Thanks everybody for joining. My name is Trevor Romeo. I'm the analyst here that covers the human capital services sector here at Blair. For a brief reminder, I'm required to inform you for a full list of research disclosures and conflicts of interest, you can visit our website at williamblair.com. With that, today we are very excited to welcome back Korn Ferry to the Growth Stock Conference. We have CFO Bob Brozick and Tiffany Lauder from Investor Relations is out there as well. Corn Fairy is a global leader in organizational consulting and comprehensive talent solutions to a wide variety of clients. If you're a golf fan, you might know the Corn Fairy tour. And so we'll start here with a presentation, some Q&A, and then there's a breakout session in the Richardson room upstairs after if anyone from the audience would like to ask questions. And then last reminder, Corn Fairy does have an earnings call in two or three weeks, maybe? two, three weeks. So just keep that in mind as well for these remarks.

So Bob, I will turn it over to you. Great. Thanks, Trevor. And thanks everybody for coming to listen to our Corn Ferry story. I see some faces I recognize, some I don't. So maybe I'll just give you a little bit of background. I'm going to try to get through the slides relatively quickly because Trevor's got some really good questions. I want to make sure we address those. So I joined Corn Ferry back in 2012. I've been there about 14 years now. And when I joined, we were about a $750 million company. We were doing primarily executive search. It was about 85% of our business. A little bit of consulting, a little bit of RPO. Today, we're about a $3 billion company. We have, if you look at the center of that slide, all of our solutions, executive search, professional search and interim, which is temporary labor, consulting, digital, and RPO. And through those services, we deliver talent acquisition, assessment and succession, total rewards, what we call org strategy, which is not so much business strategy, but it's the implementation of a business strategy, and then leadership and professional development. What really differentiates us, and I'll talk a little bit more about this on the next slide, though, is our data. And I refer to that as our foundational assets. So think about IP, data, content, behavioral science. All of that sits at the center of the firm, and that permeates up through all of our solutions and through all of our capabilities. but really when you step back and think about the firm itself we've got an initiative that we've launched at the beginning of last fiscal year called we are corn fairy and what we realized was the very value proposition in this firm is when you bring it all together not when you pull it apart and talk about the individual solutions or individual capabilities but when you bring it all together and serve our clients as their talent partner, right? Not their talent acquisition partner, not their consulting partner, but as their talent partner. Okay, here's a slide that talks a little bit about what makes us different from the rest. And I think there's a number of things that do that. And I think one most important, you'll hear that when we announce our earnings is our performance. But stepping back and thinking about what I talked about, our foundational assets, right? It's proprietary data that we have that we've collected over time. And so think about we've assessed over 115 million executives over time. That's our data, right? We have engagement data on 44 million employees covering companies across the globe. We've got 11,000 success profiles, right? All of that data, we're able to bring it together and, again, have that permeate all of our solutions and use that to create differentiated, unique, interesting analytics and insights for our clients. One of the things I talk about a lot is, and I'll call it the connective tissue that exists across our organization. So you think about everything we do, we do it through people, and it virtually touches every aspect of an employee's engagement with his or her employer. And I'll give you some quantitative statistics that prove that out. So you think about our marquee and diamond accounts. It's 350 accounts, which represents about 3% of our total customer base. And we face off with those clients in a very disciplined approach, account plans. We have global account leaders, account teams. Those 350 accounts generate 40% of our total consolidated fee revenue. Just think about the power of bringing the firm to those clients. One of the things is we've thought about taking this company on the next leg of its journey is we went in and we did a lot of analytics on our client base. And the top 4,500 clients generate 90% of our fee revenue. And if you start to stratify that, the bottom 2,000 of that 4,500 on average use one and a half solutions. and the average engagement size relationship is about, say, $170,000. When you go one half more solution, the average size goes up to $350,000. You go another half, it goes to $700,000. Once you hit three solutions with a client, you're in multiple millions of dollars. It averages $3 million. And so as we sit here today and we think about our go-to-market going forward, Our focus, obviously, we'll be looking for new logos, new clients, and so on, but there is enormous opportunity for us to further deepen those relationships with those 4,500 clients, and that'll be one of our primary focuses. The other thing that we're doing is, again, as we are corn fairies, we're trying to break down the silos that we created, the way we manage the business. Gary has been relentless in his go-to-market approach. We do a meeting every other Monday. We just talk about wins over the past two weeks, new opportunities, what engagement teams are on it, what are we selling, what else can we bring into that engagement. And what we've actually seen is our business referrals across the organization were kind of stuck at about 25% going into fiscal 26. Over the course of fiscal 26, we've elevated