# Korn Ferry: Form 10-Q for the period ended Jul 31, 2024

- Company: [Korn Ferry](/companies/kfy.md) (CIK 56679)
- Form: 10-Q
- Filed: 2024-09-06
- Accepted by EDGAR: Sep 6, 2024, 13:56 ET
- Period: 2024-07-31
- Accession: 0001628280-24-039649
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/56679/000162828024039649/kfy-20240731.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/56679/000162828024039649/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-07-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-05-01 to 2024-07-31 | $682.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-05-01 to 2024-07-31 | $76.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-05-01 to 2024-07-31 | $22.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-05-01 to 2024-07-31 | $62.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-05-01 to 2024-07-31 | $1.17 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-05-01 to 2024-07-31 | $1.19 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-05-01 to 2024-07-31 | 52,745,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-05-01 to 2024-07-31 | −$227.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-05-01 to 2024-07-31 | $10.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-05-01 to 2024-07-31 | $19.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-05-01 to 2024-07-31 | $23.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-07-31 | $633.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-07-31 | $1.42bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-07-31 | $3.45bn | us-gaap:Assets |
| Current liabilities | at 2024-07-31 | $658.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-07-31 | $1.69bn | us-gaap:Liabilities |
| Long-term debt | at 2024-07-31 | $397.1m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2024-07-31 | $1.75bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 57,326 characters.

### Forward-Looking Statements

*This Quarterly Report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our business strategy, expected demand for and relevance of our products and services, and expected results of our business diversification strategy, are also forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cybersecurity vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, including artificial intelligence ("AI"), our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, resulting organizational changes, our indebtedness, the ultimate magnitude and duration of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2024 (the “Form 10-K”). Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.*

*The following presentation of management’s discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. We also make available on the Investor Relations portion of our website earnings slides and other important information, which we encourage you to review.*

### Executive Summary

Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our” and “us”) is a leading global organizational consulting firm. We help clients synchronize strategy, operations and talent to drive superior business performance. We work with organizations to design their structures, roles and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people.

We are pursuing a strategy designed to help our colleagues focus on clients, by bringing all of our resources together to solve their human capital issues. This approach is intended to build on the best of our past and give us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients.

The Company services its clients with a core set of solutions that are anchored around talent and talent management – touching nearly every aspect of an employer’s engagement with their employees. Our five core solutions are as follows: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition. Our colleagues engage with our clients through the delivery of one of our core solutions as a point solution sale or through combining component parts of our core solutions into an integrated solution. In either case, we are helping to solve our clients’ most challenging business and human capital issues.

Further differentiating our service offerings from our competitors is the unique combination of IP, content, and data sets that we have, which permeate throughout our solution areas. For many years, we have been accumulating data around assessments of executives and professionals, pay, success profiles, organizational engagement and design, job architecture, and candidates. Integrating this unique collection of data into our service offerings provides our colleagues with differentiated points of view and solutions, as well as the ability to demonstrate the efficacy of all of our offerings.

Our vision remains unchanged to become the premier organizational consulting firm. We believe our household brand, unparalleled IP, and diversification strategy will continue to positively influence our performance and accelerate the trajectory of thousands of organizations. Indeed, Korn Ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy, operations and talent and a firm that offers increasingly relevant solutions in a rapidly changing world. The continual advancement of technologies like generative AI creates a constant demand for workers to be upskilled or reskilled. We expect these changes and disruptions will lead to opportunities for Korn Ferry and make us more relevant than at any time in our history.

Leveraging the strong connection between our various service offerings and our lines of business, we have an integrated go-to-market strategy. As we drive this strategy, a focal point for us is our Marquee and Regional account program which is comprised of more than 340 of our top clients. These accounts have Global Account Leaders assigned who help to orchestrate the delivery of core and integrated solutions that cut across multiple lines of business – effectively making all of the Firm’s resources available as our clients tackle their business and human capital issues. Despite near-term headwinds, such as economic uncertainty, we believe Korn Ferry is poised for continued growth. We are capitalizing on the current and growing relevance of our core and integrated solutions which, in combination with the strong connections amongst our service offerings and our acquisition activities, drives top-line synergies that have resulted in double digit fee revenue growth rates (CAGR) over the past twenty years.

Our eight reportable segments operate through the following five lines of business:

1\. **Consulting** aligns organizational structure, culture, performance, development and people to drive sustainable growth by addressing four fundamental organizational and talent needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. The Consulting teams work across our core capabilities, architecting integrated solutions and technology products to help clients execute their strategy in a digitally enabled world.

2\. **Digital** develops IP and science-based talent technology products that empower our clients. Our talent products and talent platform support our clients in making critical talent decisions across the continuum from talent acquisition to talent development.

3\. **Executive Search** helps organizations recruit board level, chief executive and other C-suite/senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together our research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then helps us build appropriate frameworks for compensation and attraction. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa (“EMEA”), Executive Search Asia Pacific (“APAC”), and Executive Search Latin America).

