KORN FERRY — Call Transcript 2026

Ladies and gentlemen, thank you for standing by. Welcome to the Korn Ferry third quarter fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the investor relations section of our website at kornferry.com a copy of the financial presentation that we will be reviewing with you today. Before I turn the call over to our host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Certain statements made in the call today, such as those relating to future performance, plans, and goals, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025 and in the company's soon-to-be-filed quarterly report for the quarter ended January 31st, 2026. Some of the comments today may reference non-GAAP financial measures such as constant currency amounts, EBITDA, and adjusted EBITDA. Additional information concerning these measures, including reconciliations to the most directly comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, both of which are posted in the investor relations section of the company's website at www.kornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison. Okay. Thank you, Regina, and thank you everybody for joining us. Our outstanding performance during the quarter reflects the ongoing evolution of our firm from One Korn Ferry to We Are Korn Ferry. Fundamentally, our purpose is to enable people and organizations to be more than. You know, as I reflect on all the recent conversations surrounding AI and disintermediation, it strikes me that the question isn't simply will AI take away jobs? The fact is there won't be enough workers. The prism we need to look through is of a stark imbalance in labor supply. While there may be fewer jobs compared to the last couple decades, there'll also be a lot less people in the labor force. Let's be clear on what this means. It's not simply that AI will take away your jobs. It's that those not embracing technology and AI will be left out. Today, the world is enveloped by unprecedented levels of change. Ripple effects from the pandemic, aging demographics, and technological advancement from something out of Star Wars, all of which is converging to exert greater impact on the way people live, work, and consume. For example, birth rates in the U.S. have been falling since the late 1960s. They've essentially been cut by more than half in each year. 10,000 baby boomers are retiring every day. That's four million a year for the next several years. Over the next 10 years, labor force participation is forecasted to decline further. Today, it's already lower than pre-COVID levels. As the labor force gets smaller, technology or immigration will need to fill the gap between supply and demand to maintain economic growth. AI will absolutely play a critical role. At Korn Ferry, we're at the forefront of working directly with global decision-makers who are grappling with these issues as they seek answers to creating and sustaining a high-performing workforce. The outliers of achievement and performance are going to be more in demand, not less in demand. The need for highly skilled, agile talent will only increase. It'll be more critical than ever to identify the 20% doing the 80%. Companies must identify, hire, develop, and retain the scarce, experienced professionals needed to lead this transformation, which invariably means doing more with less. When we look at our own business and our clients, it supports this macroeconomic thesis. Internally, we have become far more efficient and productive. Over the last three years, revenue is up and costs are down. Our revenue per head count has increased by almost a third. As a result, we are more profitable and we've grown our margins by more than 300 basis points. We're continuing to drive a major transformation. From One Korn Ferry to We Are Korn Ferry. What does it mean? Well, it means that we're not five businesses. We're one business with five solutions and 9,000 colleagues, all with a unified mindset. It begins with client centricity, deepening our solutions with our existing clients to unlock growth. We've got more than 10,000 clients around the world, but 4,500 of those represent 90% of our revenue. When I look at that set of clients, our penetration is only one and a half or two solutions per client for two-thirds of the 4,500 clients. That means there's a lot of runway to deepen the relationship. With We Are Korn Ferry, we are taking a top-down and bottom-up systematic process to tap this growth opportunity. Our market accounts again outperform the portfolio, up 9%, contributing 40% of our overall total revenue. Our cross-business referrals are now at a near high of 27% of our business. At the top of the house, our work has never been more impactful. Recently, a well-known TV broadcast highlighted seven major CEO transitions over the last few months, and we were involved in six of them. Further reflecting our client centricity, we've won several significant transformation engagements across the globe. A major aerospace and defense company is one of our first end-to-end Talent Suite customers, utilizing our proprietary data to make better talent decisions across 40,000 plus employees. This is a multi-year Talent Suite engagement. For me, Talent Suite isn't a product. It's Moneyball for business based on data beyond compare. It gives clients decades of insight of what separates great from good. It powers the entire firm. At one of the top financial institutions in the world, with nearly 100,000 employees, we're supporting a new enterprise-wide talent excellence program, incorporating our world-class assessment capability and Leadership Accelerator programs. Finally, we're proud to be a founding partner of the LA28 Olympic & Paralympic Games, powering the people who power the games. We're not only building their C-suite, but also helping them design the organization and hiring the nearly 5,000 people who will perform on the world's most inspiring stage. With that, I will turn it over to Bob Rozek. Bob, go ahead. Great. Thanks, Gary, and good afternoon or good morning. We're very pleased with our third quarter results. This is our fifth consecutive quarter of accelerating YoY fee revenue growth, and we continue to deliver earnings growth, driving strong profitability and free cash flow. Our go-to-market approach continues to be intentional and focused on opportunities where we can build broader relationships with clients by selling larger integrated solutions that support their evolving talent issues. What's really impressive is we are doing this in an environment where business conditions and labor markets remain challenged. It is very clear that our strategy is working, and our results demonstrate that we have built a company that is different from others in the industry. We perform differently because we are different. Turning to overall company results comparing Q3 of FY 2026 to Q3 of FY 2025. Our consolidated fee revenue grew 7% to $717 million. Again, our fifth consecutive quarter of accelerating YoY growth. Earnings continued to grow in line with fee revenue, and profitability remained strong. Adjusted EBITDA grew $9 million or 7.5% to $123 million. Our adjusted EBITDA margin was 17.2%, it's up 10 basis points, and adjusted diluted earnings per share grew $0.09 or 8% to $1.28. Total company new business, excluding RPO, grew 11%, with both consulting and digital reaching all-time quarterly highs. RPO delivered $54 million of new business in the quarter, with 78% coming from new logos and 22% from renewals. Estimated remaining fees under existing contracts at the end of the quarter were $1.85 billion. That's up 11% YoY, we estimate that approximately 60% or about $1.1 billion will be recognized within the next year, with the remaining 40% or about $734 million estimated to be recognized beyond the next four quarters. Finally, our capital allocation during the quarter remained balanced. Through the end of the third quarter, we have returned about $113 million to shareholders through combined share repurchases and dividends, we've invested $64 million back into capital expenditures focused on Talent Suite, productivity tools, and other solution and product enhancements. In a separate announcement last week, our board has approved a 15% increase in our quarterly cash dividend to $0.55 per share. That's our seventh dividend increase in the last six years. Our cash flow remains strong. We are confident in the outlook for our business. In addition to the detailed results found in our posted earnings presentation, here are a few company-wide and solution-specific highlights for the third quarter. You saw fee revenue growth was very broad-based across all solutions. The interim portion of our PS&I solution grew 4%, continuing to benefit from new business referrals, which were a key factor driving our outperformance in an industry that has been challenged for more than 36 months. Our new business referrals and Marquee Diamond Account Program continue to be contributors of growth enabled by our We Are Korn Ferry go-to-market initiative. As Gary mentioned, new business referrals accounted for 27.2% of our consolidated fee revenue, and that's up 200 basis points YoY, and the Marquee and Diamond Accounts continued to be strong at 40% of our total fee revenue. Also in the third quarter, subscription and licensed new business grew 30% YoY and accounted for 43% of Digital's total new business. Additionally, in the third quarter, subscription and license fee revenue grew 8%. Finally, our average hourly bill rates for consulting and interim grew by 2% and 15% respectively. Again, demonstrating the high value our clients place on these solutions. Now turning to our regions. Fee revenue in the Americas was up 6%, led by growth in executive search and RPO. EMEA fee revenue continued to be strong, growing 13% with double-digit growth in executive search, consulting, digital and PS&I. APAC fee revenue declined slightly at 2% with growth in executive search being offset by modest weakness in other solutions. Now turning to our outlook for the fourth quarter of fiscal 2026. Assuming no material negative impact from the recent Middle East conflict and no further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates, we expect fee revenue in the fourth quarter to range from $730 million-$750 million. Our adjusted EBITDA margin to range from 17.1%-17.3%, and our consolidated adjusted diluted earnings per share, as well as our GAAP diluted earnings per share, to range from $1.34-$1.40. In closing, our financial results over the last five quarters demonstrate that our unique combination of foundational assets, expertise, and capabilities truly matter to our clients. Looking to the future, I'm very excited about our opportunities to drive continued top-line growth. You heard Gary talk about our top 4,500 clients. With the rollout of Talent Suite and our We Are Korn Ferry initiative, we continue to see significant opportunity to expand those relationships in what we call the green space. That is horizontal expansion, where we bring additional solutions to our clients. Vertical expansion, where we leverage our strong C-suite relationships and provide solutions at scale to what we call the vital many, that's down into an organization's professional ranks. We have a great playbook to run from. Our Marquee and Diamond accounts where we have a strong track record of successfully expanding those relationships. I also see further opportunities in our joint go-to-market activities, particularly between consulting and digital. As I've said many times before on these calls, I am more convinced than ever that our best is yet to come. With that, we would be glad to answer any questions you may have. We will now begin the question and answer session. To ask a question, press star then the number one on your telephone keypad. Our first question will come from the line of Tobey Sommer with Truist Securities. Please go ahead. Thank you. Markets are certainly reacting to a number of potential outcomes as a result of AI. How do you see AI impacting Korn Ferry? Well, I think it's going to. At the end of the day, it's gonna allow us to drive more efficiency, as we've done over the last three years, number one. Number two, you know, where we play, we're playing at the high end. You know, the high end of the labor force. I mean, you know, take the United States, there's only, you know, 25,000 companies that have 1,000 employees or more. When I look at the U.S. labor force today of 171 million and really look through the categories of talent. Korn Ferry, and its clients, are very much at the high end. I don't, I don't really see that high-end labor talent being disintermediated. I believe long term, that it's actually gonna create more opportunity for us, not just in efficiency in how we deliver services, but also, in terms of our client solutions and delivery. I mean, we've got a number of engagements where we're using what we have as proprietary AI-ready leadership assessment tool, and we're using that through the Talent Suite to help companies transform their workforce. You know, I just look at the numbers in the labor force and, you know, over the last 20 years, the U.S. labor force has created, you know, something like $20 million-$25 million jobs. Over the next 10 years, it's estimated to be five million. Last year, we produced as a country, very, very few jobs. I think you've got this huge imbalance between the demand and supply of labor that either has to get filled through immigration or technology. I would say it's gonna be heavily on technology. For me, it's not, you know, it's not a simple question that AI will take away jobs. It's the people that don't embrace AI, they're gonna be left out. You know, look, this is early days. When we talk to most clients, truthfully, they haven't fully figured out how to use AI to drive efficiency. When I look at the demographic trends, it's quite clear that companies are gonna have to do more with less. It's, you know, it's mathematics around demographics. In that context, I wanna just double-click. If we have a higher or an increase in unemployment, do you think the company can grow in that kind of environment that typically used to be characterized or would reflect an economic recession? Maybe it would or maybe it won't in this, if AI goes to the nth degree as some are thinking. Well, we're trying, you know. I mean, this is my 95th earnings call, quarterly earnings call. You know, many years ago, the company was dependent on one solution, which was executive search. That was directly tied not only to the stock market with a high correlation, but to unemployment and what was happening in the labor force. Today, you've got a much more diversified business, with five different solutions. I think we've demonstrated over the last 36 months, which I consider, a labor recession, that there's quarters that one solution is up and another is down. The thing that's very interesting is when you look at the executive search solution and you think about the labor market over the last, you know, 36 months, you would have expected based on, you know, historical data going back many years, that the executive search solution would actually be down, when in fact, it's the opposite. I think that tells you part of the story there is around demographics. I mean, clearly it's around the strategy. There's no doubt about that. But it's also reflective of demographics. It's reflected of post COVID life, and it's reflective of boards looking at leadership's teams and saying, "Hey, you know, what got you here isn't gonna get you there." People are making choices about opting out of the labor force. Because most of those people in the C-suite were leading businesses during COVID. Maybe it's work-life balance. But there is something going on here that's interesting. I look at it and say, our clients, the people that are making decisions around us are truly the outliers of achievement. I just don't... I don't look at it and think, oh my God, you know, out of 171 million people in the labor force, 20 million are in management roles. I just don't see that they're gonna be wiped out here. I, you know, we have not disintermediated humanity. Thank you very much. If I could ask one more, and I'll get back in the queue. With respect to Talent Suite, do you think that is more likely to have the biggest impact deepening existing relationships, making them stickier somehow? Or is it more about expanding into new customer relationships? I'm sure there's an element of both, but, you know, if you had to choose, which way would you go? I think it's the former. The thing where there's incredible. We've been working now for 12 months on We Are Korn Ferry. The crux of it, when you look at it, there's 4,500 clients that represent 90% of our revenue. When you look at that client base, what you're gonna find is that, you know, you look at 2/3 of them, and we're only doing 1.5 or two solutions. I look at Talent Suite as not a digital solution play. I look at it as empowering the entire firm. Ultimately, the goal is to try to infuse Korn Ferry's language of talent into companies, how they hire, how they design an organization, how they retain, how they pay, how they develop. I look at it much broader, but the goal absolutely is a little bit like a Trojan horse to embed the language of client. When it comes to the digital solution in Talent Suite, the reality is we've probably got about, you know, 6,000 clients on Talent Suite, something like that. When you look at that, what you're gonna find is that 70% of them are only using one product within Talent Suite. There's enormous opportunity there. For me, it comes down to having a systematic approach on the go-to-market side and having client service teams that are targeting and servicing the world's biggest companies. Thank you very much. Our next question will come from the line of Trevor Romeo with William Blair. Please go ahead. Hi. Good morning. Thank you for taking the questions. Maybe I'll just follow up on the Talent Suite discussion. Does it look like your fees under contract were up double digits for both consulting and digital? I think your subscription and license fee revenue and the new business also accelerated. Would you attribute any of that to, I guess, you know, very early returns from Talent Suite? Is it already having an impact? Or if not, maybe you could speak to what drove that, because it seems like a pretty meaningful acceleration for both of those solutions. We had a killer, you know, we had a killer couple months in the quarter of new business. Again, the strategy is trying to deepen the relationships, you know, driving client centricity. I