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Korn/Ferry (KFY) is trading lower after reporting 3Q26 results that generally beat expectations but came with a cautious near-term outlook that didn’t fully satisfy the market. The company delivered solid growth across its diversified solutions, including strong fee revenue expansion and adjusted EBITDA improvement, but shares slid as investors digested guidance that lacked a meaningful upward revision or additional acceleration following recent momentum.

• Q3 fee revenue grew 7% yr/yr to $717.4?mln, with growth across all solutions led by Executive Search (up 13%), followed by Professional Search & Interim and Consulting (each up 5%). 
• Consulting and Digital continued contributing to diversified growth, with Consulting benefiting from increased average bill rates and Digital seeing modest fee revenue and subscription gains.
• Estimated remaining fees under existing contracts rose 11% to $1.85?bln, highlighting strength in KFY’s backlog.
• Recruitment Process Outsourcing (RPO) posted modest growth of 3% with improved adjusted EBITDA margin, reflecting new client wins in North America.
• Adjusted EBITDA rose 8% to $123.1?mln, with a 17.2% margin, reflecting continued operating leverage as fee revenue scaled, though margin was roughly flat yr/yr as expenses also increased. Net income increased roughly 12% with a 9.1% margin.

Briefing.com Analyst Insight:

The quarter showcased consistent execution and diversified growth for KFY. Fee revenue and adjusted EBITDA both expanded, underpinned by strength in high-value solutions like Executive Search and Professional Search & Interim, and supported by a healthy pipeline of contracted future fees. Estimated remaining fees under existing contracts up double digits yr/yr signal continued demand across client segments. However, the market’s disappointment stems from the outlook gradation rather than the quarter itself. Although Q3 results topped expectations on core metrics like revenue and adjusted EPS, guidance for the coming quarter was largely in line with estimates without aggressive upward revision -- effectively signaling a near-term stabilization rather than acceleration. This dynamic led to the stock sell-off, as investors had anticipated stronger trajectory calls after recent positive momentum. The reaction reflects a classic “buy the beat, sell the news” dynamic, with sentiment reset in the context of already elevated expectations.