Q3 2024 Korn Ferry Earnings Call

Participants

Gary Burnison; CEO; Korn Ferry

Bob Rozek; CFO & EVP, Chief Corporate Officer; Korn Ferry

Gregg Kvochak; SVP, Finance, Treasury, Tax, Investor Relations; Korn Ferry

Tiffany Louder; Investor Relations; Korn Ferry

Trevor Romeo; Analyst; William Blair & Company, L.L.C

George Tong; Analyst; Goldman Sachs & Company, Inc.

Josh Chan; Analyst; UBS Securities LLC

Andre Childress; Analyst; Robert W. Baird & Co., Inc.

Tobey Sommer; Analyst; Truist Securities

Presentation

Operator

Yes, ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry Third Quarter Fiscal Year 2024 conference call. (Operator Instructions) As a reminder, this conference call is being recorded for replay purposes. We have also made available in the Investor Relations section of our website at kornferry.com a copy of the final financial presentation that we'll 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 and 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 in the periodic and other reports filed by the Company with the SEC, including the Company's annual report for fiscal year 2023 and the company's soon-to-be filed quarterly report for the quarter ended January 31st, 2024. 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, it is contained in the financial presentation and earnings release relating to this call, both of which are posted in the Investor Relations section of the Company's website at www.KornFerry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison.

Gary Burnison

Okay. Thank you, Greg, and good afternoon, everybody. And number one, I'm enormously proud of our organization and how we continue to acclimate, innovate and align our business to the opportunity ahead.
Clearly, the strategy is working the results for the quarter. We did about $669 million of fee revenue, which was down 2%. But you know, the terms of the strategy working our non-search offerings provided a substantial buffer against the more cyclically sensitive recruiting offerings. Earnings and profitability were also good at 15.2% EBITDA margin and the revenue from consulting and digital, when combined with our interim business now represent 50% of our top line during the quarter, our consulting bill rate increased 12% and our digital subscription and license revenue increased 11% over the prior year.
In today's world, as organizations toggle between perform and transform. It's clear that vertical is out in horizontals. And so that's exactly the same for us. And it's gratifying to see the resolve of this cross firm collaboration strategy.
Today, we're approaching almost $3 billion in fee revenue with a balanced portfolio across solutions and geographies that's now generating over a third of our fee revenue from our very successful marquee and regional account program where it was just four short years ago. Our top five marquee and regional accounts averaged around $19 million per account with the largest at $26 million compared to today for a top five average almost $30 million.
And our largest account has a run rate of almost $50 million, driven to a large extent by this horizontal approach by our cross line of business referrals, which today generate about a quarter of our fee revenue. And further to that point, when I look at our $350 million plus digital business. Today, 30% of our fee revenue is generated from consulting referrals, and we're looking to expand this horizontal focus even further through four primary digital growth drivers.
Number one, a firm-wide push around digital sales, digital offerings, secondly, increasing our commercial output and sales productivity. Third, enhancing our product offerings like our talent applications and talent platform, and finally, increasing our digital revenue through partnerships. Including offering joint solutions and opportunities with HR technology providers. It's clear given the results over the last few quarters that we're at the threshold of even greater opportunity in regardless of the environment from one cycle to the next, our vision remains unchanged to become the premier organizational consulting firm.
Our household brand, unparalleled IP and diversification strategy will continue to positively influence our performance and to accelerate the trajectory of thousands of organizations. Indeed, Korn Ferry is uniquely positioned as a firm relentlessly focused on synchronizing strategy, operations and talent, a firm that offers increasing relevant solutions in a rapidly changing world. And I think we're only really scratching the surface of what we can become out with those short remarks, I'm joined by Tiffany, Greg and Bob and Bob, I think I'll turn it over to you next.

