Korn Ferry (KFY) on Q4 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Korn Ferry Fourth Quarter Fiscal Year 2021 Conference Call. At this time, all participants are in listen-only mode. Following the prepared remarks, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. We have also made available at 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 -- 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 and in the periodic and other reports filed by the company with the SEC, including the company's soon to be filed annual report for fiscal year 2021. 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 direct comparable GAAP financial measure 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.
Gary Burnison: Okay. Thank you, Brad. Good morning, good afternoon to everyone. Thank you for joining us. Now, what a difference a year makes. Last April was rather dark I think for all of us, and May with the George Floyd tragedy was hopeless and, boy, I'll tell you this -- the company has rebounded tremendously, and in particular our colleagues have shown incredible resilience over the past year. I'm proud of our colleagues, I’m proud of our company, what we've accomplished and our performance amid the continuing echo of change in this post-pandemic world. We are the world's premier organizational consultancy. There is no question about that. It’s definitely working. We're meeting the key objectives that we discussed last quarter, which included diversifying our offerings, capitalizing on our leadership and relevant solutions, driving an integrated go-to-market strategy, advancing our position as a premier career destination and pursuing transformational opportunities at the intersection of talent and strategy, and all of this is translating to what I believe is outstanding performance. During the quarter, we generated about $555 million in fee revenue, an all-time high that was up 26% year-over-year. Our profitability was strong. We had an adjusted EBITDA margin of a little over 20% and adjusted EPS of $1.21. We've clearly accelerated through the turn, and it's a testament to the pivot we made and the agility of our colleagues over this past year. The diversity and relevance of our offerings and our ability to deliver our consulting services in a virtual world have helped clients achieve organizational opportunities and our company deliver strong financial results. In this new world there is tangible opportunity for Korn Ferry. The center of gravity for today's workforce is shifting from a place of work to a location for collaboration. It's no longer about the where, it's all about the why and how work gets done differently. Almost every company on the planet is reimagining and will have to continue to reimagine its business from a strategy to its people to its culture. Quite simply, companies are rethinking their organizational structure, roles, and responsibilities. How they compensate, how they motivate, how they engage, how they develop their workforce, let alone the type of agile talent they hire, and how they hire that talent, and they're going to need to lead differently. Gone are the days of vertical leadership that focuses on driving results up the chain, today companies need more horizontal leadership. That's all about leading across the enterprise, and these changes align with Korn Ferry's businesses, Whether it's M&A services, change management, virtual sales effectiveness, or customer experience services, Korn-Ferry is poised to seize this opportunity. We've also used this time of change as an opportunity to reimagine our own business.
Bob Rozek: Great. Thanks, Gary, and good afternoon or good morning depending on where you are sitting. Our fourth quarter results continue to demonstrate the relevance and importance of our human capital solutions in the rapidly evolving business environment that we find ourselves in. It also validates our strategy and highlights the strength and durability of our business model. By all measures, the fourth quarter was the strongest quarter in our history with record revenue and profitability. Our new business in the fourth quarter was also a record and it actually accelerated throughout the quarter leaving us well positioned for growth in fiscal '22.
Gregg Kvochak: Great, thanks Bob. Starting with KF Digital, global fee revenue for KF Digital was $80.5 million in the fourth quarter, which was up 16% year-over-year and up 6% sequentially. The subscription and licensing component of KF Digital fee revenue continues to improve. In the fourth quarter subscription and license fee revenue was $24 million, which was up over 14% year-over-year. Global new business for KF Digital in the fourth quarter reached $108 million, the second consecutive quarter of new business over $100 million. Additionally, for all of fiscal '21, new business tied to subscription and license services improved approximately 72%. Earnings and profitability also improved for KF Digital in the fourth quarter with adjusted EBITDA of $27.9 million and a 34.7% adjusted EBITDA margin. Now turning to Consulting, in the fourth quarter Consulting generated $153.6 million of fee revenue, which was up approximately $32.6 million or 27% year-over-year and up approximately $17.3 million or 13% sequentially.
