Yahoo Finance Korn Ferry International (KFY) Q2 2019 Earnings Conference Call Transcript
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Korn Ferry International (NYSE: KFY)
Q2 2019 Earnings Conference Call
December 6, 2018, 11:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Korn Ferry Second Quarter Fiscal Year 2019 Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question-and-answer session. 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 financial presentation that we will be reviewing with you today.
Before I turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Certain statements made in the call today, such as those relating to future performance, plans, and goals constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned to not 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 reports filed by the company with the SEC, including the company's annual report for Fiscal Year 2018.
Also, some of the comments today may reference non-GAAP financial measures such as adjusted fee revenue, 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 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 will turn the call over to Mr. Burnison. Please go ahead.
Gary Burnison -- Chief Executive Officer
Okay. Thanks, John. Listen, Season's Greetings to everybody. Thank you for joining us. It certainly is a special time of the year, but particularly for Korn Ferry. We achieved the best topline and bottom line results in our history. To say that I'm proud of our performance is an understatement. Growth, constant currency, was up about 15% -- pretty balanced. All geographies, industries were up. Advisory, which was great to see, was up 12%. Products were up 11%. Profits were extraordinary. Adjusted EBITDA was $80 million, and the adjusted EBITDA margin was 16%.
For any CEO leading a company today, it's not just about strategy, but it's about how you synchronize that strategy with your organization and your talent. And that's exactly the company that we're creating, a company that is clearly the preeminent global organizational consulting firm, a company that has real impact in the world. And if you take a look at the data and the foundation that we've built to truly have impact in the world -- it's impressive when you consider that 1.2 million people a year take part in our leadership development programs.
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We have engagement reward and management data on 25 million professionals at 25,000 companies. 120 million datapoint on global professionals, organizational benchmarking data on 2,500 organizations -- I mean, clearly Korn Ferry has this unique ability to be able to synchronize strategy and talent for clients. And it's all built in IP. So, I'm very, very proud of what we have achieved. But equally, I'm very optimistic about the future for us.
New business has been very good. Gregg and Bob are with me -- they'll talk about that. October, I think, was our best month of new business in the company's history. We're going to continue to execute on our strategy of driving an integrated go-to-market strategy. We're going to continue to take IP and data and infuse it into the foundation of the house that we're building. You know what we're doing around the brand. We're going to continue to push to make this brand synonymous with driving superior performance for our clients by combining talent and strategy.
We're also going to continue a pragmatic M&A effort. And we also have to innovate. And one example is a new offering that we've got. It's in the B2C area, subscription-based offerings for professionals called KF Advance. It's like a gym membership, but to get careers in shape, where people can go for coaching, and guidance, and tools to help them with their career. We've seen some very, very good traction in that and hope to see more in 2019.
Before I turn the call over to Bob and Gregg, I wanted to share some really exciting news related to our board. Christina Gold has been appointed to the position of nonexecutive chair. That's going to be effective January 1. That's part of a planned succession. She's going to succeed George Shaheen. George has had an incredible impact on our company, for our management team, in terms of mentorship and he's going to continue to do so. And he's going to serve through the 2019 stockholders' meeting.
And so, with that, Bob Rozek Gregg Kvochak are here. Bob, why don't I turn over to you?
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
Great. Thanks, Gary, and good morning, everybody. Before I get into my highlights, I guess there's three sound bites that, as I look at the quarter, I'm focused on. One, obviously record revenue across each line of business. We had record profitability as a company with our earnings growth outpacing our revenue growth. And we had record new business in Executive Search and Advisory with also very strong new business in RPO and Professional Search. So, with those three sound bites, it was a very, very good quarter for Korn Ferry.
