What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-06-28 compared with 2022-06-28 · 406 added, 182 removed, 360 unchanged (62% of the section changed)

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These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases.

Similarly, statements that describe our objectives, plans or goals, as well as the magnitude and duration of the impact of the global (“COVID-19”) pandemic on our business, employees, customers and our ability to provide services in affected regions constitute forward-looking statements.

Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our restructuring plans and business strategy, are also forward-looking statements.

These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement.

The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to the ultimate magnitude and duration of COVID-19 and of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, inflationary pressures maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions, our indebtedness, the phase-out of LIBOR, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K.

The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Infinity Consulting Solutions ("ICS") and Salo LLC ("Salo"), resulting organizational changes, our indebtedness, the ultimate magnitude and duration of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements.

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And we advise them on how to reward, develop and motivate their people.

We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization.

This approach builds on the best of our past and gives us a clear path to the future with focused initiatives to increase our client and commercial impact.

We are pursuing a strategy to help Korn Ferry focus on clients and collaborate intensively across the organization.

This approach is intended to build on the best of our past and give us a clear path to the future with focused initiatives to increase our client and commercial impact.

Korn Ferry is transforming how clients address their talent management needs.

We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients.

Our seven reportable segments operate through the following four lines of business:

Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs:

Our eight reportable segments operate through the following five lines of business:

Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs:

Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards.

We support this work with a comprehensive range of some of the world’s leading lP and data.

The Consulting teams employ an integrated approach across core solutions,

each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world.

Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities and behaviors to drive businesses forward.

We enable this work with a comprehensive set of Digital Performance Management Tools, based on some of our world’s leading lP and data.

The Consulting teams employ an integrated approach across core solutions, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world.

Digital develops technology-enabled Performance Management Tools that empower our clients.

Our digital products give clients direct access to our proprietary data, client data and analytics to deliver clear insights with the training tools needed to align organizational structure with business strategy.

Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact.

Our approach to placing talent that brings together our research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit.

Our approach to placing talent brings together research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit.

Salary benchmarking then builds appropriate frameworks for compensation and retention.

This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, and Executive Search Latin America).

RPO and Professional Search focuses on delivering enterprise talent acquisition solutions to our clients, at the professional level.

We leverage the power of people, process expertise, IP-enabled technology, and compensation information to do this.

Transaction sizes range from single professional searches to team, department, line of business projects, and global outsource recruiting solutions.

The Company has seven reportable segments:

Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America and RPO & Professional Search.

This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific ("APAC"), and Executive Search Latin America).

Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management.

We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.

Recruitment Process Outsourcing ("RPO") offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights.

Our scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable us to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.

Professional Search & Interim and RPO were formerly referred to, and reported together, as Korn Ferry RPO & Professional Search (“RPO & Professional Search”).

We have recently acquired companies that have added critical mass to our Professional Search and Interim operations.

These acquisitions provided us the opportunity to reassess how we managed our RPO & Professional Search segment.

Therefore, beginning in fiscal 2023, we separated RPO & Professional Search into two segments to align with the Company’s strategy and the decisions of the Company’s chief operating decision maker, who began to regularly make separate resource allocation decisions and assess performance separately between our Professional Search & Interim business and RPO business.

Highlights of our performance in fiscal 2023 include:

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▪ Approximately 80% of our revenues were generated from clients that have utilized multiple lines of our business.

In fiscal 2022, we acquired The Lucas Group, which brings substantial professional search and interim placement expertise to Korn Ferry and has enhanced our industry-leading search portfolio.

We also recently acquired Patina Solutions Group, an interim executive search firm that is expected to bring access to a vast network of C-suite, top-tier, and professional interim talent.

▪ In fiscal 2023, we acquired ICS, a provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and human resources.

We also recently acquired Salo, a leading provider of finance, accounting and human resources ("HR") interim talent.

Performance Highlights

On November 1, 2021, we completed the acquisition of The Lucas Group for $90.9 million, net of cash acquired.

The Lucas Group contributes a substantial professional search and interim expertise that has enhance our search portfolio.

The Lucas Group is a professional search and interim staffing firm, targeting middle market businesses.

The addition of The Lucas Group to Korn Ferry’s broader talent acquisition portfolio – spanning Executive Search and RPO & Professional Search – is expected to accelerate our ability to capture additional share of this significant market.

The Lucas Group is included in the RPO & Professional Search segment.

On April 1, 2022, we completed the acquisition of Patina Solutions Group for $42.9 million, net of cash acquired.

Patina contributes a substantial interim executive solutions expertise across multiple industry verticals.

Patina’s vast network of C-suite, top-tier, and professional interim talent spans functional area of expertise such as finance, operations, legal, human resources, IT and more.

We believe this combination presents real, tangible opportunity for Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis.

Patina offers solutions for today’s nomadic labor market.

Patina Solutions Group is included in the RPO & Professional Search segment.

On August 1, 2022, we completed the acquisition of ICS for $99.3 million, net of cash acquired.

ICS is a highly regarded provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and HR.

On February 1, 2023, we completed the acquisition of Salo for $155.4 million, net of cash acquired.

Salo is a leading provider of finance, accounting and HR interim talent, with a strong focus on serving organizations in healthcare, among other industries.

The above acquisitions echo the commitment to scale our solutions, further increase the focus at the intersection of talent and strategy-wherever and however the needs of organizations evolve-and present real, tangible opportunity for us and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis.

We believe the addition of these acquisitions to our broader talent acquisition portfolio–spanning Executive Search, RPO, Professional Search and Interim services–has accelerated our ability to capture additional shares of this significant market.

All of the acquisitions in fiscal 2023 are included in the Professional Search & Interim segment.

In light of the Company’s evolution to an organization that is selling larger integrated solutions in a world where there are shifts in global trade lanes and persistent inflationary pressures, on January 11, 2023, the Company initiated a plan (the “Plan”) intended to realign its workforce with its business needs and objectives, namely, to invest in areas of potential growth and implement reductions where there was excess capacity.

The Plan resulted in the reduction of the Company's annualized cost base by approximately $45.0 million to $55.0 million (after taking into account new hires in connection with the rebalancing of the Company's workforce).

The Plan consisted of severance and related employee benefits payments and lease termination costs.

In fiscal 2023, the Company recorded $42.6 million in restructuring charges, net, and $5.5 million and $4.4 million in impairment of right-of-use asset and fixed assets, respectively, as a result of implementing the Plan.

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 impairment charges).

For fiscal 2022, Adjusted EBITDA excluded $7.9 million of integration/acquisition costs, a $7.4 million impairment of right-of-use assets and a $1.9 million impairment of fixed assets.

For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges and $0.7 million of integration/acquisition costs.

For fiscal 2020, Adjusted EBITDA excluded $58.6 million of restructuring charges, $12.2 million of integration/acquisition costs and $1.8 million of separation costs.

For fiscal 2023, Adjusted EBITDA excluded $42.6 million of restructuring charges, net, $14.9 million of integration/acquisition costs, $5.5 million impairment of right-of-use assets and $4.4 million impairment of fixed assets.

For fiscal 2022, Adjusted EBITDA excluded $7.9 million of integration/acquisition costs, $7.4 million impairment of right-of-use assets and $1.9 million impairment of fixed assets.

For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges, net and $0.7 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.

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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 $2,626.7 million during fiscal 2022, an increase of $816.7 million, or 45.1%, compared to $1,810.0 million in fiscal 2021, with increases in fee revenue across all lines of business primarily due to the increasing relevance of the Company’s solutions and the acquisition of companies in the RPO and Professional Search Segment.

Exchange rates unfavorably impacted fee revenue by $2.8 million during fiscal 2022 compared to fiscal 2021.

Net income attributable to Korn Ferry increased by $211.9 million during fiscal 2022 to $326.4 million from $114.5 million in fiscal 2021 .

Adjusted EBITDA was $538.9 million, an increase of $252.6 million during fiscal 2022, from Adjusted EBITDA of $286.3 million in fiscal 2021.

During fiscal 2022, the Executive Search, RPO & Professional, Consulting, and Digital lines of business contributed $257.6 million, $165.1 million, $116.1 million, and $110.1 million, respectively, offset by Corporate expenses net of other income of $110.0 million.

Our cash, cash equivalents and marketable securities increased by $114.0 million to $1,211.1 million at April 30, 2022, compared to $1,097.1 million at April 30, 2021.

This increase was mainly due to cash flows from operations as a result of cost savings initiatives that were put in place in fiscal 2021, partially offset by cash paid for the acquisitions of The Lucas Group and Patina Solutions net of cash acquired, repurchases of our common stock in the open market, the negative effect of exchange rate changes on cash and cash equivalents, purchases of property and equipment, interest payments on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) and dividends paid to stockholders during fiscal 2022.

