change: So that's very very hard to predict I quite.

Gary Burnison: So, that's very, very hard to predict. I quite, you know, I've said this before, I think a fundamental issue is the cost of living price. And when you have a gallon of milk, a carton of eggs... prices when all those things are up 50%. and people talk about inflation moderating to two percent. It's a joke. It's an absolute joke because that's on a base of up 50%. And wages have gone up, but they haven't gone up that much. So ultimately, a country either has to tax more, spend less, or grow. And growth is the best option there, and the most practical.

Speaker Change: I've said this before.

Speaker Change: Think a fundamental issue is.

Speaker Change: Is the cost of living prices.

Speaker Change: And when you have a gallon of milk carton of eggs.

Speaker Change: Prices when all of those things are up 50%.

Speaker Change: And people talk about inflation moderating to 2% its a joke it's.

Speaker Change: It is an absolute joke, because that's on a base of about 50% and wages have gone up but they haven't gone up that much. So ultimately our country either house tax more spend less or grow.

Speaker Change: And growth is the best option there in the most practical.

Gary Burnison: And you would hope that, you know, that countries have that, you know, platform of growth. And you know, America has been fortunate that it's grown productivity 2% a year for, you know, a number, a long, long time. The first quarter wasn't great, it was actually down, but over a long period of time, it's growing. And I think when you look at these demographic trends... Without immigration, what it's going to show is there's a serious shortage in, for example, in America. millions of millions of workers. Sure. And so then the natural thing that's going to fill that gap is technology.

Speaker Change: And you would hope that that.

Speaker Change: Countries have that that.

Speaker Change: Platform of growth and America has been fortunate that it's grown productivity, 2% a year.

Speaker Change: For a number a long long time.

Speaker Change: First quarter wasn't great. It was.

Speaker Change: Actually down but.

Speaker Change: Over a long period of time, it's it's growing and I think when you look at these demographic trends without immigration, what it's going to show as theirs.

Speaker Change: Theory a shortage.

Speaker Change: For example in America Mill.

Speaker Change: Millions of millions of workers short and so then the <unk>.

Speaker Change: Natural thing Thats going to fill that gap is technology.

Mark Marcon: I just, I firmly, I feel more convicted around that today than I did even a year ago. I appreciate that.

Speaker Change: I just.

Speaker Change: Firmly I feel more convicted around that today than I did even a year ago.

Speaker Change: I appreciate that one last question if I may just on the balance sheet.

Mark Marcon: One last question, if I may.

Bob Rozek: Just on the balance sheet, can you talk about what the bonus payout is going to be and how we should think about investable cash? Now, Bob, you want to do that? Yeah, we don't, we don't typically disclose too much around the bonus payout for, you know, for obvious reasons. But it's going to be, you know, it'll be sufficient to make sure that we're rewarding our real performers. I would say the investable cash, you know, the balance at the end of the year was about $600. close to 675. $675 million with about 25 to 30% of that in the U.S.

Speaker Change: Can you talk about.

Speaker Change: What the what the bonus payout is going to be.

Speaker Change: And how we should think about investable cash.

Bob: Bob do you want to do it.

Bob: Yes, if we don't we don't typically disclose too much around the.

Speaker Change: The bonus payout for <unk>.

Speaker Change: For obvious reasons.

Speaker Change: But it's going to be it will be sufficient to make sure that we're rewarding our real performers.

Speaker Change: The investable cash balance at the end of the year was about 600 and its.

Speaker Change: Close to 675.

Speaker Change: $607 million with about 25% to 30% of that in the.

Speaker Change: In the U S and we will continue to deploy capital following our balanced approach.

Bob Rozek: And we'll continue to deploy capital following our balanced approach. You know that we followed consistently over the past several years now Where we're always looking to put the money back into the business first whether it's hiring individuals teams Putting money back into the investments that we're making scary talked about the talent suite You know, that's a big play for us Doing M&A this year, you know, we've invested back into this past year into trilogy to expand our interim solution over in EMEA But then, you know, we do generate a strong amount of cash. And so we have returns to shareholders that You know, we've Gary said we've really leaned on the dividend I think the dividend and the buybacks now are pretty balanced, you know, roughly 85 to 90 million dollars a year each And so we'll continue to deploy that.

Speaker Change: That we followed consistently over the past several years now.