would say that Talent Suite had a little impact, but not much. You know, we did a soft launch in November, the harder launch was in January. We converted all of the clients seamlessly. We didn't have any problems. Now we're embarking on a journey to get all of our 2,000 front of the house colleagues to be able to talk to our clients about, you know, what I think our data is beyond compare. I really do. I look at it and say it's kind of Moneyball for business. We've got 50-plus years of knowing how you separate great from good. I think in an environment of going forward, where companies are gonna have to do more with less, I think this could play a big role in our future. I don't simply look at it as a digital solution play. It's really connected to everything we do. Our RPO solution, executive search solution, professional search solution. It's a foundation for the firm. We've never in the past taken all of our IP and put it in a seamless warehouse where you can go in and do benchmarking on your workforce and all that. Look, it's early days and, you know, we've rolled out the technology and now it's getting, our front of the house colleagues, on a very targeted basis, to take this to our client base. Thanks, Gary. That's encouraging. Then maybe one other Talent Suite question. Now that you have it in place, up and running, in addition to your other sort of tech and AI investments, how do you view Korn Ferry's technology spending, I guess in total in the next few years, whether that's CapEx or OpEx? Is the ongoing run rate here, do you think gonna be higher or lower than you may have seen in the past or the same, I guess? I think Bob can probably address that more. You know, I would just say that when you look back, we've had a fairly balanced approach to capital deployment. In call it the last trailing, you know, 15 months or so, I think the bent has been more towards Talent Suite and CapEx. Obviously, you know, dividend. Look, we just raised the dividend again. I think it's our seventh raise in six years. You know, I think you may see us lean a little bit more heavily in stock buybacks over the next few months. There could be a slight change versus call it, you know, the first nine months of this fiscal year because it was heavily tilted towards technology spend. I think that's right, Gary. I think Trevor, if you look at our CapEx spend, we're probably around $80 million-$85 million run rate currently, we had anticipated, you know, that coming back down to what you would have seen more historically is say $60 million-$65 million run rate. We'll probably see that drop in going into our fiscal 2027. We're, you know, in the process of doing our planning for next year right now. As Gary indicated, it's one of the things that we look at and think about quite a bit, is how we allocate capital. It, I would say you'll see the CapEx probably drop a bit, but maybe lean more heavily, as Gary indicated, into buybacks. Certainly when you see the market dislocated like it is today. Yep. Okay. Thank you both for that. If I could maybe just ask one more, on your, on your interim business. I think you talked about the cross referrals driving outperformance there. Obviously, the, you know, the temp staffing space has been very tough the last several years, as you pointed out. Maybe just what kind of demand trends are you seeing there, independent of your cross referrals? Are you seeing maybe a little pickup in conversations the last few months? Then on the bill rate jumping up to almost $150, anything you'd call out from a mix perspective there? Yeah. It's the Korn Ferry lift. I mean, we wanna compete there at the very high end of talent because of the questions that have been raised around AI and the like. We wanna be focused on the outliers of achievement. Yes, you know, you look at what I've seen in the industry, people have reported, they saw, you know, a slight uptick sequentially late November, saw that in December, seeing it flow through to January, somewhat flat in February because of the shorter number of days. Yes, that we've seen absolutely that go up. It's up, it was up 4% in the quarter. That's just the interim part of the business. The bill rates have gone up. You know, the temp penetration rate is still, you know, at historic lows. You know that better than I. You know, I look back over the last 25 years, and generally in the workforce, there's been about, in the U.S., 2.5 million temp workers. Obviously, the penetration rate has been significantly higher than it has today. I don't think that's gonna go away. In fact, you could make the argument that companies are gonna need more flex arrangements to deal with, you know, one-off projects and the, and the like. We're very, very happy with how that solution has done. You know, the opportunity there, quite candidly, is not only the U.S. for us, but Europe. We made an investment in an interim solution and an executive interim solution in Europe, going back, probably 15, 16 months ago. That has absolutely outperformed. One of the reasons why it's outperformed is because how we have integrated, not only because there's talented people, but we've also been very, very purposeful on a We Are Korn Ferry go-to-market strategy. All right. Thank you very much. Our next question will come from the line of George Tong with Goldman Sachs. Please go ahead. Hi, this is Alex on for George. Wanted to see if you could provide an update on what you're seeing with sales cycles and how client spending behavior may be differing across segments, and whether there's been any impact from macro sensitivity? I haven't seen any. You know, the reality is more of the same. I mean, you know, the BLS numbers in the United States were obviously not great. They weren't great because of healthcare. If you just look back over many months, the jobs that have been created were in healthcare or government. You know, I mean, to me, it's more of the same. Now, what I can't comment on is the last 10 days or so, and I don't think anybody can. We have not factored that in to our guidance. 10 days in, you just don't know. I can just tell you the direction of travel for this firm is unbelievable. I've been here with dot-com crisis, long-term credit crisis, great recession, COVID, all of that. Russia, Ukraine. I can go on and on and on. You know, the changes in China and the extended lockdowns there. I can go on and on and on, but the reality is, when you look at the direction of travel, this firm is outstanding. Great. Thanks. Yeah. The other thing I would add to that, too, is if you look at the new business in the third quarter, Gary mentioned we had, a couple of really good months. The thing that I found very interesting, usually October and March are, you know, high water marks for new business, and then December is usually one of the slowest months because of the year-end holidays and so on. We hit an all-time high in new business in October, and we eclipsed that in December this past year. We saw some very large, engagements being signed. In fact, 44% of the consulting new business in the quarter were engagements over half a million dollars. As Gary mentioned before, we're playing top of the house. People really value what we bring in, and they're struggling to work their way through, you know, the somewhat chaotic world that we live in today. They're only gonna do that through their talent, and that's exactly where we come in. Yeah. Got it. That's very helpful. I want to ask on the digital side, which saw some improvement sequentially but was flat YoY on a constant currency basis. Can you touch on what drove this and how the pivot toward enterprise-oriented sales is progressing? Yeah, I mean, that's something we have to do. We have to continue to look at our own talent, and we have to ensure that all 2,000 of our consultants can have a more enterprise-wide conversation for sure. You know, when you look at the digital solution only, you're gonna find that, you know, it's just an increasing percentage is longer term, you know, kind of software as a service deal. I don't sit there and look at simply revenue. I look at the entire firm and what is it doing in terms of our win-loss rate, which we also carefully monitor and study. You know, what is the backlog doing? You know, I sit there and say, in this environment, you know, am I totally satisfied? No, not satisfied. But we've only been at this, with this IP in a, you know, in a common warehouse for a couple months. I mean, this has not been very long at all. Makes sense. Thank you. Our next question will come from the line of Josh Chan with UBS. Please go ahead. Hi. Good morning, Gary and Bob. I guess on your- Hey, Josh. -consulting side of the business. Hi. This is usually a business that is stronger when the economy is more sure, I guess. Could you just talk to the recent strengths in this consulting new business? You know, what are some of the common threads that you're getting from sort of the, you know, half a million plus engagements that kind of Bob kind of alluded to earlier? It's around transformation. It's around org strategy and transformation. That would be the big ticket theme for those larger engagements. You know, I read something last night. There was a report that, you know, consulting firms in calendar 2025 grew something like 5% or 5.5%. You know, you have to kind of question that a little bit. You know, I look at our overall firm over the past, you know, call it 12 months, and I'm saying, "Hey, we're, you know, we're in line or better," recognizing that, you know, part of our business deals with the labor markets, which haven't been exactly fantastic. Hey, Josh. The other thing I would say too is if you look at in the consulting business right now, Gary talked about transformation. A lot of companies are looking at their talent and are they ready to be productive in an AI world, and we have solutions that look at AI-ready leaders, AI-ready talent, and that's where you see the assessment and succession having strong, YoY growth in that quarter as well. Okay, that's very clear. Thank you both. Then maybe a quick question on margin. If Korn Ferry continues to grow at the similar revenue growth rates that you're kind of guiding to, what's the right way to think about kind of margin expansion for the company as a whole kind of going forward? I mean, you know, in this investment, you know, the investment horizon we have right now. You know, I think what we've said is 16%-18%. Part of it depends on, you know, the M&A execution and, for example, how much, if there's more opportunities, which I think there are, around the interim market and the interim solution. That mix change has a big impact on that question. You know, we also, we also have to make sure that we are making the right investments as a firm, particularly around talent. You know, I think for now that's over this investment horizon, that's reasonable. You know, you look back, over the last, you know, kind of three years or four years, this is after the great resignation, which probably ended, you know, somewhere late 2022, early mid 2023. The reality is our headcount, per colleague is up almost like 35%. You know, we've got a track record of being able to, you know, to drive client impact the top line, but also be more profitable. That's right. Yeah, thanks for that follow, Gary. Yeah, congrats on that good result. Thanks, Josh. Our next question will come from the line of Mark Marcon with Baird. Please go ahead. Good afternoon. I just wanted to follow up on the last series of questions. Gary, when you're talking about the investment horizon, how long are you thinking in terms of that 16%-18%? I can't help but notice, you know, you're increasing your revenue. If we go through all the charts, it's like the number of consultants on staff has actually been flat to down, most frequently down. I'm trying to think through, like, when you think long term and you think about like, hey, we've got 2,000 front-facing consultants, 9,000 colleagues in total, and we're probably in the early stages in terms of implementing AI. I'm just wondering, like, when you really think about longer term, you know, how efficient can you be? I know you've got to make some investments in terms of people, but how are you thinking about that longer term? You know, clients have asked me that question, Mark, as they're looking at their organization. This comment is not specifically to Korn Ferry, and this is clearly an estimate. I think if you were to, say, look out over five-seven years and given the demographic trends that we've talked about on this call and the quote, shrinking labor force, not as many people coming into the labor force, not only in the United States, but other countries as well. Then the promise, you know, then the question is, well, how do you fill that gap? Well, you either do it through immigration or technology. Given the mathematics, around labor force participation and the promise of AI, what I've told clients is if you look out that kind of five years, median of the bell curve, I would expect your labor force to be smaller by, say, 15% for sure. Now, I'm not talking about every company, every industry, every sector. Just generally speaking, the theme would have to be, as it is for the country of the United States, it would have to be more with less. That's the advice that I've been giving to clients. Great. I mean, where would you say you are in terms of harnessing AI, in terms of increasing the efficiency? Are you know, is it the first inning? Are we singing the national anthem or are we in the third inning? Oh, we've taken the field. you know, the reality with all this talk, I think that, you know, many, many, many companies are in the first inning here. There's enough there, where you say, "Okay, I get it, you know. technology can definitely make you more efficient." Then the question is behavioral change. The real question is, you know, people don't change unless there's a reason to change. The question for leadership of companies is how do you create that change? How do you get people to truly embrace the, you know, ever-evolving technology that's out there? That's really the question. I think, look, the reality is, I think most people are in the first inning, Mark. Okay, great. With regards to Talent Suite, can you talk a little bit about like when you're doing these big deals and you mentioned the aerospace company with 40,000 employees. When you're pricing this and you're pricing it for complete access to Talent Suite, how do you price it? How should we think about that sort of lift? Size of the company. In terms of margins and revenue. Yeah, yeah. Size of company and number, you know, size of company and number of seats. I mean, that's generally how we do it. Is it an existing client of Korn Ferry? You know, what we've seen is that, for example, people will ask the question, CEOs will ask the question, "Is my, is my labor force, quote, AI ready?" Which a lot of that will come down to agility and dealing with ambiguity. You know, what you would do is go in and assess 5,000, 10,000 people. You know, we produce an MRI that would say, "Okay, this is what the thinking style, leadership style of the organization looks like. Based on our research, this is what a future-ready workforce would look like. You know, here's how you stack up. Here's the gaps and here's a plan towards, here's a plan towards remediation. It also depends too, is what level of consulting, is wrapped around that. Got it. Then a question for Bob, maybe. With regards to consulting in the third quarter, you had a 5% lift in terms of revenue, but the margins went down by 70 basis points YoY, and the headcount's down. What's the underlying reason for those margins to be down? This is in the context of a great quarter, so just. Yeah. Underperformed parts. Yeah, it is. It is, Mark. One of the things, is our fee revenues were, you know, well above our guidance range. They attract more bonus dollars. We, you know, we had a, an opportunity to get caught up there on the bonus that we provide for folks, and that put a little bit of downward pressure on the, on the margin in the quarter. Got it. Okay, that's great. Gary, one last one for you if you'll take it, and I know we're only 10 days in. Generally speaking, like, after all of the various things that you've gone through, what's your expectation in terms of, like, how long this would have to continue before, you know, plans would change or that you'd actually see a meaningful difference just in terms of client behavior? Well, this is just one person's, I mean, one person's view. It's, I don't think anybody really knows the answer to that. I mean, in the United States, you know, transportation and, you know, transportation costs, including gas are 17%-20% of consumer spending. Elevated oil prices are not good for consumer spending, which you're already dealing with a K-shaped economy. You know, there's a cost of living crisis. That's clearly a negative. To what extent have we opened Pandora's box? I'm the least qualified person to answer that question. You know, that's certainly one. You know, our colleagues in the Middle East, which we have an incredible business, our colleagues are continuing under very difficult circumstances, much like our colleagues in Ukraine have done throughout this time. They're working from home, you know, taking safety precautions. As of last week, it hasn't, you know, materially impacted our delivery of services. I think, you know, you go out, I think it'll be another, you know, 90 days or so, before you really get line of sight on what all this means beyond oil. I mean, beyond oil. What does this really mean? Okay. Great. Thank you very much. It appears there are no further questions at this time, Mr. Burnison. Okay. Thank you all for the questions. I'm incredibly proud of this organization and to be a founding partner, which may seem a ways away of LA28, but it's not. You know, I think that will highlight just the power of our organization, for sure. We're excited about that. With that, thank you for your questions, and we'll talk to you next time. Bye-bye. Ladies and gentlemen, this conference call will be available for replay for one week, starting today, running through the end of the day, March 16th, 2026, ending at midnight. You may access the echo replay service by dialing 800-770-2030 and entering the access code three two six eight three one five, followed by the pound key. Additionally, the replay will be available for playback at the company's website, www.kornferry.com, in the investor relations section. This concludes today's call. Thank you all for joining. You may now disconnect.