Bob Rozek

Great. Thanks, Gary, and good afternoon and good morning. Before I jump into the numbers, I just want to highlight a couple of points. First, I think the third quarter was a very good quarter and I'm extremely proud of my Korn Ferry colleagues and all that they've accomplished.
Second, equally important, I think our performance this quarter continues to demonstrate that our strategy is working. The third quarter results were ahead of our expectations. It really marked a strong start to the back half of our fiscal year. Both earnings and profitability improved year-over-year and sequentially, despite seasonally lower fee revenue a result of increasing productivity by leveraging our cost base, again, an overall positive scorecard for our broader diversification strategy.
We're excited about and confident in this strategy. It continues to play out just as we expected and have talked about, with resilience and growth in our consulting and digital business offsetting cyclical moderation in portions of our talent acquisition offerings, we continue to leverage existing client relationships, our colleagues across lines of business and our unique IP data and content to drive top line synergies with a particular focus on our marquee and regional accounts as you heard Gary talk about that. A number of our key operating statistics improved in the quarter.
We had higher higher hourly bill rates in both consulting and interim, which were up 12% and 21% year-over-year and are really reflective of the exceptional value and impact our services delivered to our clients. Our subscription and license fee revenue in digital increased 11% year-over-year and was actually 38% of Digital's total new business for the third quarter, which illustrates the underlying strength and relevance of our data and solutions as well as contributing to increasing fee revenue stability going forward.
Equally important, I'm pleased with the year-over-year and sequential growth of our earnings and profitability. The adjusted EBITDA margin was 15.2% in the third quarter, with digital consulting and RPO all improving their profitability, both year-over-year and sequentially and Exec Search improving sequentially.
Last, I'd like to highlight our balanced approach to deploying capital, specifically capital returned to shareholders.
In addition to our substantial dividend increase last quarter, this quarter, we increased our share repurchases, acquiring 383,000 shares, which brings our year-to-date share repurchase to 555,000 shares for a total of $67 million has been returned to shareholders through a combination of dividends and share repurchases year to date. And our Board just approved another dividend of $0.33 a share. That's payable on April 15.
Now let me turn the call over to Greg, who will take you through some overall Company financial highlights.

Gregg Kvochak

Okay. Thanks, Bob. For the third quarter, which is typically seasonally slower, global free revenue was $669 million and was down only 2% year over year, measured at both actual rates and at constant currency by line of business. Consulting and Digital grew 3% and 6%, respectively, year over year and combined generated 38% of total fee revenue in the third quarter. Fee revenue moderation in the third quarter for most of our talent acquisition solutions continued to stabilize. Executive Search and RPO were down 6% and 22%, respectively, year-over-year, while professional search and interim were up 11% year over year, primarily driven by sale, which was acquired in November of 2022.
Consolidated new business in the third quarter, excluding RPO, was flat year over year at both actual rates and at constant currency. By line of business. Digital new business grew 2% year over year. Consulting was flat year over year, and Professional Search and interim was up 9% year-over-year, driven in part by the acquisition of sale.
Executive Search new business was down 6% year over year, with recent monthly data points indicating that global demand is stabilizing. Our RPO new business in the third quarter was strong at $122 million and includes $83 million of renewals and extensions and $39 million of new logo wins.
Exiting the third quarter and entering our fourth quarter. Consolidated new business trends continue to improve. Excluding RPO, consolidated new business was up 11% and approximately 5% organically year over year in January and in line with expectations in February.
Earnings and profitability also continued to improve in the third quarter. Adjusted EBITDA in the third quarter grew 6% year over year to $102 million with an adjusted EBITDA margin of 15.2% and was up 3% sequentially with a 120 basis point improvement in margin. Despite seasonally slower fee revenue. Strong cost controls and greater consulting and execution staff productivity continues to drive growth and profitability, which has now improved sequentially for three consecutive quarters.
Finally, our adjusted diluted earnings per share in the third quarter were $1.7, up 6% yea- over-year and up 10% sequentially. Adjusted fully diluted earnings per share exclude $6.4 million or $0.12 per share of after-tax restructuring and acquisition integration costs, which were positively offset by $9.7 million or $0.18 per share of nonrecurring tax benefits.
GAAP fully diluted earnings per share were $1.13 in the third quarter. Our investable cash position at the end of the third quarter remains strong at $496 million, and our capital allocation continues to be balanced. Through the end of the third quarter, we deployed $122 million of cash using $37 million for capital expenditures, $18 million for debt service and returned $67 million to shareholders in combined dividends and share repurchases with that, I'll turn the call over to Tiffany to review our operating segments in more detail.

