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Item 7. Management’s Discussion and Analysis

2024-06-28 compared with 2023-06-28 · 193 added, 436 removed, 330 unchanged (66% 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, including the timing and anticipated impacts of our restructuring plans and business strategy, are also forward-looking statements.

Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our business strategy, expected demand for and relevance of our products and services, and expected results of our business diversification 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 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.

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, cybersecurity 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, including artificial intelligence ("AI"), 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, 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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Executive Summary

Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global organizational consulting firm.

Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a leading global organizational consulting firm.

We help clients synchronize strategy, operations and talent to drive superior business performance.

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

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

We are pursuing a strategy to help Korn Ferry increase its 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.

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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.

The Company services its clients with a core set of solutions that are anchored around talent and talent management – touching nearly every aspect of an employer’s engagement with their employees.

Our five core solutions are as follows:

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

Our colleagues engage with our clients through the delivery of one of our core solutions as a point solution sale or through combining component parts of our core solutions into an integrated solution.

In either case, we are helping to solve our clients’ most challenging business and human capital issues.

Further differentiating our service offerings from our competitors is the unique combination of IP, content, and data sets that we have, which permeate throughout our solution areas.

For many years, we have been accumulating data around

assessments of executives and professionals, pay, success profiles, organizational engagement and design, job architecture, and candidates.

Integrating this unique collection of data into our service offerings provides our colleagues with differentiated points of view and solutions, as well as the ability to demonstrate the efficacy of all of our offerings.

Our vision remains unchanged to become the premier organizational consulting firm.

We believe our household brand, unparalleled IP, and diversification strategy will continue to positively influence our performance and accelerate the trajectory of thousands of organizations.

Indeed, Korn Ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy, operations and talent and a firm that offers increasingly relevant solutions in a rapidly changing world.

The continual advancement of technologies like generative AI creates a constant demand for workers to be upskilled or reskilled.

We expect these changes and disruptions will lead to opportunities for Korn Ferry and make us more relevant than at any time in our history.

Leveraging the strong connection between our various service offering and our lines of business, we have an integrated go-to-market strategy.

As we drive this strategy, a focal point for us is our Marquee and Regional account program which is comprised of about 350 of our top clients.

These accounts have Global Account Leaders assigned who help to orchestrate the delivery of core and integrated solutions that cut across multiple lines of business – effectively making all of the Firm’s resources available as our clients tackle their business and human capital issues.

Despite near-term headwinds, such as economic uncertainty, we believe Korn Ferry is poised for continued growth.

We are capitalizing on the current and growing relevance of our core and integrated solutions which, in combination with the strong connections amongst our service offerings and our acquisitive activities, drives top-line synergies that have resulted in double digit fee revenue growth rates (CAGR) over the past twenty years.

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:

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

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

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 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.

The Consulting teams work across our core capabilities, architecting integrated solutions and technology products to help clients execute their strategy in a digitally enabled world.

Digital develops IP and science-based talent technology products that empower our clients.

Our talent products and talent platform support our clients in making critical talent decisions across the continuum from talent acquisition to talent development.

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

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

Salary benchmarking then helps us build appropriate frameworks for compensation and attraction.

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.

Professional Search & Interim delivers enterprise talent acquisition solutions for permanent placements at the professional level middle and upper management, and, for interim, those same levels plus senior executives.

We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors (that are focused on senior executive, information technology ("IT"), Finance & Accounting and HR roles).

Recruitment Process Outsourcing ("RPO") offers scalable recruitment outsourcing and project solutions leveraging a customized technology enabled service delivery platform and talent insights.

Our scalable solutions, built on our IP, science, and data 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.

Highlights of our performance in fiscal 2024 include:

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Our more than 3,700 search engagement clients in fiscal 2024 included many of the world’s largest and most prestigious public and private companies.

▪ We have built strong client loyalty, with nearly 80% of the assignments performed during fiscal 2023 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.

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

▪ 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.

▪ We have built strong client loyalty, with more than 85% of the assignments performed during fiscal 2024 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.

▪ More than 75% of our revenues were generated from clients that have utilized multiple lines of our business.

▪ Operating income in fiscal 2024 was $212.9 million with an operating margin of 7.7%.

▪ Fiscal 2024 Adjusted EBITDA was $408.2 million with an Adjusted EBITDA margin of 14.8%.

▪ Our fiscal 2024 Marquee and Regional Account fee revenue generated slightly more than 37% of our consolidated fee revenue and grew 3% compared to fiscal year 2023.

▪ Consulting and Digital continued to show resilient business operations:

• Consulting fee revenue grew 3% in fiscal 2024.

• Digital fee revenue grew 3% in fiscal 2024 compared to fiscal 2023 with a 9% increase in Subscription & License fee revenue growing to $131.0 million in fiscal 2024.

Performance Highlights

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.

In light of the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates, and global economic and geopolitical uncertainty, which we expected to result in near-term slowing or declines in fee revenue, on October 23, 2023, we initiated a plan (the "Plan") intended to align our workforce with our current business realities through position eliminations, which affected approximately eight percent of the Company's employees.

The Plan resulted in restructuring charges, net of $68.6 million during fiscal 2024.

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”).

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For fiscal 2024, Adjusted EBITDA excluded $68.6 million of restructuring charges, net, $14.9 million of integration/acquisition costs, $1.6 million impairment of right-of-use assets and $1.6 million impairment of fixed assets.

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 $2,835.4 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 decreased by $113.3 million to $662.4 million in fiscal 2023, as compared to $775.7 million at April 30, 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 12 months.

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.

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.

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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 is recognized when control of the goods and services are 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 (“ASC”) 606 ("ASC 606"), Revenue from Contracts with Customers:

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Depending on the timing of billings and services rendered, we accrue or defer revenue as appropriate.

Digital revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement.