Bob Rozek: Great. Thanks, Gregg. The acceleration of new business in the month exiting the fourth quarter in entering the first quarter of fiscal '22 has positioned us very well for further growth. Our combined total new business in the months of March, April and May was easily the highest total for any three-month period in company history. Additionally, strong new business activity has been broad-based with all of our lines of business taking advantage of both the market strengthening and the acceleration of demand for our unique combination of service offerings for the last couple of quarters demand across all of our lines of business has been strongest in North America, but I will say during the fourth quarter, we did begin to see signs of acceleration in international markets as well. Now, if recent new business activity continues and normal seasonal patterns hold, we expect that new business in the first quarter will remain strong. We saw that in May, and so far new business month-to-date in June is in line with our expectations. Recognizing normal seasonal patterns and assuming no new major pandemic-related lockdowns or changes in worldwide economic conditions, financial markets or foreign exchange rates, we expect our consolidated fee revenue in the first quarter of fiscal '22 to range from $535 million to $555 million and our consolidated diluted earnings per share to range from $1.04 to $1.14. As we close out the fiscal year, we are very encouraged by the momentum in our business. This is the momentum that we believe is reflective not only of the macro conditions but of the intentional steps, we have taken to build this business and extend our comprehensive offerings to our clients to enhance our financial profile and really to position Korn Ferry for long-term success. Through the power of our offerings, we look forward to building on these results for quarters and years to come. With that, we'd be glad to answer any questions that you may have.
Operator: your first question comes from the line of George Tong with Goldman Sachs. Please go ahead.
George Tong: Hi, thanks, good morning. You discussed new business trends in March and April and also exiting the quarter, can you elaborate on how new business performed in May and the first half of June in your various lines of business?
Gary Burnison: Bob, why don't you take that.
Bob Rozek: Yes. I made the comment, George, that in the month of May and June, we saw very strong new business and it's really across all of our -- all of our lines of business, and June to date we expect that to continue. June to date is in line with our expectations, again strong across all lines of business.
George Tong: Got it. That's helpful. And then, you touched a little bit on cross selling in business referrals across the business certainly making strong momentum there. How much further opportunity do you think there is for additional cross-pollination and cross-selling among the various segments?
Bob Rozek: Well, I think it's substantial. I mean, when you look overall, the encouraging thing is that you look at the company's top line and almost 30% is from inside sales, which tells you that the strategy is working, and it’s increased steadily over the last two to three years quarter-on-quarter. So, you look at it overall, and you say it's at 29%, and I think we've got substantial headroom. The thing that was -- actually the number may sound low, but the thing that was most encouraging to me this last quarter were the referrals into Executive Search, and even though the number is 12%, that may sound low, that's up substantially from a couple of years ago when it was like 3%, 4%, or 5%. So, that's an extra, call it $50 million to $60 million of top line, and so the company's strategy is to be the premier organizational consultancy. But for us, we have this intangible asset which is our Executive Search business, and that allows us to take the relationships that we have at the top of the house and drive deeper impact with our clients. So, I think there is significant room to grow, and in the RPO and NPS business, this last quarter was 50%. And so, I look overall and so we've got plenty of headroom.
George Tong: Got it, very helpful. Thank you.
Operator: Our next question comes from the line of Tim Mulrooney with William Blair. Please go ahead.
Tim Mulrooney: Good morning.
Gary Burnison: Hey, Tim.
Tim Mulrooney: A few questions here. So, in your Executive Search business, consultant productivity across the $1.5 million mark annualized in the fourth quarter. I went back in our model quite a ways and couldn't find another period where productivity was so high. Is that a clear signal that you need to accelerate hiring in the coming quarters or is a higher level of productivity expected a step-up, if you will, following the cost actions that you took at the end of last year.
