Mixed Fortunes for Korn Ferry: What's Behind Their Soaring Dividend Despite Falling Income?

Korn Ferry KFY reported a second-quarter FY24 total revenue decline of 3.2% year-over-year to $712.45 million, beating the consensus of $687.22 million. 

Fee revenue was $704.00 million, a decrease of 3.3% Y/Y. Adjusted EPS of $0.97 beats the estimate of $0.95.

Operating income declined by 80.9% Y/Y to $22.8 million, with an operating margin of 3.2% versus 16.4% a year ago. Adjusted EBITDA was $98.5 million, with Adjusted EBITDA margin of 14.0% versus 18.0% the prior year.

The company exited the quarter with cash and equivalents worth $646.99 million. The company's long-term debt as of quarter-end totaled $396.57 million.

Dividend: On December 5, 2023, the company increased its regular quarterly cash dividend by 83% to $0.33 per share, which is payable on January 12, 2024, to stockholders of record on December 21, 2023.

CEO Gary D. Burnison said, "In particular, our Consulting and Digital businesses now generate almost 40% of our top line, with Digital achieving all-time record revenue at constant currency during the quarter."

Q3 Outlook: Korn Ferry expects adjusted EPS of $0.96 - $1.02, versus consensus of $0.89 and fee revenue of $645 million - $665 million.

Price Action: KFY shares are trading higher by 6.33% to $56.75 premarket on the last check Wednesday.