Korn Ferry Posts Strong Q2 Earnings, Net Income Jumps 19%

TL;DR

**KFY is crushing it with double-digit net income growth, signaling strong demand for talent services – buy the dip!**

AI Summary

Korn Ferry (KFY) reported a robust financial performance for the three and six months ended October 31, 2025. For the three months, fee revenue increased by 7.02% to $721.7 million from $674.4 million in the prior year, while total revenue grew by 7.02% to $729.8 million from $682.0 million. Net income attributable to Korn Ferry saw a significant rise of 18.91% to $72.4 million, up from $60.8 million in the same period last year. Diluted earnings per common share increased to $1.36 from $1.14, an 19.3% improvement. For the six months, fee revenue rose 6.00% to $1.43 billion from $1.35 billion, and net income attributable to Korn Ferry increased 12.67% to $139.0 million from $123.4 million. Operating income for the six months also improved by 11.42% to $182.2 million. The company experienced a net decrease in cash and cash equivalents of $245.4 million for the six months, primarily due to $116.0 million used in operating activities and $87.8 million used in financing activities, including $51.3 million in dividends paid to shareholders and $18.4 million in common stock repurchases.

Why It Matters

Korn Ferry's strong revenue and net income growth signal healthy demand for its talent and organizational consulting services, which is a positive indicator for the broader labor market and corporate investment in human capital. For investors, the 19.3% increase in diluted EPS to $1.36 demonstrates effective management and potential for continued shareholder value creation, especially with ongoing share repurchases. Employees benefit from a thriving company, potentially leading to more opportunities and stability. In a competitive landscape with other consulting giants, KFY's ability to expand its 'Solution areas' and leverage AI-driven tools in RPO suggests a strategic edge, impacting its market share and long-term growth trajectory.

Risk Assessment

Risk Level: medium — While KFY shows strong financial performance, the net decrease in cash and cash equivalents by $245.4 million for the six months ended October 31, 2025, primarily driven by $116.0 million in cash used in operating activities and $87.8 million in financing activities, indicates a notable cash outflow. This, coupled with a decrease in total current assets from $1.75 billion to $1.61 billion, suggests a tightening liquidity position that warrants monitoring despite robust earnings.

Analyst Insight

Investors should consider KFY's strong earnings growth and strategic expansion into AI-driven solutions as positive long-term indicators. However, closely monitor the company's cash flow and liquidity trends, as the significant decrease in cash and cash equivalents could signal future operational or investment constraints if not managed effectively. This could be an opportunity to buy on any short-term dips related to cash flow concerns, given the underlying profitability.

Financial Highlights

debt To Equity

0.20

revenue

$729.8M

operating Margin

N/A

total Assets

$3.72B

total Debt

$398.1M

net Income

$72.4M

eps

$1.36

gross Margin

N/A

cash Position

$761.6M

revenue Growth

+7.02%

Revenue Breakdown

Key Numbers

• $721.7M — Fee Revenue (3 months) (Up 7.02% from $674.4M in prior year)
• $72.4M — Net Income Attributable to KFY (3 months) (Up 18.91% from $60.8M in prior year)
• $1.36 — Diluted EPS (3 months) (Up 19.3% from $1.14 in prior year)
• $1.43B — Fee Revenue (6 months) (Up 6.00% from $1.35B in prior year)
• $139.0M — Net Income Attributable to KFY (6 months) (Up 12.67% from $123.4M in prior year)
• $182.2M — Operating Income (6 months) (Up 11.42% from $163.5M in prior year)
• $245.4M — Net Decrease in Cash (6 months) (Primarily due to operating and financing activities)
• $116.0M — Cash Used in Operating Activities (6 months) (A significant outflow impacting overall cash)
• $51.3M — Dividends Paid to Shareholders (6 months) (Increased from $39.3M in prior year)
• 52.19M — Shares Outstanding (As of December 4, 2025)

