Okay, I think we're live. All right.
Awesome.
Thanks, everybody, for joining today. I'll just do a brief intro. My name's Trevor Romeo. I'm the research analyst here that covers the staffing and human capital services industry. Required to inform you for a list of full disclosures and potential conflicts of interest, please visit our website at williamblair.com. We're very excited today to have Korn Ferry, I believe, for the first time ever at the williamblair.grove.com.
I finally got an invite.
At least the first time in a long time. Korn Ferry is a global leader in organizational consulting and lots of other talent solutions, including executive search, but much, much more, as you're really here for the golf fans out there. Maybe you're familiar with the Korn Ferry tour also. We are very pleased to have CFO Bob Rozek and Vice President of Investor Relations, Tiffany Louder, in the audience too. Thank you both for being here. I'll turn it over to you, Bob.
Great. Thanks, Trevor. I'm happy to be here and talk about one of my favorite topics, Korn Ferry. One of the things I'll say before I jump into the presentation, our year-end is April 30. We're in a kind of a quiet period right now, so it's hard for me to talk about fourth-quarter results. I think the better discussion really is how the firm, what our strategy is, and how the firm has evolved over time, transforming to a global organizational consulting firm. As you look at the slide on my right-hand side, when I joined the company in fiscal year 2012, it was primarily executive search. We're about 80%-85% executive search at the time. I'm trying to be funny with my Rolodex there. I joined the company after spending time with Gary and understanding what his strategy was.
Gary grew up at KPMG. I grew up at Pricewaterhouse. As audit partners, you had relationships with your firms. The firms had built adjacent services, and you were selling those services into your firms. At Korn Ferry, one of the things that Gary realized when he joined was the relationship of the executive search partner was so much stronger than an audit partner. If I'm a search partner and I place you as a CEO, or I'm your audit partner, who's calling? Gary looked at that and said, "Wow, this is really an untapped asset." As I talked to him about it and thought about joining the company, when I finally did decide to join, I was pretty excited about the opportunity that you roll the clock forward to today, to, again, my left-hand side on that chart.
This is a company that we've built. I'll go through the concentric circles there. The outside circles represent our capabilities. Everything from organizational strategy, not necessarily like when you think about business strategy like a McKinsey or a Bain, but organizational strategy is the execution and implementation of a business strategy through people. We have assessment and succession. Obviously, talent acquisition is a big part of the company. Leadership and professional development, along with total rewards. Get on to the next circle, and that shows you how diversified we've become from when I first joined. Exec search today is 29% of the business. RPO, which is recruiting en masse, is about 13%. Consulting at 25%. Excuse me, digital at 13%. Professional search, which is search at the levels below executive search, but still at professional levels, and interim is about 20%.
What's really interesting, if you look at the circles in the middle, that's really where all of our intellectual property, data, content, and science sits. All of that permeates all of our solutions as well as our capabilities. When we go out to a client and we're talking to them about search or leadership development or total rewards, it's all based on common data, common science, common nomenclature. A fellow that used to work here, Mark, who passed away unfortunately, used to tell the story. He was up at Nike, and he was dealing with one of the executives there. The executive said to him, he says, "Hey, Mark, you know I have this person doing this for total rewards. Somebody else is doing my assessments. Somebody else is doing my search.
I feel like I have a fruit salad." He said, "What I really need is a smoothie. You guys are a smoothie because you bring everything together, one-stop shopping." That is really part of our value proposition. With what we have built, I call it an industry of one. There is no other company that has the assets that we do that is out there today. I think there is a pretty large moat around our organization. It would be extremely difficult for somebody to build the same company that we have built at Korn Ferry. I look at the opportunity today, and I think about what I thought about when I first joined, and I so underestimated the potential of where this company can go.
As I sit here today, I'm very excited about the opportunities for us as we look at the next leg of our evolution. A little bit about Korn Ferry by the numbers. I have FY24, and then we did a trailing 12 through Q3 because obviously we haven't disclosed Q4 yet. The fee revenue numbers have a little bit of rounding in there. We finished FY24 at $2.76 billion. Trailing 12 is actually $2.71 billion. The fee revenue is down a percent or two, essentially flat year over year. What's been really impressive in terms of what we've done with the company, if you can look at the adjusted EBITDA, that's up almost $50 million. If you look at the adjusted EBITDA margin, up 200 basis points.