Speaker 5: Ladies and gentlemen, thank you for standing by. Welcome to the Korn Ferry third quarter fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the investor relations section of our website at kornferry.com a copy of the financial presentation that we will be reviewing with you today. Before I turn the call over to our host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Certain statements made in the call today, such as those relating to future performance, plans, and goals, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Ladies and gentlemen, thank you for standing by. ladies and gentlemen thank you for standing by Welcome to the Korn Ferry third quarter fiscal year 2026 conference call. welcome to the korn ferry third quarter fiscal year 2026 conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode Following the prepared remarks, we will conduct a question-and-answer session. following the prepared remarks we will conduct a question-and-answer session As a reminder, this conference call is being recorded for replay purposes. as a reminder this conference call is being recorded for replay purposes We have also made available in the investor relations section of our website at kornferry.com a copy of the financial presentation that we will be reviewing with you today. we have also made available in the investor relations section of our website at kornferry.com a copy of the financial presentation that we will be reviewing with you today Before I turn the call over to our host, Mr. Gary Burnison, let me first read a cautionary statement to investors. before i turn the call over to our host mr gary burnison let me first read a cautionary statement to investors Certain statements made in the call today, such as those relating to future performance, plans, and goals, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. certain statements made in the call today such as those relating to future performance plans and goals constitute forward-looking statements within the meaning of the private securities litigation reform act of 1995 Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025 and in the company's soon-to-be-filed quarterly report for the quarter ended January 31st, 2026. Some of the comments today may reference non-GAAP financial measures such as constant currency amounts, EBITDA, and adjusted EBITDA. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions investors are cautioned not to place undue reliance on such statements Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the SEC, including the company's annual report for fiscal year 2025 and in the company's soon-to-be-filed quarterly report for the quarter ended January 31st, 2026. additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed by the company with the sec including the company's annual report for fiscal year 2025 and in the company's soon-to-be-filed quarterly report for the quarter ended january 31st 2026 Some of the comments today may reference non-GAAP financial measures such as constant currency amounts, EBITDA, and adjusted EBITDA. some of the comments today may reference non-gaap financial measures such as constant currency amounts ebitda and adjusted ebitda Additional information concerning these measures, including reconciliations to the most directly comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, both of which are posted in the investor relations section of the company's website at www.kornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison. Additional information concerning these measures, including reconciliations to the most directly comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, both of which are posted in the investor relations section of the company's website at www.kornferry.com. additional information concerning these measures including reconciliations to the most directly comparable gaap financial measures is contained in the financial presentation and earnings release relating to this call both of which are posted in the investor relations section of the company's website at www.kornferry.com With that, I'll turn the call over to Mr. Burnison. with that i'll turn the call over to mr burnison Please go ahead, Mr. Burnison. please go ahead mr burnison

Speaker 2: Okay. Thank you, Regina, and thank you everybody for joining us. Our outstanding performance during the quarter reflects the ongoing evolution of our firm from One Korn Ferry to We Are Korn Ferry. Fundamentally, our purpose is to enable people and organizations to be more than. You know, as I reflect on all the recent conversations surrounding AI and disintermediation, it strikes me that the question isn't simply will AI take away jobs? The fact is there won't be enough workers. The prism we need to look through is of a stark imbalance in labor supply. While there may be fewer jobs compared to the last couple decades, there'll also be a lot less people in the labor force. Let's be clear on what this means. It's not simply that AI will take away your jobs. Okay. okay Thank you, Regina, and thank you everybody for joining us. thank you regina and thank you everybody for joining us Our outstanding performance during the quarter reflects the ongoing evolution of our firm from One Korn Ferry to We Are Korn Ferry. our outstanding performance during the quarter reflects the ongoing evolution of our firm from one korn ferry to we are korn ferry Fundamentally, our purpose is to enable people and organizations to be more than. fundamentally our purpose is to enable people and organizations to be more than You know, as I reflect on all the recent conversations surrounding AI and disintermediation, it strikes me that the question isn't simply will AI take away jobs? you know as i reflect on all the recent conversations surrounding ai and disintermediation it strikes me that the question isn't simply will ai take away jobs The fact is there won't be enough workers. the fact is there won't be enough workers The prism we need to look through is of a stark imbalance in labor supply. the prism we need to look through is of a stark imbalance in labor supply While there may be fewer jobs compared to the last couple decades, there'll also be a lot less people in the labor force. while there may be fewer jobs compared to the last couple decades there'll also be a lot less people in the labor force Let's be clear on what this means. let's be clear on what this means It's not simply that AI will take away your jobs. it's not simply that ai will take away your jobs It's that those not embracing technology and AI will be left out. Today, the world is enveloped by unprecedented levels of change. Ripple effects from the pandemic, aging demographics, and technological advancement from something out of Star Wars, all of which is converging to exert greater impact on the way people live, work, and consume. For example, birth rates in the U.S. have been falling since the late 1960s. They've essentially been cut by more than half in each year. 10,000 baby boomers are retiring every day. That's four million a year for the next several years. Over the next 10 years, labor force participation is forecasted to decline further. Today, it's already lower than pre-COVID levels. As the labor force gets smaller, technology or immigration will need to fill the gap between supply and demand to maintain economic growth. It's that those not embracing technology and AI will be left out. it's that those not embracing technology and ai will be left out Today, the world is enveloped by unprecedented levels of change. today the world is enveloped by unprecedented levels of change Ripple effects from the pandemic, aging demographics, and technological advancement from something out of Star Wars, all of which is converging to exert greater impact on the way people live, work, and consume. ripple effects from the pandemic aging demographics and technological advancement from something out of star wars all of which is converging to exert greater impact on the way people live work and consume For example, birth rates in the U.S. have been falling since the late 1960s. for example birth rates in the u.s have been falling since the late 1960s They've essentially been cut by more than half in each year. 10,000 baby boomers are retiring every day. they've essentially been cut by more than half in each year 10,000 baby boomers are retiring every day That's four million a year for the next several years. that's four million a year for the next several years Over the next 10 years, labor force participation is forecasted to decline further. over the next 10 years labor force participation is forecasted to decline further Today, it's already lower than pre-COVID levels. today it's already lower than pre-covid levels As the labor force gets smaller, technology or immigration will need to fill the gap between supply and demand to maintain economic growth. as the labor force gets smaller technology or immigration will need to fill the gap between supply and demand to maintain economic growth AI will absolutely play a critical role. At Korn Ferry, we're at the forefront of working directly with global decision-makers who are grappling with these issues as they seek answers to creating and sustaining a high-performing workforce. The outliers of achievement and performance are going to be more in demand, not less in demand. The need for highly skilled, agile talent will only increase. It'll be more critical than ever to identify the 20% doing the 80%. Companies must identify, hire, develop, and retain the scarce, experienced professionals needed to lead this transformation, which invariably means doing more with less. When we look at our own business and our clients, it supports this macroeconomic thesis. Internally, we have become far more efficient and productive. Over the last three years, revenue is up and costs are down. AI will absolutely play a critical role. ai will absolutely play a critical role At Korn Ferry, we're at the forefront of working directly with global decision-makers who are grappling with these issues as they seek answers to creating and sustaining a high-performing workforce. at korn ferry we're at the forefront of working directly with global decision-makers who are grappling with these issues as they seek answers to creating and sustaining a high-performing workforce The outliers of achievement and performance are going to be more in demand, not less in demand. the outliers of achievement and performance are going to be more in demand not less in demand The need for highly skilled, agile talent will only increase. the need for highly skilled agile talent will only increase It'll be more critical than ever to identify the 20% doing the 80%. it'll be more critical than ever to identify the 20% doing the 80% Companies must identify, hire, develop, and retain the scarce, experienced professionals needed to lead this transformation, which invariably means doing more with less. companies must identify hire develop and retain the scarce experienced professionals needed to lead this transformation which invariably means doing more with less When we look at our own business and our clients, it supports this macroeconomic thesis. when we look at our own business and our clients it supports this macroeconomic thesis Internally, we have become far more efficient and productive. internally we have become far more efficient and productive Over the last three years, revenue is up and costs are down. over the last three years revenue is up and costs are down Our revenue per head count has increased by almost a third. As a result, we are more profitable and we've grown our margins by more than 300 basis points. We're continuing to drive a major transformation. From One Korn Ferry to We Are Korn Ferry. What does it mean? Well, it means that we're not five businesses. We're one business with five solutions and 9,000 colleagues, all with a unified mindset. It begins with client centricity, deepening our solutions with our existing clients to unlock growth. We've got more than 10,000 clients around the world, but 4,500 of those represent 90% of our revenue. When I look at that set of clients, our penetration is only one and a half or two solutions per client for two-thirds of the 4,500 clients. Our revenue per head count has increased by almost a third. our revenue per head count has increased by almost a third As a result, we are more profitable and we've grown our margins by more than 300 basis points. as a result we are more profitable and we've grown our margins by more than 300 basis points We're continuing to drive a major transformation. From One Korn Ferry to We Are Korn Ferry. we're continuing to drive a major transformation. from one korn ferry to we are korn ferry What does it mean? what does it mean Well, it means that we're not five businesses. well it means that we're not five businesses We're one business with five solutions and 9,000 colleagues, all with a unified mindset. we're one business with five solutions and 9,000 colleagues all with a unified mindset It begins with client centricity, deepening our solutions with our existing clients to unlock growth. it begins with client centricity deepening our solutions with our existing clients to unlock growth We've got more than 10,000 clients around the world, but 4,500 of those represent 90% of our revenue. we've got more than 10,000 clients around the world but 4,500 of those represent 90% of our revenue When I look at that set of clients, our penetration is only one and a half or two solutions per client for two-thirds of the 4,500 clients. when i look at that set of clients our penetration is only one and a half or two solutions per client for two-thirds of the 4,500 clients That means there's a lot of runway to deepen the relationship. With We Are Korn Ferry, we are taking a top-down and bottom-up systematic process to tap this growth opportunity. Our market accounts again outperform the portfolio, up 9%, contributing 40% of our overall total revenue. Our cross-business referrals are now at a near high of 27% of our business. At the top of the house, our work has never been more impactful. Recently, a well-known TV broadcast highlighted seven major CEO transitions over the last few months, and we were involved in six of them. Further reflecting our client centricity, we've won several significant transformation engagements across the globe. A major aerospace and defense company is one of our first end-to-end Talent Suite customers, utilizing our proprietary data to make better talent decisions across 40,000 plus employees. That means there's a lot of runway to deepen the relationship. that means there's a lot of runway to deepen the relationship With We Are Korn Ferry, we are taking a top-down and bottom-up systematic process to tap this growth opportunity. with we are korn ferry we are taking a top-down and bottom-up systematic process to tap this growth opportunity Our market accounts again outperform the portfolio, up 9%, contributing 40% of our overall total revenue. our market accounts again outperform the portfolio up 9% contributing 40% of our overall total revenue Our cross-business referrals are now at a near high of 27% of our business. our cross-business referrals are now at a near high of 27% of our business At the top of the house, our work has never been more impactful. at the top of the house our work has never been more impactful Recently, a well-known TV broadcast highlighted seven major CEO transitions over the last few months, and we were involved in six of them. recently a well-known tv broadcast highlighted seven major ceo transitions over the last few months and we were involved in six of them Further reflecting our client centricity, we've won several significant transformation engagements across the globe. further reflecting our client centricity we've won several significant transformation engagements across the globe A major aerospace and defense company is one of our first end-to-end Talent Suite customers, utilizing our proprietary data to make better talent decisions across 40,000 plus employees. a major aerospace and defense company is one of our first end-to-end talent suite customers utilizing our proprietary data to make better talent decisions across 40,000 plus employees This is a multi-year Talent Suite engagement. For me, Talent Suite isn't a product. It's Moneyball for business based on data beyond compare. It gives clients decades of insight of what separates great from good. It powers the entire firm. At one of the top financial institutions in the world, with nearly 100,000 employees, we're supporting a new enterprise-wide talent excellence program, incorporating our world-class assessment capability and Leadership Accelerator programs. Finally, we're proud to be a founding partner of the LA28 Olympic & Paralympic Games, powering the people who power the games. We're not only building their C-suite, but also helping them design the organization and hiring the nearly 5,000 people who will perform on the world's most inspiring stage. With that, I will turn it over to Bob Rozek. Bob, go ahead. This is a multi-year Talent Suite engagement. this is a multi-year talent suite engagement For me, Talent Suite isn't a product. for me talent suite isn't a product It's Moneyball for business based on data beyond compare. it's moneyball for business based on data beyond compare It gives clients decades of insight of what separates great from good. it gives clients decades of insight of what separates great from good It powers the entire firm. it powers the entire firm At one of the top financial institutions in the world, with nearly 100,000 employees, we're supporting a new enterprise-wide talent excellence program, incorporating our world-class assessment capability and Leadership Accelerator programs. at one of the top financial institutions in the world with nearly 100,000 employees we're supporting a new enterprise-wide talent excellence program incorporating our world-class assessment capability and leadership accelerator programs Finally, we're proud to be a founding partner of the LA28 Olympic & Paralympic Games, powering the people who power the games. finally we're proud to be a founding partner of the la28 olympic & paralympic games powering the people who power the games We're not only building their C-suite, but also helping them design the organization and hiring the nearly 5,000 people who will perform on the world's most inspiring stage. we're not only building their c-suite but also helping them design the organization and hiring the nearly 5,000 people who will perform on the world's most inspiring stage With that, I will turn it over to Bob Rozek. with that i will turn it over to bob rozek Bob, go ahead. bob go ahead