Gary Burnison: Well, we certainly as Bob talked about, we've been very aggressive in the marketplace in terms of bringing in talent across the entire platform. And as Bob alluded to, we’ve brought in over 160 new partners and principles into the firm, and we're going to continue to aggressively look for talent across the entire platform, and that includes Executive Search. So you're absolutely right, this was the all-time high for productivity per consultant in our Executive Search business. I still think there is more room to go there. But talent is the name of the game, it's the name of the game for clients and it's name of the game for us.
Gregg Kvochak: And Tim, I would say just to add to what Gary talked about, you should expect the productivity to continue to be at that level. So, one of the things we're doing is much more proactively managing the work for us. So, if you look at, for example in the deck we posted, if you look at the consultants in -- if you're in a consultants on Exec Search, it's up too, but that’s after taking out 11 or 12 positions for people who weren't -- who weren't performing at the top of their game. So, we'll continue to do that more proactively.
Tim Mulrooney: Okay, that's helpful. So, I mean -- just to summarize, I mean hiring more people, but perhaps productivity kind of stabilizes at a higher level than what we've seen in the past, is that fair.
Gregg Kvochak: It's fair.
Tim Mulrooney: Switching gears here on the RPO engagements billed were up quite a bit in the fourth quarter, up 35%, is what -- is what we are seeing typical for this point in the cycle or do you think the pandemic has accelerated demand for RPO services in a material way as companies emerging from the pandemic rethink not only their physical footprint, but also perhaps their overall organizational structure.
Gary Burnison: Let me make a couple of comments, Bob you can add to it. I mean I think overall, the RPO business is outstanding for us. I mean if you look over quarter-on-quarter over the last several years, and it's -- you know, it's not short of in process; I mean, it's outstanding. And you know, overall, if you look at the way the business operated here in the cycle, and Bob -- you know, Bob talked about it; what we saw was exactly the thesis that we've been talking about where Search was the most cyclical, Consulting was less cyclical than Search, and RPO was less cyclical than Consulting, and Digital was less cyclical than RPO. So clearly, the RPO business, it begins and ends with quality, with talented people, and the other thing is embedding our IP into our RPO engagements and whether that’s success profiles or talent architecture. I think that's also proven to be a winning formula. So, I look at the RPO business and say, yes, there is clearly some puts and takes quarter-on-quarter, but the trend, the trajectory is breathtaking over time.
Bob Rozek: And the only thing I would add to that Gary is -- Tim, If you look at what the RPO business did on a year-over-year basis, it actually grew 7% last year. When you think about the time frame that we went through and what the world looks like, I mean, to Gary's point just an incredible business.
Tim Mulrooney: Right. Yes, that's a -- that's a great point too, growing on top of growth even in a tough environment, that's really helpful. If I could squeeze one more in, I want to ask about your digital business because new business and Digital up 40% in the fourth quarter is promising. Can you talk about which of your digital offerings at this point in the cycle are really gaining traction and helping to drive that strong new business growth? Is it -- is it learning and development, is assessment succession now really picking up steam and any color here would be helpful.
Gary Burnison: Well, Bob, you can add to this. You know, in terms of the long game. There are some really cool things we're doing around AI and success profiles that are linked to our assessment and succession business. So that will play out over -- over several quarters. The other big transformation that's happening underneath that business. A big part of the business is around development, every year we develop about a million executives and the transformation that's happening from physical to virtual is also something that's -- that's very significant and we're seeing right now, you know the sessions are down about 20% or so from say the high. And so, we've pivoted that business and the world is pivoted too to online learning and that's something we're going to continue to do. And then, the final piece, as Bob and Gregg talked about, is the movement of the business towards subscription and licensing. And so, in this last quarter about a third of the new business was subscription-based, and that the good news is that's more sustaining, repeatable, loyal clients of scale, but it does take longer to recognize the revenue. So, it's more durable, it's more sustainable, but the tail is substantially different and that's a big, big change in the business from, say three years ago.
