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Fee revenue up 16% in Q1 2019 for Korn Ferry

Korn/Ferry International has released its results for the first quarter of 2019.

The company reported first quarter fee revenue of $465.6m. First quarter diluted loss per share was $0.70 and adjusted diluted earnings per share was $0.78. Adjusted diluted earnings per share for the first quarter excludes the $106.6m charge as discussed above and $3.1 million related to retention awards from a prior acquisition, or $1.48 per share.

Gary D. Burnison, CEO of Korn Ferry, said, "I am pleased to report fee revenue of approximately $466 million and strong profits, with Adjusted EBITDA of approximately $71 million during our recently completed first quarter.  Overall, our revenues are up 16% year over year, with balanced growth across the firm. 

"As disclosed last quarter, we are sunsetting our legacy logos and migrating to one unified brand – Korn Ferry.  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."

Fee revenue was $465.6m in Q1 FY'19, an increase of 16.0% (15.7% increase on a constant currency basis) compared to Q1 FY'18.  The increase in fee revenue was due to organic growth in all solutions.

Operating margin was (11.8%) in Q1 FY'19 compared to 10.5% in the year-ago quarter.  The decrease in operating margin was primarily due to the $106.6 million tradename write-offs in Q1 FY'19 and an increase in compensation and benefits, partially offset by an increase in fee revenue. Adjusted EBITDA margin was 15.2%, compared to 15.0% in the year-ago quarter.

In executive search, fee revenue was $192.9m in Q1 FY'19, an increase of $31.7m or 19.7% (19.3% on a constant currency basis) compared to Q1 FY'18. The increase in fee revenue was attributable to higher fee revenue in all regions.

Operating income was $40.9m in Q1 FY'19 compared to $32.9m in Q1 FY'18. Operating margin was 21.2% in Q1 FY'19 compared to 20.4% in the year-ago quarter. The increase in operating income was due to higher fee revenue in Q1 FY'19 compared to Q1 FY'18, partially offset by an increase in compensation and benefits expense driven by 3.6% increase in average headcount and an increase in performance related bonus expense. Adjusted EBITDA was $46.8m in Q1 FY'19 with an Adjusted EBITDA margin of 24.2% compared to $35.2m and 21.9%, respectively, in the year-ago quarter.

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