Korn Ferry (KFY) 2015 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry fourth quarter fiscal year 2015 conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded for replay purposes.

We have also made available on the Investor Relations section of our website at kornferry.com, a copy of the financial presentation that we will be reviewing with you today.

Before I turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investors.

Certain statements made in the call today such as those relating to future performance, plans and goals, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements.

Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the Company's control.

Additional information concerning such risks and uncertainties can be found in the release relating to this presentation in the Company's annual report for fiscal 2015 and in the other periodic reports filed by the Company with the SEC.

Also, some of the comments made today may refer to non-GAAP financial measures, such as constant currency amounts, EBITDA and adjusted EBITDA.

Additional information concerning these measures, including reconciliations to the most directly comparable GAAP financial measure, is contained in the financial presentation and release relating to this call, both of which are posted on the Company's website at www.kornferry.com.

With that, I'll turn the call over to Mr. Burnison.

Please go ahead, Sir.

Thank you, Kathy.

Good afternoon, everybody and thank you for joining us.

We just finished a fiscal year here and our fourth quarter and to say that I am pleased is an incredible understatement.

This firm is -- I'm just so proud of our colleagues here at Korn Ferry and what we're doing and what we've achieved, particularly in this last quarter.

We closed out the year with a record high $272 million and I'd just point out that on a constant currency basis, like any global company, currency hit us big time, and on a constant currency basis that revenue would have been $288 million.

Just absolutely phenomenal.

That represents 14% growth year-over-year, 11% growth sequentially, both of those are at constant currency.

EBITDA was $41 million, about a 15% margin in the quarter.

The EPS was $0.51 and the fourth quarter results propelled this firm to over $1 billion.

The first time in our history, on a constant currency basis, for the full-year, we would have been $1.52 billion.

Amazing.

Our balance sheet [per stain], we?ve got $525 million in cash and marketable securities.

And as I reflect back on this last year, and what we're driving to be, which is the preeminent authority on leadership and talent, I'd just highlight a couple things.

I mean, this last year we qualitatively and financially, knocked the cover off the ball with our flagship search business, number one, we account for 30% of all revenue generated by those firms.

We integrated all the acquisitions.

We took all the IP, created a number of new solutions, one out of four employees here at Korn Ferry is new over the last 24 months or so.

We put 35,000 professionals into new jobs over the last year.

Every month about 50,000 professionals benefit from the IP and the development programs that we have.

And financially, ROIC, we increased that 100 BPs, to about 12.5% and Gregg and Bob can talk to that.

When you look at our service lines, again, I'm really proud.

Our leadership business is now alone, it?s 26% of the revenue.

That grew in the quarter, was up over 14%, revenue there was about $73 million constant currency.

We added a new leader to that business, Matt Reilly, who joins us from Accenture.

He's got a great track record of growing professional services organizations.

And our predecessor and very good colleague of ours, RJ Heckman, is now going to be doing what he loves, which is part of the office of the chief executive program, really client facing.

So first, we congratulate RJ on what he's done to bring us to this point.

Our Futurestep team has been the highlight, clearly, for the year.

The business in the quarter was up I think about 22%.

We're doing great work, high-quality work there with significant brands.

And our search business, as I talked about, being it?s a flagship, we lead with the search business, it opens doors for us, changing people's lives.

That business in the quarter, that grew 12%.

So I look on this last quarter, this last year, half of our revenue comes from 20% of our clients and engages in more than one line of business.

You look at our top 100 clients and most of those we're doing multi-solutions for, multi-geographies.

Really, really good news.

As we look forward, we're going to continue to orient this firm in knowledge and IP, going to continue to invest there.

And in addition to making that the anchor of the organization, really four other pillars.

One is to have a proactive go to market strategy, going together as one firm.

Secondly, to continue to make the brand more elastic and elevating the brand.

Clearly, M&A is part of our playbook and we are going to make investments there, carefully, systematically like we've done in the past.

And finally, make this the best place to work.

That's really it.

