Executive Summary
Korn Ferry delivered a solid QQ2 2025 performance with continued profitability improvement and the ongoing diversification of its portfolio. Consolidated fee revenue was $681.96 million, down 4% year-over-year but flat sequentially, as management emphasized cost discipline and productivity gains that supported a sixth consecutive quarter of EBITDA margin expansion. Adjusted EBITDA rose to $112.56 million, with an adjusted EBITDA margin of 17.4%, up 340 basis points year-over-year, underscoring the company’s ability to grow earnings even as revenue declined in select segments. GAAP diluted EPS was $1.14 and adjusted diluted EPS was $1.21 for the quarter, while management highlighted a robust cash generation profile and capital allocation to shareholders. The period featured strategic investments designed to broaden Korn Ferry’s IP and go-to-market capabilities, notably the Korn Ferry Talent Suite and the Trilogy International acquisition, which expands interim professional offerings into Europe, the Middle East and Africa (EMEA) and North America.
Segment trends reflected a mixed demand backdrop: KF Digital revenue of $93 million fell 4% YoY but rose 5% QoQ with digital new business up 11% YoY and a digital EBITDA margin of 31.4%. Consulting revenue was $167 million, down 6% YoY but flat sequentially, with an 17.5% adjusted EBITDA margin as bill rates rose modestly and productivity improved. RPO remained stable at $88 million, with new awards totaling $101 million and a margin of 14.7%. Executive Search delivered $206 million in fee revenue, up 2% YoY. Management signaled that new logo activity in RPO and the larger, backlog-heavy consulting engagements could modestly accelerate in 2H calendar 2025, supported by Trilogy and the Talent Suite. The company also reiterated its focus on marquee and regional accounts (38% of the portfolio) and a people-centric strategy to sustain high performance across a diversified revenue mix. Management’s long-term thesis remains that inorganic growth will contribute meaningfully (approximately 40%) to growth, supported by disciplined integration and cultural fit.
Looking ahead, Korn Ferry guided for Q3 FY2025 fee revenue of $635–$665 million, with adjusted EBITDA margin of roughly 16.5%–17.3% and adjusted diluted EPS of $1.06–$1.18. Trilogy contributions are expected to be modest this quarter (around $14–$15 million) as the integration progresses, and the company expects seasonality and fewer working days to weigh on third-quarter results. Investors should monitor the evolution of RPO new logos, the monetization of the Talent Suite through platform integrations, and the pace of interim demand in Europe via Trilogy as key catalysts and potential upside drivers in 2H FY2025.
Key Performance Indicators
QoQ: 10.05% | YoY:-71.24%
QoQ: 15.02% | YoY:283.40%
QoQ: -2.88% | YoY:3 653.48%
QoQ: -200.00% | YoY:-3 473.57%
Key Insights
Revenue: $681.96 million; Gross profit: $179.88 million; Gross margin: 26.38%; Operating income: $87.48 million; EBITDA: $112.56 million; EBITDA margin: 16.50% (EBITDA ratio); Adjusted EBITDA margin: 17.40%; Net income: $60.80 million; Net income margin: 8.92%; GAAP diluted EPS: $1.14; Adjusted diluted EPS: $1.21; Cash from operations: $121.998 million; Free cash flow: $107.688 million; Cash at period-end: $694.85 million; Investable cash: $537 million; Total debt: $578.28 million; Net debt: -$1...
Financial Highlights
Revenue: $681.96 million; Gross profit: $179.88 million; Gross margin: 26.38%; Operating income: $87.48 million; EBITDA: $112.56 million; EBITDA margin: 16.50% (EBITDA ratio); Adjusted EBITDA margin: 17.40%; Net income: $60.80 million; Net income margin: 8.92%; GAAP diluted EPS: $1.14; Adjusted diluted EPS: $1.21; Cash from operations: $121.998 million; Free cash flow: $107.688 million; Cash at period-end: $694.85 million; Investable cash: $537 million; Total debt: $578.28 million; Net debt: -$116.57 million; Total assets: $3.52665 billion; Total stockholders’ equity: $1.77775 billion; Backlog: total contract revenue of $659 million with $296 million to be recognized in the next four quarters; New RPO awards: $101 million; New Digital subscriptions: $35 million (subscription portion of Digital), Digital new business: $105 million; Digital EBITDA margin: 31.4%; Digital revenue mix: subscriptions/licensing ~38% of Digital fee revenue; Interim fee revenue: $68 million; RPO margin: 14.7%; Executive Search margin: > 27% adjusted EBITDA and solid growth; YoY new business trends: Consolidated new business down <1% YoY, up 3% sequentially; Q3 guidance reflects calendar seasonality and working days impact; Trilogy contribution expected in Q3: ~$14–$15 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
681.96M |
-4.28% |
-0.12% |
| Gross Profit |
179.88M |
-71.24% |
10.05% |
| Operating Income |
87.48M |
283.40% |
15.02% |
| Net Income |
60.80M |
3 653.48% |
-2.88% |
| EPS |
-1.19 |
-3 473.57% |
-200.00% |
Key Financial Ratios
operatingProfitMargin
12.8%
operatingCashFlowPerShare
$2.35
freeCashFlowPerShare
$2.07
Management Commentary
Theme: Margin expansion and portfolio diversification
- Management highlighted six consecutive quarters of EBITDA margin expansion, up 340 bps YoY, supported by stronger bill rates and improved consultant productivity. Quote from Robert Rozek: 'our adjusted EBITDA margin has now increased for six consecutive quarters and is up 340 basis points year-over-year, as bill rates have remained strong and employee productivity continues to improve.'