Speaker 1: Great. Thanks, Gary, and good afternoon or good morning. We're very pleased with our third quarter results. This is our fifth consecutive quarter of accelerating YoY fee revenue growth, and we continue to deliver earnings growth, driving strong profitability and free cash flow. Our go-to-market approach continues to be intentional and focused on opportunities where we can build broader relationships with clients by selling larger integrated solutions that support their evolving talent issues. What's really impressive is we are doing this in an environment where business conditions and labor markets remain challenged. It is very clear that our strategy is working, and our results demonstrate that we have built a company that is different from others in the industry. We perform differently because we are different. Turning to overall company results comparing Q3 of FY 2026 to Q3 of FY 2025. Great. great Thanks, Gary, and good afternoon or good morning. thanks gary and good afternoon or good morning We're very pleased with our third quarter results. we're very pleased with our third quarter results This is our fifth consecutive quarter of accelerating YoY fee revenue growth, and we continue to deliver earnings growth, driving strong profitability and free cash flow. this is our fifth consecutive quarter of accelerating yoy fee revenue growth and we continue to deliver earnings growth driving strong profitability and free cash flow Our go-to-market approach continues to be intentional and focused on opportunities where we can build broader relationships with clients by selling larger integrated solutions that support their evolving talent issues. our go-to-market approach continues to be intentional and focused on opportunities where we can build broader relationships with clients by selling larger integrated solutions that support their evolving talent issues What's really impressive is we are doing this in an environment where business conditions and labor markets remain challenged. what's really impressive is we are doing this in an environment where business conditions and labor markets remain challenged It is very clear that our strategy is working, and our results demonstrate that we have built a company that is different from others in the industry. it is very clear that our strategy is working and our results demonstrate that we have built a company that is different from others in the industry We perform differently because we are different. we perform differently because we are different Turning to overall company results comparing Q3 of FY 2026 to Q3 of FY 2025. turning to overall company results comparing q3 of fy 2026 to q3 of fy 2025 Our consolidated fee revenue grew 7% to $717 million. Again, our fifth consecutive quarter of accelerating YoY growth. Earnings continued to grow in line with fee revenue, and profitability remained strong. Adjusted EBITDA grew $9 million or 7.5% to $123 million. Our adjusted EBITDA margin was 17.2%, it's up 10 basis points, and adjusted diluted earnings per share grew $0.09 or 8% to $1.28. Total company new business, excluding RPO, grew 11%, with both consulting and digital reaching all-time quarterly highs. RPO delivered $54 million of new business in the quarter, with 78% coming from new logos and 22% from renewals. Estimated remaining fees under existing contracts at the end of the quarter were $1.85 billion. Our consolidated fee revenue grew 7% to $717 million. our consolidated fee revenue grew 7% to $717 million Again, our fifth consecutive quarter of accelerating YoY growth. again our fifth consecutive quarter of accelerating yoy growth Earnings continued to grow in line with fee revenue, and profitability remained strong. earnings continued to grow in line with fee revenue and profitability remained strong Adjusted EBITDA grew $9 million or 7.5% to $123 million. adjusted ebitda grew $9 million or 7.5% to $123 million Our adjusted EBITDA margin was 17.2%, it's up 10 basis points, and adjusted diluted earnings per share grew $0.09 or 8% to $1.28. our adjusted ebitda margin was 17.2% it's up 10 basis points and adjusted diluted earnings per share grew $0.09 or 8% to $1.28 Total company new business, excluding RPO, grew 11%, with both consulting and digital reaching all-time quarterly highs. total company new business excluding rpo grew 11% with both consulting and digital reaching all-time quarterly highs RPO delivered $54 million of new business in the quarter, with 78% coming from new logos and 22% from renewals. rpo delivered $54 million of new business in the quarter with 78% coming from new logos and 22% from renewals Estimated remaining fees under existing contracts at the end of the quarter were $1.85 billion. estimated remaining fees under existing contracts at the end of the quarter were $1.85 billion That's up 11% YoY, we estimate that approximately 60% or about $1.1 billion will be recognized within the next year, with the remaining 40% or about $734 million estimated to be recognized beyond the next four quarters. Finally, our capital allocation during the quarter remained balanced. Through the end of the third quarter, we have returned about $113 million to shareholders through combined share repurchases and dividends, we've invested $64 million back into capital expenditures focused on Talent Suite, productivity tools, and other solution and product enhancements. In a separate announcement last week, our board has approved a 15% increase in our quarterly cash dividend to $0.55 per share. That's our seventh dividend increase in the last six years. That's up 11% YoY, we estimate that approximately 60% or about $1.1 billion will be recognized within the next year, with the remaining 40% or about $734 million estimated to be recognized beyond the next four quarters. that's up 11% yoy we estimate that approximately 60% or about $1.1 billion will be recognized within the next year with the remaining 40% or about $734 million estimated to be recognized beyond the next four quarters Finally, our capital allocation during the quarter remained balanced. finally our capital allocation during the quarter remained balanced Through the end of the third quarter, we have returned about $113 million to shareholders through combined share repurchases and dividends, we've invested $64 million back into capital expenditures focused on Talent Suite, productivity tools, and other solution and product enhancements. through the end of the third quarter we have returned about $113 million to shareholders through combined share repurchases and dividends we've invested $64 million back into capital expenditures focused on talent suite productivity tools and other solution and product enhancements In a separate announcement last week, our board has approved a 15% increase in our quarterly cash dividend to $0.55 per share. in a separate announcement last week our board has approved a 15% increase in our quarterly cash dividend to $0.55 per share That's our seventh dividend increase in the last six years. that's our seventh dividend increase in the last six years Our cash flow remains strong. We are confident in the outlook for our business. In addition to the detailed results found in our posted earnings presentation, here are a few company-wide and solution-specific highlights for the third quarter. You saw fee revenue growth was very broad-based across all solutions. The interim portion of our PS&I solution grew 4%, continuing to benefit from new business referrals, which were a key factor driving our outperformance in an industry that has been challenged for more than 36 months. Our new business referrals and Marquee Diamond Account Program continue to be contributors of growth enabled by our We Are Korn Ferry go-to-market initiative. Our cash flow remains strong. our cash flow remains strong We are confident in the outlook for our business. we are confident in the outlook for our business In addition to the detailed results found in our posted earnings presentation, here are a few company-wide and solution-specific highlights for the third quarter. in addition to the detailed results found in our posted earnings presentation here are a few company-wide and solution-specific highlights for the third quarter You saw fee revenue growth was very broad-based across all solutions. you saw fee revenue growth was very broad-based across all solutions The interim portion of our PS&I solution grew 4%, continuing to benefit from new business referrals, which were a key factor driving our outperformance in an industry that has been challenged for more than 36 months. the interim portion of our ps&i solution grew 4% continuing to benefit from new business referrals which were a key factor driving our outperformance in an industry that has been challenged for more than 36 months Our new business referrals and Marquee Diamond Account Program continue to be contributors of growth enabled by our We Are Korn Ferry go-to-market initiative. our new business referrals and marquee diamond account program continue to be contributors of growth enabled by our we are korn ferry go-to-market initiative As Gary mentioned, new business referrals accounted for 27.2% of our consolidated fee revenue, and that's up 200 basis points YoY, and the Marquee and Diamond Accounts continued to be strong at 40% of our total fee revenue. Also in the third quarter, subscription and licensed new business grew 30% YoY and accounted for 43% of Digital's total new business. Additionally, in the third quarter, subscription and license fee revenue grew 8%. Finally, our average hourly bill rates for consulting and interim grew by 2% and 15% respectively. Again, demonstrating the high value our clients place on these solutions. Now turning to our regions. Fee revenue in the Americas was up 6%, led by growth in executive search and RPO. As Gary mentioned, new business referrals accounted for 27.2% of our consolidated fee revenue, and that's up 200 basis points YoY, and the Marquee and Diamond Accounts continued to be strong at 40% of our total fee revenue. as gary mentioned new business referrals accounted for 27.2% of our consolidated fee revenue and that's up 200 basis points yoy and the marquee and diamond accounts continued to be strong at 40% of our total fee revenue Also in the third quarter, subscription and licensed new business grew 30% YoY and accounted for 43% of Digital's total new business. also in the third quarter subscription and licensed new business grew 30% yoy and accounted for 43% of digital's total new business Additionally, in the third quarter, subscription and license fee revenue grew 8%. additionally in the third quarter subscription and license fee revenue grew 8% Finally, our average hourly bill rates for consulting and interim grew by 2% and 15% respectively. finally our average hourly bill rates for consulting and interim grew by 2% and 15% respectively Again, demonstrating the high value our clients place on these solutions. again demonstrating the high value our clients place on these solutions Now turning to our regions. now turning to our regions Fee revenue in the Americas was up 6%, led by growth in executive search and RPO. fee revenue in the americas was up 6% led by growth in executive search and rpo EMEA fee revenue continued to be strong, growing 13% with double-digit growth in executive search, consulting, digital and PS&I. APAC fee revenue declined slightly at 2% with growth in executive search being offset by modest weakness in other solutions. Now turning to our outlook for the fourth quarter of fiscal 2026. Assuming no material negative impact from the recent Middle East conflict and no further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates, we expect fee revenue in the fourth quarter to range from $730 million-$750 million. Our adjusted EBITDA margin to range from 17.1%-17.3%, and our consolidated adjusted diluted earnings per share, as well as our GAAP diluted earnings per share, to range from $1.34-$1.40. EMEA fee revenue continued to be strong, growing 13% with double-digit growth in executive search, consulting, digital and PS&I. emea fee revenue continued to be strong growing 13% with double-digit growth in executive search consulting digital and ps&i APAC fee revenue declined slightly at 2% with growth in executive search being offset by modest weakness in other solutions. apac fee revenue declined slightly at 2% with growth in executive search being offset by modest weakness in other solutions Now turning to our outlook for the fourth quarter of fiscal 2026. now turning to our outlook for the fourth quarter of fiscal 2026 Assuming no material negative impact from the recent Middle East conflict and no further changes in worldwide geopolitical conditions, economic conditions, financial markets, and foreign exchange rates, we expect fee revenue in the fourth quarter to range from $730 million-$750 million. assuming no material negative impact from the recent middle east conflict and no further changes in worldwide geopolitical conditions economic conditions financial markets and foreign exchange rates we expect fee revenue in the fourth quarter to range from $730 million-$750 million Our adjusted EBITDA margin to range from 17.1%-17.3%, and our consolidated adjusted diluted earnings per share, as well as our GAAP diluted earnings per share, to range from $1.34-$1.40. our adjusted ebitda margin to range from 17.1%-17.3% and our consolidated adjusted diluted earnings per share as well as our gaap diluted earnings per share to range from $1.34-$1.40 In closing, our financial results over the last five quarters demonstrate that our unique combination of foundational assets, expertise, and capabilities truly matter to our clients. Looking to the future, I'm very excited about our opportunities to drive continued top-line growth. You heard Gary talk about our top 4,500 clients. With the rollout of Talent Suite and our We Are Korn Ferry initiative, we continue to see significant opportunity to expand those relationships in what we call the green space. That is horizontal expansion, where we bring additional solutions to our clients. Vertical expansion, where we leverage our strong C-suite relationships and provide solutions at scale to what we call the vital many, that's down into an organization's professional ranks. We have a great playbook to run from. Our Marquee and Diamond accounts where we have a strong track record of successfully expanding those relationships. In closing, our financial results over the last five quarters demonstrate that our unique combination of foundational assets, expertise, and capabilities truly matter to our clients. in closing our financial results over the last five quarters demonstrate that our unique combination of foundational assets expertise and capabilities truly matter to our clients Looking to the future, I'm very excited about our opportunities to drive continued top-line growth. looking to the future i'm very excited about our opportunities to drive continued top-line growth You heard Gary talk about our top 4,500 clients. you heard gary talk about our top 4,500 clients With the rollout of Talent Suite and our We Are Korn Ferry initiative, we continue to see significant opportunity to expand those relationships in what we call the green space. with the rollout of talent suite and our we are korn ferry initiative we continue to see significant opportunity to expand those relationships in what we call the green space That is horizontal expansion, where we bring additional solutions to our clients. that is horizontal expansion where we bring additional solutions to our clients Vertical expansion, where we leverage our strong C-suite relationships and provide solutions at scale to what we call the vital many, that's down into an organization's professional ranks. vertical expansion where we leverage our strong c-suite relationships and provide solutions at scale to what we call the vital many that's down into an organization's professional ranks We have a great playbook to run from. we have a great playbook to run from Our Marquee and Diamond accounts where we have a strong track record of successfully expanding those relationships. our marquee and diamond accounts where we have a strong track record of successfully expanding those relationships I also see further opportunities in our joint go-to-market activities, particularly between consulting and digital. As I've said many times before on these calls, I am more convinced than ever that our best is yet to come. With that, we would be glad to answer any questions you may have. I also see further opportunities in our joint go-to-market activities, particularly between consulting and digital. i also see further opportunities in our joint go-to-market activities particularly between consulting and digital As I've said many times before on these calls, I am more convinced than ever that our best is yet to come. as i've said many times before on these calls i am more convinced than ever that our best is yet to come With that, we would be glad to answer any questions you may have. with that we would be glad to answer any questions you may have

Speaker 5: We will now begin the question and answer session. To ask a question, press star then the number one on your telephone keypad. Our first question will come from the line of Tobey Sommer with Truist Securities. Please go ahead. We will now begin the question and answer session. we will now begin the question and answer session To ask a question, press star then the number one on your telephone keypad. to ask a question press star then the number one on your telephone keypad Our first question will come from the line of Tobey Sommer with Truist Securities. our first question will come from the line of tobey sommer with truist securities Please go ahead. please go ahead

Speaker 6: Thank you. Markets are certainly reacting to a number of potential outcomes as a result of AI. How do you see AI impacting Korn Ferry? Thank you. thank you Markets are certainly reacting to a number of potential outcomes as a result of AI. markets are certainly reacting to a number of potential outcomes as a result of ai How do you see AI impacting Korn Ferry? how do you see ai impacting korn ferry

