What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-12-09 compared with 2021-09-08 · 416 added, 205 removed, 201 unchanged (76% of the section changed)

50 unchanged sentences

As a result of this, we initiated a plan in April 2020 that was intended to adjust our cost base to the economic environment at that time and to position us to invest in the recovery.

This plan resulted in restructuring charges of $27.5 million associated with severance during three months ended July 31, 2020.

During the last three quarters, the Company has seen business conditions improve substantially from where they were in the second and first quarters of fiscal 2021.

While advances have been made in the science and societal and economic consequences of COVID-19, there remains significant uncertainty about the future impacts of COVID-19.

This plan resulted in restructuring charges of $2.4 million and $29.9 million associated with severance during the three and six months ended October 31, 2020, respectively.

During the last four quarters, the Company has seen business conditions improve substantially from where they were in the second and first quarters of fiscal 2021 as demand has increased driven by the relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues.

While advances have been made in the scien tific knowledge and understanding of COVID-19, and societal and economic consequences of COVID-19 have fluctuated, there remains significant uncertainty about the future impacts of COVID-19.

On the positive side, governments around the world have begun distributing and administering the vaccine.

In addition, the world has adopted new ways of working and interacting with

substantial acceptance of business being conducted in a virtual world.

On the negative side, there is a new more contagious variant of the virus that is infecting areas around the world , including portions of the United States and individuals that have been vaccinated.

In addition, the world has adopted new ways of working and interacting with substantial acceptance of business being conducted in a virtual world.

On the negative side, there have been new and more contagious variant s of the virus infecting areas around the world , including portions of the United States and individuals that have been vaccinated , as it appears that the protection obtained from the vaccine decreases over time .

Knowledge is evolving as to the effectiveness of the vaccine against this and other mutations of the virus.

1 unchanged sentence

Therefore, it is unknown whether and for how long restrictions may need to be re- implemented in those or other ju ri sdictions .

With the i mpro vement in business activity we experienced in the last three quarters, we believe our costs are in line with our current revenu e levels.

However, uncertainties such as the impact that the new contagious variant of the virus may have in regions around the world, how long the vaccine is effective and whether new restrictions are imposed (or prior restrictions re-imposed), make us unable to give assurance that the rate of increase in fee revenue during the three months ended July 3 1 , 2021, will continue in the three months ended October 31, 2021 and beyond .

With the i mpro vement in business activity we experienced in the last four quarters, we believe our costs are in line with our current revenu e levels.

However, uncertainties such as the impact that variant s may have in regions around the world, how long the vaccine is effective , the implementation of vaccine mandates, and whether new restrictions are imposed (or prior restrictions re-imposed), make us unable to give assurance that the rate of increase in fee revenue during the three months ended October 3 1 , 2021, will continue in the three months ended January 31, 202 2 and beyond .

Given the amount available from our current revolver and the amount of cash and cash equivalents and marketable securities net of amounts held in trust for deferred compensation and accrued bonuses, we believe that we have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, debt obligation repayments and dividend payments under our dividend policy in the next 12 months.

1 unchanged sentence

The Company evaluates performance and allocates resources based on the 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 impairments of investments).

For the three months ended July 31, 2020, Adjusted EBITDA excluded $27.5 million of restructuring charges and $0.7 million of integration/acquisition costs.

For the three months ended July 31, 2021, there were no restructuring charges and no integration/acquisition costs.

For the three and six months ended October 31, 2021, Adjusted EBITDA excluded $7.4 million impairment of right-of-use assets, $1.9 million impairment of fixed assets and $1.1 million of integration/acquisition costs.

Consolidated and the subtotals of Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and have limitations as analytical tools.

6 unchanged sentences

Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.

Fee revenue was $585.4 million during the three months ended July 31, 2021, an increase of $241.3 million, or 70%, compared to $344.1 million in the three months ended July 31, 2020, with increases in fee revenue across all lines of business due to the Company’s recovery from COVID-19, which adversely impacted the Company on a worldwide basis in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $14.0 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter.

Net income attributable to Korn Ferry in the three months ended July 31, 2021 was $74.8 million, an increase of $105.6 million as compared to net loss attributable to Korn Ferry of $30.8 million in the year-ago quarter.

Adjusted EBITDA in the three months ended July 31, 2021 was $121.3 million, an increase of $110.7 million as compared to $10.6 million in the year-ago quarter.

During the three months ended July 31, 2021, the Executive Search, RPO & Professional Search, Consulting, and Digital lines of business contributed $61.6 million, $34.0 million, $26.8 million and $25.6 million, respectively, to Adjusted EBITDA, which was offset by Corporate expenses net of other income of $26.7 million.

Our cash, cash equivalents and marketable securities decreased by $192.8 million to $904.3 million at July 31, 2021, compared to $1,097.1 million at April 30, 2021.

This decrease was mainly due to annual bonuses earned in fiscal 2021 and paid during the first quarter of fiscal 2022, retention payments, capital expenditures, the semi-annual interest payment on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) and dividends paid to stockholders during the three months ended July 31, 2021.

As of July 31, 2021, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $147.2 million and a fair value of $181.1 million.

Our vested obligations for

which these assets were held in trust totaled $171.2 million as of July 31, 2021 and our unvested obligations totaled $24.7 million.

Our working capital increased by $46.3 million to $783.4 million as of July 31, 2021, as compared to $737.1 million at April 30, 2021.

Fee revenue was $639.4 million during the three months ended October 31, 2021, an increase of $204.0 million, or 47%, compared to $435.4 million in the three months ended October 31, 2020, with increases in fee revenue across all lines of business primarily due to the relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues driven by macro, regulatory and social changes (i.e.

workforce transformation, diversity, equity & inclusion (“DE&I”) initiatives and mandates and environmental and social governance (“ESG”)) in today’s business environment and the Company’s recovery from COVID-19, which adversely impacted the Company on a worldwide basis in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $3.7 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

Net income attributable to Korn Ferry in the three months ended October 31, 2021 was $75.8 million, an increase of $48.0 million as compared to net income attributable to Korn Ferry of $27.8 million in the year-ago quarter.

Adjusted EBITDA in the three months ended October 31, 2021 was $134.9 million, an increase of $68.7 million as compared to $66.2 million in the year-ago quarter.

During the three months ended October 31, 2021, the Executive Search, RPO & Professional Search, Consulting, and Digital lines of business contributed $66.1 million, $36.3 million, $30.1 million and $28.6 million, respectively, to Adjusted EBITDA, which was offset by Corporate expenses net of other income of $26.1 million.

Our cash, cash equivalents and marketable securities decreased by $100.2 million to $996.9 million at October 31, 2021 , compared to $1,097.1 million at April 30, 2021 .

This decrease was mainly due to annual bonuses earned in fiscal 202 1 and paid during the first quarter of fiscal 202 2 , retention payments, capital expenditures, the semi-annual interest payment on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) , dividends paid to stockholders and stock repurchases made during the six months ended October 31, 202 1 .

As of October 31, 2021 , we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $153.3 million and a fair value of $191.2 million.

Our vested obligations for which these assets were held in trust totaled $174.6 million as of October 31, 2021 and our unvested obligations totaled $26.7 million.

Our working capital increased by $115.1 million to $852.2 million as of October 31, 2021, as compared to $737.1 million at April 30, 2021.

We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of debt obligations and dividend payments under our dividend policy in the next 12 months.

We had $644.5 million and $646.0 million available for borrowing under our Revolver (as defined herein) at July 31, 2021 and April 30, 2021.

As of July 31, 2021 and April 30, 2021, there were $5.5 million and $4.0 million of standby letters of credit issued under our long-term debt arrangements.

We had a total of $11.7 million and $11.0 million of standby letters of credit with other financial institutions as of July 31, 2021 and April 30, 2021, respectively .

We had $644.5 million and $646.0 million available for borrowing under our Revolver (as defined herein) at October 31, 2021 and April 30, 2021.

As of October 31, 2021 and April 30, 2021, there were $5.5 million and $4.0 million of standby letters of credit issued under our long-term debt arrangements.

We had a total of $11.5 million and $11.0 million of standby letters of credit with other financial institutions as of October 31, 2021 and April 30, 2021, respectively .

Results of Operations

2 unchanged sentences

Three Months Ended

Six Months Ended

Reimbursed out-of-pocket engagement expenses

6 unchanged sentences

Restructuring charges, net

Operating income (loss)

Operating income

Net income (loss)

3 unchanged sentences

Three Months Ended

Six Months Ended

(dollars in thousands)

9 unchanged sentences

These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base.

