Segments

9 Months Ended

Jan. 31, 2021

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 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.

The Company operates through four lines of business:

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 impairment charges). The CODM is not provided asset information by reportable segment.

Financial highlights by operating segments are as follows:

	Three Months Ended January 31, 2021
					Executive Search
	Consulting		Digital		North America			EMEA		Asia Pacific			Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	136,268	$	75,791	$	106,002		$	35,991	$	21,643		$	4,468	$	168,104	$	95,197	$	—		$	475,360
Total revenue	$	136,593	$	75,967	$	106,325		$	36,016	$	21,680		$	4,468	$	168,489	$	96,831	$	—		$	477,880
Net income attributable to Korn Ferry																						$	51,319
Net income attributable to noncontrolling interest																							269
Other income, net																							(14,935	)
Interest expense, net																							7,298
Income tax provision																							21,204
Operating income (loss)	$	22,175	$	19,214	$	17,655		$	3,114	$	5,844		$	264	$	26,877	$	18,360	$	(21,471	)	$	65,155
Depreciation and amortization		4,051		7,403		680			345		231			193		1,449		929		1,903			15,735
Other income, net		943		494		12,611			61		323			1		12,996		242		260			14,935
Restructuring, charges, net		346		23		(5	)		398		(23	)		—		370		99		—			838
Adjusted EBITDA	$	27,515	$	27,134	$	30,941		$	3,918	$	6,375		$	458	$	41,692	$	19,630	$	(19,308	)	$	96,663

	Three Months Ended January 31, 2020
					Executive Search
	Consulting		Digital		North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	140,525	$	99,389	$	106,888	$	44,301	$	25,089	$	7,283	$	183,561	$	91,850	$	—		$	515,325
Total revenue	$	144,298	$	100,663	$	110,230	$	45,077	$	25,365	$	7,351	$	188,023	$	94,995	$	—		$	527,979
Net income attributable to Korn Ferry																				$	19,993
Net income attributable to noncontrolling interest																					963
Other income, net																					(5,055	)
Interest expense, net																					6,919
Income tax provision																					8,775
Operating income (loss)	$	2,663	$	8,463	$	21,808	$	4,644	$	5,070	$	1,198	$	32,720	$	14,144	$	(26,395	)	$	31,595
Depreciation and amortization		4,417		5,832		847		422		329		295		1,893		979		1,742			14,863
Other income (loss), net		558		193		3,963		29		106		162		4,260		88		(44	)		5,055
Integration/acquisition costs		—		4,332		—		—		—		—		—		—		2,372			6,704
Restructuring, charges, net		11,061		7,032		—		—		—		—		—		—		—			18,093
Separation costs		—		—		—		1,783		—		—		1,783		—		—			1,783
Adjusted EBITDA	$	18,699	$	25,852	$	26,618	$	6,878	$	5,505	$	1,655	$	40,656	$	15,211	$	(22,325	)	$	78,093

	Nine Months Ended January 31, 2021
					Executive Search
	Consulting		Digital		North America		EMEA			Asia Pacific		Latin America			Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	362,271	$	206,807	$	266,485	$	97,701		$	59,702	$	12,419		$	436,307	$	249,511	$	—		$	1,254,896
Total revenue	$	363,234	$	207,027	$	267,790	$	97,925		$	59,840	$	12,419		$	437,974	$	254,317	$	—		$	1,262,552
Net income attributable to Korn Ferry																						$	48,264
Net income attributable to noncontrolling interest																							547
Other income, net																							(26,374	)
Interest expense, net																							21,686
Income tax provision																							25,409
Operating income (loss)	$	25,869	$	32,410	$	32,411	$	(1,596	)	$	9,958	$	(578	)	$	40,195	$	33,027	$	(61,969	)	$	69,532
Depreciation and amortization		12,123		21,134		2,126		1,062			756		597			4,541		2,814		5,456			46,068
Other income (loss), net		2,067		1,114		21,944		111			715		56			22,826		462		(95	)		26,374
Integration/acquisition costs		—		556		—		—			—		—			—		—		181			737
Restructuring charges, net		14,223		2,947		958		8,868			181		405			10,412		3,150		—			30,732
Adjusted EBITDA	$	54,282	$	58,161	$	57,439	$	8,445		$	11,610	$	480		$	77,974	$	39,453	$	(56,427	)	$	173,443

	Nine Months Ended January 31, 2020
					Executive Search
	Consulting		Digital		North America		EMEA		Asia Pacific		Latin America		Subtotal		RPO & Professional Search		Corporate			Consolidated
	(in thousands)
Fee revenue	$	422,103	$	223,097	$	332,428	$	130,652	$	78,395	$	23,140	$	564,615	$	282,448	$	—		$	1,492,263
Total revenue	$	433,832	$	224,371	$	342,753	$	132,830	$	79,201	$	23,211	$	577,995	$	292,156	$	—		$	1,528,354
Net income attributable to Korn Ferry																				$	105,748
Net income attributable to noncontrolling interest																					1,890
Other income, net																					(8,014	)
Interest expense, net																					15,186
Income tax provision																					38,988
Operating income (loss)	$	24,272	$	41,036	$	80,254	$	18,466	$	17,866	$	2,999	$	119,585	$	44,279	$	(75,374	)	$	153,798
Depreciation and amortization		13,188		13,156		2,617		1,328		1,004		938		5,887		2,961		5,163			40,355
Other income (loss), net		1,469		528		5,740		148		193		249		6,330		216		(529	)		8,014
Integration/acquisition costs		—		4,332		—		—		—		—		—		—		4,987			9,319
Restructuring charges, net		11,061		7,032		—		—		—		—		—		—		—			18,093
Separation costs		—		—		—		1,783		—		—		1,783		—		—			1,783
Adjusted EBITDA	$	49,990	$	66,084	$	88,611	$	21,725	$	19,063	$	4,186	$	133,585	$	47,456	$	(65,753	)	$	231,362