Digital fee revenue is generated from IP based software products enabling large-scale talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement.

Revenue is recognized as services are delivered and we have a legally enforceable right to payment.

Revenue also comes from the sale of our proprietary IP subscriptions, which are considered symbolic IP due to the dynamic nature of the content.

Revenue also comes from the sale of our product subscriptions, which are considered symbolic IP due to the dynamic nature of the content.

As a result, revenue is recognized over the term of the contract.

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The post-implementation recruitment phase represents end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over the period that the related recruiting services are performed.

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 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.

Accordingly, each quarter we reevaluate the assumptions used to estimate annual performance-related bonus liability and adjust the carrying amount of the liability recorded on the consolidated balance sheets and report any changes in the estimate in current operations.

Because annual performance-based bonuses are communicated and paid only after we report our full fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate.

Such changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period in which they are determined.

Deferred Compensation .

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.

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.

The actuarial assumptions we use may differ from actual results due to changing market conditions or changes in the participant population.

These differences could have a significant impact on our deferred compensation liability and the related cost.

Carrying Values .

Valuations are required under GAAP to determine the carrying value of various assets.

Our most significant assets for which management is required to prepare valuations are carrying value of receivables, goodwill, other intangible assets, share-based payments, leases and recoverability of deferred income taxes.

Management must identify whether events have occurred that may impact the carrying value of these assets and make assumptions regarding future events, such as cash flows and profitability.

Goodwill is our most significant asset for which management is required to prepare a valuation.

Management must identify whether events have occurred that may impact the carrying value of goodwill and make assumptions regarding future events, such as cash flows and profitability.

Differences between the assumptions used to prepare these valuations and actual results could materially impact the carrying amount of these assets and our operating results.

Of the assets mentioned above, goodwill is the largest asset requiring a valuation.

Fair value of goodwill for purposes of the goodwill impairment test when performing the quantitative test is determined utilizing (1) a discounted cash flow analysis based on forecasted cash flows (including estimated underlying revenue and operating income growth rates) discounted using an estimated weighted-average cost of capital for market participants and (2) a market approach, utilizing observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available).

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If the carrying amount of a reporting unit exceeds its estimated fair value, goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment loss, if any.

We perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise.

The qualitative test performed as of January 31, 2023 did not indicate any impairment, and therefore there was no need to perform a quantitative test.

As of January 31, 2024, we completed our annual qualitative test which did not indicate any impairment.

During the fourth quarter, we voluntarily changed the date of the annual impairment test from January 31 to February 1.

This voluntary change is preferable under the circumstances as it results in better alignment with our annual operating plan process.

This voluntary change in accounting principle related to the annual impairment testing date was applied prospectively and did not delay, accelerate or avoid an impairment charge.

The quantitative test performed on February 1, 2024 did not indicate any impairment and as a result, no impairment charge was recognized.

While historical performance and current expectations have resulted in fair values of goodwill in excess of carrying values, if our assumptions are not realized, it is possible that in the future an impairment charge may need to be recorded.

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Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors.

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

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.

There was no indication of potential impairment through April 30, 2024 that would have required further testing.

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Net income attributable to Korn Ferry 6.1 % 7.4 % 12.4 %

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

Our Annual Report on Form 10-K for the year ended April 30, 2023 includes a discussion and analysis of our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 in Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Fiscal 2024 Compared to Fiscal 2023

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.

Fee revenue decreased by $72.7 million, or 3%, to $2,762.7 million in fiscal 2024 compared to $2,835.4 million in fiscal 2023.

Exchange rates favorably impacted fee revenue by $13.5 million in fiscal 2024 compared to fiscal 2023.

Fee revenue decreased primarily due to decreases in demand for our permanent placement talent acquisition offerings, which include Executive Search, Professional Search Permanent Placement and RPO.

This decrease was primarily due to a decline in demand driven by the challenging global economic environment.

This was partially offset by the increase in fee revenue in the interim portion of the Professional Search & Interim, resulting from the acquisitions of Infinity Consulting Solutions and Salo (collectively " the Acquired Companies"), which were effective on August 1, 2022 and February 1, 2023, respectively, and increases in Consulting and Digital fee revenue.

Consulting reported fee revenue of $695.0 million in fiscal 2024, an increase of $18.0 million, or 3%, compared to $677.0 million in fiscal 2023.

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.

The increase in fee revenue was mainly driven by increases in demand for our organizational strategy offering and assessment & succession solutions.

Exchange rates favorably impacted fee revenue by $2.1 million, compared to fiscal 2023.

Digital reported fee revenue of $366.7 million in fiscal 2024, an increase of $12.0 million, or 3%, compared to $354.7 million in fiscal 2023.

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.

The increase in fee revenue was mainly driven by increases in demand for organizational strategy, leadership and professional development, and sales of total rewards.

Exchange rates favorably impacted fee revenue by $0.8 million, compared to fiscal 2023.

Executive Search North America .

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Exchange rates unfavorably impacted fee revenue by $0.6 million in fiscal 2024 compared to fiscal 2023.

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.

North America’s fee revenue decreased due to an 11% decrease in the number of engagements billed, driven by a decline in demand for executive searches as a result of clients being affected by the challenging economic environment, partially offset by a 1% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2024 compared to fiscal 2023.

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 EMEA reported fee revenue of $184.5 million in fiscal 2024, a decrease of $2.5 million, or 1%, compared to $187.0 million in fiscal 2023.

Exchange rates favorably impacted fee revenue by $7.0 million, or 4%, in fiscal 2024 compared to fiscal 2023.

The decrease in fee revenue was primarily due to a 7% 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 2024 compared to fiscal 2023.

Executive Search Asia Pacific.

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Exchange rates unfavorably impacted fee revenue by $2.2 million, or 2%, in fiscal 2024 compared to fiscal 2023.