Our financial results continue to accelerate, highlighting both the continued momentum of our integrated solution-based go-to-market approach and the power of our brand. In the second quarter, we achieved record highs in revenue earnings and profitability. Global fee revenue reached $495 million, which was up 12% year-over-year at actual exchange range, nearly 15% at constant currency. And this marks the fifth consecutive quarter in which we achieved double-digit revenue growth. Once again, our growth was broad-based with each of our operating segments benefiting from synergies across our core and integrated solution offerings. At constant currency, RPO and Professional Search grew 25%., Executive Search grew 14%, and revenue growth for Advisory was nearly 12%. And at $217 million, our Q3 Advisory revenue was an all-time high.
Earnings and profitability obviously kept pace and exceeded revenue growth in the second quarter. Also reaching new record highs, adjusted EBITDA was $80.3 million, which is an improvement of almost $10 million, or 14% year-over-year, while our adjusted EBITDA margin improved 30 basis points to a new high of 16.2%. And, consistent with our policy to maintain a balanced approach to capital allocation, in the second quarter we repurchased approximately 446,000 shares of stocks, spending about $22 million. And our board just approved the declaration of a quarterly dividend of $0.10 per share.
Okay. Turning to new business trends, first, for Executive Search, we saw sustained high double-digit growth in the second quarter. Globally, Executive Search new business was approximately $210 million. It's up 15% year-over-year, driven by strong growth in North America, Europe, and Asia-Pac. In Advisory, global new business growth in the second quarter again was at an all-time high at $233 million. That's up 8% year-over-year. Finally, RPO and Professional Search achieved another quarter of strong new business totaling $73 million. And that consists of $41 million of long-term RPO awards, and $32 million of Professional Search.
At the end of the second quarter, our total cash and marketable securities were $523 million. That's up about $109 million compared to the second quarter of Fiscal '18. And then, excluding amounts reserved for deferred comp and accrued bonuses, our investable cash balance at the end of the second quarter was about $244 million. And that's up approximately $59 million year-over-year. And at the end of the quarter, our outstanding debt balanced was about $225 million. Last, adjusted fully diluted earnings per share in the second quarter were a record $0.85. That's up $0.18, or 27%, compared to Q2 of last year. And on a GAAP basis, which includes the last full quarter of amortization of the retention bonuses related to Hay Group acquisition, fully diluted earnings per share were $0.81.
Gregg, you want to go through some more of the operating segments in detail?
Gregg Kvochak -- Senior Vice President, Investor Relations
Sure. Great. Thanks, Bob. Okay, growth for our Executive Search segment remained strong in the second quarter as global revenue reached $198 million, a new all-time high. Compared to year-over-year and measured at actual exchange rates, Global Executive Search fee revenue grew $20.9 million, or 11.8%, in the second quarter, and 14.1% measured at constant currency.
Consistent with recent trends, growth for our Executive Search segment remained broad-based with each of our geographic regions posting strong gains. At constant currency, North America was up 14%, Europe was up 11%, Asia-Pacific was up 12%, and Latin America was up 31%. By industry specialty practice, growth was also broad-based. Compared to the second quarter a year ago, at actual exchange rates, our financial services practice was up 5%, our industrial practice was up 7%, our life sciences and healthcare practice was up 4%, and we achieved double-digit growth in our consumer goods and technology practices, which were up 14% and 33% respectively.
The total number of dedicated Executive Search consultants worldwide at the end of the second quarter was 556, up 18 year-over-year, and up 11 sequentially. Annualized fee revenue production per consultant in the second quarter improved to $1.44 million, and the number of new search assignments open worldwide in the second quarter was 1,757, which was up approximately 11% year-over-year. Adjusted EBITDA for Executive Search in the second quarter was $49.2 million, up $11.2 million, or 29%, year-over-year. The consolidated adjusted EBITDA margin for Executive Search in the second quarter of Fiscal '19 was 24.9% compared to 21.5% in the second quarter of Fiscal '18.
