Korn Ferry (NYSE:KFY) announced its first quarter results for fiscal year 2027, on September 9. The company saw its fee revenue grow by 7% year-over-year on actual and constant currency basis, standing at $756.5 million. The quarter extended Korn Ferry’s impressive run of six back-to-back quarters of revenue growth, which underpins resilience of the underlying business model and value generation for its client base. An adjusted diluted EPS of $1.43 represented a 9% increment relative to the same period last year.
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Growth Momentum Meets Near-Term Execution Risks
Fee revenue expanded across every region during the recent quarter, as Workforce Solutions and Search segments stood out with 11% and 10% growth, respectively. Remaining fees linked with Korn Ferry’s existing contracts went up 14% year-over-year, clocking in at $1.9 billion by quarter end. Adjusted EBITDA increased 7% year-over-year to $128.2 million, while the adjusted EBITDA margin remained flat at 17%. Net income attributable to the company was $69 million, which translates into a net margin of 9.1%.
On the strategic front, Korn Ferry completed its acquisition of AMS on September 1 for approximately $1.2 billion, after announcing the transaction in late June. Chief Executive Officer, Gary D. Burnison, expressed his optimism around the acquisition of this recruitment process outsourcing and managed service provider. He described the transaction as an integration of two well-reputed brands into a unified global leader in talent and organizational consulting.
Several business metrics came under scrutiny during the first quarter. APAC fee revenue edged up only 1% to $87 million, lagging well behind the Americas and EMEA regions. The management’s guidance for the upcoming quarter also raised concerns, as it anticipates an adjusted EPS between $1.30 and $1.40. The midpoint figure of $1.35 sits below the consensus estimates of $1.48. The subdued outlook weighed on investor confidence, as shares went down during the premarket session.
Talent & Organizational Solutions, which includes Consulting and Digital and regarded as one of Korn Ferry’s foundational strengths, could not replicate the double digit growth across Search and Workforce Solutions. Profitability also stayed relatively thin, with net income margin holding near 9%, down modestly from 9.4% a year earlier. Taken together, these signals point to unbalanced growth across regions, a more cautious near-term outlook, and a business still reliant on a narrower set of segments to sustain momentum.
Hedge Fund Sentiment
Data tracked across 1,000+ hedge funds by Insider Monkey indicates slight uptick in hedge fund interest toward Korn Ferry. According to 13F filing data, total number of hedge funds that held positions in the stock jumped to 31 by the end of second quarter in 2026, relative to 26 in the previous quarter. Short interest in the stock sits slightly above 4%, which indicates modest level of betting against the stock.
BlackRock is the largest institutional investor in the stock, with other notable institutional investors including Vanguard Portfolio Management and Dimensional Fund Advisors.
Verdict
Smooth integration of AMS acquisition will be a defining factor for Korn Ferry’s path forward. Management will also need to address weakness across the APAC region to regain investor confidence. Disciplined capital allocation strategy, which entails ongoing investments on interim staffing needs and RPO, as well as a steady payout policy, could help offset potential skepticism around the stock. Finally, cross-selling opportunities from the AMS deal within the company’s current client base could help the business in sustaining its quarterly growth streak into fiscal 2027.
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