Three Months Ended July 31, 2021

Three Months Ended October 31, 2021

Executive Search

9 unchanged sentences

Other income, net

Integration/acquisition costs

Impairment of fixed assets

Impairment of right of use assets

Adjusted EBITDA

Adjusted EBITDA margin

Three Months Ended July 31, 2020

Three Months Ended October 31, 2020

Executive Search

1 unchanged sentence

Total revenue

Net income attributable to Korn Ferry

Net income attributable to noncontrolling interest

Other income, net

Interest expense, net

Income tax provision

Operating income

Depreciation and amortization

Other income, net

Restructuring charges, net

Adjusted EBITDA

Adjusted EBITDA margin

Six Months Ended October 31, 2021

Executive Search

(in thousands)

Total revenue

Net income attributable to Korn Ferry

Net income attributable to noncontrolling interest

Other income, net

Interest expense, net

Income tax provision

Operating income

Depreciation and amortization

Other income, net

Integration/acquisition costs

Impairment of fixed assets

Impairment of right of use assets

Adjusted EBITDA

Adjusted EBITDA margin

Six Months Ended October 31, 2020

Executive Search

(in thousands)

Total revenue

Net loss attributable to Korn Ferry

Net loss attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Other income, net

Interest expense, net

Income tax benefit

Operating loss

Income tax provision

Operating income

Depreciation and amortization

4 unchanged sentences

Adjusted EBITDA margin

Three Months Ended July 31, 2021 Compared to Three Months Ended July 31, 2020

Fee revenue increased by $241.3 million, or 70%, to $585.4 million in the three months ended July 31, 2021 compared to $344.1 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $14.0 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The higher fee revenue was attributable to increases in all lines of business primarily due to the increasing relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues in today’s business environment, as well as the Company’s recovery from COVID-19, which adversely impacted the Company on a worldwide basis in the year-ago quarter.

Consulting reported fee revenue of $148.5 million, an increase of $49.2 million, or 50%, in the three months ended July 31, 2021 compared to $99.3 million in the year-ago quarter.

The increase in fee revenue was due to the diversity and increasing relevance of our consulting services across all solutions and our ability to adapt to delivering the services in a virtual world as well as the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $3.7 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter.

Digital reported fee revenue of $80.7 million, an increase of $24.7 million, or 44%, in the three months ended July 31, 2021 compared to $56.0 million in the year-ago quarter.

The increase in fee revenue was primarily due to the Company

recovering from COVID-19, which negatively impacted demand for the Company ’s product and services on a worldwide basis in the year-ago quarter .

As economies around the world recover and companies pivot from in person training to virtual delivery of training courses, the demand for our products and services across all solutions continue d to recover in the three months ended July 31, 2021 .

Exchange rates favorably impacted fee revenue by $2.2 million, or 4% , in the three months ended July 31, 2021 compared to the year-ago quarter.

Three Months Ended October 31, 2021 Compared to Three Months Ended October 31, 2020

Fee revenue increased by $204.0 million, or 47%, to $639.4 million in the three months ended October 31, 2021 compared to $435.4 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $3.7 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The higher fee revenue was attributable to increases in all lines of business primarily due to the record levels of new business in the quarter driven by the relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues driven by macro, regulatory and social changes (i.e., workforce transformation, DE&I and ESG) in today’s business environment.

Further, COVID-19 adversely impacted the Company on a worldwide basis in the year-ago quarter.

Consulting reported fee revenue of $164.9 million, an increase of $38.2 million, or 30%, in the three months ended October 31, 2021 compared to $126.7 million in the year-ago quarter.

The increase in fee revenue continues to be driven by a significant number of client workforce transformation initiatives including DE&I and ESG, delivered through our Organization Strategy, Assessment, and Leadership Development solutions.

In addition, Total Rewards has increased compared to the year-ago quarter as clients address compensation and retention issues associated with labor market dislocation in the current environment and pay governance issues.

Further, COVID-19 negatively impacted the Company on a worldwide basis in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $0.8 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

Digital reported fee revenue of $88.6 million, an increase of $13.6 million, or 18%, in the three months ended October 31, 2021 compared to $75.0 million in the year-ago quarter.

The increase in fee revenue was primarily due to growth in total

rewards and assessment and succession as companies deal with elevated levels of attrition due to dislocation in the labor markets and professional development around sales effectiveness as companies reassess their commercial models in a post-COVID world .

Exchange rates favorably impacted fee revenue by $0.6 million, or 1% , in the three months ended October 31, 2021 compared to the year-ago quarter.

Executive Search North America .

Executive Search North America reported fee revenue of $138.7 million, an increase of $69.4 million, or 100%, in the three months ended July 31, 2021 compared to $69.3 million in the year-ago quarter.

North America’s fee revenue was higher due to an 82% increase in the number of engagements billed and a 9% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter.

Executive Search North America reported fee revenue of $158.2 million, an increase of $67.0 million, or 73%, in the three months ended October 31, 2021 compared to $91.2 million in the year-ago quarter.

North America’s fee revenue was higher due to a 54% increase in the number of engagements billed and a 12% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended October 31, 2021 compared to the year-ago quarter.

Executive Search EMEA.

Executive Search EMEA reported fee revenue of $42.7 million, an increase of $12.6 million, or 42% , in the three months ended July 31, 2021 compared to $30.1 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $2.5 million, or 8%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 24% increase in the number of engagements billed and a 6% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter.

Performance in the United Kingdom, United Arab Emirates, and France were the primary contributors to the increase in fee revenue in the three months ended July 31, 2021 compared to the year-ago quarter .

Executive Search EMEA reported fee revenue of $42.4 million, an increase of $10.8 million, or 34% , in the three months ended October 31, 2021 compared to $31.6 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $0.5 million, or 2%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 24% increase in the number of engagements billed and a 7% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended October 31, 2021 compared to the year-ago quarter.

Performance in the United Kingdom, United Arab Emirates, Russia and Belgium were the primary contributors to the increase in fee revenue in the three months ended October 31, 2021 compared to the year-ago quarter .

Executive Search Asia Pacific.

Executive Search Asia Pacific reported fee revenue of $28.7 million, an increase of $11.4 million, or 66%, in the three months ended July 31, 2021 compared to $17.3 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $1.2 million, or 7%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 55% increase in the number of engagements billed and a 1% increase in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter.

The performance in India, Australia and China were the primary contributors to the increase in fee revenue in the three months ended July 31, 2021 compared to the year-ago quarter.

Executive Search Asia Pacific reported fee revenue of $28.3 million, an increase of $7.5 million, or 36%, in the three months ended October 31, 2021 compared to $20.8 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $0.4 million, or 2%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 33% increase in the number of engagements billed during the three months ended October 31, 2021 compared to the year-ago quarter.

The performance in India, Singapore, Australia and China were the primary contributors to the increase in fee revenue in the three months ended October 31, 2021 compared to the year-ago quarter.

Executive Search Latin America.

Executive Search Latin America reported fee revenue of $6.8 million, an increase of $3.3 million, or 94%, in the three months ended July 31, 2021 compared to $3.5 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $0.2 million, or 6%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 67% increase in the number of engagements billed and a 9% increase in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to higher fee revenue in Brazil, Mexico and Colombia in the three months ended July 31, 2021 compared to the year-ago quarter.

Executive Search Latin America reported fee revenue of $6.6 million, an increase of $2.1 million, or 47%, in the three months ended October 31, 2021 compared to $4.5 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $0.1 million, or 2%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to a 60% increase in the number of engagements billed, partially offset by a 9% decrease in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to higher fee revenue in Mexico, Chile and Colombia in the three months ended October 31, 2021 compared to the year-ago quarter.

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $139.3 million, an increase of $70.6 million, or 103% , in the three months ended July 31, 2021 compared to $68.7 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $3.3 million, or 5%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to higher fee revenue in RPO of $43.1 million and Professional Search of $27.6 million due to wider adoption of RPO services in the market and the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in the year-ago quarter.

RPO & Professional Search reported fee revenue of $150.5 million, an increase of $64.8 million, or 76% , in the three months ended October 31, 2021 compared to $85.7 million in the year-ago quarter.

Exchange rates favorably impacted fee revenue by $1.0 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in fee revenue was due to higher fee revenue in RPO of $39.3 million and Professional Search of $25.5 million due to wider adoption of RPO services in the market compared to the year-ago quarter while the increase in Professional Search was due to a 56% increase in engagements billed and 27% increase in the weighted-average fees billed per engagement during the three months ended October 31, 2021 compared to the year-ago quarter.

Compensation and Benefits

Compensation and benefits expense increased by $112.2 million, or 40%, to $396.2 million in the three months ended July 31, 2021 from $284.0 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $9.1 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, performance related bonus expense, amortization of long-term incentive awards and the use of outside contractors due to the Company’s revenue growth through the recovery from the initial impact of COVID-19, combined with an increase in average headcount of 6% in the three months ended July 31, 2021 compared to the year-ago quarter.

Compensation and benefits expense, as a percentage of fee revenue, decreased to 68% in the three months ended July 31, 2021 from 83% in the year-ago quarter.

Consulting compensation and benefits expense increased by $25.3 million, or 33%, to $102.2 million in the three months ended July 31, 2021 from $76.9 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $2.5 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes and performance-related bonus expense due to the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount in the three months ended July 31, 2021 compared to the year-ago quarter.

Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in the three months ended July 31, 2021 from 77% in the year-ago quarter.

Digital compensation and benefits expense increased by $4.9 million, or 14% to $40.8 million in the three months ended July 31, 2021 from $35.9 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $1.3 million, or 4% , in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was due to increase s in commission expense and salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19 .

Digital compensation and benefits expense, as a percentage of fee revenue, decreased to 51% in the three months ended July 31, 2021 from 64% in the year-ago quarter.

Executive Search North America compensation and benefits expense increased by $26.0 million, or 40%, to $91.5 million in the three months ended July 31, 2021 compared to $65.5 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 1%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The change was due to increases in performance-related bonus expense and salaries and related payroll taxes as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount in the three months ended July 31, 2021 compared to the year-ago quarter.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the three months ended July 31, 2021 from 95% in the year-ago quarter.