I'm very, very proud about our colleagues here at Korn Ferry.

With that, I'm going to turn it over.

Bob Rozek and Gregg Kvochak are here.

Bob, I'll turn it over to you.

Great.

Thanks, Gary, and good afternoon, everyone.

As Gary indicated, fiscal 2015 was another very strong year for Korn Ferry, a year in which we achieved many major financial and operational milestones while we continue to position the firm for our future growth with key investments in people, processes and in intellectual property.

Before I get into remarks, though, I do want to congratulate the whole Korn Ferry family for surpassing the $1 billion revenue threshold.

That truly is, at least in my view, an exceptional feat.

As investment spending around the world continues, we also continue to help our clients achieve their business objectives by assisting them in the design of talent strategies that enable them to build, develop and attract the best talent for the workforce.

Our fourth-quarter and total year financial results really demonstrate our success and validate the demand for our industry-leading services.

As Gary indicated, our fee revenue in the fourth quarter reached an all-time high of $272 million, and it propelled the Company's full-year fee revenue to $1.28 billion.

At constant currency, fee revenue for all of fiscal 2015 grew nearly $92 million or 9.6%, and out of that, 42% of that annual fee revenue was generated from services outside of executive recruitment.

Also at constant currency our fourth-quarter fee revenue of $272 million was up $35.8 million or 14.2% year-over-year and up $28.3 million or 11.3% sequentially.

Some positive factors that impacted our fourth-quarter fee revenues were the Pivot acquisition, that contributed about $3.7 million for the two months.

We had seasonally strong upticks which are up about $5.5 million sequentially and $3.5 million year-over-year.

And we also had seasonally strong sales of our perpetual licenses which are up about $1 million sequentially and flat year-over-year.

Also, as we previously mentioned, we did face some currency headwinds which negatively impacted our fourth-quarter revenues by about $16 million year-over-year.

Finally, if we adjust for the acquisition of Pivot whose operations were consolidated with L&TC as of March 1, that was the date that we acquired them, the consolidated fee revenue fourth quarter grew 12.5% year-over-year and 9.8% sequentially on a constant currency basis.

As expected, Executive Search new business was seasonally strong in the fourth quarter.

Worldwide Executive Search new business was up 4.1% compared to the fourth quarter of last year and up 12.5% compared to the sequential third quarter of this year.

Seasonally strong uptick activity was the main factor driving the overall new business growth year-over-year.

In LTC, our new business awards in the fourth quarter were also seasonally strong, growing over 12%, compared to the third quarter of FY15.

And finally, Futurestep, which as Gary indicated had just a fantastic year, reached another record high for new business in the fourth quarter with the total dollar amount of confirmed assignments up 95% year-over-year and up 61% sequentially.

For all of fiscal 2015, Futurestep was awarded approximately $118 million of new solutions contracts which is up 11% year-over-year.

Despite the negative impact to our expenses of foreign currency losses and investment hiring targeted to drive growth in future periods, our profitability remained strong in the fourth quarter.

Excluding acquisition costs of $500,000, adjusted EBITDA in the fourth quarter improved $6.2 million or 18% year-over-year to $40.7 million.

Compared to the third quarter of fiscal 2015, adjusted EBITDA in the fourth quarter was up $1.6 million, or 4.2% with foreign currency losses and investment hiring tempering some of the near-term earnings growth.

However, adjusted EBITDA margin did remain strong in the quarter at 15%, which compares to 15.7% in the third quarter and 13.7% in the fourth quarter of fiscal 2014.

For all of fiscal 2015, our adjusted EBITDA was up $23.4 million, or over 17%, reaching $161.7 million with earnings growth in all service lines.

Consolidated adjusted EBITDA margin was 15.7% for fiscal 2015 compared to 15.4% for fiscal 2014.

And as Gary indicated, our financial position continued to strengthen in the fourth quarter.

We ended up with total cash and marketable securities of $525 million, which was up $72 million compared to the third quarter of fiscal 2015 and up $57 million compared to last year.

