Q1 2026 Korn Ferry Earnings Call

Operator: 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. Before I turn the call over to your host, Mr. Gary Burnison, 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 nineteen ninety-five. 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.

Operator: 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. Before I turn the call over to your host, Mr. Gary Burnison, 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.

Following their prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the Investor Relations section of our website at Korn Ferry Dot com a copy of the financial presentation that we will be reviewing with you today.

Before I turn the call over to your host Mr. Gary Burnaston, 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 of a number of risks and uncertainties, which are beyond the company's control.

Operator: Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025 and in the company's soon-to-be-filed quarterly report for the quarter ended July 31, 2025. 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 measures, 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.kornferry.com.

Operator: Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025 and in the company's soon-to-be filed quarterly report for the quarter ended July 31, 2025. 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 reconciliation to the most directly comparable GAAP financial measures, 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.kornferry.com.

Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in our periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025, and in the company's soon to be filed quarterly report for the quarter ended July 31.

2025.

So 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 measures is contained in the financial presentation and earnings release relating to this call both of which are posted in the investor.

Your 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. Brennan.

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

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

Okay. Thank you Regina and thanks to everybody for joining us.

Gary Burnison: Okay. Thank you, Regina, and thanks to everybody for joining us. I'm really pleased with our performance in the quarter. The team's gonna get into the results in a little bit. When I look at the results, even over the past few quarters, with all the choppiness, the, you know, the uncertainty around tariffs, the labor and economic environment, it's clear that our strategy is working. In fact, when you consider our diversification strategy and the current and future demographic trends alone, the opportunity is immense, and I think that's evidenced this quarter by the growth in all of our solutions. Today, we're driving performance with a far more sophisticated, holistic approach that delivers our expertise and robust IP through integrated solutions in every region of the world.

Gary Burnison: Okay. Thank you, Regina, and thanks to everybody for joining us. I'm really, really pleased with our performance in the quarter. The team's going to get into the results in a little bit. When I look at the results, even over the past few quarters, with all the choppiness, the uncertainty around tariffs, the labor, and economic environment, it's clear that our strategy is working. In fact, when you consider our diversification strategy and the current and future demographic trends alone, the opportunity is immense. I think that's evidenced this quarter by the growth in all of our solutions. Today, we're driving performance with a far more sophisticated, holistic approach that delivers our expertise and robust IP through integrated solutions in every region of the world. In the quarter, we won a number of notable engagements. I'll highlight a couple.

Im really really pleased with our performance in the quarter. The team is going to get in.

The results in a little bit, but when I look at the results.

Even over the past few quarters.

With all the Choppiness.

The you know the uncertainty around tariffs.

The labor and economic environment, it's clear that our strategy is working.

In fact, when you consider our diversification strategy.

And the current and future demographic trends along the opportunity is immense and I think that's evidenced this quarter by the growth.

And all of our solutions and today, we are driving performance with a far more sophisticated holistic approach.

That delivers our expertise and robust IP.

Integrated solutions in every region of the world.

In the quarter.

One a number of notable engagements I'll highlight a couple of top pharma company with over 20000 employees, where we're building a globally aligned leadership team.

Gary Burnison: In the quarter, we won a number of notable engagements. I'll highlight a couple. A top pharma company with over 20,000 employees, where we're building a globally aligned leadership team, helping them foster a culture of innovation and streamline talent development across regions. It's part of a multi-year engagement. A FTSE 100 retailer where we're now the exclusive assessment provider across all levels of the organization, using our consulting-led assessments and our digital at scale solutions, with the ambition to deliver our capabilities from the shop floor to the boardroom. Finally, a top provider of HR management software, where we're gonna deliver a subscription-based digital solution, a global leadership offering that includes content, instructor-led materials, micro-learning and more, and that complements a consulting engagement that includes leadership assessments and coaching.

Gary Burnison: A top pharma company with over 20,000 employees, where we're building a globally aligned leadership team, helping them foster a culture of innovation and streamline talent development across regions. It's part of a multi-year engagement. A FTSE 100 retailer where we're now the exclusive assessment provider across all levels of the organization, using our consulting-led assessments and our digital at-scale solutions, with the ambition to deliver our capabilities from the shop floor to the boardroom. Finally, a top provider of HR management software, where we're going to deliver a subscription-based digital solution, a global leadership offering that includes content, instructor-led materials, microlearning, and more. That complements a consulting engagement that includes leadership assessments and coaching. These are just three examples of how we're integrating multiple solutions to create enduring client partnerships.

Helping them Foster a culture of innovation and streamline talent development across regions.

Part of a multi year engagement or a FTSE 100 retailer, where we are now the exclusive assessment provider across all levels.

The organization.

Using our consulting led assessments and our digital at scale solutions.

With the ambition to deliver our capabilities from the shop floor to the boardroom and finally, a top <unk>.

Provider of HR management software.

We're going to deliver our subscription based.

Digital solution.

Our global leadership offering that includes content instructor led materials micro learning and more and that complements a consulting engagement.

That includes leadership assessments and coaching and these are just you know.

Three examples of how we are.

Gary Burnison: These are just, you know, three examples of how we're integrating multiple solutions to create enduring client partnerships. We also continue to make measured capital investments that extend our offerings and solutions and expand our impact with clients. A case in point is Talent Suite, which offers seamless integration of proprietary IP and data and talent applications into one digital SaaS platform, which enables our clients to make better hiring decisions, structure their organizations, assess, develop, and reward their talent. In other words, Talent Suite enables clients to unlock human and organizational potential at scale. Our evolution towards large-scale multi-solution client engagements is real as we change the fundamental composition and scale of our business.

Integrating multiple solutions to create enduring client partnerships. We also continue to make measured measured capital investments that extend our offerings and solutions and expand our impact with clients in a case in point is talent suite.

Gary Burnison: We also continue to make measured capital investments that extend our offerings and solutions and expand our impact with clients. A case in point is TalentSuite, which offers seamless integration of proprietary IP and data and talent applications into one digital SaaS platform, which enables our clients to make better hiring decisions, structure their organizations, assess, develop, and reward their talent. In other words, TalentSuite enables clients to unlock human and organizational potential at scale. Our evolution towards large-scale multi-solution client engagements is real as we change the fundamental composition and scale of our business. When I just look at the tail of the tape, today, we have loyal, repeatable clients of scale, marquee and diamond accounts generating almost 40% of our revenue, a 10-year revenue CAGR of 10%, driven by an expanding set of diversified solutions. We have strong top-line synergies with 25% of revenue generated from cross-solution referrals.

Which offers seamless integration of proprietary IP and data.

Talent applications into one digital SaaS platform, which enables our clients to make better hiring decisions.

Through their organizations assess develop and reward their talent in other words talent suite enables clients to unlock human and organizational potential at scale, our evolution towards large scale multi solution client engagements Israel.

As we changed the fundamental composition and scale of our business and when I just look at the tail of the tape.

Gary Burnison: When I just look at the tale of the tape, today we have loyal, repeatable clients of scale, Marquee and Diamond accounts generating almost 40% of our revenue, a 10-year revenue CAGR of 10% driven by an expanding set of diversified solutions. We have strong top-line synergies with 25% of revenue generated from cross-solution referrals. Clearly, this diversification is driving resilience and durability in our business and contributing to sustained shareholder value, and that's evidenced through our balanced capital allocation strategy, which includes 6 dividend increases in the last 5 years and a demonstrated track record of M&A and share repurchases. I'm optimistic, truly optimistic about the trajectory of this firm and more importantly, the impact we're making. We have a strong foundation with incredible brand permission that is fostering deep client relationships.

Today, we have a loyal repeatable clients of scale.

<unk> and diamond accounts generating almost 40% of our revenue a 10 year revenue CAGR of 10% driven by an expanding set of diversified solutions, we have strong.

Topline synergies with 25% of revenue generated from cross solution referrals. Clearly this diversification is driving the resilience and durability in our business and contributing to sustained shareholder value and thats evidence through our balance <unk>.

Gary Burnison: Clearly, this diversification is driving resilience and durability in our business and contributing to sustained shareholder value. That is evidenced through our balanced capital allocation strategy, which includes six dividend increases in the last five years and a demonstrated track record of M&A and share repurchases. I'm optimistic, truly optimistic about the trajectory of this firm and, more importantly, the impact we're making. We have a strong foundation with incredible brand permission that is fostering deep client relationships. We have relevant, diverse, scaled, and increasingly more integrated solutions that are even more closely aligned with the talent needs of our clients. Through our disciplined approach, I'm confident we are poised and well-positioned for the future. With that, Regina, I'll now turn it over to Bob. Bob, it's all yours.

Capital allocation strategy.

Which includes six dividend increases in the last five years and a demonstrated track record of M&A.

Share repurchases.

Im optimistic truly optimistic about the trajectory of this firm and more importantly, the impact we are making.

We have a strong foundation with incredible brand permission.

That is fostering deep client relationships, we have relevant diverse.

Gary Burnison: We have relevant, diverse, scaled, and increasingly more integrated solutions that are even more closely aligned with the talent needs of our clients. Through our disciplined approach, I'm confident we are poised and well-positioned for the future. With that, Regina, I'll now turn it over to Bob. Bob, it's all yours.

Scaled and increasingly more integrated solutions.

They're even more closely align with the talent needs of our clients and through our disciplined approach I am confident we are poised and well positioned for.

For the future.

With that Regina ill now turn it over to Bob Bob It's all yours.

Thanks, Gary and good morning, good afternoon, depending on where you're at.

Bob: Great. Thanks, Gary, and good morning, good afternoon, depending on where you're at. The global business environment over the last quarter remained extremely uncertain, with many lingering economic challenges keeping investment spending cautious. Unresolved tariff issues added to ongoing geopolitical tensions. Readings on inflation caused uncertainties as to whether interest rates would remain higher for longer. Despite the impact of these uncertainties on business sentiment, our clients continued to see the impact and value of our services and solutions. Our financial results for Q1 of fiscal 2026 remained strong, providing further proof that our integrated business strategy, which is really diversified across industries, geographies, and solutions, you know, is working.

Robert Rozek: Great. Thanks, Gary, and good morning, good afternoon, depending on where you're at. The global business environment over the last quarter remained extremely uncertain, with many lingering economic challenges keeping investment spending cautious. Unresolved tariff issues added to ongoing geopolitical tensions, and readings on inflation caused uncertainties as to whether interest rates would remain higher for longer. Despite the impact of these uncertainties on business sentiment, our clients continue to see the impact and value of our services and solutions. Our financial results for the first quarter of fiscal 2026 remained strong, providing further proof that our integrated business strategy, which is really diversified across industries, geographies, and solutions, is working. In fact, the current economic environment has created opportunity for Korn Ferry to really strengthen our client relationships and continue becoming a trusted global partner of choice, helping our clients solve complex talent and organizational performance challenges.

