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Segments | 6 Months Ended
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Oct. 31, 2022
Segment Reporting [Abstract] |
Segments | SegmentsIn the past year, the Company has allocated capital to build out its Professional Search and Interim operations through the acquisition of Lucas Group, Patina and Infinity Consulting Solutions ("ICS"). These acquisitions provided the Company with the opportunity to reassess how it manages its RPO & Professional Search segment. Given the Company’s strategy and development of separate financial and operational metrics for the Professional Search & Interim and RPO operations, the Company’s chief operating decision maker has begun to regularly make separate resource allocation decisions between Professional Search & Interim and RPO. Therefore, on May 1, 2022, the Company changed the composition of its global segments and under the new reporting format, the RPO & Professional Search segment has been separated into two segments; Professional Search & Interim and RPO. Revenues are directly attributed to a segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. Due to this change, the Company completed a quantitative assessment for potential goodwill impairment both prior and subsequent to the aforementioned change and determined there was no goodwill impairment. The presentation of operating results prior to May 1, 2022 has been revised to conform to the new segment reporting. The Company now has eight reportable segments: Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America, Professional Search & Interim and RPO. The Company’s eight reportable segments operate through the following five lines of business: 1.Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is supported by a comprehensive range of some of the world’s leading lP and data. The Consulting teams employ an integrated approach across our core capabilities and integrated solutions, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world. 2.Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities and behaviors to drive businesses forward. Our digital products give clients direct access to our proprietary data, client data, and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy. 3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. The Company’s approach to placing talent that brings together research-based IP, proprietary assessments, behavioral interviewing with practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific and Executive Search Latin America). 4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. The Company helps clients source high-quality candidates at speed and at scale globally, covering single hire to multi hire permanent placements and interim contractors. 5.RPO offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. Our scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable us to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit. Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, Professional Search & Interim and RPO are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, Professional Search & Interim and RPO report directly to the Chief Executive Officer of the Company. The Company also operates Corporate to record global expenses. The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker (“CODM”) review of 1) fee revenue and 2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairment charges). The CODM is not provided asset information by reportable segment. Financial highlights are as follows:
| Three Months Ended October 31, |  | Six Months Ended October 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
| Consolidated
| (in thousands)
Fee revenue | $ | 727,849 |  |  | $ | 639,443 |  |  | $ | 1,423,752 |  |  | $ | 1,224,838 |
Total revenue | $ | 735,719 |  |  | $ | 643,398 |  |  | $ | 1,438,867 |  |  | $ | 1,231,496 |
Net income attributable to Korn Ferry | $ | 73,541 |  |  | $ | 75,772 |  |  | $ | 150,788 |  |  | $ | 150,595 |
Net income attributable to noncontrolling interest | 1,074 |  |  | 560 |  |  | 2,363 |  |  | 2,134 |
Other loss (income), net | 9,048 |  |  | (5,066) |  |  | 8,273 |  |  | (9,513) |
Interest expense, net | 7,098 |  |  | 6,365 |  |  | 14,710 |  |  | 11,791 |
Income tax provision | 28,886 |  |  | 26,145 |  |  | 55,112 |  |  | 50,024 |
Operating income | 119,647 |  |  | 103,776 |  |  | 231,246 |  |  | 205,031 |
Depreciation and amortization | 17,093 |  |  | 15,633 |  |  | 33,322 |  |  | 31,277 |
Other (loss) income, net | (9,048) |  |  | 5,066 |  |  | (8,273) |  |  | 9,513 |
Integration/acquisition costs | 3,411 |  |  | 1,084 |  |  | 7,016 |  |  | 1,084 |
Impairment of fixed assets | — |  |  | 1,915 |  |  | — |  |  | 1,915 |
Impairment of right of use assets | — |  |  | 7,392 |  |  | — |  |  | 7,392 |
Adjusted EBITDA(1) | $ | 131,103 |  |  | $ | 134,866 |  |  | $ | 263,311 |  |  | $ | 256,212 |
___________________
(1) | Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition costs, impairment of fixed assets and impairment of right of use assets.
