Earnings Call Transcript - KFY Q1 2020

Operator, Operator

Welcome to the Korn Ferry First Quarter Fiscal Year 2020 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 a copy of the financial presentation that we will be reviewing with you today. Before I turn the call over to your 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 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 reports filed by the company with the SEC, including the company's annual report for fiscal year 2019. Also, 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 direct comparable GAAP financial measure, is contained in the financial presentation and earnings release related to this call, both of which are posted in the Investor Relations section of the company's website. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison.

Gary Burnison, CEO

Okay. Thanks, Greg, and good afternoon, everybody, and thanks for joining us. We had a very good quarter. We came in with growth at about 7% constant currency, which is 4% actual. Fee revenue was $485 million. And that growth was clearly driven by our RPO and Professional Search offering, which grew at 27% constant currency, and that's the 21st consecutive quarter of double-digit growth for our RPO and Professional Search business. We saw revenue growth in all geographies, again constant currency. Asia and South America were up 11%, EMEA was up 7%, and North America was up 5%. Earnings remained very strong. EBITDA was about $75 million, and we continued to allocate capital to share repurchases. We bought back almost 1 million shares to date using about $40 million. Our financial results for the quarter, I think they really demonstrate the durability of our business model, and whether that's driving our clients' organizational efficiency or delivering on an M&A integration, our firm Korn Ferry not only helps organizations, but as importantly, teams, leaders, and individuals exceed their potential, and that's what this company is all about enabling people and organizations to indeed exceed their potential. In a couple of months here in November 14th, it's going to mark our 50th year in business, and out of this five-decade journey, I certainly haven't been here for all 50 years, but I've been here for a good 17 or 18, and I think out of that five-decade journey, I'm probably more confident today about where we are positioned and our strategy than ever before. I see rich opportunities in our vast IP, which will provide a platform for digital insights, a part of our business that provides more regular, durable revenue streams. We have an advisory business today that is twice the size of what the entire firm was a decade ago. I think we've got headroom in the marquee and regional clients. The marquees represent about 21% of our portfolio. And in the first quarter, we expanded this to about 200 regional accounts. I also look at opportunities like KF Advance, which is a business that we've basically just started, but it entails offering career advice to professionals, and in a very short time, we've gone to asking could we do this to a full-fledged offering with 82,000 professionals who are benefiting from to date about 11,000 coaching sessions. I think we're building the world's career gymnasium for people to exercise their career fitness. And so that single Rolodex that Lester Korn and Richard Ferry started this great firm with many years ago has been transformed into arguably the world's most comprehensive people and organizational databases. We've got organizational benchmark data on 12,000 entities, 4 billion data points on professionals, 69 million assessments taken and rewards data on over 20 million people and almost 25,000 companies, clearly that's Mr. Inside Baseball. And so that boutique firm of the past with a long line of business today puts somebody in a job every three working minutes. Every month, we develop over 100,000 individuals and we've dramatically now shifted to a global firm with solutions that synchronize an organization’s strategy and talent to drive superior performance for our clients. That's what it's all about. So more than organizational strategy or compensation advisory, more than talent acquisition, more than leadership development, Korn Ferry enables people and organizations to be more than, simply put, to exceed their potential. Today's Korn Ferry is instrumental to the growth of organizations, helping them optimize their workforce and driving meaningful business outcomes. Our go-forward strategy is going to comprise really five pillars. One, an enterprise go-to-market approach with clients of scale, creating a portfolio of house accounts. We'd like to see them be 30%, 35%, 40% of our portfolio. Two, developing a more subscription-based revenue stream from our digital insights business, which was formerly called our products business. Three, continuing to create a career destination for our colleagues. Four, a disciplined approach to capital, including M&A, share repurchases, and dividends. And finally, innovating and monetizing our IP. An example would be the Korn Ferry Advance offering that we've gotten now. So I'm joined here with our CFO, Bob Rozek, and Gregg Kvochak. So Bob, I'll turn it over to you.