Bob Rozek: Tim, if you -- just to add to what Gary said, if you look at the level of revenues that the subscription and licenses comprised, it's about -- for fiscal '21, it's about 31%. For new -- new business subscription and license comprises about 36% of the total for the year. So you can see how that's going to continue to add. The couple of areas where if you look at it from a revenue perspective, Tim, where we saw better -- better growth was in the assessment and succession area, it was up about almost 18% year-over-year and then in leadership development, it was up -- this is in -- I'm sorry, this was in the fourth quarter, it was up about 29% year-over-year.
Tim Mulrooney: All right, got it. Congrats on a nice quarter. Thanks for taking my questions.
Bob Rozek: Thanks.
Operator: And our next question comes from the line of Marc Riddick with Sidoti. Please go ahead.
Marc Riddick: Hi, good morning.
Gary Burnison: Hi Marc.
Marc Riddick: So there's a lot we could talk about in the quarter and certainly a lot of the things are going very well. I wanted to specifically talk about the -- within the Consulting space is a pretty significant pickup in bill rate year-over-year, I was wondering if you could sort of dissect that a little bit and sort of talk a little bit about maybe what you're seeing there that's led to such a meaningful jump there and then after that, I have a follow-up.
Gary Burnison: Well, every business in the world is reimagining how they get things done and that's at the forefront of our Consulting business. So whether it's our org strategy or assessment succession, leadership professional development or our rewards business, our comp and benefits business, we are benefiting from the megatrend that's happening which is change, the echo of change here in the post-pandemic world. Then there's other factors too, whether it's ESG which is driving consulting engagements, that could even include Executive Pay tied to ESG goals. Our diversity, equity and inclusion business has been phenomenal, it continues to be. So, I can't -- I can't say enough good things about our Consulting business and I think the other thing is pivoting towards larger engagements. Years ago, we were really anchored around smaller -- smaller, shorter assignments and we purposely, we've talked about this, for I bet, it's been three years now, a consistent strategy of migrating the business towards more impactful engagements, whether that's organizational transformation, upskilling talent, our Consulting business is just -- it's phenomenal and what we've achieved coming out of this dark period in human history.
Bob Rozek: And Marc, I would add that I think, it's particularly interesting, we talk about large engagements over $500,000 but if you look at the engagements below that level over the course of fiscal '21 Q1 they were -- the smaller engaged engagements were down 27%, Q2 down 9%, Q3 down 3%, this is in new business and then in Q4, it was actually up over 40%. So we're starting to see that portion of the business rebound and when you look at the bill rate, the function of the revenues divided by the hours you work and so with the spike up in revenue, and that's what's driving our bill rate up.
Marc Riddick: Okay, that's very encouraging. And I wanted to shift gears, there was a commentary made around the pickup, we've seen the strength in North America kind of leading and there was commentary in pick up and what we're seeing internationally. I was wonder if you could delve a little bit deeper into that as to maybe some of the areas that have picked up more recently and then maybe some other geographies or even, maybe even client types perhaps that may still be sort of on the cusp of accelerating in a way that you've seen with the rest of your client base. Thank you.
Gary Burnison: Well, the -- you know the industrial business has been historically the biggest part of our portfolio, it's 26% to 28% historically. Maybe even as high as 30% and so that part of the business saw growth which is very, very encouraging, but it's still got long ways to go. So that provides further upside, obviously energy continues to go through all sorts of transformation and change. So that's really, really good news for us. When you look at on a regional basis, as Bob talked about, we have seen an uptick in both EMEA and Asia, that gives us hope for the future as well. Although, look, in parts of the world it is just -- it's heartbreaking to see what's happening. I mean, when you think about in South America, for example, and you look at the numbers of -- the COVID numbers and the death, it's just -- it's a tragedy, it's heartbreaking and yet our business, our colleagues have shown just incredible resilience and in India, as an example, trailing four months New business, it's up 36%, Brazil was up 93% in the face of ; so that gives you I think a lot of promise of what the future can hold.