Tiffany Louder

Thanks, Greg. Starting with KF Digital global fee revenue in the third quarter was $90 million, which was up 6% year over year at actual rates and at constant currency. Digital subscription and license fee revenue in the third quarter was $33 million, which was approximately 37% of fee revenue for the quarter and up 11% year over year level. New business for KF Digital was $111 million, with $42 million or 38% of the total tied to subscription and license sales, up from 36% last quarter. The overall pipeline for digital remains strong as we head into the fourth quarter and into the next fiscal year.
For consulting fee revenue in the third quarter was $167 million, which was up approximately 3% year over year at actual rates and at constant currency. Fee revenue growth was strongest in organizational strategy, which increased 9% year over year. Today, we are selling larger and more complex transformational engagements, which use our rich proprietary data to drive unique and differentiated insights. Consulting's average bill rate continues to climb now at $438, an hour, which is up over $46 an hour or 12% from just one year ago.
Adjusted EBITDA margins also improved, increasing 40 bps sequentially and by 230 bps year over year. Additionally, global new business consulting in the third quarter was flat year over year with double-digit growth in India and in North America. Total fee revenue of professional search and interim in the third quarter was $131 million, up $13 million or 11% year over year.
Breaking down the quarter year over year. Fee revenue growth was mostly driven by the interim portion of the business, which offset moderation in the permanent placement portion of effect. And our fee revenue grew to $78 million from $53 million year over year, driven by a recent acquisition of sale.
Interims averages. Average hourly bill rate has increased to $129 per hour which is up $22 an hour or over 20% from one year ago and reflective of the added value of being part of the broader Korn Ferry ecosystem, professional services and permanent placement fee revenue declined by $23 million or 19% year over year to $56 million. Professional Search and interim new business increased 9% year over year in the third quarter, aided by the recent acquisition of sales.
Moving on to recruitment process outsourcing new business for the third quarter was $122 million comprised of $39 million of new logos and $83 million of renewals, which included several marquee accounts. Total revenue under contract at the end of the quarter was approximately $696 million. Fee revenue in the third quarter totaled $81 million, which was down $23 million or 22% year over year at actual rates and constant currency.
Fee revenue was impacted by a moderation in hiring volume within the existing base of contracts as well as labor hoarding conditions, which have continued in the market. Historically, fee revenue averaged 106% of the original contract value, which is why we view the current slowdown in demand as transitory and believe RPO is well positioned to benefit and client hiring returns to more normalized levels.
Pipeline remains strong as RPO continues to renew existing clients and win new business with a differentiated service offering in the marketplace. Finally, global fee revenue for Executive Search in the third quarter was $199 million, down 6% in actual and 7% at constant currency. Overall, global demand in the third quarter would indicate that demand is stabilizing. Additionally, consultant productivity has improved, driving a year-over-year 222 basis point improvement in adjusted EBITDA margin. I will now call the turn turn the call back over to Bob to discuss our outlook for the fourth quarter of fiscal 24.

Bob Rozek

Thanks Tiffany. A monthly new business trends exiting our third quarter entering the fourth quarter had begun to stabilize. January new business was up 11% and 5% organically year over year. February new business was in line with our expectations, and we are well positioned to deliver our March new business, which historically is one of our best new business month of the year, assuming normal monthly seasonal new business patterns and assuming no further changes in worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates, we expect fee revenue in the fourth quarter of fiscal '24 will range from $675 million to $695 million. Our adjusted EBITDA margin to improve to approximately 15.3% to 15.5%, and our consolidated adjusted diluted earnings per share to range from $1.9 to $1.17.
Finally, we expect our GAAP diluted earnings per share in the fourth quarter to range from $1.6 to $1.14.
Now in closing, we've made substantial progress as demonstrated by our continuing performance in delivering our strategic plan to lead the market in organizational consulting. Our top line diversification continues to serve us well as the non permanent placement talent acquisition portions of the business, which represent almost 50% of fee revenue, as Gary mentioned, remain on track to deliver consistent growth.
Our IP data and science-backed services and solutions continue to differentiate us in this war for the best talent. Further our strong cost base management really positions us to deliver continuing improvements in earnings and profitability and positions us to successfully continue our balanced approach to capital deployment. As I always say we're at the beginning of what's going to be a very long ball game, and I truly believe our best is yet to come.
With that, we'd like to answer any questions that you may have.