Excluding cash and marketable securities that we reserve for deferred comp arrangements and for accrued bonuses which we'll pay within the next month, and after payments for quarterly dividends and acquisitions, our current investable cash balance is approximately $236 million, up $31 million or 15% compared to the third quarter of fiscal 2015.

And out of that amount, about 39% of that resides in the US.

If you pull out our working capital needs, our net investable cash is approximately $160 million and about 38% of that resides in the US.

And finally, our adjusted fully diluted earnings per share were $0.51 in the fourth quarter.

That's an improvement of $0.08 or 19% year-over-year and $0.05 or 11% sequentially.

The impact of a lower tax rate in the fourth quarter helped adjusted fully diluted earnings per share by about $0.03 or $0.04.

This was however substantially offset by costs associated with foreign currency losses as well as the cost associated with the investment hiring as our new hires take time to ramp up to full productivity.

For all of fiscal 2015, adjusted earnings per share were $1.90, a year-over-year improvement of $0.30 or 19%.

With that, I'll turn it over to Gregg who will cover our operating segments in more detail.

Okay.

Thanks, Bob.

I'm going to start with our Executive Recruitment segment.

Globally revenue for our Executive Recruitment segment was seasonally strong in the fourth quarter.

At actual foreign exchange rates, consolidated Executive Recruitment fee revenue in the fourth quarter was $156.6 million, up $8.4 million or 5.7% year-over-year and up $13.1 million or 9.1% sequentially.

As discussed on our third quarter earnings call, the current strength of the US dollar continues to be a significant headwind for growth for our Executive Recruitment segment.

Adjusting to constant currency, our consolidated Executive Recruitment fee revenue in the fourth quarter was up $18 million or 12.1% year-over-year, and up $16.8 million or 11.7% sequentially.

On a regional basis at constant currency, North America was up 10%, Europe was up 13.7%, Asia-Pacific was up 10.6% and South America was up 37% year-over-year.

On a quarter sequential basis also at constant currency, North America grew 12.8%, Europe grew 13.5%, Asia-Pacific was up 10.4% and South America was down 4% in the fourth quarter.

For the full-year at constant currency, the Executive Recruitment segment was up 7.6% with growth in every region, led by North America and Europe, which were up 8.5% and 8.6%, respectively.

Compared to the fourth quarter a year ago, growth in our Executive Recruitment specialty practice was mixed in the fourth quarter.

Worldwide, growth was strongest in our financial services practice, up 17%, life sciences and healthcare practice, up 11%, and our consumer goods practice, up 6%, while our industrial and technology practices were down 4% and 9% respectively.

Financial services accounted for approximately 21% of all Executive Recruitment fee revenue in the fourth quarter, which was up 190 basis points sequentially.

Sequentially, all of our specialty practices grew in the fourth quarter with the exception of the industrial practice.

Financial services was up 20%, life sciences and healthcare was up 12%, while consumer goods and technology were each up 8%.

Worldwide, the industrial practice was down 4%, driven primarily by softer market conditions in North America.

For all of fiscal 2015, all of our global specialty practices, except technology, grew led by the financial services, industrial and consumer goods practices which were up 10%, 10% and 8% respectively.

Consultant hiring accelerated in the fourth quarter.

The total number of dedicated executive recruiting consultants worldwide at the end of the fourth quarter was 452, up 20 year-over-year and up 8 sequentially.

Annualized fee revenue production per consultant in the fourth quarter improved to $1.4 million, which was up approximately 2% year-over-year and up approximately 8% sequentially.

The number of new search assignments opened worldwide in the fourth quarter was 1,382, which was up 6% year-over-year and up 4.8% sequentially.

Consolidated Executive Search EBITDA in the fourth quarter was $33.4 million with a 21.3% margin, an improvement of $1.7 million or 5.2% year-over-year with an essentially flat margin.

On a sequential basis, higher costs associated with investment hiring and higher incentive compensation expense associated with greater consultant productivity, reduced EBITDA by $1.6 million with a 310 basis point drop in margin.