Marc Riddick: That certainly makes a lot of sense. I appreciate your commentary, thank you.
Operator: And we do have a question from the line of Tobey Sommer with Truist Securities. Please go ahead.
Tobey Sommer: Thanks. I'd love to get your perspective on the long-term EBITDA margin opportunity at the company. You had a couple of tremendous quarters here, even with some non-recurring expenses, the 17% to 18% still the right number long term or is there kind of a 17% to 18% plus that you're thinking about?
Gary Burnison: That's a good question. I think the world is in a couple of year transitionary falls, and you know it's really hard to say where -- where it's going to end. I would say that it's basically and I've said this for a long time, that 50% of whatever you were doing is probably going to be replaced with something else. So how you're entertained, how you consume, how you work, it's just -- it's changing dramatically and you see it today and all the debate about working-from-home and going into the office. I mean I think it's going to take a couple of years for this to settle in to what this decade really looks like, but I personally believe it's probably going to be something like 50% of the people are really going to focus on accomplishment over activity and this has proven the world can get things done differently, that's the definition of culture, how an organization gets things done. So the wild card in that really for me is around, you know, what does -- what the society say that is and you know what is going to be the view around all sorts of different things. Getting on airplanes and meeting people in person, going to conferences, that's the big wildcard around quote the plus. And so, yes, we put out, we've raised the long-term target of our firm up to 17% and 17% to 18% and I would probably, yes I'd probably put a plus on that for now but I -- I think in the fall, we're going to learn a lot hopefully this delta variant does not take hold in the United States or other parts of the world but I would -- yes, I'd probably put a plus on that at least at this moment in time.
Tobey Sommer: Thank you. I wanted to ask a question about what you feel like the right kind of balance sheet is for the firm, longer term. I realize you increased the dividend today but whether 17% to 18% or 17% to 18% plus, over time, on average, that's a -- that's a very healthy margin that will generate a lot of cash. Should the company operate with net debt on a sustained basis and if so, what level?
Gary Burnison: Well, I'll let Bob can talk about the net debt level. The thing that we look at is the return on capital and if you take the last couple of quarters and you are to annualize it, it's probably at least 15% and that's going to go higher probably this next four quarters, assuming the world doesn't change. I mean our strategy has been very disciplined around M&A and that is our first and foremost priority is to use the capital that we have to create the premier organizational consultancy and to do that, we have to continue to invest not only in our digital capabilities and our solutions organically, but we also have to do that inorganically as well and we've done 13 acquisitions. I think we're incredibly disciplined in how we do that, but your -- the sentiment behind the question, we have a very robust balance sheet and that gives us tremendous strength and flexibility and we want to continue to be balanced when it comes to capital, in terms of our shareholders, our colleagues and investing in the business .
Bob Rozek: I would just add to that a couple of thoughts, so one is, I think you'll see us starting to ramp up our investment back into the Digital business last year. We, obviously, going through the pandemic cut back and we spent roughly $30 million on PPV last year and this year we'll see that number jump back up to what I would call more historical level around the $45 million plus or minus level. In terms of net debt, we operate fairly conservatively. I don't see us being operating on long-term basis in a net debt position. We actually look at it a little bit differently in terms of where we're comfortable operating, at two times leverage or below. As we've said in the past, we would go up to 3 to 3.25 if the right acquisition came along, but our predisposition would be to pay that down as quickly as possible to get below -- to get blow back the two times leverage.
Tobey Sommer: Great. I can appreciate the returns. They have improved and managing that balance sheet is another lever, I guess, you get the pulse. Could I ask you, your perspective on a couple of market-related things that we're hearing about retirements being prevalent and maybe what on an ongoing structural basis remote works -- work means in terms of unlocking more sort of national recruiting to occupations and job levels where that really wasn't part of the landscape previously.