The global business environment over the last quarter remained extremely uncertain with many lingering economic challenges keeping investments spending cautious.

Unresolved tariff issues added to ongoing geopolitical.

Pensions readings on inflation cause uncertainties as to whether interest rates remain higher for longer.

And despite the impact of these uncertainties on business sentiment our clients continue to see the impact and value of our services and solutions our financial results for the first quarter of fiscal 'twenty six remains strong providing further proof that our integrated business strategy, which is really diversified across industries geographies and.

<unk>.

Is working in fact, the current economic environment has created opportunity for Korn ferry to really strengthen our client relationships and continue becoming a trusted global partner of choice, helping our clients solve complex talent and organizational performance challenges.

Bob: In fact, the current economic environment has created opportunity for Korn Ferry to really strengthen our client relationships and continue becoming a trusted global partner of choice, helping our clients solve complex talent and organizational performance challenges. Today, we're helping our clients resolve these challenges with both our skilled workforce and our proprietary data and IP, which is really a product of decades of behavioral science research. Additionally, we focus our efforts to sell larger, more integrated solutions via our We Are Korn Ferry go-to-market strategy. We're paving the way for stronger, more durable long-term growth. I'm also pleased to share that we remain on track for the market launch of our new Talent Suite platform that Gary referenced, this November.

And today, we are helping our clients resolve these challenges with both our skilled workforce and our proprietary data and IP, which is really a product of decades of behavioral science research.

Robert Rozek: Today, we're helping our clients resolve these challenges with both our skilled workforce and our proprietary data and IP, which is really a product of decades of behavioral science research. Additionally, we focus our efforts to sell larger, more integrated solutions via our We Are Korn Ferry go-to-market strategy. We're paving the way for stronger, more durable long-term growth. I'm also pleased to share that we remain on track for the market launch of our new TalentSuite platform that Gary referenced this November. TalentSuite will enable our consultants and clients to more easily derive and prioritize insights across our multiple talent products using client data, our own proprietary data, and select third-party data to help them make better and more insightful talent decisions.

Additionally, we focus our efforts to sell larger more integrated solutions via our Weir Korn Ferry go to market strategy, we're paving the way for stronger more durable long term growth.

I'm also pleased to share that we remain on track for the market launch of our new talent suite platform that Gerry referenced this November talent suite will enable our consultants and clients more easily derive and prioritize insights across our multiple tablet products.

Bob: Talent Suite will enable our consultants and clients to more easily derive and prioritize insights across our multiple talent products using client data, our own proprietary data, and select third-party data to help them make better and more insightful talent decisions. Now in addition to the detailed results found in our posted earnings presentation, I just wanna go over a couple of company-wide solution-specific highlights for Q1. As Gary mentioned, the Marquee and Diamond accounts remained strong at almost 40% of our consolidated fee revenue, that program delivered a little better than 7% fee revenue growth when you look at it year over year. Our cross solution referrals also remained strong at 25% of our consolidated fee revenue.

Using client data our own proprietary data and select third party data to help them make better more insightful talent decisions.

In addition to the detailed results found in our posted earnings presentation. I just wanted to go over a couple of company wide solutions specific highlights for the first quarter.

Robert Rozek: In addition to the detailed results found in our posted earnings presentation, I just want to go over a couple of company-wide solution-specific highlights for the first quarter. As Gary mentioned, the marquee and diamond accounts remain strong at almost 40% of our consolidated fee revenue, and that program delivered a little better than 7% fee revenue growth when you look at it year over year. Our cross-solution referrals also remain strong at 25% of our consolidated fee revenue. Executive Search fee revenue also remains strong, growing 8% in the quarter, and that's our fifth consecutive quarter of year-over-year growth in that solution area. Professional Search and Interim fee revenue was up 10% year over year, with growth in both professional services per employee plus 5%, and Interim was up 14%.

As Gary mentioned American Diamond accounts remained strong at almost 40% of our consolidated fee revenue in that program delivered a little better than 7% fee revenue growth. When you look at it year over year.

Our cross solution referrals also remained strong at 25% of our consolidated fee revenue executive search fee revenue also remained strong growing 8% in the quarter and Thats, our fifth consecutive quarter of year over year growth in that solution area.

Bob: Executive Search fee revenue also remained strong, growing 8% in the quarter, and that's our 5th consecutive quarter of year-over-year growth in that solution area. Professional Search & Interim fee revenue was up 10% year-over-year, with growth in both professional services perm placement plus 5%, and Interim was up 14%. Our Digital subscription and licensed new business grew 10% year-over-year in Q1, and with 39% of total Digital new business, and that's gonna continue to add stability and predictability to our overall revenue base. Last, our average bill rates in consulting and Interim both grew year-over-year, consulting by 9% and Interim by 4%.

First general search and interim fee revenue was up 10% year over year with growth in both professional services Perm placement plus 5% and interim was up 14%.

Our digital subscription and license new business grew 10% year over year in the first quarter and was 39% of total digital new business and that's going to continue to add stability and predictability to our over overall revenue base.

Robert Rozek: Our digital subscription and license new business grew 10% year over year in the first quarter and was 39% of total digital new business, and that's going to continue to add stability and predictability to our overall revenue base. Last, our average bill rates in Consulting and Interim both grew year over year, Consulting by 9% and Interim by 4%. Now, turning to company overall results, our consolidated fee revenue grew 5% year over year to $709 million, which is a second consecutive quarter of positive growth. Earnings and profitability also continue to grow. Adjusted EBITDA grew $9 million, or 8% year over year to $120 million. Adjusted EBITDA margin grew 50 basis points year over year to 17%, and our adjusted diluted EPS grew $0.13, or 11% year over year to $1.31.

And last our average bill rates and consulting and interim both grew year over year consulting by 9% in interim by 4%.

Now turning to company overall results, our consolidated fee revenue grew 5% year over year to $709 million.

Bob: Now turning to company overall results, our consolidated fee revenue grew 5% year-over-year to $709 million, which is a second consecutive quarter of positive growth. Earnings and profitability also continued to grow. Adjusted EBITDA grew $9 million, or 8% year-over-year to $120 million. Adjusted EBITDA margin grew 50 basis points year-over-year to 17%, our adjusted diluted earnings per share grew $0.13 or 11% year-over-year to $1.31. Total company new business excluding RPO grew 5% year-over-year, led by strength in EMEA and APAC. Our RPO delivered $99 million of new business in the quarter. 46% of that came from new logos, 54% from renewals, the renewals included 1 large financial institution at $32 million.

Which is the second consecutive quarter of positive growth.

Earnings and profitability also continued to grow adjusted EBITDA grew $9 million or 8% year over year to $120 million.

Adjusted EBITDA margin grew 50 basis points year over year to 17%.

And our adjusted diluted earnings per share grew 13, or 11% year over year to $1 31.

Total company new business, excluding <unk> grew 5% year over year led by strength in EMEA and APAC.

Robert Rozek: Total company new business, excluding RPO, grew 5% year over year, led by strength in EMEA and APAC. Our RPO delivered $99 million of new business in the quarter. 46% of that came from new logos, 54% from renewals, and the renewals included one large financial institution at $32 million. Estimated remaining fees under existing contracts also remained strong in the first quarter. As a reminder, this operating metric that we introduced last quarter is the quarter-ending estimated fees under existing contracts to be recognized in future periods. At the end of the first quarter, this amounted to $1.67 billion, which was up 9% year over year. Of this amount, we expect approximately 58%, or $972 million, will be recognized as fees within the next year and 42%, or $702 million, to be recognized thereafter.

<unk> delivered $99 million of new business in the quarter, 46% of that came from new logos, 54% from renewals and the renewals included one large financial institution.

$32 million.

Estimated remaining fees under existing contracts also remained strong in the first quarter now as a reminder, this operating metric.

Bob: Estimated remaining fees under existing contracts also remained strong in Q1. As a reminder, this operating metric that we introduced last quarter is the quarter-ending estimated fees under existing contracts to be recognized in future periods. At the end of Q1, this amounted to $1.67 billion, which was up 9% year over year. Of this amount, we expect approximately 58% or $972 million will be recognized as fees within the next year, and 42% or $702 million to be recognized thereafter. Turning to our regional results. Fee revenue in the Americas was down 2% year over year, with growth in Executive Search and RPO being offset by slightly lower demand in Consulting and Digital and Professional Search & Interim.

That we introduced last quarter is the quarter ending estimated fees under existing contracts to be recognized in future periods.

The end of the first quarter. This amounted to $1 67 billion, which was up 9% year over year.

Of this amount, we expect approximately 58% or $972 million will be recognized as fees within the next year, and 42% or $702 million to be recognized thereafter.

Now turning to our regional results fee revenue in the Americas was down 2% year over year with growth in the executive search and <unk> being offset by slightly lower demand in consulting.

Robert Rozek: Now, turning to our regional results, fee revenue in the Americas was down 2% year over year with growth in Executive Search and RPO being offset by slightly lower demand in Consulting, Digital, and Professional Search and Interim. EMEA fee revenue was strong, growing 19% year over year, and we saw growth in all solutions. APAC fee revenue was also strong, growing 12% year over year, also with growth in all solutions. Finally, our capital allocation in the first quarter remained balanced as we returned $36 million to shareholders through combined share repurchases and dividends, and we invested $22 million in capital expenditures focused on TalentSuite, our new technology platform, as well as productivity tools and other product enhancements.

Digital and professional search in interim.

EMEA fee revenue was strong growing 19% year over year, and we saw growth in all solutions AP.

Bob: EMEA fee revenue was strong, growing 19% year-over-year, we saw growth in all solutions. APAC fee revenue was also strong, growing 12% year-over-year, also with growth in all solutions. Finally, our capital allocation in Q1 remained balanced as we returned $36 million to shareholders through combined share repurchases and dividends, we invested $22 million in capital expenditures focused on Talent Suite, our new technology platform, as well as productivity tools and other product enhancements. Now turning to our outlook for Q2 of fiscal 2026, assuming no further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates, we expect fee revenue in Q2 of fiscal 2026 to range from $690 million to $710 million.

APAC fee revenue was also strong growing 12% year over year also with growth in all solutions.

And finally, our capital allocation in the first quarter remain balanced as we returned $36 million to shareholders through combined share repurchases and dividends and we invested $22 million in capital expenditures focused on talent suite, our new technology platform.

As well as productivity tools and other product enhancements.

Now turning to our outlook for the second quarter of fiscal 'twenty six assuming no further changes in worldwide geopolitical conditions economic conditions financial markets and foreign exchange rates, we expect fee revenue in the second quarter of fiscal 2006 to range from $690 million to 710 million.