Now turning to Advisory, in the second quarter Global Advisory fee revenue also reached a new all-time high of $217 million, which was up year-over-year by 8.6%, or 11.8% measured at constant currency. All geographic regions achieved growth in the second quarter, led by Europe and Asia-Pacific, which both grew at a double-digit pace. As previously mentioned, global new business awards for the Advisory segment in the second quarter were up approximately 8% measured year-over-year. Growth in earnings and profitability for Advisory in the second quarter were in line with fee revenue growth. In the second quarter, adjusted EBITDA was $39.4 million, an improvement of $2.6 million, or 7%, year-over-year, with an adjusted EBITDA margin of 18.2%.
Finally, turning to RPO and Professional Search, where in the second quarter growth continued at a high double-digit pace. The RPO and Professional Search segment generated $80.5 million of fee revenue in the second quarter, which was up 21.4% year-over-year at actual rates, and up 24.5% at constant currency. All geographic regions grew double digits in the second quarter, led by North America and Europe, which were up 29% and 25% respectively.
And as previously mentioned, new business was also strong for the RPO and Professional Search segment in the second quarter, with awards totaling $73 million, consisting of $41 million of larger long-term RPO assignments, and $32 million of smaller shorter-term Professional Search assignments. Earnings also improved in the second quarter for the RPO and Professional Search segment with record EBITDA of $13.2 million and an EBITDA margin of 16.4%, which were both up year-over-year.
Now, I'll turn the call back over to Bob to discuss our outlook for the third quarter of Fiscal '19.
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
Great. Thanks, Gregg. New business awards in October, exiting our fiscal second quarter were very strong compared to the prior year. And new business awards in November, which began our fiscal third quarter, continued to be strong measured year-over-year. For Executive Search, global new business awards in the month of October and November were up year-over-year 30% and almost 10% respective. The fiscal third quarter's typically a seasonally slower quarter due to less working days resulting from the year-end Holidays. And if monthly new business patterns are consistent with prior years, we expect December awards to be down sequentially relative to November and then to rebound and peak to a quarter high in January.
For Advisory, the third quarter is also typically seasonally weaker for new business and revenue due to the same less working days resulting from year-end Holidays. Exiting the second quarter and beginning the third quarter, Advisory monthly new business trends have been strong with record new business in the quarter. And November new business continued with that year-over-year growth. Like Executive Search, we expect December new business for Advisory to be slower and the peak to a quarter high in January.
With regards to RPO and Professional Search, business under contract in the pipeline of potential new business opportunities continues to remain strong, and we expect both will continue to drive growth in the third quarter. Considering all these factors, assuming worldwide economic conditions, financial markets, and foreign exchange rates remain steady, and assuming a 25-26% effective tax rate for the quarter, we expect our consolidated fee revenue in the third quarter of Fiscal '19 to range from $470-490 million, and we expect our consolidated adjusted diluted earnings per share to range from $0.77-0.85.
And then, finally, in the third quarter, we will expect the last remaining month of the Hay Group retention bonuses, which will impact earnings in the third quarter by about $1 million. Considering this, we estimate that Fiscal '19 third quarter fully diluted earnings per share measured under U.S. GAAP will likely be in the range of $0.76-0.84.
...
That concludes our prepared remarks. We would be glad to answer questions that anyone has.
Questions and Answers:
Operator
Ladies and gentlemen, if you would like to ask a question on the call, please press * then 1. You'll hear a tone indicating you've been placed in the queue. If your question gets answered and you wish to remove yourself from the queue, please press the # key. Once again, *1 if you have a question. Our first question is from the line of Tim McHugh with William Blair. Please go ahead.
Trevor Romeo -- William Blair & Company -- Analyst
Hi. Good morning. It's actually Trevor Romeo on for Tim today. Thanks for taking the call. Just wanted to touch on Advisory a bit more. I think you mentioned that EMEA and Asia were up double digits for Advisory? But how was the growth in the U.S. in the quarter? And also, are there any particular types of consulting projects that are strong right now?