Speaker 2: Well, I think it's going to. At the end of the day, it's gonna allow us to drive more efficiency, as we've done over the last three years, number one. Number two, you know, where we play, we're playing at the high end. You know, the high end of the labor force. I mean, you know, take the United States, there's only, you know, 25,000 companies that have 1,000 employees or more. When I look at the U.S. labor force today of 171 million and really look through the categories of talent. Well, I think it's going to. well i think it's going to At the end of the day, it's gonna allow us to drive more efficiency, as we've done over the last three years, number one. at the end of the day it's gonna allow us to drive more efficiency as we've done over the last three years number one Number two, you know, where we play, we're playing at the high end. number two you know where we play we're playing at the high end You know, the high end of the labor force. you know the high end of the labor force I mean, you know, take the United States, there's only, you know, 25,000 companies that have 1,000 employees or more. i mean you know take the united states there's only you know 25,000 companies that have 1,000 employees or more When I look at the U.S. labor force today of 171 million and really look through the categories of talent. when i look at the u.s labor force today of 171 million and really look through the categories of talent Korn Ferry, and its clients, are very much at the high end. I don't, I don't really see that high-end labor talent being disintermediated. I believe long term, that it's actually gonna create more opportunity for us, not just in efficiency in how we deliver services, but also, in terms of our client solutions and delivery. I mean, we've got a number of engagements where we're using what we have as proprietary AI-ready leadership assessment tool, and we're using that through the Talent Suite to help companies transform their workforce. You know, I just look at the numbers in the labor force and, you know, over the last 20 years, the U.S. labor force has created, you know, something like $20 million-$25 million jobs. Korn Ferry, and its clients, are very much at the high end. korn ferry and its clients are very much at the high end I don't, I don't really see that high-end labor talent being disintermediated. i don't i don't really see that high-end labor talent being disintermediated I believe long term, that it's actually gonna create more opportunity for us, not just in efficiency in how we deliver services, but also, in terms of our client solutions and delivery. i believe long term that it's actually gonna create more opportunity for us not just in efficiency in how we deliver services but also in terms of our client solutions and delivery I mean, we've got a number of engagements where we're using what we have as proprietary AI-ready leadership assessment tool, and we're using that through the Talent Suite to help companies transform their workforce. i mean we've got a number of engagements where we're using what we have as proprietary ai-ready leadership assessment tool and we're using that through the talent suite to help companies transform their workforce You know, I just look at the numbers in the labor force and, you know, over the last 20 years, the U.S. labor force has created, you know, something like $20 million-$25 million jobs. you know i just look at the numbers in the labor force and you know over the last 20 years the u.s labor force has created you know something like $20 million-$25 million jobs Over the next 10 years, it's estimated to be five million. Last year, we produced as a country, very, very few jobs. I think you've got this huge imbalance between the demand and supply of labor that either has to get filled through immigration or technology. I would say it's gonna be heavily on technology. For me, it's not, you know, it's not a simple question that AI will take away jobs. It's the people that don't embrace AI, they're gonna be left out. You know, look, this is early days. When we talk to most clients, truthfully, they haven't fully figured out how to use AI to drive efficiency. Over the next 10 years, it's estimated to be five million. over the next 10 years it's estimated to be five million Last year, we produced as a country, very, very few jobs. last year we produced as a country very very few jobs I think you've got this huge imbalance between the demand and supply of labor that either has to get filled through immigration or technology. i think you've got this huge imbalance between the demand and supply of labor that either has to get filled through immigration or technology I would say it's gonna be heavily on technology. i would say it's gonna be heavily on technology For me, it's not, you know, it's not a simple question that AI will take away jobs. for me it's not you know it's not a simple question that ai will take away jobs It's the people that don't embrace AI, they're gonna be left out. it's the people that don't embrace ai they're gonna be left out You know, look, this is early days. you know look this is early days When we talk to most clients, truthfully, they haven't fully figured out how to use AI to drive efficiency. when we talk to most clients truthfully they haven't fully figured out how to use ai to drive efficiency When I look at the demographic trends, it's quite clear that companies are gonna have to do more with less. It's, you know, it's mathematics around demographics. When I look at the demographic trends, it's quite clear that companies are gonna have to do more with less. when i look at the demographic trends it's quite clear that companies are gonna have to do more with less It's, you know, it's mathematics around demographics. it's you know it's mathematics around demographics

Speaker 6: In that context, I wanna just double-click. If we have a higher or an increase in unemployment, do you think the company can grow in that kind of environment that typically used to be characterized or would reflect an economic recession? Maybe it would or maybe it won't in this, if AI goes to the nth degree as some are thinking. In that context, I wanna just double-click. in that context i wanna just double-click If we have a higher or an increase in unemployment, do you think the company can grow in that kind of environment that typically used to be characterized or would reflect an economic recession? if we have a higher or an increase in unemployment do you think the company can grow in that kind of environment that typically used to be characterized or would reflect an economic recession Maybe it would or maybe it won't in this, if AI goes to the nth degree as some are thinking. maybe it would or maybe it won't in this if ai goes to the nth degree as some are thinking

Speaker 2: Well, we're trying, you know. I mean, this is my 95th earnings call, quarterly earnings call. You know, many years ago, the company was dependent on one solution, which was executive search. That was directly tied not only to the stock market with a high correlation, but to unemployment and what was happening in the labor force. Today, you've got a much more diversified business, with five different solutions. I think we've demonstrated over the last 36 months, which I consider, a labor recession, that there's quarters that one solution is up and another is down. Well, we're trying, you know. well we're trying you know I mean, this is my 95th earnings call, quarterly earnings call. i mean this is my 95th earnings call quarterly earnings call You know, many years ago, the company was dependent on one solution, which was executive search. you know many years ago the company was dependent on one solution which was executive search That was directly tied not only to the stock market with a high correlation, but to unemployment and what was happening in the labor force. that was directly tied not only to the stock market with a high correlation but to unemployment and what was happening in the labor force Today, you've got a much more diversified business, with five different solutions. today you've got a much more diversified business with five different solutions I think we've demonstrated over the last 36 months, which I consider, a labor recession, that there's quarters that one solution is up and another is down. i think we've demonstrated over the last 36 months which i consider a labor recession that there's quarters that one solution is up and another is down The thing that's very interesting is when you look at the executive search solution and you think about the labor market over the last, you know, 36 months, you would have expected based on, you know, historical data going back many years, that the executive search solution would actually be down, when in fact, it's the opposite. I think that tells you part of the story there is around demographics. I mean, clearly it's around the strategy. There's no doubt about that. But it's also reflective of demographics. It's reflected of post COVID life, and it's reflective of boards looking at leadership's teams and saying, "Hey, you know, what got you here isn't gonna get you there." People are making choices about opting out of the labor force. The thing that's very interesting is when you look at the executive search solution and you think about the labor market over the last, you know, 36 months, you would have expected based on, you know, historical data going back many years, that the executive search solution would actually be down, when in fact, it's the opposite. the thing that's very interesting is when you look at the executive search solution and you think about the labor market over the last you know 36 months you would have expected based on you know historical data going back many years that the executive search solution would actually be down when in fact it's the opposite I think that tells you part of the story there is around demographics. i think that tells you part of the story there is around demographics I mean, clearly it's around the strategy. i mean clearly it's around the strategy There's no doubt about that. there's no doubt about that But it's also reflective of demographics. but it's also reflective of demographics It's reflected of post COVID life, and it's reflective of boards looking at leadership's teams and saying, "Hey, you know, what got you here isn't gonna get you there." People are making choices about opting out of the labor force. it's reflected of post covid life and it's reflective of boards looking at leadership's teams and saying "hey you know what got you here isn't gonna get you there." people are making choices about opting out of the labor force Because most of those people in the C-suite were leading businesses during COVID. Maybe it's work-life balance. But there is something going on here that's interesting. I look at it and say, our clients, the people that are making decisions around us are truly the outliers of achievement. I just don't... I don't look at it and think, oh my God, you know, out of 171 million people in the labor force, 20 million are in management roles. I just don't see that they're gonna be wiped out here. I, you know, we have not disintermediated humanity. Because most of those people in the C-suite were leading businesses during COVID. because most of those people in the c-suite were leading businesses during covid Maybe it's work-life balance. maybe it's work-life balance But there is something going on here that's interesting. but there is something going on here that's interesting I look at it and say, our clients, the people that are making decisions around us are truly the outliers of achievement. i look at it and say our clients the people that are making decisions around us are truly the outliers of achievement I just don't... i just don't I don't look at it and think, oh my God, you know, out of 171 million people in the labor force, 20 million are in management roles. i don't look at it and think oh my god you know out of 171 million people in the labor force 20 million are in management roles I just don't see that they're gonna be wiped out here. i just don't see that they're gonna be wiped out here I, you know, we have not disintermediated humanity. i you know we have not disintermediated humanity

Speaker 6: Thank you very much. If I could ask one more, and I'll get back in the queue. With respect to Talent Suite, do you think that is more likely to have the biggest impact deepening existing relationships, making them stickier somehow? Or is it more about expanding into new customer relationships? I'm sure there's an element of both, but, you know, if you had to choose, which way would you go? Thank you very much. thank you very much If I could ask one more, and I'll get back in the queue. if i could ask one more and i'll get back in the queue With respect to Talent Suite, do you think that is more likely to have the biggest impact deepening existing relationships, making them stickier somehow? with respect to talent suite do you think that is more likely to have the biggest impact deepening existing relationships making them stickier somehow Or is it more about expanding into new customer relationships? or is it more about expanding into new customer relationships I'm sure there's an element of both, but, you know, if you had to choose, which way would you go? i'm sure there's an element of both but you know if you had to choose which way would you go

Speaker 2: I think it's the former. The thing where there's incredible. We've been working now for 12 months on We Are Korn Ferry. The crux of it, when you look at it, there's 4,500 clients that represent 90% of our revenue. When you look at that client base, what you're gonna find is that, you know, you look at 2/3 of them, and we're only doing 1.5 or two solutions. I look at Talent Suite as not a digital solution play. I look at it as empowering the entire firm. Ultimately, the goal is to try to infuse Korn Ferry's language of talent into companies, how they hire, how they design an organization, how they retain, how they pay, how they develop. I think it's the former. i think it's the former The thing where there's incredible. the thing where there's incredible We've been working now for 12 months on We Are Korn Ferry. we've been working now for 12 months on we are korn ferry The crux of it, when you look at it, there's 4,500 clients that represent 90% of our revenue. the crux of it when you look at it there's 4,500 clients that represent 90% of our revenue When you look at that client base, what you're gonna find is that, you know, you look at 2/3 of them, and we're only doing 1.5 or two solutions. when you look at that client base what you're gonna find is that you know you look at 2/3 of them and we're only doing 1.5 or two solutions I look at Talent Suite as not a digital solution play. i look at talent suite as not a digital solution play I look at it as empowering the entire firm. i look at it as empowering the entire firm Ultimately, the goal is to try to infuse Korn Ferry's language of talent into companies, how they hire, how they design an organization, how they retain, how they pay, how they develop. ultimately the goal is to try to infuse korn ferry's language of talent into companies how they hire how they design an organization how they retain how they pay how they develop I look at it much broader, but the goal absolutely is a little bit like a Trojan horse to embed the language of client. When it comes to the digital solution in Talent Suite, the reality is we've probably got about, you know, 6,000 clients on Talent Suite, something like that. When you look at that, what you're gonna find is that 70% of them are only using one product within Talent Suite. There's enormous opportunity there. For me, it comes down to having a systematic approach on the go-to-market side and having client service teams that are targeting and servicing the world's biggest companies. I look at it much broader, but the goal absolutely is a little bit like a Trojan horse to embed the language of client. i look at it much broader but the goal absolutely is a little bit like a trojan horse to embed the language of client When it comes to the digital solution in Talent Suite, the reality is we've probably got about, you know, 6,000 clients on Talent Suite, something like that. when it comes to the digital solution in talent suite the reality is we've probably got about you know 6,000 clients on talent suite something like that When you look at that, what you're gonna find is that 70% of them are only using one product within Talent Suite. when you look at that what you're gonna find is that 70% of them are only using one product within talent suite There's enormous opportunity there. there's enormous opportunity there For me, it comes down to having a systematic approach on the go-to-market side and having client service teams that are targeting and servicing the world's biggest companies. for me it comes down to having a systematic approach on the go-to-market side and having client service teams that are targeting and servicing the world's biggest companies

Speaker 6: Thank you very much. Thank you very much. thank you very much

Speaker 5: Our next question will come from the line of Trevor Romeo with William Blair. Please go ahead. Our next question will come from the line of Trevor Romeo with William Blair. our next question will come from the line of trevor romeo with william blair Please go ahead. please go ahead

Speaker 7: Hi. Good morning. Thank you for taking the questions. Maybe I'll just follow up on the Talent Suite discussion. Does it look like your fees under contract were up double digits for both consulting and digital? I think your subscription and license fee revenue and the new business also accelerated. Would you attribute any of that to, I guess, you know, very early returns from Talent Suite? Is it already having an impact? Or if not, maybe you could speak to what drove that, because it seems like a pretty meaningful acceleration for both of those solutions. Hi. hi Good morning. good morning Thank you for taking the questions. thank you for taking the questions Maybe I'll just follow up on the Talent Suite discussion. maybe i'll just follow up on the talent suite discussion Does it look like your fees under contract were up double digits for both consulting and digital? does it look like your fees under contract were up double digits for both consulting and digital I think your subscription and license fee revenue and the new business also accelerated. i think your subscription and license fee revenue and the new business also accelerated Would you attribute any of that to, I guess, you know, very early returns from Talent Suite? would you attribute any of that to i guess you know very early returns from talent suite Is it already having an impact? is it already having an impact Or if not, maybe you could speak to what drove that, because it seems like a pretty meaningful acceleration for both of those solutions. or if not maybe you could speak to what drove that because it seems like a pretty meaningful acceleration for both of those solutions