Gary Burnison: It's incredible, there is a big reset and it was 20 years ago this whole thing around the world for talent, I mean it's here, it's absolutely here and you don't -- you don't really read much about the baby boomers, but it's here and this has been the big reset, and we've seen just tremendous mobility. We've had -- we've seen executives who have said, this is -- I'm going to go off and do something else, whether that's charitable work, whether it's retirement, you've got career nomads now that -- that whole trend has been greatly accelerated. I would have thought two years ago, you wouldn't have hired anybody virtually, now we're doing it every single day. And so there is tremendous, you know, it's really, really fluid the job market. I don't know if I've seen a better job market in all my years in business, I mean this is unbelievable with the flexibility around geography, it's breathtaking.
Tobey Sommer: I have a follow-up, one last question, I'll get back in the queue. Is there a of a manifestation within sort of the key metrics driving your recruiting businesses that wage inflation, comp and sort of effectively price in some of your businesses might be driven higher by the fact that somebody in Des Moines doesn't necessarily have to live in Des Moines even if the company is headquartered there.
Gary Burnison: I think there will be -- I think that's not an if, but when. I mean there is -- there is no question about that given how the punch bowl would spike. I mean there is -- that's really clear. We haven't seen, if your question is, our company is paying less to be in Kansas versus New York City, you know, sure there is a cost of living element. We haven't seen companies make dramatic changes there. The market is really high and there is a war for talent right now and it's all of these factors coming together, there's 9 million job openings, probably 9 million people unemployed. We've got the baby boomers, you've got career Nomads, you've got the stimulus, you've got the flexibility of work, all of those things hitting the labor market at the same time.
Tobey Sommer: Thank you very much
Operator: And we do have a question from the line of Mark Marcon with Baird. Please go ahead.
Mark Marcon: Hey, good morning. Wondering if you can talk a little bit about your last comment. Gary, you mentioned, hey you haven't seen a job market like this. Some people might react to that and say, well, this is the peak, but if we take a look at the baby boomers and where they are at in terms of retirement cycles and kind of the fluidity, I'm wondering if you can just comment with regards to the sustainability of these high levels of demand and what you think executive comp inflation rates are going to be and how you think about the productivity within the executive search consultant force and then I've got some other questions with regards to Consulting and Digital?
Gary Burnison: I think looking -- I do believe barring some -- some unforeseen events such as a delta variant, I do believe that this is going to continue. I don't see this lessening over the next quarter, two quarters three quarters. I'm not going to say it's a peak or a valley, but I certainly don't foresee any let up. You're absolutely right about the baby boomers but the data supports that. And I wouldn't be shocked if there was wage inflation looking at the year, it's hard to see that there would not be. The only, I guess, argument or theory against that would be the flexibility that knowledge workers have today and how -- what's the economic price of that flexibility because there is an economic price to that flexibility, there is no question about it and Tobey kind of alluded to it, we haven't -- maybe that's playing out now and that's why you're not seeing it, but I do think when you look at the search business, which is 36% of the company today, I wouldn't be surprised if there would be wage pick up in that for sure.
Mark Marcon: Right. And then, with regards to use that flexibility. I mean, we're in the very early stages in terms of determining that. When you talk to companies, I mean when do they -- how are they thinking about it because I think the most thoughtful companies are actually in a wait and see mode in terms of, I need to see how this is going to work out, which means it could end up playing out over several years no?
Gary Burnison: Yes. I think it's playing out over two years from now. I do believe that's correct. But ultimately, there is an economic trade off of flexibility versus location and I just don't know as you said, I don't know how much that's going to factor into the calculus but it will, it makes sense that it does. But you're right, companies or not pulling that card today, we're not pulling card today because there -- there is such a shortage of skills. When I look at some of our clients and what they're doing around workforce transformation and the types of upskilling engagements we have, it's big, it's definitely -- it's definitely big. So I really think that we're in for a kind of a two-year transitionary period along a number of dimensions on what work really looks like.