4\. **Professional Search & Interim** delivers enterprise talent acquisition solutions for permanent placements at the professional level middle and upper management, and, for interim, those same levels plus senior executives. We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors (that are focused on senior executive, information technology ("IT"), Finance & Accounting and human resources roles).

5\. **Recruitment Process Outsourcing (“RPO”)** offers scalable recruitment outsourcing and project solutions leveraging a customized technology enabled service delivery platform and talent insights. Our scalable solutions, built on our IP, science, and data and powered by best-in-class technology and consulting expertise, enable us to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.

#### Q1 FY'25 Performance Highlights

- We reported Q1 FY'25 fee revenue of $674.9 million, a year-over-year decrease of 3%.
- Executive Search fee revenue grew 2% year-over-year.
- Fee revenue for Consulting and Digital was flat year-over-year, continuing to demonstrate stability in a challenging market.
- Net income attributable to Korn Ferry was $62.6 million with a margin of 9.3%, a 260bps increase compared to the year-ago quarter, while diluted earnings per share was $1.17 in Q1 FY'25.
- Operating income was $76.1 million and Adjusted EBITDA was $111.2 million.
- Operating margin increased 320bps year-over-year to 11.3%. Adjusted EBITDA margin of 16.5%, a 280bps increase compared to the year-ago quarter, and our fifth consecutive quarter of sequential improvement.

The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairments charges). For the three months ended July 31, 2024, Adjusted EBITDA excluded $1.1 million of integration/acquisition costs. For the three months ended July 31, 2023, Adjusted EBITDA excluded $4.1 million of integration/acquisition costs, $1.6 million impairment of right-of-use assets, $0.4 million of restructuring charges, net and $0.1 million impairment of fixed assets.

Consolidated and the subtotals of Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and have limitations as analytical tools. They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. In addition, they may not necessarily be comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of these non-GAAP financial measures provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges, items of income and other items that may not be indicative of Korn Ferry’s ongoing operating results. The use of these non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance and the identification of operating trends that may otherwise be distorted by the factors discussed above. Korn Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in the accompanying condensed consolidated financial statements, except that the above noted items are excluded to arrive at Adjusted EBITDA. Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.

### Results of Operations

The following table summarizes the results of our operations as a percentage of fee revenue:

(Numbers may not total exactly due to rounding)

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| Fee revenue | 100.0% | 100.0% |
| Reimbursed out-of-pocket engagement expenses | 1.2 | 1.0 |
| Total revenue | 101.2 | 101.0 |
| Compensation and benefits | 66.9 | 68.6 |
| General and administrative expenses | 8.9 | 9.4 |
| Reimbursed expenses | 1.2 | 1.0 |
| Cost of services | 10.0 | 11.0 |
| Depreciation and amortization | 2.9 | 2.7 |
| Restructuring charges, net | — | 0.1 |
| Operating income | 11.3 | 8.1 |
| Net income | 9.5% | 6.7% |
| Net income attributable to Korn Ferry | 9.3% | 6.7% |

The following tables summarize the results of our operations:

(Numbers may not total exactly due to rounding)

*(dollars in thousands)*

| Fee revenue | Three Months Ended July 31, 2024 Dollars% |  | 2023 Dollars% |  |
| --- | ---: | ---: | ---: | ---: |
| **Consulting** | $167,870 | 24.9% | $168,088 | 24.0% |
| **Digital** | 88,180 | 13.1 | 87,986 | 12.6 |
| **Executive Search:** |  |  |  |  |
| North America | 134,752 | 20.0 | 127,498 | 18.2 |
| EMEA | 45,981 | 6.8 | 46,776 | 6.7 |
| Asia Pacific | 20,579 | 3.0 | 24,539 | 3.5 |
| Latin America | 7,323 | 1.1 | 6,421 | 0.9 |
| **Total Executive Search** | 208,635 | 30.9 | 205,234 | 29.4 |
| **Professional Search & Interim** | 121,741 | 18.0 | 142,179 | 20.3 |
| **RPO** | 88,520 | 13.1 | 95,702 | 13.7 |
| **Total fee revenue** | 674,946 | 100.0% | 699,189 | 100.0% |
| Reimbursed out-of-pocket engagement expense | 7,815 |  | 7,073 |  |
| **Total revenue** | $682,761 |  | $706,262 |  |

24

In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual Executive Search Regions. These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base.