Bob Rozek, CFO

Great, thanks, Gary, and good afternoon, everybody. I would echo Gary's comments on the strong results we had in this quarter. The financial results do remain strong, and we continue to demonstrate the durability of our business model as well as the relevance that our solutions have in driving meaningful business outcomes for our clients. Fee revenue in our just-completed first quarter grew to almost $485 million, which is up 4% year-over-year in actual dollars, and as Gary indicated, nearly 7% measured at constant currency. Each of our business segments grew in the first quarter. Exec Search was up 2%, Advisory up 3%, and RPO and Pro Search up over 27%; again, all measured at constant currency. Our earnings remained strong with EBITDA at approximately $75 million, which compared to adjusted EBITDA in the first quarter of fiscal 19 was up $4 million or about 5.8%. Our profitability also improved with EBITDA margin reaching 15.5% compared to an adjusted EBITDA margin last year in the first quarter of 15.2%. Now, turning to new business trends. Globally, new business in search was essentially flat year-over-year, while advisory new business was up 4% at constant currency. For advisory, new business in the first quarter was up 19% year-over-year in North America, but was partially offset by weakness in certain geographies internationally. Demand for RPO and Pro Search services remained strong in the first quarter with total new business awards of $97 million, consisting of $31 million of new Pro Search assignments and $66 million of longer-term recruitment outsourcing contracts. Now of the $66 million, approximately $32 million are new logos or new clients, with approximately $34 million of the extensions and renewals making up the difference. Also of particular note, in the first quarter, we had strong RPO wins in the UK, which is a strong indicator of the secular demand for recruitment outsourcing even in markets challenged by economic and geopolitical turmoil. At the end of the first quarter, total cash and marketable securities were $567 million, and that's up about $67 million compared to the first quarter of last year. Excluding amounts reserved for deferred comp and for accrued bonuses, our investable cash balance at the end of the first quarter was approximately $363 million, and that's also up about $67 million year-over-year. We had outstanding debt at the end of the first quarter of about $223 million. As Gary indicated, we did stay on path with our balanced approach to capital allocation. The Board declared a dividend of $0.10. And as Gary mentioned, we repurchased about 1 million shares, spending just shy of $40 million. Currently, we have about $213 million remaining on our authorization for share repurchases. Finally, fully-diluted earnings per share in the first quarter was $0.76. That's down $0.02 or 2% compared to the same number last year in the first quarter. The decrease is primarily driven by a higher effective tax rate in this year's first quarter versus last year. This year, our rate was 24.9%, and last year, the rate was 19.6% in the first fiscal quarter. I'll now turn the call over to Gregg to review operating segments in more detail.

Gregg Kvochak, Analyst

Okay. Thanks, Bob. Global Executive Search fee revenue in the first quarter of fiscal 20 was $193.2 million, which compared year-over-year was flat, but measured at constant currency was up 2%. By region at constant currency, North America was flat, Europe was up 4%, Asia-Pacific was up 8%, and Latin America was up 3%. By Executive Search specialty practice at actual rates, growth in the first quarter was led by our financial services practice at 6% and our industrial practice at 4%. Our life sciences, healthcare, consumer goods, and technology practices were flat to down modestly. The total number of dedicated executive search consultants worldwide at the end of the first quarter was 569, up 24 year-over-year and up four sequentially. Annualized fee revenue production per consultant in the first quarter was $1.36 million, and the number of new search assignments opened worldwide in the first quarter was 1,695, which was essentially flat year-over-year. EBITDA for Executive Search in the first quarter was $48.9 million, up $2.1 million or over 4.6% year-over-year. The consolidated EBITDA margin for Executive Search in the first quarter of fiscal 20 was 25.3% compared to 24.2% in the first quarter of fiscal 19. Now turning to Advisory. In the first quarter, global Advisory fee revenue was $195.5 million, which grew 3% year-over-year measured at constant currency. Growth was spread across all regions with North America up approximately 1%, Europe up approximately 2%, and Asia Pacific up approximately 9%, all measured at constant currency. As previously mentioned, global new business awards in the first quarter for Advisory were up approximately 4% year-over-year measured at constant currency, with double-digit growth in North America being offset by weaker new business in international markets. In the first quarter, EBITDA for Advisory was $34.6 million with a 17.7% margin, both flat year-over-year. Finally, growth for RPO and Professional Search continued at a high double-digit pace in the first quarter of fiscal 20. In the first quarter, RPO and Professional Search generated a record-high $95.8 million of fee revenue, which was up 24% year-over-year, and measured at constant currency, up over 27%. All geographic regions grew in the first quarter with North America up 28%, Europe up 33%, and Asia Pacific up 18%. As previously mentioned, in the first quarter, RPO and Professional Search was awarded another $97 million of global new business, consisting of $66 million of longer-term recruitment outsourcing contracts and $31 million of shorter Professional Search assignments. Earnings and profitability for RPO and Professional Search continued to grow with revenue in the first quarter. EBITDA grew to $16.1 million, up $3.6 million or nearly 29% year-over-year, and EBITDA margin improved year-over-year to 16.8%. Now I'll turn the call back over to Bob to discuss our outlook for the second quarter of fiscal 20.