Fee revenue was $2,835.4 million during fiscal 2023, an increase of $208.7 million, or 8%, compared to $2,626.7 million in fiscal 2022, with increases in fee revenue in all lines of business with the exception of Executive Search.

Professional Search & Interim had the largest increase in fee revenue when compared to fiscal 2022.

The acquisition of companies in the Professional Search & Interim segment was a significant factor in the year-over-year increase in fee revenue.

Exchange rates unfavorably impacted fee revenue by $96.8 million, or 4%, during fiscal 2023 compared to fiscal 2022.

Net income attributable to Korn Ferry decreased by $116.9 million during fiscal 2023 to $209.5 million from $326.4 million in fiscal 2022.

Adjusted EBITDA was $457.3 million, a decrease of $81.6 million during fiscal 2023, from Adjusted EBITDA of $538.9 million in fiscal 2022.

During fiscal 2023, the Executive Search, Professional Search & Interim, Consulting, Digital, and RPO lines of business contributed Adjusted EBITDA of $205.8 million, $110.9 million, $108.5 million, $97.5 million and $52.6 million, respectively, offset by Corporate expenses net of other income of $118.0 million.

Our cash, cash equivalents and marketable securities decreased by $143.2 million to $1,067.9 million at April 30, 2023, compared to $1,211.1 million at April 30, 2022.

This decrease was mainly due to the acquisitions of ICS and Salo, retention payments, capital expenditures, stock repurchases and dividends paid to stockholders during fiscal 2023.

As of April 30, 2023, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $187.0 million and a fair value of $187.8 million.

Our vested obligations for which these assets were held in trust totaled $172.2 million as of April 30, 2023 and our unvested obligations totaled $21.9 million.

Our working capital increased by $38.6 million to $775.7 million in fiscal 2022.

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 our debt obligations and dividend payments under our dividend policy in the next twelve months.

We had $645.3 million and $646.0 million available for borrowing under our Revolver (as defined herein) at April 30, 2022 and 2021, respectively.

As of April 30, 2022 and 2021, there was $4.7 million and $4.0 million of standby letters of credit issued, respectively, under our long-term debt arrangements.

Our working capital decreased by $113.3 million to $662.4 million in fiscal 2023, as compared to $775.7 million at April 30, 2022.

We had a total of $1,145.4 million available under the Credit Facilities (defined in Liquidity and Capital Resources) and a total of $645.3 million available under the previous credit facilities after $4.6 million and $4.7 million of standby letters of credit issued as of April 30, 2023 and 2022, respectively.

Of the amount available under the Credit Facilities, $500.0 million is under the Delayed Draw Facility that expired on June 24, 2023 and is no longer available as a source of liquidity.

We had a total of $11.5 million and $10.0 million of standby letters of credits with other financial institutions as of April 30, 2023 and 2022, respectively.

Our Annual Report on Form 10-K for the year ended April 30,2021 includes a discussion and analysis of our financial condition and results of operations for the year ended April 30, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Critical Accounting Policies

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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 and determinable.

In preparing our 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.

In preparing our 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 discussed below as critical to an understanding of our consolidated financial statements because their application places the most significant demands on management’s judgment and estimates.

Specific risks for these critical

accounting policies are described in the following paragraphs.

Specific risks for these critical accounting policies are described in the following paragraphs.

Senior management has discussed the development, selection and key assumptions of the critical accounting estimates with the Audit Committee of the Board of Directors.

Revenue Recognition .

Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis and RPO, either stand-alone or as part of a solution.

Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis, interim services and RPO, either stand-alone or as part of a solution.

Revenue is recognized when control of the goods and services is transferred to the customer in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods and services.

Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification 606 (“ASC 606”), Revenue from Contracts with Customers:

Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification (“ASC”) 606 ("ASC 606"), Revenue from Contracts with Customers:

1) identify the contract with a customer;

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Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped.

Fee revenue from Executive Search and Professional Search activities is generally one-third of the estimated first year compensation of the placed candidate plus a percentage of the fee to cover indirect engagement related expenses.

Fee revenue from executive and professional search activities is generally one-third of the estimated first-year cash compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement-related expenses.

In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation.

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In a standard search engagement, there is one performance obligation, which is the promise to undertake a search.

We generally recognize such revenue over the course of a search and when it is legally entitled to payment as outlined in the billing terms of the contract.

We generally recognize such revenue over the course of a search and when we are legally entitled to payment as outlined in the billing terms of the contract.

Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the customer.

These assumptions determine the timing of revenue recognition for the reported period.

In addition to talent acquisition for permanent placement roles, the Professional Search & Interim segment also offers recruitment services for interim roles.

Interim roles are short term in duration, generally less than 12 months.

Generally, each interim role is a separate performance obligation.

We recognize fee revenue over the duration that the interim resources’ services are provided which also aligns to the contracted invoicing plan and enforceable right to payment.

RPO fee revenue is generated through two distinct phases:

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Annual Performance-Related Bonuses .

Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive search consultants and revenue and other performance/profitability metrics for Consulting, Digital and RPO & Professional Search consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance including profitability, competitive forces and future economic conditions and their impact on our results.

Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by Executive Search and Professional Search consultants and revenue and other performance/profitability metrics for Consulting, Digital, Interim and RPO consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance, including profitability, competitive forces and future economic conditions and their impact on our results.

At the end of each fiscal year, annual performance-related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results, including profitability, the achievement of strategic objectives, the results of individual performance appraisals and the current economic landscape.

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Estimating deferred compensation requires assumptions regarding the timing and probability of payments of benefits to participants and the discount rate.

Changes in these assumptions could

significantly impact the liability and related cost on our consolidated balance sheets and statements of income, respectively.

Changes in these assumptions could significantly impact the liability and related cost on our consolidated balance sheets and statements of income, respectively.

For certain deferred compensation plans, management engages an independent actuary to periodically review these assumptions in order to confirm that they reflect the population and economics of our deferred compensation plans in all material respects and to assist us in estimating our deferred compensation liability and the related cost.

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As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future.

As of our testing date, the fair value of each reporting unit exceeded its carrying amount and as a result, no impairment charge was recognized.

As of our testing date, there were no indicators of impairments that required us to perform a quantitative test and as a result, no impairment charge was recognized.

There was no indication of potential impairment through April 30, 2023 that would have required further testing.

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▪ Competition and disruption in our core business;

▪ Technological advances such as artificial intelligence that impact labor markets and can diminish the value of our IP.

Results of Operations

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Year Ended April 30,

2023 2022 2021

Fee revenue 100.0 % 100.0 % 100.0 %

Reimbursed out-of-pocket engagement expenses 1.0 0.6 0.5

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Operating income 11.2 17.9 8.6

Net income 7.5 % 12.6 % 6.4 %

Net income attributable to Korn Ferry 7.4 % 12.4 % 6.3 %

The operating results for fiscal 2022 and 2021 have been revised to conform to the new segment reporting.

The following tables summarize the results of our operations:

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Year Ended April 30,

2023 2022 2021

Dollars % Dollars % Dollars %

(dollars in thousands)

Consulting $ 677,001 23.9 % $ 650,204 24.8 % $ 515,844 28.5 %

Digital 354,651 12.5 349,025 13.3 287,306 15.9

Executive Search:

North America 562,139 19.8 605,704 23.1 397,275 21.9

EMEA 187,014 6.6 182,192 6.9 138,954 7.7

Asia Pacific 95,598 3.4 118,596 4.5 83,306 4.6

Latin America 31,047 1.1 29,069 1.1 17,500 1.0

Total Executive Search 875,798 30.9 935,561 35.6 637,035 35.2

RPO & Professional Search

Professional Search & Interim 503,395 17.7 297,096 11.3 130,831 7.2

RPO 424,563 15.0 394,832 15.0 239,031 13.2

Total fee revenue 2,835,408 100.0 % 2,626,718 100.0 % 1,810,047 100.0 %

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Year Ended April 30,

Executive Search

2023 2022 2021

(in thousands)

Fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047

Total revenue $ 2,863,836 $ 2,643,455 $ 1,819,946

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Net income attributable to noncontrolling interest 3,525 4,485 1,108

Other loss, net

Other (income) loss, net (5,261) 11,880 (37,194)

Interest expense, net 25,864 25,293 29,278

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Depreciation and amortization 68,335 63,521 61,845

Other loss, net

Other income (loss), net 5,261 (11,880) 37,194

Integration/acquisition costs 14,922 7,906 737

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Impairment of right of use assets 5,471 7,392 —