For the full-year, Executive Search adjusted EBITDA was $132.3 million with a 22.2% margin, compared to $127.8 million with a 22.5% margin for all of fiscal 2014.

Now, turning to our Leadership & Talent Consulting segment.

Rebounding from a seasonally slow third quarter, worldwide fee revenue for L&TC improved to $72.8 million in the fourth quarter.

Measured on a constant currency basis, L&TC's fee revenue in the fourth quarter grew by $9.6 million or 14.5%, with a year-over-year growth in every region.

Compared to the third quarter of fiscal 2015, also on constant currency basis, L&TC's fee revenue grew $9.6 million or 14.9%.

Regionally, North America accounted for approximately 72% of total L&TC worldwide fee revenue in the fourth quarter, compared to 73% in the third quarter of fiscal 2015.

Excluding the impact of Pivot on L&TC's fourth quarter fee revenue, growth at constant currency was 8.8% year-over-year and 9.2% sequentially.

For the full-year, also excluding the impact of the Pivot acquisition, L&TC's fee revenue grew $12.9 million or 5% at constant currency.

L&TC also ramped up investment hiring in the fourth quarter.

At the end of the fourth quarter, there were 164 dedicated L&TC consultants compared to 140 in the third quarter of fiscal 2015 and 127 in the fourth quarter of fiscal 2014.

Professional staff utilization improved to 74% in the fourth quarter from a seasonal low of 65% in the third quarter.

Compared to the fourth quarter fiscal 2014, L&TC's EBITDA in the fourth quarter of fiscal 2015 was up approximately $2.1 million or 20.7% to $12 million with a 150 basis point improvement in margin.

Sequentially, L&TC's EBITDA grew $300,000 or 2.6% with earnings growth being negatively impacted by recent investment hiring.

Finally, turning to our firm's fastest growing segment, Futurestep, which grew for the tenth consecutive quarter and generated $42.4 million of fee revenue in the fourth quarter.

Measured on a constant currency basis, Futurestep's fourth quarter fee revenue was up $8.2 million or 22% year-over-year and up $1.8 million or 4.5% sequentially.

On a regional basis, measured year-over-year at constant currency, North America was up 28.7%, Europe was up 14.9%, Asia-Pacific was up 18%, and South America was up 36.4%.

Sequentially, constant currency growth was the strongest in North America which grew over 10%.

For all of fiscal 2015, Futurestep generated the strongest growth improving to $163.7 million of fee revenue which was up nearly $32 million or 23% at constant currency.

Finally, driven by improving fee revenue, Futurestep's EBITDA in the fourth quarter grew $1.2 million or nearly 26% year-over-year, reaching $6.1 million with a 130 basis point improvement in margin.

For all of fiscal 2015, Futurestep's EBITDA grew $6.2 million or 37% reaching $23 million.

Now I'll turn the call back over to Bob to discuss our outlook for the first quarter of fiscal 2016.

Great.

Thanks, Gregg.

Globally across all of our operating segments, new business awards were seasonally strong in the fiscal fourth quarter and it really provides us with a strong backlog of assignments as we enter into the first quarter of fiscal 2015.

Our main new business was down compared to April and historically both June and July have been stronger months for us in terms of new business in advance of a seasonally softer August due to vacations.

We also expect upticks in perpetual license sales to return to historical levels off of the fourth quarter seasonal high that I previously talked about.

And in spite of the time required to ramp up to full productivity, we do expect revenue contribution from our new hire consultants brought on board in both the fourth quarter of fiscal 2015 as well as some of those that we continue to bring on to date.

Given all the above and assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, fee revenue in the first quarter of fiscal 2016 is likely to range from $258 million to $270 million and diluted earnings per share are likely to range from $0.44 to $0.50.

So that concludes our prepared remarks and we'd be glad to answer any questions you may have.

(Operator Instructions) George Tong, Piper Jaffray.

Hi, good afternoon.

Can you talk about trends we're seeing in North America Exec Search in May and June and how this compares to April and how they're tracking versus expectations?

Yes.