Robert Rozek: Now, turning to our outlook for the second quarter of fiscal 2026, assuming no further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates, we expect fee revenue in the second quarter of fiscal 2026 to range from $690 million to $710 million. Our adjusted EBITDA margin is expected to range from approximately 17% to 17.5%, and our consolidated adjusted diluted earnings per share to range from $1.23 to $1.33. We expect our GAAP diluted earnings per share in the second quarter to range from $1.10 to $1.16. I would like to note that our GAAP diluted earnings per share includes approximately $10 million, or $0.14 per share, of accelerated depreciation, and that's related to our current product technology platform, which will be sunsetted as TalentSuite is commercially launched at the beginning of the third quarter, in November.

Our adjusted EBITDA margin to range from approximately 17% to 17, 5% and our consolidated adjusted diluted earnings per share to range from $1 23 to $1 33.

Bob: Our adjusted EBITDA margin to range from approximately 17% to 17.5%, and our consolidated adjusted diluted earnings per share to range from $1.23 to $1.33. Finally, we expect our GAAP diluted earnings per share in Q2 to range from $1.10 to $1.16. Now, I'd like to note that our GAAP diluted earnings per share includes approximately $10 million or $0.14 per share of accelerated depreciation, and that's related to our current product technology platform, which will be sunsetted as the Talent Suite is commercially launched at the beginning of Q3 in November. We remain committed to controlling what we can control, leaning into identified growth opportunities, and driving operational excellence. We will continue to promote a culture of innovation and remain focused on delivering outstanding client service.

Finally, we expect our GAAP diluted earnings per share in the second quarter to range from $1 10 to $1 16, now I'd like to note that our GAAP diluted earnings per share includes approximately $10 million or <unk> 14 per share of accelerated depreciation and thats related to our current.

Product technology platform, which will be sunset. It is the tailings Swedish commercially launched at the beginning of the third quarter.

In November we remain committed to controlling what we can control leaning into identified growth opportunities and driving operational excellence. We will continue to promote a culture of innovation and remain focused on delivering outstanding client service Korn Ferry is a global consulting firm.

Robert Rozek: We remain committed to controlling what we can control, leaning into identified growth opportunities, and driving operational excellence. We will continue to promote a culture of innovation and remain focused on delivering outstanding client service. Korn Ferry is a global consulting firm that powers client performance. We're focused on improving our go-to-market efforts, engaging with our clients as one firm. We are Korn Ferry. We are well-positioned for the next step in our growth, and I'm more confident and excited than I've ever been about what this company can become. With that, we would be glad to answer any questions you may have.

Power's client performance, we're focused on improving our go to market efforts engaging with our clients as one firm.

Bob: Korn Ferry is a global consulting firm that powers client performance. We're focused on improving our go-to-market efforts, engaging with our clients as one firm. We Are Korn Ferry. We are well positioned for the next step in our growth, and I'm more confident and excited than I've ever been about what this company can become. With that, we would be glad to answer any questions you may have.

Korn Ferry, we are well positioned for the next step in our growth and are more confident and excited than I've ever been about what this company can become.

With that we would be glad to answer any questions you may have.

We will now begin the question and answer session in order to ask a question Press Star then the number one on your telephone keypad to withdraw your question Press Star One a second time. Our first question will come from the line of Trevor Romeo with William Blair. Please go ahead.

Operator: We will now begin the question-and-answer session. In order to ask a question, press star then 1 on your telephone keypad. To withdraw your question, press star 1 a second time. Our first question will come from the line of Trevor Romeo with William Blair. Please go ahead.

Operator: We will now begin the question and answer session. In order to ask a question, press star then the number one on your telephone keypad. To withdraw your question, press star one a second time. Our first question will come from the line of Trevor Romeo with William Blair. Please go ahead.

Hi, Thanks, so much for taking the questions.

Trevor Romeo: Hi, thanks so much for taking the questions. Just maybe had a couple on your digital business to start. You know, the Talent Suite rollout coming up in November. As you're getting ready for that commercial launch, I guess what are some of the key milestones you'll be tracking there, and how should we be thinking about maybe the timeline for the benefits there to start flowing through the financials?

Trevor Romeo: Hi. Thanks so much for taking the questions. Just maybe had a couple on your digital business to start, you know, the TalentSuite rollout coming up in November. As you're getting ready for that commercial launch, I guess, what are some of the key milestones you'll be tracking there, and how should we be thinking about maybe the timeline for the benefits there to start going through the financials?

Just maybe had a couple on your digital business to start the <unk>.

Talent suite rollout coming up in November.

As youre getting ready for that commercial launch I guess, what are some of the key milestones you'll be tracking there and how should we be thinking about maybe the timeline for the benefits there to start flowing through the financials.

Well I think the benefits will take some time I think it'll be towards the end of calendar 'twenty realistically.

Gary Burnison: Well, I think the benefits will take some time. I think it'll be towards the end of calendar 2026, realistically, when we start to see the true benefits of it. You know, some of the milestones that we are working on include the partnerships that we have and further accelerating the go-to-market strategy around those partnerships. That's very important, particularly with the three or four large HCM players. That's certainly one thing we're working on. The second is enabling our colleagues and training our colleagues. We have a robust schedule in front of us to train all of our 1,800 frontline consultants on awareness and provocation and selling of the Talent Suite. That's gonna be happening over the next 6 months, starting in October.

Gary Burnison: I think the benefits will take some time. I think it'll be towards the end of calendar 2026, realistically, when we start to see the true benefits of it. Some of the milestones that we are working on include the partnerships that we have and further accelerating the go-to-market strategy around those partnerships. That's very important, particularly with the three or four large HCM players. That's certainly one thing we're working on. The second is enabling our colleagues and training our colleagues. We have a robust schedule in front of us to train all of our 1,800 frontline consultants on awareness and provocation and selling of the TalentSuite. That's going to be happening over the next six months, starting in October. We also have a targeted strategy with milestones there around our marquee and diamond accounts.

When we when we started to see the true benefits of it.

Some of the milestones that we are working on.

Include the partnerships that we have.

And further accelerating the go to market strategy around those partnerships.

That's very important particularly with.

The three or four large HCM players.

That's certainly one thing we're working on.

The second is enabling our colleagues and training on our colleagues.

We have a robust schedule in front of us to train all of our 1800 frontline consultants.

<unk> awareness and provocation.

And salt.

Selling the talent suite.

That's going to be happening over the next six months starting in October.

And then we also have a targeted strategy with milestones are there around our marquee and diamond accounts.

Gary Burnison: We also have a targeted strategy with milestones there around our Marquee and Diamond accounts. It's really kind of a, you know, a balanced approach here, a multi-prong approach, outside with partners, with our Marquee and Diamond accounts top-down, bottom-up, with many of our clients. There's an internal mobility strategy as well.

It's really kind of.

Gary Burnison: It's really kind of a balanced approach here, a multiprong approach: outside with partners, with our marquee and diamond accounts top-down, bottom-up, with many of our clients. There is an internal mobility strategy as well.

Balanced approach here on multi prong approach.

Outside with partners.

With our marquee and diamond accounts top down.

Bottom up with many of our of our clients and then there is an internal mobility strategy as well.

Thanks, Gary maybe just one quick follow up on digital.

Trevor Romeo: Thanks, Gary. Maybe just one quick follow-up on digital. The subscription and license piece of the segment going above, I think, 40% of segment revenue now. Could you maybe just remind us what is your kind of long-term aspirational target for how big those subscriptions could grow as a percentage of that segment?

Trevor Romeo: Thanks, Gary. Maybe just a quick follow-up on digital, the subscription and license piece of the segment going above, I think, 40% of segment revenue now. Could you maybe just remind us what is your kind of long-term aspirational target for how big those subscriptions could grow as a percentage of that segment?

Description and license piece of the segment going above I think 40% of segment revenue now.

And could you maybe just remind us what is your kind of long term aspirational target for how big those subscriptions to grow as a percentage of that segment.

Well, we'd like to see it being.

Would be north of say, 60%.

Gary Burnison: Well, we'd like to see it, you know, be north of, say 60%. You know, that's certainly not in the next several months. I just think there's, you know, there's this opportunity to impact a lot of people's lives and the destination of organizations through our IP, and we just have to figure out the best way to drive scale. I think the best way to drive scale in that business is through our partnerships that we have. We, that's something that we're gonna pursue very aggressively.

Gary Burnison: We'd like to see it be north of, say, 60%, but that's certainly not in the next several months. I just think there's this opportunity to impact a lot of people's lives and the destination of organizations through our IP, and we just have to figure out the best way to drive scale. I think the best way to drive scale in that business is through our partnerships that we have, and that's something that we're going to pursue very aggressively.

But that's certainly not in the next several months but.

I just think there is there is.

This opportunity too to impact a lot of People's lives and the destination of organizations through our IP and we just have to figure out.

The best way to drive scale, and I think the best way to drive scale in that business.

As through through our partnerships that we have.

And we that's.

That's something that we're going to pursue very aggressively.

And Charles this is Bob the one thing I would add to that as you think about talent suite.

Bob: Trevor, this is Bob. One thing I would add to that, as you think about Talent Suite, obviously selling subscriptions and licenses is important for us, but it is also think about it as an enabler of the delivery of our other services solutions. Whether it's talent acquisition, it's consulting, other areas in your organization are gonna really benefit from having all of the assets, IP, data, content, what we call foundational assets at the center of the organization, right? They're gonna be able to much easier, gain much easier access and utilization of those.

Robert Rozek: Hey, hey, Travis, this is Bob. The one thing I would add to that, as you think about TalentSuite, obviously, selling subscriptions and licenses is important for us, but it is also think about it as an enabler of the delivery of our other services and solutions. Whether it's talent acquisition, it's consulting, other areas in your organization are going to really benefit from having all of the assets, IP, data, content, what we call foundational assets at the center of the organization, right? They're going to be able to gain much easier access and utilization of those. We have a reporting analytics layer. When you layer on AI and GenAI, in terms of being able to access, slice and dice data much faster, easier, quicker, you have to think about it more broadly than just selling subscriptions and licenses.

Obviously, selling subscriptions and licenses is important for us but it is.

Also think about it as an enabler of the delivery of our other services solutions or whether it is talent acquisition. Its consulting other areas in the organization are going to.

Really benefit from having all of the assets IP data content.

Call foundational assets at the center of the organization.

And theyre going to be able to much easier gain much easier access and utilization of those and then we have a reporting analytics layer and then when you layer on AI and <unk>.

Bob: Then we have a reporting analytics layer. When you layer on, AI and GenAI, you know, in terms of being able to access, slice and dice data much faster, easier, quicker, you have to think about it more broadly than just selling subscriptions and licenses.

In terms of being able to access slice and dice data much faster easier quicker.

You have to think about it more broadly than just selling subscriptions and licenses.

Great. Thank you and then maybe maybe one more if you don't mind, maybe for you Bob.