Question and Answer Session

Operator

(Operator Instructions)
Trevor Romeo from William Blair.

Trevor Romeo

Thanks so much for your taking the questions here. First, wanted to just kind of on the overall macro and demand backdrop. And yes, I think if you look at some of the CEO. content surveys. We've seen those increase a little bit so far in the last couple of months. I think the capital markets backdrop feels a bit more stable. It seems like maybe fewer people are talking about a severe recession now. So I guess how much change have you started to see in overall demand sentiment? And what do you think from this point? Could be a catalyst to start seeing a more significant demand recovery?

Gary Burnison

Well, in the latter parts of the question, clearly, we've seen those same trends for sure. And as I talked about on the last earnings call that my expectation was you'd start to see deflation, deflationary pressures. I think you're starting to see that for sure. Obviously, everybody is on pins and needles with respect to the Fed. But I still I think what I've said for some time, I think we're in the middle of a multi-quarter reset and you know, back to a period of time where rates would be at more normalized levels come from a period of two to three decades of very cheap money.
And I think companies are adjusting to that reality. And what that is creating is a focus on organizations to have a more horizontal approach, less vertical, more horizontal and perform at the same time they transform, which creates opportunities for our consulting business and digital offerings, which is exactly what you're saying. And CTOs are looking not just at their strategy and how to be more horizontal. But looking at their leadership and their talent. And I think that's reflective of the engagements that we're winning today.
I would say that there is I was listening to Tiffany and Greg and Bob the word that kept coming up was stabilizing. And I think that is absolutely true and for sure, and I do think there's there's some green shoots and it's hard to again I'm not going to say that two or three months make a trend. But certainly when you look at the most cyclical parts of at least our business, you take, for example, pro serv. And number one, we have seen an uplift in volume, and we think that uplift is 15% to 20% over the last few months. And that's what we're expecting in the fourth quarter. That's what February delivered. So I think that's a that's a positive, a very positive sign and interim has also stabilized as well. So I think those are for us. I think those are two good green shoots and I think they do portray on, you know, a positive sign for the labor market.

Trevor Romeo

Okay. Thanks, Gary. That's helpful. Maybe a follow up on on margins, nice improvement at 15% EBITDA in the quarter. It looks like a little bit of further improvement in the guidance. And as we think about kind of modeling margins maybe beyond the next quarter, can you talk about some of the puts and takes and maybe a base case for fiscal 25 and how quickly you could get back to that 16% to 18% target range you're looking for?

Bob Rozek

Well, the we that is the longer-term target is 16% to 18%. If I just dial it back before the pandemic on an apples to apples basis. So adjusting for the mix shift, as we entered this new business called interim, which today is about $350 million it was zero from 4.5 years ago, and that impacts the margin compares by 200 to 250 basis points. So if you had when you adjust for that pre-pandemic, we were running at 12%, 12.5% pro forma adjusted for the mix margin. Today we're at 15%. So profitability is substantially ahead of where it was pre-pandemic.
The business is up, call it third top line is up kind of 30% on from the pre-pandemic levels. Both of those data points I'm extremely proud on. We have to deliver profitable revenue growth. And we do think there's some upside in the EBITDA margin and when that can crank up to 16% to 18%, I think part of that depends on on the Fed and what a more normalized rate environment is going to look like?
The search business today is, call it $800 million. I mean, I got to as high as nine 30, which probably isn't, you know, a good a good compare, but clearly, there's a lot of room there. There's room on Pro Search. There's room on interop I think the consulting business, we're scratching the surface. And so at the end of the day, in this kind of business, it's really about the top line. And that's why we've got a strategy really focused on one Korn Ferry, a horizontal approach to going to market. And I think that's reflective in the data around our marquee and regional accounts as well as the <unk> as well as the cross referrals. And but we do think there's upside on the EBITDA margin.

Trevor Romeo

Okay. Thank you.

Operator

George Tong from Goldman Sachs.

George Tong

Thanks. Good morning. You're consulting and digital businesses are seeing good growth and you're making inroads with your interim search of business. Can you provide some additional stats on cross referrals and cross-selling involving these lines of businesses across the broader organization?