Financial highlights by reportable segments are as follows:
| Three Months Ended October 31,
| 2022 |  | 2021
| Fee revenue |  | Total revenue |  | Adjusted EBITDA |  | Fee revenue |  | Total revenue |  | Adjusted EBITDA
| (in thousands)
Consulting | $ | 173,092 |  |  | $ | 175,845 |  |  | $ | 31,089 |  |  | $ | 164,893 |  |  | $ | 165,732 |  |  | $ | 30,061 |
Digital | 94,329 |  |  | 94,577 |  |  | 27,524 |  |  | 88,639 |  |  | 88,712 |  |  | 28,556 |
Executive Search: |  |  |  |  |  |  |  |  |  |  |
North America | 142,485 |  |  | 144,147 |  |  | 37,969 |  |  | 158,197 |  |  | 159,082 |  |  | 48,907 |
EMEA | 44,645 |  |  | 44,919 |  |  | 8,081 |  |  | 42,434 |  |  | 42,571 |  |  | 7,663 |
Asia Pacific | 23,408 |  |  | 23,523 |  |  | 5,834 |  |  | 28,257 |  |  | 28,267 |  |  | 8,201 |
Latin America | 7,821 |  |  | 7,822 |  |  | 2,607 |  |  | 6,571 |  |  | 6,572 |  |  | 1,366 |
Professional Search & Interim | 134,743 |  |  | 135,762 |  |  | 32,457 |  |  | 54,559 |  |  | 54,702 |  |  | 21,825 |
RPO | 107,326 |  |  | 109,124 |  |  | 16,004 |  |  | 95,893 |  |  | 97,760 |  |  | 14,433 |
Corporate | — |  |  | — |  |  | (30,462) |  |  | — |  |  | — |  |  | (26,146) |
Consolidated | $ | 727,849 |  |  | $ | 735,719 |  |  | $ | 131,103 |  |  | $ | 639,443 |  |  | $ | 643,398 |  |  | $ | 134,866 |
| Six Months Ended October 31,
| 2022 |  | 2021
| Fee revenue |  | Total revenue |  | Adjusted EBITDA |  | Fee revenue |  | Total revenue |  | Adjusted EBITDA
| (in thousands)
Consulting | $ | 339,576 |  |  | $ | 344,580 |  |  | $ | 60,639 |  |  | $ | 313,371 |  |  | $ | 314,739 |  |  | $ | 56,902 |
Digital | 178,090 |  |  | 178,392 |  |  | 51,702 |  |  | 169,310 |  |  | 169,393 |  |  | 54,188 |
Executive Search: |  |  |  |  |  |  |  |  |  |  |
North America | 294,029 |  |  | 297,031 |  |  | 81,718 |  |  | 296,875 |  |  | 298,382 |  |  | 92,237 |
EMEA | 91,701 |  |  | 92,248 |  |  | 16,596 |  |  | 85,181 |  |  | 85,414 |  |  | 15,248 |
Asia Pacific | 49,789 |  |  | 49,975 |  |  | 13,185 |  |  | 56,960 |  |  | 56,999 |  |  | 16,521 |
Latin America | 15,629 |  |  | 15,631 |  |  | 5,224 |  |  | 13,347 |  |  | 13,351 |  |  | 3,720 |
Professional Search & Interim | 233,690 |  |  | 235,814 |  |  | 61,618 |  |  | 106,396 |  |  | 106,634 |  |  | 41,264 |
RPO | 221,248 |  |  | 225,196 |  |  | 33,713 |  |  | 183,398 |  |  | 186,584 |  |  | 28,961 |
Corporate | — |  |  | — |  |  | (61,084) |  |  | — |  |  | — |  |  | (52,829) |
Consolidated | $ | 1,423,752 |  |  | $ | 1,438,867 |  |  | $ | 263,311 |  |  | $ | 1,224,838 |  |  | $ | 1,231,496 |  |  | $ | 256,212 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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