Korn Ferry International Inc. (NYSE: KFY) yesterday reported total fee revenue rose 15.7% in constant currency in its fiscal first quarter ended July 31. The increase on a reported basis was 16.0%. The Los Angeles-based provider of executive search and consulting reported the organic growth was driven by all three lines of business.
| (US$ thousands) | Q1 2019 | Q1 2018 | % change | % change (constant currency) |
| Fee revenue | $465,568 | $401,254 | 16.0% | 15.7% |
| Net loss/income | -$38,611 | $29,041 | nm |
During the first quarter the company announced a rebranding campaign under which it is sunsetting all sub-brands and moving to one unified brand – Korn Ferry. In connection with this, the company incurred a charge of $106.6 million related to tradenames from prior acquisitions that the company will no longer be using, resulting in an operating loss of $55.1 million.
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“As disclosed last quarter, we are sunsetting our legacy logos and migrating to one unified brand — Korn Ferry,” CEO Gary Burnison said. “Over the next 15 months, we will continue to move our organization towards an industry, solution and geographic orientation to capture the substantial opportunity we have as an organizational consulting firm.”
- Executive search fee revenue rose 19.3% on a constant currency basis to $192.9 million. The increase was attributable to higher fee revenue in all regions.
- Advisory (formerly Hay Group) fee revenue rose 8.6% in constant currency to $195.4 million, driven by increases in each of our Advisory solution areas — primarily from consulting.
- Fee revenue in RPO and professional search data (formerly Futurestep) rose 27.2% in constant currency to $77.3 million. The higher fee revenue was primarily driven by year-over-year increases in recruitment process outsourcing and professional search of $9.3 million and $7.4 million, respectively.
Fee revenue by segment
| (US$ thousands) | Q1 2019 | Q1 2018 | % change | % change (constant currency) |
| Total executive search | $192,924 | $161,191 | 19.7% | 19.3% |
| Advisory | $195,375 | $179,453 | 8.9% | 8.6% |
| RPO and professional search | $77,269 | $60,610 | 27.5% | 27.2% |
Executive search fee revenue by geography
| (US$ thousands) | Q1 2019 | Q1 2018 | % change |
| North America | $112,097 | $91,833 | 22.1% |
| Europe, the Middle East and Africa | $46,654 | $40,121 | 16.3% |
| Asia Pacific | $26,295 | $21,578 | 21.9% |
| Latin America | $7,878 | $7,659 | 2.9% |
Guidance
Korn Ferry expects second-quarter fee revenue to range between $470 million and $490 million.
Share price and market cap
Shares in Korn Ferry fell 21.99% to $49.90 as of 1:19 p.m. Eastern time today. The company had a market cap of $2.866 billion.