Korn Ferry (KFY) reported first-quarter fiscal 2027 results that topped Wall Street expectations on both earnings and revenue, but shares fell in premarket trading as investors weighed a guidance period that included only two months of Alexander Mann Solutions (AMS) contribution.
Adjusted diluted earnings per share came in at $1.43, rising 9% from a year earlier and beating consensus estimates of $1.36 by $0.07, or roughly 5%. Fee revenue reached $756.5 million, up 7% year-over-year and above the $736.76 million estimate, marking the sixth consecutive quarter of top-line growth.
Adjusted EBITDA was $128 million, up 7% from a year earlier, with margin holding flat at 17%. New business bookings rose 12%, and the internal business referral rate climbed approximately 300 basis points to 29.4% of consolidated fee revenue. Marquee and Diamond accounts remained steady at about 40% of revenue, with more than 90% holding an active Talent Suite subscription.
The backlog of estimated remaining fees under contract grew 14% to $1.92 billion. Roughly 56%, or $1.1 billion, is expected to be recognized over the next four quarters, while the remaining 44%, or $835 million, extends beyond that horizon. Total combined backlog with AMS was cited at $3.5 billion.
Regional fee revenue broke out as follows: Americas $442 million, up 9%; EMEA $228 million, up 4%; and APAC $87 million, up 1%.
For the second quarter of fiscal 2027, Korn Ferry guided for fee revenue of $860 million to $878 million, adjusted EBITDA margin of 16.8% to 17.2%, and adjusted diluted EPS of $1.30 to $1.40. The period includes only September and October contributions from AMS.
CEO Gary Burnison called the results "absolutely outstanding" and emphasized the company's full-spectrum talent capabilities across search, workforce solutions, and organizational development. He expressed strong confidence in the AMS integration, stating he was "200% confident" the firm would achieve at least $140 million in run-rate EBITDA synergies within a year of the deal announcement. Management also indicated confidence in reaching at least $40 million in incremental EBITDA sooner than the one-year mark.
The AMS integration is targeted for completion by May 1, 2027, when both businesses will unify onto common SAP and CRM platforms in a process expected to take roughly eight months.
Shares fell 1.83% in premarket trading to $80.54, down from a prior close of $82.04. The stock has traded between $58.95 and $87.51 over the past year. Korn Ferry's market capitalization stands at approximately $4.11 billion, with a price-to-earnings ratio of 15.35 and a dividend yield of 2.68%. The company raised dividends for a fifth consecutive year.
On the conference call, analysts from Truist, William Blair, Goldman Sachs, Baird, and UBS questioned management on search timelines, AMS backlog durability, and the pace of synergy realization.