Gary Burnison

Digital is a huge opportunity for us. When we look at the cross referrals into the digital offerings, it's been underweighted compared to the rest of the portfolio. And so the cross referrals, George, for this quarter because about 25% year to date, I think is about 25%, something like that. The cross referral percentages into Pro Search interim substantially higher like way, higher RPOs, the same thing and historically, maybe not as much recently, digital is an undersized penetration that we have to get out and that's opportunity for us. And I think right off the top, my head George, I want to say that that cross referral percentage in the interim is probably and Bob can correct me on all this, but it's probably like 15% or so consulting which is a good sign that cross referral percentage into digital is like 30%. But for our firm overall, it's underweight or underweighted, which creates enough nothing but opportunity for us yes.

Bob Rozek

I just add maybe a little bit more color on the interim. So if you go back to the point in time when we acquired Lucas group and you roll the clock forward to today as a result of being part of those businesses being part of the Korn Ferry ecosystem, we've had somewhere around 1,500 to 1,600 incremental opportunities that were identified between lines of business in room and they've won in the neighborhood of like a 50 to 900 of those, creating kind of $50 million to $60 million of incremental fee revenue that those businesses never would have gotten had they not been part of our ecosystem.

George Tong

Got it. That's helpful. In recent time periods, you've undertaken some cost rationalization actions, most of which are complete at this point, do you envision needing to take additional cost or headcount actions or do you think at this point? The organization is rightsized for where we are in the cycle.

Gregg Kvochak

We are always looking at our talent in terms of promotion and, you know, on development opportunities. That's something we're constantly working at night on. I don't see any on any and kind of workforce actions other than our normal talent management processes.

Bob Rozek

Yes, George, I would say on the from a cost perspective to where we were managing our RBT and travel down to a number that I think is sustainable at this point as the business goes forward. And as I said in the past, on the real estate side, we have some opportunities, but the big big opportunities are behind us at this point to me, it's really all about what Gary said earlier, it's productivity and that we're going to get leverage out of a top line growth, what's the what's the cloud?

George Tong

Great. Very helpful. Thank you.

Operator

Josh Chan from UBS.

Josh Chan

Good morning. Thanks for taking my questions. On the digital business. So you've run the business at about 30% margin for the last two quarters. Now about a year ago, it was 25% to 26% margin. So is the difference mainly the people that have kind of come out of the business? And if that's the case what does that mean in terms of long-term growth potential in the digital business going forward?

Gary Burnison

Well, I think we're scratching the surface of what the digital business can be. I mean, we we have to make sure that we're driving the entire firm across this IP that we have and creating knowledge transfer to clients. And I you know it could this be three or four times the size of what it is today, absolutely could be, but we have to invest in the platform, which we're which we're continuing to do. The profitability is clearly up not just because of the cost reductions, but also because of the collaboration between consulting and digital. I've never seen it to be higher and clearly, it should be the most profitable part of our business. And it creates, I think, enormous opportunity for shareholders. And if we were to do nothing but double or triple that business, you can imagine what that could do for shareholder value. So it's clearly a focus of ours, but we've taken a very systematic approach to it and trying to build partnerships and an ecosystem. And also investing in the platform and the technology platform that we have.

Josh Chan

Okay.Yes. Thanks for the color there, Gary, that's helpful. And then on the consulting side, I guess growth has been sustained by Europe strength over the last couple of quarters. So there's as Europe continues to look strong on consulting business or at some point, does that become a tougher compare as we kind of look ahead here?

Gregg Kvochak

Well, clearly, you know, it could be a tougher compare. But I think overall, in terms of where the consulting businesses, again, it's the beginning, not knocking. And we just continue to see we have a fabulous team and a great leader and market oriented. And his strategy was to move the business towards bigger, more impactful transformational assignments and the business many years ago started out with assessments and smaller ticket engagements and over time through incredible team and the IP that we have and have a firm-wide push we have, you know, systematically I move that towards bigger organizational units, strategy assignments and you see it in the numbers. You see it in the bill rate. I mean that bill rate. And I don't know the exact time, but it's like three or four years ago. I think that bill rate was sub 300 bucks an hour. Now it's 438. That's a that's a combination of everything and the strategy working. So, you know, yes, did I do that comparisons get a little bit tougher for sure. They do no question about it, but in terms of and the long-term potential of this business more at the beginning.