Speaker Change: Or are you looking to put the money back into the business versus whether it's hiring individuals teams.

Speaker Change: Putting money back into the investments that we're making as Gary talked about the <unk> suite.

Speaker Change: That's a big play for us doing M&A. This year, we've missed it back into past year into trilogy, two expand our interim solution over in EMEA.

Speaker Change: But then we do generate a strong amount of cash.

Speaker Change: So we have returns to shareholders.

Speaker Change: As Gary said, we've really leaned in on the dividend I think the dividend and the buybacks now are pretty balanced roughly $85 million to $90 million a year each.

Speaker Change: So we'll continue to deploy that and to the extent that we've got great opportunities from an M&A perspective, we would lean in there.

Bob Rozek: And to the extent that we've got great opportunities from an M&A perspective, we would lean in there. And to me, the kind of the swing vote would be the share buy.

Speaker Change: To me the kind of the swing vote would be the share buybacks.

Speaker Change: Great. Thank you very much.

Mark Marcon: Great. Thank you very much.

Speaker Change: Your next question comes from the line of Tobey Sommer of Truest. Your line is open.

Tobey Sommer: Your next question comes from the line of Tobey Sommer of Truist. Your line is open. Thank you. In the marketplace, Gary, you described the labor market where things are tough, purchasing power is down. Also, employee turnover in the market is now down for, I don't know, probably four consecutive years and actually below pre-COVID levels. Is that something that you monitor and feel like it's needed to kind of drive some more dynamism in the labor market? What kind of macro changes could we look at to see an improvement in the velocity? Yeah, economic growth. I mean, it's not a good, it's at an all-time.

Speaker Change: Thank you.

Speaker Change: In the marketplace, Gary you've described the labor market, where things are tough purchasing power is down.

Speaker Change: Also employee turnover in the market is now down for I don't know probably four consecutive years and actually below pre COVID-19 levels.

Speaker Change: Is that something that you monitor and feel like it's needed to kind of drive some more dynamism in the labor market and what kind of macro changes could we look at to see an improvement in the velocity there.

Speaker Change: Yes, economic growth I mean, it's not again, it's at an all time I think youll notice better than I, but I think in the United States that they kind of annual turnover now is kind of like I mean, this is a meeting of the bell curve, but I think it's like eight or 9%.

Gary Burnison: I think that I, you know, you all know this better than I, but I think in the United States, the, the kind of, you know, annual turnover now is kind of like, I mean, this is the median of the bell curve, but I think it's like eight or nine percent. I mean, it's, it's historically very, very, very low. Why? Because people can't get jobs. And so you've got a very anemic labor, you know, if you're cranking out 100,000 jobs a month or 125 or, you know, something like that, the labor participation rates less today than it was, you know, but but, you know, before the pandemic.

Speaker Change: Historically, very very low why because people can't get jobs.

Speaker Change: And so you've got a very anemic labor.

Speaker Change: Cranking out of 100000 jobs, a month or $1 25 or.

Speaker Change: Something like that the labor participation rates less today than it was.

Speaker Change: But before the pandemic and so.

Gary Burnison: And so, you know, people are are hesitant to leave a job. Even though the best time to look for a job is when you have a job and companies. They've been very, very reluctant because they, I'm generalizing, but they don't have pricing power. They've raised prices so much to deal with the supply shock from COVID that there's no mosque. There's no more that you can raise prices. And so, that's kind of the deal. And yeah, it's actually not a good thing.

Speaker Change: Yes people are hesitant to leave a job.

Speaker Change: Even though the best time to look for a job is when you have a job and companies.

Speaker Change: They've been very very reluctant because they I'm generalizing, but they don't have pricing power.

Speaker Change: They've raised prices so much to deal with the supply chart shock from Covid.

Speaker Change: There is no mass E. There is no more that you can raise prices and so.

Speaker Change: That's that's kind of the deal and yeah, it's actually not a good thing.

Gary Burnison: to have this low level of employee turnover from a number of different dimensions.

Speaker Change: To have this low level.

Speaker Change: Employee turnover.

Speaker Change: From a number of different dimensions.

Speaker Change: Thank you I appreciate that.

Tobey Sommer: Thank you, I appreciate that.