that by about 200 basis points. So more of our solutions are being referred across the organization. And then last, one of the things we started to do at the beginning of fiscal 26 is provide, I'll call it backlog. We call it existing fee revenues remaining under contract. People think about us as an exec search firm, as somebody who starts every quarter at zero. And as we step back and we looked at our backlog, if you will, we're going to end the year with about $2 billion in backlog. $1 billion will be recognized over the next 12 months. The remaining piece will be recognized two years after that. So a very different profile of the firm today than what we were back when I started. Okay, market opportunity and strengths. You know, we, and any market is more art than science, but we view the market size for us about $450 billion. We're a $3 billion company, so obviously enormous opportunity for us to grow. I won't go through all the points on a slide here. The one thing I do want to talk about is AI. And we've gotten a lot of questions today about AI and its impact on our business. What I would say is AI for us today is a tailwind, right? You look at where our executive search business is. You look at where our pro-search inner business is, and we are different from those that people compare us to. We're actually growing in each of those areas. If you look at the competitor set, they're either continuing to decline or doing less, worse. We're actually growing, right? So for us, as we think about AI, companies are coming to us saying, do I have the right talent? Do I have the right leadership to lead in this environment? Can you upskill, reskill my talent? They're looking at it from an organizational structure. They're looking at it from a job architecture structure. Are my jobs constructed properly? Do I include AI where I need it? Personally, I have a point of view on AI, and I think the world is starting to change a little bit. about six months ago, you know, none of us would have had jobs in two weeks, right? We'd be all unemployed. I think the pendulum is swinging back now. And I think as I look at how our clients are interacting with us, I look at how we're deploying AI in the firm and the learnings that are coming from that. I don't see the workforce being blown up like some folks do. I think what's going to end up happening is right now people have their firms, what I would call AI ready, so tools in hands. But when you think about that, if everybody in this room is using AI, we're all going to use it differently. So how do you gather that up and really get the productivity out of that? So what I'm doing with our organization is we're looking at areas where we have critical mass, redundant, repetitive activities, and we're trying to deploy the tool that way. And then once we get those learnings, we'll then bring that back in and say, okay, here's how we're going to gather the productivity. And then I have to make a decision. Do I just fire a bunch of people? Or I have $2 billion in backlog. Why wouldn't I take those folks and apply them against that backlog and drive growth, right? So very different thought process. Our firm's approach is not AI or people. It's AI plus people, right? And that's the way that we're doing it for ourselves and actually had a kind of an interesting learning a couple weeks ago i have a fellow named daniel is doing our corporate ai activities and tim i said you know low-hanging fruit for me is if i look at our order to cash we look at a million different contracts and it would wouldn't be interesting to apply a tool to help us get through there more effectively and i sat down with him and he actually laid out the whole workflow there's probably whatever 20 tasks across. And as I looked at that and we talked about it, he said, you can use AI here, here, and here. Everything else is human. As you think about that, I think companies need to really get down to that granular level and think about AI. And maybe I don't need 10 people anymore. I only need eight, but I'm not blowing that up, right? I'm not getting rid of that workforce. So we have a very different perspective on AI. And I think for us, it's going to continue to be a tailwind as we go forward. A little bit of corn fairy by the numbers. So this is a trailing 12 again, our earnings announcements in a couple of weeks, but $2.9 billion in fee revenue, almost $500 million in adjusted EBITDA, a 17.1% adjusted EBITDA margin. And over the 10 years, getting to FY25, CAGR of 10% for fee revenue growth, 11% for adjusted EBITDA, and 10% for adjusted EBITDA margin. And as I think about the company going forward and in this leg of our journey, our long-term financial modeling, fee revenue growth relatively at the same level that we've seen over the past 10 years. Right now, we're focused on EBITDA margin, 16% to 18%. That's going to be driven largely by the revenue mix that we experience at any one point in time. So if we get a little more interim, it may go down a bit. If digital gets to where we believe it can get to, it'll go up a bit. And the last thing I would talk about before I turn it over to Trevor is our approach to capital allocation. We try to be very balanced, talking to investors, 50% like dividends, 50% like buybacks. Our preference is to put money back into the business. We really believe deeply in our strategy. I think our performance demonstrates that it works. But we do generate a lot of cash, and there is an opportunity to return to shareholders. So we try to take a balanced approach. We have a dividend. Right now, it's yielding about 3%. I think you'll continue to see us increase that on an annual basis, similar to what we've done the past six years. And then I would say the share buybacks is kind of what I would call the swing vote. So if we have an M&A opportunity that we think is a really good opportunity for us, we'll do that. In the absence of that, we'll lean more heavily into share buybacks. So with that, Trevor, I'll turn it over to you. I got a minute to spare on my 15 minutes.