Key Players & Entities

• Korn Ferry (company) — global consulting firm
• Bloomberg (company) — financial news organization
• SEC (regulator) — Securities and Exchange Commission
• $721.7 million (dollar_amount) — fee revenue for three months ended October 31, 2025
• $72.4 million (dollar_amount) — net income attributable to Korn Ferry for three months ended October 31, 2025
• $1.36 (dollar_amount) — diluted earnings per common share for three months ended October 31, 2025
• $1.43 billion (dollar_amount) — fee revenue for six months ended October 31, 2025
• $139.0 million (dollar_amount) — net income attributable to Korn Ferry for six months ended October 31, 2025
• $245.4 million (dollar_amount) — net decrease in cash and cash equivalents for six months ended October 31, 2025
• New York Stock Exchange (regulator) — exchange where KFY common stock is traded

FAQ

Risk Factors

• Reliance on Key Personnel [medium — operational]: Korn Ferry's success is heavily dependent on its ability to attract, retain, and motivate highly skilled professionals. The loss of key executives or consultants could materially impact client relationships and the company's ability to deliver services.
• Economic Downturns [medium — market]: The company's services are discretionary for many clients. Economic slowdowns or recessions can lead to reduced demand for consulting and talent acquisition services, impacting revenue and profitability.
• Data Privacy and Security [medium — regulatory]: Handling sensitive client and candidate data exposes Korn Ferry to risks related to data breaches and non-compliance with evolving data privacy regulations (e.g., GDPR, CCPA). Such incidents could result in significant fines and reputational damage.
• Foreign Currency Fluctuations [low — financial]: As a global company, Korn Ferry is exposed to fluctuations in foreign currency exchange rates. Adverse movements can negatively impact reported revenues and profits when translated into U.S. dollars.
• Integration of Acquisitions [low — operational]: The company may pursue strategic acquisitions. The failure to successfully integrate acquired businesses, technologies, or personnel could disrupt operations and prevent the realization of expected synergies.

Industry Context

Korn Ferry operates in the professional services sector, specifically talent acquisition and consulting. The industry is characterized by its cyclical nature, closely tied to global economic health and corporate spending on human capital. Key trends include the increasing demand for specialized skills, the rise of contingent workforces, and the strategic importance of diversity, equity, and inclusion initiatives for clients.

Regulatory Implications

Korn Ferry must navigate a complex regulatory landscape, particularly concerning data privacy and employment laws across various jurisdictions. Compliance with regulations like GDPR and CCPA is critical to avoid significant penalties and reputational damage. Changes in labor laws or tax regulations could also impact operational costs and service delivery models.

What Investors Should Do

1. Monitor operating expense trends, particularly compensation and benefits, to assess margin leverage.
2. Analyze the drivers of the net decrease in cash, focusing on operating and investing activities.
3. Evaluate the impact of goodwill and intangible assets on future performance.
4. Assess the company's strategy for managing economic downturns and competitive pressures.

Key Dates

• 2025-10-31: End of Second Quarter Fiscal Year 2026 — Reporting period for the condensed consolidated financial statements.
• 2025-04-30: End of First Quarter Fiscal Year 2026 — Prior period balance sheet comparison point.
• 2025-12-04: Date of Share Count — Indicates 52.19 million shares outstanding as of this date.

Glossary

Fee Revenue

Revenue generated from professional services, excluding reimbursed expenses. (Primary driver of Korn Ferry's top-line performance.)

Diluted Earnings Per Common Share (EPS)

Net income divided by the weighted-average number of common shares outstanding, including the dilutive effect of stock options and other potential common shares. (Key profitability metric for shareholders.)

Operating Lease Right-of-Use Assets

Assets recognized under accounting standards for leases, representing the right to use an asset for the lease term. (Reflects the company's long-term rental commitments.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net assets. (Represents the value of acquired businesses, indicating past M&A activity.)

Unearned Compensation

Compensation that has been awarded but not yet earned by employees, often related to deferred compensation plans or stock awards. (Represents future compensation obligations.)

Noncontrolling Interest

The portion of equity in a subsidiary that is not attributable to the parent company. (Indicates ownership stakes in consolidated subsidiaries not fully owned by Korn Ferry.)

Year-Over-Year Comparison

Korn Ferry has demonstrated positive year-over-year growth in both fee revenue and net income for the three and six months ended October 31, 2025, compared to the prior year. Fee revenue increased by 7.02% and 6.00% respectively, while net income saw more substantial gains of 18.91% and 12.67%. This indicates improved profitability and operational efficiency. However, there was a notable net decrease in cash and cash equivalents of $245.4 million for the six-month period, primarily driven by operating and financing activities, including increased dividend payments and stock repurchases, which warrants investor attention.

