8-K: Korn Ferry Reports Strong Q2 FY26 Growth, Surging Contract Backlog

Korn Ferry announced robust second quarter fiscal year 2026 results, with fee revenue up 7% year-over-year and net income increasing by 19%.

Summary

• Q2 FY26 fee revenue reached $721.7 million, an increase of 7% year-over-year (6% at constant currency).
• Net income attributable to Korn Ferry was $72.4 million, up 19% year-over-year, with a margin of 10.0% (an increase of 100bps).
• Adjusted EBITDA stood at $124.8 million, a 7% increase year-over-year, with a margin of 17.3% (essentially flat).
• Diluted earnings per share (EPS) was $1.36, up 19% year-over-year, while adjusted diluted EPS was $1.33, up 10% year-over-year.
• Estimated remaining fees under existing contracts at the end of the quarter totaled $1.842 billion, marking a 20% increase year-over-year.
• Executive Search fee revenue grew 10% year-over-year, and Professional Search & Interim fee revenue increased 17% year-over-year.
• Consulting fee revenue rose 4% (3% at constant currency), primarily driven by a 10% increase in average bill rates.
• Digital segment fee revenue decreased 2% (3% at constant currency), while RPO fee revenue grew 4% (3% at constant currency) due to new client acquisitions.

Sentiment

Score: 8

Explanation: The company delivered strong Q2 FY26 results with significant year-over-year growth in fee revenue, net income, and EPS. The 20% increase in estimated remaining fees under existing contracts is a strong indicator of future performance. While the Digital segment saw a slight decline and Professional Search & Interim experienced some margin compression, the overall performance and management's commentary are highly positive, reflecting effective strategy execution in a dynamic market.

Positives

• Strong overall fee revenue growth of 7% year-over-year, reaching $721.7 million.
• Significant increase in net income attributable to Korn Ferry by 19% to $72.4 million, with margin expansion of 100bps.
• Diluted earnings per share increased by 19% to $1.36 and adjusted diluted earnings per share increased by 10% to $1.33.
• Estimated remaining fees under existing contracts surged by 20% year-over-year to $1.842 billion, indicating a robust future pipeline.
• Executive Search and Professional Search & Interim segments showed robust growth of 10% and 17% respectively.
• Consulting segment's average bill rates increased by 10%, contributing to 4% fee revenue growth.
• RPO segment's fee revenue increased by 4% due to new logo clients.
• Adjusted EBITDA increased by 7% to $124.8 million.

Negatives

• Digital segment fee revenue decreased by 2% year-over-year (3% at constant currency), aligning with the strategic decision to sunset the Digital platform, which incurred accelerated depreciation of $10.2 million in Q2 FY26.
• Adjusted EBITDA margin for Professional Search & Interim decreased by 110bps to 21.4%, attributed to growth in lower-margin Interim services.
• Latin America Executive Search fee revenue decreased by 0.5% in Q2 FY26 and 8.2% year-to-date FY26.
• Cash and cash equivalents decreased from $1,006,964 thousand at April 30, 2025, to $761,579 thousand at October 31, 2025.

Risks

• Global and local political and/or economic developments, including inflation, trade wars, interest rates, labor market conditions, global slowdowns, or recessions.
• Competition within the consulting and talent acquisition industries.
• Geopolitical tensions and shifts in global trade patterns.
• Changes in demand for services as a result of automation.
• Dependence on and costs of attracting and retaining qualified and experienced consultants.
• Impact of inflationary pressures on profitability.
• Ability to maintain relationships with customers and suppliers and retaining key employees.
• Maintaining brand name and professional reputation.
• Potential legal liability and regulatory developments.
• Portability of client relationships and consolidation of or within the industries served.
• Changes and developments in government laws and regulations, and evolving investor and customer expectations regarding corporate responsibility matters.
• Currency fluctuations in international operations.
• Risks related to growth and alignment of cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives.
• Restrictions imposed by off-limits agreements.
• Reliance on information processing systems, cyber security vulnerabilities or events, and changes to data security, data privacy, and data protection laws.
• Dependence on third parties for the execution of critical functions and limited protection of intellectual property.
• Ability to enhance, develop, and respond to new technology, including artificial intelligence.
• Ability to successfully recover from a disaster or other business continuity problems.
• Employment liability risk and an impairment in the carrying value of goodwill and other intangible assets.
• Treaties or regulations on business and deferred tax assets that may not be able to be used.
• Ability to develop new products and services, changes in accounting estimates and assumptions, and the utilization and billing rates of consultants.
• Seasonality and the expansion of social media platforms.
• The ability to effect acquisitions and integrate acquired businesses, resulting organizational changes, and indebtedness.
• The ultimate magnitude and duration of any pandemic or outbreaks.