One of the things that, as you think about Korn Ferry and our evolution, having more durable, resilient revenue streams is important to us. With our digital business, we have subscription and license revenue, and that grew 200 basis points as well over that same period. Look at our client base. Very impressive client base. We work with some of the world's leading companies. 97% of the S&P 100 and 86% of the S&P 500. Fortune Magazine does a series of studies. Three out of every four best companies that they've identified, we work with. One out of every two fastest growing companies we work with. 96% of the 50. A very, very impressive client base.
Why would you think about looking at Korn Ferry as an investment?
We've got a number of things to chat about on the slide here. We have a strong, durable foundation. Leading brand and talent in organizational consulting. As you think about the business strategy, your mind automatically goes to McKinsey, Bain, BCG. What we're striving for, as you think about talent strategy, that your mind immediately goes to Korn Ferry. Again, only organization in the world that has all of the assets and solutions that we do. We have 9,000 colleagues across the globe operating in 50 countries. We have a balanced approach to our capital allocation. I have another slide on capital I will talk about in a little bit. We have an excellent M&A track record. One of the things that we have done as an organization is we have built a company that is what I call plug and place.
We have common processes, common systems, common controls across the globe. Most of the companies that we buy are private, so kind of underinvested, maybe not as well managed. We are able to pick those companies up and plug them into our ecosystem and really generate a significant amount of cost synergies that make the transaction economics work. When we get the top-line revenue synergies, that is kind of like icing on the cake. A proven management team. I have been at the company about 13 and a half years now. I am probably one of the shortest-tenured people on Gary's leadership team. A very experienced and dedicated leadership team. We have phenomenal brand permission. I talked about executive search partners and how people would respond to them calling. We have now been able to replicate that across the firm.
We've done a really good job over time of institutionalizing our client relationships, which do give us great brand permission. We have relevant solutions aligned with client talent needs. As we look at, and listen, any addressable market is art, not science. As we start to size the marketplace that we have in front of us across all of our solution areas, I think it's about $450 billion. There are a lot of demographic changes happening in that marketplace, which present opportunities for us as we move forward. I already talked about our integrated capabilities there. Proven track record, poised for sustainable growth.
The one thing that I hear a lot from investors when we talk to them is they say, "You guys tell us what you're going to do, and you're really good at doing it." That's one of the things that we take a lot of pride in. If we say we're going to do something, we stick to the knitting, and we make sure that we get it done. We go to market very opportunistically, but also starting to go very intentionally through our Marquee and Diamond accounts. It's about 350 accounts. When we started that program seven or eight years ago, it was about 30% of our consolidated fee revenue. Today, it's about 40%. We have dedicated client service partners, dedicated global account leaders, and we have a very disciplined account management program that we follow as we face off with those clients. We do comp plans.
We do monthly calls with the account teams. We have what we call a must-win program. Those are the larger opportunities on those clients where the leadership team gets together, looks at the opportunity, can we make it bigger, broader, do we have the right team on it, enhancing our chances to win. Looking back over 20 years, our fee Revenue CAGR has been 11%. As I look forward, we would expect to be there as well. We have gotten there through a combination of M&A along with organic growth. M&A is about 40%. Your organic growth is the remaining 60%. 76% of our clients buy three or more solutions. This is really important. When you are a monoline client and you go to two solutions or three solutions, the revenue growth multiplier is about three to four times.
That's one of our areas of focus today is looking at how many solutions we've penetrated a client with and how do we expand it to if it's one to two, two to three, three to four. We drive strong top-line synergies. 25% of our fee revenue is generated from referrals across from lines of business. We started that really in earnest back in 2018. At that time, about 18% of our fee revenues were referred across. Today, we're at 25%. I think we've got an opportunity to take that somewhere north of 30%, closer to 35% over time. We've got a strong dividend. We just had a dividend increase back in Q3. It's about 2.5% yield. Consumes about roughly $100 million of cash a year. We'll again talk about that as part of our cash allocation.