Bob Rozek, CFO

Okay. Thanks, Gregg. Across all service lines, global new business growth in July and August combined was up 7% at constant currency, led by RPO and Professional Search. For Executive Search, new business awards in July and August combined were down about 3% year-over-year. If historic monthly new business trends repeat, we expect Executive Search new business to grow sequentially in September and to hit a quarter-peak in the month of October. For Advisory, new business in the second quarter is typically seasonally strong led by our digital insights. Globally, Advisory new business in July and August combined was flat measured year-over-year at constant currency. For Professional Search, new business in July and August combined measured year-over-year at constant currency was up approximately 5%. For RPO, both business under contract and the pipeline of potential new business opportunities remain strong, and we expect growth to continue in the second quarter. Now considering these factors and assuming worldwide economic conditions, financial markets, and foreign exchange rates remain steady, we expect our consolidated fee revenue in the second quarter of fiscal 20 to range from $485 million to $505 million, and we expect our consolidated diluted earnings per share to range from $0.76 to $0.84. That concludes our prepared remarks, and we would be glad to answer any questions you may have.

Operator, Operator

Our first question comes from Kevin McVeigh with Credit Suisse. Please go ahead, your line is open.

Kevin McVeigh, Analyst

Thank you very much. I appreciate it. Bob, regarding the Q2 guidance, it usually tends to be one of the stronger quarters. I noticed that historically, there’s typically an increase of between $30 million and $50 million. The lower end suggests stability, while the upper end indicates a slight increase. What factors might be affecting that? And could you also provide the tax rate or mention any other elements that could be influencing the EPS in Q2 in relation to the revenue?

Bob Rozek, CFO

Yeah. So I would say that the gating factors when you look across what's happening in the different geographies, you have trade wars with China, you have Brexit, who knows where that's going to end up, a technical recession in Germany. So, those are some of the factors that are weighing a little bit on our Q2 guide. We were experiencing the softness in the geographies or countries where you would expect to see that. In terms of the EPS guidance, it's really not the tax rate. The tax rate is really no different than what we had talked about previously. I think it's going to be 25% to 27% in that range generally. But we continue to be very bullish on our business. We believe deeply in our strategy, and we're just continuing to execute on our balanced approach to capital allocation, which the first priority is to invest back into the business. So, as we expand our base of fee earners, as we expand the marquee account program introduced to regional accounts, those are areas where we're investing back in at this point. And Kevin, if you step back and look at our marquee accounts, Gary indicated they are about 21% of our revenue of those accounts in Q1 where it's a more mature program grew 9% in constant currency. So that growth rate continues to outpace the rest of the company, and that's where we're making our investments.

Kevin McVeigh, Analyst

Got it. Is the Advisory head count down quarter-to-quarter? I noticed it decreased from 577 to 563. Was this due to some regions being a bit weaker?

Bob Rozek, CFO

The Advisory headcount actually went up quarter-to-quarter, Kevin. Do you have the number there, Gregg?

Gregg Kvochak, Analyst

I'm not sure what you're referring to, Kevin. But in the slides that we posted on our website, we now include consultants and execution staff for the quarter, and it was 1,758. In the previous quarter, it was 1,699. So it's actually an increase.

