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View All NewsKorn Ferry fee revenue up 13% in constant currency in fiscal Q1
Korn Ferry International (NYSE: KFY) reported fee revenue rose 6.4% — or 12.9% on a constant currency basis — to $267.4 million in its fiscal first quarter ended July 31. Fee revenue growth at the executive search and talent consulting provider came in near the top end of its guidance of $258 million to $270 million.
Pivot Leadership, a global provider of executive development programs that Korn Ferry acquired this year, contributed about $5.2 million of fee revenue in the fiscal first quarter. Adjusting for Pivot, organic consolidated fee revenue in the first quarter at constant currency grew about 10.8% year over year, CFO Bob Rozek said in a conference call with investors.
Los Angeles-based Korn Ferry reported fee revenue growth in life science/healthcare and technology was partially offset by a decline in industrial and consumer goods.
First-quarter executive recruitment fee revenue rose 2.5%, an increase of 8.8% on a constant currency basis. The overall increase in fee revenue was primarily attributable to a 3.7% increase in the weighted-average fees billed per engagement, partially offset by a 1.1% decrease in the number of engagements billed in first quarter 2016 compared to the same quarter last year.
| (US$ thousands) | Q1 2016 | Q1 2015 | % growth |
| Fee revenue | $267,394 | $251,188 | 6.4% |
| Net income | $23,082 | $14,533 | 58.8% |
Quote
“For our fiscal first quarter we reported 13% year over year growth at constant currency and growth within all of our service lines,” CEO Gary Burnison said. “Our Futurestep offering continued to deliver outsized results growing 27% year over year at constant currency. Our strong performance reaffirms that Korn Ferry is increasingly the people advisory firm that organizations turn to for the people strategies that deliver business strategies.”
Fee revenue by segment and geography
| (US$ thousands) | Q1 2016 | Q1 2015 | % growth | % growth (constant currency) |
| Executive recruitment | ||||
| North America | $90,359 | $82,300 | 9.8% | 10.8% |
| Europe, the Middle East, Africa | $36,090 | $40,297 | -10.4% | 3.0% |
| Asia Pacific | $19,215 | $19,534 | -1.5% | 7.2% |
| South America | $6,426 | $6,284 | 1.6% | 25.4% |
| Total executive recruitment | $152,090 | $148,415 | 2.5% | 8.8% |
| Leadership & Talent Consulting | $69,240 | $63,548 | 8.8% | 13.7% |
| Futurestep* | $46,064 | $39,225 | 17.6% | 27.3% |
*Futurestep includes recruitment process outsourcing, project-based recruitment and other services.
Guidance
Korn Ferry expects second-quarter fee revenue to be in the range of $267 million to $277 million, a year-over-year increase of between 4.4% and 8.3%.
Share price and market cap
Shares in Korn Ferry fell 1.73% to $34.04 in late morning trading. The company had a market cap of $1.76 billion, according to Yahoo!