Korn Ferry (KFY) 2016 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Korn/Ferry first-quarter FY16 conference call.

(Operator Instructions)

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

We've also made available on the Investor Relations section of our website at www.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 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 and the Company's annual report for FY15 and any other periodic reports filed by the Company with the SEC.

Also some of the comments today may reference 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 the call, both of which are posted on the Company's website at www.KornFerry.com.

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

Please go ahead, sir.

Okay.

Thank you, everybody.

I think that this performance here in the quarter really reaffirms the transformation that our firm has undertaken.

It's really, I think, a very solid quarter.

And more importantly, strategically, I think really affirms where we are headed and really our vision of being the preeminent global people and organizational advisory.

I think we are building a firm that's redefining the category and supporting the global business community, not only in recruiting top talent, but also with an integrated approach to the entire leadership and people continuum, including org design and development.

And I think our firm absolutely increasingly owns the people agenda, and underpinning everything that we do is research and intellectual property.

And I think our vast library of proprietary tools are really making a difference in people's lives and the destination of our clients.

So thanks for joining us here.

It was a good quarter overall.

The firm was up 13% in constant currency.

EBITDA for the quarter was $42 million, about a 15.6% EBITDA margin.

EBITDA on an annualized basis would've been about $170 million.

Fee revenue came in at about $267 million.

Again on a constant currency compared to last year, that would've been $284 million, so again currency had a pretty big negative impact on us in the quarter.

But in actual last year's dollars, it would have been about $284 million.

EPS was $0.47.

The balance sheet continues to be rock solid.

All three lines of business grew, every practice area has shown strong growth.

LTC was up about 14% during the quarter, constant currency.

Futurestep continues to be a shining star for us.

That was up 27% constant currency.

And I think one of the interesting things, if you look at the number of consultants that we have brought on, say over the last six months, we brought on 85 new consultants, and basically half in search and half in LTC.

So from six months ago, we have really ramped up our capacity.

That's up about 15% or so from a couple quarters ago.

Like I said, the LTC business performed very well.

The most recent acquisition Pivot has made a real difference for us and with clients and wins.

The RPO business continues to perform well.

So all in all, I think it was a quarter that reaffirms the transformation that we've undertaken.

With that, I'm going to turn it over to our CFO, Bob Rozek.

Thanks, Gary, and good afternoon, everybody.

As Gary indicated, demand for our industry-leading talent management services really remained strong in the first quarter of FY16 with year-over-year growth in all of our major operating segments.

Recent investments in consultant hires and innovations to our service delivery platform are really paying dividends for us, driving near-term market share gains, as well as positioning us for future growth.

As Gary indicated, our fee revenue in the first quarter was $267.4 million, which at constant currency is up $32.5 million or 13% compared to the first quarter of FY15.

Our revenue mix continues to diversify with slightly more than 43% being generated from services other than executive recruitment in the quarter.

Sequentially, also at constant currency, our first-quarter fee revenue was down about $4.4 million or 1.6%, and that was due primarily to the seasonally strong year-end uptick activity that we had in the fourth quarter of FY15, which, if you recall from our last earnings call, we talked about.

That level of uptick activity did not repeat at the same level in the first quarter, nor do we expect it to, and we're back to a normalized run rate for what we expect in the first quarter.

Another positive factor impacting growth in the first quarter was, as Gary indicated, the recent Pivot acquisition that contributed about $5.2 million of fee revenue in the first quarter of 2016, compared to $3.7 million in the fourth quarter of 2015.

If you remember in the fourth quarter of 2015, we only had them for two out of the three months in the quarter.

Adjusting for Pivot, our organic consolidated fee revenue in the first quarter at constant currency grew about 10.8% year over year and was down about a couple points on a quarter sequential basis.

Turning to new business, as expected, executive search new business remains strong in the first quarter.

In actual foreign exchange rates, our worldwide executive search new business was up almost 4% compared to the first quarter of FY15, with the number of new assignments up over 9.6% in the quarter.

Monthly within the quarter, we started out with weaker confirmations in May and followed that up with record levels of new business in both June and July.

On a quarter sequential basis, our global executive search comps were down a little over $3 million or 2% with the previously discussed seasonally strong uptick activity in the fourth quarter of FY15.