The demonstrated track record of share repurchases. Over the past couple of years, we've been buying back roughly $100 million worth of stock a year. I think as I think about and look at this slide and think about why Korn Ferry, I think we've got a very good track record, a very good demonstrated success rate that would make us an enticing opportunity to invest into. This slide takes us through what I would call our what we call our strategic levers. We have five strategic levers. It's kind of interesting as I go around and do these every now and then, I'll take a look at this slide and kind of scratch my head and say, "This is the same five that we've had since I've been here.
Is that a good thing or a bad thing?" I quickly come to the conclusion that it's a very good thing, which means we have the right strategy. We're not flip-flopping all over the place. We're not like a pinball bouncing all around. We've got a strategy. We're executing it, and we're sticking to it. The first bullet, driving fully integrated, scalable, and sustainable client engagements. One of the things that is really important for us now as we look at the next evolution of our company is to be in a position to face off with our clients as Korn Ferry. I talked to Gary before our board offsite, and he said to me, "If you look five years ahead, how do you define success?" I said, "To me, it's really simple, Gary.
I go out to a client, introduce myself, I'm Bob from Korn Ferry, and I stop. I'm not executive search. I'm not consulting. I'm not digital. I'm just Korn Ferry. I'm capable of having a conversation with my client to understand their business issues and talent needs. I understand the breadth and depth of what we do as a firm, and I can articulate not what the solution is, but a value proposition to that client so that when I walk out of the meeting, they're thinking to themselves, "These guys can really help us." If we get 1,500- 2,000 people doing that, that is, in my mind, success. That's one of the key things we're focused on now is bringing going to market, facing off with our clients as a firm, not necessarily as consulting or digital or exec search any longer.
Monetizing unique and proprietary intellectual property. I got a slide in that, and I'll talk about that in a second. Driving an integrated go-to-market strategy through the Marquise and Diamond accounts. I already touched on that. Again, that's us trying to become much more intentional in terms of our selling efforts. Pursuing transformational opportunities at the intersection of talent and strategy. That's our M&A program, which, again, if you go back over time, 40% of our growth has come from M&A. And since I've been at the company, there's been two deals that I think have really been transformative for us. The first is when I first joined, we did PDI, and they brought assessment protocol that really put us on the assessment map. And today, we're the leading assessment house in the world. The second transformational M&A opportunity for us was the Hay Group.
They really are what rounded us out to the company that we are today. They had a total rewards business. They had the org strategy business, which we were able to bring together with the other assets and solution areas that we had. Advancing Korn Ferry as a coveted career destination is obviously very important to have great talent. We're always in the market to bring on new talent. We've got a good track record of attracting, promoting, and recognizing, rewarding folks at Korn Ferry. In fact, one of the KPIs that Gary and I are paid off of is our ability to retain. When we rate people, if you're a four or a five, that means you exceed or substantially exceed expectations.
When we look at our senior client population over the past five years, we've been better than a 99% retention rate on that group, which is, again, very, very important for us, especially in the people business. You may have seen something recently where we started talking about what we call a Talent Suite. This is something that our Digital folks are working on earnestly. Today, we've rolled out the Talent Suite, but what we've rolled out today is not the final product. We're looking at a November launch of the final product. As you look at all of the solution or capabilities within the Talent Suite there, Architect would be the tools or solutions that we use in our org strategy business. You think about job architecture, success profiles, roles and responsibilities, layers and spans of control, items like that.
We've got over 12,000 success profiles and roles all across the globe. Recruiting and selecting, it's our candidate database. Pay data, we've got 28 million data points on pay across 31,000 companies across the globe. Listen is our engagement survey. We've got 38 million engagement surveys that we've conducted over time. Assessment is our assessment protocol. 108 million executives that we've assessed over time. Learning coaches, learning and development. We develop over a million people every single year. KFSL, our assets that we bought back in 2019 when we acquired the Miller Heiman assets. That's all about sales, growth, sales methodology, sales incentives, sales organization, and so on. Today, the way that that operates is we sell licenses and subscriptions to it. Each of the areas kind of sits its own repository. I'll give you an example.
If I go in and I take an assessment, the assessment comes back and says, "Okay, Bob, here's your development needs." I'd have to log in, log out, then I'd have to go to learning coaching, log in, get the development content, log out, take the courses, and so on, or get coached up or whatever. What we're rolling out in November is a single repository for all of this. When I go in to take the assessment, I'll take it, the development content will be delivered to me. It'll be delivered to me in descending order in terms of relevance to the organization that I'm working on. What has the greatest impact? That's what I would do first, second, third, fourth, and so on.