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.

The decrease in fee revenue was due to a 15% 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 2024 compared to fiscal 2023.

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.

Executive Search Latin America reported fee revenue of $28.9 million in fiscal 2024, a decrease of $2.1 million, or 7%, compared to $31.0 million in fiscal 2023.

Exchange rates favorably impacted fee revenue by $1.5 million, or 5%, in fiscal 2024 compared to fiscal 2023.

The decrease in fee revenue was due to a 16% decrease in the number of engagements billed, partially offset by a 5% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2024 compared to fiscal 2023.

Professional Search & Interim.

Professional Search & Interim reported fee revenue of $540.6 million in fiscal 2024, an increase of $37.2 million, or 7%, compared to $503.4 million in fiscal 2023.

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.

Exchange rates favorably impacted fee revenue by $1.5 million in fiscal 2024 compared to fiscal 2023.

The increase in fee revenue was due to an increase in interim fee revenue of $94.8 million, mainly driven by the Acquired Companies.

This increase was partially offset by a decrease in permanent placement fee revenue of $57.6 million.

RPO reported fee revenue of $354.1 million in fiscal 2024, a decrease of $70.5 million, or 17%, compared to $424.6 million in fiscal 2023.

Exchange rates favorably impacted fee revenue by $3.4 million, or 1%, in fiscal 2024 compared to fiscal 2023.

The decrease in fee revenue was primarily due to a decline in the number of placements being requested by existing clients as a result of clients being affected by the challenging economic environment as well as clients "labor hoarding" during fiscal 2024.

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.

Compensation and benefits expense decreased by $57.0 million, or 3%, to $1,844.2 million in fiscal 2024 from $1,901.2 million in fiscal 2023.

Exchange rates unfavorably impacted compensation and benefits by $11.8 million, or 1%, in fiscal 2024 compared to fiscal 2023.

The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $85.8 million driven by an 8% decrease in average headcount in fiscal 2024 compared to fiscal 2023.

Also contributing to the decrease was a $19.4 million decrease in performance-related bonus expense due to lower fee revenues in fiscal 2024 compared to fiscal 2023.

The decrease was partially offset by higher deferred compensation expenses of $29.7 million as a result of an increase in the fair value of participants' accounts, a $9.2 million increase in severance due to lay-offs that took place during the year, $5.7 million more in integration and acquisition costs and an increase in the amortization of long-term awards of $4.4 million in fiscal 2024 compared to fiscal 2023.

Consulting compensation and benefits expense increased by $6.0 million, or 1%, to $484.5 million in fiscal 2024 from $478.5 million in fiscal 2023.

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 unfavorably impacted compensation and benefits by $2.6 million, or 1%, in fiscal 2024 compared to fiscal 2023.

The increase in compensation and benefits expense was primarily due to increases in deferred compensation of $4.3 million as a result of increases in the fair value of participants' accounts and a $1.8 million increase in severance due to more lay-offs in fiscal 2024 compared to fiscal 2023.

Digital compensation and benefits expense decreased by $1.2 million, or 1%, to $187.9 million in fiscal 2024 from $189.1 million in fiscal 2023.

Exchange rates unfavorably impacted compensation and benefits by $0.9 million in fiscal 2024 compared to fiscal 2023.

The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $9.0 million driven by a 2% decrease in average headcount and a decrease in restricted stock compensation expense of $2.5 million, partially offset by increases in performance-related bonus expense of $5.8 million and commission expense of $3.3 million driven by the segment revenue growth in fiscal 2024 compared to fiscal 2023, and a $1.7 million increase in the amortization of long-term awards.

Executive Search North America compensation and benefits expense decreased by $14.9 million, or 4%, to $371.2 million in fiscal 2024 compared to $386.1 million in fiscal 2023.

Exchange rates favorably impacted compensation and benefits by $0.3 million in fiscal 2024 compared to fiscal 2023.

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.

The decrease in compensation and benefits expense was primarily due to decreases in performance-related bonus expense of $28.1 million due to lower segment fee revenue and salaries and related payroll taxes of $5.8 million driven by a 4% decrease in average headcount.

The decrease in compensation and benefits expense was partially offset by a higher deferred compensation expense of $21.0 million as a result of increases in the fair value of participants' accounts in fiscal 2024 compared to 2023.

Executive Search EMEA compensation and benefits expense increased by $1.2 million, or 1%, to $141.7 million in fiscal 2024 compared to $140.5 million in fiscal 2023.

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.

Exchange rates unfavorably impacted compensation and benefits by $4.4 million, or 3%, in fiscal 2024 compared to fiscal 2023.

The increase in compensation and benefits expense was primarily due to an increase in severance expense of $4.4 million due to the lay-offs that took place in fiscal 2024 compared to fiscal 2023.

The increase was partially offset by a decrease in performance-related bonus expense of $2.3 million due to lower segment fee revenue and a $1.0 million decrease in salaries and related payroll taxes driven by a 1% decrease in average headcount.

Executive Search Asia Pacific compensation and benefits expense decreased by $3.1 million, or 5%, to $58.8 million in fiscal 2024 compared to $61.9 million in fiscal 2023.

Exchange rates favorably impacted compensation and benefits by $1.1 million, or 2%, in fiscal 2024 compared to fiscal 2023.

The decrease in compensation and benefits expense was primarily due to a decrease in performance-related bonus expense of $1.9 million in fiscal 2024 compared to fiscal 2023 due to lower segment fee revenue and a decrease in salaries and related payroll taxes of $0.7 million driven by a 5% decrease in average headcount.

Executive Search Latin America compensation and benefits expense decreased by $1.7 million, or 8%, to $18.7 million in fiscal 2024 compared to $20.4 million in fiscal 2023.