Trevor Romeo: Great. Thank you. Maybe one more if you don't mind, maybe for you, Bob. Just on the guidance. I think typically Q2 is a little bit of a stronger seasonal revenue quarter for you. I guess the guidance may be a slight dip at the midpoint sequentially for revenue. Can we just maybe reconcile that? Should we read that as a little bit of conservatism or any reasons across the businesses that would make you think you wouldn't see a little bit of an uptick?

Trevor Romeo: Great. Thank you. Maybe one more, if you don't mind, maybe for you, Bob, just on the guidance. I think typically Q2 is a little bit of a stronger seasonal revenue quarter for you. I guess the guidance may be a slight dip at the midpoint sequentially for revenue. Can we just maybe reconcile that? Should we read that as a little bit of conservatism or any reasons across the businesses that would make you think you wouldn't see a little bit of an uptick?

Just on the guidance I think typically Q2 is a little bit of a stronger seasonal revenue quarter for you. So I guess the guidance, maybe a slight dip at the mid point sequentially for revenue can we just maybe reconcile that.

Should we read that as a little bit of conservatism or any reasons across the businesses that would make you think you wouldn't see.

A little bit of an uptick.

I would say Trevor just given the.

Bob: I would say, Trevor, just given, you know, the uncertainties in the backdrop out there, we're probably little bit on the conservative side.

Robert Rozek: I would say, Trevor, just given the uncertainties and the backdrop out there, we're probably a little bit on the conservative side.

Uncertainty in the backdrop out there were probably a little bit on the conservative side.

Okay.

Well. Thank you very much I really appreciate it.

Trevor Romeo: Okay. Understood. Well, thanks very much. I really appreciate it.

Trevor Romeo: Okay. Understood. Thanks very much. I really appreciate it.

Okay.

Our next question will come from the line of Tobey Sommer with Truest. Please go ahead.

Operator: Our next question will come from the line of Tobey Sommer with Truist. Please go ahead.

Operator: Our next question will come from the line of Tobey Sommer with Truist Securities. Please go ahead.

Thank you.

I wanted to ask what you're hearing from clients.

Tobey Sommer: Thank you. I wanted to ask what you're hearing from clients. You mentioned that uncertainty out in the economy prompted some conservatism in guidance. We see the, you know, BLS revision lower here this morning for job creation over the last year, maybe rates starting to come down here at the Fed sometime soon. What are customers telling you?

Mark Marcon: Thank you. I wanted to ask what you're hearing from clients. You mentioned in your that uncertainty out in the economy prompted some conservatism in guidance. We see the BLS revision lower here this morning for job creation over the last year. Maybe rates starting to come down here at the Fed sometime soon. What are customers telling?

You mentioned in your that uncertainty out in the economy prompted some conservatism in guidance, which is the BLS revision lower here. This morning for job creation over the last year maybe.

Rates starting to come down here at the fed sometime soon.

What a quarter customers Tony.

Well it depends where you are in the world look everybody's got a play on the pitch everybody is dealing with the same same.

Gary Burnison: Well, it depends where you are in the world. Look, everybody's got to play on the pitch. Everybody's dealing with the same economic and labor environment. You know, I spent, you know, the last several months with clients and colleagues in Europe in many different countries, and I think, broadly speaking, there's a great deal of optimism. In the Americas, I think people are dealing with the lack of pricing power and the fact that, you know, costs have escalated 50% over the last 5.5 to 6 years. You know, look, I'm not surprised at all by the downward revision in those BLS numbers. I mean, that's not shocking. There's been a labor recession for 2 years.

Gary Burnison: It depends where you are in the world. Look, everybody's got to play on the pitch. Everybody's dealing with the same economic and labor environment. I've spent the last several months with clients and colleagues in Europe in many different countries, and I think, broadly speaking, there's a great deal of optimism. In the Americas, I think people are dealing with the lack of pricing power and the fact that costs have escalated 50% over the last five and a half to six years. I'm not surprised at all by the downward revision in those BLS numbers. I mean, that's not shocking. There's been a labor recession for two years. Companies are not doing massive downsizing, but they're letting natural attrition take its course, and they're not replacing those hires.

Economic and labor environment.

I spent the last several months with clients and colleagues in Europe.

In many different countries and I think.

Broadly speaking.

There's a great deal of optimism.

And in the Americas.

Think people are dealing with the lack of pricing power.

And the product cost escalated.

50% over the last five to six years.

Look we are not surprised at all.

By the downward revision.

And those Pos numbers, I mean, thats not shocking there has been a labour recession for two years.

And so companies are.

Gary Burnison: Companies are, they're not doing massive downsizing, they're letting natural attrition take its course, and they're not replacing those hires. The other big theme, not only in Europe but in America and Asia, is, you know, what does AI do long term in terms of how does an organization get work done and with how many people? We've seen a really good rebound in Asia. You see it in the numbers. Both Europe and Asia really performed well. It was fairly broad-based in both regions. Life sciences clients are, you know, that's a tougher deal as well as healthcare. We've seen a lot of great activity in industrial, which is 30% of the company.

Theyre not doing massive downsizing.

They are letting natural attrition take its course and theyre not replacing those hires and then the other big theme not only in Europe and in America and Asia, Yes.

Gary Burnison: The other big theme, not only in Europe but in America and Asia, is what does AI do long-term in terms of how does an organization get work done and with how many people? We've seen a really good rebound in Asia, and you see it in the numbers. Both Europe and Asia really performed well. It was fairly broad-based in both regions. Life sciences clients are, that's a tougher deal as well as healthcare. We've seen a lot of great activity in industrial, which is 30% of the company. Private equity has been a source of significant strength because they have thousands of companies that are past their sell-by date. Because of that, they're actually having to go in and think about how you really operate the company beyond just cutting costs and increasing EBITDA. Those would be the major themes that I've heard from clients directly.

What does AI do long term in terms of how as an organization get work done.

With how many people.

We've seen.

A really good rebound in Asia.

And you see it in the numbers, both Europe and Asia really performed well.

That was fairly broad based in both regions.

Life Sciences clients are.

Tougher tougher deal as well as health care.

We've seen a lot of great activity in industrial which is 30% of the company.

Private equity has been a source of.

Gary Burnison: private equity has been a source of significant strength, because they have thousands of companies that are past their sell-by date. Because of that, they're actually having to go in and think about how you really operate the company beyond just cutting costs and increasing EBITDA. Those would be the major themes that I've heard from clients directly.

Significant strength.

Because they have thousands of.

Companies that are past their sell by date.

And because of that.

They are actually having to go in and think about how you really operate the company beyond just cutting cost and increasing evidence. So those would be the major themes that ive heard from clients directly.

Just sort of a specific question on consulting if I could.

Tobey Sommer: Just sort of a specific question on consulting, if I could. With respect to your merger and divestiture kind of services in playbook, what are you seeing there? We've seen sort of an uptick in at least announced deals and many of them seem to be sort of corporate breakups. Wondering if you're participating in that from a consulting perspective.

Mark Marcon: Just sort of a specific question on Consulting, if I could. With respect to your merger and divestiture kind of services and playbook, what are you seeing there? We've seen sort of an uptick in at least announced deals, and many of them seem to be sort of corporate breakups. I'm wondering if you're participating in that from a Consulting perspective.

With respect to your.

Merger and divestiture kind of <unk>.

Services and playbook.

What are you seeing there because we've seen sort of an uptick in at least announced deals.

And.

Many of them seem to be sort of.

Corporate.

Corporate break ups I'm wondering if you're participating in that from a consulting perspective.

There is actually there are a couple that we are participating I can't talk about it but there are a couple.

Gary Burnison: There's actually, yeah, there are a couple that we are participating. I can't talk about it, but there are a couple. I think the bigger activity has actually been on the private equity side. I think that's a direct result of, you know, firms hanging on to portfolio companies longer, and the work that has to be done beyond three, four or five years.

Gary Burnison: There are a couple that we are participating in. I can't talk about it, but there are a couple. I think the bigger activity has actually been on the private equity side. I think that's a direct result of firms hanging on to portfolio companies longer and the work that has to be done beyond three, four, or five years.

But I think the bigger the bigger activity has actually been on the private equity side.

And I think that's a direct result.

Our firm's hanging onto portfolio companies longer.

And the work that has to be done beyond three four or five years.

I appreciate that last question for me is if you.

Tobey Sommer: Appreciate that. Last question from me is, if we do see an appreciable, you know, uptick in demand or across the businesses and get a little bit faster revenue growth for the firm, do you have some excess capacity now sort of in the businesses to be able to meet that? Or might you need to step on the gas with hiring and have sort of flat to downish margins for a quarter or 2 while you ramp things up?

Mark Marcon: Appreciate that. Last question for me is, if we do see an appreciable uptick in demand across the businesses and get a little bit faster revenue growth for the firm, do you have some excess capacity now in the businesses to be able to meet that, or might you need to step on the gas with hiring and have sort of flat to downish margins for a quarter or two while you ramp things up?

If we do see an appreciable.

Uptick in demand.

Across the businesses and get a little bit faster revenue growth.

For the firm.

Do you have.

So some excess capacity now sort of in the businesses to be able to meet that or might you need to step on the gas with with hiring and half sort of flat to down ish margins for a quarter or two while you ramp things up.

No.

Continually managing that that talent and.

Gary Burnison: No, we're, you know, we're continually managing that talent. I do think that there is capacity. I think the big question, you know, what do you have to believe for this economic environment that we see now for a couple of years to actually turn? There's got to be some significant rate cuts. The Fed has been slow. You know, it was never transitory several years ago. Anybody with any common sense could have said that. You know, that's what you have to see to get this thing going.

Gary Burnison: No, we're continually managing that talent. I do think that there is capacity. I think the big question is, what do you have to believe for this economic environment that we've seen now for a couple of years to actually turn? There's got to be some significant rate cuts. The Fed has been slow. It was never transitory several years ago. Anybody with any common sense could have said that. That's what you have to see to get this thing going.

I do think that there is capacity and I think the big question.

No.

What do you have to believe for this.

Economic environment that we've seen now for a couple of years to actually turn Theres got to be some significant rate cuts.

The fed has been slow.

It was never transitory several years ago anybody.

With any common sense could've said now.

And.

That's that's what you have to say to get this thing going.

Tobey, it's Bob the other thing I would add to that too as well.

Bob: Tobey, it's Bob. The other thing I would add to that too is we're, you know, we've got ourselves more formally organized around AI, GenAI, and we're driving that into the organization. From a capacity perspective, I would expect that to, you know, to help us get through any groundswell that comes out of, you know, a more rapid rebound.

Robert Rozek: Hey, Tobey, it's Bob. The other thing I would add to that is we're, you know, we've got ourselves more formally organized around AI, GenAI, and we're driving that into the organization. From a capacity perspective, I would expect that to help us get through any groundswell that comes out of a more rapid rebound.

We've set ourselves formally organized around AI journey.

<unk>.

And we're driving that into the organization. So from a capacity perspective, I would expect that to.