What it's going to allow folks to do, our consultants will have much easier access to that and much more efficient use of it in their consulting engagements. The other way that we would go to market with that is in what we call an integrated solution. A consulting engagement that would include a license or subscription to this. A third way would be clients can just have a license or subscription and use it themselves. If you look at the sort of the top arrows, we just entered into a deal with Tableau. They're going to provide a reporting analytics tool that companies can use or our consultants can use as they go into that database.
I think where it gets really interesting when you think about the collection of all of that data, we've been working with clients now for probably close to a year on what we call scaled analytics. It would be going in and looking at an organization who, let's say we've done thousands of assessments over time, and they're looking at a certain group of folks. They can benchmark those folks relative to other people in your organization. If you're a bank, we can benchmark you, obviously anonymously, but to other financial institutions and see how your workforce compares to other workforces. Today, it's a manual exercise.
One of the things we are working on with AI, GenAI, is being able to have a large language model that will go in and do that for us instead of having people going to do it to really accelerate our ability to provide those unique and differentiated insights to our clients. Okay, last slide I have here. This is our balanced approach to capital allocation. This is no different than what I have been talking about for 13 years. We are always going to put money back into the business first. We really believe we have got the right strategy. I think our performance demonstrates that. That means we would hire individuals, hire teams, put money back into what I just talked about, like on the Talent Suite, right, into our IP or other technology-enabled solutions. We would look to put money back into the business through M&A.
We've got a pretty good track record, as I said earlier, on M&A. Having said that, we do generate a lot of cash. We have tried to be balanced in terms of money back into the business because at some point, you hit the point of diminishing returns. We have put a share buyback program and a dividend program in place. We have had them in place for a while. We have leaned a little bit more heavily into dividends lately because we were a little bit out of balance, if you will. As I said earlier, we now have the dividend up to this point. We feel very good about where it's at. Same level of cash consumption as the buybacks are roughly. Each of them are about $100 million of cash each year. What I would say is we are not serial acquirers.
We're very disciplined when it comes to M&A. We look at three things for any M&A transaction. One, it has to have strategic alignment. Two, obviously, you have to make the math work. Three, I think the most important thing is there's got to be a cultural fit. Gary and Brian Suh, who leads our corporate development, spend a lot of time meeting with companies. Gary has to be very comfortable about the cultural fit before he will. To the extent that we're not finding deals and we're seeing cash build up on the balance sheet, at that point, I think you would see us probably lean a little bit heavier back into share buybacks. I do anticipate that we've been increasing our dividend. We had six dividend increases over the past five years.
I would anticipate us continuing to do that, probably smaller increases, but continuing to do the annual increases that we've been doing. With that, I would be happy to take any questions.
Great. Thanks for the overview, Bob. Let's see. We've got about six minutes left. I've got a few before I forget, by the way, the breakout room is Burnham A upstairs. If anyone would like some additional Q&A after this. Bob, maybe we could talk, maybe you hit kind of on the business mix and how it's changed over the years a lot already. One question I had was you went from being 85% Executive Search. Now it's under 30%. You got kind of five or six distinct business areas. You talk about being one Korn Ferry. I'm Bob from Korn Ferry, period. How do you get to the point where you're not just selling point solutions and you're kind of truly that integrated provider?
Yeah, that's exactly what we're working on. That's what I was mentioning earlier when we were getting ready for the offsite. Again, $700 million when I joined, $2.7 billion-ish today. We've enjoyed success managing the business exactly like you just said. You got these point solution sales. You have distinct lines of business. What we've noted is we've created some subconscious, some siloing in the business. Mathias, you deal with digital. Leslie, you go deal with consulting. We're trying to break all that down now where we're not going out to clients, as I said before, hi, I'm Bob, I'm from executive search, I'm here to sell you an executive search. It's facing off with clients as Korn Ferry. It's a large sort of continuation of our transformation, but it's a very important one.