Executive Search EMEA compensation and benefits expense increased by $6.3 million, or 26%, to $30.9 million in the three months ended July 31, 2021 compared to $24.6 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $1.9 million, or 8%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase was due to higher salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 72% in the three months ended July 31, 2021 from 82% in the year-ago quarter.

Executive Search Asia Pacific compensation and benefits expense increased by $4.3 million, or 31%, to $18.0 million in the three months ended July 31, 2021 compared to $13.7 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.7 million, or 5%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase was due to increases in performance-related bonus expense and salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 63% in the three months ended July 31, 2021 from 80% in the year-ago quarter.

Executive Search Latin America compensation and benefits expense increased by $1.8 million, or 56%, to $5.0 million in the three months ended July 31, 2021 compared to $3.2 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.2 million, or 6%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase was due to higher performance-related bonus expense in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19.

Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 74% in the three months ended July 31, 2021 from 92% in the year-ago quarter.

RPO & Professional Search compensation and benefits expense increased by $38.4 million, or 70%, to $93.1 million in the three months ended July 31, 2021 from $54.7 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $2.1 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase was due to higher performance-related bonus expense, higher salaries and related payroll taxes due to a 23% increase in the average headcount in the three months ended July 31, 2021 compared to the year-ago quarter and an increase in the use of outside contractors.

These increases were all as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, decreased to 67% in the three months ended July 31, 2021 from 80% in the year-ago quarter.

Corporate compensation and benefits expense increased by $5.3 million, or 56%, to $14.8 million in the three months ended July 31, 2021 from $9.5 million in the year-ago quarter.

The increase was due to higher perform ance-related bonus expense and higher salaries and related payroll taxes due to a 14% increase in the average headcount in the three months ended July 31, 2021 compared to the year-ago quarter.

These increases were all as a result of the Company’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability on a consolidated basis.

Compensation and benefits expense increased by $124.4 million, or 40%, to $431.6 million in the three months ended October 31, 2021 from $307.2 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $2.6 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, performance related bonus expense, amortization of long-term incentive awards and the use of outside contractors due to the increase in fee revenue, combined with increases in overall profitability and headcount in the three months ended October 31, 2021 compared to the year-ago quarter.

Also contributing to the higher compensation and benefits expense was an increase in the amounts owed under certain deferred compensation and retirement plans driven by increases in the fair market value of the participants’ accounts in the three months ended October 31, 2021 compared to the year-ago quarter.

Compensation and benefits expense, as a percentage of fee revenue, decreased to 68% in the three months ended October 31, 2021 from 71% in the year-ago quarter.

Consulting compensation and benefits expense increased by $26.5 million, or 30%, to $114.5 million in the three months ended October 31, 2021 from $88.0 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.6 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes and performance-related bonus expense due to the increase in the segment’s fee revenue, combined with increases in overall profitability and

headcount in the three months ended October 31, 2021 compared to the year-ago quarter.

Consulting compensation and benefits expense, as a percentage of fee revenue, was 69% for both the three months ended October 31, 2021 and 2020 .

Digital compensation and benefits expense increased by $7.4 million, or 19%, to $46.4 million in the three months ended October 31, 2021 from $39.0 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in compensation and benefits expense was due to higher performance-related bonus expense, salaries and related payroll taxes and commission expense in the three months ended October 31, 2021 compared to the year-ago quarter as a result of the increase in the segment’s fee revenue.

Digital compensation and benefits expense, as a percentage of fee revenue, was 52% for both the three months ended October 31, 2021 and 2020.

Executive Search North America compensation and benefits expense increased by $40.9 million, or 65%, to $103.9 million in the three months ended October 31, 2021 compared to $63.0 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.2 million, in the three months ended October 31, 2021 compared to the year-ago quarter.

The change was due to increases in performance-related bonus expense and salaries and related payroll taxes as a result of the segment’s fee revenue growth, combined with an increase in overall profitability and headcount in the three months ended October 31, 2021 compared to the year-ago quarter.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the three months ended October 31, 2021 from 69% in the year-ago quarter.

Executive Search EMEA compensation and benefits expense increased by $5.6 million, or 23%, to $30.4 million in the three months ended October 31, 2021 compared to $24.8 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.3 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase was due to higher salaries and related payroll taxes and performance-related bonus expense in the three months ended October 31, 2021 compared to the year-ago quarter as a result of the segment’s fee revenue growth, combined with an increase in overall profitability and headcount.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 72% in the three months ended October 31, 2021 from 78% in the year-ago quarter.

Executive Search Asia Pacific compensation and benefits expense increased by $2.2 million, or 14%, to $17.4 million in the three months ended October 31, 2021 compared to $15.2 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.2 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase was due to increases in salaries and related payroll taxes and performance-related bonus expense in the three months ended October 31, 2021 compared to the year-ago quarter as a result of the segment’s fee revenue growth, combined with an increase in overall profitability and headcount.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in the three months ended October 31, 2021 from 73% in the year-ago quarter.

Executive Search Latin America compensation and benefits expense increased by $0.4 million, or 11%, to $4.1 million in the three months ended October 31, 2021 compared to $3.7 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.1 million, or 3%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase was due to higher salaries and related payroll taxes in the three months ended October 31, 2021 compared to the year-ago quarter as a result of the segment’s fee revenue growth.

Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in the three months ended October 31, 2021 from 83% in the year-ago quarter.

RPO & Professional Search compensation and benefits expense increased by $36.9 million, or 59%, to $99.6 million in the three months ended October 31, 2021 from $62.7 million in the year-ago quarter.

Exchange rates unfavorably impacted compensation and benefits by $0.7 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase was due to higher salaries and related payroll taxes, an increase in the use of outside contractors and higher performance-related bonus expense in the three months ended October 31, 2021 compared to the year-ago quarter.

These increases were all as a result of the segment’s fee revenue growth, combined with increases in overall profitability and headcount.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the three months ended October 31, 2021 from 73% in the year-ago quarter.

Corporate compensation and benefits expense increased by $4.6 million, or 43%, to $15.4 million in the three months ended October 31, 2021 from $10.8 million in the year-ago quarter.

The increase was due to higher perform ance-related bonus expense and higher salaries and related payroll taxes due to an increase in consolidated fee revenue, combined with increases in overall profitability and headcount in the three months ended October 31, 2021 compared to the year-ago quarter.

General and Administrative Expenses

General and administrative expenses increased by $3.2 million, or 7%, to $50.3 million in the three months ended July 31, 2021 from $47.1 million in the year-ago quarter.

Exchange rates unfavorably impacted general and administrative expenses by $1.6 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter.

The increase in general and administrative expenses was due to higher marketing and business development expenses and premise and office expenses.

General and administrative expenses, as a percentage of fee revenue, were 9% in the three months ended July 31, 2021 compared to 14% in the year-ago quarter.

Consulting general and administrative expenses were $12.0 million in the three months ended July 31, 2021 compared to $11.8 million in the year-ago quarter, essentially flat.

Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in the three months ended July 31, 2021 from 12% in the year-ago quarter.

Digital general and administrative expenses were $7.1 million in the three months ended July 31, 2021 compared to $7.3 million in the year-ago quarter, essentially flat.

Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in the three months ended July 31, 2021 from 13% in the year-ago quarter.

Executive Search North America general and administrative expenses were $6.7 million in the three months ended July 31, 2021 compared to $6.8 million in the year-ago quarter, essentially flat.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the three months ended July 31, 2021 from 10% in the year-ago quarter.

Executive Search EMEA general and administrative expenses increased by $0.6 million, or 16%, to $4.3 million in the three months ended July 31, 2021 from $3.7 million in the year-ago quarter.

The increase in general and administrative expenses was due to the impact of foreign currency with foreign exchange losses in the three months ended July 31, 2021 compared to foreign currency gains in the year-ago quarter.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, decreased to 10% in the three months ended July 31, 2021 from 12% in the year-ago quarter.

Executive Search Asia Pacific general and administrative expenses increased by $0.5 million, or 24%, to $2.6 million in the three months ended July 31, 2021 from $2.1 million in the year-ago quarter.

The increase was due to higher bad debt expense in the three months ended July 31, 2021 compared to the year-ago quarter.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue decreased to 9% in the three months ended July 31, 2021 from 12% in the year-ago quarter.

Executive Search Latin America recognized a reduction in general and administrative expenses of $2.4 million in the three months ended July 31, 2021 compared to the year-ago quarter.

The decrease in general and administrative expenses was due to a decrease in premise and office expenses and the impact of foreign currency with foreign exchange gains recognized in the three months ended July 31, 2021 compared to foreign currency losses in the year-ago quarter.

RPO & Professional Search general and administrative expenses increased by $1.2 million, or 21%, to $6.9 million in the three months ended July 31, 2021 compared to $5.7 million in the year-ago quarter.

The increase in general and administrative expenses was primarily due to higher bad debt expense and an increase in premise and office expenses.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the three months ended July 31, 2021 from 8% in the year-ago quarter.

Corporate general and administrative expenses increased by $3.3 million, or 38%, to $12.1 million in the three months ended July 31, 2021 compared to $8.8 million in the year-ago quarter.