Bob Rozek, CFO

Yeah, it's up, Kevin. And Kevin, what we've done is we've really shifted away from just calling out what we call the fee earners or the consultants in the advisory space. We’ve essentially taken a look at that business through more of Executive Search lines, and what really drives revenue is not just the individuals who sell the work, but you have to have the staff on hand to execute the work. So we've gone to a different defined number, if you will, in terms of what we're communicating now.

Kevin McVeigh, Analyst

Got it. I apologize for the confusion. I was examining slide number 12, where it appeared that the number of consultants and professional staff decreased from 577 to 563.

Bob Rozek, CFO

Sure, Kevin, let's discuss that later.

Kevin McVeigh, Analyst

Sorry about that. Maybe I picked it up wrong. Okay, thank you guys.

Operator, Operator

And our next question comes from the line of George Tong with Goldman Sachs. Please go ahead.

George Tong, Analyst

Hi, thanks, good afternoon. The Advisory business moderated a bit to low-single-digit growth on the constant currency basis. Can you discuss initiatives that you have to re-accelerate the growth towards your longer-term growth target of 10% to 15%?

Gary Burnison, CEO

Well, I think you would sit there and look at several factors. Number one, when we have built that business which was $8 million not that long ago, today it is over $800 million. When you look at that business, particularly the last investment we made in the Hay Group, a substantial 80% of that business was outside the United States, which was great at that point. Where we are today is the first thing you've got to do is to increase the scale of the U.S. business. So that's something we're working on very, very hard, and you will see that Bob commented on the new business that we saw in consulting in North America with double digit, very, very impressive. So that would be one. Number two is, for any professional services firm, you have to have house accounts, you have to have big, loyal clients of scale where you're delivering multiple services with hundreds of colleagues. So that would be two. The third is around our IP, and we've got to continue to digitize that IP and create that more scalable lift in revenue. So, those are really the primary three avenues excluding M&A that we’re going down.

George Tong, Analyst

Very helpful. If we switch gears and look at the RPO business, that segment grew 27% constant currency, very strong. Can you dissect how much of this growth is being driven by an un-penetrated market versus new product and sales initiatives that you're internally executing upon?

Gary Burnison, CEO

I'll let Bob handle the numbers. I want to highlight both aspects. The noteworthy point regarding RPO and the Professional Search business is our strategic choice to target IT and technical skills within the Professional Search sector. We believe this market could be valued at a minimum of $20 billion, possibly even $30 billion. We are quite enthusiastic about our potential there. This assessment is solely for firm recruiting, not staffing, although we are not excluding staffing. We've achieved very positive outcomes in this area. Regarding the RPO business, the synergy of our intellectual property and technology has been extremely effective. Bob, do you want to add anything?

Bob Rozek, CFO

I believe Gary is correct. George, I think it's both aspects. As Gary mentioned, the focus on Pro Search and investments in professional sales personnel are yielding positive results. Regarding RPO, Gary highlighted our extensive intellectual property at the core of our company, and clients are differentiating their offerings by utilizing that IP in their RPO services. While other companies can produce numerous resumes, we can deliver resumes that meet the standards of successful organizations. We also provide interview questions, job descriptions, and role responsibilities. Therefore, our service offerings significantly surpass what others in the industry can provide.

Gary Burnison, CEO

It's interesting to note that although I prefer not to use the term "cross sell," I would describe our deeper multi-line offerings to individual clients in that way. In the last quarter, approximately 20% of our new consulting business revenue came from this approach, mainly from search. For the RPO business, the percentage was 37%, and for Professional Search, it was 52%. However, when looking at other lines of business integrated with search, the figure was only 6%. This highlights a clear opportunity. The strategy of one firm is not merely a narrative; it reflects a real situation. The numbers indicate that something is indeed working, and there remains further potential.

Bob Rozek, CFO

George, it's Bob again. Last point I would add, and the thing that I found very interesting is we were looking at the results for the quarter and then we started to understand August as it played out, we had RPO good new business wins in both July and August in China and in Germany. So again, you look at those marketplaces, and you expect there to be some headwinds there, but we actually saw the RPO with some strength, which kind of runs to the whole countercyclical period that we've been talking about.

George Tong, Analyst

Got it. Very helpful, thank you.