Gary Burnison -- Chief Executive Officer
A couple things. I think, one, just that the context -- we are very much repositioning the business. And if you look at it today, about 40% or so of the new engagements are over $500,000. And so, what we built and what we bought were much smaller, less impactful, sized engagements. And so, we're moving the entire organization toward more of a business outcome solution focus. Because, for any CEO, it's about how you synchronize your strategy with your talent. So, there's a major shift going on. And one of the things that I point to that's giving me great hope is the migration of the business to bigger, more impactful solutions-based engagements. So, that's number one.
The second is, the last acquisition that we did -- which is actually three years ago almost to the day. About three days ago. And that's been enormously transformative for Korn Ferry. When you look at that acquisition, the people -- the IP -- that we picked up, it was largely outside the United States. And so, 80% of the assets were in essence outside the U.S. And, when you look at the growth -- and this quarter is no exception -- EMEA and Asia-Pacific Advisory were just off the charts. I mean, Asia-Pacific Advisory this quarter was like 34% constant currency. So, that's good. When you look at the U.S., and you look over the last couple of quarters, what you're going to see is a very, very positive trend. So, increasing levels of new business and increasing growth.
So, for the quarter, the U.S. consulting business was up 8%. So, trend lines pointing the right way, but the bigger story is the actual changes to the business.
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
Yeah. And, Trevor, this is Bob. The other thing I would add to the point Gary's making, in terms of the migration of the business, we're also migrating our products business from selling a -- what I would call a static file -- to more of a subscription base. So, we used to sell the static file book revenue on day one, and that was it. Now, as a subscription model, it's more like software as a service. So, we're not getting the day one revenue that we did under a static sale, but we are getting subscription revenue which comes in over a one-, two-, or three-year period, which is a much more favorable model to be under.
Trevor Romeo -- William Blair & Company -- Analyst
Okay. Great. Thanks. That's all very helpful. And then, just one follow-up. How do you think about headcount growth going forward between Search and Advisory segments? And do you see any risk of higher turnover in Advisory since the Hay Group retention program is ending so soon?
Gary Burnison -- Chief Executive Officer
No. I mean, this is a professional services firm. This is a consulting firm. We have almost 10,000 people when you include the part-time folks that we have. And so, with any professional services firm, you're going to see a classic up-or-out model and corresponding levels of turnover. But, we don't guide out in terms of headcount. I will tell you that we are very, very aggressive in the marketplace, looking for talent right now.
Trevor Romeo -- William Blair & Company -- Analyst
Okay. Great. Thank you very much.
Operator
Our next question is from Tobey Sommer with SunTrust. Please go ahead.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Thanks. I can start, maybe, with the RPO business. What does the pipeline look like? I can recall a few quarters ago you cited some very large deals that will be folded into the business. Just curious about the pipeline and, in particular, the presence of those megadeal opportunities.
Gary Burnison -- Chief Executive Officer
Yeah, I'll -- Bob, you can talk about the numbers. But I would say that there are a handful of really large engagements that are currently being implemented. And I would say, for those four or five that are global deals, big impact deals -- I mean, we're talking hiring thousands of people a year for branded organizations. I would say, with those, we're probably in the third or fourth inning in terms of implementing it. So, that's extremely positive. And, at the same time, we're pursuing -- I can think of 10-20 -- I wouldn't call them megadeals, but several million dollars a year engagements across different industries. So, Bob, I don't know if you have --
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
[Crosstalk] Yeah. Yeah. Our -- the pipeline, Tobey, in RPO right now is somewhere between $260-270 million of contract awards.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Perfect. From a competitive positioning standpoint, is the company -- in the RPO business -- able to bid on just about any size and any geography at this point? Or are there still things you need to do to open up and increase the adjustable market?