The increase was primarily due to higher marketing and business development expenses and an increase in legal and professional fees during the three months ended July 31, 2021 compared to the year-ago quarter.

General and administrative expenses increased by $17.6 million, or 38%, to $64.1 million in the three months ended October 31, 2021 from $46.5 million in the year-ago quarter.

Exchange rates unfavorably impacted general and administrative expenses by $0.3 million, or 1%, in the three months ended October 31, 2021 compared to the year-ago quarter.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint and integration and acquisition costs incurred with the Lucas Group acquisition that closed on November 1, 2021.

In addition, the Company incurred higher marketing and business development expenses which contributed to the increase in fee revenue and new business in the quarter, as well as increased legal and other professional fees.

General and administrative expenses, as a percentage of fee revenue, were 10% in the three months ended October 31, 2021 compared to 11% in the year-ago quarter.

Consulting general and administrative expenses increased by $2.1 million, or 17% to $14.6 million in the three months ended October 31, 2021 from $12.5 million in the year-ago quarter.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint in the three months ended October 31, 2021.

Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 9% in the three months ended October 31, 2021 from 10% in the year-ago quarter.

Digital general and administrative expenses were $8.2 million in the three months ended October 31, 2021 compared to $7.4 million in the year-ago quarter, an increase of $0.8 million, or 11%.

Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in the three months ended October 31, 2021 from 10% in the year-ago quarter.

Executive Search North America general and administrative expenses increased by $1.7 million, or 28% to $7.8 million in the three months ended October 31, 2021 from $6.1 million in the year-ago quarter.

The increase in general and administrative expenses was primarily due to higher bad debt expense and increase in business development expenses as a result of the growth in fee revenue, and to a lesser extent, an increase in premise and office expense.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the three months ended October 31, 2021 from 7% in the year-ago quarter.

Executive Search EMEA general and administrative expenses increased by $1.3 million, or 33%, to $5.3 million in the three months ended October 31, 2021 from $4.0 million in the year-ago quarter.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, decreased to 12% in the three months ended October 31, 2021 from 13% in the year-ago quarter.

Executive Search Asia Pacific general and administrative expenses increased by $0.7 million, or 37%, to $2.6 million in the three months ended October 31, 2021 from $1.9 million in the year-ago quarter.

The increase was due to higher bad debt expense in the three months ended October 31, 2021 compared to the year-ago quarter.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, were 9% for both the three months ended October 31, 2021 and 2020.

Executive Search Latin America general and administrative expenses increased by $0.9 million to $1.1 million in the three months ended October 31, 2021 from $0.2 million in the year-ago quarter.

The increase in general and administrative expenses was due to the impact of foreign currency with foreign exchange losses recognized in the three months ended October 31, 2021 compared to foreign currency gains in the year-ago quarter.

Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, increased to 16% in the three months ended October 31, 2021 from 4% in the year-ago quarter.

RPO & Professional Search general and administrative expenses increased by $5.6 million, or 86%, to $12.1 million in the three months ended October 31, 2021 compared to $6.5 million in the year-ago quarter.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint, and to a lesser extent, an increase in premise and office expenses and higher bad debt expense.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, were 8% for both the three months ended October 31, 2021 and 2020.

Corporate general and administrative expenses increased by $4.5 million, or 57%, to $12.4 million in the three months ended October 31, 2021 compared to $7.9 million in the year-ago quarter.

The increase was primarily due to higher marketing expenses, legal and other professional fees and integration and acquisition costs incurred with the Lucas Group acquisition that closed on November 1, 2021.

Cost of Services Expense

Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital.

Cost of services expense increased by $7.7 million, or 54%, to $22.0 million in the three months ended July 31, 2021 compared to $14.3 million in the year-ago quarter.

Cost of services expense increased by $8.4 million, or 53%, to $24.3 million in the three months ended October 31, 2021 compared to $15.9 million in the year-ago quarter.

The increase was due to the increase in fee revenue.

Cost of services expense, as a percentage of fee revenue, was 4% in both the three months ended July 31, 2021 and 2020.

Cost of services expense, as a percentage of fee revenue, was 4% in both the three months ended October 31, 2021 and 2020.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $15.6 million, an increase of $0.6 million, or 4%, in the three months ended July 31, 2021 compared to $15.0 million in the year-ago quarter.

Depreciation and amortization expenses were $15.6 million, an increase of $0.3 million, or 2%, in the three months ended October 31, 2021 compared to $15.3 million in the year-ago quarter.

The increase was primarily due to the technology investments made in the current and prior year in software in our Digital business.

1 unchanged sentence

In April 2020, we implemented a restructuring plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of fiscal 2020.

As part of this plan, we continued to reduce our workforce during the first quarter of fiscal 2021 and recorded restructuring charges, net of $27.5 million of severance costs during the year-ago quarter.

There were no restructuring charges, net during the three months ended July 31, 2021.

Net Income (Loss) Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $105.6 million, or 343%, to $74.8 million in the three months ended July 31, 2021, as compared to a net loss attributable to Korn Ferry of $30.8 million in the year-ago quarter.

The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue, which was driven by the factors discussed above.

The increase in fee revenue was partially offset by increases in compensation and benefits expense and cost of services expense associated with the higher levels of business demand and an increase in income tax provision that resulted in net income attributable to Korn Ferry in the three months ended July 31, 2021.

Net income (loss) attributable to Korn Ferry, as a percentage of fee revenue, was 13% and (9%) in the three months ended July 31, 2021 and 2020, respectively.

We continued the implementation of this plan in the first quarter of fiscal 2021 and adjusted the previously recorded restructuring accruals in the second quarter of fiscal 2021, and this resulted in restructuring charges, net of $2.4 million of severance costs during the year-ago quarter.

There were no restructuring charges, net during the three months ended October 31, 2021.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $48.0 million, or 173%, to $75.8 million in the three months ended October 31, 2021, as compared to $27.8 million in the year-ago quarter.

The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue, partially offset by increases in compensation and benefits expense and cost of services expense associated with the higher levels of business demand.

Also impacting Net Income attributable to Korn Ferry was an increase in general and administrative expenses due in large part to impairment charges associated with the reduction of the Company’s real estate footprint and integration and acquisition costs incurred with the Lucas Group acquisition and an increase in income tax provision.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 12% and 6% in the three months ended October 31, 2021 and 2020, respectively.

Adjusted EBITDA

Adjusted EBITDA increased by $110.7 million, or 1044%, to $121.3 million in the three months ended July 31, 2021 as compared to $10.6 million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by an increase in fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding integration/acquisition costs).

Adjusted EBITDA, as a percentage of fee revenue, was 21% in the three months ended July 31, 2021 compared to 3% in the year-ago quarter.

Consulting Adjusted EBITDA was $26.8 million in the three months ended July 31, 2021, an increase of $20.2 million, or 306%, as compared to $6.6 million in the year-ago quarter.

Adjusted EBITDA increased by $68.7 million, or 104%, to $134.9 million in the three months ended October 31, 2021 as compared to $66.2 million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by an increase in fee revenue, partially offset by increases in compensation and benefits expense, cost of services expense, and general and administrative expenses (excluding impairment charges and integration/acquisition costs).

Adjusted EBITDA, as a percentage of fee revenue, was 21% in the three months ended October 31, 2021 compared to 15% in the year-ago quarter.

Consulting Adjusted EBITDA was $30.1 million in the three months ended October 31, 2021, an increase of $9.9 million, or 49%, as compared to $20.2 million in the year-ago quarter.

This increase in Adjusted EBITDA was driven by higher fee revenue in the segment, as well as cost savings realized from work being conducted virtually.

These changes were partially offset by increases in compensation and benefits expense and cost of services expense .

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% and 7% in the three months ended July 31, 2021 and 2020, respectively.

Digital Adjusted EBITDA was $25.6 million in the three months ended July 31, 2021, an increase of $17.7 million, or 224%, as compared to $7.9 million in the year-ago quarter.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% and 16% in the three months ended October 31, 2021 and 2020, respectively.

Digital Adjusted EBITDA was $28.6 million in the three months ended October 31, 2021, an increase of $5.5 million, or 24%, as compared to $23.1 million in the year-ago quarter.

This increase in Adjusted EBITDA was mainly driven by an increase in fee revenue in the segment, as well as cost savings realized from work being conducted virtually.

These changes were partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense during the three months ended July 31, 2021 compared to the year-ago quarter.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 32% and 14% in the three months ended July 31, 2021 and 2020, respectively.

Executive Search North America Adjusted EBITDA increased by $38.0 million, or 717%, to $43.3 million in the three months ended July 31, 2021 compared to $5.3 million in the year-ago quarter.

The increase was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 31% and 8% in the three months ended July 31, 2021 and 2020, respectively.

Executive Search EMEA Adjusted EBITDA increased by $5.9 million, or 347%, to $7.6 million in the three months ended July 31, 2021 compared to $1.7 million in the year-ago quarter.

These changes were partially offset by increases in compensation and benefits expense and cost of services expense during the three months ended October 31, 2021 compared to the year-ago quarter.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 32% and 31% in the three months ended October 31, 2021 and 2020, respectively.

Executive Search North America Adjusted EBITDA increased by $27.7 million, or 131%, to $48.9 million in the three months ended October 31, 2021 compared to $21.2 million in the year-ago quarter.

The increase was driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense and general and administrative expenses.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 31% and 23% in the three months ended October 31, 2021 and 2020, respectively.

