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View All NewsKorn Ferry fee revenue up in fiscal third quarter
Executive search provider Korn Ferry International (NYSE: KFY) reported fee revenue rose 37.9% in its fiscal third quarter ended Jan. 31. The company closed on its acquisition of the Hay Group on Dec. 1; excluding legacy Hay Group, fee revenue was $272.3 million, an increase of 14.0% on a constant-currency basis.
Third-quarter results include $58.3 million of restructuring charges, integration/acquisition and separation costs, and a deferred revenue adjustment related to the Hay Group.
Third-quarter executive recruitment fee revenue rose 7.8%, or 12.8% on a constant currency basis. The increase was primarily attributable to a 10.6% increase in the weighted-average fees billed per engagement.
On a constant currency basis, all regions, with the exception of Asia Pacific, experienced year-over-year growth with North America at 20.9%;, South America at 9.1%; and Europe, the Middle East and Africa at 4.6%.
| (US$ thousands) | Q3 2016 | Q3 2015 | % growth |
| Fee revenue | $344,158 | $249,545 | 37.9% |
| Net loss/income | -$15,995 | $22,939 | nm |
Quote
“Despite the threat of economic contagion at the beginning of this calendar year, I am pleased to report 14% year over year growth in fee revenue at constant currency in our third fiscal quarter — excluding the legacy Hay Group business,” said CEO Gary Burnison. “Combined, adjusted fee revenue for the quarter was $350 million.”
Burnison continued: “We have successfully completed the initial synergy phase of our combination with Hay Group, which is partially reflected in the new combined Hay Group segment Adjusted EBITDA margin of 15.6% in the quarter. Over the last few weeks, we have launched phase two of our Hay Group unification, which incorporates growth areas such as the expansion of our intellectual property, solutions and offerings. Our intent is to substantially complete the last phase of our integration activities by July 31, 2016, which will be eight months from the closing date of the transaction.”
Fee revenue by segment and geography
| (US$ thousands) | Q3 2016 | Q3 2015 | % growth | % growth (constant currency) |
| Executive recruitment | ||||
| North America | $93,520 | $78,026 | 19.9% | 20.9% |
| Europe, the Middle East, Africa | $35,498 | $36,816 | -3.6% | 4.6% |
| Asia Pacific | $19,094 | $20,924 | -8.7% | na |
| South America | $6,541 | $7,713 | -15.2% | 9.1% |
| Total executive recruitment | $154,653 | $143,479 | 7.8% | 12.8% |
| Hay Group | $140,508 | $64,313 | 118.5% | na |
| Futurestep* | $48,997 | $41,753 | 17.3% | 23.7% |
| *Futurestep includes recruitment process outsourcing, project-based recruitment and other services. | ||||
Share price and market cap
Shares in Korn Ferry rose 1.24% to $27.77 in late morning trading today. The company had a market cap of $1.42 billion, according to Yahoo!