In L&TC, new business awards in the fourth quarter at actual exchange rates were up about 1.3% year over year.

And finally, Futurestep, which achieved another record high for new business in the first quarter, with a total dollar amount of confirmed assignments up 129% year over year and up 15% sequentially.

In the last two quarters combined, Futurestep has won approximately $137 million of new assignments, which includes approximately $100 million of longer-term RPO and related services work, which we expect to recognize into revenue over the next three to four years.

Despite the recent surge in investment hiring, I think we did a really good job maintaining profitability in the first quarter.

Excluding acquisition and integration costs of about $700,000 and $9.9 million of restructuring charges in the first quarter of last year, our adjusted EBITDA in the first quarter improved $3.8 million or nearly 10% year over year to $41.7 million.

And compared to the fourth quarter of FY15, adjusted EBITDA in the first quarter was up $900,000 or 2.3%, with higher new hire related compensation expenses more than offset by lower G&A which impacted the earnings growth in the quarter favorably.

Our adjusted EBITDA margin improved to 15.6% in FY16 Q1 compared to 15.1% and 15% in the first and fourth quarters respectively of FY15.

At the end of the first quarter, our total cash and marketable securities were $414 million, up $42 million compared to the first quarter of FY15.

When you exclude cash and marketable securities that we reserve for deferred comp and bonuses, our investable cash balance is about $237 million, which is up $26 million or 12% compared to the first quarter and essentially flat with fourth quarter of FY15.

Of that investable cash balance, about 37% resides in the US.

And if you consider our working capital needs, our net investable cash position is about $[52] million, and about 34% of that resides in the US.

And finally, excluding all transaction, integration and restructuring charges in all quarters, our adjusted fully diluted earnings per share $[0.47] for FY16, an improvement of $0.04 or 9% year over year.

And for the fourth quarter of FY15, the adjusted fully diluted earnings per share were down $0.04 or about 8%.

And if you recall, this decline was primarily due to a lower tax rate that we enjoy in the fourth quarter, which resulted in a positive impact to that quarter's adjusted fully diluted earnings per share of about $0.03 to $0.04.

I am now going to turn the call over to Gregg Kvochak who will review our operating segments in more detail.

Okay.

Thanks, Bob.

I will start with our executive recruitment segment.

Globally revenue for our executive recruitment segment remains strong in the first quarter.

At actual foreign exchange rates, consolidated executive recruitment fee revenue in the first quarter was $152.1 million, which was up $3.7 million or 2.5% year over year and down $4.4 million or 2.9% sequentially.

As discussed in our third- and fourth-quarter earnings call for FY15, the current strength of the US dollar continues to have a significant impact on year-over-year growth rates in our executive recruitment segment.

Adjusting to constant currency, our consolidated executive recruitment fee revenue in the first quarter was up $13.1 million or 8.8% year over year and down $4.5 million or 2.9% sequentially.

As previously mentioned, the sequential drop in executive recruitment fee revenue was primarily a result of seasonally higher year-end uptick revenue in the fourth quarter of FY15, which was down $4.8 million or nearly 22% in the first quarter of FY16.

On a regional basis, compared year over year at constant currency, North America grew 10.8%, Europe grew 3%, Asia Pacific grew 7.2%, and South America was up over 25%.

On a quarter sequential basis, also at constant currency, North America grew 3.1%, Europe was down 9.9%, Asia Pacific was down 14.2%, and South America was down 2.1% in the first quarter.

Sequential growth in North America was favorably impacted by the ramp up of newly hired consultants.

Compared to the first quarter a year ago, growth in our executive recruitment specialty practice was mixed in the first quarter of FY16.

Worldwide, growth was strongest in our financial services practice, up 19%; life sciences and healthcare practice, up 17%; and our technology practice, up 4%.

While our industrial and consumer good practices were down 11% and 7% respectively.

Financial services accounted for approximately 21% of all executive recruitment fee revenue in the first quarter, which was up 300 basis points yea over year and 10 basis point sequentially.

Compared to the fourth quarter of FY15, our life sciences and healthcare and technology specialty practices grew in the first quarter and were up 3% and 1% respectively.

Sequentially, both the financial services and industrial practices were down 2%, while the consumer goods practice was down 7%.