*(in thousands)*

|  | Three Months Ended July 31, 2024 Consolidated | 2023 |
| --- | ---: | ---: |
| Fee revenue | $674,946 | $699,189 |
| Total revenue | $682,761 | $706,262 |
| Net income attributable to Korn Ferry | $62,604 | $46,605 |
| Net income attributable to noncontrolling interest | 1,652 | 580 |
| Other income, net | (14,505) | (13,577) |
| Interest expense, net | 3,945 | 4,740 |
| Income tax provision | 22,354 | 18,420 |
| Operating income | 76,050 | 56,768 |
| Depreciation and amortization | 19,578 | 19,012 |
| Other income, net | 14,505 | 13,577 |
| Integration/acquisition costs | 1,076 | 4,128 |
| Impairment of fixed assets | — | 123 |
| Impairment of right-of-use assets | — | 1,629 |
| Restructuring charges, net | — | 421 |
| Adjusted EBITDA | $111,209 | $95,658 |
| Adjusted EBITDA margin | 16.5% | 13.7% |

*(dollars in thousands)*

|  | Three Months Ended July 31, 2024 Fee revenue | Total revenue | Adjusted EBITDA | Adjusted EBITDA margin | 2023 Fee revenue | Total revenue | Adjusted EBITDA | Adjusted EBITDA margin |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Consulting** | $167,870 | $170,767 | $29,294 | 17.5% | $168,088 | $170,793 | $25,180 | 15.0% |
| **Digital** | 88,180 | 88,211 | 26,623 | 30.2% | 87,986 | 88,012 | 24,325 | 27.6% |
| **Executive Search:** |  |  |  |  |  |  |  |  |
| North America | 134,752 | 136,087 | 35,098 | 26.0% | 127,498 | 129,413 | 28,756 | 22.6% |
| EMEA | 45,981 | 46,276 | 7,265 | 15.8% | 46,776 | 47,135 | 5,638 | 12.1% |
| Asia Pacific | 20,579 | 20,704 | 4,218 | 20.5% | 24,539 | 24,610 | 6,315 | 25.7% |
| Latin America | 7,323 | 7,326 | 2,798 | 38.2% | 6,421 | 6,422 | 1,741 | 27.1% |
| **Total Executive Search** | 208,635 | 210,393 | 49,379 | 23.7% | 205,234 | 207,580 | 42,450 | 20.7% |
| **Professional Search & Interim** | 121,741 | 122,730 | 25,706 | 21.1% | 142,179 | 143,069 | 24,329 | 17.1% |
| **RPO** | 88,520 | 90,660 | 12,494 | 14.1% | 95,702 | 96,808 | 10,471 | 10.9% |
| **Corporate** | — | — | (32,287) |  | — | — | (31,097) |  |
| **Consolidated** | $674,946 | $682,761 | $111,209 | 16.5% | $699,189 | $706,262 | $95,658 | 13.7% |

25

### Three Months Ended July 31, 2024 Compared to Three Months Ended July 31, 2023

### Fee Revenue

*Fee Revenue.* Fee revenue was $674.9 million in the three months ended July 31, 2024, a decrease of $24.3 million, or 3% compared to $699.2 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $7.6 million, or 1%, in the three months ended July 31, 2024 compared to the year-ago quarter. Fee revenue decreased primarily due to lower fee revenues in Professional Search & Interim and RPO mainly driven by the global economic environment, partially offset by an increase in fee revenue in Executive Search North America.

*Consulting.* Consulting reported fee revenue of $167.9 million in the three months ended July 31, 2024, essentially flat compared to $168.1 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $2.5 million, or 1%, in the three months ended July 31, 2024 compared to the year-ago quarter.

*Digital.* Digital reported fee revenue of $88.2 million in the three months ended July 31, 2024, essentially flat compared to $88.0 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $1.9 million, or 2%, in the three months ended July 31, 2024 compared to the year-ago quarter.

*Executive Search North America*. Executive Search North America reported fee revenue of $134.8 million, an increase of $7.3 million, or 6%, in the three months ended July 31, 2024 compared to $127.5 million in the year-ago quarter, driven by a growth in demand for executive searches. North America’s fee revenue increased primarily due to a 4% increase in the number of engagements billed during the three months ended July 31, 2024 compared to the year-ago quarter and a 2% increase in the weighted-average fee billed per engagement.

*Executive Search EMEA*. Executive Search EMEA reported fee revenue of $46.0 million, a decrease of $0.8 million, or 2%, in the three months ended July 31, 2024 compared to $46.8 million in the year-ago quarter.

*Executive Search Asia Pacific.* Executive Search Asia Pacific reported fee revenue of $20.6 million, a decrease of $3.9 million, or 16%, in the three months ended July 31, 2024 compared to $24.5 million in the year-ago quarter. The decrease in fee revenue was primarily due to a 14% decrease in the number of engagements billed.

*Executive Search Latin America.* Executive Search Latin America reported fee revenue of $7.3 million, an increase of $0.9 million, or 14%, in the three months ended July 31, 2024 compared to $6.4 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $0.6 million, or 9%, in the three months ended July 31, 2024 compared to the year-ago quarter.

*Professional Search & Interim.* Professional Search & Interim reported fee revenue of $121.7 million, a decrease of $20.5 million, or 14%, in the three months ended July 31, 2024 compared to $142.2 million in the year-ago quarter. The decrease in fee revenue was due to a decrease in interim fee revenue of $14.4 million as well as a decrease in permanent placement fee revenue of $6.1 million, each of which resulted from lower demand in the current economic environment.