Key Financial Figures

• $0.01 — ich Registered Common Stock, par value $0.01 per share KFY New York Stock Exchange

Filing Documents

• kfy-20251031.htm (10-Q) — 1772KB
• kfy-20251031xq2fy26xexx311.htm (EX-31.1) — 10KB
• kfy-20251031xq2fy26xexx312.htm (EX-31.2) — 10KB
• kfy-20251031xq2fy26xexx321.htm (EX-32.1) — 6KB
• kffy26logo.jpg (GRAPHIC) — 6KB
• kffy26logo1.jpg (GRAPHIC) — 6KB
• kffy26logo2.jpg (GRAPHIC) — 6KB
• kfy-20251031_g1.jpg (GRAPHIC) — 5KB
• kfy-20251031_g2.jpg (GRAPHIC) — 6KB
• 0001628280-25-056040.txt ( ) — 9761KB
• kfy-20251031.xsd (EX-101.SCH) — 48KB
• kfy-20251031_cal.xml (EX-101.CAL) — 91KB
• kfy-20251031_def.xml (EX-101.DEF) — 233KB
• kfy-20251031_lab.xml (EX-101.LAB) — 631KB
• kfy-20251031_pre.xml (EX-101.PRE) — 444KB
• kfy-20251031_htm.xml (XML) — 2044KB

Financial Information

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of October 31, 2025 (unaudited) and April 30, 2025 1 Condensed Consolidated Statements of Income (unaudited) for the three and six months ended October 31, 2025 and 2024 2 Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended October 31, 2025 and 2024 3 Condensed Consolidated Statements of Stockholders' Equity (unaudited) for three and six months ended October 31, 2025 and 2024 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended October 31, 2025 and 2024 5 Notes to Condensed Consolidated Unaudited Financial Statements 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 44 Item 4.

Controls and Procedures

Controls and Procedures 45

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 46 Item 1A.

Risk Factors

Risk Factors 46 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46 Item 5. Other Information 46 Item 6. Exhibits 47

Condensed Consolidated Financial Statements

Item 1. Condensed Consolidated Financial Statements KORN FERRY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS October 31, 2025 April 30, 2025 (unaudited) (in thousands, except per share data) ASSETS Cash and cash equivalents $ 761,579 $ 1,006,964 Marketable securities 39,509 36,388 Receivables due from clients, net of allowance for doubtful accounts of $ 43,418 and $ 40,461 at October 31, 2025 and April 30, 2025, respectively 607,303 565,255 Income taxes and other receivables 75,254 38,394 Unearned compensation 67,603 61,649 Prepaid expenses and other assets 54,989 41,488 Total current assets 1,606,237 1,750,138 Marketable securities, non-current 237,227 233,626 Property and equipment, net 176,506 173,610 Operating lease right-of-use assets, net 131,861 152,712 Cash surrender value of company-owned life insurance policies, net of loans 270,984 252,621 Deferred income taxes 127,324 144,560 Goodwill 948,284 948,832 Intangible assets, net 57,901 70,193 Unearned compensation, non-current 137,290 106,965 Investments and other assets 29,319 27,967 Total assets $ 3,722,933 $ 3,861,224 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 53,032 $ 58,884 Income taxes payable 23,243 23,079 Compensation and benefits payable 355,256 530,473 Operating lease liability, current 32,996 38,573 Other accrued liabilities 284,722 304,589 Total current liabilities 749,249 955,598 Deferred compensation and other retirement plans 476,882 477,770 Operating lease liability, non-current 118,563 131,762 Long-term debt 398,145 397,736 Deferred tax liabilities 6,276 5,981 Other liabilities 24,033 20,238 Total liabilities 1,773,148 1,989,085 Stockholders' equity Common stock: $ 0.01 par value, 150,000 shares authorized, 79,136 and 78,264 shares issued and 51,694 and 51,458 shares outstanding at October 31, 2025 and April 30, 2025, respectively 355,151 364,425 Retained earnings 1,675,964 1,588,274 Accumulated other comprehensive loss, net

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View this 10-Q filing on SEC EDGAR