Restructuring charges, net 42,573 — 30,732

Adjusted EBITDA $ 457,277 $ 538,928 $ 286,292

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Year Ended April 30, 2023

Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin

(dollars in thousands)

Consulting $ 677,001 $ 686,979 $ 108,502 16.0 %

Digital 354,651 354,967 97,458 27.5 %

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

Restructuring charges, net

Adjusted EBITDA

Adjusted EBITDA margin

North America 562,139 568,212 140,850 25.1 %

EMEA 187,014 188,114 31,380 16.8 %

Asia Pacific 95,598 95,956 24,222 25.3 %

Latin America 31,047 31,054 9,370 30.2 %

Total Executive Search 875,798 883,336 205,822 23.5 %

Professional Search & Interim 503,395 507,058 110,879 22.0 %

RPO 424,563 431,496 52,588 12.4 %

Corporate — — (117,972)

Consolidated $ 2,835,408 $ 2,863,836 $ 457,277 16.1 %

Year Ended April 30, 2022

Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin

(dollars in thousands)

Consulting $ 650,204 $ 654,199 $ 116,108 17.9 %

Digital 349,025 349,437 110,050 31.5 %

Executive Search:

(in thousands)

Total revenue

North America 605,704 609,258 181,615 30.0 %

EMEA 182,192 182,866 31,804 17.5 %

Asia Pacific 118,596 118,705 35,105 29.6 %

Latin America 29,069 29,079 9,089 31.3 %

Total Executive Search 935,561 939,908 257,613 27.5 %

Professional Search & Interim 297,096 297,974 106,015 35.7 %

RPO 394,832 401,937 59,126 15.0 %

Corporate — — (109,984)

Consolidated $ 2,626,718 $ 2,643,455 $ 538,928 20.5 %

Year Ended April 30, 2021

Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin

(dollars in thousands)

Consulting $ 515,844 $ 517,046 $ 81,522 15.8 %

Digital 287,306 287,780 86,095 30.0 %

Executive Search:

North America 397,275 399,104 98,099 24.7 %

EMEA 138,954 139,213 11,742 8.5 %

Asia Pacific 83,306 83,463 16,676 20.0 %

Latin America 17,500 17,500 1,289 7.4 %

Total Executive Search 637,035 639,280 127,806 20.1 %

Professional Search & Interim 130,831 131,080 36,934 28.2 %

RPO 239,031 244,760 32,477 13.6 %

Corporate — — (78,542)

Consolidated $ 1,810,047 $ 1,819,946 $ 286,292 15.8 %

Fiscal 2023 Compared to Fiscal 2022

Fee revenue increased by $208.7 million, or 8.0%, to $2,835.4 million in fiscal 2023 compared to $2,626.7 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $96.8 million, or 4%, in fiscal 2023 compared to fiscal 2022.

Fee revenue increased in all lines of business except in Executive Search which saw a decline in fee revenue compared to fiscal 2022 primarily due to a decline in demand for our products and services caused by the slowdown in the global economy.

The acquisitions of The Lucas Group, Patina Solutions Group ("Patina"), ICS and Salo (the "Acquired Companies") were a significant factor in the increase in fee revenue compared to fiscal 2022.

Consulting reported fee revenue of $677.0 million in fiscal 2023, an increase of $26.8 million, or 4%, compared to $650.2 million in fiscal 2022.

The increase in fee revenue was mainly driven by an increase in demand for workforce transformation, organization design, and senior leadership development delivered through our Organization Strategy, Leadership Development, Total Rewards and Assessment & Succession solutions, as clients aligned their structures to new market opportunities and addressed compensation and retention issues.

Exchange rates unfavorably impacted fee revenue by $27.8 million, or 4%, compared to fiscal 2022.

Digital reported fee revenue of $354.7 million in fiscal 2023, an increase of $5.7 million, or 2%, compared to $349.0 million in fiscal 2022.

The increase in fee revenue was primarily driven by increasing demand for Development offerings as companies invest in sales effectiveness tools and training content to build their commercial teams' capabilities to maximize

revenue growth, as well as in analytics on Total Rewards trends used to aid in retention and staffing decisions.

Exchange rates unfavorably impacted fee revenue by $18.8 million, or 5%, compared to fiscal 2022.

Executive Search North America .

Executive Search North America reported fee revenue of $562.1 million in fiscal 2023, a decrease of $43.6 million, or 7%, compared to $605.7 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $2.2 million in fiscal 2023 compared to fiscal 2022.

North America’s fee revenue decreased due to a 14% decrease in the number of engagements billed, partially offset by an 8% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2023 compared to fiscal 2022.

Executive Search EMEA.

Executive Search EMEA reported fee revenue of $187.0 million in fiscal 2023, an increase of $4.8 million, or 3%, compared to $182.2 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $15.6 million, or 9%, in fiscal 2023 compared to fiscal 2022.

The increase in fee revenue was primarily due to a 10% increase in the weighted-average fees billed per engagement (calculated using local currency) and a 2% increase in the number of engagements billed in fiscal 2023 compared to fiscal 2022.

The performance in the United Arab Emirates, Switzerland, Denmark, Netherlands and Germany were the primary contributors to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by a decrease in fee revenue in France, Russia and Italy.

Executive Search Asia Pacific.

Executive Search Asia Pacific reported fee revenue of $95.6 million in fiscal 2023, a decrease of $23.0 million, or 19%, compared to $118.6 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $7.9 million, or 7%, in fiscal 2023 compared to fiscal 2022.

The decrease in fee revenue was due to a 16% decrease in the number of engagements billed, partially offset by a 2% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2023 compared to fiscal 2022.

The performance in China, Japan, Australia, India and Korea were the primary contributors to the decrease in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by an increase in fee revenue in Malaysia.

Executive Search Latin America.

Executive Search Latin America reported fee revenue of $31.0 million in fiscal 2023, an increase of $1.9 million, or 7%, compared to $29.1 million in fiscal 2022.

Exchange rates were relatively flat in fiscal 2023 compared to fiscal 2022.

The increase in fee revenue was due to a 9% increase in the weighted-average fees billed per engagement (calculated using local currency), partially offset by a decrease of 2% in the number of engagements billed in fiscal 2023 compared to fiscal 2022.

The performance in Mexico and Brazil were the primary contributors to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by a decrease in fee revenue in Colombia.

Professional Search & Interim.

Professional Search & Interim reported fee revenue of $503.4 million in fiscal 2023, an increase of $206.3 million, or 69%, compared to $297.1 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $7.4 million, or 2%, in fiscal 2023 compared to fiscal 2022.

The increase in fee revenue was driven by an increase in both interim and professional search fee revenue of $188.1 million and $18.2 million, respectively, which was primarily due to the acquisitions of the Acquired Companies.

RPO reported fee revenue of $424.6 million in fiscal 2023, an increase of $29.8 million, or 8%, compared to $394.8 million in fiscal 2022.

Exchange rates unfavorably impacted fee revenue by $17.1 million, or 4%, in fiscal 2023 compared to fiscal 2022.

The increase in fee revenue was due to wider adoption of RPO services in the market in combination with our differentiated solutions.

Compensation and Benefits

Compensation and benefits expense increased by $159.7 million, or 9%, to $1,901.2 million in fiscal 2023 from $1,741.5 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $53.6 million, or 3%, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes of $147.7 million and employer insurance of $15.3 million.

These increases were due to the increase in fee revenue overall which resulted in an increase in average headcount of 15% in fiscal 2023 compared to fiscal 2022, and wage inflation.

Also contributing to higher compensation and benefits expense were increases in commission expense of $20.2 million due to higher fee revenue, $18.7 million more in deferred compensation expenses as a result of increases in the fair value of participants’ accounts in fiscal 2023 compared to fiscal 2022 and higher integration/acquisition costs of $6.4 million.

This increase was partially offset by decreases in performance-related bonus expense of $38.2 million and $8.9 million in amortization of long-term incentive awards.

Compensation and benefits expense, as a percentage of fee revenue, increased to 67% in fiscal 2023 from 66% in fiscal 2022.

Consulting compensation and benefits expense increased by $27.6 million, or 6%, to $478.5 million in fiscal 2023 from $450.9 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $16.5 million, or 4%, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes of $22.2 million and employer insurance of $2.5 million.

These increases were due to the segment's revenue growth coupled which resulted in an increase in average headcount of 7% in fiscal 2023 compared to fiscal 2022, and wage inflation.

Also contributing to higher compensation and benefits expense was an increase in deferred compensation expense of $2.6 million in fiscal 2023 compared to fiscal 2022.

Consulting compensation and benefits expense, as a percentage of fee revenue, increased to 71% in fiscal 2023 from 69% in fiscal 2022.