*RPO.* RPO reported fee revenue of $88.5 million, a decrease of $7.2 million, or 8%, in the three months ended July 31, 2024 compared to $95.7 million in the year-ago quarter. The decrease in fee revenue was due to moderation in the hiring volume in the existing base of clients due to the current economic environment.

### Compensation and Benefits

Compensation and benefits expense decreased by $28.1 million, or 6%, to $451.8 million in the three months ended July 31, 2024 from $479.9 million in the year-ago quarter. Exchange rates favorably impacted compensation and benefits by $4.7 million, or 1% in the three months ended July 31, 2024 compared to the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $35.5 million as a result of a 14% reduction in average headcount compared to the year-ago quarter and decreases of $5.1 million and $3.9 million in severance expense and commission expense, respectively. These decreases were partially offset by an increase of $20.8 million in performance-related bonus expense in the three months ended July 31, 2024 compared to the year-ago quarter.

Consulting compensation and benefits expense decreased by $6.4 million, or 5%, to $114.7 million in the three months ended July 31, 2024 from $121.1 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to lower salaries and related payroll taxes of $7.0 million as a result of a 10% decrease in average headcount in the three months ended July 31, 2024 compared to the year-ago quarter.

Digital compensation and benefits expense decreased by $1.4 million, or 3%, to $45.3 million in the three months ended July 31, 2024 from $46.7 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $4.7 million as a result of a 12% decrease in average headcount, partially offset by a higher performance-related bonus expense of $3.1 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Executive Search North America compensation and benefits expense increased by $2.6 million, or 3%, to $101.2 million in the three months ended July 31, 2024 compared to $98.6 million in the year-ago quarter. Compensation and benefits expense increased primarily due to an increase in performance-related bonus expense of $4.7 million driven by the higher segment fee revenue and profitability, partially offset by a decrease in salaries and related payroll taxes of $2.2 million due to a 9% decrease in average headcount in the three months ended July 31, 2024 compared to the year-ago quarter.

Executive Search EMEA compensation and benefits expense decreased by $2.7 million, or 7%, to $34.6 million in the three months ended July 31, 2024 compared to $37.3 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to decreases in severance expense and amortization of long-term incentive awards of $3.9 million and $1.4 million, respectively, in the three months ended July 31, 2024 compared to the year-ago quarter. Also contributing to the decrease was lower salaries and related payroll taxes of $2.1 million due to an 8% decrease in average headcount, partially offset by an increase in performance-related bonus expense of $4.7 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Executive Search Asia Pacific compensation and benefits expense decreased by $1.7 million, or 11%, to $14.4 million in the three months ended July 31, 2024 compared to $16.1 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to decreases in performance-related bonus expense of $1.2 million driven by lower segment fee revenue, and a decrease in salaries and related payroll taxes of $1.0 million due to a 9% decrease in average headcount in the three months ended July 31, 2024 compared to the year-ago quarter.

Executive Search Latin America compensation and benefits expense decreased by $0.5 million, or 10%, to $4.4 million in the three months ended July 31, 2024 compared to $4.9 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $0.5 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Professional Search & Interim compensation and benefits expense decreased by $10.2 million, or 17%, to $49.2 million in the three months ended July 31, 2024 from $59.4 million in the year-ago quarter. The decrease was primarily due to decreases in salaries and related payroll taxes of $5.9 million due to a 24% decrease in average headcount as well as a decrease in commission expense of $3.8 million driven by lower segment fee revenue and $2.8 million in lower integration/acquisition costs in the three months ended July 31, 2024 compared to the year-ago quarter. The decreases were partially offset by an increase of $3.0 million in performance-related bonus expense in the three months ended July 31, 2024 compared to the year-ago quarter.

RPO compensation and benefits expense decreased by $9.0 million, or 12%, to $68.6 million in the three months ended July 31, 2024 from $77.6 million in the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $12.3 million as a result of a 16% decrease in average headcount in the three months ended July 31, 2024 compared to the year-ago quarter. The decrease was partially offset by an increase of $4.9 million in performance-related bonus expense in the three months ended July 31, 2024 compared to the year-ago quarter.

Corporate compensation and benefits expense increased by $1.2 million, or 7%, to $19.4 million in the three months ended July 31, 2024 from $18.2 million in the year-ago quarter. The increase in compensation and benefits expense was primarily due to an increase in stock-based compensation expense of $1.1 million in the three months ended July 31, 2024 compared to the year-ago quarter.

### General and Administrative Expenses

General and administrative expenses decreased by $5.9 million, or 9%, to $60.0 million in the three months ended July 31, 2024 from $65.9 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in legal and other professional fees of $3.1 million in the three months ended July 31, 2024 compared to the year-ago quarter and a decrease in premise and office expense of $2.9 million due to cost reduction efforts and a $1.6 million right-of-use assets impairment charge incurred in the year-ago quarter.

