Korn Ferry (KFY) - Q3 FY2026 10-Q Summary
Business Context and Reporting Period
Company: Korn Ferry (KFY)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter ended January 31, 2026 (Q3 Fiscal 2026)
Business Overview: A global consulting firm providing talent and organizational performance solutions across five areas: Consulting, Digital, Executive Search, Professional Search & Interim, and Recruitment Process Outsourcing (RPO).
Key Financial Metrics
| Metric (in thousands) | Q3 2026 | Q3 2025 | 9M 2026 | 9M 2025 |
|---|---|---|---|---|
| Fee Revenue | $717,385 | $668,729 | $2,147,697 | $2,018,040 |
| Total Revenue | $725,042 | $676,538 | $2,170,385 | $2,041,259 |
| Net Income (Attributable to KFY) | $65,265 | $58,414 | $204,300 | $181,818 |
| Diluted EPS | $1.23 | $1.10 | $3.84 | $3.40 |
| Adjusted EBITDA | $123,066 | $114,489 | $368,281 | $342,725 |
| Operating Cash Flow (9M) | $117,508 | $108,549 | - | - |
| Cash & Equivalents (End of Period) | $938,365 | $779,298 | - | - |
| Long-Term Debt | $398,354 | $397,736 | - | - |
Note: Adjusted EBITDA is a non-GAAP measure. Q3 2026 Adjusted EBITDA margin was 17.2% of fee revenue.
Material Changes vs. Prior Period
- Revenue Growth: Fee revenue increased 7% year-over-year (YoY) in Q3 and 6% for the nine-month period. Growth was broad-based across all solution areas, driven by favorable foreign exchange rates and higher engagement volumes in Executive Search and Professional Search.
- Profitability: Net income attributable to Korn Ferry rose 12% YoY in Q3. Adjusted EBITDA increased 8% YoY.
- Expense Management: Compensation and benefits expenses increased 7% in Q3, primarily due to higher performance-related bonuses tied to revenue growth. General and administrative expenses were flat in Q3 but decreased 5% for the nine-month period, aided by a $13.9 million gain from an office lease modification.
- Depreciation: Depreciation and amortization increased 12% in Q3 and 29% for the nine months, largely due to accelerated depreciation associated with the planned sunset of the legacy Digital platform and new technology investments.
- Acquisitions: The nine-month period included the impact of the Trilogy International acquisition (closed Nov 1, 2024), contributing to growth in the Professional Search & Interim segment.
Guidance, Outlook, and Risks
- Dividend Increase: On March 5, 2026, the Board declared a quarterly cash dividend of $0.55 per share, a 15% increase from the previous $0.48 per share.
- Share Repurchases: The Company repurchased $19.3 million of stock in Q3. As of January 31, 2026, $306.6 million remained available under the repurchase program.
- Capital Structure: On July 1, 2025, the Company entered a new $850 million credit facility, replacing the prior $650 million facility. No borrowings were outstanding under the facility as of January 31, 2026.
- Tax Legislation: The "One Big Beautiful Bill Act" enacted in July 2025 was reflected in the tax provision but did not materially impact the effective tax rate (28.7% in Q3 2026).
- Risks: Key risks include global economic slowdowns, inflationary pressures, currency fluctuations, and the ability to attract and retain qualified consultants. The Company noted no material changes to risk factors from its prior 10-K.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 7% revenue growth, specifically the contribution from the Trilogy International acquisition and the impact of favorable foreign exchange rates ($18.8 million in Q3).
- Digital Transition: Monitor the impact of the accelerated depreciation related to the sunset of the legacy Digital platform and the rollout of the new Korn Ferry Talent Suite on future margins.
- Cost Structure: Assess the trajectory of compensation and benefits expenses, which rose 7% YoY, to ensure they remain aligned with revenue growth rates.
- Working Capital: Review the increase in Days Sales Outstanding (DSO) from 58 to 67 days, which contributed to a decrease in cash and cash equivalents despite strong operating cash flow.
- Capital Allocation: Confirm the Board's commitment to the increased dividend ($0.55/share) and the remaining capacity ($306.6 million) for share repurchases.