To help us get through any.

Groundswell that comes out of.

A more rapid rebound.

Thank you very much.

Mark Marcon: Thank you very much.

Tobey Sommer: Thank you very much.

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

Operator: Our next question comes from the line of George Tong with Goldman Sachs Group. Please go ahead.

Operator: Our next question comes from the line of George Tong with Goldman Sachs. Please go ahead.

Hi, This is <unk> on for George could you talk about how consulting new business performed in the quarter.

[Analyst] (Goldman Sachs): Hi, this is Sammy on for George Tong. Could you talk about how consulting new business performed in the quarter? What is your outlook for consulting for the remainder of the year? Any, the key drivers behind your expectations?

[Analyst]: Hi. This is Sammy on for George. Could you talk about how Consulting new business performed in the quarter? What is your outlook for Consulting for the remainder of the year? Any key drivers driving your expectations?

What is your outlook for consulting for the remainder of the Euro and.

And the key drivers behind your expectations.

Well I think it's going to depend regionally too.

Gary Burnison: Well, I think it's gonna depend regionally too. I'm not looking, you know, I just don't think the economic environment particularly is gonna change dramatically unless we see the Fed take action. You know, I think it's been a very, very difficult consulting market for 8 quarters now. You know, when you look at the overall firm results quarter on quarter on quarter, in what I would characterize as a labor recession, it is incredibly impressive. I would ascend that in Europe and Asia, we're gonna see continued momentum with our consulting solutions. In the Americas, I think it's gonna be a bit more challenging given the backdrop of what we're dealing with.

Gary Burnison: I think it's going to depend regionally too. I'm not looking, you know, I just don't think the economic environment particularly is going to change dramatically unless we see the Fed take action. I think it's been a very, very difficult consulting market for eight quarters now. When you look at the overall firm results quarter on quarter on quarter in what I would characterize as the labor recession, it is incredibly, incredibly impressive. I would assume that in Europe and Asia, we're going to see continued momentum with our consulting solutions. In the Americas, I think it's going to be a bit more challenging given the backdrop of what we're dealing with.

I'm not looking.

I just don't think the economic environment, particularly is going to change dramatically unless we see the fed take action.

And I think it's been a very very difficult consulting market.

For eight quarters now.

When you look at the overall firm results quarter on quarter on quarter, and what I would characterize as the labor recession. It is incredibly incredibly impressive.

And so I would I would assume.

In Europe in Asia, we're going to see continued momentum with our consulting solutions.

And in the Americas, I think it's going to be.

A bit more challenging given the backdrop of what we're dealing with and then the other the other move that we're making now and this is not new.

Gary Burnison: Then the other, you know, the other move that we're making now, and this is not new, but, you know, many, many years ago, we said, Look, we've got to get into bigger, larger scale, as Bob said, you know, more integrated solutions, you know, delivering impact to our clients. So we purposely made an effort towards bigger, more transformational assignments, and it shows in the numbers. You know, this isn't just rhetoric. When you look at the average, look at rate per hour as an example, you know, that has gone up 50% from $300 an hour just a few years ago to now almost, you know, $500 an hour, $470 an hour. When you look at the backlog, the backlog is actually increasing in consulting.

Gary Burnison: The other move that we're making now, and this is not new, but many, many years ago, we said, "Look, we've got to get into bigger, larger scale," as in, as Bob said, more integrated solutions, delivering impact to our clients. We purposely made an effort towards bigger, more transformational assignments. It shows in the numbers. This isn't just rhetoric. When you look at the average rate per hour as an example, that has gone up 50% from $300 an hour just a few years ago to now almost $500 an hour, $470 an hour. When you look at the backlog, the backlog is actually increasing in consulting. 42% of that backlog is engagements over $1 million. When you look at the new wins, those are also, a good part of them, not the majority, but a good part are over $1 million.

Many many years ago, we said look we've got to get into a bigger larger scale and as Bob said more integrated solutions.

Delivering impact to our clients and so we purposely made an effort.

Towards bigger more transformational assignments and it shows in the numbers.

Isn't just rhetoric when you look at the average.

We look at rate per hour as an example.

That has gone from its gone up 50% from $300 in oil <unk>.

Just a few years ago to now almost $500 $470 an hour.

When you look at the backlog for <unk>.

Backlog is actually increasing in consulting.

42% of our backlog is engagements over $1 million.

Gary Burnison: 42% of that backlog is engagements over $1 million. When you look at the new wins, those are also, you know, a good part of them, not the majority, but a good part are over $1 million. What's happening is we're moving the entire organization towards more integrated solutions. The numbers reflect that. With that then becomes a slower consumption by clients of the backlog. You know, when we look at new business, it was your specific question in consulting, in the quarter, you know, it was decent. I mean, it was definitely, you know, on the plus side. I, you know, I tend to look at the firm as a whole and, you know, what we're doing there.

And when you look at the new win those are also.

A good part of them.

Not the majority, but a good part of our over $1 million.

What's happening.

As we're moving the entire organization.

Gary Burnison: What's happening is we're moving the entire organization towards more integrated solutions. The numbers reflect that. With that then becomes a slower consumption by clients of the backlog. When we look at new business, that was your specific question in consulting in the quarter, it was decent. I mean, it was definitely on the plus side. I tend to look at the firm as a whole and what we're doing there. I just think you look quarter on quarter in an environment that's being very difficult. Looking at the company's profitability, it's impressive.

Towards more integrated solutions.

The numbers reflect.

And with that then becomes a slower consumption.

By clients.

The backlog.

And so you know.

When we look at new business that was your specific question in consulting.

In the quarter. It was it was decent I mean, it was definitely on the plus side.

But.

I tend to look at the firm as a whole.

And what we're doing there and I just I, just think you look quarter on quarter in an environment that seem very different difficult.

Gary Burnison: I just think you look quarter on quarter in an environment that's been very difficult and, looking at the company's profitability, it's impressive.

Looking at the company's profitability it's in process.

Got it.

The number of consultants was down significantly this quarter could you talk about what drove the decision to reduce titular head count, especially given you have the launch of balance. So it is coming up and as the headcount now fully aligned with the current demand or could we see further right sizing.

[Analyst] (Goldman Sachs): Got it. On digital, the number of consultants was down significantly this quarter. Could you talk about what drove the decision to reduce digital headcount, especially given you have the launch of Talent Suite coming up? Is the headcount now fully aligned with the current demand, or could we see further right-sizing?

[Analyst]: Got it. On Digital, the number of consultants was down significantly this quarter. Could you talk about what drove the decision to reduce Digital headcount, especially given you have the launch of TalentSuite coming up? Is the headcount now fully aligned with the current demand, or could we receive further right-sizing?

Well we are always.

Gary Burnison: Well, we are always managing the workforce. We've done it over the last, you know, two to three years. If you look at Professional Search and Interim, for example, you'll find there that we've made significant changes in that workforce and repositioned that workforce, and we've done the same thing in digital. You know, for us, it's again, it's around the firm and it's not around, you know, these segments. It's around enabling the entire firm to be able to deliver the platform. That platform is at its very foundation, how do you unlock human and organizational performance? How do you design an organization? How do you assess what type of leaders do you need? How do you develop them? How do you pay them? That's what it's about.

Gary Burnison: We are always managing the workforce. We've done it over the last two to three years. If you look at Professional Search and Interim, for example, you'll find there that we've made significant changes in that workforce and repositioned that workforce. We've done the same thing in Digital. For us, it's again, it's around the firm. It's not around the segments. It's around enabling the entire firm to be able to deliver the platform. That platform is at its very, very foundation. How do you unlock human and organizational performance? How do you design an organization? How do you assess what type of leaders do you need? How do you develop them? How do you pay them? That's what it's about. It's not strictly around the 236 Digital sellers that we have.

Managing.

The workforce and so we've done it over the last two to three years, if you look at it.

Professional search in interim for example.

Youll find there that we've made significant changes.

And that workforce and reposition that work for us and we've done the same thing in digital so.

For us.

It's again, it's around the firm and it's not around.

These segments, it's around enabling the entire firm.

To be able to deliver the platform and that platform is at its very very foundation, how do you unlock human and organizational performance.

Can you design an organization how do you assess what type of leaders do you need how do you develop on how can you pay them.

That's what it's about so it's not strictly.

Around the 236 digital sellers that we have it's around the entire firm and the 1800 frontline consultants that we have and their ability to deliver the entire firm.

Gary Burnison: It's not, you know, strictly around the 236 digital sellers that we have. It, it's around the entire firm and the 1,800 frontline consultants that we have and their ability to deliver the entire firm.

Gary Burnison: It's around the entire firm and the 1,800 frontline consultants that we have and their ability to deliver the entire firm.

That's helpful. Thank you for taking my questions.

Josh Chan: That's helpful. Thank you for taking my questions.

[Analyst]: That's helpful. Thank you for taking my questions.

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

Operator: Our next question comes from the line of Josh Chan with UBS Investment Bank. Please go ahead.

Operator: Our next question comes from the line of Josh Chan with UBS. Please go ahead.

Hi, Gary and Bob Thanks for taking my questions.

Josh Chan: Hi, Gary and Bob. Thanks for taking my questions.

[Analyst]: Hi, Gary and Bob. Thanks for taking my questions. If I look at the geography, the North American part of the business, most parts of the business are down somewhat, which jives with the macro, but Executive Search is still up in North America. What's going on in Executive Search that's allowing that part of your business to really seemingly outperform the environment?

If I look at the high.

Gary Burnison: You bet.

Josh Chan: If I look at the geography, the North American part of the business, most parts of the business is down somewhat, which jives with the macro, but Exec Search is still up in North America. What's going on in Exec Search that's allowing that part of your business to really seemingly outperform the environment?

If I look at the geography that North American part of the business. Most parts of the business is down somewhat which jives with the macro but exact search is still up in North America. So what's going on in exec search, that's allowing that part of your business really seemingly outperformed the environment.

Yes.

It's a combination of factors.

Gary Burnison: Yeah, it's, you know, a combination of factors. It's the phenomenon where I've talked about this for a good, you know, 6 quarters, 7 quarters. It's Peak 65, so there's the demographic shifts and trends that I referred to in my opening comments. You've got that playing out. You've got the fact that many of the executives in the C-suite were probably in the C-suite during COVID. You had a, you know, a period of going from, you know, from light to darkness to light and all the things in between around that, around that time. The subsequent pent-up demand and great resignation. You've got people that are making the decision for themselves around work-life balance.

Gary Burnison: Yeah, it's a combination of factors. It's the phenomenon where I've talked about this for a good six quarters, seven quarters. It's peak 65. There are the demographic shifts and trends that I referred to in my opening comments, so you've got that playing out. You've got the fact that many of the executives in the C-suite were probably in the C-suite during COVID. You had a period of going from light to darkness to light and all the things in between around that time, then the subsequent pent-up demand and the great resignation. You've got people that are making the decision for themselves around work-life balance. You have boards looking at the C-suite and saying, is the leadership team that I need over the next five years, what are their skills that will be needed versus the past five years?