Gary Burnison -- Chief Executive Officer
Yeah, no. We still -- no, we still need to add -- we can add some resources, particularly in pockets of Asia, which we're looking to do. But obviously, the business has pretty nice impact and reach. But look, it's a business that's growth 25% or so quarter-on-quarter for several quarters. It's been impressive. And the quality is what I'm more proud of than anything.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Okay. With respect to the Product business, it grew just about in line with Advisory as a whole. And Bob referenced a transformation to a subscription business model. Just checking in on when you think we'll see demonstrably faster growth from the whole -- is that still two or three quarters away?
Gary Burnison -- Chief Executive Officer
Yeah, no. I had said last quarter that I thought it was three to four quarters. I'm going to stick with that. There's really two aspects to what we're doing. One is what Bob referenced, which is building the platform. So, building a platform that companies can use to hire, to assess, to compensate, to develop, to empower, inspire their employee base. So, that's one aspect of it that we're working on very, very heard. And what we're doing is taking all the data that we have -- which I think is unprecedented. We develop 1.2 million people a year. We've got datapoints on 25,000 organizations, 25 million people. I mean, the IP is pretty rich. So, we're trying to take that IP and put it, as Bob said, into a software as a service -- a platform -- what we would call a talent hub -- that we can license. So that's one aspect, one strategic aspect.
The second strategic aspect is the commercialization. And so, building the salesforce, helping to integrate that with the broader Korn Ferry platform -- because remember, I mean, products should drive services and services should drive products. So, that's where we are.
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
Yeah. And, Tobey, the other thing I would add to that, too, is -- if you step back and look at, across our solution sets, we have what we call the pay hub, which obviously in the rewards and benefits solutions. We have talent hub, which really underlies the assessment in succession solutions. And what we're focused on now is building out products in talent acquisition. So, Gary referenced Korn Ferry Advance. We have what we call Talent Direct, which is the technology piece that goes into our RPO engagements, using more of a stand-alone product. Looking at leadership development to build out a products platform there. So, we've got enormous opportunity, but some more of the job to get there.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Great. With respect to new business trends since the quarter, you said October was, I think, a great month -- maybe the best in a while. Has the market volatility bled into anything? What do you hear in terms of your customer conversations?
Gary Burnison -- Chief Executive Officer
No. Obviously, the Dow's down 800 points right now. So, the last three or four days have been extremely, extremely volatile. But no, I -- look, October was absolutely the best month for new business in the company's history. November was right in line with what we would expect. November and December, you're going to lose -- I mean, we're going to lose probably 12 or 13 days of consulting time because of the Holidays and the respite, hopefully, all of our colleagues can take. So, no. We haven't seen any -- nothing in the data.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Perfect. Just two last questions for me. If you could comment about pricing in the business and which segments are going to -- seeing the most benefit from price currently. And then maybe add your opinion about which segment has the most opportunity going forward in terms of pricing?
Gary Burnison -- Chief Executive Officer
Look, I think that, to the extent that we continue to move this organization toward solutions rather than vitamins -- the impact and the value will be reflected in the price. So, that's how I would look at it. You look at the company today. Essentially, 55% of it is Talent Acquisition, 45% is Advisory. And so, we've clearly been moving the organization on the Advisory side to have more impactful engagements. And so, I would hope that over time the pricing follows the impact and the value that we deliver to clients.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
And, Gary, you mentioned that ROIC improved substantially. Are you any closer to having some goals that you can share with us over time? Because part of the improvement recently, I think, was probably -- the brand action was probably a decent contributor. So, I'm wondering what kind of operational improvements we might be able to look for going forward.
Gary Burnison -- Chief Executive Officer
Yeah. It was a contributor. Not the overwhelming contributor, but it was a contributor. So, the ROIC was 12.5%. I'd like to see it at 14.5-15%-plus. And that's what we're sticking to.
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Thank you.