Exchange rates unfavorably impacted compensation and benefits by $1.0 million, or 5%, in fiscal 2024 compared to fiscal 2023.

The decrease in compensation and benefits expense was primarily due to a decrease in performance-related bonus expense of $1.5 million in fiscal 2024 compared to fiscal 2023 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.

Professional Search & Interim compensation and benefits expense increased by $1.1 million to $224.4 million in fiscal 2024 compared to $223.3 million in fiscal 2023.

Exchange rates unfavorably impacted compensation and benefits by $0.8 million in fiscal 2024 compared to fiscal 2023.

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.

The increase in compensation and benefits expense was primarily due to increases in integration/acquisition costs of $5.7 million due to the acquisitions of the Acquired Companies and higher deferred compensation expense of $2.2 million as a result of increases in the fair value of participants' accounts.

Further contributing to the increase in compensation and benefits expense were increases in employee insurance of $1.7 million and performance-related bonus expense of $1.4 million, partially offset by lower salaries and related payroll taxes of $5.7 million due to a 3% reduction in average headcount and a decrease in commission expense of $4.4 million in fiscal 2024 compared to fiscal 2023.

RPO compensation and benefits expense decreased by $54.7 million, or 16%, to $284.3 million in fiscal 2024 from $339.0 million in fiscal 2023.

Exchange rates unfavorably impacted compensation and benefits by $3.4 million, or 1%, in fiscal 2024 compared to fiscal 2023.

The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $56.0 million driven by a 15% decrease in average headcount in fiscal 2024 compared to fiscal 2023.

Average headcount declined due to cost reduction actions and attrition.

Corporate compensation and benefits expense increased by $10.2 million, or 16%, to $72.6 million in fiscal 2024 from $62.4 million in fiscal 2023.

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.

The increase was primarily due to increases in restricted stock compensation expense of $4.9 million and higher deferred compensation expense of $2.1 million due to an increase in the fair value of participants' accounts in fiscal 2024 compared to fiscal 2023.

Also contributing to the increase in compensation and benefits expense was a decrease in the cash surrender value (“CSV”) of company-owned life insurance (“COLI”) of $1.8 million as a result of less death benefits recorded in fiscal 2024 compared to fiscal 2023.

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.

General and administrative expenses decreased by $9.5 million, or 4%, to $259.0 million in fiscal 2024 compared to $268.5 million in fiscal 2023.

Exchange rates favorably impacted general and administrative expenses by $0.8 million in fiscal 2024 compared to fiscal 2023.

The decrease in general and administrative expenses was primarily due to decreases in impairment of fixed and right-of-use assets of $6.6 million, integration/acquisition costs of $5.8 million and legal and professional expenses of $4.5 million in the fiscal 2024 compared to fiscal 2023.

The decrease was partially offset by higher marketing and business development expenses of $4.5 million and an increase in foreign exchange loss of $2.5 million in fiscal 2024 compared to fiscal 2023.

Consulting general and administrative expenses decreased by $3.2 million, or 6%, to $54.7 million in fiscal 2024 compared to $57.9 million in fiscal 2023.

The decrease in general and administrative expenses was primarily due to a decrease in impairment of fixed and right-of-use assets of $5.4 million, partially offset by higher bad debt expense of $1.9 million in fiscal 2024 compared to fiscal 2023.

Digital general and administrative expenses decreased by $0.7 million, or 2%, to $39.9 million in fiscal 2024 compared to $40.6 million in fiscal 2023.

Executive Search North America general and administrative expenses decreased by $0.2 million, or 1%, to $32.2 million in fiscal 2024 from $32.4 million in fiscal 2023.

Executive Search EMEA general and administrative expenses increased by $2.1 million, or 14%, to $16.8 million in fiscal 2024 from $14.7 million in fiscal 2023.

The increase in general and administrative expenses was primarily due to an increase in premise and office expense of $1.0 million, of which $0.4 million is related to the impairment of right-of-use assets associated with the reduction of the Company's real estate footprint.

Also contributing to the increase was a foreign exchange loss of $0.2 million in fiscal 2024 compared to a foreign exchange gain of $0.4 million in fiscal 2023.

Executive Search Asia Pacific general and administrative expenses decreased by $0.9 million, or 9%, to $8.8 million in fiscal 2024 from $9.7 million in fiscal 2023.

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 $3.4 million, or 243%, to $4.8 million in fiscal 2024 from $1.4 million in fiscal 2023.

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.

The increase in general and administrative expenses was primarily due to a foreign exchange loss of $0.8 million in fiscal 2024 compared to a foreign exchange gain of $1.4 million in fiscal 2023.

Professional Search & Interim general and administrative expenses decreased by $6.0 million, or 20%, to $24.3 million in fiscal 2024 from $30.3 million in fiscal 2023.

The decrease in general and administrative expenses was primarily due to decreases in bad debt expense of $2.6 million and integration/acquisition costs of $2.1 million in fiscal 2024 compared to fiscal 2023 and impairment of fixed and right-of-use assets of $0.6 million incurred in fiscal 2023.

RPO general and administrative expenses decreased by $2.5 million, or 12%, to $18.8 million in fiscal 2024 from $21.3 million in fiscal 2023.

The decrease in general and administrative expenses was primarily due to a foreign exchange gain of $0.1 million in fiscal 2024 compared to a foreign exchange loss of $1.2 million in fiscal 2023 and a decrease in premise and office expense of $0.9 million.

Corporate general and administrative expenses decreased by $1.3 million, or 2%, to $58.8 million in fiscal 2024 compared to $60.1 million in fiscal 2023.

The decrease was primarily due to lower legal and other professional fees of $5.3 million and a decrease in integration/acquisition costs of $3.6 million, partially offset by increases in marketing and business development expenses of $4.0 million and computer license expense of $1.7 million and a decrease in foreign exchange gain of $1.8 million in fiscal 2024 compared to fiscal 2023.

