Segments

6 Months Ended

Oct. 31, 2020

Segment Reporting [Abstract]

Segments

11. Segments

The Company has invested in its digital business over the past year in order to digitize and harmonize the structure of its IP content and data and to build a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement. These investments combined with the recent acquisition of the Acquired Companies resulted in a reassessment in the third quarter of fiscal 2020 of how the Company managed its former Advisory business. Given the Company’s strategy and development of financial and operational metrics for the consulting and digital businesses, the Company’s chief operating decision maker (“CODM”) had begun to make resource allocation decisions and assess performance separately between Consulting and Digital. Therefore, on November 1, 2019, the Company changed the composition of its global segments, and under the new reporting format, the Advisory segment was separated into two segments: Consulting and Digital. Revenues are directly attributed to a segment and expenses not directly associated with a

specific segment are allocated based on the most relevant measures applicable, including revenues, headcount, and other factors. Operating results by segment prior to November 1, 2019 have been recast to conform to the new segment reporting.

The Company operates through four global segments:

1. Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits. This work is supported and underpinned by a comprehensive range of some of the world’s leading lP and data.

2. Digital leverages an artificial intelligence powered platform to identify structure, roles, capabilities, and behaviors needed to drive business forward. This end-to-end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success along with the guidance and tools to deliver it.

3. Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.

4. RPO and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.

Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, and RPO and Professional Search are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses.

The Company evaluates performance and allocates resources based on the CODM’s review of 1) fee revenue and 2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in Note 1—Organization and Summary of Significant Accounting Policies, except the items described above are excluded from earnings before interest, taxes, depreciation and amortization (“EBITDA”) to arrive at Adjusted EBITDA. The CODM is not provided asset information by reportable segment.

Financial highlights by operating segment are as follows:

	Three Months Ended October 31, 2020
					Executive Search
	Consulting		Digital		North America			EMEA		Asia Pacific			Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	126,685	$	75,043	$	91,168		$	31,629	$	20,807		$	4,456	$	148,060	$	85,651	$	—		$	435,439
Total revenue	$	127,051	$	75,038	$	91,609		$	31,714	$	20,820		$	4,456	$	148,599	$	87,101	$	—		$	437,789
Net income attributable to Korn Ferry																						$	27,778
Net income attributable to noncontrolling interest																							300
Other income net																							(277	)
Interest expense, net																							7,494
Income tax provision																							12,877
Operating income (loss)	$	14,621	$	15,823	$	20,491		$	1,509	$	3,253		$	375	$	25,628	$	12,502	$	(20,402	)	$	48,172
Depreciation and amortization		4,063		7,005		716			355		250			202		1,523		945		1,762			15,298
Other income (loss), net		336		202		(9	)		31		166			7		195		24		(480	)		277
EBITDA		19,020		23,030		21,198			1,895		3,669			584		27,346		13,471		(19,120	)		63,747
Restructuring, charges, net		1,143		54		(12	)		922		(28	)		—		882		328		—			2,407
Adjusted EBITDA	$	20,163	$	23,084	$	21,186		$	2,817	$	3,641		$	584	$	28,228	$	13,799	$	(19,120	)	$	66,154

	Three Months Ended October 31, 2019
					Executive Search
	Consulting		Digital		North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	144,036	$	65,724	$	113,818	$	39,821	$	25,944	$	8,272	$	187,855	$	94,774	$	—		$	492,389
Total revenue	$	148,198	$	65,724	$	117,077	$	40,441	$	26,168	$	8,273	$	191,959	$	98,296	$	—		$	504,177
Net income attributable to Korn Ferry																				$	42,804
Net income attributable to noncontrolling interest																					228
Other income, net																					(1,133	)
Interest expense, net																					4,210
Income tax provision																					15,760
Operating income (loss)	$	9,826	$	18,565	$	28,124	$	6,511	$	5,803	$	791	$	41,229	$	15,094	$	(22,845	)	$	61,869
Depreciation and amortization		4,357		3,685		869		450		329		315		1,963		990		1,720			12,715
Other income (loss), net		386		134		637		107		72		30		846		54		(287	)		1,133
EBITDA		14,569		22,384		29,630		7,068		6,204		1,136		44,038		16,138		(21,412	)		75,717
Integration/acquisition costs		—		—		—		—		—		—		—		—		2,615			2,615
Adjusted EBITDA	$	14,569	$	22,384	$	29,630	$	7,068	$	6,204	$	1,136	$	44,038	$	16,138	$	(18,797	)	$	78,332

	Six Months Ended October 31, 2020
					Executive Search
	Consulting		Digital		North America		EMEA			Asia Pacific		Latin America			Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	226,003	$	131,016	$	160,483	$	61,710		$	38,059	$	7,951		$	268,203	$	154,314	$	—		$	779,536
Total revenue	$	226,641	$	131,060	$	161,465	$	61,909		$	38,160	$	7,951		$	269,485	$	157,486	$	—		$	784,672
Net loss attributable to Korn Ferry																						$	(3,055	)
Net income attributable to noncontrolling interest																							278
Other income, net																							(11,439	)
Interest expense, net																							14,388
Income tax provision																							4,205
Operating income (loss)	$	3,694	$	13,196	$	14,756	$	(4,710	)	$	4,114	$	(842	)	$	13,318	$	14,667	$	(40,498	)	$	4,377
Depreciation and amortization		8,072		13,731		1,446		717			525		404			3,092		1,885		3,553			30,333
Other income (loss), net		1,124		620		9,333		50			392		55			9,830		220		(355	)		11,439
EBITDA		12,890		27,547		25,535		(3,943	)		5,031		(383	)		26,240		16,772		(37,300	)		46,149
Integration/acquisition costs		—		556		—		—			—		—			—		—		181			737
Restructuring charges, net		13,877		2,924		963		8,470			204		405			10,042		3,051		—			29,894
Adjusted EBITDA	$	26,767	$	31,027	$	26,498	$	4,527		$	5,235	$	22		$	36,282	$	19,823	$	(37,119	)	$	76,780

	Six Months Ended October 31, 2019
					Executive Search
	Consulting		Digital		North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	281,578	$	123,708	$	225,540	$	86,351	$	53,306	$	15,857	$	381,054	$	190,598	$	—		$	976,938
Total revenue	$	289,534	$	123,708	$	232,523	$	87,753	$	53,836	$	15,860	$	389,972	$	197,161	$	—		$	1,000,375
Net income attributable to Korn Ferry																				$	85,755
Net income attributable to noncontrolling interest																					927
Other income, net																					(2,959	)
Interest expense, net																					8,267
Income tax provision																					30,213
Operating income (loss)	$	21,609	$	32,573	$	58,446	$	13,822	$	12,796	$	1,801	$	86,865	$	30,135	$	(48,979	)	$	122,203
Depreciation and amortization		8,771		7,324		1,770		906		675		643		3,994		1,982		3,421			25,492
Other income (loss), net		911		335		1,777		119		87		87		2,070		128		(485	)		2,959
EBITDA		31,291		40,232		61,993		14,847		13,558		2,531		92,929		32,245		(46,043	)		150,654
Integration/acquisition costs		—		—		—		—		—		—		—		—		2,615			2,615
Adjusted EBITDA	$	31,291	$	40,232	$	61,993	$	14,847	$	13,558	$	2,531	$	92,929	$	32,245	$	(43,428	)	$	153,269