Consulting general and administrative expenses decreased by $1.7 million, or 12%, to $12.9 million in the three months ended July 31, 2024 compared to $14.6 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in legal and other professional fees of $0.7 million in the three months ended July 31, 2024 compared to the year-ago quarter and lower premise and office expense of $0.6 million due to a right-of-use assets impairment charge incurred in the year-ago quarter.

Digital general and administrative expenses were $9.1 million in the three months ended July 31, 2024, essentially flat compared to $9.5 million in the year-ago quarter.

Executive Search North America general and administrative expenses decreased by $1.4 million, or 16%, to $7.6 million in the three months ended July 31, 2024 compared to $9.0 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in premise and office expense of $1.0 million primarily due to a $0.5 million right-of-use assets impairment charged incurred in the year-ago quarter and a decrease in legal and other professional fees of $0.3 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Executive Search EMEA general and administrative expenses were $4.1 million in both the three months ended July 31, 2024 and the year-ago quarter.

Executive Search Asia Pacific general and administrative expenses were $2.2 million in the three months ended July 31, 2024, essentially flat compared to $2.4 million in the year-ago quarter.

Executive Search Latin America general and administrative expenses increased by $0.4 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Professional Search & Interim general and administrative expenses decreased by $1.5 million, or 22%, to $5.2 million in the three months ended July 31, 2024 compared to $6.7 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to decreases in premise and office expense of $0.9 million and marketing and business development expense of $0.3 million compared to the year-ago quarter.

RPO general and administrative expenses decreased by $0.9 million, or 16%, to $4.7 million in the three months ended July 31, 2024 compared to $5.6 million in the year-ago quarter. The decrease in general and administrative expenses was primarily due to a decrease in foreign exchange loss of $0.7 million in the three months ended July 31, 2024 compared to the year-ago quarter.

Corporate general and administrative expenses were $14.0 million in the three months ended July 31, 2024, essentially flat compared to $14.1 million in the year-ago quarter.

### Cost of Services Expense

Cost of services expense consists of contractor and product costs related to delivery of various services and products through Consulting, Digital, Professional Search & Interim and RPO. Cost of services expense decreased by $9.7 million, or 13%, to $67.5 million in the three months ended July 31, 2024 compared to $77.2 million in the year-ago quarter. Professional Search & Interim accounted for $13.1 million of the decrease due to a decline in fee revenue in the segment as the significant amount of interim services that they perform have a higher cost of service expense as compared to the Company's other segments. The decrease was partially offset by an increase in cost of services expense from the Consulting segment.

### Depreciation and Amortization Expenses

Depreciation and amortization expenses were $19.6 million in the three months ended July 31, 2024, compared to $19.0 million in the year-ago quarter.

### Restructuring Charges, Net

During fiscal 2023, we implemented a restructuring plan to realign our workforce with our business needs and objectives. In the three months ended July 31, 2023, the Company made adjustments to previously recorded restructuring accruals resulting in restructuring charges of $0.4 million. There were no restructuring charges, net during the three months ended July 31, 2024.

### Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $16.0 million, or 34%, to $62.6 million in the three months ended July 31, 2024, as compared to $46.6 million in the year-ago quarter. The increase in net income attributable to Korn Ferry was primarily due to decreases of compensation and benefits expense of $28.1 million, cost of services expense of $9.7 million and general and administrative expenses of $5.9 million in the three months ended July 31, 2024 compared to the year-ago quarter. The increase in net income attributable to Korn Ferry was partially offset by a decrease in fee revenue of $24.3 million. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 9% and 7% in the three months ended July 31, 2024 and 2023, respectively.

### Adjusted EBITDA

Adjusted EBITDA increased by $15.5 million, or 16%, to $111.2 million in the three months ended July 31, 2024 as compared to $95.7 million in the year-ago quarter. The increase in Adjusted EBITDA was driven by decreases in compensation and benefit expense (excluding integration/acquisition costs) and general and administrative expenses (excluding impairment charges and integration/acquisition costs) due to strong cost management, coupled with lower cost of services expense, partially offset by a decrease in fee revenue. Adjusted EBITDA, as a percentage of fee revenue, was 16% in the three months ended July 31, 2024 compared to 14% in the year-ago quarter.

Consulting Adjusted EBITDA was $29.3 million in the three months ended July 31, 2024, an increase of $4.1 million, or 16%, as compared to $25.2 million in the year-ago quarter. This increase in Adjusted EBITDA was driven by decreases in compensation and benefits expense and general and administrative expenses (excluding impairment charges), partially offset by an increase in cost of services expense for the three months ended July 31, 2024 compared the year-ago quarter. Consulting Adjusted EBITDA, as a percentage of fee revenue, was 17% and 15% in the three months ended July 31, 2024 and 2023, respectively.

