Basic and Diluted (Loss) Earnings Per Share

6 Months Ended

Oct. 31, 2023

Basic and Diluted (Loss) Earnings Per Share

ASC 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating (loss) earnings per share. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is required to apply the two-class method in calculating (loss) earnings per share. The two-class method of computing (loss) earnings per share is an earnings allocation formula that determines (loss) earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method.

Basic (loss) earnings per common share was computed using the two-class method by dividing basic net (loss) earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted (loss) earnings per common share was computed using the two-class method by dividing diluted net (loss) earnings attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts to issue common stock as if they were exercised or converted. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share or decrease loss per share, are anti-dilutive and are not included in the computation of diluted (loss) earnings per share. For the three months ended October 31, 2023, the Company is in a net loss position and diluted net loss per share therefore excludes the effects of common equivalents consisting of restricted awards, which are all antidilutive.

During the three and six months ended October 31, 2023, restricted stock awards of 2.1 million shares and 1.2 million shares, respectively, were outstanding but not included in the computation of diluted (loss) earnings per share because they were anti-dilutive. During the three and six months ended October 31, 2022, restricted stock awards of 1.6 million shares and 1.2 million shares, respectively, were outstanding but not included in the computation of diluted (loss) earnings per share because they were anti-dilutive.

The following table summarizes basic and diluted (loss) earnings per common share attributable to common stockholders:


	Three Months Ended October 31,				Six Months Ended October 31,
	2023		2022		2023		2022

	(in thousands, except per share data)
Net (loss) income attributable to Korn Ferry	$	(1,711)	$	73,541	$	44,894	$	150,788
Less: distributed and undistributed earnings to nonvested restricted stockholders	169		1,615		843		3,295
Basic net (loss) earnings attributable to common stockholders	(1,880)		71,926		44,051		147,493
Add: undistributed earnings to nonvested restricted stockholders	—		1,436		459		2,945
Less: reallocation of undistributed earnings to nonvested restricted stockholders	—		1,432		457		2,927
Diluted net (loss) earnings attributable to common stockholders	$	(1,880)	$	71,930	$	44,053	$	147,511

Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding	51,328		51,868		51,131		51,820
Effect of dilutive securities:
Restricted stock	—		134		262		319
ESPP	—		3		8		4
Diluted weighted-average number of common shares outstanding	51,328		52,005		51,401		52,143

Net (loss) earnings per common share:
Basic (loss) earnings per share	$	(0.04)	$	1.39	$	0.86	$	2.85
Diluted (loss) earnings per share	$	(0.04)	$	1.38	$	0.86	$	2.83