Its the phenomenon, where you have I've talked about this for.

A good six quarters seven quarters. Its peak 65, so there is the demographic shifts and trends.

That I referred to in my opening comments, so so you've got that playing out.

You've got the fact that many of the executives in the C suite.

We're probably in the C suite during Covid.

You had a.

A period of going from.

Now from light to darkness to light and all the things in between.

Around that.

Around that time.

And then the subsequent.

Pent up demand and the great resignation.

So you've got people that are making the decision for themselves.

Around work life balance and then we have.

Boards.

Gary Burnison: Then you have, you know, boards, looking at the C-suite and saying, you know, Is the leadership team that I need over the next 5 years, what are their skills that will be needed and versus the past 5 years? It's really those combination of factors that I believe are driving the Executive Search business.

Looking at the C suite, and saying is the leadership team that I need over the next five years.

What are their skills that will be needed.

And versus the past five years, so it's really those combination of factors.

Gary Burnison: It's really those combination of factors that I believe are driving the Executive Search business.

That I believe are driving.

<unk>.

The executive search business.

Okay. Thanks for that color there Gary.

Josh Chan: Great. Well, thanks for the color there, Gary. I think you guys also mentioned that, you know, in a choppy environment that could provide some opportunity for you to strengthen your position. I'm sure you'd love a stronger environment, but curious how you can still win business in a weaker environment and what kind of opportunities those might be.

I think you guys also mentioned that.

[Analyst]: Great. Thanks for the color there, Gary. I think you guys also mentioned that, you know, in a choppy environment, that could provide some opportunity for you to strengthen your position. I'm sure you'd love a stronger environment, but curious how you can still win business in a weaker environment and what kind of opportunities those might be.

In a choppy environment that could provide some opportunity for you to strengthen your position I'm trying it while the stronger environment environment, but curious how you can still win business in a in a weaker environment and what kind of opportunities those might be.

Yes. This is the best environment I mean, it's we're on most motivated.

Gary Burnison: Yeah, this is the best environment. I mean, it's where I'm most motivated. You know, this is where good companies, you know, become great companies. It's only in these type of environments because people don't change unless there's a reason to change. I think the environment gives us that reason to change. I look at it. You know, it's not a question of just dealing with ambiguity, but it's embracing ambiguity. I love the environment. It does present opportunities for us, and it presents an opportunity even internally around how we think about ourselves. Do we think about ourselves as, you know, business segments, or do you think about yourself as Korn Ferry?

Gary Burnison: Yeah, this is the best environment. I mean, it's where I'm most motivated. This is where good companies become great companies. It's only in these types of environments because people don't change unless there's a reason to change. I think the environment gives us that reason to change. I look at it and it's not a question of just dealing with ambiguity, but it's embracing ambiguity. I love the environment. It does present opportunities for us. It presents an opportunity even internally around how we think about ourselves. Do we think about ourselves as business segments, or do you think about yourself as Korn Ferry? The truth is that we don't have five businesses. We have one business, which is Korn Ferry. We have five solutions, but we have one business. The ability to change mindset in an environment like this, you have to take advantage of it.

This is this is where good companies become great companies. It's only in these type of environments because people don't change unless there's a reason to change.

And I think the environment gives us.

That reason to change so.

I look at it and.

It's not a question just dealing with ambiguity, but its embracing ambiguity ni I loved the environment.

And it does present opportunities for us and it presents an opportunity.

Even internally around how we think about ourselves and do we think about ourselves.

As you know.

Business segments.

Or do you think about yourself Korn ferry and the truth is that.

Gary Burnison: The truth is that we don't have 5 businesses. We have 1 business, which is Korn Ferry. We have 5 solutions, but we have 1 business. The ability to change mindset in an environment like this, you have to take advantage of it. That's what, you know, that's what we're doing, and that's what we plan to do over the next several months, is to continue to change mindset, particularly around how we go to market.

We don't have.

Five businesses, we have one business, which is which is Korn ferry.

We have five solutions, but we have one business.

And so the ability to change of mindset.

In an environment like this you'd have to take advantage of it and Thats what.

Gary Burnison: That's what we're doing, and that's what we plan to do over the next several months, to continue to change mindset, particularly around how we go to market.

That's what we're doing and that's what we plan to do over the next several months is to continue to change mindset.

Particularly around how we go to market.

Great.

Yeah, Hey, Bob one of the things that I've talked about quite a bit.

Josh Chan: Great.

[Analyst]: Great.

Robert Rozek: Yeah, that's another comment.

Bob: Josh,

Bob: Yeah. Hey, Bob.

[Analyst]: Okay. Hey, Bob.

Bob: One of the things I've talked about quite a bit with investors is, you know, when the world is somewhat chaotic, it's actually, as Gary mentioned, a good thing for us. Think about, you know, COVID hit, everybody went home. Work got done differently, different work had to get done, and organizations turned to us to help figure that out. Right, you know, right now there's a lot of uncertainty out there. AI, GenAI is out there. How do I change? You know, how does that impact my workforce? Does it change my job profiles? Do people have the right skills? Do I need different people? When there's chaos out in the world and organizations are trying to figure their way through it, they, you know, turn to us to help them do that.

Robert Rozek: One of the things that I've talked about quite a bit with investors is, you know, when the world is somewhat chaotic, it's actually, as Gary mentioned, a good thing for us. Think about, you know, COVID hit, everybody went home. Work got done differently, different work had to get done, and organizations turned to us to help figure that out. Right now, there's a lot of uncertainty out there. AI, GenAI is out there. How do I change, you know, how does that impact my workforce? Does it change my job profiles? Do people have the right skills? Do I need different people? When there's chaos out in the world and organizations are trying to figure their way through it, they, you know, turn to us to help them do that. For Gary indicated, it's actually a good thing for us.

Investors.

When the world is some chaos.

Chaotic.

It's actually as Gary mentioned, a good thing for us to think about.

Covid hit everybody went home.

Work got done differently different work has to get done and organizations turned to us to help figure that out right now there's a lot of uncertainty out there AI AI is out there out of way changed.

Does that impact my workforce. This change my job profiles to people, who have the right skills to any different people. So when there is chaos out in the world and organizations are trying to figure their way through it.

It turned to us to help them do that and so for as Gary indicated it's actually a good thing for us.

Bob: As Gary indicated, it's actually a good thing for us.

Fashion perspective, yes. Thank you thanks for the color on the time.

Josh Chan: That's an interesting perspective. Yeah. Thank you for both for the color and the time.

[Analyst]: That's an interesting perspective. Thank you both for your color and the time.

Our next question will come from the line of Mark Marcon with Baird. Please go ahead.

Operator: Our next question will come from the line of Mark Marcon with Robert W. Baird & Co. Please go ahead.

Operator: Our next question will come from the line of Mark Marcon with Baird. Please go ahead.

Hey, good afternoon, Thanks for taking my question.

Mark Marcon: Hey, good afternoon, and thanks for taking my questions. During our discussion, you talked a lot about some of the bigger deals that you've been signing, and you specifically noted one with a big HCM company. I'm wondering if you can elaborate in terms of what you're going to do for them.

Mark Marcon: Hey, good afternoon. Thanks for taking my questions. Gary, in your discussion, you talked a lot about, you know, some of the bigger deals that you've been signing, and you specifically noted one with a big HCM company. I'm wondering if you can elaborate in terms of what you're gonna do for them.

Terry.

<unk> discussion you talked a lot about some of the bigger deals that you can cite.

Perfectly noted one with.

Our Big HCM Company I'm wondering if you can elaborate in terms of what youre going to do for them.

Yeah.

Yes.

So im not going to get into it it's really a.

Gary Burnison: I'm not gonna get into It, it's really a transformational program centered around leadership development. You know, it's a big learning engagement where that particular client is not only licensing our IP around developing and transforming a workforce, but it also includes consulting with assessments and coaching. It's really around kind of, you know, transforming a workforce and transforming not just skill set, but mindset. It's using both our IP and consulting.

Gary Burnison: I'm not going to get into it. It's really a transformational program centered around leadership development. It's a big learning engagement where that particular client is not only licensing our IP around developing and transforming a workforce, but it also includes consulting with assessments and coaching. It's really around kind of transforming a workforce and transforming not just skill set, but mindset. It's using both our IP and consulting.

A transformational program.

Centered around.

Leadership development.

And.

So it's a big learning engagement.

Where.

That particular client.

Is not only licensing.

Our IP.

Around developing and transforming our workforce.

But it also includes consulting.

We are.

Assessments and coaching.

So it's really around kind of.

Transforming our workforce and transforming not just skill set that mindset.

And it's using both our IP.

And in consulting.

That's really interesting.

How big of a program could something like that.

Mark Marcon: That's really interesting. How big of a program could something like that be?

Mark Marcon: That's really interesting. How big of a program could something like that be?

These are typically multi year and several million dollars.

Gary Burnison: You know, these are typically multi-year and several million dollars. I'm not saying that this particular one is that, but that's generally what these look like. Part of it then is, you know, it gets consumed by the clients, not the digital piece, but the consulting wraparound on these leadership development programs. You know, they have to consume it. They have to pull it down off the shelf. That's why, you know, I can think of one that is huge. You know, it was an 8-digit sale to a massive organization. We just completed year three, and we've touched about 40% of that organization.

Gary Burnison: These are typically multi-year and several million dollars. I'm not saying that this particular one is that, but that's generally what these look like. Part of it then is, you know, it gets consumed by the clients, not the digital piece, but the consulting wraparound. I think leadership development programs, you know, they have to consume it. They have to pull it down off the shelf. That's why, you know, I can think of one that is a huge, you know, it was an eight-digit sale to a massive, massive organization. We are now, we've just completed year three, and we've touched about 40% of that organization. The consumption of all of those services, not the IP, obviously, but the consumption of the services is really dependent on the client's speed, not on us.

I'm not saying that this particular, one is that but that's generally what things look like.

And part of it then is.

It gets consumed.

By the clients not not the digital piece, but the consulting wraparound.

On the leadership development programs.

They have to consume that they have to pull it down off the shelf.

And that's why we I can think of one that is.

Huge.

It was an eight digit.

So set sail.

Two a massive massive organization.

And we are now we've just completed year three.

And we've touched.

About 40% of that organization and so.

The consumption.

Gary Burnison: You know, the consumption of all of those services, not the IP obviously, but the consumption of the services is really dependent on the client's speed, not on us. That's one reason why you see the backlog, for example, in consulting increasing, is because of that phenomenon, moving to multi-year, multi-million dollar engagements.

Of all of those services not not.

The IP, obviously, but that the consumption of the services.

It really dependent on the clients speed.