Tobey Sommer: I wanted to ask a question about headcount productivity broadly in the organization from a corporate perspective. What's enabled delivering the higher corporate revenue without increasing internal headcount comparably over the last five years, and is there more to do there, like on a go-forward basis? Should we think about the company being able to add a point of revenue with less than that in terms of bodies and headcount? Yeah, I don't know. I think we've been through a pretty unique time. You know, the wild, the big, big wild is the monetization of our IP, which is a story that we've called forever and ever.

Speaker Change: Wanted to ask a question about head count productivity broadly in the organization from a corporate perspective.

Speaker Change: What's enabled delivering the higher corporate revenue without increasing internal head count comparably over the last five years and is there.

Speaker Change: More to do there like on a go forward basis should we think about the company being able to.

Speaker Change: At a point of revenue with.

Speaker Change: With less than that in terms of.

Speaker Change: Our bodies and head count.

Speaker Change: Yes, I don't know I think we've been through a pretty unique time.

Speaker Change: While the big Big wildcard.

Speaker Change: Is is the is the monetization of our IP, which is a story that we've called forever and ever.

Speaker Change: That continues to be the single biggest wildcard because it's.

Gary Burnison: That continues to be the single biggest wildcard, because it's very, very scalable, and I read off all the statistics around data. It is very impressive, and hopefully when we can create something that's more seamless for a user, and have a couple ecosystem partners, and we really put the full weight of the firm behind it, that that really does. That's where the scale really comes in, from a shareholder perspective and from a colleague employee perspective, quite candidly. It's whether you can monetize that IP, and so in a very difficult market, I look at it, and am I over the moon, am I completely happy, no.

Speaker Change: It's very very scalable.

Speaker Change: I read off all the statistics around data.

Speaker Change: Is very impressive and hopefully when we can create something that's more seamless for user and have a couple ecosystem ecosystem partners and we really put the full weight of the firm behind it.

Speaker Change: But that really does that that's where the scale, that's where the scale really comes in.

Speaker Change: From a shareholder perspective and from a colleague employee perspective quite candidly, it's whether you can monetize that IP.

Speaker Change: So in a very difficult market I look at it and you know.

Speaker Change: Am I over the Moon and I completely happy now.

Gary Burnison: Am I totally depressed, no, but that's the thing. That is the one thing that can create real financial scale, and we have that opportunity, we've had that opportunity, and we're working hard at it, but I think looking forward, that's clearly the issue there. Then on the consulting business, we just have to continue to move towards... Longer, you know, bigger engagements, the trouble with that is it does impact short-term revenue. It doesn't look as good necessarily on the outside. The backlog, like I look at our backlog, I think in both consulting and digital, they're actually higher than they were a year ago.

Speaker Change: Totally depressed no.

Speaker Change: But that's the thing that is the one thing that can create.

Speaker Change: Real financial scale and.

Speaker Change: We have that opportunity, we've had that opportunity and we're working hard at it.

Speaker Change: But I think.

Speaker Change: I think looking forward.

Speaker Change: That's clearly the issue there then on the consulting business, we just have to continue to move towards.

Speaker Change: Longer bigger engagements the trouble with that is it does impact short term revenue.

Speaker Change: It doesn't look as good necessarily on the outside the backlog like I look at our backlog I think in both consulting and digital they are actually higher.

Speaker Change: Then they were a year ago.

Speaker Change: So it's look it's been a unique time COVID-19 changed everything so I'm not going to sit there.

Gary Burnison: So, you know, it's look, it's been a unique time. COVID changed everything, so I'm not going to sit there. You know, we've had a big change in the mix of business. We added a whole new capability with this interim. You know, that. Apples to apples, if you adjust back, you know, before COVID, you know, you would find that when you take the mix into account, we've increased EBITDA margins, like 300 basis points, 350 basis points, something like that. I'm not going to sit here and pretend that we can do that, you know, again, because there's a whole host of things at play here.

Speaker Change: We've had a big change in the mix of business, we added a whole new capability with this interim.

Speaker Change: You know that.

Speaker Change: <unk> to apples, if you adjust back before Covid.

Speaker Change: You would find that when you take the mix into account, we've increased EBITDA margins like 300 basis points 350 basis points, something like that I'm not going to sit here and pretend that that we can do that.

Speaker Change: Again, because there's a whole host of things that play here.

Speaker Change: But clearly one one big thing you would look at.

Bob Rozek: But clearly, one big thing you would look at is, you know, is this talent suite and the monetization of our IT.