Executive Search EMEA Adjusted EBITDA increased by $4.9 million, or 175%, to $7.7 million in the three months ended October 31, 2021 compared to $2.8 million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense.

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 18% and 9% in the three months ended October 31, 2021 and 2020, respectively.

Executive Search Asia Pacific Adjusted EBITDA increased by $4.6 million, or 128% , to $8.2 million in the three months ended October 31, 2021 compared to $3.6 million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment , partially offset by increases in compensation and benefits expense and general and administrative expenses .

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 18% and 6% in the three months ended July 31, 2021 and 2020, respectively.

Executive Search Asia Pacific Adjusted EBITDA increased by $6.7 million, or 419%, to $8.3 million in the three months ended July 31, 2021 compared to $1.6 million in the year-ago quarter.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 29% and 17% in the three months ended October 31, 2021 and 2020, respectively.

Executive Search Latin America Adjusted EBITDA increased by $0.8 million, or 133%, to $1.4 million in the three months ended October 31, 2021 compared to $0.6 million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in general and administrative expenses and compensation and benefits expense.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 21% and 13% in the three months ended October 31, 2021 and 2020, respectively.

RPO & Professional Search Adjusted EBITDA was $36.3 million in the three months ended October 31, 2021, an increase of $22.5 million, or 163%, as compared to $13.8 million in the year-ago quarter.

The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense, cost of services expense, and general and administrative expenses (excluding impairment charges).

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 24% and 16% in the three months ended October 31, 2021 and 2020, respectively.

Other Income, Net

Other income, net was $5.1 million in the three months ended October 31, 2021 compared to $0.3 million in the year-ago quarter.

The difference was primarily due to larger gains from the fair value of our marketable securities during the three months ended October 31, 2021 compared to the year-ago quarter.

Interest Expense, Net

Interest expense, net primarily relates to the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) issued in December 2019 and borrowings under company-owned life insurance (“COLI”) policies, which are partially offset by interest earned on cash and cash equivalent balances.

Interest expense, net was $6.4 million in the three months ended October 31, 2021 compared to $7.5 million in the year-ago quarter.

Interest expense, net decreased due to interest income earned as a result of death benefits received from our COLI policies and lower interest expense on borrowings under our COLI policies in the three months ended October 31, 2021 due to the lower amount of borrowings outstanding.

Income Tax Provision

The provision for income tax was $26.1 million in the three months ended October 31, 2021, compared to $12.9 million in the year-ago quarter.

This reflects a 25.5% and 31.4% effective tax rate for the three months ended October 31, 2021 and 2020, respectively.

In addition to the impact of U.S.

state income taxes and jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the effective tax rate for the three months ended October 31, 2020, was affected by a tax expense recorded for withholding taxes on intercompany dividends that are not eligible for tax credit.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations.

Net income attributable to noncontrolling interest for the three months ended October 31, 2021 was $0.6 million, as compared to $0.3 million in the three months ended October 31, 2020.

Six Months Ended October 31, 2021 Compared to Six Months Ended October 31, 2020

Fee revenue increased by $445.3 million, or 57%, to $1,224.8 million in the six months ended October 31, 2021 compared to $779.5 million in the year-ago period.

Exchange rates favorably impacted fee revenue by $17.6 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

The higher fee revenue was attributable to increases in all lines of business, primarily driven by the relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues driven by macro, legal and regulatory changes (i.e., workforce transformation, DE&I and ESG) in today’s business environment.

Further, COVID-19 adversely impacted the Company on a worldwide basis in the year-ago period.

Consulting reported fee revenue of $313.4 million, an increase of $87.4 million, or 39%, in the six months ended October 31, 2021 compared to $226.0 million in the year-ago period.

The increase in fee revenue was driven by a significant number of client workforce transformation initiatives including DE&I and ESG, delivered through our Organization Strategy, Assessment, and Leadership Development solutions.

In addition, Total Rewards has increased compared to the year-ago

period as clients address compensation and retention issues associated with labor market dislocation in the current environment and pay governance issues.

Further, COVID-19 negatively impacted the Company on a worldwide basis in the year-ago period .

Exchange rates favorably impacted fee revenue by $4.5 million, or 2% , in the six months ended October 31, 2021 compared to the year-ago period .

Digital reported fee revenue of $169.3 million, an increase of $38.3 million, or 29%, in the six months ended October 31, 2021 compared to $131.0 million in the year-ago period.

The increase in fee revenue was primarily due to growth in leadership and professional development and assessment and succession products as companies deal with elevated levels of attrition due to dislocation in the labor markets and professional development around sales effectiveness as companies reassess their commercial models in a potentially post-COVID world .

Exchange rates favorably impacted fee revenue by $2.8 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

Executive Search North America .

Executive Search North America reported fee revenue of $296.9 million, an increase of $136.4 million, or 85%, in the six months ended October 31, 2021 compared to $160.5 million in the year-ago period.

Exchange rates favorable impacted fee revenue by $1.2 million in the six months ended October 31, 2021 compared to the year-ago period.

North America’s fee revenue was higher due to a 62% increase in the number of engagements billed and a 13% increase in the weighted-average fee billed per engagement (calculated using local currency) during the six months ended October 31, 2021 compared to the year-ago period.

Executive Search EMEA.

Executive Search EMEA reported fee revenue of $85.2 million, an increase of $23.5 million, or 38% , in the six months ended October 31, 2021 compared to $61.7 million in the year-ago period.

Exchange rates favorably impacted fee revenue by $3.0 million, or 5%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in fee revenue was due to a 20% increase in the number of engagements billed and a 10% increase in the weighted-average fee billed per engagement (calculated using local currency) during the six months ended October 31, 2021 compared to the year-ago period.

Performance in the United Kingdom, United Arab Emirates, Russia, France and Belgium were the primary contributors to the increase in fee revenue in the six months ended October 31, 2021 compared to the year-ago period .

Executive Search Asia Pacific.

Executive Search Asia Pacific reported fee revenue of $57.0 million, an increase of $18.9 million, or 50%, in the six months ended October 31, 2021 compared to $38.1 million in the year-ago period.

Exchange rates favorably impacted fee revenue by $1.5 million, or 4%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in fee revenue was due to a 38% increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per engagement (calculated using local currency) during the six months ended October 31, 2021 compared to the year-ago period.

The performance in India, Australia, Singapore and China were the primary contributors to the increase in fee revenue in the six months ended October 31, 2021 compared to the year-ago period.

Executive Search Latin America.

Executive Search Latin America reported fee revenue of $13.3 million, an increase of $5.3 million, or 66%, in the six months ended October 31, 2021 compared to $8.0 million in the year-ago period.

Exchange rates favorably impacted fee revenue by $0.3 million, or 4%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in fee revenue was due to a 50% increase in the number of engagements billed and a 7% increase in the weighted-average fees billed per engagement (calculated using local currency) during the six months ended October 31, 2021 compared to the year-ago period.

The increase in fee revenue was due to higher fee revenue in Brazil, Mexico and Colombia in the six months ended October 31, 2021 compared to the year-ago period.

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $289.8 million, an increase of $135.5 million, or 88% , in the six months ended October 31, 2021 compared to $154.3 million in the year-ago period.

Exchange rates favorably impacted fee revenue by $4.3 million, or 3%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in fee revenue was due to higher fee revenue in RPO of $82.3 million and Professional Search of $53.2 million due to wider adoption of RPO services in the market while the increase in Professional Search is due to a 65% increase in engagements billed and 26% increase in the weighted-average fees billed per engagement in the six months ended October 31, 2021 compared to the year-ago period.

Compensation and Benefits

Compensation and benefits expense increased $236.7 million, or 40%, to $827.9 million in the six months ended October 31, 2021 from $591.2 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $11.7 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, performance-related bonus expense, amortization of long-term incentive awards and the use of outside contractors due to the increase in fee revenue combined with increases in overall profitability and average headcount in the six months ended October 31, 2021 compared to the year-ago period.

Also contributing to the higher compensation and benefits expense was an increase in the amounts owed under certain deferred compensation and retirement plans.

Compensation and benefits expense, as a percentage of fee revenue, decreased to 68% in the six months ended October 31, 2021 from 76% in the year-ago period.

Consulting compensation and benefits expense increased by $51.8 million, or 31% , to $216.7 million in the six months ended October 31, 2021 from $164.9 million in the year- ago period .

Exchange rates unfavorably impacted compensation and benefits by $3.1 million, or 2% , in the six months ended October 31, 2021 compared to the year-ago period .

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes , performance-related bonus expense , amortization of long-term incentive award s and the use of outside contractors due to the increase in fee revenue combined with increases in overall profitability and average headcount in the six months ended October 31, 2021 compared to the year-ago period.

Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in the six months ended October 31, 2021 from 73% in the year-ago period .

Digital compensation and benefits expense increased by $12.3 million, or 16%, to $87.2 million in the six months ended October 31, 2021 from $74.9 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $1.7 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, commission expenses and performance-related bonus expense in the six months ended October 31, 2021 compared to the year-ago period as a result of an increase in fee revenue.

Digital compensation and benefits expense, as a percentage of fee revenue, decreased to 51% in the six months ended October 31, 2021 from 57% in the year-ago period.