Digital Adjusted EBITDA was $26.6 million in the three months ended July 31, 2024, an increase of $2.3 million, or 9%, as compared to $24.3 million in the year-ago quarter. This increase in Adjusted EBITDA was driven by improved consultant productivity and strong cost management. Digital Adjusted EBITDA, as a percentage of fee revenue, was 30% and 28% in the three months ended July 31, 2024 and 2023, respectively.

Executive Search North America Adjusted EBITDA increased by $6.3 million, or 22%, to $35.1 million in the three months ended July 31, 2024 compared to $28.8 million in the year-ago quarter. The increase was mainly driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense for the three months ended July 31, 2024 compared the year-ago quarter. Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 26% and 23% in the three months ended July 31, 2024 and 2023, respectively.

Executive Search EMEA Adjusted EBITDA increased by $1.7 million, or 30%, to $7.3 million in the three months ended July 31, 2024 compared to $5.6 million in the year-ago quarter. The increase was primarily driven by a decrease in compensation and benefits expense, partially offset by a decrease in segment fee revenue. Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 16% and 12% in the three months ended July 31, 2024 and 2023, respectively.

Executive Search Asia Pacific Adjusted EBITDA decreased by $2.1 million, or 33%, to $4.2 million in the three months ended July 31, 2024 compared to $6.3 million in the year-ago quarter. The decrease in Adjusted EBITDA was driven by lower fee revenue in the segment, partially offset by a decrease in compensation and benefits expense. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 20% and 26% in the three months ended July 31, 2024 and 2023, respectively.

Executive Search Latin America Adjusted EBITDA increased by $1.1 million, or 65%, to $2.8 million in the three months ended July 31, 2024 compared to $1.7 million in the year-ago quarter. The increase in Adjusted EBITDA was primarily driven by higher fee revenue in the segment. Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 38% and 27% in the three months ended July 31, 2024 and 2023, respectively.

Professional Search & Interim Adjusted EBITDA was $25.7 million in the three months ended July 31, 2024, an increase of $1.4 million, or 6%, as compared to $24.3 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by decreases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs), and general and administrative expenses (excluding integration/acquisition costs). These decreases were partially offset by lower fee revenue in the segment. Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 21% and 17% in the three months ended July 31, 2024 and 2023, respectively.

RPO Adjusted EBITDA was $12.5 million in the three months ended July 31, 2024, an increase of $2.0 million, or 19%, as compared to $10.5 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by a decrease in compensation and benefits expense, partially offset by lower fee revenue in the segment. RPO Adjusted EBITDA, as a percentage of fee revenue, was 14% and 11% in the three months ended July 31, 2024 and 2023, respectively.

### Other Income, Net

Other income, net was $14.5 million in the three months ended July 31, 2024 compared to $13.6 million in the year-ago quarter. The difference was primarily due to greater gains from the increase in the fair value of our marketable securities that are held in trust for the settlement of the Company's obligation under the Executive Capital Accumulation Plan ("ECAP") during the three months ended July 31, 2024 compared to the year-ago quarter.

### Interest Expense, Net

Interest expense, net primarily relates to the Company's 4.625% Senior Unsecured Notes due 2027 ("Notes") issued in December 2019, borrowings under company-owned life insurance ("COLI") policies and interest cost related to our deferred compensation plans, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $3.9 million in the three months ended July 31, 2024 compared to $4.7 million in the year-ago quarter. Interest expense, net decreased due to an increase in interest income earned on cash and cash equivalent balances as a result of higher interest rates in the three months ended July 31, 2024 compared to the year-ago quarter.

### Income Tax Provision

The provision for income tax was $22.4 million in the three months ended July 31, 2024, with an effective tax rate of 25.8%, compared to $18.4 million in the three months ended July 31, 2023, with an effective rate of 28.1%. In addition to the impact of U.S. state income taxes and the jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the lower effective tax rate for the three months ended July 31, 2024 was primarily due to the windfall from stock-based awards that vested during the three months ended July 31, 2024, which was greater than the benefit recorded for the three months ended July 31, 2023 in connection with the windfall from stock-based awards that vested during the year-ago quarter. The windfall is the amount by which the Company’s tax deduction for these awards, based on the fair market value of the awards on the date of vesting, is greater than the expense recorded in the Company’s financial statements over the awards’ vesting period.

### Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the condensed consolidated results of operations. Net income attributable to noncontrolling interest for the three months ended July 31, 2024 was $1.7 million, as compared to $0.6 million in the three months ended July 31, 2023.

### Liquidity and Capital Resources

The Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that are expected to earn a return that is superior to the Company's cost of capital. Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of the Form 10-K. Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Amended Credit Agreement (defined below) and Notes, as well as using excess cash to repay the Notes.

On December 16, 2019, we completed a private placement of the Notes with a $400.0 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our obligations under the Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith. As of July 31, 2024, the fair value of the Notes was $386.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.

