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Executive Search firm Korn/Ferry International (KFY: NYSE) announced total revenue of USD 237.6 million for the first quarter ending 31 July 2013. Revenue for the period increased +21.2% compared to USD 196 million for the same period last year. Fee revenue for the first quarter of 2014 increased from USD 186.7 million last year to USD 228.4 million this year, a rise of +23% in constant currency.
Operating income for the period fell by -2%, year-on-year, from USD 17 million in Q1 2013 to USD 16.6 million in Q1 2014. Net income, however, increased from USD 10.4 million last year, to USD 11.4 million this year, an increase of +9.6%.
Gary D. Burnison, CEO of Korn/Ferry International, commented: “I am pleased with our continued momentum and operating results during the first quarter. With our leadership team effectively driving our strategy, we have increased revenue within our flagship Search business and broader talent management offering, year over year.”
“We are making our brand more elastic with 40% of the revenue talent management offerings in the quarter. Today’s businesses are increasingly borderless and knowledge-based, and asking their workforce to do much more, with much less. Irrespective of industry or geography, talent is a driver of success. Accordingly, Korn/Ferry is transforming its business, helping organisations navigate this complex environment by linking their business and talent strategies,” he added.
Fee revenue across North America rose +3% from USD 72.1 million in Q1 2013 to USD 74.1 million this year. Fee revenue in Europe, Middle East, and Africa rose +15% despite a persistently tight job market. Fee revenue across EMEA increased to USD 34.4 million from USD 29.8 million year-on-year. Asia-Pacific’s year-on-year fee revenue rose from USD 17.4 million in Q1 2013 to USD 21.1 million in Q1 2014, an increase of +22%. South America was the only region to post fee revenue declines, falling by -14% to USD 7 million from USD 8.1 million a year ago.
Korn/Ferry’s largest business segment, Executive Recruitment, reported total revenue of USD 142.5 million, up by +7% compared with revenue of USD 133.2 million last year. Fee revenue also increased, rising to USD 136.6 million from USD 127.4 million a year ago, equating to a rise of +8% in constant currency.
The increase in fee revenue was driven by fee revenue increases in Europe, Asia, and North America; partially offset by a decrease in Latin America. The increase is primarily attributed to a +6% increase in the number of executive recruitment engagements billed and a +1% increase in the weighted-average fee billed per engagement, compared with a year ago.
Korn/Ferry’s Leadership and Talent Consulting business segment reported more than double the fee revenue and total revenue reported during the first quarter of 2013. Total revenue increased +108% from USD 29.8 million in Q1 2013 to USD 62.1 million this year. Fee revenue rose +113% in constant currency, to USD 60.1 million from USD 28.4 million last year.
Excluding acquisitions made during the first quarter of last year, fee revenue increased by +12% in constant currency. The increase in fee revenue (excluding acquisitions) was primarily due to an increase in consulting fee revenue driven by a +14% increase in the number of clients, year-on-year.
Total revenue in Korn/Ferry’s Futurestep business segment was USD 33 million, recording no year-on-year change. Fee revenue rose slightly from USD 30.9 million to USD 31.7 million, a rise of +3%, year-on-year. The increase in fee revenue was driven by a +3% increase in weighted-average fee billed per engagement during Q1 2014 compared with Q1 2013, which was driven by increases in recruitment process outsourcing and recruitment.
Looking forward, the company advised: “Assuming worldwide economic conditions, financial markets, and foreign exchange rates remain steady, fee revenue is expected to be in the range of USD 225 million to USD 237 million in Q2 2014.”
According to research from Staffing Industry Analysts, Korn/Ferry is ranked among the largest staffing firms in the world. After the earnings announcement on Thursday, the company’s share price closed up +2.6% at USD 18.72, an increase of +31.1% compared with a year ago. Based on its current share price, the company has a market value of USD 913.8 million.