Theme: IP/Data assets and Talent Suite expansion
- Gary Burnison discussed investments to productize Korn Ferry IP and data assets (100 million assessments, 10,000 success profiles, 28 million rewards data across 30,000 organizations) and the launch of the Korn Ferry Talent Suite, designed to license IP and provide integrated talent management capabilities on a subscription basis.
Theme: Trilogy acquisition and interim growth in EMEA
- The Trilogy International acquisition expands interim professional offerings to EMEA and North America. Gary noted Trilogy provides a foundation to tap a large addressable market and will contribute meaningfully to growth over time; the company expects continued earnings trajectory and synergy from this platform.
Theme: Demand environment and RPO green shoots
- In the Q2 call, management described stabilization in new business, with RPO delivering new logos and stronger October activity. The team highlighted green shoots in RPO (new logos) and a healthy pipeline, with RPO new awards at $101 million and 60% of new business from new clients in the quarter. The management team also discussed a benign near-term macro environment and a potential uplift from RPO and healthcare verticals.
Theme: Seasonality and longer implementation cycles in Consulting
- George Tong and Gary discussed seasonality in Q3 and the impact of holidays (three to four fewer days) and Chinese New Year, expecting a material revenue headwind of roughly $30–$40 million in Q3. They noted larger, backlog-heavy engagements in Consulting may delay revenue realization but are expected to contribute to future profitability as demand normalizes.
Theme: Cross-selling and ecosystem credibility
- The company emphasized the Korn Ferry ecosystem’s cross-referral benefits, enhanced by the Talent Suite and Trilogy, and the critical role of marquee accounts (38% of portfolio) that typically employ three or more Korn Ferry service offerings, supporting higher win rates and stickiness across segments.
our adjusted EBITDA margin has now increased for six consecutive quarters and is up 340 basis points year-over-year, as bill rates have remained strong and employee productivity continues to improve.
— Robert Rozek
Trilogy gives us a foundation to tap, which is arguably the largest piece of that interim market in EMEA.
— Gary Burnison
Forward Guidance
Assessment of the near-term outlook is cautiously constructive, anchored by continued profitability and portfolio evolution. Key factors and expectations include:
- Q3 FY2025 guidance anticipates revenue of $635–$665 million with a 16.5%–17.3% adjusted EBITDA margin, indicating ongoing operating leverage despite seasonality headwinds.
- Trilogy contribution to Q3: approximately $14–$15 million, modest relative to total quarterly revenue, reflecting early-stage integration and onboarding but representing a meaningful long-term growth vector in EMEA and North America.
- Digital growth remains a focal point, with a transition toward subscription-based revenues through the Korn Ferry Talent Suite. Management indicated that ~43% of Digital new business in the quarter came from subscriptions/licenses, and the integrated platform should improve client access and cross-product adoption over time.
- RPO remains a bright spot with new logos contributing to a healthier new business pipeline and a potential offset to declines in interim and professional search activity as the year progresses.
- Seasonality and working-day adjustments will continue to influence Q3 results; investors should monitor calendar effects, client backlog conversion rates, and the pace of large-scale engagements (over $1 million) in Consulting, which may take longer to deliver but can yield higher margin expansion when executed.
- Key risk factors include macroeconomic volatility, wage inflation, geopolitical uncertainties, and execution risk associated with Trilogy integration and Talent Suite go-to-market deployments. Value drivers to monitor include: (1) speed and scale of RPO new logo wins, (2) monetization of IP assets via subscriptions, (3) cross-segment cross-sell traction, and (4) integration milestones with Trilogy and HCM partners.
Overall, the combination of strong cash flow generation, a diversified revenue mix, and strategic investments into scalable IP platforms and international expansion can support a longer-term earnings trajectory, albeit with near-term seasonality headwinds and integration risks.