Operator
Our next question is from Mark Marcon with RW Baird. Please go ahead.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Good morning. And I guess I just want to start off by just saying, to the extent that George Shaheen is listening, congratulations to him. For those who aren't familiar with what boards do, Korn's board's really been heavily involved, and George has clearly been a big contributor over the years. So, on that, Gary, any anticipation of any change with regards to Christina's leadership on the board?
Gary Burnison -- Chief Executive Officer
No. No. I'll echo what you say about George. He's a legend, not only in his own mind, but in a lot of people's minds in the professional services firms. And Christina is equally talented. We have a great board and the reality is we all age and we have a retirement age as a board, unfortunately. And, for George, it was coming up on that date and the board said, "Hey, let's do this the right way -- what we would advise clients to do." And so, Christina is outstanding. I've got a great relationship with her, as does the management team. She's been the CEO of numerous companies, including Western Union. And we've worked very, very closely together. So, I share your sentiment for George. And if George is listening, he knows what the company thinks and the management team. And we look forward to his continued contribution.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Great. I mean, just between when he first started on the board and where Korn Ferry is now -- and obviously, that's due to Paul and your efforts initially, and instituting the turnaround. And then, obviously Gary, you and Gregg and Bob continuing that. So, it's just -- going back from the B of A days, it's interesting.
Gary Burnison -- Chief Executive Officer
Well, yeah. It's a company that's transformed. We're a couple billion dollars now, half the business from Advisory. It's quite remarkable and a lot of people have contributed to that. So, thank you for those words.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
With regards to the Executive Search, you've got $1.44 million in terms of current productivity out of the consultants. How do you see that progressing? I know you've got lots of consultants that are doing more than that, obviously. But what's a pace that you think is sustainable?
Gary Burnison -- Chief Executive Officer
Yeah, in the United States, just to bring color to that, just to the average it's a $1.9 million. So, that's number's impacted greatly by the global footprint that we have. So, you look at that number and it's -- when you actually dissect it and take the U.S., it's substantially higher than that. I continue to believe that there's room there for that to improve. Part of that -- our Financial Services business is a smaller part of our business than I would like. Today, it's only about 19%. It would be great if that would be a higher -- with respect to the Executive Search business, you tend to see much higher fees there given the compensation levels. So, Mark, that's what I would say.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Okay. And then, everything's happening real time. Gary, you've got a ton of experience with cycles. How long do you think it takes before the recent volatility ends up impacting a little bit of the psychology in terms of the confidence -- or how are you thinking about planning under those circumstances?
Gary Burnison -- Chief Executive Officer
I think if you look back in time, it would be two to three quarters -- is what you would -- that's what you would analytically look at. Clearly, there is a lot of geopolitical risk happening as we speak. Forget the cycle and how long it's been --
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Yeah.
Gary Burnison -- Chief Executive Officer
But I think that -- and I have some personal views. But I do believe that this trade skirmish will be sorted out. I think rational heads will prevail over time, and somebody's going to give. The situation in Europe and Brexit, I would not be surprised if there was a second vote. But I tend to believe there that there's not -- I just don't see people driving a car off the cliff. That's hard for me to see. And I think the monetary policy in the U.S., that will be tempered versus what has been previously communicated say eight weeks ago. Whether we're at full employment now in the United States, it's a bit of a question. The numbers today would -- there's -- people would suggest that. But I can only tell you that -- what we're seeing. I can report on new business. I can tell you that companies have been adjusting supply chains in China now for several months. So, that would be my read on things.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Just on the China element, they have been adjusting things. How much of an impact does that have on you in terms of just -- when we took a look at your APAC business, it was quite strong. It sounds like the orders are still strong. How should we think about that?
Gary Burnison -- Chief Executive Officer
Yeah, the orders are strong. The growth -- just take China, for example -- the growth in the quarter was 11-12% constant currency. Year-to-date it's been 13%, so you could say that maybe there's a slight impact. But I think that those -- that's been happening now for many, many months. And now, we're going to head into the Chinese New Year and all that good stuff. But, marginally is probably what I would say up to this point.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Okay. And then, with regards to Advisory, it sounds like things are moving in the right direct there. How long do you think it'll take before North America really gets up to a targeted 10% growth rate?