That's great. We've got 16 minutes for Q&A. There you go. Thanks, Bob. I appreciate the overview. And honestly, you hit on a few of the questions I was going to ask anyway, so that's even better. We can go deeper.

Yeah.

So maybe we could start with the go-to-market, the We Are Corn Fairy strategy. So you kind of hit on some of the benefits of it, how you're driving some outperformance. You know, we put charts in some of our notes where you see Corn Fairy, you know, the PSI segment versus the pure set. And I think the last several quarters, there is kind of a clear gap with you kind of the line being higher. If you think about the cross-selling opportunity, you talked about how you moved from 25 to 27. But you have a goal of getting up into the 30s, I believe. So you still have some silos. You still have some point solutions. You have some people at the firm who are great at selling the firm, but not everybody. So how do you get there? Maybe you could talk about the incentive structures you put into place for some of the consultants to kind of drive that behavior.

I'll talk a couple things there. So the one thing, as you were asking a question that came to my mind that I think is really interesting, you talked about PSI. We're going to finish fiscal 26 with an interim business that's kind of $350, $360 million. As a result of referrals coming into that business, $55 million of that amount is referred. So just think about had those companies not been part of the corn fruit ecosystem, it would have been a $300 million business. not 360. So that shows you the power of the flywheel that we have in the organization. So in terms of the go-to-market, we've been managing the business by solution. So I would look out consulting, Leslie, what are you doing about consulting? Matisse, what are you doing about digital? And we didn't do this consciously, but we tended to create silos. And so we've brought all of our fee owners together. We had separate sessions because there's about 2,000 of them. and we brought them through actually a training session to talk about what we're doing, why we're doing, and we actually did, you know, use some of our own medicine. We actually took them through simulations, so how to, you know, bring together, how to solution around a client, and then we, you know, myself and other of the Gary's leadership team, you know, you sat in a chair, pretend you're CEO of ABC Company, and we had them pitch to us, and then, you know, obviously, you work through and critique it and you know everybody has uh joins into that it's going to be a journey for us today we probably have i don't know what the number is 50 60 70 people who are really good at that we need like 1500 and that's the path that we're on we did the sessions top down and now we're going to drive sessions this year more bottom up so taking that similar training to the masses right and doing the top down bottom up approach uh and again it's going to take us a couple of years where people that just becomes part of what you do, right? Like when I grew up at Price Waterhouse, when I made partner, it's, I just watched partners do it. That's where we need to be, right? People just have to demonstrate that behavior. And that's the journey that we're on. Yeah. Okay.

Great. And then I do want to definitely follow up on the AI point, because I think it's, you know, big topic of investor discussion and important. So I appreciate all the comments you made already. I think it's easy for investors to focus on, you know, what's going to be disrupted. But I think, you know, with your business, you have kind of a unique insight into the C-suite and one or two layers below the C-suite, how things are changing. So how do you see AI kind of reshaping the talent landscape? You know, what kind of skills are necessary in this new paradigm we're in?