Speaker 2: We had a killer, you know, we had a killer couple months in the quarter of new business. Again, the strategy is trying to deepen the relationships, you know, driving client centricity. I would say that Talent Suite had a little impact, but not much. You know, we did a soft launch in November, the harder launch was in January. We converted all of the clients seamlessly. We didn't have any problems. Now we're embarking on a journey to get all of our 2,000 front of the house colleagues to be able to talk to our clients about, you know, what I think our data is beyond compare. I really do. I look at it and say it's kind of Moneyball for business. We had a killer, you know, we had a killer couple months in the quarter of new business. we had a killer you know we had a killer couple months in the quarter of new business Again, the strategy is trying to deepen the relationships, you know, driving client centricity. again the strategy is trying to deepen the relationships you know driving client centricity I would say that Talent Suite had a little impact, but not much. i would say that talent suite had a little impact but not much You know, we did a soft launch in November, the harder launch was in January. you know we did a soft launch in november the harder launch was in january We converted all of the clients seamlessly. we converted all of the clients seamlessly We didn't have any problems. we didn't have any problems Now we're embarking on a journey to get all of our 2,000 front of the house colleagues to be able to talk to our clients about, you know, what I think our data is beyond compare. now we're embarking on a journey to get all of our 2,000 front of the house colleagues to be able to talk to our clients about you know what i think our data is beyond compare I really do. i really do I look at it and say it's kind of Moneyball for business. i look at it and say it's kind of moneyball for business We've got 50-plus years of knowing how you separate great from good. I think in an environment of going forward, where companies are gonna have to do more with less, I think this could play a big role in our future. I don't simply look at it as a digital solution play. It's really connected to everything we do. Our RPO solution, executive search solution, professional search solution. It's a foundation for the firm. We've never in the past taken all of our IP and put it in a seamless warehouse where you can go in and do benchmarking on your workforce and all that. We've got 50-plus years of knowing how you separate great from good. we've got 50-plus years of knowing how you separate great from good I think in an environment of going forward, where companies are gonna have to do more with less, I think this could play a big role in our future. i think in an environment of going forward where companies are gonna have to do more with less i think this could play a big role in our future I don't simply look at it as a digital solution play. i don't simply look at it as a digital solution play It's really connected to everything we do. it's really connected to everything we do Our RPO solution, executive search solution, professional search solution. our rpo solution executive search solution professional search solution It's a foundation for the firm. it's a foundation for the firm We've never in the past taken all of our IP and put it in a seamless warehouse where you can go in and do benchmarking on your workforce and all that. we've never in the past taken all of our ip and put it in a seamless warehouse where you can go in and do benchmarking on your workforce and all that Look, it's early days and, you know, we've rolled out the technology and now it's getting, our front of the house colleagues, on a very targeted basis, to take this to our client base. Look, it's early days and, you know, we've rolled out the technology and now it's getting, our front of the house colleagues, on a very targeted basis, to take this to our client base. look it's early days and you know we've rolled out the technology and now it's getting our front of the house colleagues on a very targeted basis to take this to our client base

Speaker 7: Thanks, Gary. That's encouraging. Then maybe one other Talent Suite question. Now that you have it in place, up and running, in addition to your other sort of tech and AI investments, how do you view Korn Ferry's technology spending, I guess in total in the next few years, whether that's CapEx or OpEx? Is the ongoing run rate here, do you think gonna be higher or lower than you may have seen in the past or the same, I guess? Thanks, Gary. thanks gary That's encouraging. that's encouraging Then maybe one other Talent Suite question. then maybe one other talent suite question Now that you have it in place, up and running, in addition to your other sort of tech and AI investments, how do you view Korn Ferry's technology spending, I guess in total in the next few years, whether that's CapEx or OpEx? now that you have it in place up and running in addition to your other sort of tech and ai investments how do you view korn ferry's technology spending i guess in total in the next few years whether that's capex or opex Is the ongoing run rate here, do you think gonna be higher or lower than you may have seen in the past or the same, I guess? is the ongoing run rate here do you think gonna be higher or lower than you may have seen in the past or the same i guess

Speaker 2: I think Bob can probably address that more. You know, I would just say that when you look back, we've had a fairly balanced approach to capital deployment. In call it the last trailing, you know, 15 months or so, I think the bent has been more towards Talent Suite and CapEx. Obviously, you know, dividend. Look, we just raised the dividend again. I think it's our seventh raise in six years. You know, I think you may see us lean a little bit more heavily in stock buybacks over the next few months. There could be a slight change versus call it, you know, the first nine months of this fiscal year because it was heavily tilted towards technology spend. I think Bob can probably address that more. i think bob can probably address that more You know, I would just say that when you look back, we've had a fairly balanced approach to capital deployment. you know i would just say that when you look back we've had a fairly balanced approach to capital deployment In call it the last trailing, you know, 15 months or so, I think the bent has been more towards Talent Suite and CapEx. in call it the last trailing you know 15 months or so i think the bent has been more towards talent suite and capex Obviously, you know, dividend. obviously you know dividend Look, we just raised the dividend again. look we just raised the dividend again I think it's our seventh raise in six years. i think it's our seventh raise in six years You know, I think you may see us lean a little bit more heavily in stock buybacks over the next few months. you know i think you may see us lean a little bit more heavily in stock buybacks over the next few months There could be a slight change versus call it, you know, the first nine months of this fiscal year because it was heavily tilted towards technology spend. there could be a slight change versus call it you know the first nine months of this fiscal year because it was heavily tilted towards technology spend

Speaker 1: I think that's right, Gary. I think Trevor, if you look at our CapEx spend, we're probably around $80 million-$85 million run rate currently, we had anticipated, you know, that coming back down to what you would have seen more historically is say $60 million-$65 million run rate. We'll probably see that drop in going into our fiscal 2027. We're, you know, in the process of doing our planning for next year right now. As Gary indicated, it's one of the things that we look at and think about quite a bit, is how we allocate capital. It, I would say you'll see the CapEx probably drop a bit, but maybe lean more heavily, as Gary indicated, into buybacks. I think that's right, Gary. i think that's right gary I think Trevor, if you look at our CapEx spend, we're probably around $80 million-$85 million run rate currently, we had anticipated, you know, that coming back down to what you would have seen more historically is say $60 million-$65 million run rate. i think trevor if you look at our capex spend we're probably around $80 million-$85 million run rate currently we had anticipated you know that coming back down to what you would have seen more historically is say $60 million-$65 million run rate We'll probably see that drop in going into our fiscal 2027. we'll probably see that drop in going into our fiscal 2027 We're, you know, in the process of doing our planning for next year right now. we're you know in the process of doing our planning for next year right now As Gary indicated, it's one of the things that we look at and think about quite a bit, is how we allocate capital. as gary indicated it's one of the things that we look at and think about quite a bit is how we allocate capital It, I would say you'll see the CapEx probably drop a bit, but maybe lean more heavily, as Gary indicated, into buybacks. it i would say you'll see the capex probably drop a bit but maybe lean more heavily as gary indicated into buybacks Certainly when you see the market dislocated like it is today. Certainly when you see the market dislocated like it is today. certainly when you see the market dislocated like it is today

Speaker 7: Yep. Okay. Thank you both for that. If I could maybe just ask one more, on your, on your interim business. I think you talked about the cross referrals driving outperformance there. Obviously, the, you know, the temp staffing space has been very tough the last several years, as you pointed out. Maybe just what kind of demand trends are you seeing there, independent of your cross referrals? Are you seeing maybe a little pickup in conversations the last few months? Then on the bill rate jumping up to almost $150, anything you'd call out from a mix perspective there? Yep. yep Okay. okay Thank you both for that. thank you both for that If I could maybe just ask one more, on your, on your interim business. if i could maybe just ask one more on your on your interim business I think you talked about the cross referrals driving outperformance there. i think you talked about the cross referrals driving outperformance there Obviously, the, you know, the temp staffing space has been very tough the last several years, as you pointed out. obviously the you know the temp staffing space has been very tough the last several years as you pointed out Maybe just what kind of demand trends are you seeing there, independent of your cross referrals? maybe just what kind of demand trends are you seeing there independent of your cross referrals Are you seeing maybe a little pickup in conversations the last few months? are you seeing maybe a little pickup in conversations the last few months Then on the bill rate jumping up to almost $150, anything you'd call out from a mix perspective there? then on the bill rate jumping up to almost $150 anything you'd call out from a mix perspective there

Speaker 2: Yeah. It's the Korn Ferry lift. I mean, we wanna compete there at the very high end of talent because of the questions that have been raised around AI and the like. We wanna be focused on the outliers of achievement. Yes, you know, you look at what I've seen in the industry, people have reported, they saw, you know, a slight uptick sequentially late November, saw that in December, seeing it flow through to January, somewhat flat in February because of the shorter number of days. Yes, that we've seen absolutely that go up. It's up, it was up 4% in the quarter. That's just the interim part of the business. The bill rates have gone up. Yeah. yeah It's the Korn Ferry lift. it's the korn ferry lift I mean, we wanna compete there at the very high end of talent because of the questions that have been raised around AI and the like. i mean we wanna compete there at the very high end of talent because of the questions that have been raised around ai and the like We wanna be focused on the outliers of achievement. we wanna be focused on the outliers of achievement Yes, you know, you look at what I've seen in the industry, people have reported, they saw, you know, a slight uptick sequentially late November, saw that in December, seeing it flow through to January, somewhat flat in February because of the shorter number of days. yes you know you look at what i've seen in the industry people have reported they saw you know a slight uptick sequentially late november saw that in december seeing it flow through to january somewhat flat in february because of the shorter number of days Yes, that we've seen absolutely that go up. yes that we've seen absolutely that go up It's up, it was up 4% in the quarter. it's up it was up 4% in the quarter That's just the interim part of the business. that's just the interim part of the business The bill rates have gone up. the bill rates have gone up You know, the temp penetration rate is still, you know, at historic lows. You know that better than I. You know, I look back over the last 25 years, and generally in the workforce, there's been about, in the U.S., 2.5 million temp workers. Obviously, the penetration rate has been significantly higher than it has today. I don't think that's gonna go away. In fact, you could make the argument that companies are gonna need more flex arrangements to deal with, you know, one-off projects and the, and the like. We're very, very happy with how that solution has done. You know, the opportunity there, quite candidly, is not only the U.S. for us, but Europe. You know, the temp penetration rate is still, you know, at historic lows. you know the temp penetration rate is still you know at historic lows You know that better than I. you know that better than i You know, I look back over the last 25 years, and generally in the workforce, there's been about, in the U.S., 2.5 million temp workers. you know i look back over the last 25 years and generally in the workforce there's been about in the u.s 2.5 million temp workers Obviously, the penetration rate has been significantly higher than it has today. obviously the penetration rate has been significantly higher than it has today I don't think that's gonna go away. i don't think that's gonna go away In fact, you could make the argument that companies are gonna need more flex arrangements to deal with, you know, one-off projects and the, and the like. in fact you could make the argument that companies are gonna need more flex arrangements to deal with you know one-off projects and the and the like We're very, very happy with how that solution has done. we're very very happy with how that solution has done You know, the opportunity there, quite candidly, is not only the U.S. for us, but Europe. you know the opportunity there quite candidly is not only the u.s for us but europe We made an investment in an interim solution and an executive interim solution in Europe, going back, probably 15, 16 months ago. That has absolutely outperformed. One of the reasons why it's outperformed is because how we have integrated, not only because there's talented people, but we've also been very, very purposeful on a We Are Korn Ferry go-to-market strategy. We made an investment in an interim solution and an executive interim solution in Europe, going back, probably 15, 16 months ago. we made an investment in an interim solution and an executive interim solution in europe going back probably 15 16 months ago That has absolutely outperformed. that has absolutely outperformed One of the reasons why it's outperformed is because how we have integrated, not only because there's talented people, but we've also been very, very purposeful on a We Are Korn Ferry go-to-market strategy. one of the reasons why it's outperformed is because how we have integrated not only because there's talented people but we've also been very very purposeful on a we are korn ferry go-to-market strategy

Speaker 7: All right. Thank you very much. All right. all right Thank you very much. thank you very much

Speaker 5: Our next question will come from the line of George Tong with Goldman Sachs. Please go ahead. Our next question will come from the line of George Tong with Goldman Sachs. our next question will come from the line of george tong with goldman sachs Please go ahead. please go ahead

Speaker 8: Hi, this is Alex on for George. Wanted to see if you could provide an update on what you're seeing with sales cycles and how client spending behavior may be differing across segments, and whether there's been any impact from macro sensitivity? Hi, this is Alex on for George. hi this is alex on for george Wanted to see if you could provide an update on what you're seeing with sales cycles and how client spending behavior may be differing across segments, and whether there's been any impact from macro sensitivity? wanted to see if you could provide an update on what you're seeing with sales cycles and how client spending behavior may be differing across segments and whether there's been any impact from macro sensitivity

Speaker 2: I haven't seen any. You know, the reality is more of the same. I mean, you know, the BLS numbers in the United States were obviously not great. They weren't great because of healthcare. If you just look back over many months, the jobs that have been created were in healthcare or government. You know, I mean, to me, it's more of the same. Now, what I can't comment on is the last 10 days or so, and I don't think anybody can. We have not factored that in to our guidance. 10 days in, you just don't know. I can just tell you the direction of travel for this firm is unbelievable. I've been here with dot-com crisis, long-term credit crisis, great recession, COVID, all of that. Russia, Ukraine. I haven't seen any. i haven't seen any You know, the reality is more of the same. you know the reality is more of the same I mean, you know, the BLS numbers in the United States were obviously not great. i mean you know the bls numbers in the united states were obviously not great They weren't great because of healthcare. they weren't great because of healthcare If you just look back over many months, the jobs that have been created were in healthcare or government. if you just look back over many months the jobs that have been created were in healthcare or government You know, I mean, to me, it's more of the same. you know i mean to me it's more of the same Now, what I can't comment on is the last 10 days or so, and I don't think anybody can. now what i can't comment on is the last 10 days or so and i don't think anybody can We have not factored that in to our guidance. 10 days in, you just don't know. we have not factored that in to our guidance 10 days in you just don't know I can just tell you the direction of travel for this firm is unbelievable. i can just tell you the direction of travel for this firm is unbelievable I've been here with dot-com crisis, long-term credit crisis, great recession, COVID, all of that. i've been here with dot-com crisis long-term credit crisis great recession covid all of that Russia, Ukraine. russia ukraine I can go on and on and on. You know, the changes in China and the extended lockdowns there. I can go on and on and on, but the reality is, when you look at the direction of travel, this firm is outstanding. I can go on and on and on. i can go on and on and on You know, the changes in China and the extended lockdowns there. you know the changes in china and the extended lockdowns there I can go on and on and on, but the reality is, when you look at the direction of travel, this firm is outstanding. i can go on and on and on but the reality is when you look at the direction of travel this firm is outstanding