Gary Burnison -- Chief Executive Officer
We need talent, Mark. So, we've got a strategy -- severalfold strategy there. But the fundamental issue is not the marketplace. It's scale and talent. And we just don't have enough of it. So, we're out very aggressively. And also, we're on college campuses recruiting -- building our own farm team. So, it's not just going out into the marketplace and doing lateral hires, but we're also on college campuses. We'll have another class start here in January. So, there's severalfold to ensure that we have a solutions-based business that's focused on what a CEO cares about. So, for example, around M&A or digitization, we're moving the business toward solutions. That's well well under its way.
We have a pretty strong account strategy, account focus. We're executing on that. And then, there's the talent piece, and we just don't have enough. We just don't have enough coverage in the United States. And the acquisition -- the last acquisition added great people, just not enough great people, in the U.S.
Mark Marcon -- Robert W. Baird & Co. -- Analyst
Your success in Advisory hasn't gone unnoticed. You've got copycats out there that are -- I guess that's the highest form of a compliment, is when you take the path. What are you seeing from a competitive perspective in terms of what the other players are doing and -- how does that effect the ability to recruit and retain?
Gary Burnison -- Chief Executive Officer
There are -- I'm not going to mention names. There are two strategy firms that are very well known. Arguably two of the largest in the world. I've seen -- they enjoy aftermarket work. What I mean by that is, they go in and diagnose a strategy. And invariably, the CEO starts asking questions about people and talent and organizational structure. And so, that is certainly -- I definitely have seen that. Then, there's one of the big four that comes at it from a technology perspective. And it gets into things that we do, not in terms of the RPO or Talent Acquisition business, but in terms of the Advisory. And neither of those two, though, have the IP or the data. They don't have the products business. So, that's what I would say.
Operator
Our next question is from George Tong with Goldman Sachs. Please go ahead.
George Tong -- Goldman Sachs Group, Inc. -- Analyst
All right. Thanks. Good morning. I wanted to ask about marquee accounts and the layer of managed accounts below that. Can you discuss how revenue growth performed in those categories? And any plans to drive account manager growth to augment the cross-selling initiatives that you have with your larger accounts?
Gary Burnison -- Chief Executive Officer
The marquee accounts now represent about 21% of the portfolio. There's slightly over 100 of those. On those accounts, we have account leaders. The growth in those accounts this last quarter was better than the portfolio average, which is good. And year-to-date, it's certainly been better. We are going under the -- as we think about one, Korn Ferry, one of the changes -- one of the decisions -- that we've made is, we're going to go a level below the marquee accounts. And so, we are going to target say a couple hundred what we would call -- not managed, but regional -- accounts. And so, we're just now at the beginning of implementing that. And so, we are assigning our current talent to some of those accounts. The accounts have been identified. All that's been done. All the screens have been run. And what we're going to have to do, though, is go out and hire more account professionals to augment what we have in the marquee account program.
So, I'm not, at this point, going to state any goals, but I will in March. But I'm just not ready today to state the goals. But, overall, if you think about this organization having real impact in the world and not being $2 billion, but $10 billion or -- substantially bigger than it is today. There has to be a real focus on several hundred clients where you've got dedicated teams against those clients.
George Tong -- Goldman Sachs Group, Inc. -- Analyst
Got it. Very helpful. You talked about healthy October and November trends for new business. Looking out a little bit beyond that, can you discuss how your broader pipeline of new business is performing across your segments, particularly given where we are in the cycle?
Gary Burnison -- Chief Executive Officer
Yeah, I think -- George, I think our pipeline is strong. It manifests itself in what we saw in the new business in Q2 as well as what we're seeing in November. So, there's been really no diminished activity in terms of our pipeline.
