Can Korn Ferry grow if unemployment rises, given its historical correlation with economic cycles?

Burnison highlighted Korn Ferry's diversified business model across five solutions, which makes it less dependent on Executive Search and less correlated with unemployment than in the past. He noted Executive Search has grown despite a "labor recession" over the last 36 months, attributing this to demographics and post-COVID shifts. “Today, you've got a much more diversified business with 5 different solutions. And I think we've demonstrated over the last 36 months, which I consider a labor recession that there's quarters that one solution is up and another is down.”

Will Talent Suite primarily deepen existing client relationships or expand into new ones?

Burnison believes Talent Suite will primarily deepen existing relationships by embedding Korn Ferry's "language of talent" into client processes. He noted that for 2/3 of their 4,500 key clients, they only provide 1.5-2 solutions, indicating significant cross-sell opportunity. “I look at Talent Suite as not a digital solution play. I look at it as empowering the entire firm. And ultimately, the goal is to try to infuse Korn Ferry's language of talent in the companies, how they hire, how they design an organization, how they retain, how they pay, how they develop.”

How will Korn Ferry's total technology spending (CapEx/OpEx) evolve in the next few years after Talent Suite launch?

Robert Rozek stated current CapEx is around $80M-$85M, expected to drop to a historical run rate of $60M-$65M in FY27. Gary Burnison added that capital deployment might lean more heavily into stock buybacks in the coming months, shifting from the recent focus on technology spend. “I would say you'll see the CapEx probably drop a bit, but maybe lean more heavily, as Gary indicated, into buybacks, certainly where -- when you see the market dislocated like it is today.”

KFY

Korn Ferry (KFY) Q3 FY26 earnings call: guidance and Q&A

Q: How does AI impact Korn Ferry, especially given concerns about job displacement?

Gary Burnison stated AI will drive efficiency and create more opportunities for Korn Ferry, particularly at the high end of the labor force where talent is scarce. He emphasized the demographic imbalance (fewer workers, more retirees) means companies must "do more with less" through technology. “It's not simply that AI will take away your job. It's that those not embracing technology in AI will be left out.”

Earnings call· Jan 2026 (Q3 FY26)· Industrials· Mar 9, 2026

Source: earnings call transcript

Executive summary

Korn Ferry Q3 FY26 — Accelerating Revenue Growth and Strategic Transformation

Korn Ferry delivered a strong quarter, driven by its "We Are Korn Ferry" strategy focused on client centricity and integrated solutions, leading to accelerating revenue growth and margin expansion. The firm is navigating challenging labor markets by leveraging its Talent Suite and proprietary data to help clients with workforce transformation, while also balancing capital deployment between technology investments and shareholder returns.

Highlights

Consolidated fee revenue grew 7% YoY to $717 million, marking the fifth consecutive quarter of accelerating growth.
Adjusted EBITDA increased 7.5% to $123 million, with adjusted EBITDA margin expanding by 10 basis points to 17.2%.
Adjusted diluted EPS grew 8% to $1.28.
Total company new business (excluding RPO) grew 11%, with Consulting and Digital achieving all-time quarterly highs.
Quarterly cash dividend increased by 15% to $0.55 per share, the seventh increase in six years.

Concerns

APAC fee revenue declined slightly by 2% due to modest weakness in solutions other than Executive Search.
Business conditions and labor markets remain challenged, with potential negative impacts from the Middle East conflict not factored into guidance.
Consulting segment margins decreased by 70 basis points year-over-year due to higher bonus accruals.