I think -- George, this is Bob.

May, the dollars that we saw in North America Search in May were roughly flat with what we saw last year in May.

But it was interesting, last year in May we had three very large Search engagements; two CEOs and one chief compliance -- risk compliance officer.

But the number of units this year is up about 20 over last year, it's about 12%.

So we continue to see pretty robust activity in North America Search.

Got it.

That's helpful.

And as a follow-up, can you discuss a bit your investment spending outlook in terms of the hiring of sales and recruiters and which areas these new hires are going into, what the anticipated impact will be on operating margins, et cetera?

Well, we continue to bring talent into the organization.

We also promote from within.

So on beginning of May, we probably promoted 20 or 30 colleagues to partner so that would certainly -- that would hit when we talk next quarter.

We've also got some consultants that we've hired but they hadn't started as of April 30.

So we're continuing to add talent and on the leadership side, we're following the same playbook.

Which areas are you hiring the most?

If you had to break out proportionally where these hires are going?

Well, we look at the opportunity really across the globe.

And I wouldn't say that we're overweighted strategically in any one place.

When you look at some recent activity, a lot of that has been focused in the United States.

But that's not -- that just -- that was kind of opportunistic.

We're trying to bring talent in pretty evenly across the world.

Thank you.

Tim McHugh, William Blair.

Thank you.

Just on the North American market, does it feel like the environment changed?

I guess obviously the growth rate ticked up.

You talked a little bit about the fact that it was driven partially by upticks which I know are lumpy.

But I guess, how do you -- how does the market feel versus what it did six, 12 months ago to you?

I don't think the market is substantially different.

I don't think there's a huge tailwind nor do I think that there's a big headwind.

It feels about the same.

Obviously, you've got softness in energy, you've got the CEO confidence numbers that came out were weaker this week, you've got a big jolts number which was substantially higher, so there's puts and takes.

But I really don't think -- I haven't seen any marked change in the last few weeks or months compared to six months ago.

So is the hiring more -- it feels like it picked up both in LTC and Executive Search.

Is it, as you said, opportunistic or is there another reason that it picked up pace?

Listen, it's all about talent in any kind of industry and talent is as important as strategy.

So we've had it as a stated goal for a long time that we would add talent into our leadership, Futurestep, search business and that's what we've done.

Okay.

And then just a numbers question.

The tax rate was I guess abnormally low this quarter.

What are you assuming for Q1 and do you have any sense of what then for the full-year of 2016?

Yes.

Based on our preliminary plan for next year, Tim, it looks like we're, with the mix of earnings we have, we're anticipating about a 32% rate.

Is that for Q1, too?

Yes.

Okay.

Thanks.

Is that all Mr. McHugh?

Yes.

Thanks.

Mark Marcon, RW Baird.

Good afternoon.

Congratulations.

Great to see.

Gary, you mentioned the environment doesn't feel that different than it did six months ago.

But clearly, the results are better.

What would you primarily attribute that to?

Would you say it's basically the gelling of the strategy and the go to market philosophy that you are executing against or what's driving it?

I think it's the -- yes, I think it's a combination.

I think it's the differentiated platform, I think it is the intellectual property and increased solutions and then it's the talent that we're bringing in.

And I think all three or four of those things combined are really resonating with our clients.

So it sounds like you're probably gaining share then as a result of these steps.

Again, you look at the market opportunity and I think that you just take what companies spend in learning and development.

I mean, that's a $150 billion market.

So I think if you look at it myopically through a Executive Search lens, you're going to find the markets $3 billion to $5 billion.

If you reorient yourself to what a CEO really thinks about driving talent to deliver superior business outcomes, then I think your market sizing becomes larger.

And that's what we're focused on.

Great, and can you talk a little bit about Pivot in terms of how it fits in with PDI and the other assets that you've got there?

How do you view that, the solution set now?

We've got a focus on adding capabilities around organizational design, around development.

And then the third piece that we have a very big appetite for would be around rewards.