Operator, Operator

And our next question comes from the line of Tobey Sommer with SunTrust. Please go ahead.

Tobey Sommer, Analyst

Thank you. I was wondering if you could comment on your appetite for acquisitions, capital deployment in the quarter focused on share repurchase, and if I recall correctly, in the last call, Gary, you talked about acting in winter, I don't know, up 7% in constant currency equates to winter, but how are you feeling?

Gary Burnison, CEO

I think we are going to be quite active in repurchasing our stock. The value is clear; our current platform and the profit derived from our more durable product business are significant. When I compare ourselves to others in the market, it’s evident that we are trading at a much lower enterprise multiple of 7. I consider the stability of our consulting business and examine the multiples there as well. Looking at the RPO business and its multiples, we plan to be more aggressive in buying back stock. Regarding acquisitions, we are certainly active. Over the past three to four months, we were very close to finalizing three or four deals, but we ultimately decided not to proceed. I believe in this approach, and while I cannot predict the fall, I acknowledge that there is ongoing economic uncertainty. Therefore, we will continue to focus on investing for the winter.

Tobey Sommer, Analyst

Thank you. Could you elaborate on your strategies to drive growth in the marquee account base to over 30% of the mix? I know you've had some plans and efforts in recent years, but I would appreciate an update on their progress and what future options you might have.

Gary Burnison, CEO

I think it comes down to a few key factors. It's important to choose the right accounts, establish effective governance, implement appropriate processes, and surround ourselves with the right people. We've made significant investments over the past few quarters in account leaders whose primary responsibility is to manage a few accounts. While we don't have quite 100 of them, we're close and have intentionally focused our efforts there. This involves both will and skill. On the capability side, we've scaled our RPO offering successfully and can deliver it anywhere. Leadership development and training represent a substantial market, and we need to enhance our efforts in creating platforms that foster individual growth and can be marketed to major accounts. This could be seen as leadership development outsourcing, which holds considerable financial potential and allows for large-scale engagement. It's also interesting to note that although our KF Advance business is currently quite small, the technology and platform we are utilizing can be leveraged to provide broad leadership development. This approach may seem tactical, but it highlights practical elements that are critical to our strategy.

Tobey Sommer, Analyst

Great. Last question for me. Can you talk about what you're hearing from clients. Because on an overall basis, some of the international revenue growth, and for reasons I think Bob cited, it has been slower than in the U.S., but then you kind of mentioned new business in a couple of sour spots as being fine in August. So what are those conversations like? What are you hearing?

Gary Burnison, CEO

I would describe the situation as confused. It's a tumultuous environment with economic uncertainty and a lack of clarity. It’s absurd that a single comment can move the market by 500 points. You can't reverse the relationship between Britain and the EU that has been built over 50 years. That change isn't going to happen quickly; it hasn’t in three years, so it won’t in three months either. The same goes for trade issues; they’ll take time to resolve. I would say things are confused. The consumer in the United States appears to be quite strong. Productivity is decent, and as interest rates decrease, it will benefit those with mortgages, allowing them to spend more. I haven't noticed any significant discussions about downsizing or similar issues. Over recent months, clients have indeed been taking longer to make decisions and finalize agreements. So, my one-word summary would be confused.

Tobey Sommer, Analyst

Okay, thank you. If I could sneak one more in. How are you planning on handling your own internal revenue-generating headcount growth in the different businesses?

Gary Burnison, CEO

Yeah, we're going after revenue producers enterprise-wide. And then on the leverage side of it, we're much more cautious.

Operator, Operator

Your next question comes from the line of Mark Marcon with Baird. Please go ahead.

Mark Marcon, Analyst

Good afternoon. Many of my questions have already been addressed, but I wanted to ask about the trends in July and August. Given how the quarter turned out, can you discuss how the pace of news flow changed during July and August and into early September? Did you observe any relationship between that news flow, social media activity, and the business performance, particularly in terms of July and August combined?

Gary Burnison, CEO

No. In terms of new business for July, the year-over-year comparison was clearly better. The year-over-year comparison for August was slightly lower. I can't draw any conclusions from just one month. I prefer to analyze trends over two or three months to understand what they really indicate. Therefore, there was no significant change in conversations or tone between July and August that would suggest a different conclusion or direction.

