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View All NewsKorn Ferry fee revenue up, Hay Group acquisition fuels growth
Executive search and advisory firm Korn Ferry International (NYSE: KFY) reported fee revenue rose 47.2% in its fiscal fourth quarter ended April 30. The company closed on its acquisition of the Hay Group on Dec. 1; excluding legacy Hay Group, fee revenue rose 4.9%, or 7.1% on a constant-currency basis, primarily due to increases in fee revenue in the North America region of executive search and the Futurestep segment.
Fourth-quarter results include $2.4 million in restructuring costs, including real estate co-location, related to the Hay Group, and the integration will be substantially complete this quarter.
| (US$ thousands) | Q4 2016 | Q4 2015 | % growth |
| Fee revenue | $399,960 | $271,717 | 47.2% |
| Net income | $6,375 | $25,482 | -75.0% |
Quote
“We are in the midst of creating a new firm — with 65% of our colleagues new to the organization in the last three years, due to expansion and growth,” said CEO Gary Burnison.
“We are a company that accelerates our clients’ business performance through solutions and productized services that span from strategy implementation and organizational design to recruitment and leadership development to compensation and reward strategies,” Burnison said. “Our advisory business, now bolstered by our Hay Group combination, has given us more reasons to engage with clients. Also, our recruiting businesses, executive search and Futurestep, have never been stronger than they were in the fourth quarter. We are indeed creating the preeminent organizational and people advisory firm.”
Fee revenue by segment and geography
| (US$ thousands) | Q4 2016 | Q4 2015 | % growth |
| Executive search | |||
| North America | $94,678 | $87,579 | 8.1% |
| Europe, the Middle East, Africa | $36,161 | $39,677 | -8.9% |
| Asia Pacific | $21,199 | $22,533 | -5.9% |
| Latin America | $7,661 | $6,794 | 12.8% |
| Total executive search | $159,699 | $156,583 | 2.0% |
| Hay Group | $187,795 | $72,749 | 158.1% |
| Futurestep* | $52,466 | $42,385 | 23.8% |
| *Futurestep includes recruitment process outsourcing, project-based recruitment and other services. | |||
Full-year results
| (US$ thousands) | FY 2016 | FY 2015 | % growth |
| Fee revenue | $1,292,112 | $1,028,152 | 25.7% |
| Net income | $31,433 | $88,357 | -64.4% |
Guidance
Korn Ferry expects first-quarter fee revenue in the range of $371 million and $391 million on a consolidated basis and in the range of $375 million and $395 million on a consolidated as adjusted basis.
Share price and market cap
Shares in Korn Ferry fell 18.36% to $27.58 in late morning trading today and the company had a market cap of $1.3 billion, according to Yahoo!