Speaker Change: It is.

Speaker Change: Is this talent suite and the monetization of our IP.

Bob Rozek: Sobey, I would just add, from a corporate cost perspective, you know, as we've talked in the past, you know, we built a company that's plug-and-play, so we have common systems, processes, controls across the globe, so getting scale over time on our corporate function has been, you know, relatively, I won't say easy, but it's easier because of the infrastructure that we have in place.

Speaker Change: Yes, Tobey I would just add.

Speaker Change: From a corporate cost perspective, as we've talked in the past, we built a company that.

Speaker Change: Plug in place, we have common systems processes controls across the globe, so getting scale over time.

Speaker Change: Corporate function has been relatively almost say easy, but it's easier because of the infrastructure that we have in place.

Speaker Change: Thank you for that.

Tobey Sommer: Thank you for that.

Gary Burnison: I'd like you to, I know you gave a great answer, Gary, an expansive one, but I would ask you to elaborate a little bit more on kind of really accelerating and changing the digital. You mentioned ecosystem, channel partners. Are there any additional internal changes to drive that acceleration, things sort of within your span of control, sort of to go from the here to the there, as you say, whether it's incentive comp, are you doubling down on the marquee sales force, internal org structure? What levers do you have at your disposal? I think number one is we have one business.

Speaker Change: <unk>.

Mark Marcon: I'd like you to I know you gave a great answer Gary expand through them, but I would ask you to elaborate a little bit more.

Speaker Change: On kind of really accelerating and changing the digital you mentioned ecosystem channel partners are there any additional internal changes.

Speaker Change: To drive that acceleration things sort of within your span of control to go from this year to that there are as you say, whether it's incentive comp.

Speaker Change: Ah you're doubling down on the marquee sales force internal org structure, what levers do you have at your disposal.

Speaker Change: I think number one is we have to.

Speaker Change: We have one business.

Gary Burnison: at Korn Ferry. We don't have five businesses. We have one business with five solutions. And I think number one is to change the mindset of the organization. so that everybody in the firm is actually pushing that. So that's number one. Number two is the marquee and diamond accounts, for sure. Number three is we have a relentless focus on every single day as a leadership team. When we look at new businesses being opened and the logos, we're actually going through a very systematic and programmatic exercise to look at those logos like I just did an hour ago, and say, okay, what is the solution there?

Speaker Change: Korn Ferry, we don't have five businesses, we have won business.

Speaker Change: With five solutions and I think number one is to change the mindset of the organization.

Speaker Change: So that.

Speaker Change: Everybody in the firm is actually pushing that so that that's number one number two is the marquee and diamond accounts.

Speaker Change: For sure number three is.

Speaker Change: We have a relentless focus on every single day as a leadership team when we look at new business Thats being opened in the logos, we're actually going through a very systematic and programmatic exercise.

Speaker Change: To look at those logos like I, just did an hour ago and say okay. What is the solution. There have we have we been able to penetrate with our IP with digital or it could be interim could be consulting.

Gary Burnison: Have we been able to penetrate with our IP, with digital? Or it could be interim, could be consulting. It's a very, very programmatic exercise that we are doing every single day within the leadership team. So those are absolutely come to the forefront. We continue with changing skillset and roles. We have global account leaders now. We've introduced a new role client service partner where we are eliciting even more people that can deliver the entire firm. We're in the early days of that. So yeah, there's a handful of practical things that we absolutely are doing.

Speaker Change: It's a very very programmatic exercise.

Speaker Change: That we are doing every single day.

Speaker Change: Within within the leadership team.

Speaker Change: Those are absolutely come to the forefront we continue with.

Speaker Change: Changing skill set enrolls we have global account leaders now we've introduced a new role client service partner.

Speaker Change: Where we are eliciting even more people that can deliver the entire firm.

Speaker Change: We're in the early days of that so yes. There is a handful of practical things that we are that we absolutely are doing.

Tobey Sommer: Thank you very much.

Speaker Change: Thank you very much.

Speaker Change: Your last question comes from the line of Josh Chen of UBS. Your line is open.