Speaker 8: Great. Thanks. Great. great Thanks. thanks

Speaker 1: Yeah. The other thing I would add to that, too, is if you look at the new business in the third quarter, Gary mentioned we had, a couple of really good months. The thing that I found very interesting, usually October and March are, you know, high water marks for new business, and then December is usually one of the slowest months because of the year-end holidays and so on. We hit an all-time high in new business in October, and we eclipsed that in December this past year. We saw some very large, engagements being signed. In fact, 44% of the consulting new business in the quarter were engagements over half a million dollars. As Gary mentioned before, we're playing top of the house. Yeah. yeah The other thing I would add to that, too, is if you look at the new business in the third quarter, Gary mentioned we had, a couple of really good months. the other thing i would add to that too is if you look at the new business in the third quarter gary mentioned we had a couple of really good months The thing that I found very interesting, usually October and March are, you know, high water marks for new business, and then December is usually one of the slowest months because of the year-end holidays and so on. the thing that i found very interesting usually october and march are you know high water marks for new business and then december is usually one of the slowest months because of the year-end holidays and so on We hit an all-time high in new business in October, and we eclipsed that in December this past year. we hit an all-time high in new business in october and we eclipsed that in december this past year We saw some very large, engagements being signed. we saw some very large engagements being signed In fact, 44% of the consulting new business in the quarter were engagements over half a million dollars. in fact 44% of the consulting new business in the quarter were engagements over half a million dollars As Gary mentioned before, we're playing top of the house. as gary mentioned before we're playing top of the house People really value what we bring in, and they're struggling to work their way through, you know, the somewhat chaotic world that we live in today. They're only gonna do that through their talent, and that's exactly where we come in. People really value what we bring in, and they're struggling to work their way through, you know, the somewhat chaotic world that we live in today. people really value what we bring in and they're struggling to work their way through you know the somewhat chaotic world that we live in today They're only gonna do that through their talent, and that's exactly where we come in. they're only gonna do that through their talent and that's exactly where we come in

Speaker 8: Yeah. Got it. That's very helpful. I want to ask on the digital side, which saw some improvement sequentially but was flat YoY on a constant currency basis. Can you touch on what drove this and how the pivot toward enterprise-oriented sales is progressing? Yeah. yeah Got it. got it That's very helpful. that's very helpful I want to ask on the digital side, which saw some improvement sequentially but was flat YoY on a constant currency basis. i want to ask on the digital side which saw some improvement sequentially but was flat yoy on a constant currency basis Can you touch on what drove this and how the pivot toward enterprise-oriented sales is progressing? can you touch on what drove this and how the pivot toward enterprise-oriented sales is progressing

Speaker 2: Yeah, I mean, that's something we have to do. We have to continue to look at our own talent, and we have to ensure that all 2,000 of our consultants can have a more enterprise-wide conversation for sure. You know, when you look at the digital solution only, you're gonna find that, you know, it's just an increasing percentage is longer term, you know, kind of software as a service deal. I don't sit there and look at simply revenue. I look at the entire firm and what is it doing in terms of our win-loss rate, which we also carefully monitor and study. You know, what is the backlog doing? Yeah, I mean, that's something we have to do. yeah i mean that's something we have to do We have to continue to look at our own talent, and we have to ensure that all 2,000 of our consultants can have a more enterprise-wide conversation for sure. we have to continue to look at our own talent and we have to ensure that all 2,000 of our consultants can have a more enterprise-wide conversation for sure You know, when you look at the digital solution only, you're gonna find that, you know, it's just an increasing percentage is longer term, you know, kind of software as a service deal. you know when you look at the digital solution only you're gonna find that you know it's just an increasing percentage is longer term you know kind of software as a service deal I don't sit there and look at simply revenue. i don't sit there and look at simply revenue I look at the entire firm and what is it doing in terms of our win-loss rate, which we also carefully monitor and study. i look at the entire firm and what is it doing in terms of our win-loss rate which we also carefully monitor and study You know, what is the backlog doing? you know what is the backlog doing You know, I sit there and say, in this environment, you know, am I totally satisfied? No, not satisfied. But we've only been at this, with this IP in a, you know, in a common warehouse for a couple months. I mean, this has not been very long at all. You know, I sit there and say, in this environment, you know, am I totally satisfied? you know i sit there and say in this environment you know am i totally satisfied No, not satisfied. no not satisfied But we've only been at this, with this IP in a, you know, in a common warehouse for a couple months. but we've only been at this with this ip in a you know in a common warehouse for a couple months I mean, this has not been very long at all. i mean this has not been very long at all

Speaker 8: Makes sense. Thank you. Makes sense. makes sense Thank you. thank you

Speaker 5: Our next question will come from the line of Josh Chan with UBS. Please go ahead. Our next question will come from the line of Josh Chan with UBS. our next question will come from the line of josh chan with ubs Please go ahead. please go ahead

Speaker 3: Hi. Good morning, Gary and Bob. I guess on your- Hi. hi Good morning, Gary and Bob. good morning gary and bob I guess on your- i guess on your-

Speaker 2: Hey, Josh. Hey, Josh. hey josh

Speaker 3: -consulting side of the business. Hi. This is usually a business that is stronger when the economy is more sure, I guess. Could you just talk to the recent strengths in this consulting new business? You know, what are some of the common threads that you're getting from sort of the, you know, half a million plus engagements that kind of Bob kind of alluded to earlier? -consulting side of the business. -consulting side of the business Hi. hi This is usually a business that is stronger when the economy is more sure, I guess. this is usually a business that is stronger when the economy is more sure i guess Could you just talk to the recent strengths in this consulting new business? could you just talk to the recent strengths in this consulting new business You know, what are some of the common threads that you're getting from sort of the, you know, half a million plus engagements that kind of Bob kind of alluded to earlier? you know what are some of the common threads that you're getting from sort of the you know half a million plus engagements that kind of bob kind of alluded to earlier

Speaker 2: It's around transformation. It's around org strategy and transformation. That would be the big ticket theme for those larger engagements. You know, I read something last night. There was a report that, you know, consulting firms in calendar 2025 grew something like 5% or 5.5%. You know, you have to kind of question that a little bit. You know, I look at our overall firm over the past, you know, call it 12 months, and I'm saying, "Hey, we're, you know, we're in line or better," recognizing that, you know, part of our business deals with the labor markets, which haven't been exactly fantastic. It's around transformation. it's around transformation It's around org strategy and transformation. it's around org strategy and transformation That would be the big ticket theme for those larger engagements. that would be the big ticket theme for those larger engagements You know, I read something last night. you know i read something last night There was a report that, you know, consulting firms in calendar 2025 grew something like 5% or 5.5%. there was a report that you know consulting firms in calendar 2025 grew something like 5% or 5.5% You know, you have to kind of question that a little bit. you know you have to kind of question that a little bit You know, I look at our overall firm over the past, you know, call it 12 months, and I'm saying, "Hey, we're, you know, we're in line or better," recognizing that, you know, part of our business deals with the labor markets, which haven't been exactly fantastic. you know i look at our overall firm over the past you know call it 12 months and i'm saying "hey we're you know we're in line or better," recognizing that you know part of our business deals with the labor markets which haven't been exactly fantastic

Speaker 1: Hey, Josh. The other thing I would say too is if you look at in the consulting business right now, Gary talked about transformation. A lot of companies are looking at their talent and are they ready to be productive in an AI world, and we have solutions that look at AI-ready leaders, AI-ready talent, and that's where you see the assessment and succession having strong, YoY growth in that quarter as well. Hey, Josh. hey josh The other thing I would say too is if you look at in the consulting business right now, Gary talked about transformation. the other thing i would say too is if you look at in the consulting business right now gary talked about transformation A lot of companies are looking at their talent and are they ready to be productive in an AI world, and we have solutions that look at AI-ready leaders, AI-ready talent, and that's where you see the assessment and succession having strong, YoY growth in that quarter as well. a lot of companies are looking at their talent and are they ready to be productive in an ai world and we have solutions that look at ai-ready leaders ai-ready talent and that's where you see the assessment and succession having strong yoy growth in that quarter as well

Speaker 3: Okay, that's very clear. Thank you both. Then maybe a quick question on margin. If Korn Ferry continues to grow at the similar revenue growth rates that you're kind of guiding to, what's the right way to think about kind of margin expansion for the company as a whole kind of going forward? Okay, that's very clear. okay that's very clear Thank you both. thank you both Then maybe a quick question on margin. then maybe a quick question on margin If Korn Ferry continues to grow at the similar revenue growth rates that you're kind of guiding to, what's the right way to think about kind of margin expansion for the company as a whole kind of going forward? if korn ferry continues to grow at the similar revenue growth rates that you're kind of guiding to what's the right way to think about kind of margin expansion for the company as a whole kind of going forward

Speaker 2: I mean, you know, in this investment, you know, the investment horizon we have right now. You know, I think what we've said is 16%-18%. Part of it depends on, you know, the M&A execution and, for example, how much, if there's more opportunities, which I think there are, around the interim market and the interim solution. That mix change has a big impact on that question. You know, we also, we also have to make sure that we are making the right investments as a firm, particularly around talent. You know, I think for now that's over this investment horizon, that's reasonable. I mean, you know, in this investment, you know, the investment horizon we have right now. i mean you know in this investment you know the investment horizon we have right now You know, I think what we've said is 16%-18%. you know i think what we've said is 16%-18% Part of it depends on, you know, the M&A execution and, for example, how much, if there's more opportunities, which I think there are, around the interim market and the interim solution. part of it depends on you know the m&a execution and for example how much if there's more opportunities which i think there are around the interim market and the interim solution That mix change has a big impact on that question. that mix change has a big impact on that question You know, we also, we also have to make sure that we are making the right investments as a firm, particularly around talent. you know we also we also have to make sure that we are making the right investments as a firm particularly around talent You know, I think for now that's over this investment horizon, that's reasonable. you know i think for now that's over this investment horizon that's reasonable You know, you look back, over the last, you know, kind of three years or four years, this is after the great resignation, which probably ended, you know, somewhere late 2022, early mid 2023. The reality is our headcount, per colleague is up almost like 35%. You know, we've got a track record of being able to, you know, to drive client impact the top line, but also be more profitable. You know, you look back, over the last, you know, kind of three years or four years, this is after the great resignation, which probably ended, you know, somewhere late 2022, early mid 2023. you know you look back over the last you know kind of three years or four years this is after the great resignation which probably ended you know somewhere late 2022 early mid 2023 The reality is our headcount, per colleague is up almost like 35%. the reality is our headcount per colleague is up almost like 35% You know, we've got a track record of being able to, you know, to drive client impact the top line, but also be more profitable. you know we've got a track record of being able to you know to drive client impact the top line but also be more profitable

Speaker 3: That's right. Yeah, thanks for that follow, Gary. Yeah, congrats on that good result. That's right. that's right Yeah, thanks for that follow, Gary. yeah thanks for that follow gary Yeah, congrats on that good result. yeah congrats on that good result

Speaker 2: Thanks, Josh. Thanks, Josh. thanks josh

Speaker 5: Our next question will come from the line of Mark Marcon with Baird. Please go ahead. Our next question will come from the line of Mark Marcon with Baird. our next question will come from the line of mark marcon with baird Please go ahead. please go ahead

Speaker 4: Good afternoon. I just wanted to follow up on the last series of questions. Gary, when you're talking about the investment horizon, how long are you thinking in terms of that 16%-18%? I can't help but notice, you know, you're increasing your revenue. If we go through all the charts, it's like the number of consultants on staff has actually been flat to down, most frequently down. I'm trying to think through, like, when you think long term and you think about like, hey, we've got 2,000 front-facing consultants, 9,000 colleagues in total, and we're probably in the early stages in terms of implementing AI. I'm just wondering, like, when you really think about longer term, you know, how efficient can you be? Good afternoon. good afternoon I just wanted to follow up on the last series of questions. i just wanted to follow up on the last series of questions Gary, when you're talking about the investment horizon, how long are you thinking in terms of that 16%-18%? gary when you're talking about the investment horizon how long are you thinking in terms of that 16%-18% I can't help but notice, you know, you're increasing your revenue. i can't help but notice you know you're increasing your revenue If we go through all the charts, it's like the number of consultants on staff has actually been flat to down, most frequently down. if we go through all the charts it's like the number of consultants on staff has actually been flat to down most frequently down I'm trying to think through, like, when you think long term and you think about like, hey, we've got 2,000 front-facing consultants, 9,000 colleagues in total, and we're probably in the early stages in terms of implementing AI. i'm trying to think through like when you think long term and you think about like hey we've got 2,000 front-facing consultants 9,000 colleagues in total and we're probably in the early stages in terms of implementing ai I'm just wondering, like, when you really think about longer term, you know, how efficient can you be? i'm just wondering like when you really think about longer term you know how efficient can you be I know you've got to make some investments in terms of people, but how are you thinking about that longer term? I know you've got to make some investments in terms of people, but how are you thinking about that longer term? i know you've got to make some investments in terms of people but how are you thinking about that longer term

