US-based international executive recruitment firm Heidrick & Struggles (HSII: NSQD) yesterday reported net revenue for the first quarter ending 31 March 2018 of $160.1 million, an increase of 14.3%, or 10.2% in constant currency, over last year.

The company said that improvements in operating income and adjusted EBITDA were primarily driven by the increase in revenue from Executive Search.

On 1 January 2018, the company adopted ASC 606, Revenue from Contracts with Customers, and applied the modified retrospective method, which involves recognising the cumulative effect of applying the guidance at the date of initial application with no restatement of the comparative periods presented. This adoption increased consolidated net revenue in the 2018 first quarter by $2.5 million compared to the historical method of revenue recognition.

Krishnan Rajagopalan, Heidrick & Struggles’ President and Chief Executive Officer, commented, “We are very pleased with our firm’s accomplishments in the first quarter, continuing on our momentum from year-end. All three regions achieved strong, double-digit net revenue growth and contributed to the year-over-year increase in Executive Search. With the formal launch of Heidrick Consulting in the first quarter, we are now turning our focus to scaling the business to enhance our impact with clients by expanding our consultant expertise, service offerings, and scalable tools and methodologies. “

Beginning 1 January 2018, the Leadership Consulting and Culture Shaping businesses were combined into one business, Heidrick Consulting.

First quarter revenue was broken down as follows.

The impact of the adoption of ASC 606 increased revenue in the 2018 first quarter for Executive Search by approximately $3.5 million, with approximately $1.8 million in the Americas, $1.1 million in Europe, and $0.6 million in Asia Pacific.  For Heidrick Consulting, the adoption of the new revenue recognition standard decreased enterprise revenue in the 2018 first quarter by approximately $1.0 million.

Looking ahead, the company is forecasting 2018 second quarter consolidated net revenue of between $160 million and $170 million. This forecast is based on the average currency rates in March 2018 and reflects, among other factors, management’s assumptions for the anticipated volume of new Executive Search confirmations, Heidrick Consulting assignments, the current backlog, consultant productivity, consultant retention, and the seasonality of its business.

Rajagopalan added, “Our outlook for the market demand for executive search and leadership advisory services remains positive. The strategic actions that we took at the end of 2017 are enabling us to execute our plan to drive profitable growth and operating excellence. Our digital transformation – driving and leveraging our propriety IP-based solutions and data—will continue to distinguish Heidrick & Struggles in the market.”

In trading yesterday, Heidrick & Struggles International shares closed at $32.40, up 1.09% on the day and 1.37% below its 52-week high of $32.85, set on 19 Apr 2018. Based on its current share price the company has a market value of $602.98 million.