Consultant hiring continued to accelerate in the first quarter.

The total number of dedicated executive recruiting consultants worldwide at the end of the first quarter was 486, up 44 year over year and up 34 sequentially.

The 34 consultant additions from the fourth quarter FY15 includes 21 net new hires and 13 internal promotions.

Annualized fee revenue production per consultant in the first quarter was $1.3 million and was negatively impacted by the lower production of both new hire and newly promoted consultant whose productivity is expected to ramp up over the next few quarters.

The number of new search assignments opened worldwide in the first quarter was 1372, which was up 9.6% year over year and down less than 1% sequentially.

Consolidated executive search EBITDA in the fourth quarter was $36.9 million with a 24.3% margin, an improvement of $5 million or 15.7% year over year and $3.5 million or 10.5% sequentially.

On a sequential basis, higher cost associated with new hire consultants was offset by lower G&A expense.

Now turning to our leadership and consulting segment, which generated $69.2 million of fee revenue in the first quarter, measured on a constant currency basis, L&TC's fee revenue in the first quarter grew by $8.7 million or 13.7% with year-over-year growth in every region.

Compared to the fourth quarter FY15, also on a constant currency basis, L&TC's fee revenue was seasonally weaker and down $3.5 million or 4.9%.

Regionally, North America accounted for 72% of total L&TC worldwide fee revenue in the first quarter.

Excluding the impact of Pivot on L&TC's first-quarter fee revenue, growth at constant currency was 5.5% year over year and down 7.4% sequentially.

L&TC also increased investment hiring in the first quarter.

At the end of the first quarter, there were 181 dedicated L&TC consultants compared to 164 in the fourth quarter of FY15 and 127 in the first quarter of FY15.

The 17 consultant additions over the fourth quarter of FY15 includes 13 net new hires and 4 internal promotions.

Professional staff utilization fell to 68% in the first quarter from a seasonally high of 74% in the fourth quarter of FY15 and 70% in the first quarter FY15.

Compared to the first quarter of FY15, L&TC's EBITDA in the first quarter of FY16 was up approximately $1 million or 10.3% to $10.7 million with a 30 basis point improvement in margin.

Sequentially L&TC's EBITDA fell $1.3 million or 11% with earnings growth being negatively impacted by seasonally low fee revenue and recent hiring activity.

Finally, turning to the firm's fastest growing segment Futurestep, which grew for the 11th consecutive quarter and generated $46.1 million of fee revenue in the first quarter.

Measured on a constant currency basis, Futurestep's first-quarter fee revenue was up $10.7 million or 27% year over year and up $3.7 million or 8.9% sequentially.

On a regional basis, measured year over year at constant currency, North America was up 33%, Europe was up 26%, Asia Pacific was up 13%, and South America was up 97%.

Sequentially, constant currency growth in North America was 7.6% while Europe and Asia Pacific were up 8.7% and 9% respectively.

Futurestep's earnings power also continues to grow with fee revenue.

EBITDA in the first quarter grew $1.5 million or over 28% year over year, reaching $6.8 million with a 110 basis point improvement in margin.

Futurestep's EBITDA margin was 14.7% in the quarter.

On a sequential basis, Futurestep's EBITDA grew 10.9% with a 30 basis point improvement in margin.

I will now turn the call back over to Bob to discuss our outlook for the second quarter of FY16.

Thanks a lot, Gregg.

After a softer May, new business awards across all of our major service lines improved in June and July.

In the executive search, global new business in both June and July rose to new highs.

This trend was especially true in North America where market conditions have remained favorable and newly hired consultants have begun their ramp up towards full capacity.

August, which is typically one of the seasonally slower months for new business due to vacations, and that's in any fiscal year, was down compared to July.

And if normal seasonal patterns hold, we would expect a rebound in executive search new awards in both September and October.

Additionally, as previously discussed, Futurestep had another record quarter of new awards in the first quarter and should continue its recent growth trend in the second quarter, while both consultant new hires and continued focus on major account development are expected to drive growth for L&TC in a seasonally stronger quarter.

Given all the above and assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, fee revenue in the second quarter of FY16 is likely to range from $267 million to $277 million.

And diluted earnings per share are likely to range from $0.47 to $0.53.