Bob Rozek, CFO

Mark, this is Bob. I agree with Gary. Looking at July and August, one month was up and one month was down. They're just data points. As a result of those changes, we haven't decided to take any different action internally.

Mark Marcon, Analyst

Great. Regarding the business initiatives you can control, how would you describe the brand integration and collaboration under the Korn Ferry brand? Is everything completely unified, particularly in the Advisory business and in terms of local brand changes and the firm's positioning?

Gary Burnison, CEO

I believe we've made significant progress on that. The strategy we implemented around 15 to 18 months ago appears effective, as indicated by the data showing stronger marquee account growth compared to the overall portfolio, and successful cross-selling from Search into consulting and other areas. Additionally, the perception of our company has shifted over the past few months. Many still associate our brand with what we did 50 years ago rather than our current efforts, such as coaching 1,000 individuals. The branding initiative associated with our sponsorship of the Korn Ferry tour was aimed at promoting development and helping individuals exceed their potential through opportunity, which reflects the core mission of Korn Ferry. Our capabilities have advanced significantly, yet they are not fully represented in our brand imagery. We need to focus on ensuring that our marketing reflects our current position more accurately, as it still seems to lag behind.

Mark Marcon, Analyst

It seems like you've made a lot of progress on multiple assets including handing out Tour Card. So that had to be fun. Can you talk a little bit about KF Advance just in terms of how you're going to monetize that?

Gary Burnison, CEO

The idea is that individuals starting their careers often have to navigate through various companies without much support, unlike earlier generations who felt their employers cared for them. People need opportunities to assess and grow their skills, which includes coaching, development, advice, and possibly job placement. We believe we can penetrate the business-to-consumer market effectively. There are two main strategies for this: one is business-to-business-to-consumer, where we partner with organizations that have large memberships to offer our career services. The second strategy is to approach consumers directly. Although our direct consumer business is currently under $10 million in annual revenue, we see potential in using our platform for leadership development. The recruitment process outsourcing market is substantial, and so is the training and development market, both of which could allow for significant engagement. While this isn't something that will materialize immediately, over time, we envision a growth path toward leadership development outsourcing. Although we have a long way to go, that is the vision we are working toward.

Mark Marcon, Analyst

Good vision. Regarding the Advisory business, what have you observed in the markets, especially given the more challenging headlines? What is the extent of the decline in the business, particularly in Germany or China?

Bob Rozek, CFO

Mark, it's Bob. In the Advisory business, if we focus on key markets like the UK, we are seeing low single-digit growth comparing Q1 this year to Q1 last year. While the UK overall is performing better, much of that growth is due to the RPO we've mentioned. In Germany, Q1 Advisory was down a couple of percentage points, and France experienced a significant decline of about 21% year-over-year. China also saw a slight decrease of low single digits year-over-year. Although we're not witnessing major declines in any of these markets, we are definitely feeling the headwinds.

Mark Marcon, Analyst

Okay. And then regarding Executive Search and the practices, you mentioned that financial services and industrial sectors were up. What are the contrasting areas in terms of the macro headwinds and their impacts?

Gary Burnison, CEO

We have observed the impact on supply chains in China, which has affected industrial sectors in North America for about six or seven months now. In terms of the industry, financial services performed well overall. Investment banking was down significantly, but this decline was balanced out by gains in commercial banking, private equity, and real estate. Technology performed very well. In the last quarter, life sciences and healthcare saw a slight drop of a few percentage points; however, I don't think this trend is likely to continue. The consumer sector has remained relatively flat, making the overall situation quite mixed.

Mark Marcon, Analyst

I have two more questions, if you don’t mind. First, regarding the IT Professional Search, how large is that segment for you now and how quickly can you grow it?

Gary Burnison, CEO

It's a very good question. It's certainly less than $100 million. We believe that market size could be around $20 billion. While it can't be fully captured in a single quarter, it might be achievable over four to six quarters, as we have the technology and process in place, making it relatively straightforward to understand.

Mark Marcon, Analyst

Yeah. Regarding the RPO business continuing to ramp, it seems that based on all the data we have, the market isn't growing as quickly. You're definitely gaining market share. Is that a fair assessment?