Cost of Services Expense

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Cost of services expense was $300.0 million in fiscal 2024, an increase of $61.5 million, or 26%, compared to $238.5 million in fiscal 2023.

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.

Professional Search & Interim accounts for $54.8 million of the increase primarily due to the Acquired Companies, which perform a significant amount of interim services.

Interim services have a higher cost of service expense as compared to the Company's other segments.

The rest of the increase was from the Consulting and Digital segments due to an increase in fee revenue in the segments.

Cost of services expense, as a percentage of fee revenue, was 11% and 8% in fiscal 2024 and fiscal 2023, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $78.0 million in fiscal 2024, an increase of $9.7 million, or 14%, compared to $68.3 million in fiscal 2023.

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

The increase was primarily due to technology investments made in the current and prior year, and an increase in amortization of intangible assets due to 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.

During the second quarter of fiscal 2024, we implemented the Plan to eliminate excess capacity resulting from a challenging and uncertain macroeconomic business environment.

As a result, in fiscal 2024, the Company recorded restructuring charges, net of $68.6 million.

In fiscal 2023, the Company implemented a separate restructuring plan to eliminate excess capacity resulting from the challenging macroeconomic business environment impacting demand and to realign our workforce with our business needs and objectives and as a result recorded restructuring charges, net of $42.6 million.

Net Income Attributable to Korn Ferry

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.

Net income attributable to Korn Ferry was $169.2 million in fiscal 2024, a decrease of $40.3 million, or 19%, compared to $209.5 million in fiscal 2023.

The decrease in net income attributable to Korn Ferry was primarily due to a decrease in fee revenue combined with an increase in cost of services as a result of the Acquired Companies.

Further contributing to the decrease in net income attributable to Korn Ferry was an increase in the restructuring charges, net recorded during fiscal 2024 in order to align our workforce to the challenging macroeconomic business environment.

The decrease in net income was partially offset by decreases in compensation and benefits expenses, income tax provision and general and administrative expenses and an increase in other income, net due to greater gains from the increase in the fair value of our marketable securities that are held in trust for the settlement of the Company's obligation under the ECAP in fiscal 2024 compared to fiscal 2023.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 6% in fiscal 2024 compared to 7% in fiscal 2023.

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 was $408.2 million in fiscal 2024, a decrease of $49.1 million, or 11%, compared to $457.3 million in fiscal 2023.

The decrease in Adjusted EBITDA was driven by a decrease in fee revenue combined with an increase in cost of services, partially offset by decreases in compensation and benefits expense (excluding integration/acquisition costs), and an increase in other income driven by the increases in the value of our marketable securities (that are held in trust to satisfy obligations under our deferred compensation plan) due to market movements in fiscal 2024 compared to fiscal 2023.

Adjusted EBITDA, as a percentage of fee revenue, was 15% in fiscal 2024 compared to 16% in fiscal 2023.

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.

Consulting Adjusted EBITDA was $114.3 million in fiscal 2024, an increase of $5.8 million, or 5%, compared to $108.5 million in fiscal 2023.

The increase in Adjusted EBITDA was driven by an increase in fee revenue, partially offset by increases in compensation and benefits expense and cost of services expense in fiscal 2024 compared to fiscal 2023.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2024 and fiscal 2023.

Digital Adjusted EBITDA was $108.7 million in fiscal 2024, an increase of $11.2 million, or 11%, compared to $97.5 million in fiscal 2023.

The increase in Adjusted EBITDA was mainly driven by an increase in fee revenue combined with a decrease in compensation and benefits expense, partially offset by an increase in cost of services expense in fiscal 2024 compared to fiscal 2023.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2024 compared to 27% in fiscal 2023.

Executive Search North America Adjusted EBITDA decreased by $20.2 million, or 14%, to $120.7 million in fiscal 2024 compared to $140.9 million in fiscal 2023.

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.

The decrease in Adjusted EBITDA was primarily driven by a decrease in the segment fee revenue, partially offset by a decrease in compensation and benefits expense and an increase in other income driven by the increases in the value of our marketable securities (that are held in trust to satisfy obligations under our deferred compensation plan) due to market movements in fiscal 2024 compared to fiscal 2023.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 24% in fiscal 2024 compared to 25% in fiscal 2023.

Executive Search EMEA Adjusted EBITDA decreased by $5.5 million, or 18%, to $25.9 million in fiscal 2024 compared to $31.4 million in fiscal 2023.

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.

The decrease in Adjusted EBITDA was driven by lower fee revenue in the segment coupled with increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges) in fiscal 2024 compared to fiscal 2023.

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 14% in fiscal 2024 compared to 17% in fiscal 2023.

Executive Search Asia Pacific Adjusted EBITDA decreased by $5.3 million, or 22%, to $18.9 million in fiscal 2024 compared to $24.2 million in fiscal 2023.

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.

The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment, partially offset by decreases in compensation and benefits expense and general and administrative expenses in fiscal 2024 compared to fiscal 2023.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 22% in fiscal 2024 compared to 25% in fiscal 2023.

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 decreased by $3.8 million, or 40%, to $5.6 million in fiscal 2024 compared to $9.4 million in fiscal 2023.

The decrease in Adjusted EBITDA was driven by lower fee revenue in the segment and an increase in general and administrative expenses, partially offset by a decrease in compensation and benefits expense in fiscal 2024 compared to fiscal 2023.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 19% in fiscal 2024 compared to 30% in fiscal 2023.

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 was $101.9 million in fiscal 2024, a decrease of $9.0 million, or 8%, compared to $110.9 million in fiscal 2023.

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

Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 19% in fiscal 2024 compared to 22% in fiscal 2023.

RPO Adjusted EBITDA was $40.4 million in fiscal 2024, a decrease of $12.2 million, or 23%, compared to $52.6 million in fiscal 2023.