Mark Marcon: Right. Can you talk a little bit about on the Consulting side, both traditional consulting as well as digital. You know, Miller Heiman, you bought that right prior to pandemic. So you haven't seen the full benefit, but it would seem like now, given that everybody is finally returning. There's a lot of people who are entering the workforce that don't have a lot of training, lot of formal training, can you just talk about the evolution of that solution, the different ways that you're marketing it and what you think of as kind of the opportunity set for Korn Ferry outside of the traditional leadership Consulting assessment and into some areas that are not considered as traditional for Korn Ferry.
Gary Burnison: Well, we call that -- yes, we have a major push underway. We've had it now for the last several months around accelerated revenue growth and it is a solution anchored around customer experience as well as sales effectiveness and we're in the very early days of taking that out to market and so you probably see it on our website. We're taking it to our marquee and regional accounts right now. We've got many, many people in the company organized around it, and so it seems like it should be low hanging fruit as companies are really re-imagining what that customer experience should be and how a client interacts with their customers. So, we do think that is an opportunity for us. It is one of the gems that in our last acquisition of the Aspen companies which included Miller Heiman not only did we pick up, as you alluded to, the professional development and all of that, but we picked up, real capabilities around customer experience and the thing that we've done is we've tied that together with our success profiles around what customer-facing people look like in the post-pandemic world. So yes, we're making a big -- a big push -- a big, big push around that.
Bob Rozek: Hey Mark, this is Bob. I would just add to that this is a great example of what we refer to as our integrated solutions. So as you think about the accelerated revenue growth, we call it ARG, it pulls from every single core solution area that we have and obviously you would cobble together a solution. Our architecture solution is different for each client because they have a different use case, but this is an absolutely fantastic demonstration of our integrated -- integrated solutions and even what's interesting to me on this one is even runs to of process. So as you think about the sales process and we now have content in IP around how to improve your, to Gary's point, the sales effectiveness or the sales process as well. So very, very good example of an integrated solution.
Mark Marcon: That's great. And then from a capital allocation perspective, I mean you've alluded to potential for acquisitions and also building the firm organically. You also ended up increasing the dividend here, I'm just wondering to what extent can we do both on a continued basis, so continue to return even more cash to shareholders either through the dividend or through buybacks in addition to pursuing M&A. I mean especially with the strength of the balance sheet as it currently exists.
Gary Burnison: Yes. I think there is that opportunity to do both, Mark. And I think both you and Tobey have kind of inferred that which we would agree with. So, we do think that there is now kind of opportunity. And on the M&A front, we're just going to -- we've been fairly systematic in how we do it and disciplined and we're going to continue to do that.
Mark Marcon: Great. Thank you very much.
Operator: And it appears there are no further questions. Mr. Burnison, please continue.
Gary Burnison: Okay. Well, I want to thank our shareholders and my constituencies here who have listened but clearly most important our colleagues and for the resilience and is one word and that's resiliency and for their resiliency over this last year and I think also the consistency of our actions that we've taken, whether it was over a year ago with the George Floyd tragedy, our voice around D&I, our initiatives such as Leadership U for humanity developing million professionals of color over the next few years, it's been consistency and resiliency. So, thank you very much, and we look forward to talking to you next time.
Operator: And ladies and gentlemen, this conference will be available for replay one week starting today at 3:00 PM Eastern Time running through the day June 29 midnight. You may access the AT&T Executive Playback Service by dialing 1866-207-1041 entering the access code 6425814. International participants may dial 402-970-0847; additionally, the replay will be available for playback at the company's website which is www.kornferry.com in the Investor Relations Section. That does conclude your conference for today. Thank you for your participation, and for using AT&T Teleconference service. You may now disconnect.