Guidance & targets

Category	Target	Timeline	Confidence
Q4 FY26 Fee Revenue	$730M-$750M high materiality	Q4 · FY26	High
Q4 FY26 Adjusted EBITDA Margin	17.1%-17.3% high materiality	Q4 · FY26	High
Q4 FY26 Adjusted Diluted EPS	$1.34-$1.40 high materiality	Q4 · FY26	High
Q4 FY26 GAAP Diluted EPS	$1.34-$1.40 high materiality	Q4 · FY26	High
FY27 Capital Expenditures Run Rate	$60M-$65M medium materiality	FY27	Medium
Investment Horizon Adjusted EBITDA Margin	16%-18% medium materiality	Investment horizon	Medium
Quarterly Cash Dividend	$0.55 per share medium materiality	Ongoing	High
Client Labor Force Reduction (Advice)	15% smaller low materiality	5-7 years	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consolidated Fifth consecutive quarter of accelerating year-over-year fee revenue growth. Profitability remained strong with adjusted EBITDA margin up 10 basis points. Adjusted EBITDA growth: 7.5%Adjusted diluted EPS: $1.28Adjusted diluted EPS growth: 8%New business (excluding RPO) growth: 11%New business referrals: 27.2% of consolidated fee revenueMarquee & Diamond Accounts: 40% of total fee revenue	$717M	7%	—	Adjusted EBITDA $123M, 17.2%
Interim (PS&I) Continued to benefit from new business referrals, driving outperformance in an industry that has been challenged for more than 36 months. Average hourly bill rates growth: 15%	—	4%	—	—
Digital Saw some improvement sequentially, with an increasing percentage of longer-term Software as a Service deals. Subscription and license new business growth: 30%Subscription and license new business as % of Digital total new business: 43%Subscription and license fee revenue growth: 8%	—	Flat (constant currency)	—	—
Consulting Strong new business driven by transformation and org strategy engagements. Margin decline due to higher bonus accruals. Average hourly bill rates growth: 2%New business: 44% of engagements over $0.5M	—	—	—	Margin down 70 bps YoY
Americas Growth led by Executive Search and RPO.	—	6%	—	—
EMEA Strong growth with double-digit increases in Executive Search, Consulting, Digital, and PS&I.	—	13%	—	—
APAC Growth in Executive Search offset by modest weakness in other solutions.	—	-2%	—	—

KFY operating KPIs by quarter

KFY operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jan 2026 Q3 FY26	Apr 2026 Q4 FY26	Jul 2026 Q1 FY27	Change vs prior quarter
Clients	10K+ We've got more than 10,000 clients around the world, but 4,500 of those represent 90% of our revenue. Source: earnings call transcript	<14K And so my starting point rather than org structure has been on mindset, mindset of our leaders and mindset of the organization because the fact is when you look at the data, we do business with almost 14,000 clients around the world. Source: earnings call transcript	—	—
Backlog	$1.85B Estimated remaining fees under existing contracts at the end of the quarter were $1.85 billion. Source: earnings call transcript	<$1.9B So for Q4, our ending estimated remaining fees under existing contracts grew 10% year-over-year to almost $1.9 billion with growth in every solution. Source: earnings call transcript	$1.92B As previously mentioned, our estimated remaining fees under existing contracts were $1.92 billion at the end of the quarter. Source: earnings call transcript	—
Orders RPO	$54M RPO delivered $54 million of new business in the quarter with 78% coming from new logos and 22% from renewals. Source: earnings call transcript	$137M The RPO business itself won $137 million of new business in the fourth quarter and 74% of that came from new logos. Source: earnings call transcript	—	+153.7%
New business from new logos share RPO	78% RPO delivered $54 million of new business in the quarter with 78% coming from new logos and 22% from renewals. Source: earnings call transcript	74% The RPO business itself won $137 million of new business in the fourth quarter and 74% of that came from new logos. Source: earnings call transcript	50% And in this quarter, the RPO new wins were something like $160 million, 50% of those were from new logos. Source: earnings call transcript	-24 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Estimated remaining fees under existing contracts $1.85B Q3 FY26 end

Up 11% YoY

Approximately 60% ($1.1B) recognized within the next year; remaining 40% ($734M) estimated to be recognized beyond the next 4 quarters.

Product announcements

Product	Type	Timeline	Details
Talent Suite	launch	Soft launch November, harder launch January

Deals & partnerships

LA28 Olympic and Paralympic Games Founding partner, powering the people who power the game

Building C-suite, designing organization, and hiring nearly 5,000 people for the games.