Bob Rozek

Hey, Josh, the one thing I would add is that as we move through the quarter, we did see a talked about green shoots and some positive activities happening in North America as well.

Josh Chan

Okay. Yes, that's very helpful. And thanks. Thank you, both for your time, and congrats on a good quarter for Asia.

Bob Rozek

We'll see you talk to you on Tuesday.

Operator

Andre Childress from Baird.

Andre Childress

This is Andrea on for Mark Marcon. Thank you for taking our questions. My first question is just a follow-up to some of the prior commentary.
Just to add on. Could you provide a little bit more of a breakdown in terms of what you're seeing by major geography between North America, Europe and in Asia Pacific on I'll talk about I'll talk about revenue first and overall as a firm as we reported down 2% and you know, Amir was Amea was flat. You know, kind of the same for North America, Asia was down like 5%. And a large part of that was driven by the continuing challenges that every company is facing in China.

Gregg Kvochak

On the new business front for the quarter, overall, we were flat compared to the prior year. Amea was up 6% on Asia was continued to be challenged and consulting was flat. Digital was up 2%. And in North America. We've seen stabilization over the past few months in importers.

Andre Childress

Okay, great. And thank you for that. And then as a follow-up, digital saw a nice improvement pretty much across the board and your from your in your prepared remarks, you had a big point of emphasis in terms of trying to drive more cross-sells into that going forward. Could you provide a little bit more color on some of those strategies. And if you could, in particular touch on some of the commentary regarding joint solutions with HR technology providers and how you see that evolving over time?

Gary Burnison

Well, we built everything up to this point, really by ourselves. And when you look at world-class consulting firms, they've typically enjoyed an ecosystem of partners that create deal flow. And we have to this point really haven't been able to we haven't monetized that, and that's been an effort. We have a new leader in the digital business Mateus Herzog and who brings a fresh perspective with people. We've got a great team. And so that is an opportunity for us. And so there are three to five largely technology players that we are working on steadily well to create an ecosystem where we can deliver more value through our IP with their technology solutions on to their clients and vice versa.
And so I think it is a greenfield for us for sure. I think also the collaboration between digital and consulting, as I said earlier, has never been higher. I think that is that is something that's positive for us. And overall as a firm, when you think about the kinds of data that we have and being able to provide insight to clients it's extraordinary. I was on a call last week with the CEO, huge health care company.
We've done thousands of assessments where we're able to tell about CEO exactly kind of a DNA and MRI of their organization and juxtapose that with that organization strategy and show where the gaps are, which leads to assessment leads to development. And so I do think as a firm that one to one huge focus for us. We're calling it cap rise, but a lot of focus of that is to make sure that we are delivering delivering scaled analytics through our data.
We've done 103 million assessments over time. Every year, we develop over 1 million professionals. We have comp data on 30 million people, 25,000 companies. And so a big big focus of us here is to make sure that we're and that we're able to create more insight based on that data with clients and we have to get the whole firm behind that effort. And that's an activity that's in. It's a big activity that's underway for us, but right now.

Andre Childress

Great. Thank you.

Operator

Your next question comes from the line of Tobey Sommer from Truist.

Tobey Sommer

Thank you. I was wondering if you could give us some more color on that a trend you quoted recently of Professional Search being up, maybe talk about how broad-based it is and any industry verticals that stand out as either leaders or laggards in that regard for the industry verticals?

Gary Burnison

I think it's going to be hard for me to comment on. I would say that it's been somewhat broad-based, I'm for sure. But when you do look, it is up into the right. And I'm not going to sit here and say no three months, four months make a trend line. But I do think it is kind of reflective of of where companies are in terms of their adaptation in this small type quarter reset. And so it is true that over the last few months we have seen in Pro Search new kind of monthly new business trends up 15%, 20% on largely in North America, but also in the media. And you know, that's been generally been one of the most cyclically sensitive parts of the labor market, at least the union. We're recruiting companies, staffing companies. So I do think I do think that is a green shoot.
The other thing that I would point out is on the RPO business. When you look back and after this great resignation and we've talked about labor hoarding, you've seen other you've seen other RPO providers and what's happened to their top line. We are expecting a share and largely over the last two to three quarters. You'll you'll see that it's been a substantial part of the business has been renewals, which is important. I mean, there's no question about it. It shows the quality of the work. And as Tiffany said, the revenue that we actually recognize from what we report as new business has been about 106% of notional value. But we are we do think there's going to be a shift away from that. That trend line more towards new wins.
And so I would expect that in this next quarter here, we'll probably do $100 million, maybe a little bit north in new business. And I think that trend of 70% or so renewals is going to flip a little bit, and I think you're going to see more new logos last renewals.