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.

The decrease in Adjusted EBITDA was mainly driven by lower fee revenue in the segment, partially offset by decreases in compensation and benefits expense and general and administrative expenses (excluding impairment charges) in fiscal 2024 compared to fiscal 2023.

RPO Adjusted EBITDA, as a percentage of fee revenue, was 11% in fiscal 2024 compared to 12% in fiscal 2023.

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.

Other Income, Net

Other income, net was $30.7 million in fiscal 2024 compared to $5.3 million in fiscal 2023.

The difference was primarily due to greater gains from the increase in the fair value of our marketable securities that are held in trust for the settlement of the Company's obligation under the ECAP in fiscal 2024 compared to fiscal 2023.

Interest Expense, Net

1 unchanged sentence

Interest expense, net was $21.0 million in fiscal 2024 compared to $25.9 million in fiscal 2023.

Income Tax Provision

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 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.

The increase in fee revenue was partially driven by our Organizational Strategy work in organization and job redesign, people strategy and culture transformation.

In addition, our diversity, equity & inclusion (“DE&I”) business remained strong in fiscal 2022 as we helped clients move the needle on their diversity efforts.

Also, greater expectations for organizations to be a force for good in society more broadly has been increasing demand for our environmental and social governance (“ESG”) and sustainability offerings.

Leadership Development continues to focus on the importance of increasing employee engagement through coaching and structured leadership workshops.

Assessment and Succession increased as clients rely on Korn Ferry’s robust data, science and IP to fuel leadership and scaled workforce transformations.

Finally, growth in Total Rewards was fueled by global compensation and retention challenges associated with labor market dislocation;

merger & acquisition and IPO activity;

and increased focus on executive pay and governance issues, all of which increased pressure to offer higher and more competitive compensation.

Exchange rates unfavorably impacted fee revenue by $2.8 million, or 1%, compared to fiscal 2021.

Digital reported fee revenue of $349.0 million in fiscal 2022, an increase of $61.7 million, or 21%, compared to $287.3 million in fiscal 2021.

The increase in fee revenue was primarily due to Professional Development where we targeted new offerings and partnerships in fiscal 2022 to meet the growing need of companies focusing on sales effectiveness.

We had double digit increases in fee revenue across our other solutions focusing on assessment, total rewards and organizational strategy as companies focused on retaining and rewarding key talent to reduce levels of attrition from dislocation in the labor markets.

Exchange rates unfavorably impacted fee revenue by $1.8 million, or 1%, compared to fiscal 2021.

Executive Search North America .

Executive Search North America reported fee revenue of $605.7 million in fiscal 2022, an increase of $208.4 million, or 52%, compared to $397.3 million in fiscal 2021.

Exchange rates favorably impacted fee revenue by $1.3 million in fiscal 2022 compared to fiscal 2021.

North America’s fee revenue was higher due to a 35% increase in the number of engagements billed and a 12% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021.

Executive Search EMEA.

Executive Search EMEA reported fee revenue of $182.2 million in fiscal 2022, an increase of $43.2 million, or 31%, compared to $139.0 million in fiscal 2021.

Exchange rates unfavorably impacted fee revenue by $0.5 million in fiscal 2022 compared to fiscal 2021.

The increase in fee revenue was due to a 15% increase in the number of engagements billed and a 14% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021.

The performance in the United Kingdom, France, the United Arab Emirates and Belgium were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021, driving $31.0 million of increased revenue.

Executive Search Asia Pacific.

Executive Search Asia Pacific reported fee revenue of $118.6 million in fiscal 2022, an increase of $35.3 million, or 42%, compared to $83.3 million in fiscal 2021.

Exchange rates favorably impacted fee revenue by $0.6 million, or 1%, in fiscal 2022 compared to fiscal 2021.

The increase in fee revenue was due to a 27% increase in the number of engagements billed and an 11% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021.

The performance in Australia, India, China and Singapore were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021, contributing $28.8 million of increased fee revenue.

Executive Search Latin America.

Executive Search Latin America reported fee revenue of $29.1 million in fiscal 2022, an increase of $11.6 million, or 66%, compared to $17.5 million in fiscal 2021.

Exchange rates favorably impacted fee revenue by $0.2 million, or 1%, in fiscal 2022 compared to fiscal 2021.

The increase in fee revenue was due to a 34% increase in the number of engagements billed and a 22% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2022 compared to fiscal 2021.

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.

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 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

Compensation and benefits expense increased $443.6 million, or 34% to $1,741.5 million in fiscal 2022 from $1,297.9 million in fiscal 2021.

Exchange rates favorably impacted compensation and benefits by $0.3 million in fiscal 2022 compared to fiscal 2021.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes of $230.4 million, performance-related bonus expense of $160.3 million, amortization of long-term incentive awards of $16.4 million, employer insurance of $13.8 million and the use of outside contractors of $9.3 million.

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 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.

Consulting compensation and benefits expense increased by $90.5 million, or 25%, to $450.9 million in fiscal 2022 from $360.4 million in fiscal 2021.

Exchange rates favorably impacted compensation and benefits by $1.2 million in fiscal 2022 compared to fiscal 2021.

The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes of $48.9 million, performance-related bonus expense of $24.5 million, amortization of long-term incentive awards of $5.0 million and employer insurance of $2.7 million due to an increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.

Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in fiscal 2022 from 70% in fiscal 2021.

Digital compensation and benefits expense increased by $31.1 million, or 21%, to $177.8 million in fiscal 2022 from $146.7 million in fiscal 2021.

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

The increase in compensation and benefits expense was primarily due to increases in performance-related bonus expense of $11.4 million, salaries and related payroll taxes of $7.9 million and commission expenses of $5.8 million in fiscal 2022 compared to fiscal 2021 as a result of an increase in fee revenue combined with increases in overall profitability and average headcount.