Not on Us and that's one reason why you see the backlog.

Gary Burnison: That's one reason why you see the backlog, for example, in Consulting increasing, is because of that phenomenon moving to multi-year, multi-million dollar engagements.

For example in consulting increasing.

Because of that phenomenon moving to multiyear multimillion dollar engagements.

That's great.

Mark Marcon: That's great. Gary, you know, we have been in a labor recession. You guys have held up the best of arguably any of the major players that are out there, that most investors look at. You've been getting more and more into Professional Search & Interim. You've made a number of acquisitions there. I'm wondering, you know, as the environment remains relatively uncertain, you know, what's your posture there? What have you learned from the acquisitions that you've made in terms of, you know, what are the best types of acquisitions, the best spaces where you guys actually fit? How many more opportunities are there in terms of bolstering the areas where you really do fit?

Mark Marcon: That's great. Gary, you know, we have been in a labor recession. You guys have held up the best of arguably any of the major players that are out there that most investors look at. You've been getting more and more into Professional Search and Interim. You've made a number of acquisitions there. I'm wondering, as the environment remains relatively uncertain, what's your posture there? What have you learned from the acquisitions that you've made in terms of what are the types of acquisitions, the best spaces where you guys actually fit? How many more opportunities are there in terms of bolstering the areas where you really do fit?

Barry.

We have been developed and our labor recession, you guys have held up the best.

Arguably with the major players that are out there.

Most investors look at.

You've been getting more and more into professional search and interim.

You've made a number of acquisitions there im wondering.

As the environment remains relatively uncertain whats your.

Your posture there.

What have you learned from the acquisitions that you've made in terms of.

What are the types of acquisitions, the best spaces, where you guys actually states and how many more opportunities are there in terms of bolstering the areas, where you really do fit.

I think the.

The pro search let me, let me bifurcate that the pro search market as you said is enormous.

Gary Burnison: I think the ProSearch. Let me bifurcate that. The ProSearch market, as you said, is enormous. Today, most of that business that we have, most of that solution is in the US. What we've learned is the contingent part of that market opportunity does not work for us for the most part. The learning there is, we love the market, we want to go into it, but we also want to be eyes wide open. We don't want to be in contingent recruiting. It doesn't fit well with the brand and the Marquee and Diamond account strategy. There is still a big opportunity outside the US. We're under-penetrated there.

Gary Burnison: I think the Professional Search, let me bifurcate that. The Professional Search market, as you said, is enormous. Today, most of that business that we have, most of that solution is in the U.S. What we've learned is the contingent part of that market opportunity does not work for us for the most part. The learning there is we love the market. We want to go into it, but we also want to be eyes wide open. We don't want to be in contingent recruiting. It doesn't fit well with the brand and the marquee and diamond account strategy. There is still a big opportunity outside the U.S. We're underpenetrated there. We have to be very cognizant both in Professional Search and Interim as to what technology is going to do to a company's labor force over the next 5 or 10 years.

Today, most of that business that we have most of that solution is in the U S.

What we've learned is that contingent.

Part of that market opportunity does not work for us.

The most part.

So the learning there is we love the market.

We want to go into it.

But we also want to be eyes wide open.

We don't want to be in contingent recruiting it doesn't fit well with the brand in the market and Diamond account strategy.

And there is a still a big opportunity outside the U S, where we're underpenetrated there.

Yeah.

And we have to be very cognizant.

Gary Burnison: We have to be very cognizant, both in ProSearch and Interim, as to what technology is going to do to a company's labor force over the next 5 or 10 years. We have to be very, very targeted there, and very smart. On the Interim side, what we've learned is that it is number 1, why did we get into it? We got into it because we see a mega trend that's playing out that we continue to think is going to play out even with AI, with fractional workers. We think that mega trend is something that we should invest into. What we've learned there is that it is very synergistic with our brand.

Both in pro search and interim.

As to what technology is going to do.

To a company's labor force.

Over the next five or 10 years, so we have to be very very targeted there.

Gary Burnison: We have to be very, very targeted there and very smart. On the Interim side, what we've learned is that it is, number one, why did we get into it? We got into it because we see a mega trend that's playing out that we continue to think is going to play out even with AI, with fractional workers. We think that mega trend is something that we should invest into. What we've learned there is that it is very synergistic with our brand. Similar to Professional Search, the opportunity is quite significant outside of the United States. In fact, when you look at both Professional Search and Interim, you would find that 70% or so of our solution today is in the United States. There's an enormous market opportunity.

And very smart.

On the interim side what.

We have learned is that it is the number one why did we gain to get into it we got into it because we see a mega trend.

That's playing out that we continue to think is going to play out even with AI.

With fractional workers.

So.

We think that Mega trend is something that we should invest into.

What we've learned there is that it is very synergistic.

With with our brand.

Similar to pro search.

Gary Burnison: Similar to ProSearch, the opportunity is quite significant outside of the United States. In fact, when you look at both ProSearch and Interim, you would find that, you know, 70% or so of our solution today is in the United States. There's an enormous market opportunity. I think you would see us on the acquisition side more oriented towards Interim than ProSearch, because on the ProSearch side, there are a number of transactions we could do today. Those transactions would come with a large ProSearch contingent piece, which we don't think is commensurate with our brand.

The opportunity is.

Quite significant outside of the United States and in fact, when you look at both pro search in interim.

You would find that.

70%.

Or so of our solution today.

As in the United States and there is an enormous market opportunity.

I think you would see us on the.

Gary Burnison: I think you would see us on the acquisition side more oriented towards Interim than Professional Search because on the Professional Search side, there are a number of transactions we could do today. Those transactions would come with a large Professional Search contingent piece, which we don't think is commensurate with our brand.

On the acquisition side more oriented towards interim than pro search.

Because on the pro search side, there are number of transactions, we can do today.

Well those transactions would come with a large pro search contingent piece.

Which we don't think is commensurate with our brand.

Pre financed hey, Mark just maybe it was a little bit more color with a couple of things.

Mark Marcon: finance-

Bob: Hey, Mark, just maybe a little bit more color. I think a couple of things that for me that I have been learning. Gary mentioned the synergistic and the, you know, the ability to sell across the organization. Within the Interim Business itself, since we started down that path, we've created over 1,200 incremental opportunities by referring work across the system that never would have existed in those organizations had they stayed independent.

Robert Rozek: Hey, Mark, maybe a little bit more color. A couple of things that for me, that I have been learning. Gary mentioned the synergistic and the ability to sell across the organization within the Interim business itself. Since we started down that path, we've created over 1,200 incremental opportunities by referring work across the system that never would have existed in those organizations had they stayed independent. The other thing is I talk to people in the field that I find very interesting is a lot of our clients are asking us, you do my perm hiring now, why wouldn't you help us with the Interim or temporary labor force as well? I think the market's huge, as Gary indicated, and there's great demand amongst our client base. It is extremely synergistic as you bring it into this organization.

To me that had been learning here you mentioned the synergistic.

Andy.

The ability to sell across the organization within the interim business itself. Since we started down that path we've created.

Over 200 incremental opportunities by referring work across the system that never would have existed in those organizations had a state.

Independent.

And the other thing as I talked to people in the field.

Bob: And the other thing is I talk to people in the field that, you know, I find very interesting is a lot of our clients are asking us, you know, You do my perm hiring now, why wouldn't you help us with the interim or temporary labor force as well? I think there's, you know, the market's huge, as Gary indicated, and there's great demand amongst our client base, and it is extremely synergistic as you bring it into this organization.

Find very interesting is a lot of our clients are asking us.

You do my Perm.

Now why wouldn't you help us with the with the <unk>.

From our temporary labor force as well so I think the market is huge as Gerry indicated and theres, great demand amongst our client base and it is extremely synergistic as you're bringing into this organization.

That's terrific. Thanks, Bob and then can I just ask about NII.

Mark Marcon: That's terrific. Thanks, Bob. Can I just ask about AI? It's a twofold question. One is, you know, clearly there's been a labor recession for anybody who's been following the labor market for some time. The question revolves around like, even if, you know, we do see some, you know, the Fed acting a little bit more actively, do Gary, what do you think about this, the chance of uncertainty around AI kind of freezing, you know, certain employers? In some cases, you know, we are actually seeing some, you know, situations where labor demand is being reduced by AI. Just wondering what you're seeing on the client front. Secondly, you mentioned you're injecting AI into your processes.

Mark Marcon: That's terrific. Thanks, Bob. Can I just ask about AI? The twofold question. One is, clearly, there's been a labor recession for anybody who's been following the labor market for some time. The question revolves around, even if we do see the Fed acting a little bit more actively, Gary, what do you think about just the chance of uncertainty around AI kind of freezing certain employers? In some cases, we are actually seeing some chance where labor demand is being reduced by AI. I'm just wondering what you're seeing on the client front. The second will be, you mentioned you're injecting AI into your processes. I'm wondering if you can be a little bit more specific in terms of specific areas that you're injecting AI. How much are you spending there? Do you expect it to be an efficiency driver?

So twofold question one is.

Clearly there has been a labour recession for anybody who's been following the labor markets.

Right.

And the question revolves around like even if we do see some.

<unk> a little bit more.

Actively.

Gary what do you think about this.

The chance of uncertainty around AI.

Freezing.

Certain employers and in some cases, we are seeing some certain.

Trends were labor demand is being reduced by AI. So just wondering what you are.

And then secondly.

Thanks, Ben you're injecting ACO processes I'm wondering if you can be a little bit more specific in terms of.

Mark Marcon: I'm wondering if you can be a little bit more specific in terms of, you know, specific areas that you're injecting AI. How much are you spending there? Do you expect it to be an efficiency driver? What's that impact gonna be in terms of your own headcount?

Specific areas that you're injecting AI, how much are you spending there and do you expect it to be an efficiency driver.

What's that impact can be in terms of your own head count.

Mark Marcon: What's that impact going to be in terms of your own headcount?

I'll, let Bob Bob you can address the second part I guess I would.

Gary Burnison: I'll let Bob, you can address the second part. I guess I would, none of us have a crystal ball. I would say when you look at America, there's no question that lower birth rates over the last 30 years are going to result in, you know, significantly less people coming into the labor force over the next many years. Therefore, if a country wants to grow productivity like America has done at 2% a year, how does that supply and demand imbalance, you know, get corrected? Well, it gets corrected through technology.

Gary Burnison: I'll let Bob address the second part. None of us have a crystal ball. I would say when you look at the Americas, there's no question that lower birth rates over the last 30 years are going to result in significantly less people coming into the labor force over the next many years. Therefore, if a country wants to grow productivity like America has done at 2% a year, how does that supply and demand imbalance get corrected? It gets corrected through technology. I think there will be, whether in whatever form that is, GenAI, whatever it is, I think there will be a massive sucking sound, and it'll be this huge pull that technology will have to bridge that less people into the American workforce. I think that's undeniable. That's mathematics. That's data.