Executive Search North America compensation and benefits expense increased by $66.9 million, or 52%, to $195.4 million in the six months ended October 31, 2021 compared to $128.5 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $0.6 million, in the six months ended October 31, 2021 compared to the year-ago period.

The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, performance-related bonus expense and amortization of long-term incentive awards due to the increase in fee revenue combined with increases in overall profitability and average headcount in the six months ended October 31, 2021 compared to the year-ago period.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the six months ended October 31, 2021 from 80% in the year-ago period.

Executive Search EMEA compensation and benefits expense increased by $11.9 million, or 24%, to $61.3 million in the six months ended October 31, 2021 compared to $49.4 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $2.2 million, or 4%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase was due to higher salaries and related payroll taxes, performance-related bonus expense and amortization of long-term incentive awards in the six months ended October 31, 2021 compared to the year-ago period due to an increase in fee revenue combined with an increase in overall profitability.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 72% in the six months ended October 31, 2021 from 80% in the year-ago period.

Executive Search Asia Pacific compensation and benefits expense increased by $6.4 million, or 22%, to $35.4 million in the six months ended October 31, 2021 compared to $29.0 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $1.0 million, or 3%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase was due to increases in performance-related bonus expense and salaries and related payroll taxes in the six months ended October 31, 2021 compared to the year-ago period due to an increase in fee revenue combined with an increase in overall profitability.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in the six months ended October 31, 2021 from 76% in the year-ago period.

Executive Search Latin America compensation and benefits expense increased by $2.2 million, or 32%, to $9.1 million in the six months ended October 31, 2021 compared to $6.9 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 6%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase was due to higher performance-related bonus expense and an increase in salaries and related payroll taxes in the six months ended October 31, 2021 compared to the year-ago period due to an increase in fee revenue combined with an increase in overall profitability.

Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 68% in the six months ended October 31, 2021 from 87% in the year-ago period.

RPO & Professional Search compensation and benefits expense increased by $75.3 million, or 64%, to $192.7 million in the six months ended October 31, 2021 from $117.4 million in the year-ago period.

Exchange rates unfavorably impacted compensation and benefits by $2.8 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

The increase was due to higher salaries and related payroll taxes and performance-related bonus expense, driven by a 33% increase in the average headcount in the six months ended October 31, 2021 compared to the year-ago period and an increase in the use of outside contractors.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the six months ended October 31, 2021 from 76% in the year-ago period.

Corporate compensation and benefits expense increased by $10.0 million, or 50%, to $30.2 million in the six months ended October 31, 2021 from $20.2 million in the year-ago period.

The increase was due to higher salaries and related payroll taxes

and perform ance-related bonus expense and due to an increase in consolidated fee revenue, combined with increases in overall profitability and average headcount in the six months ended October 31, 2021 compared to the year-ago period .

General and Administrative Expenses

General and administrative expenses increased $20.7 million, or 22%, to $114.3 million in the six months ended October 31, 2021 from $93.6 million in the year-ago period.

Exchange rates unfavorably impacted general and administrative expenses by $2.0 million, or 2%, in the six months ended October 31, 2021 compared to the year-ago period.

In addition, the Company incurred higher marketing and business development expenses, which contributed to the increase in fee revenue and new business in the six months ended October 31, 2021, as well as increased legal and other professional fees and premise and office expense.

General and administrative expenses, as a percentage of fee revenue, were 9% in the six months ended October 31, 2021 as compared to 12% in the six months ended October 31, 2020.

Consulting general and administrative expenses increased by $2.4 million, or 10% to $26.6 million in the six months ended October 31, 2021 from $24.2 million in the year-ago period.

Consulting general and administrative expenses, as a percentage of fee revenue, were 8% in the six months ended October 31, 2021 as compared to 11% in the six months ended October 31, 2020.

Digital general and administrative expenses were $15.3 million in the six months ended October 31, 2021 compared to $14.7 million in the year-ago period, an increase of $0.6 million, or 4%.

Digital general and administrative expenses, as a percentage of fee revenue, were 9% in the six months ended October 31, 2021 as compared to 11% in the six months ended October 31, 2020.

Executive Search North America general and administrative expenses increased by $1.6 million, or 12%, to $14.6 million in the six months ended October 31, 2021 from $13.0 million in the year-ago period.

The increase in general and administrative expenses was primarily due to increases in business development expenses, premise and office expenses and the impact of foreign currency with foreign exchange losses in the six months ended October 31, 2021 compared to foreign currency gains in the year-ago period.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, were 5% in the six months ended October 31, 2021 compared to 8% in the year-ago period.

Executive Search EMEA general and administrative expenses increased by $1.9 million, or 25%, to $9.6 million in the six months ended October 31, 2021 from $7.7 million in the year-ago period.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint in the six months ended October 31, 2021 and the impact of foreign currency with foreign exchange losses in the six months ended October 31, 2021 compared to foreign currency gains in the year-ago period.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, were 11% in the six months ended October 31, 2021 compared to 13% in the year-ago period.

Executive Search Asia Pacific general and administrative expenses increased by $1.3 million, or 33%, to $5.3 million in the six months ended October 31, 2021 from $4.0 million in the year-ago period.

The increase was due to higher bad debt expense in the six months ended October 31, 2021 compared to the year-ago period.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, were 9% in the six months ended October 31, 2021 compared to 10% in the year-ago period.

Executive Search Latin America recognized a reduction in general and administrative expenses of $0.4 million in the six months ended October 31, 2021 compared to an expense of $1.1 million in the year-ago period.

The decrease in general and administrative expenses was due to a decrease in premise and office expenses in the six months ended October 31, 2021 compared to the year-ago period.

RPO & Professional Search general and administrative expenses increased by $6.9 million, or 57%, to $19.0 million in the six months ended October 31, 2021 compared to $12.1 million in the year-ago period.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, were 7% in the six months ended October 31, 2021 compared to 8% in the year-ago period.

Corporate general and administrative expenses increased by $7.8 million, or 47%, to $24.5 million in the six months ended October 31, 2021 compared to $16.7 million in the year-ago period.

The increase was primarily due to higher marketing expenses, an increase in legal and other professional fees and integration and acquisition costs incurred with the acquisition

of Lucas Group that closed on November 1, 2021, during the six months ended October 31, 2021 compared to the year-ago period .

Cost of Services Expense

Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital.

Cost of services expense increased by $16.1 million, or 53%, to $46.3 million in the six months ended October 31, 2021 compared to $30.2 million in the year-ago period.

The increase was due to the increase in fee revenue.

Cost of services expense, as a percentage of fee revenue, was 4% in both the six months ended October 31, 2021 and 2020.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $31.3 million, an increase of $1.0 million, or 3%, in the six months ended October 31, 2021 compared to $30.3 million in the year-ago period.

The increase was primarily due to the technology investments made in the current and prior year in software in our Digital business.

Restructuring Charges, Net

In April 2020, we implemented a restructuring plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of fiscal 2020.

We continued the implementation of this plan in fiscal 2021 and as a result recorded restructuring charges, net of $29.9 million of severance costs during the six months ended October 31, 2020.

There were no restructuring charges, net during the six months ended October 31, 2021.

Net Income (Loss) Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $153.7 million to $150.6 million in the six months ended October 31, 2021, as compared to a net loss attributable to Korn Ferry of $3.1 million in the year-ago period.

The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue, which was driven by the factors discussed above, and restructuring charges, net incurred in the year-ago period.

This was partially offset by increases in compensation and benefits expense and cost of services expense associated with the higher levels of business demand and increases in income tax provision and general and administrative expenses.

Net income (loss) attributable to Korn Ferry, as a percentage of fee revenue, was 12% in the six months ended October 31, 2021 compared to (0.4%) in the six months ended October 31, 2020.

Adjusted EBITDA

Adjusted EBITDA increased by $179.4 million, or 234%, to $256.2 million in the six months ended October 31, 2021 as compared to $76.8 million in the year-ago period.

Adjusted EBITDA, as a percentage of fee revenue, was 21% and 10% in the six months ended October 31, 2021 and 2020, respectively.

Consulting Adjusted EBITDA was $56.9 million in the six months ended October 31, 2021, an increase of $30.1 million, or 112%, as compared to $26.8 million in the year-ago period.

This increase in Adjusted EBITDA was driven by higher fee revenue in the segment, as well as cost savings realized from work being conducted virtually.

These changes were partially offset by increases in compensation and benefits expense and cost of services expense .

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% in the six months ended October 31, 2021 compared to 12% in the year-ago period.

Digital Adjusted EBITDA was $54.2 million in the six months ended October 31, 2021, an increase of $23.2 million, or 75%, as compared to $31.0 million in the year-ago period.

This increase in Adjusted EBITDA was mainly driven by an increase in fee revenue in the segment, as well as cost savings realized from work being conducted virtually.

These changes were partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense during the six months ended October 31, 2021 compared to the year-ago period.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 32% in the six months ended October 31, 2021 as compared to 24% in the six months ended October 31, 2020.

Executive Search North America Adjusted EBITDA increased by $65.7 million, or 248%, to $92.2 million in the six months ended October 31, 2021 compared to $26.5 million in the year-ago period.

The increase was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense and general and administrative expenses.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 31% in the six months ended October 31, 2021 as compared to 17% in the six months ended October 31, 2020.