So those are some areas that we could add a great deal of capability to and would not at all be redundant and in fact, would be -- would resonate with clients.

So Pivot, Mark, is on the development side.

A high-end development, team effectiveness, C-suite kind of stuff.

Great.

And then, with regards to -- this was asked a different way, but in terms of the additions that you've had on the Executive Search side, has it been primarily focused on any one particular practice area?

And as a follow-up to that, really strong growth in financial services.

Where is that coming from?

The financial services growth, I mean, you're right.

We saw definitely an uptick there and it would be really spread across asset management, even capital markets to some extent.

I mean, not like it was, but -- and then banking.

So we saw steady improvement there.

That business can tend to be impacted by one-time kinds of things.

So I wouldn't read too much into that.

Then in terms of your specific question, we recently made a good investment into a team to help build out our capabilities in professional services.

Professional service organizations spend billions of dollars in how they develop people, how they hire people.

And so we made an investment into a group of people that I think will deliver great things for us here in the future.

But other than that, Mark, I think it's been pretty, pretty balanced.

Great.

And then one last one, Gary, with regards to Futurestep and the RPO market, how much of Futurestep's growth or what percentage of Futurestep is now RPO?

And what are you seeing in terms of RPO internationally now?

Well, we just signed a huge engagement with a European company.

I mean, multi-million dollars to help build out technical capabilities.

So number one, what we're seeing is this increasing desire on companies to find highly skilled, highly technical talent that's kind of difficult to come by.

So that's really playing quite well for that Futurestep business and that's pretty consistent across the globe.

But I think your question and Bob can -- our RPO project business (multiple speakers)?

Mark, I would say if you look at Futurestep's growth, the RPO projects and solutions business is about 60% of the total and single search is the remaining 40%.

And both of those businesses grew at a rate that contributed pretty evenly to the overall growth in that line of business this year.

So we saw a really good growth out of both the single search and the solution set side.

Great.

Thank you.

Tobey Sommer, SunTrust.

Thanks very much.

Gary, I was just wondering if the markets are expanding so much, how do you structurally at this point include the margin profile (Technical Difficulty)?

Hey, Tobey.

I got something about the margins.

But I couldn't quite hear.

Your phone was breaking up, Tobey.

Thank you very much.

Gary, the margins have improved substantially.

How do you structurally try to improve the margin profile of the firm from here?

Thanks.

I think two things.

I think that one is deeper penetration on current clients.

We deal with 5,000 clients a year and to the extent that we can be smarter and deliver more value, broaden the services to existing clients, that has a greater impact on profitability than anything else.

So that's absolutely got to be the focus is outside in and how you go to market and how you dedicate your talent pool towards opportunities.

That's clearly number one.

The second, is to go into businesses that are more I'd say product oriented where you can leverage IP.

That would contribute to margin.

So it's really those two things, those are -- those aren't dreams, those are real possibilities.

We have to keep executing against both those paths.

Thanks.

That kind of goes to my next question.

Could you speak to the differentiation in the marketplace and how IP comes into play?

I understand you can probably leverage it across the segments, perhaps applying it more intensively to the Executive Search segment, but I'd love to hear you speak about that.

Thanks.

Number one, the IP is being leveraged in all of the recruiting assignments that we do.

So whether it's in the Futurestep business or the search business, that kind of talent, it's not about what those people have done, the candidates, it's really who they are.

So we've got a proprietary assessment that we just rolled out 4D that we think is the best anywhere and it's actually built on success.

So what has been success of executives?

And so that continued.

All that, given that we put somebody in a job every 3.5 minutes, you can imagine how many people we're seeing.

When we put them through the assessment, it refreshes it and we think we can show any client the difference between good and great in any country across any function.

So that's number one.

In terms of the product capability and what you could do there, there's opportunities not only to license that kind of assessment tools to companies for them to use in hiring.

But we can also use those same kinds of things on the development side where clients can use our intellectual property on a license basis to develop their own people.

So that's how we do it.

Thanks.

Just two other questions for me.

Could you repeat the new business award for Futurestep in the quarter?