Speaker 2: You know, clients have asked me that question, Mark, as they're looking at their organization. This comment is not specifically to Korn Ferry, and this is clearly an estimate. I think if you were to, say, look out over five-seven years and given the demographic trends that we've talked about on this call and the quote, shrinking labor force, not as many people coming into the labor force, not only in the United States, but other countries as well. Then the promise, you know, then the question is, well, how do you fill that gap? Well, you either do it through immigration or technology. You know, clients have asked me that question, Mark, as they're looking at their organization. you know clients have asked me that question mark as they're looking at their organization This comment is not specifically to Korn Ferry, and this is clearly an estimate. this comment is not specifically to korn ferry and this is clearly an estimate I think if you were to, say, look out over five-seven years and given the demographic trends that we've talked about on this call and the quote, shrinking labor force, not as many people coming into the labor force, not only in the United States, but other countries as well. i think if you were to say look out over five-seven years and given the demographic trends that we've talked about on this call and the quote shrinking labor force not as many people coming into the labor force not only in the united states but other countries as well Then the promise, you know, then the question is, well, how do you fill that gap? then the promise you know then the question is well how do you fill that gap Well, you either do it through immigration or technology. well you either do it through immigration or technology Given the mathematics, around labor force participation and the promise of AI, what I've told clients is if you look out that kind of five years, median of the bell curve, I would expect your labor force to be smaller by, say, 15% for sure. Now, I'm not talking about every company, every industry, every sector. Just generally speaking, the theme would have to be, as it is for the country of the United States, it would have to be more with less. That's the advice that I've been giving to clients. Given the mathematics, around labor force participation and the promise of AI, what I've told clients is if you look out that kind of five years, median of the bell curve, I would expect your labor force to be smaller by, say, 15% for sure. given the mathematics around labor force participation and the promise of ai what i've told clients is if you look out that kind of five years median of the bell curve i would expect your labor force to be smaller by say 15% for sure Now, I'm not talking about every company, every industry, every sector. now i'm not talking about every company every industry every sector Just generally speaking, the theme would have to be, as it is for the country of the United States, it would have to be more with less. just generally speaking the theme would have to be as it is for the country of the united states it would have to be more with less That's the advice that I've been giving to clients. that's the advice that i've been giving to clients

Speaker 4: Great. I mean, where would you say you are in terms of harnessing AI, in terms of increasing the efficiency? Are you know, is it the first inning? Are we singing the national anthem or are we in the third inning? Great. great I mean, where would you say you are in terms of harnessing AI, in terms of increasing the efficiency? i mean where would you say you are in terms of harnessing ai in terms of increasing the efficiency Are you know, is it the first inning? are you know is it the first inning Are we singing the national anthem or are we in the third inning? are we singing the national anthem or are we in the third inning

Speaker 2: Oh, we've taken the field. you know, the reality with all this talk, I think that, you know, many, many, many companies are in the first inning here. There's enough there, where you say, "Okay, I get it, you know. technology can definitely make you more efficient." Then the question is behavioral change. The real question is, you know, people don't change unless there's a reason to change. The question for leadership of companies is how do you create that change? How do you get people to truly embrace the, you know, ever-evolving technology that's out there? That's really the question. I think, look, the reality is, I think most people are in the first inning, Mark. Oh, we've taken the field. you know, the reality with all this talk, I think that, you know, many, many, many companies are in the first inning here. oh we've taken the field you know the reality with all this talk i think that you know many many many companies are in the first inning here There's enough there, where you say, "Okay, I get it, you know. technology can definitely make you more efficient." Then the question is behavioral change. there's enough there where you say "okay i get it you know technology can definitely make you more efficient." then the question is behavioral change The real question is, you know, people don't change unless there's a reason to change. the real question is you know people don't change unless there's a reason to change The question for leadership of companies is how do you create that change? the question for leadership of companies is how do you create that change How do you get people to truly embrace the, you know, ever-evolving technology that's out there? how do you get people to truly embrace the you know ever-evolving technology that's out there That's really the question. that's really the question I think, look, the reality is, I think most people are in the first inning, Mark. i think look the reality is i think most people are in the first inning mark

Speaker 4: Okay, great. With regards to Talent Suite, can you talk a little bit about like when you're doing these big deals and you mentioned the aerospace company with 40,000 employees. When you're pricing this and you're pricing it for complete access to Talent Suite, how do you price it? How should we think about that sort of lift? Okay, great. okay great With regards to Talent Suite, can you talk a little bit about like when you're doing these big deals and you mentioned the aerospace company with 40,000 employees. with regards to talent suite can you talk a little bit about like when you're doing these big deals and you mentioned the aerospace company with 40,000 employees When you're pricing this and you're pricing it for complete access to Talent Suite, how do you price it? when you're pricing this and you're pricing it for complete access to talent suite how do you price it How should we think about that sort of lift? how should we think about that sort of lift

Speaker 2: Size of the company. Size of the company. size of the company

Speaker 4: In terms of margins and revenue. In terms of margins and revenue. in terms of margins and revenue

Speaker 2: Yeah, yeah. Size of company and number, you know, size of company and number of seats. I mean, that's generally how we do it. Is it an existing client of Korn Ferry? You know, what we've seen is that, for example, people will ask the question, CEOs will ask the question, "Is my, is my labor force, quote, AI ready?" Which a lot of that will come down to agility and dealing with ambiguity. You know, what you would do is go in and assess 5,000, 10,000 people. You know, we produce an MRI that would say, "Okay, this is what the thinking style, leadership style of the organization looks like. Based on our research, this is what a future-ready workforce would look like. You know, here's how you stack up. Yeah, yeah. yeah yeah Size of company and number, you know, size of company and number of seats. size of company and number you know size of company and number of seats I mean, that's generally how we do it. i mean that's generally how we do it Is it an existing client of Korn Ferry? is it an existing client of korn ferry You know, what we've seen is that, for example, people will ask the question, CEOs will ask the question, "Is my, is my labor force, quote, AI ready?" Which a lot of that will come down to agility and dealing with ambiguity. you know what we've seen is that for example people will ask the question ceos will ask the question "is my is my labor force quote ai ready?" which a lot of that will come down to agility and dealing with ambiguity You know, what you would do is go in and assess 5,000, 10,000 people. you know what you would do is go in and assess 5,000 10,000 people You know, we produce an MRI that would say, "Okay, this is what the thinking style, leadership style of the organization looks like. you know we produce an mri that would say "okay this is what the thinking style leadership style of the organization looks like Based on our research, this is what a future-ready workforce would look like. based on our research this is what a future-ready workforce would look like You know, here's how you stack up. you know here's how you stack up Here's the gaps and here's a plan towards, here's a plan towards remediation. It also depends too, is what level of consulting, is wrapped around that. Here's the gaps and here's a plan towards, here's a plan towards remediation. here's the gaps and here's a plan towards here's a plan towards remediation It also depends too, is what level of consulting, is wrapped around that. it also depends too is what level of consulting is wrapped around that

Speaker 4: Got it. Then a question for Bob, maybe. With regards to consulting in the third quarter, you had a 5% lift in terms of revenue, but the margins went down by 70 basis points YoY, and the headcount's down. What's the underlying reason for those margins to be down? This is in the context of a great quarter, so just. Got it. got it Then a question for Bob, maybe. then a question for bob maybe With regards to consulting in the third quarter, you had a 5% lift in terms of revenue, but the margins went down by 70 basis points YoY, and the headcount's down. with regards to consulting in the third quarter you had a 5% lift in terms of revenue but the margins went down by 70 basis points yoy and the headcount's down What's the underlying reason for those margins to be down? what's the underlying reason for those margins to be down This is in the context of a great quarter, so just. this is in the context of a great quarter so just

Speaker 1: Yeah. Yeah. yeah

Speaker 4: Underperformed parts. Underperformed parts. underperformed parts

Speaker 1: Yeah, it is. It is, Mark. One of the things, is our fee revenues were, you know, well above our guidance range. They attract more bonus dollars. We, you know, we had a, an opportunity to get caught up there on the bonus that we provide for folks, and that put a little bit of downward pressure on the, on the margin in the quarter. Yeah, it is. yeah it is It is, Mark. it is mark One of the things, is our fee revenues were, you know, well above our guidance range. one of the things is our fee revenues were you know well above our guidance range They attract more bonus dollars. they attract more bonus dollars We, you know, we had a, an opportunity to get caught up there on the bonus that we provide for folks, and that put a little bit of downward pressure on the, on the margin in the quarter. we you know we had a an opportunity to get caught up there on the bonus that we provide for folks and that put a little bit of downward pressure on the on the margin in the quarter

Speaker 4: Got it. Okay, that's great. Gary, one last one for you if you'll take it, and I know we're only 10 days in. Generally speaking, like, after all of the various things that you've gone through, what's your expectation in terms of, like, how long this would have to continue before, you know, plans would change or that you'd actually see a meaningful difference just in terms of client behavior? Got it. got it Okay, that's great. okay that's great Gary, one last one for you if you'll take it, and I know we're only 10 days in. gary one last one for you if you'll take it and i know we're only 10 days in Generally speaking, like, after all of the various things that you've gone through, what's your expectation in terms of, like, how long this would have to continue before, you know, plans would change or that you'd actually see a meaningful difference just in terms of client behavior? generally speaking like after all of the various things that you've gone through what's your expectation in terms of like how long this would have to continue before you know plans would change or that you'd actually see a meaningful difference just in terms of client behavior

Speaker 2: Well, this is just one person's, I mean, one person's view. It's, I don't think anybody really knows the answer to that. I mean, in the United States, you know, transportation and, you know, transportation costs, including gas are 17%-20% of consumer spending. Elevated oil prices are not good for consumer spending, which you're already dealing with a K-shaped economy. You know, there's a cost of living crisis. That's clearly a negative. To what extent have we opened Pandora's box? I'm the least qualified person to answer that question. You know, that's certainly one. Well, this is just one person's, I mean, one person's view. well this is just one person's i mean one person's view It's, I don't think anybody really knows the answer to that. it's i don't think anybody really knows the answer to that I mean, in the United States, you know, transportation and, you know, transportation costs, including gas are 17%-20% of consumer spending. i mean in the united states you know transportation and you know transportation costs including gas are 17%-20% of consumer spending Elevated oil prices are not good for consumer spending, which you're already dealing with a K-shaped economy. elevated oil prices are not good for consumer spending which you're already dealing with a k-shaped economy You know, there's a cost of living crisis. you know there's a cost of living crisis That's clearly a negative. that's clearly a negative To what extent have we opened Pandora's box? to what extent have we opened pandora's box I'm the least qualified person to answer that question. i'm the least qualified person to answer that question You know, that's certainly one. you know that's certainly one You know, our colleagues in the Middle East, which we have an incredible business, our colleagues are continuing under very difficult circumstances, much like our colleagues in Ukraine have done throughout this time. They're working from home, you know, taking safety precautions. As of last week, it hasn't, you know, materially impacted our delivery of services. I think, you know, you go out, I think it'll be another, you know, 90 days or so, before you really get line of sight on what all this means beyond oil. I mean, beyond oil. What does this really mean? You know, our colleagues in the Middle East, which we have an incredible business, our colleagues are continuing under very difficult circumstances, much like our colleagues in Ukraine have done throughout this time. you know our colleagues in the middle east which we have an incredible business our colleagues are continuing under very difficult circumstances much like our colleagues in ukraine have done throughout this time They're working from home, you know, taking safety precautions. they're working from home you know taking safety precautions As of last week, it hasn't, you know, materially impacted our delivery of services. as of last week it hasn't you know materially impacted our delivery of services I think, you know, you go out, I think it'll be another, you know, 90 days or so, before you really get line of sight on what all this means beyond oil. i think you know you go out i think it'll be another you know 90 days or so before you really get line of sight on what all this means beyond oil I mean, beyond oil. i mean beyond oil What does this really mean? what does this really mean

Speaker 4: Okay. Great. Thank you very much. Okay. okay Great. great Thank you very much. thank you very much

Speaker 5: It appears there are no further questions at this time, Mr. Burnison. It appears there are no further questions at this time, Mr. Burnison. it appears there are no further questions at this time mr burnison

Speaker 2: Okay. Thank you all for the questions. I'm incredibly proud of this organization and to be a founding partner, which may seem a ways away of LA28, but it's not. You know, I think that will highlight just the power of our organization, for sure. We're excited about that. With that, thank you for your questions, and we'll talk to you next time. Bye-bye. Okay. okay Thank you all for the questions. thank you all for the questions I'm incredibly proud of this organization and to be a founding partner, which may seem a ways away of LA28, but it's not. i'm incredibly proud of this organization and to be a founding partner which may seem a ways away of la28 but it's not You know, I think that will highlight just the power of our organization, for sure. you know i think that will highlight just the power of our organization for sure We're excited about that. we're excited about that With that, thank you for your questions, and we'll talk to you next time. with that thank you for your questions and we'll talk to you next time Bye-bye. bye-bye

Speaker 5: Ladies and gentlemen, this conference call will be available for replay for one week, starting today, running through the end of the day, March 16th, 2026, ending at midnight. You may access the echo replay service by dialing 800-770-2030 and entering the access code three two six eight three one five, followed by the pound key. Additionally, the replay will be available for playback at the company's website, www.kornferry.com, in the investor relations section. This concludes today's call. Thank you all for joining. You may now disconnect. Ladies and gentlemen, this conference call will be available for replay for one week, starting today, running through the end of the day, March 16th, 2026, ending at midnight. ladies and gentlemen this conference call will be available for replay for one week starting today running through the end of the day march 16th 2026 ending at midnight You may access the echo replay service by dialing 800-770-2030 and entering the access code three two six eight three one five, followed by the pound key. you may access the echo replay service by dialing 800-770-2030 and entering the access code three two six eight three one five followed by the pound key Additionally, the replay will be available for playback at the company's website, www.kornferry.com, in the investor relations section. additionally the replay will be available for playback at the company's website www.kornferry.com in the investor relations section This concludes today's call. this concludes today's call Thank you all for joining. thank you all for joining You may now disconnect. you may now disconnect