Skip to content
    KFY
    Earnings call· Jan 2026(Q3 FY26)

    KORN FERRY Q3 FY26 earnings call KFY

    Mar 9, 2026 Source

    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

    5

    • 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

    3

    • 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

    8
    CategoryTargetConfidence
    Q4 FY26 Fee Revenue
    $730M-$750M
    high materiality
    High
    Q4 FY26 Adjusted EBITDA Margin
    17.1%-17.3%
    high materiality
    High
    Q4 FY26 Adjusted Diluted EPS
    $1.34-$1.40
    high materiality
    High
    Q4 FY26 GAAP Diluted EPS
    $1.34-$1.40
    high materiality
    High
    FY27 Capital Expenditures Run Rate
    $60M-$65M
    medium materiality
    Medium
    Investment Horizon Adjusted EBITDA Margin
    16%-18%
    medium materiality
    Medium
    Quarterly Cash Dividend
    $0.55 per share
    medium materiality
    High
    Client Labor Force Reduction (Advice)
    15% smaller
    low materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    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
    		$717M7%—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%——

    Operational metrics

    14
    Revenue per headcount
    Up almost 1/3
    Last 3 years

    Reflects increased efficiency and productivity, with costs down.

    Operating margins
    Up more than 300
    Last 3 years

    Driven by increased efficiency and productivity.

    Headcount per colleague
    Up almost 35%
    Last 3-4 years

    Since the Great Recession, demonstrating ability to drive client impact and profitability.

    Consulting firms growth
    5% or 5.5%
    Calendar 2025

    Industry growth rate cited by management.

    US labor force
    171 million
    Current

    Context for discussion on labor supply and demand, highlighting the high end of the labor force.

    US companies with 1000+ employees
    25,000
    Current

    Indicates Korn Ferry's focus on the high end of the labor force.

    US jobs created
    20 million to 25 million
    Last 20 years

    Historical context for labor market trends, contrasted with future estimates.

    US jobs estimated
    5 million
    Next 10 years

    Forecasted decline in job creation, highlighting labor supply imbalance.

    Temp workers in US
    2.5 million
    Historical average

    Historical average for temp workers in the US workforce, noting current penetration rate is at historic lows.

    Oil prices as % of consumer spending
    17% to 20%
    Current

    Impact of elevated oil prices on consumer spending, particularly transportation costs.

    Client penetration (solutions per client)
    1.5 or 2 solutions
    Current

    Identified as a significant runway for growth by deepening relationships with existing clients.

    Capital expenditures
    $64M
    YTD Q3 FY26

    Invested in Talent Suite productivity tools and other solution and product enhancements.

    Capital returned to shareholders
    $113M
    YTD Q3 FY26

    Through combined share repurchases and dividends.

    Dividend increases
    7th
    Last 6 years

    Reflects strong cash flow and confidence in the business outlook.

    Orderbook & backlog

    1
    Estimated remaining fees under existing contracts$1.85BQ3 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

    1
    ProductTypeDetails
    Talent Suitelaunch

    Deals & partnerships

    3
    LA28 Olympic and Paralympic GamesFounding 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 companyEnd-to-end Talent Suite customerMultiyear

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

    Top financial institutionSupporting new enterprise-wide talent excellence program

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

    Risks & headwinds

    4
    Challenged business conditions and labor marketsOngoing

    Industry has been challenged for more than 36 months.

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

    Potential negative impact from Middle East conflictNear-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 pricesOngoing

    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 ratesOngoing

    No material negative impact assumed in Q4 FY26 outlook.

    Mitigation: Acknowledged as external factors beyond company control.

    What to watch in Q4 FY26

    5

    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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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."

    02

    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).

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.