KORN FERRY Q4 FY26 earnings call KFY

Korn Ferry is evolving its foundational brand from "one Korn Ferry" to "We Are Korn Ferry," emphasizing deep client centricity and expanding solution breadth. Starting Q1 FY27, external reporting segments will shift from global solution-based to regional (Americas, EMEA, APAC), with solution-level detail provided in three categories: Search, Talent and Organizational Solutions, and Workforce Solutions. This change aims to better reflect how work is delivered and how clients buy services, aligning with the "We Are Korn Ferry" operating model.

The company's "We Are Korn Ferry" go-to-market strategy focuses on leveraging relationships across geographies and delivering impact with the totality of the firm to build sustainable client relationships. This approach has led to a significant increase in the business referral rate to 29.1% of consolidated fee revenue, up 320 basis points, and strong marketing and diamond account penetration at 40% of consolidated fee revenue. Management noted that 60-65% of their 5,000 key clients (representing 90% of revenue) currently utilize only about 1.5 of their solutions, highlighting a significant cross-selling opportunity.

Executive Search has grown for eight consecutive quarters, with average fees up almost 10% over the last couple of years, indicating a successful move upmarket. Management views the total market opportunity as $300 billion, with the search market at $14 billion to $15 billion, and aims to monetize its unparalleled access through high-quality, adjacent solutions. The trailing four months and current month show very strong new business in this segment, driven by real demographic trends.

The Professional Search and Interim solution, which started 5.5 years ago, has grown into an almost $400 million annual solution. Growth is driven by its synergistic nature with the rest of the firm and an increase in average bill rates for interim services from approximately $100 to $150 per hour. Key areas of focus include technology, finance and accounting, HR, and supply chain. Over 10% of the interim business originates from referrals within Korn Ferry's ecosystem, demonstrating the effectiveness of internal collaboration.

New business growth, excluding RPO, moderated to 2% year-over-year, primarily due to geopolitical conditions, specifically "the war" in the Middle East, which impacted new business levels in APAC and EMEA. While the Americas has shown strong new business, these regions have experienced a slowdown. Management anticipates potential pent-up demand as conditions stabilize and calmer minds prevail.

Korn Ferry maintains a disciplined and balanced approach to capital allocation, combining share repurchases and dividends with strategic inorganic growth. In Q4 FY26, the company purchased 1.24 million shares for approximately $78 million, and for the full year FY26, returned $221 million to shareholders through repurchases and dividends. Historically, 60% of growth has been organic and 40% inorganic, with the last acquisition being an interim solution provider almost two years ago.

The company is actively using AI across 17 workstreams, with 5 focused on search, to drive efficiency and address labor supply/demand imbalances. While AI can make processes more efficient, Korn Ferry emphasizes protecting its proprietary data and intellectual property, particularly its 113 million executive assessments. The focus remains on the human element, culture fit, and customer experience, rather than solely on efficiency gains, ensuring that technology augments rather than disintermediates humanity in talent acquisition.