And then, I was curious if from your perspective, the upticks in the quarter, how you would view those in light of just a cyclical potential for executive compensation growth to pick up?

Thanks.

Okay.

Tobey, this is Bob.

In Futurestep, the new orders and I'll give you to by the two line sort of segments.

So their line of business.

The solutions piece was roughly say $45 million-ish and then the single search in new orders in the quarter were about $18 million.

So net-net, it is a little bit above $63 million.

Then, in terms of your question, on wage growth, this last number, you look at the BLS numbers 2.9%.

We are definitely seeing a trend where it used to be salary increases were 10% of payroll.

Right?

I mean, 20 years ago.

That's not the case.

Companies are going to more variable structures giving people Apple watches or time off.

But I don't -- analytically you would say that our average fee constant currency was $119,000 for the year.

So that was the highest during the quarter, I guess.

Gregg, was it quarter?

That's for the year.

For the year.

So $119,000.

That's up a little bit for sure.

I'm not so sure I would -- I don't think you can extrapolate that (technical difficulty) growth.

I mean, that's a thing that's very difficult for us to measure and set guidance is that uptick piece.

I mean, it's several million dollars a month and the fourth quarter does tend to be richer for sure.

And there was a lot of upticks that came through.

Thank you.

Bob, in terms of the new business for Futurestep, what was the growth for the overall new business?

Sequentially, it was about 60%, I think I said 62% or 63%, and then year-over-year was above 90%, Tobey.

Okay.

That's the part I was double checking because I thought I was too high or something.

All right.

Thanks for your help.

Mark Marcon, RW Baird.

With the 90% new business growth on a year-over-year basis for the RPO side, wouldn't that imply some acceleration?

You know, Mark, listen, it's very difficult to really assess that.

I mean, this quarter was definitely -- this last quarter was impacted for sure by some license sales, some higher than normal upticks and you?re moving into the summer months.

So I wouldn't make that call.

Intuitively, I can see how one would say that.

I'm just not so -- we'll have to see if that actually flows through.

Mark, on the -- specific to Futurestep, because I asked that of the business, I asked that very question.

And what's happening there is the tenor of the contracts is stretching out longer and longer.

So even if you take the $118 million and you play it out over time, it will be fairly consistent with what we saw -- what we've seen historically.

So you get like a third in the first year, a third the second year, and then the rest would spread out over the next say 18 months or so.

So even though the dollar value of the awards are growing, the length of the contracts are extending out as well which both of those are obviously are very good facts for us.

Certainly is.

And then with regard to L&TC.

In the past we've talked about there was a little bit of a constraint in terms of the number of individuals who are skilled at selling those solutions.

Can you give us a progress report in terms of how that's been going?

Well, the progress report, I think, will be next quarter and the quarter after.

We've now -- we're up now, Mark, almost 40 consultants year-over-year.

So that's about 28% up.

We're 24% up sequentially.

So we have made a marked investment in those colleagues and it does take time to ramp up.

But they are still very, very difficult to come by.

Quite candidly, that's why if you can make a bigger investment and not only get capabilities and solutions, but people, that's an interesting way to do that at a faster pace.

So Pivot is a great example of that.

Great.

Thank you.

Thank you and it appears there are no further questions, Mr. Burnison.

Okay.

Well, listen, I want to thank everybody for joining us and we look forward to reporting on our progress as we continue to build on our leadership position of helping companies deliver superior business outcomes through impactful people strategies.

So with that, thank you very much and we'll talk to you next time.

Thank you and ladies and gentlemen, this conference call will be available for replay for one week starting today at 7:30 PM Eastern Daylight Time and running through the day June 18, ending at midnight.

You may access the AT&T executive playback service by dialing 1-800-475-6701 and entering the access code 361940.

International participants may dial 320-365-3844.

Additionally, the replay will be available for replay at the Company's website, www.kornferry.com in the Investor Relations section.

That does conclude our conference for today.

Thank you for your participation and for using AT&T Executive Teleconference.

You may now disconnect.