Digital compensation and benefits expense, as a percentage of fee revenue, was 51% in both fiscal 2022 and fiscal 2021.

Executive Search North America compensation and benefits expense increased by $77.6 million, or 26%, to $377.1 million in fiscal 2022 compared to $299.5 million in fiscal 2021.

Exchange rates unfavorably impacted compensation and benefits by $0.7 million in fiscal 2022 compared to fiscal 2021.

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 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.

Executive Search EMEA compensation and benefits expense increased by $22.0 million, or 20%, to $133.1 million in fiscal 2022 compared to $111.1 million in fiscal 2021.

Exchange rates favorably impacted compensation and benefits by $0.5 million in fiscal 2022 compared to fiscal 2021.

The increase was primarily due to higher salaries and related payroll taxes of $12.6 million and performance-related bonus expense of $8.2 million in fiscal 2022 compared to fiscal 2021 due to the increase in fee revenue combined with an increase in overall profitability.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 73% in fiscal 2022 from 80% in fiscal 2021.

Executive Search Asia Pacific compensation and benefits expense increased by $14.0 million, or 24%, to $72.3 million in fiscal 2022 compared to $58.3 million in fiscal 2021.

Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 1%, in fiscal 2022 compared to fiscal 2021.

The increase was primarily due to increases in performance-related bonus expense of $10.2 million and salaries and related payroll taxes of $6.2 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase overall profitability.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 61% in fiscal 2022 from 70% in fiscal 2021.

Executive Search Latin America compensation and benefits expense increased by $4.3 million, or 30%, to $18.4 million in fiscal 2022 compared to $14.1 million in fiscal 2021.

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

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.

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 $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 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.

General and Administrative Expenses

General and administrative expenses increased $45.5 million, or 24%, to $237.3 million in fiscal 2022 compared to $191.8 million in fiscal 2021.

Exchange rates favorably impacted general and administrative expenses by $0.9 million in fiscal 2022 compared to fiscal 2021.

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 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.

Consulting general and administrative expenses increased by $2.9 million, or 6%, to $51.5 million in fiscal 2022 compared to $48.6 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $2.8 million in fiscal 2022.

Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2022 from 9% in fiscal 2021.

Digital general and administrative expenses increased by $1.9 million, or 7%, to $31.0 million in fiscal 2022 compared to $29.1 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $1.5 million in fiscal 2022.

Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 10% in fiscal 2021.

Executive Search North America general and administrative expenses increased by $3.9 million, or 14%, to $30.8 million in fiscal 2022 from $26.9 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to increases in business development expenses of $2.4 million and bad debt expense of $0.7 million.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 5% in fiscal 2022 compared to 7% in fiscal 2021.

Executive Search EMEA general and administrative expenses increased by $2.0 million, or 13%, to $18.0 million in fiscal 2022 from $16.0 million in fiscal 2021.

The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $1.1 million and the impact of foreign currency with foreign exchange losses of $0.7 million in fiscal 2022 compared to foreign currency gains of $0.3 million in fiscal 2021.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue was 10% in fiscal 2022 compared to 12% in fiscal 2021.

Executive Search Asia Pacific general and administrative expenses increased by $2.4 million, or 28%, to $11.0 million in fiscal 2022 from $8.6 million in fiscal 2021.

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 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.

The decrease in general and administrative expenses was primarily due to lower premise and office expenses of $1.4 million in fiscal 2022 compared to fiscal 2021.

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.

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 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 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 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.

Depreciation and Amortization Expenses

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 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

There were no restructuring charges, net during fiscal 2022.

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

We continued the implementation of this plan in fiscal 2021 and as a result recorded restructuring charges, net of $30.7 million of severance costs in fiscal 2021.

Net Income Attributable to Korn Ferry

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

The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue of $816.7 million, which was driven by the factors discussed above, and restructuring charges, net of $30.7 million incurred in fiscal 2021.

This was partially offset by increases in compensation and benefits expense of $443.6 million, cost of services expense of $42.4 million associated with the higher levels of business demand, a higher income tax provision of $54.0 million and general and an increase in administrative expenses of $45.5 million.

The rest of the change is due to other loss, net of $11.9 million in fiscal 2022 compared to other income, net of $37.2 million in fiscal 2021.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 12% in fiscal 2022 as compared to 6% in fiscal 2021.

Adjusted EBITDA

Adjusted EBITDA increased by $252.6 million to $538.9 million in fiscal 2022 compared to $286.3 million in fiscal 2021.

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

Adjusted EBITDA, as a percentage of fee revenue, was 21% and 16% in fiscal 2022 and 2021.

Consulting Adjusted EBITDA was $116.1 million in fiscal 2022, an increase of $34.6 million, or 42%, compared to $81.5 million in fiscal 2021.

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

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

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

These changes were partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense in fiscal 2022 compared to fiscal 2021.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 32% in fiscal 2022 as compared to 30% in fiscal 2021.

Executive Search North America Adjusted EBITDA increased by $83.5 million, or 85%, to $181.6 million in fiscal 2022 compared to $98.1 million in fiscal 2021.

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

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2022 compared to 25% in fiscal 2021.

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).

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

Executive Search Asia Pacific Adjusted EBITDA increased by $18.4 million, or 110%, to $35.1 million in fiscal 2022 compared to $16.7 million in fiscal 2021.

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

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2022 compared to 20% in fiscal 2021.

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 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.

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

Other loss, net was $11.9 million in fiscal 2022 compared to other income, net of $37.2 million in fiscal 2021.

The difference was primarily due to losses from the fair value of our marketable securities in fiscal 2022 compared to gains in fiscal 2021.

Interest Expense, Net

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

Interest expense, net was $25.3 million in fiscal 2022 compared to $29.3 million in fiscal 2021.