Gary Burnison, CEO

I think that's right.

Bob Rozek, CFO

Not only are we gaining share, Mark, but when we look at renewals, we can count on one hand the number of times we have lost one. I believe we do a great job of being very, very sticky once we get in.

Mark Marcon, Analyst

Excellent. And then lastly, buyback. It sounds like you're clearly going to do that. What's the authorization now and when is the next board meeting?

Gary Burnison, CEO

We've got a couple of hundred left. Last authorization was $250 million. I think we spent almost $40 million in the first quarter, then to date. So we got a couple of hundred million left.

Mark Marcon, Analyst

Gary, would the intent be to actually shrink the share count in a material way?

Gary Burnison, CEO

Yes.

Mark Marcon, Analyst

Because in the past it's been kind of offset by option grants and things of that nature?

Gary Burnison, CEO

I think where this company is today and what we've got, yes, we will absolutely. Now again, we're also looking at acquisitions. So we've got to have a balanced mindset here, but today, September 5th, we're going to have more of an orientation towards share repurchases and continue to look at acquisitions.

Mark Marcon, Analyst

Makes sense. Great, thank you.

Operator, Operator

Our next question comes from the line of Marc Riddick with Sidoti. Please go ahead.

Marc Riddick, Analyst

Hi, good afternoon. I wanted to sort of continue on that being a little bit. Just wondering in the context of some of the things that you've looked at, can you sort of give some parameters or thoughts around the scale that you're comfortable with as far as potential acquisitions and maybe what you're seeing out there? Certainly it's been a few years since Hay Group and I just wanted to get a sense of comfort level as to size and scope of potential acquisition targets.

Gary Burnison, CEO

I think it's always dangerous to kind of talk about that. I would say that we've looked at things that would have grown our top line by 50%. And we've also looked at things that would grow our top line by 5%. So we've had a pretty wide screen in terms of size. And as you said, it has 3.5 years. But you don't want to do something just to do it, it needs to fit culturally, and it needs to make sense in the context of our overall strategy.

Marc Riddick, Analyst

Okay, great. That makes sense. And then, I just want to then follow, because a lot of my other questions were answered. So I just wanted to touch a little bit on the marquee accounts and then the expansion into the region. Also sort of, wanted to get a sense of maybe the receptivity of those, I guess it was 200 regional accounts and if there was any particular mix that we should be thinking about the regionals, if they were heavily weighted in any particular way. How we should be thinking about that and the initial thoughts on how that part of its going? Thank you.

Gary Burnison, CEO

I would say, we're not even out of the first inning on the regional accounts. So, the marquee account, it really took us a college degree. I mean, it took us four years I think to kind of really get that right, and not that we have it right, we can continue to improve on it, but I think you really got to look at this as a two, three, four-year endeavor on the regional accounts. The way that we did those, we put a top-down screen on it, and then we did it obviously bottom-up by region and the geographic dispersion kind of is reflective of Korn Ferry today. So you're going to find 40% in the United States and 30% or so in Europe. Then we did overweight Asia. We purposefully overweighted Asia just because of the size of some of those companies that are in China and the like, but it's early days for sure. But I think that if you look at any world-class professional services firm, an anchor of that strategy would be having a proactive, go-to-market approach around real scaled loyal repeatable clients where you can deliver impact where you can have hundreds of people working on the accounts and have real impact on those clients.

Marc Riddick, Analyst

Okay, great. For my last question, I wanted to revisit the topic of your go-to-market strategy and global branding efforts, particularly regarding your tour. Could you provide an update on how far along you are with these initiatives? Additionally, are there any specific elements you feel are still needed in your global branding efforts, or is there anything you believe you are currently lacking? Thanks.