Joshua Chan: Your last question comes from the line of Josh Chan of UBS. Your line is open. Hi, Karen and Bob, congrats on a good quarter. Just two quick ones for me on exact search. I guess, would you classify the business as having really accelerated? Because that's what it looks like externally. You know, you have this similar level of consultants, but your engagements are up a lot sequentially and year over year. So is that how you would look at the business in terms of it having accelerated just this quarter? You know, I don't, I tend not to pay attention to, you know, you can, you can have some significant ebbs and flows, you know, depending on the solution.

Josh Chen: Hi, Gary and Bob Congrats on a good quarter.

Josh Chen: Just two quick ones from me on exact search I guess would you classify the business has having really accelerated because that's what it looks like externally.

Josh Chen: Some of our consultants, but your engagements are up a lot sequentially and year over year or so.

Josh Chen: Is that how you would look at the business in terms of having accelerated just this quarter.

Josh Chen: I don't I tend not to pay attention to you can you can have some significant ebbs and flows.

Josh Chen: Depending on the solution.

Gary Burnison: So I wouldn't want to get in, you know, into that. I would just say that over seven or eight quarters. That solution has definitely gained more traction in the market. That is a true statement, and I think it's part us, but part all these other factors that we've talked about. So when you look over time, it has been up and to the right over, you know... several quarters, over which I would describe those quarters as a very, very challenging economic environment, you know, being the last seven or so quarters.

Josh Chen: So I wouldn't want to get in.

Josh Chen: Into that I would just say that over seven or eight quarters.

Josh Chen: That solution has definitely gained more traction in the market that that is a true that is a true statement and I think it's part of us but part all of these other factors that we've talked about so when you look over time it has been up into the right over.

Josh Chen: Now.

Josh Chen: Several several quarters.

Josh Chen: Over which I would describe those quarters as a very very challenging economic environment.

Josh Chen: Being the last seven or so quarters.

Bob Rozek: Okay, yeah, that makes a lot of sense. And then maybe a quick one for Bob, I guess, relatedly, does the Q1 guide kind of include continued double-digit growth in exact search? I guess it's sort of a similar vein of questioning on the guidance. Yeah, we don't we don't I mean, we just guided the total company number Josh, but it does anticipate continued some level of continued growth. on a year-over-year basis. Okay, great.

Speaker Change: Okay, Yes that makes a lot sense and then maybe a quick one for Bob I guess Relatedly does the Q1 guide kind of include continued double digit growth in exact search I guess, it's sort of a similar vein of questioning on the guidance there.

Josh Chen: Yes.

Josh Chen: I mean, we just guided to the total company number Josh but it does anticipate continued some level of continued growth.

Josh Chen: On a year over year basis.

Josh Chen: Okay, Okay, great. Thanks for the color and congrats on the corner.

Joshua Chan: Thanks for the cover and congrats on the quarter. Thank you.

Josh Chen: Thank you.

Mr. Benson: It appears there are no further questions Mr. Benson.

Operator: It appears there are no further questions. Okay. Thanks for joining us. Thanks for taking the time.

Speaker Change: Okay. Thanks for joining us thanks for taking the time I'm really really proud of our colleagues.

Gary Burnison: I'm really, really proud of our colleagues, particularly in the face of what we all read about every single day. And, you know, we look forward to talking to you again. And I'm very, very excited about what we've got in store for us. This is just the beginning for Korn Ferry. Thank you all. We'll talk to you later. Bye-bye.

Speaker Change: Particularly in the face of what we all read about every single day and.

Speaker Change: We look forward to talking to you again in <unk>.

Speaker Change: I'm very very excited about what we've got in store for US. This is just the beginning for Korn ferry. Thank you all we will talk to you later bye bye.

Speaker Change: Ladies and gentlemen, this conference call will be available for replay one week starting today running through the day June 25, 2025, ending at midnight you.

Operator: Ladies and gentlemen, this conference call will be available for replay one week starting today, running through the day, June 25th, 2025, ending at midnight. You may access the Echo Replay Service by dialing 800-770-2030 and entering the access code 1015275, followed by the pound code.

Speaker Change: You may access vehicle replay service by dialing 870, 702030 and entering the access code 1015 to 705, followed by the pound key.

Operator: Additionally, the replay will be available for playback at the company's website at www.kornferry.com and the investor relations This concludes today's conference call. You may now disconnect. [music]

Speaker Change: Additionally, the replay will be available for playback at the company's website at Www Dot Korn ferry Dot com in the Investor Relations section.

Speaker Change: This concludes today's conference call you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.