None of us have a crystal ball I would say when you when you look at the take the America America.

There is no question that.

Lower birth rates over the last 30 years.

Or again are resolved and significantly less people.

Coming into the Labor force.

Over the next many years.

And so therefore, if a country wants to grow productivity like America is done at 2% a year.

How does that supply and demand.

Imbalance.

<unk> corrected well it gets corrected through technology, So I think there will be.

Gary Burnison: I think there will be, in whatever form that is, agentic AI, whatever it is, I think there will be a massive sucking sound, and it'll be this huge pull that technology will have to bridge that, you know, less people into the American workforce. I think that's undeniable. That's mathematics. That's data. In this environment that companies have been dealing with now for a couple years, the reality, you know, people can talk about inflation at 2% or 2.5% or 3%. That is like such, you know, navel gazing. The fact is costs are up 40% to 50%, and that's a direct result of COVID.

Weather in.

Whatever form that is <unk> whatever whatever it is.

I think there will be a massive.

Sucking sound and it will be this huge poll.

That technology will have the bridge.

Less people.

In into the American.

Workforce. So I think that's that's undeniable, that's mathematics that data.

And in this environment the companies have been dealing with now for a couple of years.

Gary Burnison: In this environment that companies have been dealing with now for a couple of years, the reality, people can talk about inflation at 2%, at 2.5%, or 3%. That is like such belly glazing. The fact is costs are up 40% to 50%. That's a direct result of COVID. In this environment, companies are having to look at ways to deliver impact to their customers more efficiently. That has played out in the labor force over the last eight quarters by letting, for the most part, letting attrition take its course and not being so hell-bent on replacing those people that leave. There's no doubt that when you look at what you can do today with AI, any CEO would be absolutely looking at their organization and saying, what does this mean for my workforce strategy? It invariably has to mean that I'm probably going to have less employees.

The reality.

People can talk about inflation of 2% two 5% 3%.

That is why such.

Belly glaze.

<unk> costs are up 40%, 50%.

That's a direct result of Covid so in this environment.

Gary Burnison: In this environment, companies are having to look at ways to deliver impact to their customers more efficiently. That has played out in the labor force over the last eight quarters by letting, for the most part, letting attrition take its course and not being so, you know, hell-bent on, you know, replacing those people that leave. There's no doubt that when you look at what you can do today with AI, any CEO would be absolutely looking at their organization and saying, You know, what does this mean for my workforce strategy? It invariably has to mean that I'm probably gonna have, you know, less employees. I don't see how one would come to a different conclusion than that.

Companies are having to look at ways to deliver impact to their customers.

More efficiently.

And.

That has played out in the labor force over the last eight quarters by leading for the most part letting attrition take its course.

And not being so hellbent.

Hell bent on replacing.

Those those people that leave.

There is no doubt that when you look at what you can do today.

With AI.

Got any CEO would be absolutely looking at their organization.

And saying.

What does this mean for my workforce strategy and invariably has to mean.

That I'm, probably going to have.

<unk> employees I don't see how one would come to a different conclusion than that.

Gary Burnison: I don't see how one would come to a different conclusion than that. For us, we are, broadly, there's inside out and outside in. Inside out, we're doing the things that you would expect around our own workforce and how we mobilize that workforce with AI. Then there's the outside in with our delivery of services and not only the consulting engagements such as we have today around going into an organization and saying, are they AI ready? We have many, many of those engagements where we're actually using, again, our IP to assess and benchmark a company's quote, AI readiness. We're also using it relative to our assessment and coaching engagement. Bob, maybe you could take the second part of Mark's question.

And so for us.

Gary Burnison: For us, we are, you know, broadly there's inside out and outside in. Inside out, we're doing the things that you would expect around our own workforce and how we, you know, mobilize that workforce with AI. Then there's the outside in with our delivery of services and not, you know, not only the consulting engagements, such as we have today around going into an organization and saying, Are they AI ready? Which we have many of those engagements. We're actually using, again, our IP to assess and benchmark a company's quote AI readiness. We're also using it relative to our assessment and coaching engagements. Bob, maybe you could take the second part of Mark's question.

We are.

Broadly there is inside out and outside in.

Inside out we're doing the things that you would expect around our own workforce and how we.

Mobilize that workhorse will pay off.

And then there's the outside in with our delivery.

Services and not not only the consulting engagements.

Such as we have today.

Around going into an organization and saying are they AI ready.

We have many many of those <unk>.

Engagements, where we're actually using again our IP.

To assess and benchmark.

The company's quota AI readiness.

But we're also using it relative to our assessment and coaching engagements. So Bob maybe you could take the second part of Mark's question.

Sure So mark.

We actually are making investments into this area that are fairly substantial and we haven't gone out and hired a bunch of people. What we've done is we've taken approximately 40 <unk>.

Bob: Sure. Mark, we actually are making investments into this area that are, you know, fairly substantial. Now we haven't gone out and hired a bunch of people. What we've done is we've taken approximately 40 individuals who had been within each of our solution areas, working on various aspects of AI, GenAI, and we've organized them under a central leader, a fella named Bryan Ackermann. Bryan is driving the AI, GenAI usage in the firm. We've taken those roughly 40 people, centralized them. We now have rolled out licenses depending on, you know, your skill level or what your job role is and so on. The licenses may have some might be more, have more efficacy than others.

Robert Rozek: Sure. Mark, we actually are making investments into this area that are fairly substantial. We haven't gone out and hired a bunch of people. What we've done is we've taken approximately 40 individuals who had been within each of our solution areas working on various aspects of AI, GenAI. We've organized them under a central leader called Brian Ackerman. Brian is driving the AI, GenAI usage in the firm. We've taken those roughly 40 people and centralized them. We now have rolled out licenses depending on your skill level or what your job role is and so on. The licenses may have, some might have more efficacy than others. We're going through right now and figuring out the impact that the AI, GenAI is going to have on our work. Where we are today, if you think about AI and GenAI, to me, our mantra is human plus AI.

Individuals who had been within each of our solution areas working on various aspects of AI journey, II and we've organized them under a central leader only Brian Ackerman.

And Brian is driving the AI journey.

Usage in the firm.

<unk>.

So we've taken those.

Roughly 40 people centralize them, we now have rolled out licenses depending on your skill level of what your job rule is so on the licenses may have some might be more and more efficacy than than others.

And we're going through right now and figuring out the impact that the.

Bob: We're going through right now and figuring out the impact that the AI, GenAI is gonna have on our work. I guess where we are today, if you think about AI and GenAI, to me it's our, you know, our mantra is human plus AI. It's really looking at those as efficiency tools. I think where it potentially gets more interesting is with the use of agents ultimately as they will be integrated into workflows, work process. The impact of that's obviously something that we're gonna, you know, we'll figure out, but that's down the road. I would say that and as I look at our workforce skill, Gary mentioned a couple times on the call our backlog, right?

G&A is going to have on our work.

I guess.

Where we are today, if you think about AI and Jen AIA, It's to me it's.

Mitra as human plus AI. So it's really looking at those as efficiency tools I think we.

Robert Rozek: It's really looking at those as efficiency tools. I think where it potentially gets more interesting is with the use of agents ultimately as they will be integrated into workflows, work process. The impact of that is obviously something that we're going to figure out, but that's down the road. As I look at our workforce, Gary mentioned a couple of times on the call our backlog. To me, it's not just about how do I look at AI and GenAI as a way to get our headcount down, but it's also a way of how do I take out some of the menial tasks that folks are doing today and I could take that freed up capacity and use that to deliver the backlog that we have. In my mind, it's sort of a combination of, yeah, will it have impact on our overall headcount? Absolutely.

There are potentially gets more interesting is with the use of agents ultimately as they will be integrated into workflows work process.

And so the impact that Thats, obviously, something that we're going to we'll figure out, but that's down the road.

I would say that as I look at our workforce scale, Gary mentioned, a couple of times on the call our backlog.

So to me, it's not just about how do I look at AI in G&A as a way to get our head count down, but it's also a way is how do I take out some of the menial tasks that folks are doing today and I can take that freed up capacity and use that to deliver the backlog that we have.

Bob: To me it's not just about how do I look at AI and GenAI as a way to get our headcount down, but it's also a way is how do I take out some of the menial tasks that folks are doing today, and I can take that freed-up capacity and use that to deliver the backlog that we have. In my mind it's sort of a combination of, yeah, will it have impact on our overall headcount? Absolutely. It's also gonna give us the ability to free up capacity to, you know, provide and deliver, services to our clients, you know, more, on a more rapid basis.

So in my mind, it's sort of a combination of yes. It will have impact on our overall headcount absolutely, but it's also going to give us the ability to free up capacity to.

Robert Rozek: It's also going to give us the ability to free up capacity to provide and deliver services to our clients on a more rapid basis.

Provided and deliver.

Services to our clients more.

On a more rapid basis.

Thank you very much.

Terrific.

Mark Marcon: Thank you very much. That was terrific.

Mark Marcon: Thank you very much. That was terrific.

And it appears that there are no further questions Mr Bernstein.

Operator: It appears that there are no further questions, Mr. Burnison.

Operator: It appears that there are no further questions, Mr. Burnison.

Okay Regina, Thank you for hosting us and we.

Gary Burnison: Okay, Regina, thank you for hosting us and we certainly appreciate you listening to our story and we look forward to talking to you here over the next few days and over the next quarter. Thanks a lot.

Gary Burnison: Okay, Regina, thank you for hosting us. We certainly appreciate you listening to our story. We look forward to talking to you here over the next few days and over the next quarter. Thanks a lot.

We certainly appreciate you listening to our story and we look forward to talking to you here over the next few days and.

Over the next quarter, Thanks, a lot.

Ladies and gentlemen, this conference call will be available for replay for one week, starting running through the day September 16th 2025, and at Midnight you May access the <unk> replay service by dialing 807, 702030 and entering the access code five nine <unk>.

Operator: Ladies and gentlemen, this conference call will be available for replay for 1 week running through the day 16 September 2025, ending at midnight. You may access the Echo Replay service by dialing 800-770-2030 and entering the access code 5927661, followed by the pound key. Additionally, the replay will be available for play-playback at the company's website, www.kornferry.com, in the investor relations section. This concludes our call today. Thank you for joining. You may now disconnect.

Operator: Ladies and gentlemen, this conference call will be available for replay for one week starting September 16th, 2025, ending at midnight. You may access the Echo replay service by dialing 800-770-2030 and entering the access code 5927661, followed by the pound key. Additionally, the replay will be available for playback at the company's website, www.kornferry.com, in the investor relations section. This concludes our call today. Thank you for joining. You may now disconnect.

7661, followed by the pound key. Additionally, the replay will be available for playback at the company's website www dot corn theory dot com in the Investor Relations section. This concludes our call today. Thank you for joining you may now disconnect.