Digital compensation and benefits expense increased by $11.3 million, or 6%, to $189.1 million in fiscal 2023 from $177.8 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $7.5 million, or 4%, in fiscal 2023

compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to an increase in salaries and related payroll taxes of $13.8 million due to a 9% increase in average headcount in fiscal 2023 compared to fiscal 2022 and wage inflation.

The increase was partially offset by a decrease in performance-related bonus expense of $3.0 million.

Digital compensation and benefits expense, as a percentage of fee revenue, increased to 53% in fiscal 2023 from 51% in fiscal 2022.

Executive Search North America compensation and benefits expense increased by $9.0 million, or 2%, to $386.1 million in fiscal 2023 compared to $377.1 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $1.0 million in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes of $12.4 million and an increase in employer insurance of $1.6 million.

These increases were due to an increase in average headcount of 10% in fiscal 2023 compared to fiscal 2022 and wage inflation.

Also contributing to the increase in compensation and benefits expense was an increase in deferred compensation expense of $12.4 million due to an increase in the fair market value of participants' accounts in fiscal 2023 compared to fiscal 2022.

The increase was partially offset by lower performance-related bonus expense of $12.4 million as a result of lower fee revenue and a decrease in the amortization of long-term incentive awards of $4.9 million.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, increased to 69% in fiscal 2023 from 62% in fiscal 2022.

Executive Search EMEA compensation and benefits expense increased by $7.4 million, or 6%, to $140.5 million in fiscal 2023 compared to $133.1 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $8.2 million, or 6%, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to higher performance-related bonus expense of $4.5 million, salaries and related payroll taxes of $2.5 million and amortization of long-term incentive awards of $1.1 million in fiscal 2023 compared to fiscal 2022.

These increases were due to the Executive search EMEA segment's revenue growth combined with an increase in average headcount of 11% in fiscal 2023 compared to fiscal 2022.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, increased to 75% in fiscal 2023 from 73% in fiscal 2022.

Executive Search Asia Pacific compensation and benefits expense decreased by $10.4 million, or 14%, to $61.9 million in fiscal 2023 compared to $72.3 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $4.3 million, or 6%, in fiscal 2023 compared to fiscal 2022.

The decrease in compensation and benefits expense was primarily due to a decrease in performance-related bonus expense of $8.3 million in fiscal 2023 compared to fiscal 2022 due to lower segment fee revenue.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, increased to 65% in fiscal 2023 from 61% in fiscal 2022.

Executive Search Latin America compensation and benefits expense increased by $2.0 million, or 11%, to $20.4 million in fiscal 2023 compared to $18.4 million in fiscal 2022.

Exchange rates unfavorably impacted compensation and benefits by $0.1 million, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to an increase in salaries and related payroll taxes as a result of the segment’s fee revenue growth with an increase in average headcount of 8% in fiscal 2023 compared to fiscal 2022.

Executive Search Latin America compensation and benefits expense, as percentage of fee revenue, increased to 66% in fiscal 2023 from 63% in fiscal 2022.

Professional Search & Interim compensation and benefits expense increased by $74.5 million, or 50%, to $223.3 million in fiscal 2023 compared to $148.8 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $2.9 million, or 2%, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes of $52.0 million, commission expense of $18.0 million, employee insurance of $3.9 million and integration/acquisition costs of $6.4 million due to the acquisitions of the Acquired Companies, which resulted in a 55% increase in the average headcount in fiscal 2023 compared to fiscal 2022.

This increase was partially offset by a decrease of $8.0 million in performance-related bonus expense.

Professional Search & Interim compensation and benefits expense, as a percentage of fee revenue, decreased to 44% in fiscal 2023 from 50% in fiscal 2022.

RPO compensation and benefits expense increased by $35.8 million, or 12%, to $339.0 million in fiscal 2023 from $303.2 million in fiscal 2022.

Exchange rates favorably impacted compensation and benefits by $13.1 million, or 4%, in fiscal 2023 compared to fiscal 2022.

The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes of $42.1 million and employer insurance of $6.1 million as a result of the segment's fee revenue growth combined with an increase in average headcount of 18% in fiscal 2023 compared to fiscal 2022.

Also contributing to the higher compensation and benefits expense was the increase in severance expense of $3.2 million.

This increase was partially offset by decreases in performance-related bonus expense of $12.6 million and in the use of outside contractors of $5.4 million.

RPO compensation and benefits expense, as a percentage of fee revenue, increased to 80% in fiscal 2023 from 77% in fiscal 2022.

Corporate compensation and benefits expense increased by $2.7 million, or 5%, to $62.4 million in fiscal 2023 from $59.7 million in fiscal 2022.

The increase in compensation and benefits expense was primarily driven by higher salaries and related payroll taxes of $4.5 million due to an increase in average headcount of 13% in fiscal 2023 compared to fiscal 2022, and to a lesser extent to an increase in stock-based compensation expense of $2.3 million and the use of outside contractors of $1.3 million.

Also contributing to the increase in compensation and benefits expense was an increase in deferred compensation expense of $1.1 million due to increases in the fair value of participants' accounts.

The increase was

partially offset by an increase in the cash surrender value ("CSV") of company-owned life insurance ("COLI") of $4.8 million as a result of increased death benefits, and a decrease in the amortization of long-term incentive awards of $1.2 million in fiscal 2023 compared to fiscal 2022.

General and Administrative Expenses

General and administrative expenses increased by $31.2 million, or 13%, to $268.5 million in fiscal 2023 compared to $237.3 million in fiscal 2022.

Exchange rates favorably impacted general and administrative expenses by $12.5 million, or 5%, in fiscal 2023 compared to fiscal 2022.

The increase in general and administrative expenses was primarily due to higher marketing and business development expenses of $15.9 million and an increase in computer software licenses expense of $9.0 million, which contributed to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, as well as an increase in legal and other professional fees of $6.7 million.

General and administrative expenses, as a percentage of fee revenue, was 9% in both fiscal 2023 and fiscal 2022.

Consulting general and administrative expenses increased by $6.4 million, or 12%, to $57.9 million in fiscal 2023 compared to $51.5 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to increases in impairment charges of $3.1 million associated with the reduction of the Company’s real estate footprint and marketing and business development expenses of $2.1 million related to fee revenue growth.

Also contributing to the increase in general and administrative expenses was an increase in foreign exchange losses of $2.0 million in fiscal 2023 compared to fiscal 2022.

Consulting general and administrative expenses, as a percentage of fee revenue, increased to 9% in fiscal 2023 from 8% in fiscal 2022.

Digital general and administrative expenses increased by $9.6 million, or 31%, to $40.6 million in fiscal 2023 compared to $31.0 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to higher computer software licenses expense of $3.2 million and an increase in marketing and business development expenses of $3.1 million.

Also contributing to the increase in general and administrative expense was an increase in impairment charges of $1.7 million associated with the reduction of the Company's real estate footprint and an increase in foreign exchange losses of $1.5 million in fiscal 2023 compared to fiscal 2022.

Digital general and administrative expenses, as a percentage of fee revenue, increased to 11% in fiscal 2023 from 9% in fiscal 2022.

Executive Search North America general and administrative expenses increased by $1.6 million, or 5%, to $32.4 million in fiscal 2023 from $30.8 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to an increase in marketing and business development expenses of $2.1 million, partially offset by foreign exchange gains of $0.2 million in fiscal 2023 compared to foreign exchange losses of $0.4 million in fiscal 2022.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, increased to 6% in fiscal 2023 from 5% in fiscal 2022.

Executive Search EMEA general and administrative expenses decreased by $3.3 million, or 18%, to $14.7 million in fiscal 2023 from $18.0 million in fiscal 2022.

The decrease in general and administrative expenses was primarily due to a decrease in premise and office expense of $3.3 million due to impairment charges recorded in fiscal 2022 and as a result of the reduction of the Company's real estate footprint.

Also contributing to the decrease is the impact of foreign currency with foreign currency gains of $0.3 million in fiscal 2023 compared to foreign exchange losses of $0.7 million in fiscal 2022.

This decrease was partially offset by an increase in marketing and business development expense of $1.0 million related to fee revenue growth in fiscal 2023 compared to fiscal 2022.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2023 from 10% in fiscal 2022.

Executive Search Asia Pacific general and administrative expenses decreased by $1.3 million, or 12%, to $9.7 million in fiscal 2023 from $11.0 million in fiscal 2022.

The decrease in general and administrative expenses was primarily due to decreases in bad debt expense of $0.7 million and premise and office expense of $0.6 million in fiscal 2023 compared to fiscal 2022.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, increased to 10% in fiscal 2023 from 9% in fiscal 2022.