Executive Search EMEA Adjusted EBITDA increased by $10.7 million, or 238%, to $15.2 million in the six months ended October 31, 2021 compared to $4.5 million in the year-ago period.

The increase in Adjusted EBITDA was driven by higher fee

revenue in the segment , partially offset by increase s in compensation and benefits expense and general and administrative expenses (excluding impairment charges) .

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 18% in the six months ended October 31, 2021 as compared to 7% in the six months ended October 31, 2020 .

Executive Search Asia Pacific Adjusted EBITDA increased by $11.3 million, or 217%, to $16.5 million in the six months ended October 31, 2021 compared to $5.2 million in the year-ago period.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense and general and administrative expenses .

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 29% and 9% in the three months ended July 31, 2021 and 2020, respectively.

Executive Search Latin America Adjusted EBITDA increased by $3.0 million to $2.4 million in the three months ended July 31, 2021 compared to $(0.6) million in the year-ago quarter.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment and a decrease in general and administrative expenses, partially offset by an increase compensation and benefits expense.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 35% and (16%) in the three months ended July 31, 2021 and 2020, respectively.

RPO & Professional Search Adjusted EBITDA was $34.0 million in the three months ended July 31, 2021, an increase of $28.0 million, or 467%, as compared to $6.0 million in the year-ago quarter.

The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense, cost of

services expense, and general and administrative expenses.

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 24% and 9% in the three months ended July 31, 2021 and 2020, respectively.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 29% in the six months ended October 31, 2021 as compared to 14% in the six months ended October 31, 2020.

Executive Search Latin America Adjusted EBITDA increased by $3.7 million to $3.7 million in the six months ended October 31, 2021.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by an increase compensation and benefits expense.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 28% in the six months ended October 31, 2021 as compared to 0.3% in the six months ended October 31, 2020.

RPO & Professional Search Adjusted EBITDA was $70.2 million in the six months ended October 31, 2021, an increase of $50.4 million, or 255%, as compared to $19.8 million in the year-ago period.

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 24% in the six months ended October 31, 2021 compared to 13% in the year-ago period.

Other Income, Net

Other income, net was $4.4 million in the three months ended July 31, 2021 compared to $11.2 million in the year-ago quarter.

The difference was primarily due to smaller gains from the fair value of our marketable securities during the three months ended July 31, 2021 compared to the year-ago quarter.

Other income, net was $9.5 million in the six months ended October 31, 2021 compared to $11.4 million in the year-ago period.

The difference was primarily due to smaller gains from the fair value of our marketable securities during the six months ended October 31, 2021 compared to the year-ago period.

Interest Expense, Net

Interest expense, net primarily relates to the Notes issued in December 2019 and borrowings under company-owned life insurance (“COLI”) policies, which are partially offset by interest earned on cash and cash equivalent balances.

Interest expense, net was $5.4 million in the three months ended July 31, 2021 compared to $6.9 million in the year-ago quarter.

Interest expense, net decreased due to interest income earned as a result of death benefits received from our COLI policies in three months ended July 31, 2021.

Income Tax Provision (Benefit)

The provision for income tax was $23.9 million in the three months ended July 31, 2021 compared to a benefit of $8.7 million in the year-ago quarter.

This reflects a 23.8% and 21.9% effective tax rate for the three months ended July 31, 2021 and 2020, respectively.

Interest expense, net primarily relates to the Notes issued in December 2019 and borrowings under COLI policies, which are partially offset by interest earned on cash and cash equivalent balances.

Interest expense, net was $11.8 million in the six months ended October 31, 2021 compared to $14.4 million in the year-ago period.

Interest expense, net decreased due to interest income earned as a result of death benefits received from our COLI policies and lower interest expense on borrowings under our COLI policies in six months ended October 31, 2021 due to lower amount of borrowings outstanding.

Income Tax Provision

The provision for income tax was $50.0 million in the six months ended October 31, 2021 compared to $4.2 million in the year-ago period.

This reflects a 24.7% and 294.5% effective tax rate for the six months ended October 31, 2021 and 2020, respectively.

The variability in effective tax rate is primarily due to the impact of U.S.

state income taxes and the jurisdictional mix of earnings.

Net Income (loss) Attributable to Noncontrolling Interest

Net income (loss) attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations.

Net income attributable to noncontrolling interest for the three months ended July 31, 2021 was $1.6 million, as compared to break-even in the three months ended July 31, 2020.

In addition to the impact of U.S.

state income taxes and jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the effective tax rate for the three and six months ended October 31, 2020 was particularly impacted by the initial business downturn and uncertainties brought on by the COVID-19 outbreak.

Specifically, in the three months ended July 31, 2020 (the first quarter of fiscal 2021), the Company recorded a tax benefit of $8.7 million on a $39.5 million pre-tax loss.

As business conditions improved and the Company returned to profitability over the remainder of fiscal 2021, the tax benefit recorded in the first quarter continued to have a meaningful, albeit diminishing, impact on the last three reporting periods of the preceding fiscal year.

Furthermore, the effective tax rate in the six months ended October 31, 2020 was affected by a tax expense recorded for withholding taxes on intercompany dividends that are not eligible for credit and a shortfall recorded in connection with stock-based awards that vested in the three months ended July 31, 2020.

The shortfall is the amount by which the Company’s tax deduction for these awards, based on the fair market value of the awards on the date of vesting, is less than the expense recorded in the Company’s financial statements over the awards’ vesting period.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest for the six months ended October 31, 2021 was $2.1 million, as compared to $0.3 million in the six months ended October 31, 2020.

Liquidity and Capital Resources

3 unchanged sentences

Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Credit Agreement (defined below), as well as using excess cash to repay the Notes.

As previously discussed under the heading “Impact of COVID-19”, with the implementation of the restructuring plan that was initiated on April 20, 2020 to reduce, in part, our human capital expenditures, and the improved business activity we experienced in the first quarter of fiscal 2022 demonstrated by an increase in fee revenue compared to the first quarter of fiscal 2021, we believe our costs are in line with our current revenue levels, but given the unpredictable and fluid nature of the pandemic and its economic consequences, our revenue levels may change.

As previously discussed under the heading “Impact of COVID-19”, with the implementation of the restructuring plan that was initiated on April 20, 2020 to reduce, in part, our human capital expenditures, and the improved business activity we experienced in the first two quarters of fiscal 2022 demonstrated by an increase in fee revenue compared to the first two quarters of fiscal 2021, we believe our costs are in line with our current revenue levels, but given the unpredictable and fluid nature of the pandemic and its economic consequences, our revenue levels may change.

Given the amount available from our Revolver (defined below) and the amount of cash and cash equivalents and marketable securities, net of amounts held in trust for deferred compensations and accrued bonuses, we believe that we have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, debt obligation payments and dividend payments under our dividend policy in the next 12 months.

On November 1, 2021, we completed the acquisition of Lucas Group for approximately $90 million, net of cash acquired.

Lucas Group brings substantial professional search and contracting expertise that is expected to enhance our search portfolio.

On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

5 unchanged sentences

We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith.

As of July 31, 2021, the fair value of the Notes was $415.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.

On December 1 6 , 201 9 , we also entered into a senior secured $650.0 million c redit a greement (the “ Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility.

As of October 31, 2021, the fair value of the Notes was $415.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.

On December 16, 2019, we also entered into a senior secured $650.0 million credit agreement (the “Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility.

See Note 12— Long-Term Debt for a description of the Credit Agreement.

We ha d a total of $644.5 million and $ 646.0 million available under our $ 650.0 million five-year senior secured revolving credit facility (the “ Revolver ”) after $5.5 million and $ 4.0 million of standby letters of credit ha d been issued as of July 31, 2021 and April 30, 2021 , respectively .

We had a total of $ 11.

7 million and $ 11.

0 million of standby letters of credits with other financial institutions as of July 31, 2021 and April 30, 2021 , respectively.

We had a total of $644.5 million and $ 646.0 million available under our $ 650.0 million five-year senior secured revolving credit facility (the “Revolver”) after $5.5 million and $4.0 million of standby letters of credit had been issued as of October 31, 2021 and April 30, 2021, respectively.

We had a total of $ 11.5 million and $ 11.0 million of standby letters of credits with other financial institutions as of October 31, 2021 and April 30, 2021, respectively.

The standby letters of credits were generally issued as a result of entering into office premise leases.

5 unchanged sentences

On March 6, 2019, our Board of Directors approved an increase to the share repurchase program of approximately $200 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to approximately $250 million.

The Company repurchased approximately $2.5 million of the Company’s stock during the three months ended July 31, 2021, compared to none in the year-ago quarter.

As of July 31, 2021 , $ 125.4 million remained available for common stock repurchases under our share repurchase program.

The Company repurchased approximately $9.4 million and $22.8 million of the Company’s stock during the six months ended October 31, 2021 and 2020, respectively.

As of October 31, 2021 , $ 118.5 million remained available for common stock repurchases under our share repurchase program.

Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated net leverage ratio”) is no greater than 4.00 to 1.00, and pro forma liquidity is at least $50 million, including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans.

Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no default under the indenture governing the Notes.

00 to 1.00, and pro forma liquidity is at least $50 million , including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans .

Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00 , and there is no default under the i ndenture governing the Note s .

Our performance is subject to the general level of economic activity in the geographic regions and the industries we service.