Major aerospace and defense company End-to-end Talent Suite customer Multiyear

Utilizing proprietary data to make better talent decisions across 40,000+ employees.

Top financial institution Supporting new enterprise-wide talent excellence program

Incorporating world-class assessment capability and leadership accelerator programs for nearly 100,000 employees.

Risks & headwinds

Challenged business conditions and labor markets Ongoing

Industry has been challenged for more than 36 months.

Mitigation:Diversified business model, client-centric strategy, integrated solutions.

Potential negative impact from Middle East conflict Near-term (next 90 days for clarity)

Not factored into Q4 FY26 guidance.

Mitigation:Colleagues taking safety precautions; monitoring situation, but no material impact on service delivery as of last week.

Elevated oil prices Ongoing

17% to 20% of consumer spending is on transportation costs (including gas).

Mitigation:Acknowledged as a negative for consumer spending, especially in a K-shaped economy.

Uncertainty from worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates Ongoing

No material negative impact assumed in Q4 FY26 outlook.

Mitigation:Acknowledged as external factors beyond company control.

What to watch in Q4 FY26

Capital expenditure run rate

FY27

Current $80M-$85M

Target $60M-$65M

Why it matters

Indicates a shift in capital allocation towards potentially higher shareholder returns (buybacks) and away from recent tech investments.

I would say you'll see the CapEx probably drop a bit, but maybe lean more heavily, as Gary indicated, into buybacks, certainly where -- when you see the market dislocated like it is today.

Find out whether KFY delivers this. Inve re-checks your case every morning.

Q&A highlights

How does AI impact Korn Ferry, especially given concerns about job displacement?

Gary Burnison stated AI will drive efficiency and create more opportunities for Korn Ferry, particularly at the high end of the labor force where talent is scarce. He emphasized the demographic imbalance (fewer workers, more retirees) means companies must "do more with less" through technology.

“It's not simply that AI will take away your job. It's that those not embracing technology in AI will be left out.”

asked by Tobey Sommer · answered by Gary Burnison

2 min read 5 chapters

Detailed narrative

Strategic Evolution and AI Impact

Korn Ferry is undergoing a transformation from "One Korn Ferry" to "We Are Korn Ferry," emphasizing a unified mindset and client centricity. The firm views AI not as a job destroyer but as a critical tool to address the stark imbalance in labor supply due to aging demographics and declining birth rates.

Management believes AI will increase the demand for highly skilled talent and drive efficiency, enabling companies to "do more with less."

Client Centricity and Solution Deepening

The company's strategy focuses on deepening relationships with its 4,500 key clients, which represent 90% of its revenue, by expanding solution penetration beyond the current 1.5-2 solutions per client for two-thirds of this base. This approach is supported by the "We Are Korn Ferry" initiative, driving cross-business referrals (27.2% of fee revenue) and strong performance in Marquee & Diamond Accounts (40% of total fee revenue).

Talent Suite Launch and Impact

Korn Ferry soft-launched its proprietary Talent Suite in November, with a harder launch in January, seamlessly converting existing clients. This platform, described as "moneyball for business," integrates decades of insight and data to empower the entire firm, aiming to infuse Korn Ferry's "language of talent" into clients' hiring, design, retention, and development processes.

While early, it is seen as a foundational tool for future growth and efficiency.

Interim Business Outperformance

The interim portion of the PS&I solution grew 4% in the quarter, benefiting from new business referrals and outperforming a challenging industry. Management noted a slight sequential uptick in demand from late November through January, with bill rates increasing by 15%. The company sees significant opportunity in this solution, particularly in Europe, driven by its integrated go-to-market strategy.

Consulting Strength and Engagement Trends

The consulting business is experiencing strong demand, particularly for large engagements focused on organizational strategy and transformation. Many companies are seeking solutions to assess and prepare their talent for an AI-driven world, leading to significant deals, with 44% of consulting new business in the quarter coming from engagements over $0.5 million.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.