Future Outlook

For Q3 FY26, Korn Ferry expects consolidated fee revenue to be in the range of $680 million to $694 million. Consolidated diluted earnings per share is projected to range from $1.15 to $1.21, and consolidated adjusted diluted earnings per share is expected to be between $1.19 and $1.25, assuming worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates remain steady.

Management Comments

• "Our performance during the quarter was outstanding, as we achieved our fourth consecutive quarter of accelerated growth, led by our Marquee and Diamond accounts." Gary D. Burnison, CEO.
• "In a world defined by disruption, digitization and economic fluctuation, organizations require more than static strategies. They need the ability to adapt, align and act." Gary D. Burnison, CEO.
• "Korn Ferry sits at the intersection of these opportunities, unlocking the potential in people and organizations—synchronizing strategy, operations and talent to accelerate performance, fuel growth and inspire a legacy of change." Gary D. Burnison, CEO.

Industry Context

Korn Ferry positions itself as a global consulting firm that helps organizations navigate disruption, digitization, and economic fluctuation by integrating strategy, operations, and talent. This aligns with broader industry trends emphasizing digital transformation, strategic human capital management, and the increasing demand for specialized talent acquisition services in a dynamic global business environment. The strong growth in Executive Search and Professional Search & Interim reflects this demand, while the decline in Digital revenue suggests a strategic shift or challenges within that specific offering.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased net income, EPS growth, and a robust future pipeline (estimated remaining fees up 20%).
• Employees: The company incurred restructuring charges to align its workforce and eliminate excess capacity, which may have resulted in job reductions for some employees. However, overall growth in key segments could create new opportunities.
• Customers: Continued strong service delivery and growth in key segments suggest ongoing value. The company's focus on "unlocking the potential in people and organizations" and "synchronizing strategy, operations and talent" aims to benefit clients. The sunsetting of the Digital platform might impact customers relying on that specific offering, but it's part of a strategic realignment.
• Creditors: The company's strong financial performance and increased profitability enhance its ability to meet financial obligations. Long-term debt remained stable at approximately $398 million.

Next Steps

• Host an earnings conference call webcast on December 9, 2025, at 12:00 PM (EST).
• Post earnings slides and other important information to the investor relations section of the company website.
• Continue to execute strategy to synchronize strategy, operations, and talent to accelerate performance, fuel growth, and inspire change.

Key Dates

Recommendation

The company delivered outstanding Q2 FY26 results, exceeding expectations with significant year-over-year growth in fee revenue (7%), net income (19%), and diluted EPS (19%). The 20% increase in estimated remaining fees under existing contracts to $1.842 billion provides a strong foundation for future revenue and indicates robust demand for its services. While the Digital segment saw a slight decline, the strong performance in high-margin Executive Search (10% growth) and Professional Search & Interim (17% growth) demonstrates effective strategy execution and market leadership. The positive management commentary and solid Q3 FY26 guidance further reinforce a strong investment thesis, suggesting continued momentum and value creation.

Keywords

Korn Ferry, KFY, Consulting, Executive Search, Professional Search, Interim Staffing, Recruitment Process Outsourcing, RPO, Financial Results, Earnings, Q2 FY26, Human Capital, Talent Management, Global Consulting