2 unchanged sentences

If these conditions were to persist over an extended period of time, we may incur negative cash flows and it might require us to access additional borrowings under the Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.

Cash and cash equivalents and marketable securities were $904.3 million and $1,097.1 million as of July 31, 2021 and April 30, 2021, respectively.

Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $614.2 million and $642.1 million at July 31, 2021 and April 30, 2021, respectively.

As of July 31, 2021 and April 30, 2021, we held $395.0 million and $382.8 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2021 and 2020 annual bonuses.

Cash and cash equivalents and marketable securities were $996.9 million and $1,097.1 million as of October 31, 2021 and April 30, 2021, respectively.

Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $591.2 million and $642.1 million at October 31, 2021 and April 30, 2021, respectively.

As of October 31, 2021 and April 30, 2021, we held $329.1 million and $382.8 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2022 and 2021 annual bonuses.

Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less.

Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S.

Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and as of April 30, 2021 also includes U.S.

Treasury and Agency securities.

1 unchanged sentence

Treasury and Agency securities are available for general corporate purposes.

As of July 31, 2021 and April 30, 2021, marketable securities of $ 255.0 million and $246.4 million, respectively, included equity securities of $181.1 million (net of gross unrealized gains of $33.9 million) and $ 175.6 million (net of gross unrealized gains of $ 30.0 million and gross unrealized losses of $ 0.1 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $171.3 million and $166.5 million, respectively, are classified as non-current.

These marketable securities were held to satisfy vested obligations totaling $171.2 million and $ 157.3 million as of July 31, 2021 and April 30, 2021, respectively.

Unvested obligations under the deferred compensation plans totaled $24.7 million and $ 26.5 million as of July 31, 2021 and April 30, 2021, respectively.

The net increase in our working capital of $ 46.3 million as of July 31, 2021 compared to April 30, 2021 is primarily attributable to a decrease in compensation and benefits payable and an increase in accounts receivable, partially offset by a decrease in cash and cash equivalents.

The decrease in cash and cash equivalents and compensation and benefits payable was primarily

due to payment s of annual bonuses earned in fiscal 20 2 1 and paid during the first quarter of fiscal 202 2 .

The in crease in accounts receivable was due to a n increase in fee revenue and an increase in days of sales outstanding, which went from 57 days to 67 days (which is consistent with historical experience) from April 30, 2021 to July 31, 2021 .

Cash used by operating activities was $160.5 million in the three months ended July 31, 2021 , a n in crease in cash used of $ 1 6.

2 million, compared to $144.3 million in the three months ended July 31, 2020 .

Cash used in investing activities was $10.4 million in the three months ended July 31, 2021 compared to $13.2 million in the year-ago quarter.

A decrease in cash used in investing activities was primarily due to an increase in proceeds from life insurance policies of $1.7 million and a decrease in the purchase of marketable securities net of sale/maturities of $1.2 million during the three months ended July 31, 2021 compared to the year-ago quarter.

Cash used in financing activities was $23.7 million in the three months ended July 31, 2021 compared to $7.8 million in the three months ended July 31, 2020.

The increase in cash used in financing activities was primarily due to higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $17.6 million in the three months ended July 31, 2021 compared to $ 4.4 million in the year-ago quarter.

The rest of the change was due to $2.5 million repurchases of the Company’s common stock in three months ended July 31, 2021 compared to none in the year ago quarter.

As of October 31, 2021 and April 30, 2021, marketable securities of $ 271.5 million and $246.4 million, respectively, included equity securities of $191.2 million (net of gross unrealized gains of $38.0 million and gross unrealized losses of $0.1 million) and $ 175.6 million (net of gross unrealized gains of $ 30.0 million and gross unrealized losses of $ 0.1 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $181.1 million and $166.5 million, respectively, are classified as non-current.

These marketable securities were held to satisfy vested obligations totaling $174.6 million and $ 157.3 million as of October 31, 2021 and April 30, 2021, respectively.

Unvested obligations under the deferred compensation plans totaled $26.7 million and $ 26.5 million as of October 31, 2021 and April 30, 2021, respectively.

The net increase in our working capital of $ 115.1 million as of October 31, 2021 compared to April 30, 2021 is primarily attributable to an increase in accounts receivable and a decrease in compensation and benefits payable, partially offset by a decrease in cash and cash equivalents.

The decrease in cash and cash equivalents and compensation and benefits payable was primarily due to payments of annual bonuses earned in fiscal 2021 and paid during the first quarter of fiscal 2022.

The increase in accounts receivable was due to an increase in fee revenue and an increase in days of sales outstanding, which went from 57 days to 72 days (which is consistent with historical experience) from April 30, 2021 to October 31, 2021.

Cash used by operating activities was $42.5 million in the six months ended October 31, 2021, a decrease of $49.6 million, compared to cash used by operating activities of $92.1 million in the six months ended October 31, 2020.

Cash used in investing activities was $31.3 million in the six months ended October 31, 2021 compared to $23.3 million in the year-ago quarter.

An increase in cash used in investing activities was primarily due to an increase in the purchase of marketable securities net of sale/maturities of $7.1 million and $3.7 million more in the purchase of property and equipment, partially offset by an increase proceeds from life insurance policies of $2.6 million during the six months ended October 31, 2021 compared to the year-ago quarter.

Cash used in financing activities was $38.1 million in the six months ended October 31, 2021 compared to $37.2 million in the six months ended October 31, 2020.

The increase in cash used in financing activities was primarily due to higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $18.1 million in the six months ended October 31, 2021 compared to $ 4.6 million in the year-ago quarter and an increase of $2.1 million in dividends paid to our shareholders.

This was offset by decreases in repurchases of the Company’s common stock of $13.4 million, dividends paid out to noncontrolling interest of $0.6 million and payments made on life insurance policy loans of $0.5 million in six months ended October 31, 2021 compared the year ago quarter.

Cash Surrender Value of Company-Owned Life Insurance Policies, Net of Loans

We purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans.

As of July 31, 2021 and April 30, 2021, we held contracts with gross cash surrender value (“CSV”) of $ 243.2 million and $ 241.3 million, respectively.

Total outstanding borrowings against the CSV of COLI contracts was $ 80.0 million as of July 31, 2021 and April 30, 2021.

Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts.

At July 31, 2021 and April 30, 2021, the net cash surrender value of these policies was $ 163.2 million and $161.3 million, respectively.

As of October 31, 2021 and April 30, 2021, we held contracts with gross cash surrender value (“CSV”) of $ 244.7 million and $ 241.3 million, respectively.

outstanding borrowings against the CSV of COLI contracts w as $ 80 .

0 million as of October 31, 2021 and April 30, 2021 .

Such borrowings do not require annual principal repayments, bear interest primarily at variable rate s and are secured by the CSV of COLI contracts.

At October 31, 2021 and April 30, 2021 , the net cash surrender value of these policies was $ 1 6 4 .

8 million and $ 161.3 million, respectively.

Long-Term Debt

14 unchanged sentences

In addition, we are required to pay to the lenders a quarterly commitment fee ranging from 0.175% to 0.35% per annum on the average daily unused amount of the Revolver, based upon our consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit.

As of July 31, 2021 and April 30, 2021 , there was no amounts outstanding under the Revolver.

The unamortized debt issuance costs associated with the Credit Agreement were $ 3 .

1 million as of July 31, 2021 and $ 3 .

3 million as of April 30, 2021 .

As of July 31, 2021 , we were in compliance with our debt covenants.

We had a total of $644.5 million and $ 646.0 million available under the Revolver after $5.5 million and $ 4.0 million of standby letters of credit had been issued as of July 31, 2021 and April 30, 2021, respectively.

We had a total of $ 11.7 million and $11.0 million of standby letters of credits with other financial institutions as of July 31, 2021 and April 30, 2021, respectively.

As of October 31, 2021 and April 30, 2021, there was no amounts outstanding under the Revolver.

The unamortized debt issuance costs associated with the Credit Agreement were $2.9 million as of October 31, 2021 and $3.3 million as of April 30, 2021 .

As of October 31, 2021, we were in compliance with our debt covenants.

We had a total of $644.5 million and $ 646.0 million available under the Revolver after $5.5 million and $ 4.0 million of standby letters of credit had been issued as of October 31, 2021 and April 30, 2021, respectively.

We had a total of $ 11.5 million and $11.0 million of standby letters of credits with other financial institutions as of October 31, 2021 and April 30, 2021, respectively.

The standby letters of credits were generally issued as a result of entering into office premise leases.

Other than the factors discussed in this section and the potential impacts of COVID-19 on our business, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of July 31, 2021 .

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities.

We had no material changes in contractual obligations as of July 31, 2021 , as compared to those disclosed in our table of contractual obligations included in our Annual Report.

We had no material changes in contractual obligations as of October 31, 2021 , as compared to those disclosed in our table of contractual obligations included in our Annual Report.

Critical Accounting Policies

1 unchanged sentence

Actual results could differ from those estimates and assumptions and changes in the estimates are reported in current operations as new information is learned or upon the amounts becoming fixed or determinable.

In preparing our interim consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our consolidated financial statements.

We consider the policies related to revenue recognition, performance - related bonuses, deferred compensation, carrying values of receivables, goodwill, intangible assets , leases and recoverability of deferred income taxes as critical to an understanding of our interim consolidated financial statements because their application places the most significant demands on management’s judgment and estimates.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis