Executive search firm Korn Ferry International (KFY: NYSE) yesterday reported total revenue for the company’s fiscal first quarter ending 31 July 2016 of USD 392.9 million, an increase of 40.6% compared with USD 279.3 million last year. 

*Adjusted to exclude Hay Group deferred revenue write-off related to the acquisition, restructuring and management separation charges and integration/acquisition costs.

Korn Ferry reported fee revenue of USD 375.6 million (USD 379.2 million on an adjusted basis), up from USD 267.4 million last year. The growth was primarily due to increases in fee revenue in Futurestep and Hay Group segments with the company’s core executive search services declining by 3.7% primarily attributable to lower fee revenues in North America, partially offset by an increase in Latin America.

The results fell short of Wall Street expectations in terms of both revenue and earnings per share.

 “I am proud of the performance of our firm during the fiscal first quarter. We generated USD 376 million of fee revenue and USD 379 million of adjusted fee revenue, up 40% and 42% year over year, respectively,” said Gary D. Burnison, CEO Korn Ferry. “Operationally, our combination with Hay Group and investments in our business have provided us with a more compelling platform to not only accelerate our clients’ success, but accelerate Korn Ferry’s growth – and generate stronger earnings power. I am confident that our strategic actions are making us more relevant to our clients, and firmly establishing Korn Ferry as a world-class people and organizational advisor.”

Korn Ferry operates three primary business segments; Executive Recruitment; Hay Group and Futurestep. Fee revenue in Q1 FY17 was broken down as follows: 

The year-over-year increase for the Hay Group segment is primarily attributed to the legacy Hay Group acquisition that took place in the third quarter of fiscal 2016.  As a result, consulting fee revenue was higher by USD 70.5 million in Q1 FY'17 compared to Q1 FY'16 with the remaining increase being generated by product revenue.

In the Futurestep segment, the higher fee revenue was driven by a USD 5.4 million increase in recruitment process outsourcing in Q1 FY'17 compared to Q1 FY'16.

The rest of the increase was due to higher fee revenue in professional search due to a 14.2% increase in engagements billed in Q1 FY'17 compared to Q1 FY'16.

Korn Ferry’s Executive Recruitment division operates in four primary geographies; North America, EMEA, Asia Pacific, and South America. Fee revenue for Q1 FY16 was as follows: 

On yesterday’s earnings call, Burnison told investors, “While the vote in Brexit did happen and we did in fact see some minor impact on our business in this first quarter that ended in July, particularly around a handful of European countries, I don't anticipate…… I certainly don't have a crystal ball……. but I don't anticipate any further declines coming out of Brexit at least over the next two or three quarters as far as one could see here. So that's one clarifying factor.”

Looking forward, assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis, Korn Ferry states that Q2 FY'17 fee revenue is expected to be in the range of USD 380 million and USD 400 million.

In trading yesterday, Korn Ferry International closed at USD 24.09, up 0.21% on the day and 29.73% above the 52-week low of USD 18.57 set on 27 June 2016. Based on its current share price the company has a market value of USD 1.4 billion.