How can you help with that, whether it's through the search businesses or maybe the org strat business on the consulting side or the digital or however you'd like to address that yeah i think i mean it touches all of those areas right so i think there's a big you know question mark in most companies minds of talent do i have the right talent and we get to ask that question a lot uh and that's where you can bring together all of our resources so the way to figure that we actually have an assessment that looks at um am i ai ready It looks like, am I an AI-ready leader, right? So we can go in and we can assess people. And we've got, our assessments are based off of psychometrics, right? And there's 38 capabilities. And our IO psychologists and behavioral science PhDs have identified those characteristics that are most critical to somebody being successful in the new AI environment. And so we'll put people through those assessments. Some will make it. Some won't, right? Some will be okay, but we can develop those people, train them up. And a lot of our clients, you know, once you get through that process, then it's like, how do we redesign work, right? And that's where our org strategy business comes into play, and we look at what we call job architecture. So how are jobs constructed? How does work get done? You know, it's kind of interesting, Trevor. If you go back to the past five years when the pandemic hit, right, one day everybody was in work. in the next area at home, so everything had to get done differently. That was a tailwind for us, right? Then you look at the progression over that five-year period, and you had the recovery, the great resignation, supply chain disruptions, geopolitical, and AI, and all of that has been a tailwind for us because companies are constantly trying to figure out, you know, how do I operate in this new norm, right? And that's exactly where we come in. And no company has ever solved an issue or a problem without people, right? And everything we do, we do through people. And so for us, it's been a good story and a tailwind. And I continue, I expect that to continue.

So rapid pace of change in the world equals opportunity for Corn Fairy and advice on how to make transportation and operate. Okay. So and then maybe you could walk through again kind of how Corn Fairy is using AI internally and particularly focus on the data, as you mentioned, which is one of your biggest advantages, for example, you know, in some of your businesses, when you're helping a client to find a person, how can you use that data, the proprietary data that you have on the assessments and the placements and the comp benchmarking, all that kind of stuff to help?

Yeah. I mean, the easy example that comes to my mind is like, if you've got a role, whatever industry you're in, whatever geography you're in, whatever role that is, again, And we've assessed 115 million executives over time. And that data keeps getting refreshed. Every time somebody takes an assessment, our stuff updates. And so we have a pretty good idea of what good looks like, again, across industries, jobs, geographies. And then we can marry that up with the success profile of a company. And then we can build the assessment, the characteristics that are important to that company. We can build the assessment. and as you're finding people, right, they take the assessment and you're comparing that back to the success profile and all of that is enabled through AI, right? We've got 12 billion data points. There's not a human on earth that can crawl through that and make sense of it.

But we can connect the success profile to the assessment, to pay data, and all the other assets that we have within what we call the talent suite. great segue that was my next question here you've talked about talent suite being not a thing but a platform yeah um i think it's been kind of rolled out for a few months at this point you have focus groups where you have clients kind of giving you real-time feedback i think you've kind of talked about calendar q4 of this year maybe being the start of a potential where you start to see it the financials. That's coming up. Is that kind of still the plan? And then you talk about 75% of the clients, I think only buying one solution. And so that's $88,000 per solution, I believe. So talk about kind of the incremental opportunity there.

Sure. So initially when, and some of this is on us, when we started thinking about talent suite, everybody thought that this is talent suite it really isn't the talent suite is more of a it's a technology platform that enables access efficient and effective access to all of our assets right we now have them all on a single repository and so somebody can sign in and take an assessment and then the content delivery development content gets delivered to them in the past you had to sign in sign out sign in sign out So it makes it much more effective and efficient. And the one thing that as we think about talking about TalentSuite going forward, I really want to disconnect it from digital because it really enables the whole firm. When you think about the assets that sit on TalentSuite, it's our assessment protocol. It's KF Nimble Recruit, which drives our RPO business. It's the pay data. right it's it's all the assets that we have that are in that are really permeate everything that we do as an organization as you think about it you really need to think about its impact on corn fairy not just the impact on digital it'll you know manifest itself in digital to the extent we continue to sign subscriptions and licenses for use of those products but it really needs to be enabling the whole the whole firm and that's part of the the process we're going through that we are corn fairy part of those sessions is really talking to our folks because you're dealing with people who've done services for 50 years and all of a sudden you're looking at more of a product type sale so what does that mean how do you do it right how do you use it and to me you almost you're not selling the talent so you're not selling high assets you're selling talent intelligence but you need a presenting issue first right and that's where the all this relationship selling that we're working with our folks on so you sit down have a conversation with your client and understand what the issues are and then how do our assets and our solutions line up against that so it's a very different way for us to go to market and again that's the the journey that we're on for the you know the next leg of our uh of our growth second part of your question um i think i would well the timing on the financial inflection was yeah no we're still We're still targeting the latter part of this calendar year, and that's our goal. And it may drag a little bit beyond that because it's a big change. But it's absolutely the right thing to do, and that's really one of the reasons I'm really excited about the future of the firm.