Tobey Sommer

Appreciate that from a modeling perspective, is the effect of recent cost cutting are fully captured in this quarter? Or is there sort of an incremental tailwind in the quarter you're guiding for beyond?

Gregg Kvochak

Yes, Bob, I'll leave that you can answer that.

Bob Rozek

Yes, Tobey, I think most of the benefits of the actions we took are embedded in our run rate numbers that we posted today and for us. As we said earlier, I mean, the where we're going to continue to see and margin improvement is top line growth. And then also we we're going to look to drive more to continue to drive productivity so that we're not adding back headcount as quickly as we may perhaps have in the past as our top line recovers.

Tobey Sommer

Understood. Amyn from a cross-sell with referral. And I think you quoted you have been in sort of the mid 20s now. Do you have any thoughts on sort of the evolution of your approach to driving that? Is it still a marquee account and marquee sales force focus? Or do you have different sort of tools and approaches to trying to drive that higher?

Gary Burnison

And you know it is it clearly starts with a top-down go-to-market strategy, but we also have to make sure that we are doing it bottom up. And the reality is we haven't had as much firm-wide push and around that as we would like to have or what there is opportunity to do. And so that is a, you know, an initiative that we called KF RISE.
That's first and foremost, investing in data and being able to do scaled analytics. And because I think you know, wherever this thing goes on a I which we are absolutely trying to incorporate into our into our business. It starts with proprietary data and insight, then it's how do we get that data and insight into our consultant's hands to differentiate Korn Ferry on with our clients.
And so that is an active part of the strategy that scaled analytics that data, some are around sectors, industries, geographies, and we have to do a better job of getting that into our consultants' hands across the entire platform and to be able to differentiate Korn Ferry and offer more insight into customers so that that is definitely something that is that accelerated for us. I'm not going to say it's new, but we've certainly put a fresh emphasis on.

Gregg Kvochak

But I would guess ideally, I would add to that is historically, I would say that the we were more opportunistic than intentional and I think is part of what the program Gary's talking about. We're going to become much more intentional. Give you an example in the past if somebody was an account leader on account and we wanted it was the $10 million account. We wanted 20% growth. We typically get $2 million. Now the KPA.s are being built where we're actually saying we wanted to million, but a million of it needs to come from consulting, a million of it needs to come from digital so that we're focusing efforts where we really see the opportunities and going after it with intent versus again, just be more opportunistic and money taking kind of what was given to us.

Tobey Sommer

And my last question is has to do with the bill rate growth in consulting. And I know you had some success with some sort of <unk> government work in Amea. I'm just curious if that's the main driver of the bill rate growth or it's broad-based. How would you characterize as larger projects, et cetera. Thanks

Gary Burnison

It is it is broadly clearly that's had an impact of what you're referencing around governmental work. No question about it, but I also think it's reflective of the strategy and from going from smaller engagements to bigger, more impactful transformational assignments, that's how you get leverage on. We still have to we still have to continue to push and towards that, the organizational strategy, organizational design transformation, we still have to push the firm that direction. But clearly on that's had a big, big impact on the bill rates as well.

Tobey Sommer

Thank you.

Operator

And at this time, there are no further questions. I'd now like to turn the call back to Gary Burnison for any closing remarks.

Gary Burnison

Okay, Greg, it looks and thank you to everybody for listening today. We're very, very excited, obviously about the future of Korn Ferry. I think this is the beginning we've done. We've proven, but there's customer receptivity in the marketplace. The IP and the data that we have is enormous, and we're excited about the future. Thank you for taking an interest, and we'll talk to you next time. Thank you, Greg.

Operator

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