Because I believe we can continue to manage the business the way we are today and we'll be successful. I believe we'll suboptimize the opportunity if we don't move to just we can't even say one Korn Ferry anymore. Gary doesn't allow it. Those are like bad words. Can't say lines of business anymore, bad words. We have to say we are Korn Ferry and we're just going to address our clients. In fact, he is so engaged on this concept. Every other Monday, we have a call. It's two and a half hours. We look at the Marquise and D iamond accounts. What are our best opportunities? Who's on them? How are we going to market with those clients? What are our must wins? Who's on it? How are we expanding? We get a daily email now of all the new business who we won yesterday.
If we place a chief revenue officer, Mathias in Digital will get for KFSL, we'll get an email saying, "Hey, we placed this chief revenue officer. You guys need to connect in with this person and help them become successful." There are a lot of things that we're doing. It's more of what I would call a forcing function to get people to think and behave very differently in the organization.
Great. Maybe we can touch on the executive search business for a minute because there is kind of an interesting trend that I've seen develop, I guess, is a lot of the other kind of staffing talent solutions type businesses that we cover cover a lot of different types of services, but it's really been three years of downturn for most of those types of businesses. For the executive search business, you've seen you and your peers last several quarters have actually returned to positive year-over-year growth. You and Gary have talked about the Peak 65 trend. Maybe you could just talk about maybe some of the underlying or secular factors that are supporting that business.
Yeah. So we absolutely are seeing that positive inflection in search. We talked about it on our third quarter earnings call. I think as I think about it, I think there's a couple of things happening. One, the past four or five years have been really hard. You got the pandemic and you got this steep curve recovery. You have the great resignation. There are wars. There is supply chain dislocation, geopolitical. I think some people are at a point in their career where they're just tired. I do not want to do this anymore. Or they're saying, "You know what? I still want to stay in the game, but I do not want to do it five days a week, so I'll do it two days or three days." We are seeing that turnover happening, and that is really creating the positive inflection that we are seeing on the executive search side.
That continues.
Yeah. That is a big driver for your Interim business too, which you have been doing a lot of M&A.
It is. That is part of the reason why we invested, even in spite of the commentary you made where it has been going down. Even the penetration rate has a different pattern to it now. We really believe the secular changes that are out there. I mean, I look at where I am in terms of the workforce. I am on the very far right side, right? My daughters think so different about work today than I did coming up. You have that, and then you have people at my end who want to stay relevant but do not want to do it full time. There are all these secular changes that I think are going to give us great growth opportunities. That is a massive market, right? The interim business is a massive market.
Yeah. Okay. Maybe one other area where I think Korn Ferry has outperformed a lot of the other peers that we cover, at least, is on the margin side. Despite the tough revenue and macro environment the last couple of years, you've actually seen margins increase. If you could talk maybe about the factors that have led to that, technology, productivity, etc., and then where you go from here with the, I guess, 16-18% target you have, but you're already kind of at 17%. Thoughts on that would be great.
Yeah. No, I mean, you're looking at why the margins where I used to be six foot tall with a full head of hair. The past couple of years have been tough trying to manage to get there. We've done a number of things in the company that have led to where we are margin-wise. We've taken out about 65% of our real estate or 35% of our real estate. Coming out of the pandemic when we were going through the recovery, one of the things I started to do took about three or four quarters. I looked at each business's performance and then came up with what I thought was the right business model. Spent some time with Gary, and we both agreed on what that looked like. That's how we manage the business today.
We looked at revenue per headcount, profitability, came up with metrics, and that's what we drive those businesses to today. We also have cut back on our business development, internal meeting, travel spend pretty significantly. As I think about the business going forward, we're doing a couple of things. We continue to always continue to invest into fee earners. We need people that will bring the firm to our clients. We're getting more proactive in terms of weeding out the poor performers. We used to hire people, and they sit until we did the next restructuring. Every quarter now, I'm pushing people. We got a bottom 5%. Let's get them out, get new people here, free up some cap space. It's really just a proactive management of our cost base that we do. We're at 17%.
I think we're very comfortable at 16-18, depending on revenue mix at any one point in time. If Digital goes where we want it to go and where we think it can go, that could push us towards the top end. If we invest more into Interim, that'll put a little bit of downward pressure. You're not going to see us go below 16 unless there's a severe recession or something.
Okay. Okay. I think we are up on time. So Bob, thanks so much. Tiffany, thanks for being here.
Very good. Thank you. Thanks, everybody.
Appreciate it.