I do want to make sure we hit, I think we have five-ish minutes left, capital allocation, which you talked about. I think last time we spoke, you kind of hinted at the M&A market starting to maybe thaw. So you do have a great balance sheet. Maybe you could talk about after kind of a down period in the industry where there weren't many targets available, what are you seeing out there? Is interim kind of the main area that you might continue to focus on? And if so, I'd say a common question we get from people is, you know, well, why are they taking the margin dilution here? because those are usually lower margin when you buy them. So you could talk about maybe the opportunity you see there and the opportunity to improve margins as you integrate those businesses.

So, listen, we're always in the market looking for good assets to buy because, again, we believe deeply in our strategy. The interim business for me has been pretty interesting to watch because these companies, as you buy them, they're generally kind of 5% adjusted EBITDA margins, not well managed, not invested in. And we have a company that we built that has a common platform across the globe, systems, processes, controls. So we're kind of plug and play. So for us, you know, we just pick them up, plug them in. And when we do an M&A transaction, we're pretty disciplined. It has to be strategically aligned. You have to make the math work. And then the cultural fit is probably the biggest thing that Gary will spend a lot of time with the leadership of the target company to make sure he's comfortable. that they would be a good fit into our organization. When we look at the math, like I've worked at companies before where magically when you buy something, the revenue just goes up, right? We don't do that, right? We make the math work through the cost synergies. And then we obviously do, I talked about the flywheel effect. So again, in the interim business, 55 out of $360 million came from being part of our ecosystem. And when you look at the part of the reason why we got into interim, number one, our clients are asking us, you guys are managing on my perm, why not do the temp, right, so there's demand there, you see the secular changes that are happening in the workforce, you know, I have two daughters, and they think about the world very differently than I do, or I did, and you have, you know, just the secular changes, people don't want to get up nine to five anymore, they're ready to retire, but they still want to be relevant, so they do projects, And so all of those reasons led us to down this path of investing into Interim. And that the opportunity, the market there is massive, right? Search is probably a $5 or $6 billion opportunity for us. Professional Search is probably $25, and Interim is probably five times that. So we think it's a great growth opportunity. We see great synergies within the firm. And so that's an area that we'll be focused on as we go forward. I would also say another area that we're interested in is leadership and professional development. That area is tough. It's very fragmented. So it would probably be a lot more tuck-ins, if you will, if we did something there. But that's going to be our highest priority is to put money back into the business.

Great. And then maybe, I'm guessing this will be the last question. So I wanted to also touch on the margin target because I think you've pretty consistently stuck to the 16 to 18. And throughout even a pretty soft period in the industry, I think you've improved margins up to kind of the midpoint of that range, if not a little bit higher. But there seems to be a lot of potential upside if things go right from, you know, talent suite, maybe digital increasing as a percentage of the whole, or, you know, just the macro, better in operating leverage. So you talk about potential to exceed that target, but there are puts and takes. So maybe you could walk through the mixed differences, and then if you go through the upside there, where could you ultimately end up potentially?

Yeah, so I would say right now we're focused on the 16%, 18%. A lot of that's going to depend on the revenue mix at any one point in time. We talked about being interested in continuing with interim. When we buy those businesses, again, 5%, we take them up to about 14% or 15%, so it's similar to our RPO. So if we double down on that, that would obviously have a little bit of downward pressure. But to your point, macro improves, right? CEO confidence goes up. Our talent acquisition business go really strong. That puts upward pressure. We get digital where we believe it to be. That'll put upward pressure. I think in the long term, we also have a very, what I would consider for our organization, a small corporate group. And we're able to do that because we have common systems, processes across the globe. And so we get a lot of leverage. Like when we buy companies, we don't necessarily grow corporate. We absorb a lot. So over the next three, five years, if we're successful delivering, we are a corn fairy, and the digital takes off, assets are more fully integrated into client workflows, I think we will see us at the top end with the potential to go through the top end of that.

Okay. Let me just double check. But I believe, yeah, we are out of time. So thank you, Bob. This was excellent. There's a breakout session if anyone would like to. Thank you, everybody.