And with that, I will conclude our prepared remarks, and we would be glad to answer any questions that you may have.

(Operator Instructions)

Kevin McVeigh, Macquarie.

Great, thanks.

Congratulations on the results.

One thing that really jumped out at me was, obviously the margins looked really strong for Q1.

Just wanted to get a sense of how you're thinking about that relative to the prior investments in hiring, and as they continue to scale, how should we think about the investments from where they -- I guess from a utilization perspective, particularly the new hires?

Hi Kevin.

This is Bob.

I guess I would go back to our long-term EBITDA margin goals.

If you remember, search is 20% to 25%.

I would fully expect search to inch up closer to the top end of that range over the course of the year assuming economic conditions and everything stay consistent.

LTC, it takes the folks there a little longer to ramp up and get up to full capacity.

But again, they were at 15.6%, that's at the lower end of the range.

I expect us to be above the midpoint towards three quarters of the way to the high end of that range.

And then Futurestep just continues on a nice march each quarter, and we have taken that range up to 13% to 16%.

And I would guess, by the end of this year we will be closer to the 15% or 15.5% range.

Got it.

And then in terms of that, it seems like business has been pretty strong.

Does the guidance incorporate any of the uncertainty that has been in the market in the last couple weeks?

Yes, it absolutely does.

We remain fairly confident and bullish in our guidance, but there is noise in China and we're seeing -- are they going to raise rates in the US?

We're seeing problems down in Latin America.

And so we bear all that in mind when we come back to our guidance for the quarter.

And even though that stuff is weighing on us to some extent, we still are up year over year like 6.5% and you translate that to constant currency, and it's still low double-digit growth.

So I think there's a balance between some level of optimism recognizing the hiring that we have made as well as some of the economic uncertainly we're seeing in the markets and so on.

Great.

Thank you.

George Tong, Piper Jaffray.

Hi.

Good afternoon.

An increase in average fees billed per engagement for executive recruiting in Futurestep contributed pretty strongly to revenue growth this quarter.

Can you talk about the fee environment currently and how much you believe fees per engagement have further room to increase this year FY16?

I would think, George -- this is Bob again.

I would think on a constant currency basis, the average fees in search are essentially flat.

They haven't really grown.

I think when you look at where we are in the cycle and so on, I wouldn't expect there to be enormous uplift coming from average fees at this point especially with currency over the next quarter.

Once you get past Q2 and get into Q3 where currency starts to become less of a factor because we're lapping ourselves, we may see a little bit there.

We're more focused on the level of units that we're doing which is up 9.6% year over year as well as getting the recent hires up to full capacity.

Ours is more of a volume, we see more coming from volume than average fees.

Got it.

And you saw a 12% increase in average headcount this quarter compared to last year.

Can you talk about plans you have for additional hiring and comment on productivity from past hiring cohorts?

Well, we are all in the business of talent, like any company is, and we're always looking to both promote from within and grow from hiring.

We've consistently done that, and over the last six months we've made a concerted effort to add to our talented colleagues and the leadership business and the search business.

So we would look at those, and that is about 85 consultants in total between the two business segments.

The LTC as Bob said, it takes a couple of years for those folks to generally ramp up to what we would think would be normalized productivity levels, and the search would be somewhat less than that.

So we are going to continue to attract talent to the firm and both from promoting from within and also hiring from the outside.

Great.

Thank you.

Tobey Sommer, SunTrust.

Please go ahead.

Thanks.

Start out with outsized growth at Futurestep.

Could you maybe describe the growth within the RPO type businesses and markets if there is a difference between the two and then maybe talk about what factors you think are driving what appear to be market share gains at this stage with Futurestep?

Thanks.

Tobey, this is Bob.

I think if you go in and look at the growth, we're getting really good growth from both the markets piece, which I refer to as a single search site, as well as the RPO.

Even if you go back to last year, the business grew over 20%, and both of those categories contributed to that growth, and that's continuing in Q1.

I think in the single search side, a good portion of the success, Burn has made some real good hiring decisions into that business as well as our strategy of cross line business referrals with executive search are able to refer quite a bit into Futurestep single search.

And we're seeing some of that on the RPO side as well as the fact that in this business, I will say success begets success.

So the more success we have, the more advanced we get, the more demonstrated ability that we put forth, the more success we have.

