Segments

3 Months Ended

Jul. 31, 2019

10. Segments

The Company currently operates through three global business segments: Advisory, Executive Search and RPO & Professional Search. Advisory assists clients to synchronize strategy and talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership Development and Rewards and Benefits, all underpinned by a comprehensive array of one of the world-leading IP, products and tools. Executive Search focuses on recruiting board level, chief executive and other senior executive and general management positions, in addition to research-based interviewing and assessment solutions, for clients predominantly in the consumer goods, financial services, industrial, life sciences/healthcare and technology industries. RPO & Professional Search uses data-backed insight and IP, matched with strategic collaboration and innovative technology, to meet people challenges head on—and succeed. Solutions span all aspects of RPO, Professional Search and Project Recruitment. Executive Search is managed by geographic regional leaders and Advisory and RPO & Professional Search worldwide operations are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Advisory and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in Note 1—Organization and Summary of Significant Accounting Policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.

Financial highlights by business segment are as follows:

	Three Months Ended July 31, 2019
			Executive Search
	Advisory		North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	195,526	$	111,722	$	46,530	$	27,362	$	7,585	$	193,199	$	95,824	$	—		$	484,549
Total revenue	$	199,320	$	115,446	$	47,312	$	27,668	$	7,587	$	198,013	$	98,865	$	—		$	496,198

Net income attributable to Korn Ferry																		$	42,951
Net income attributable to noncontrolling interest																			699
Other income, net																			(1,826	)
Interest expense, net																			4,057
Income tax provision																			14,453
Operating income (loss)	$	25,791	$	30,322	$	7,311	$	6,993	$	1,010	$	45,636	$	15,041	$	(26,134	)		60,334
Depreciation and amortization		8,053		901		456		346		328		2,031		992		1,701			12,777
Other income (loss), net		726		1,140		12		15		57		1,224		74		(198	)		1,826
EBITDA and Adjusted EBITDA	$	34,570	$	32,363	$	7,779	$	7,354	$	1,395	$	48,891	$	16,107	$	(24,631	)	$	74,937

	Three Months Ended July 31, 2018
				Executive Search
	Advisory			North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	195,375		$	112,097	$	46,654	$	26,295	$	7,878	$	192,924	$	77,269	$	—		$	465,568
Total revenue	$	200,147		$	115,757	$	47,749	$	26,625	$	7,903	$	198,034	$	80,181	$	—		$	478,362

Net loss attributable to Korn Ferry																			$	(38,611	)
Net income attributable to noncontrolling interest																				19
Other income, net																				(4,520	)
Interest expense, net																				4,103
Income tax benefit																				(16,110	)
Operating income (loss)	$	(83,079	)	$	26,514	$	6,969	$	6,641	$	754	$	40,878	$	11,645	$	(24,563	)		(55,119	)
Depreciation and amortization		7,431			979		370		370		107		1,826		761		1,713			11,731
Other income (loss), net		570			3,501		340		175		37		4,053		105		(208	)		4,520
EBITDA		(75,078	)		30,994		7,679		7,186		898		46,757		12,511		(23,058	)		(38,868	)
Integration/acquisition costs		3,027			—		—		—		—		—		—		80			3,107
Tradename write-offs		106,555			—		—		—		—		—		—		—			106,555
Adjusted EBITDA	$	34,504		$	30,994	$	7,679	$	7,186	$	898	$	46,757	$	12,511	$	(22,978	)	$	70,794