Executive Search Latin America general and administrative expenses increased by $0.5 million, or 56%, to $1.4 million in fiscal 2023 from $0.9 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to a gain recorded in fiscal 2022 due to the termination of a lease agreement in Mexico, thereby increasing premise and office expense by $1.7 million, partially offset by an increase in foreign exchange gains of $0.8 million in fiscal 2023 compared to fiscal 2022.

Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, increased to 4% in fiscal 2023 from 3% in fiscal 2022.

Professional Search & Interim general and administrative expenses increased by $10.1 million, or 50%, to $30.3 million in fiscal 2023 from $20.2 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to increases in bad debt expense of $5.4 million, marketing and business development expenses of $2.4 million, premise and office expense of $1.3 million and integration/acquisition costs of $0.8 million in fiscal 2023 compared to fiscal 2022.

Professional Search & Interim general and administrative expenses, as a percentage of fee revenue, decreased to 6% in fiscal 2023 from 7% in fiscal 2022.

RPO general and administrative expenses increased by $0.9 million, or 4%, to $21.3 million in fiscal 2023 from $20.4 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to increases in marketing and business development expenses of $1.0 million, legal and other professional fees of $0.4 million, as well as a foreign

exchange losses of $1.2 million in fiscal 2023 as opposed to foreign exchange gains of $0.8 million in fiscal 2022.

This increase was partially offset by a lower bad debt expense of $2.5 million in fiscal 2023 compared to fiscal 2022.

RPO general and administrative expenses, as a percentage of fee revenue, was 5% in both fiscal 2023 and fiscal 2022.

Corporate general and administrative expenses increased by $6.6 million, or 12%, to $60.1 million in fiscal 2023 compared to $53.5 million in fiscal 2022.

The increase in general and administrative expenses was primarily due to increases in legal and other professional fees of $3.9 million, marketing and business development expenses of $3.8 million, as well as premise and office expense of $2.7 million, partially offset by an increase in foreign exchange gains of $2.3 million in fiscal 2023 compared to fiscal 2022.

Cost of Services Expense

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

Cost of services expense was $238.5 million in fiscal 2023, an increase of $124.1 million, or 108%, compared to $114.4 million in fiscal 2022.

Professional Search & Interim accounts for $122.9 million of the increase primarily due to the acquisitions of the Acquired Companies which, includes a significant amount of interim business as part of the services they perform which has higher cost of services expense compared to other services Korn Ferry provides.

As the interim business becomes an increasing portion of our fee revenue, we expect cost of services expense to continue to increase in future periods.

The rest of the increase was from the Consulting segment driven by the increase in fee revenue in the segment.

Cost of services expense, as a percentage of fee revenue, increased to 8% in fiscal 2023 from 4% in fiscal 2022 due to the acquisition of the Acquired Companies.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $68.3 million in fiscal 2023, an increase of $4.8 million, or 8%, compared to $63.5 million in fiscal 2022.

The increase was primarily due to the amortization of intangible assets due to the acquisition of the Acquired Companies.

Restructuring Charges, Net

In fiscal 2023, we implemented the Plan to realign our workforce with our business needs and objectives.

As a result, we recorded restructuring charges, net of $42.6 million during fiscal 2023.

There were no restructuring charges, net in fiscal 2022.

Net Income Attributable to Korn Ferry

Net income attributable to noncontrolling interest

Other loss, net

Net income attributable to Korn Ferry decreased by $116.9 million, to $209.5 million in fiscal 2023 compared to $326.4 million in fiscal 2022.

The decrease in net income attributable to Korn Ferry was driven by increases in compensation and benefits expense, cost of services expense, general and administrative expenses, and restructuring charges, net in fiscal 2023 compared to fiscal 2022.

This decrease was partially offset by an increase in fee revenue, lower income tax provision and an increase in other income (loss), net in fiscal 2023 compared to fiscal 2022.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 7% and 12% in fiscal 2023 and 2022, respectively.

Adjusted EBITDA

Adjusted EBITDA a decrease of $81.6 million to $457.3 million in fiscal 2023 compared to $538.9 million in fiscal 2022.

The decrease in Adjusted EBITDA was driven by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding integration/acquisition costs and impairment charges), partially offset by increases in fee revenue and other income (loss), net in fiscal 2023 compared to fiscal 2022.

Adjusted EBITDA, as a percentage of fee revenue, was 16% in fiscal 2023 compared to 21% in fiscal 2022.

Adjusted EBITDA margin decreased primarily due to a change in fee revenue mix, with a decrease in fee revenue in Executive Search and Permanent Placement, which have higher margins, and being replaced with fee revenue in Interim that has lower margins, but is more resilient to economic factors and in line with our strategy

Consulting Adjusted EBITDA was $108.5 million in fiscal 2023, a decrease of $7.6 million, or 7%, compared to $116.1 million in fiscal 2022.

The decrease in Adjusted EBITDA was driven by increases in compensation and benefits expense, general and administrative expenses (excluding impairment charges), and cost of services expense, partially offset by an increase in fee revenue in fiscal 2023 compared to fiscal 2022.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 16% in fiscal 2023 compared to 18% in fiscal 2022.

Digital Adjusted EBITDA was $97.5 million in fiscal 2023, a decrease of $12.6 million, or 11%, compared to $110.1 million in fiscal 2022.

The decrease in Adjusted EBITDA was mainly driven by increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges), partially offset by an increase in fee revenue in fiscal 2023 compared to fiscal 2022.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 27% in fiscal 2023 compared to 32% in fiscal 2022.

Executive Search North America Adjusted EBITDA decreased by $40.7 million, or 22%, to $140.9 million in fiscal 2023 compared to $181.6 million in fiscal 2022.

The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment, coupled with increases in compensation and benefits expense and general and administrative expenses,

partially offset by an increase in other income (loss), net in fiscal 2023 compared to fiscal 2022.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2023 compared to 30% in fiscal 2022.

Executive Search EMEA Adjusted EBITDA decreased by $0.4 million, or 1%, to $31.4 million in fiscal 2023 compared to $31.8 million in fiscal 2022.

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

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 17% in both fiscal 2023 and fiscal 2022.

Executive Search Asia Pacific Adjusted EBITDA decreased by $10.9 million, or 31%, to $24.2 million in fiscal 2023 compared to $35.1 million in fiscal 2022.

The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment, partially offset by decreases in the compensation and benefits expense and general and administrative expenses in fiscal 2023 compared to fiscal 2022.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2023 compared to 30% in fiscal 2022.

Executive Search Latin America Adjusted EBITDA increased by $0.3 million, or 3%, to $9.4 million in fiscal 2023 compared to $9.1 million in fiscal 2022.

The increase in Adjusted EBITDA was driven by higher fee revenue in the segment and an increase in other income (loss), net, partially offset by an increase in compensation and benefits expense in fiscal 2023 compared to fiscal 2022.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2023 compared to 31% in fiscal 2022.

Professional Search & Interim Adjusted EBITDA was $110.9 million in fiscal 2023, an increase of $4.9 million, or 5%, compared to $106.0 million in fiscal 2022.

The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment as a result of the acquisition of the Acquired Companies, partially offset by increases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs) and general and administrative expenses (excluding impairment charges and integration/acquisition costs) in fiscal 2023 compared to fiscal 2022.

Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 22% in fiscal 2023 compared to 36% in fiscal 2022.

RPO Adjusted EBITDA was $52.6 million in fiscal 2023, a decrease of $6.5 million, or 11%, compared to $59.1 million in fiscal 2022.

The decrease in Adjusted EBITDA was mainly driven by increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges), partially offset by higher fee revenue in the segment in fiscal 2023 compared to fiscal 2022.

RPO Adjusted EBITDA, as a percentage of fee revenue, was 12% in fiscal 2023 compared to 15% in fiscal 2022.

Other Income (Loss), Net

Other income, net was $5.3 million in fiscal 2023 compared to other loss, net of $11.9 million in fiscal 2022.

The difference was primarily due to gains from the fair value of our marketable securities in fiscal 2023 compared to losses in fiscal 2022.

Interest Expense, Net

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

Interest expense, net was $25.9 million in fiscal 2023 compared to $25.3 million in fiscal 2022.

Income Tax Provision

Operating income

Depreciation and amortization

Other loss, net

Integration/acquisition costs

Restructuring charges, net

Separation costs

Adjusted EBITDA

Adjusted EBITDA margin

The provision for income tax was $82.7 million in fiscal 2023 compared to $102.1 million in fiscal 2022.

This reflects a 28% effective tax rate for fiscal 2023 compared to a 24% effective tax rate for fiscal 2022.

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 higher effective tax rate in fiscal 2023 was affected by a tax expense recorded for withholding taxes that are not eligible for credit.