So I think Burn has this business on a really good in cadence right now.

When you look at some of the hiring he's done on the RPO side as well as some of the intellectual property development that we've had over the course of the past year with our KF4D that he's putting into that line of business, I think those are the attributes that you're seeing result in the outsized growth.

Thanks.

And maybe a question for Gary.

The P&L has been performing well and you've been investing to fuel further growth.

Yet for returns on capital, et cetera, the balance sheet still is relatively underutilized.

Could you speak to what you have planned to rectify that over time?

Well, I think our return on capital this quarter, what was it Gregg, 11%, 12%?

So this quarter was about 12%, and our cost of capital was probably 11% or so.

So we are pretty mindful of that as you indicated.

Our playbook continues to be the same, to number one, invest in the business.

I really believe that this is a multi billion-dollar opportunity.

You talk about Futurestep market share gains, that, I don't know if that is market share gain.

That is -- that market is 10 times the size of the executive search market, so I would hope there's runway there.

Listen, we are pretty mindful of that, and if we're not returning the cost of capital, then we're going to do something about it.

So I'm not going to go beyond that except that as you said, the balance sheet is pristine.

It's probably under levered, and we are very aware of that.

Okay.

And then just from a big picture standpoint, my last question.

Gary, what is the -- I guess the esprit de corps at the firm relative to, you've been working in this role and other executive roles for a long time now.

So I just want to hear your perspective on how it feels at the Company versus other periods in your tenure.

Feels from what perspective?

What the employee esprit de corps is at the firm compared to other periods of time that you worked there.

Well, I think we are all trying to be very urgently patient.

I think that we have this insatiable appetite use this brand to become the people advisor.

I think that people are engaged.

I think that we've demonstrated that we can take this flagship search business and add adjacent solutions and it would fuel a deeper relationship with clients.

So I think it's urgently patient, fired up, and insatiable appetite to learn and grow.

It feels pretty good to me.

Thank you.

(Operator Instructions)

Mark Marcon, R. W. Baird.

Please go ahead.

Good afternoon and let me add my congratulations.

With regards to all the news that's been out with regards to Asia, specifically China, can you tell us a little bit about what you're seeing in your Hong Kong offices?

Anything that would be impacted by China, what are you seeing over there?

It's -- the China business is about 2.5% of the firm, so it's a relatively small percentage, but we do have pretty good line of sight.

I think it's really too soon to tell.

In terms of my channel checks, there is nothing that would thing an alarm bell here per se.

We haven't seen a deterioration in their appetite for talent.

Our China search business is essentially, if you look year over year, it's going to be flat to up a little bit.

The Futurestep business in China year over year is going to be up about 16%.

So we haven't really seen it.

I would also say, Mark, it's probably too soon to tell given the holidays.

I was just wondering what your clients or what your consultants are telling your client, not only in China but let's say Australia, Hong Kong, Singapore.

Yes, our Australian business is actually up quite considerably year over year.

All of the data points, they point at each other.

Now, we haven't really seen anything that would say we should be ringing an alarm bell.

Great.

And with regards to really positioning yourself as a multi-line provider, can you talk a little bit about some of the engagements that you're getting where there is some significant cross selling?

The engagements range from culture shaping kinds of assignments to leadership development to creating more engaged and inspired teams.

That would be three examples.

I think of a major organization, we're very prominent, you would know it.

We are being asked to help shape the culture and align the culture to the business strategy of this organization.

It ranges from the very high end search to the RPO activity now that is really around professional workers.

And on the leadership development side it's from succession to teambuilding to culture shaping, obviously assessment is a pretty big piece of it as well.

Great.

And on the RPO side, you mentioned the amount of business that you've won Can you talk a little bit about how that layers in?

Obviously, some of the RPO contracts it takes a while to set all that up.

Yes, it does.

And I would say that the RPO in the Futurestep work has been particularly strong in North America.

It's been, again, it's been good in Europe and Asia, but real strength in North America.

And it layers in over 4 to 12 quarters, so it's not necessarily overnight.

I will think of --one of the things we have seen is a nice uptick in financial services now, admittedly off a low base.

When you look at it, it really is around commercial consumer banking insurance.

But one of the RPO projects that came to mind when you asked the question was a large commercial bank that asks us to put in many bankers in a relatively short amount of time.

