Korn Ferry (NYSE:KFY) stock traded lower Wednesday after the consulting firm reported first-quarter fiscal 2027 results that beat Wall Street expectations on both earnings and sales, while issuing second-quarter adjusted EPS guidance below estimates.
• Korn Ferry stock is under selling pressure. What’s driving KFY stock lower?
Korn Ferry reported adjusted EPS of $1.43, beating the $1.36 estimate. GAAP diluted EPS rose 5% year over year to $1.32.
Total revenue rose 6.9% year over year to $764.622 million, beating the $739.430 million estimate.
Fee revenue increased 7% to $756.5 million, marking a sixth consecutive quarter of top-line growth.
The pullback followed adjusted EPS guidance of $1.30-$1.40 for the second quarter, compared with the $1.45 estimate.
Profitability Holds Steady
Net income attributable to Korn Ferry increased 4% to $69 million, while its margin narrowed to 9.1% from 9.4%.
Adjusted EBITDA rose 7% to $128.2 million, with the margin unchanged at 17%. Integration and acquisition costs increased to $7.6 million from $1.5 million.
Regional and Solution Growth
Americas fee revenue increased 9% to $442.1 million, EMEA rose 4% to $227.7 million, and APAC increased 1% to $86.7 million.
Americas adjusted EBITDA margin improved to 26.3% from 24.9%, while APAC’s margin declined to 22.2% from 23.1%.
Search fee revenue climbed 10% to $307.9 million, and Workforce Solutions rose 11% to $189.4 million. Talent & Organizational Solutions remained roughly flat at $259.2 million.
New Business and Capital Allocation
New business rose 12% year over year to $832.3 million, while estimated remaining fees under existing contracts increased 14% to $1.915 billion.
Fee-earner new business productivity improved to $1.84 million from $1.61 million.
Korn Ferry ended the quarter with $800.9 million in cash and $398.8 million in long-term debt.
It deployed $54 million during the quarter, including $15 million in capital expenditures, $9 million in debt service, and $30 million in dividends.
The company also increased its annual dividend by 15% to $2.20 per share.
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AMS Deal Shapes Q2 Outlook
Korn Ferry closed its AMS acquisition Sept. 1, adding approximately $650 million of annual fee revenue.
“AMS brings profound operational capability, delivering technology-enabled talent solutions at scale, supported by long-term contracted client relationships,” stated Gary D. Burnison, CEO, Korn Ferry
For the second quarter, Korn Ferry expects fee revenue of $860 million to $878 million and an adjusted EBITDA margin of 16.8% to 17.2%.
The outlook includes two months of AMS and assumes no further changes in geopolitical conditions, economic conditions, financial markets or foreign exchange rates.
KFY Price Action: Korn Ferry shares were down 1.83% at $80.54 at the time of publication on Wednesday, according to Benzinga Pro data.
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