Interest expense, net decreased due to interest income earned on the death benefits received from our COLI policies in fiscal 2022 and lower interest expense on borrowings under our COLI policies in fiscal 2022 compared to fiscal 2021 due to the lower amount of borrowings outstanding.

Interest expense, net decreased due to an increase in interest income earned on cash and cash equivalent balances as a result of higher interest rates in fiscal 2024 compared to fiscal 2023.

Income Tax Provision

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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 lower effective tax rate in fiscal 2022 was partially attributable to a tax benefit recorded in connection with tax credits claimed in the current year for eligible research and development expenditures.

The fiscal 2021 effective tax rate was higher due to a tax expense recorded for withholding taxes on intercompany dividends that are not eligible for credit and a shortfall recorded in connection with stock-based awards that vested in fiscal 2021.

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

Conversely, the Company recorded a tax benefit for a windfall in connection with stock-based awards that vested in fiscal 2022.

state income taxes and jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the lower effective tax rate in fiscal 2024 was primarily due to a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance.

The fiscal 2023 effective tax rate was higher due to a tax expense recorded for withholding taxes that were not eligible for credit.

Net Income Attributable to Noncontrolling Interest

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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 $400.0 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

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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 has a total of $645.5 million and $1,145.4 million available under the Credit Facilities after $4.5 million and $4.6 million of standby letters of credit have been issued as of April 30, 2024 and 2023, respectively.

Of the amount available under the Credit Facilities as of April 30, 2023, $500.0 million was under the Delayed Draw Facility that expired on June 24, 2023.

The Company had a total of $13.2 million and $11.5 million of standby letters with other financial institutions as of April 30, 2024 and 2023, respectively.

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

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

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.

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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.

On December 5, 2023, the Board of Directors approved an increase of 83% in the quarterly dividend, which increased the quarterly dividend to $0.33 per share.

On June 12, 2024, the Board of Directors approved an increase in the quarterly dividend to $0.37 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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The Company repurchased approximately $52.5 million and $93.9 million of the Company’s stock during fiscal 2024 and fiscal 2023, respectively.

As of April 30, 2023, $235.2 million remained available for common stock repurchases under our share repurchase program.

As of April 30, 2024, $182.7 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 primary 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, 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.

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Unvested obligations under the deferred compensation plans totaled $22.4 million and $21.9 million as of April 30, 2024 and 2023, 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.

The net increase in our working capital of $77.2 million as of April 30, 2024 compared to April 30, 2023 is primarily attributable to an increase in cash and cash equivalents.

The increase in cash and cash equivalents was primarily due to cash from operations, partially offset by payments of annual bonuses earned in fiscal 2023 and paid during the first quarter of fiscal 2024, purchase of property and equipment, dividends paid to shareholders and repurchases of common stock.

Cash provided by operating activities was $284.0 million in fiscal 2024, a decrease of $59.9 million, compared to $343.9 million in fiscal 2023.

Cash used in investing activities was $53.8 million in fiscal 2024 compared to $323.5 million in fiscal 2023.

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.

The decrease in cash used in investing activities was primarily due to $254.8 million in cash paid for acquisitions in fiscal 2023 compared to no acquisition in fiscal 2024.

Also contributing to a decrease in cash used in investing activities was a decrease in the purchase of property and equipment of $15.2 million and an increase of $11.9 million the amount received from our life insurance policies, partially offset by $12.1 million less in proceeds net of purchases in our marketable securities in fiscal 2024 compared to fiscal 2023.

Cash used in financing activities was $116.3 million in fiscal 2024 compared to $152.2 million in fiscal 2023.

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.

The decrease in cash used in financing activities was primarily due to decreases in repurchases of the Company's common stock and payments of tax withholdings on restricted stock of $42.3 million and $11.5 million, respectively in fiscal 2024 compared to fiscal 2023, partially offset by an increase of $21.4 million in dividends paid to shareholders.

Off-Balance Sheet Arrangements

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

As of April 30, 2023 and 2022, we held contracts with gross cash surrender value (“CSV”) of $275.1 million and $263.2 million, respectively.

As of April 30, 2024 and 2023, we held contracts with gross cash surrender value of $295.9 million and $275.1 million, respectively.

Total outstanding borrowings against the CSV of COLI contracts were $77.0 million and $77.1 million as of April 30, 2024 and 2023, respectively.

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Accounting Developments

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 Accounting Standards Codification ("ASC 606"), Revenue from Contracts with Customers .

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

The amendment should be applied prospectively to business combinations that occur after the effective date.

Recently Adopted Accounting Standards

In October 2021, the Financial Accounting Standard Board 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 became effective in fiscal years beginning after December 15, 2022 and is to be applied prospectively to business combinations that occur after the effective date.

We adopted this guidance in our fiscal year beginning May 1, 2023 and the adoption of this guidance did not have a material impact on the consolidated financial statements.

Recent Accounting Standards - Not Yet Adopted

In November 2023, the Financial Accounting Standards Board issued an amendment in accounting update for all public entities that are required to report segment information in accordance with Topic 280, Segment Reporting.

The amendment in this update improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense.

The amendment in this update is effective for fiscal years beginning after December 15, 2023, and interim periods with fiscal years beginning after December 15, 2024.

We will adopt this guidance in the fiscal year

beginning May 1, 2024.

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

In December 2023, the Financial Accounting Standards Board issued an amendment in accounting update for income taxes disclosures.

The new amendment provides improvements to income tax disclosures by requiring specific categories in the rate reconciliation and disaggregated information for income taxes paid.

The amendment of this update is effective for annual periods beginning after December 15, 2024, and should be applied on a prospective basis.

We will adopt this guidance in our fiscal year beginning May 1, 2025.

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

The adoption of this guidance is not anticipated to 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