The fiscal 2022 effective tax rate was lower due to a tax benefit recorded in connection with tax credits for eligible research and development expenditures incurred in fiscal 2022 and the four immediately preceding fiscal years.

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 income.

Net income attributable to noncontrolling interest was $3.5 million and $4.5 million in fiscal 2023 and fiscal 2022, respectively.

Fiscal 2022 compared to Fiscal 2021

During fiscal 2023, the Company changed the composition of its global segments.

The Professional Search & Interim segment and RPO segment were previously included in the RPO & Professional Search segment.

Segment data for fiscal 2022 and 2021 have been recast to reflect the division of the RPO & Professional Search segment into the Professional Search & Interim and RPO segments.

Fee revenue increased by $816.7 million, or 45.1%, to $2,626.7 million in fiscal 2022 compared to $1,810.0 million in fiscal 2021.

Exchange rates unfavorably impacted fee revenue by $2.8 million, in fiscal 2022 compared to fiscal 2021.

The higher fee revenue was attributable to increases in all lines of business primarily due to an increase in new business driven by the increased relevance of the Company’s solutions and the acquisition of companies in the RPO & Professional Search.

Further, COVID-19 had adversely impacted demand for the Company’s services on a worldwide basis in fiscal 2021.

The higher fee revenue was attributable to increases in all lines of business primarily due to an increase in new

business driven by the increased relevance of the Company’s solutions and the acquisition of The Lucas Group that closed on November 1 2021 and Patina that closed on April 1, 2022 ("Acquired Companies in fiscal 2022") in the Professional Search & Interim segment.

Further, the coronavirus pandemic ("COVID-19") adversely impacted demand for the Company’s services on a worldwide basis in fiscal 2021.

Consulting reported fee revenue of $650.2 million in fiscal 2022, an increase of $134.4 million, or 26%, compared to $515.8 million in fiscal 2021.

31 unchanged sentences

The performance in Mexico, Brazil and Chile were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021, driving $9.4 million of increased revenue.

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $691.9 million in fiscal 2022, an increase of $322.0 million, or 87%, compared to $369.9 million in fiscal 2021.

Professional Search & Interim .

Professional Search & Interim reported fee revenue of $297.1 million in fiscal 2022, an increase of $166.3 million, or 127%, compared to $130.8 million in fiscal 2021.

Exchange rates favorably impacted fee revenue by $0.3 million compared to fiscal 2021.

The increase in fee revenue was due to higher fee revenue in

Professional Search of $166.2 million and RPO of $ 1 55 .

8 million due to wider adoption of RPO services in the market .

T he increase in Professional Search is due to an 86 % increase in engagements billed and a 21 % increase in the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021.

The increase in Professional Search was also due to the acquisition of The Lucas Group and Patina Solutions Group (“Acquisitions”) , which contributed $69.3 million and $4.1 million of fee revenue , respectively .

The increase in Professional Search & Interim fee revenue was due to an 86% increase in engagements billed and a 21% increase in the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021.

The increase in Professional Search fee revenue was also due to the acquisition of the Acquired Companies in fiscal 2022, which contributed $69.3 million and $4.1 million of fee revenue, respectively.

RPO reported fee revenue of $394.8 million in fiscal 2022, an increase of $155.8 million, or 65%, compared to $239.0 million in fiscal 2021.

Exchange rates unfavorably impacted fee revenue by $0.1 million compared to fiscal 2021.

The increase in fee revenue was due to the wider adoption of RPO services in the market.

Compensation and Benefits

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These increases were due to the increase in fee revenue combined with increases in overall profitability and average headcount.

Also contributing to higher compensation and benefit expense was an increase in commission expense of $28.5 million due to the Acquisitions, partially offset by a decrease in deferred compensation expenses of $30.7 million as a result of decreases in the fair value of participants’ accounts in fiscal 2022 compared to fiscal 2021.

Also contributing to higher compensation and benefits expense was an increase in commission expense of $28.5 million due to the Acquired Companies in fiscal 2022, partially offset by a decrease in deferred compensation expenses of $30.7 million as a result of decreases in the fair value of participants’ accounts in fiscal 2022 compared to fiscal 2021.

Compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in fiscal 2022 from 72% in fiscal 2021.

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The increase was primarily due to increases in performance-related bonus expense of $82.6 million and salaries and related payroll taxes of $24.6 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.

The increases in compensation and benefit expense was partially offset by a decrease in the amounts owed under certain deferred compensation and retirement plans $35.4 million due to a decrease in the fair market value of the participants’ accounts in fiscal 2022 compared to fiscal 2021.

The increases in compensation and benefits expense was partially offset by a decrease in the amounts owed under certain deferred compensation and retirement plans of $35.4 million due to a decrease in the fair market value of the participants accounts in fiscal 2022 compared to fiscal 2021.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in fiscal 2022 from 75% in fiscal 2021.

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Exchange rates unfavorably impacted compensation and benefits by $0.3 million, or 2%, in fiscal 2022 compared to fiscal 2021.

The in crease was primarily due to higher salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase in overall profitability .

The increase was primarily due to higher salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022 compared to fiscal 2021 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 63% in fiscal 2022 from 80% in fiscal 2021.

RPO & Professional Search compensation and benefits expense increased by $187.4 million, or 71%, to $452.0 million in fiscal 2022 from $264.6 million in fiscal 2021.

Professional Search & Interim compensation and benefits expense increased by $63.0 million, or 73%, to $148.8 million in fiscal 2022 from $85.8 million in fiscal 2021.

The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021.

The increase was due to higher salaries and related payroll taxes of $122.1 million, performance-related bonus expense of $17.6 million, employer insurance of $8.4 million and the use of outside contractors of $5.0 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.

Also contributing to the increase in compensation and benefit was an increase in commission expenses of $22.7 million and integration and acquisition costs of $1.9 million driven by the Acquisitions.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, decreased to 65% in fiscal 2022 from 72% in fiscal 2021.

The increase was due to higher salaries and related payroll taxes of $23.0 million, performance-related bonus of $14.7 million, employer insurance of $2.7 million and the use of outside contractors of $0.8 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.

Also contributing to the increase in compensation and benefits was an increase in commission expenses of $22.7 million and

integration and acquisition costs of $1.9 million driven by the acquisition of the Acquired Companies in fiscal 2022.

Professional Search & Interim compensation and benefits expense, as a percentage of fee revenue, decreased to 50% in fiscal 2022 from 66% in fiscal 2021.

RPO compensation and benefits expense increased by $124.3 million, or $69%, to $303.2 million in fiscal 2022 from $178.9 million in fiscal 2021.

The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021.

The increase was primarily due to higher salaries and related payroll taxes of $99.1 million, employer insurance of $5.7 million and the use of outside contractors of $4.2 million due to increases in revenue and average headcount in fiscal 2022 compared to fiscal 2021.

RPO compensation and benefits expense, as a percentage of fee revenue, increased to 77% in fiscal 2022 from 75% in fiscal 2021.

Corporate compensation and benefits expense increased by $16.5 million, or 38%, to $59.7 million in fiscal 2022 from $43.2 million in fiscal 2021.

The increase of $7.2 million was due to the changes in cash surrender value (“CSV”) of the company-owned life insurance (“COLI”) contracts due to lower death benefits recognized in fiscal 2022 compared to fiscal 2021.

The increase of $7.2 million was due to the changes in CSV of the COLI contracts due to lower death benefits recognized in fiscal 2022 compared to fiscal 2021.

Also contributing to the increase was higher salaries and related payroll taxes of $6.0 million and performance-related bonus expense of $4.2 million due to an increase in consolidated fee revenue, combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.

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The increase in general and administrative expenses was primarily due to higher marketing and business development expenses of $14.0 million, which contributed to the increase in fee revenue and new business in fiscal 2022, as well as an increase in premise and office expense of $6.9 million, bad debt expense of $5.8 million and legal and other professional fees of $5.3 million.

In addition the Company recorded impairment charges associated with the reduction of the Company’s real estate footprint of $9.3 million and integration and acquisition costs of $6.0 million incurred with the acquisition of The Lucas Group that closed on November 1, 2021 and Patina Solutions Group that closed on April 1, 2022.

In addition, the Company recorded impairment charges associated with the reduction of the Company’s real estate footprint of $9.3 million and integration and acquisition costs of $6.0 million incurred with the acquisition of the Acquired Companies in fiscal 2022.

General and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 11% in fiscal 2021.

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The increase in general and administrative expenses was primarily due to higher bad debt expense of $1.0 million in fiscal 2022 compared to fiscal 2021.

Executive Search

Asia Pacific general and administrative expenses, as a percentage of fee revenue , was 9% in fiscal 2022 compared to 10% in fiscal 2021 .

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, was 9% in fiscal 2022 compared to 10% in fiscal 2021.