On June 24, 2022, we entered into an amendment (the “Amendment”) to our December 16, 2019 Credit Agreement (the "Credit Agreement"; as amended by the Amendment, the "Amended Credit Agreement") with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) replace the London interbank offered rate with Term SOFR, and (iii) replace the existing financial covenants with financial covenants described below. The Amended Credit Agreement provides for five-year senior secured credit facilities comprised of a $650.0 million revolving credit facility (the “Revolver”). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00. See Note 11 —*Long-Term Debt* for a further description of the Amended Credit Agreement. The Company has a total of $645.4 million and $645.5 million available under the Revolver after $4.6 million and $4.5 million of standby letters of credit have been issued as of July 31, 2024 and April 30, 2024, respectively. The Company had a total of $12.3 million and $13.2 million of standby letters with other financial institutions as of July 31, 2024 and April 30, 2024, respectively. The standby letters of credit were generally issued as a result of entering into office premise leases.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend. On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors approved an increase of 20% in the quarterly dividend, which increased the quarterly dividend to $0.18 per share. On December 5, 2023, the Board of Directors approved an increase of 83% in the quarterly dividend, which increased the quarterly dividend to $0.33 per share. On June 12, 2024, the Board of Directors approved an increase in the quarterly dividend to $0.37 per share. The Amended Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) is no greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant. Furthermore, our Notes allow us to pay $25.0 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no default under the indenture governing the Notes. The declaration and payment of future dividends under the quarterly dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend policy at any time and for any reason.

On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318.0 million. The Company repurchased approximately $23.5 million and $4.2 million of the Company’s stock during the three months ended July 31, 2024 and 2023, respectively. As of July 31, 2024, $159.2 million remained available for common stock repurchases under our share repurchase program. Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

Our primary source of liquidity is the fee revenue generated from our operations, supplemented by our borrowing capacity under our Amended Credit Agreement. Our performance is subject to the general level of economic activity in the geographic regions and the industries we service. We believe, based on current economic conditions, that our cash on hand and funds from operations and the Amended Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, debt repayments, share repurchases and dividend payments under our dividend policy during the next 12 months and thereafter for the foreseeable future. However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, including as a result of ongoing macroeconomic uncertainty due to inflation and a potential recession, such changes have and could put further negative pressure on demand for our services and affect our operating cash flows. If these conditions were to persist over an extended period of time, we may incur negative cash flows and it might require us to access additional borrowings under the Amended Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.

Cash and cash equivalents and marketable securities were $905.2 million and $1,195.4 million as of July 31, 2024 and April 30, 2024, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $553.1 million and $606.4 million at July 31, 2024 and April 30, 2024, respectively. As of July 31, 2024 and April 30, 2024, we held $368.0 million and $393.8 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay accrued bonuses. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes.

As of July 31, 2024 and April 30, 2024, marketable securities of $271.8 million and $254.4 million, respectively, included equity securities of $232.6 million (net of gross unrealized gains of $38.2 million and gross unrealized losses of $0.7 million) and $219.9 million (net of gross unrealized gains of $27.0 million and gross unrealized losses of $1.2 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $220.1 million and $202.5 million, respectively, are classified as non-current. These marketable securities were held to satisfy vested obligations totaling $214.5 million and $198.6 million as of July 31, 2024 and April 30, 2024, respectively. Unvested obligations under the deferred compensation plans totaled $16.7 million and $22.4 million as of July 31, 2024 and April 30, 2024, respectively.

The net increase in our working capital of $17.8 million as of July 31, 2024 compared to April 30, 2024 is primarily attributable to decreases in compensation and benefit payable and other accrued liabilities and increases in accounts receivable, income taxes and other receivables, and prepaid expenses and other assets, partially offset by a decrease in cash and cash equivalents. The decrease in compensation and benefits payable and cash and cash equivalents was primarily due to payments of annual bonuses earned in fiscal 2024 and paid during the first quarter of fiscal 2025. Other accrued liabilities decreased due to interest payments made on the Notes in fiscal 2025 and a decrease in deferred revenue due to lower fee revenue in the three months ended July 31, 2024 compared to the three months ended April 30, 2024. The increase in accounts receivable is due to an increase in days of sales outstanding, which went from 58 days to 65 days (which is consistent with historical experience). Prepaid expenses and other asset increased due to annual renewal of our computer software licenses and insurance, which typically takes place in first quarter of the fiscal year while the increase in income taxes and other receivables was due to large tax payments made in the first quarter of fiscal 2025. Cash used in operating activities was $227.2 million in the three months ended July 31, 2024 compared to $274.5 million in the three months ended July 31, 2023.

Cash used in investing activities was $26.7 million in the three months ended July 31, 2024 compared to cash provided by investing activities of $11.4 million in the year-ago quarter. The change from cash provided by investing activities to cash used in investing activities was primarily due to $13.5 million in premiums paid on company-owned life insurance policies during the three months ended July 31, 2024 compared to $0.2 million in the year-ago quarter. Also contributing to this change was an increase in the purchase of marketable securities of $11.2 million and lower proceeds received from sales/maturities of marketable securities $9.6 million during the three months ended July 31, 2024 compared to the year-ago quarter.