Gary Burnison, CEO

You know the way that you market, there is a couple of things. One is our digital insights business that has a different cadence and a different marketing strategy. You have to be way more digital, you have to do a lot of SEO, and so we've got a whole path that we're going down there. I think secondly, we have capabilities today that completely outstrip what most people think of us for. So when you think about having the kind of data that we have 12,000 organizational benchmark data, 69 million assessments, rewards data 20 million and counting you kind of look at those numbers and what we're doing and the market in general doesn't know that. So I think we have to continue top-down to message that purposefully. And the Korn Ferry Tour is clearly a big piece of that. The B2C business or the B2B2C business, the KF events also requires a different market strategy, in that it's going to look a little bit more like our digital insights or our former products business. But ultimately, good work begets good work. And so the quality of what we deliver has to be top rate and it has to be top rate from CEO succession work that we do to the digital insights business to the RPO business, and there is nothing, nothing, nothing that's better than doing high quality work.

Marc Riddick, Analyst

Okay, great, thank you very much.

Operator, Operator

We have a follow-up from the line of Kevin McVeigh with Credit Suisse. Please go ahead.

Kevin McVeigh, Analyst

Great, thanks. Hey Gary. Do you have any thoughts on whether the US might see a re-acceleration that could support countries like Germany and France, as well as China? Are you observing any early signs of capacity shifting out of China to other regions where there might be increased demand, especially since many companies seem to be planning away from China? With the US moving forward, are you expecting any re-acceleration that could help stabilize that business, and how are you approaching this from a planning standpoint?

Gary Burnison, CEO

I believe the current president has about 10 or 11 months left. It will be a matter of self-interest versus national interest, and it's difficult to predict who will prevail. I'm anticipating a period of stagnation. The efforts to decouple supply chains, which have been ongoing for six to nine months, are more challenging than anticipated. It's similar to trying to dismantle a union that's been around for 40 or 50 years; discussing it is one thing, but implementing it is quite another. On a positive note, as we've mentioned, central banks are likely to become more accommodating, which could benefit the US consumer and drive the economy. I don't foresee a dramatic decline or a sudden surge in momentum; that doesn't seem realistic given the current sociopolitical landscape.

Kevin McVeigh, Analyst

That's helpful. And then again, not so much on the size of deals, but would you expect and given the success in the RPO, would they be along those lines or maybe something that would diversify the business a little bit more similar to what Hay? Or just any thoughts around how you're thinking from a strategic perspective as it relates to the core business?

Gary Burnison, CEO

I believe there is definitely a question about whether to expand our capabilities, particularly in general management consulting. However, this may not be something we can execute in the short term. Over the long run, it is a strategic consideration for the company. In the short term, leadership development, including training and development, represents a significant portion of market spending. Enhancing our current offerings in this area could be quite beneficial. I don’t see a strong need for improvement in assessment and succession planning, as we possess valuable intellectual property. Our focus should be on making these areas more engaging. Overall, our existing capabilities in organizational strategy, which often leads to general consulting, could be promising, along with our interest in leadership development.

Kevin McVeigh, Analyst

Thank you.

Operator, Operator

And we have a follow-up from the line of Tobey Sommer with SunTrust. Please go ahead.

Tobey Sommer, Analyst

Thanks, Gary. I understand that there are a few opportunities you are exploring that didn't close, and there can be various reasons why transactions don't get finalized. Are there any common factors, like multiples, that prevented those deals from being completed? Have those transactions moved on from the company, or are they still being marketed?

Gary Burnison, CEO

It was never for sale, so it's still available in the market. Another opportunity has been completed outside of the company. A common factor is always culture, which we pay close attention to, but in this situation, it mainly came down to price, especially considering our current valuation.

Tobey Sommer, Analyst

Thank you very much for the color.

Operator, Operator

It appears there are no further questions, Mr. Burnison.

Gary Burnison, CEO

Okay. Well, look, like I said, it's going to be 50 years on November 14. The company that Lester Korn and Richard Ferry started in Los Angeles, California, is in many respects, the same firm, but actually quite different. So we're excited about what we can do. We're confident in our strategy, and we thank you for your support. We'll talk to you next time. See you, bye bye.

Operator, Operator

Ladies and gentlemen, this conference call will be available for replay for one week starting today at 6:30 PM Eastern Time, running to the day, September 12, ending at midnight. You may access the AT&T Executive Playback Service by dialing 1800-475-6701 and entering the access code 470062. International participants may dial 1-320-365-3844. Additionally, the replay will be available for playback at the company's website in the Investor Relations section. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.