Executive Search Latin America general and administrative expenses decreased by $1.3 million, or 59%, to $0.9 million in fiscal 2022 from $2.2 million in fiscal 2021.

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Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, was 3% in fiscal 2022 compared to 12% in fiscal 2021.

RPO & Professional Search general and administrative expenses increased by $15.8 million, or 64%, to $40.6 million in fiscal 2022 from $24.8 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to an increase in premise and office expense $5.3 million, higher bad debt expense of $3.7 million, impairment charges associated with the reduction of the Company’s real estate footprint of $3.9 million and integration and acquisition costs associated with the Acquisitions of $1.8 million.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, was 6% in fiscal 2022 compared to 7% in fiscal 2021.

Professional Search & Interim general and administrative expenses increased by $12.2 million, or 153%, to $20.2 million in fiscal 2022 from $8.0 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to an increase in premise and office expense of $4.4 million, impairment charges associated with the reduction of the Company's real estate footprint of $2.3 million, higher bad debt expense of $2.1 million, and integration and acquisition costs of $1.8 million.

Professional Search & Interim general and administrative expenses, as a percentage of revenue, was 7% in fiscal 2022 compared to 6% in fiscal 2021.

RPO general and administrative expenses increased by $3.6 million, or 21%, to $20.4 million in fiscal 2022 from $16.8 million in fiscal 2021.

The increase was primarily due to higher bad debt expense of $1.6 million, and impairment charges associated with the reduction of the Company's real estate footprint of $1.6 million.

RPO general administrative expenses, as a percentage of revenue, was 5% in fiscal 2022 compared to 7% in fiscal 2021.

Corporate general and administrative expenses increased by $18.0 million, or 51%, to $53.5 million in fiscal 2022 compared to $35.5 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to higher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million incurred with the Acquisitions in fiscal 2022, legal and other professional fees of $3.8 million and an increase of $1.5 million in charitable contributions in fiscal 2022 compared to fiscal 2021.

The increase in general and administrative expenses was primarily due to higher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million due to the acquisition of the Acquired Companies in fiscal 2022, legal and other professional fees of $3.8 million and an increase of $1.5 million in charitable contributions in fiscal 2022 compared to fiscal 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 consists primarily of contractor and product costs related to the delivery of various services and products, primarily in Professional Search & Interim, Consulting, Digital and RPO.

Cost of services expense was $114.4 million in fiscal 2022 compared to $72.0 million in fiscal 2021.

The increase was due to an increase in fee revenue and the Acquisitions.

The increase was due to an increase in fee revenue and the acquisition of the Acquired Companies in fiscal 2022.

Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 2022 and fiscal 2021.

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Depreciation and amortization expenses were $63.5 million in fiscal 2022, an increase of $1.7 million, or 3%, compared to $61.8 million in fiscal 2021.

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

The increase was primarily due to technology investments made in the current and prior year in software for our Digital business and the Acquired Companies in fiscal 2022 in the Professional Search & Interim segment.

Restructuring Charges, Net

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Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% in fiscal 2022 compared to 16% in fiscal 2021.

Digital A djusted EBITDA was $110.1 million in fiscal 2022 , an increase of $24.0 million, or 28% , compared to $86.1 million in fiscal 2021 .

Digital Adjusted EBITDA was $110.1 million in fiscal 2022, an increase of $24.0 million, or 28%, compared to $86.1 million in fiscal 2021.

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

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Executive Search EMEA Adjusted EBITDA increased by $20.1 million, or 172%, to $31.8 million in fiscal 2022 compared to $11.7 million in fiscal 2021.

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 (excluding impairment charges).

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 (excluding impairment charges).

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 17% in fiscal 2022 compared to 8% in fiscal 2021.

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Executive Search Latin America Adjusted EBITDA increased by $7.8 million to $9.1 million in fiscal 2022 compared to $1.3 million in fiscal 2021.

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

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 Latin America Adjusted EBITDA, as a percentage of fee revenue, was 31% in fiscal 2022 compared to 7% in fiscal 2021.

RPO & Professional Search Adjusted EBITDA was $165.1 million in fiscal 2022, an increase of $95.7 million, or 138%, compared to $69.4 million in fiscal 2021.

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

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 24% in fiscal 2022 compared to 19% in fiscal 2021.

Professional Search & Interim Adjusted EBITDA was $106.0 million in fiscal 2022, an increase of $69.1 million, or 187%, compared to $36.9 million in fiscal 2021.

The increase in Adjusted EBITDA was mainly driven by higher 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 impairment charges and integration and acquisition costs).

Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 36% in fiscal 2022 compared to 28% in fiscal 2021.

RPO Adjusted EBITDA was $59.1 million in fiscal 2022, an increase of $26.6 million, or 82%, compared to $32.5 million in fiscal 2021.

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 Adjusted EBITDA, as a percentage of fee revenue, was 15% in fiscal 2022 compared to 14% in fiscal 2021.

Other (Loss) Income, Net

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The Company and its Board of Directors endorse a balanced approach to capital allocation.

The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive merger and acquisition transactions that earn a return that is superior to the Company's cost of capital.

The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that are expected to earn a return that is superior to the Company's cost of capital.

Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of this Annual Report on Form 10-K.

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

On April 1, 2022, we completed the acquisition of Patina Solutions Group for $42.9 million, net of cash acquired.

We believe Patina Solutions Group contributes a substantial interim executive solutions expertise across multiple industry verticals as well as offers ideal solutions for today’s nomadic labor market.

Patina Solutions Group’s vast network of C-suite, top-tier, and professional interim talent spans functional areas of expertise such as finance, operations, legal, human resources, IT and more.

This combination presents real, tangible opportunity for Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis.

Patina Solutions Group offers.

On November 1, 2021, we completed the acquisition of The Lucas Group for $90.9 million, net of cash acquired.

The Lucas Group contributes a substantial professional search and interim expertise that is expected to enhance our search portfolio.

The Lucas Group is a professional search and interim staffing firm, targeting middle market businesses.

The addition of The Lucas Group to Korn Ferry’s broader talent acquisition portfolio – spanning Executive Search, RPO & Professional Search – is expected to accelerate our ability to capture additional share of this significant market.

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

On February 1, 2023, we completed the acquisition of Salo for $155.4 million, net of cash acquired.

Salo is a leading provider of finance, accounting and HR interim talent, with a strong focus on serving organizations in healthcare, among other industries.

On August 1, 2022, we completed the acquisition of ICS for $99.3 million, net of cash acquired.

ICS contributes interim professional placement offerings and expertise that are highly relevant for the new world of work where more workplaces are hybrid or virtual.

ICS is a highly regarded provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and HR.

We believe the above acquisitions echo the commitment to scale our solutions and further increase our focus at the intersection of talent and strategy-wherever and however the needs of organizations-evolve and present real, tangible opportunity for us and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis.

The addition of these acquisitions to our broader talent acquisition portfolio–spanning Executive Search, RPO, Professional Search and Interim services–has accelerated our ability to capture additional shares of this significant market.

Both acquisitions are included in the Professional Search & Interim segment.

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.

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The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest.

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

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 April 30, 2023 , the fair value of the Notes was $381.5 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 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.

See Note 1 1 — Long-Term Debt for a description of the Credit Agreement.

We ha d a total of $ 64 5 .

3 million and $646.0 million available under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) after $4.7 million and $ 4 .

0 million of standby letters of credit had been issued as of April 30, 2022 and 202 1, respectively .

We had a total of $ 1 0 .

0 million and $ 11 .

0 million of standby letters of credits with other financial institutions as of April 30, 2022 and 2021 , res pectively.

On June 24, 2022, we entered into an amendment (the "Amendment") to our December 16, 2019 Credit Agreement (the "Credit Agreement";

as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for a new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with Term SOFR, and (iv) replace the existing financial covenants with financial covenants described below.

The Amended Credit Agreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility (the "Revolver") and a $500 million delayed draw term loan facility with the delayed draw having an expiration date of June 23, 2023 (the "Delayed Draw Facility", and together with the Revolver, the "Credit Facilities").

The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00.

See Note 11 — Long-Term Debt for a further description of the Amended Credit Agreement.

The Company has a total of $1,145.4 million available under the Credit Facilities and had a total of $645.3 million available under the previous credit facilities after $4.6 million and $4.7 million of standby letters of credit have been issued as of April 30, 2023 and 2022, respectively.

Of the amount available under the Credit Facilities, the $500.0 million Delayed Draw Facility expired on June 24, 2023 and is no longer available as a source of liquidity.

The Company had a total of $11.5 million and $10.0 million of standby letters with other financial institutions as of April 30, 2023 and 2022, respectively.