Cash used in financing activities was $56.1 million in the three months ended July 31, 2024 compared to the cash used in financing activities of $20.6 million in the three months ended July 31, 2023. The increase in cash used in financing activities was primarily due to higher repurchases of the Company’s common stock, as well as higher dividends paid to shareholders, as a result of increases in the quarterly dividend of $18.4 million and $10.2 million, respectively, in the three months ended July 31, 2024 compared to the year-ago quarter. Also contributing to the increase was higher payments of tax withholding on restricted stock of $6.4 million in the three months ended July 31, 2024 compared to the year-ago quarter.

### Cash Surrender Value of Company-Owned Life Insurance Policies, Net of Loans

We purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. As of July 31, 2024 and April 30, 2024, we held contracts with gross cash surrender value of $311.7 million and $295.9 million, respectively. Total outstanding borrowings against the CSV of COLI contracts was $77.0 million as of both July 31, 2024 and April 30, 2024. Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At July 31, 2024 and April 30, 2024, the net cash value of these policies was $234.7 million and $219.0 million, respectively.

Other than the factors discussed in this section, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of July 31, 2024.

### Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities. We had no material changes in contractual obligations as of July 31, 2024, as compared to those disclosed in our table of contractual obligations included in our Annual Report.

### Critical Accounting Policies

Preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and assumptions and changes in the estimates are reported in current operations as new information is learned or upon the amounts becoming fixed or determinable. In preparing our interim condensed consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our condensed consolidated financial statements and in Form 10-K. There have been no material changes in our critical accounting policies since the end of fiscal 2024.

## Market risk

As filed, 3,887 characters.

As a result of our global operating activities, we are exposed to certain market risks, including foreign currency exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal course of our business as described below.

### Foreign Currency Risk

Substantially all our foreign subsidiaries’ operations are measured in their local currencies. Assets and liabilities are translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue and expenses are translated at daily rates of exchange during the reporting period. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss, net on our condensed consolidated balance sheets.

Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to foreign currency gains or losses that impact our results of operations. Historically, we have not realized significant foreign currency gains or losses on such transactions. During the three months ended July 31, 2024 and 2023, we recorded foreign currency losses of $0.8 million and $0.9 million, respectively, in general and administrative expenses in the condensed consolidated statements of income.

Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following currencies — U.S. Dollar, Canadian Dollar, Pound Sterling, Euro, Polish Zloty, Danish Krone, Swiss Franc, Swedish Krona, South African Rand, Singapore Dollar, South Korean Won, Japanese Yen, and Mexican Peso. Based on balances exposed to fluctuation in exchange rates between these currencies as of July 31, 2024, a 10% increase or decrease in the value of these currencies could result in a foreign exchange gain or loss of $11.8 million. We have a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting Standards Codification 815, *Derivatives and Hedging.*

### Interest Rate Risk

Our exposure to interest rate risk is limited to our Credit Facilities, borrowings against the CSV of COLI contracts and to a lesser extent our fixed income debt securities. As of July 31, 2024, there were no amounts outstanding under the Credit Facilities. At our option, loans issued under the Amended Credit Agreement bear interest at either Term Secured Overnight Financing Rate ("SOFR") or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Amended Credit Agreement may fluctuate between Term SOFR plus a SOFR adjustment of 0.10%, plus 1.125% per annum to 2.00% per annum, in the case of Term SOFR borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) at such time. In addition, we are required to pay the lenders a quarterly commitment fee ranging from 0.175% to 0.300% per annum on the average daily unused amount of the Revolver, based upon our consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit.

We had $77.0 million of borrowings against the CSV of COLI contracts as of both July 31, 2024 and April 30, 2024, bearing interest primarily at variable rates. We have sought to minimize the risk of fluctuations in these variable rates by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate, which has the effect of increasing the CSV on our COLI contracts.

## Controls and procedures

As filed, 1,041 characters.

a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, management, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures and internal controls over financial reporting. Based on their evaluation of our disclosure controls and procedures conducted as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the “Exchange Act”)) were effective as of July 31, 2024.

b) Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting during the three months ended July 31, 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 574 characters.

In our Form 10-K, we described the material factors, events, and uncertainties that make an investment in our securities risky. Those risk factors should be considered carefully, together with all other information in that Form 10-K and our subsequent filings with the SEC. It does not address all of the risks that we face, and additional risks not presently known to us or that we currently deem immaterial may also arise and impair our business operations. As of the date of this report, there have been no material changes to the risk factors described in our Form 10-K.

Filed Sep 6, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-039649. Last ingested by Listed: Oct 30, 2026, 12:03 ET. No prices; not investment advice.