And that was done over the last quarter or so.

So it's generally, I would say North America has been a big tail wind, and it's really been professional knowledge workers.

Great.

And then just to go back to something that Bob was talking about, just with regards to the target margin levels, I got it for executive search and for Futurestep, but I didn't get it for L&TC.

Yes, L&TC target range is somewhere between 15% and 18%.

This quarter was 15.6%, there was a little bit of downward pressure from the hires that Gary referred to that we made, but we expect that back over 16% by year's end.

Great.

Thank you very much.

Tim McHugh, William Blair.

Please go ahead sir.

Yes, most of my questions have been asked, but just on leadership and talent consulting, I guess you mentioned that the long ramp up period, but in the interim, how do you get comfort that you've added a lot of people and you're adding the right people I guess.

Can you talk a little bit about that because actually headcount is growing, really picked up in the last six to nine months, but we're not really seeing it in organic growth at this point.

Well, listen, it is definitely, and I think this is very consistent with what we have said, it is a much slower ramp for those types of individuals.

I think that what you have to believe, well, number one, the market opportunity is there, and I think that anybody would look at that space -- how does the CEO create the motivated, inspired, engaged and developed and compensated workforce, and you would say that is $50 billion to $100 billion, that there is a market there.

You would also say that it is extraordinarily fragmented.

In terms of our success, you would have to believe that we could bring these people in, that we can have them learn our IP and the different kinds of solutions that we have, and that you'd also have to believe that the search channel would be very advantageous to those people.

And I think that our past history demonstrates that yes, we can onboard them, we can train them in new solutions and that the search channel is extremely effective.

When we look at it, you will find that quarter on quarter, 60%, 70% of whether it's the Futurestep for the LTC business, it comes from the access that the brand provides.

So I think that we've demonstrated that they can do all the things you'd have to believe to say, could this be a billion-dollar business on its own.

I think it can.

But again, it's not a question of just a quarterly snapshot of this.

I think it's probably not an industry that grows at 15% or 20%.

That's probably not what the characteristics of the leadership business are in the marketplace.

I'd just add a couple of points.

Gary mentioned the on boarding.

We have significantly stepped up our ongoing efforts in that business to help the individuals with the ramp and with the view that by investing in the onboarding process, we can shorten the time frame to improve productivity.

And the other thing we do too, is quite honestly, we very closely monitor and manage by person what they are doing, what the new business levels are.

So I think with the assistance we give them on the way in and the close monitoring and management throughout their time here, I think we accomplish everything that Gary talked about.

Are you doing anything different versus nine months ago, I guess, define the people how you're identifying people given how much the growth rate's changed on the headcount side.

Well, I think that we have been much more aggressive.

You go back a year ago, and I had it as a personal goal that I wanted to add 100 more LTC partners.

I go back to last August, and we only got 40% of that.

But we've certainly for quite some time have turned up the heat in terms of bringing people in.

We haven't necessarily changed the places we are looking for.

But I think this is a business that is very fragmented, and frankly, I think there needs to be somebody who defines a category here.

And just like when CEOs turn to MacKenzie or Bain for strategic advice, they don't have a firm to turn to when it comes to people advisory.

And I think that is the opportunity to define the category to be that firm, and that is a multi billion-dollar opportunity for us.

My last question, I guess Mark asked about Asia, in Europe given the volatility with Greece and everything and the revenue, it wasn't quite as strong as it delivered in the last year.

So I know there was a tough comp, but does Europe feel differently from a demand perspective than three to six months ago to you guys?

No, again it's a little bit hard because we are only eight days into September, right, and people are just literally back from holiday, so it's hard to get a clean read on that.

But I would say, no, it doesn't.

Obviously, the next 30 to 60 days we will have much better visibility on that question, but, no, I don't think that the feeling is significantly different.

Okay.

Thank you.

Mr. Burnison, there's no further questions at this time.

I will turn the call back to you for final comments.

Okay.

Well thank you everybody for joining us.

Again, I'm very proud of the quarter and I really do believe there is an opportunity here to define a category, and that is how we are looking at it.

And this organization is absolutely committed to make a powerful impact on people and organizations and at the same time producing positive returns for our shareholders.

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

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