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

One June 24, 2022, we entered into an Amendment to the Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things, extend the existing maturity date and provide for a new delayed draw term loan facility.

See Note 18— Subsequent Events – Credit Facility for a further description of the Amended Credit Agreement.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share.

Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend.

On June 21, 2021, the Board of Directors increased the quarterly dividend to $0.12 per share.

On June 21, 2022, the Board of Directors approved a 25% increase in the quarterly dividend, which increased the quarterly dividend to $0.15 per share.

On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively.

On June 26, 2023, the Board of Directors approved an increase of 20% in the quarterly dividend, which increased the quarterly dividend to $0.18 per share.

The Amended Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) is no greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant.

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On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318 million.

The Company repurchased approximately $98.8 million and $30.4 million of the Company’s stock during fiscal 2022 and 2021, respectively.

The Company repurchased approximately $93.9 million and $98.8 million of the Company’s stock during fiscal 2023 and fiscal 2022, respectively.

As of April 30, 2023, $235.2 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.

Our primarily source of liquidity is the fee revenue generated from our operations, supplemented by our borrowing capacity under our Amended Credit Agreement.

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

We believe, based on current economic conditions, that our cash on hand and funds from operations and the Amended Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, debt repayments, share repurchases and dividend payments under our dividend policy during the next 12 months.

However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our operating cash flows.

However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, including as a result of ongoing macroeconomic uncertainty due to inflation and a potential recession, such changes have and could put further negative pressure on demand for our services and affect our operating cash flows.

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 Amended Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.

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Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $488.2 million and $605.4 million at April 30, 2023 and 2022, respectively.

As of April 30, 2022 and 2021, we held $416.7 million and $382.8 million, respectively of cash and cash equivalents and marketable securities in foreign locations, net of amounts held in trust for deferred compensation plans and to pay accrued bonuses.

As of April 30, 2023 and 2022, we held $395.2 million and $416.7 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay accrued bonuses.

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

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Treasury and Agency securities are available for general corporate purposes .

As of April 30, 2022 and 2021 , marketable securities of $ 2 33 .

0 million and $ 246.4 million, respectively, included equity securities of $ 1 68 .

7 million (net of gross unrealized gains of $ 10 .

7 million and gross unrealized losses of $ 6 .

1 million) and $ 175.6 million (net of gross unrealized gains of $ 3 0 .

0 million and gross unrealized losses of $ 0 .

1 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $ 1 5 8 .

7 million and $ 1 66 .

5 million, respectively, are classified as non-current.

These marketable securities were held to satisfy vested obligations totaling $160.8 million and $ 1 57 .

3 million as of April 30, 2022 and 2021 , respectively.

Unvested obligations under the deferred compensation plans totaled $24.0 million and $ 2 6 .

5 million as of April 30, 2022 and 2021 , respectively.

The net increase in our working capital of $38.6 million as of April 30, 2022 compared to April 30, 2021 is primarily attributable to increase s in cash and cash equivalents and accounts receivables, partially offset by increases in compensation and benefits payable and other accrued liabilities.

Cash and cash equivalents increased primarily due to cash from operations, partially offset by the Acquisitions, purchase of property and equipment, repurchase of common stock and dividends issued to shareholders.

The increase in accounts receivable was due to higher revenue in the fourth quarter of fiscal 2022 compared to fiscal 2021.

Compensation and benefits payable increased due to higher performance-related bonus liability as a result of higher fee revenue while the increase in other accrued liabilities was due to higher levels of new business.

Cash provided by operating activities was $501.7 million in fiscal 2022, an increase of $250.3 million, compared to $251.4 million in fiscal 2021.

As of April 30, 2023 and 2022, marketable securities of $223.9 million and $233.0 million, respectively, included equity securities of $187.8 million (net of gross unrealized gains of $9.5 million and gross unrealized losses of $8.7 million) and $168.7 million (net of gross unrealized gains of $10.7 million and gross unrealized losses of $6.1 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $176.1 million and $158.7 million, respectively, are classified as non-current.

These marketable securities were held to satisfy vested obligations totaling $172.2 million and $160.8 million as of April 30, 2023 and 2022, respectively.

Unvested obligations under the deferred compensation plans totaled $21.9 million and $24.0 million as of April 30, 2023 and 2022, respectively.

The net decrease in our working capital of $113.3 million as of April 30, 2023 compared to April 30, 2022 is primarily attributable to decreases in cash and cash equivalents.

Cash and cash equivalents decreased primarily due to the acquisitions of ICS and Salo, purchases of property and equipment, repurchases of common stock and dividends paid to shareholders during fiscal 2023.

Cash provided by operating activities was $343.9 million in fiscal 2023, a decrease of $157.8 million, compared to $501.7 million in fiscal 2022.

Cash used in investing activities was $323.5 million in fiscal 2023 compared to $184.3 million in fiscal 2022.

An increase in cash used in investing activities was primarily due to $133.8 million in cash paid for the Acquisitions, an increase in the purchase of property and equipment of $18.3 million and a decrease in proceeds received from life insurance policies of $15.3 million.

This was partially offset by an increase of proceeds received from sales of marketable securities for $22.8 million and a decrease in purchase of marketable securities for $21.5 million in fiscal 2022 compared to fiscal 2021.

Cash used in financing activities was $137.4 million in fiscal 2022 compared to cash used in financing activities of $66.9 million in fiscal 2021.

The increase in cash used in financing activities was primarily due to an increase in repurchases of shares of the Company’s common stock of $65.9 million in fiscal 2022 compared to fiscal 2021, higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $18.5 million in fiscal 2022 compared to $5.0 million in fiscal 2021 and an increase of $4.3 million in dividends paid to our shareholders.

This was partially offset by less payments made on life insurance policy loans of $12.1 million in fiscal 2022 compared to fiscal 2021.

The increase in cash used in investing activities was primarily due to higher cash paid for acquisitions of $254.8 million in fiscal 2023 compared to $133.8 million in fiscal 2022, an increase in purchases of property and equipment of $21.0 million coupled with a decrease in proceeds received from sales of marketable securities of $26.6 million, partially offset by a decrease in purchases of marketable securities of $28.5 million in fiscal 2023 compared to fiscal 2022.

Cash used in financing activities was $152.2 million in fiscal 2023 compared to $137.4 million in fiscal 2022.

The increase in cash used in financing activities was primarily due to increases in dividends paid to our shareholders of $6.2 million, dividends paid to non controlling interest of $3.3 million, payments made on life insurance policies of $2.6 million, as well as higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $22.2 million in fiscal 2023 compared to $18.5 million in fiscal 2022.

Off-Balance Sheet Arrangements

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Payments Due in:

Total Less Than

1-3 Years 3-5 Years More Than

(in thousands)

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Interest payments on COLI loans (2)

11 31,698 4,507 9,011 8,440 9,740

Long-term debt 11 400,000 — — 400,000 —

Estimated interest on long-term debt (3)

11 92,500 18,500 37,000 37,000 —

Total $ 719,696 $ 84,316 $ 131,857 $ 477,488 $ 26,035

_______________________________

(1) See the corresponding Note in the accompanying consolidated financial statements in Item 15.

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These liabilities are recorded in our consolidated balance sheets.

The obligations related to these employee benefit plans

are described in Note 6— Deferred Compensation and Retirement Plans , in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.

The obligations related to these employee benefit plans are described in Note 6— Deferred Compensation and Retirement Plans , in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.

Lastly, we have contingent commitments under certain employment agreements that are payable upon involuntary termination without cause, as described in Note 17— Commitments and Contingencies , in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.

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Accounting Developments

Recently Adopted Accounting Standards

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued guidance on Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This guidance provides optional expedients and exceptions to the guidance on contract modifications and hedge accounting related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative rates.

Entities can elect to adopt this guidance as of any date within an interim period that includes or is subsequent to March 12, 2020 and can adopt it for new contracts and contract modifications entered into through December 31, 2022.

We adopted this guidance in our fiscal year beginning May 1, 2021 and we elected to apply the amendments prospectively through December 12, 2022.

The adoption of this guidance did not have a material impact on the consolidated financial statements.

Recently Proposed Accounting Standards - Not Yet Adopted

In October 2021, the FASB issued an amendment in accounting for contract assets and contract liabilities from contracts with customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with Customers .

The amendment of this standard becomes effective in fiscal years beginning after December 15, 2022.

1 unchanged sentence

We will adopt this guidance in our fiscal year beginning May 1, 2023.

We are currently evaluating the impact of this accounting guidance but do not anticipate that it will have a material impact on the consolidated financial statements.

We do not anticipate that this accounting guidance will have a material impact on the consolidated financial statements.

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-K

Item 7. Management’s Discussion and Analysis