George Tong -- Goldman Sachs Group, Inc. -- Analyst
Got it. Thank you.
Operator
And next question is from Marc Riddick with Sidoti. Please go ahead.
Marc Riddick -- Sidoti & Company, LLC -- Analyst
Hey, good morning.
Gary Burnison -- Chief Executive Officer
Good morning, Mark.
Marc Riddick -- Sidoti & Company, LLC -- Analyst
I wanted to touch on -- actually, before I start on where I was going to go, I just want to do a quick follow-up on what you had just mentioned as far as going to that next level of accounts. Is there a ballpark level of how much of the current business that target group currently represents?
Gary Burnison -- Chief Executive Officer
I don't want to -- I just -- I'm going to do it in March. I just -- we --
Marc Riddick -- Sidoti & Company, LLC -- Analyst
Okay.
Gary Burnison -- Chief Executive Officer
We're just not ready for primetime. Under this -- the one brand initiative is way, way more than a marketing exercise. And so, there are several levers that I want to pull as part of that. And one is this account focus. So, I'll do it in March. I'm sorry. I'm just not -- we're not ready to do that.
Marc Riddick -- Sidoti & Company, LLC -- Analyst
No, that's fine. That actually leads to the question where I was originally going to go, which is, with the announcement of making this shift to the Korn Ferry name and letting go of the international part of it at the beginning of the year, I was wondering if you could give a bit of an update as far as, I guess, the original timing that you were looking at for the endeavor was kind of along the lines of a little over a year, a year and a half, I suppose. As you look at it now versus when you began the rebranding process, how do you think that's kind of evolved? And do you see -- I guess, maybe this is part of it, but other opportunities that would maybe expand and extend the timeframe of what you're looking, and maybe some of the discoveries that you've made along the way of where this can go. Thank you.
Gary Burnison -- Chief Executive Officer
Yeah. No, thank you. We're right at -- we announced this in June, so we're essentially six months in. And we're right on track with what we thought. And there's, again, two aspects to it. One, is all the infrastructure and legal entity rationalization that is going on. And that's exactly on line. We said in -- last June, six months ago, that we thought it would be 12-18 months. January 1, there's -- from a legal entity perspective, there's four or five countries that are going to go. And those are the big countries. And then, we would anticipate that, over the succeeding 9-12 months, we will execute on the remaining. So, that's -- there's a whole aspect of that. Contracts with clients, employment agreements -- I mean, all that stuff, we're exactly on line.
The other aspect of it is the -- what I would say, the commercialization. So, the go-to-market strategy, the reward system, the development of employees, the rotation of employees between assignments -- that's what we're working through right now.
Marc Riddick -- Sidoti & Company, LLC -- Analyst
Okay. Great. And then one last thing for me. I was wondering if you could maybe give updated thoughts as far as global acquisition pipeline views and if you think there's been much, if any, changes given the market pullbacks that we've seen over the last few weeks? Thank you.
Gary Burnison -- Chief Executive Officer
We continue to execute. We're continuing to meet with companies. I just haven't seen anything -- the volatility has clearly picked up, as you said, over the last several weeks -- particularly, the last few days. But no, there's nothing that would ring the bell.
Marc Riddick -- Sidoti & Company, LLC -- Analyst
Okay, great. Thank you very much.
Gary Burnison -- Chief Executive Officer
Okay.
Operator
And with no further questions, I'll turn it back to you, Mr. Burnison, for closing comments.
Gary Burnison -- Chief Executive Officer
Okay. Well, listen, I really appreciate everybody's time. I certainly appreciate Mark Marcon's comments. Thank you for those. And, look, it's been an incredible calendar year for Korn Ferry, and we look forward to this next year as well. And I just say Season's Greetings to everybody and have a wonderful Holiday if we don't speak before then. And we look forward to talking to you in Calendar 2019. Thank you.
...
Operator
Ladies and gentlemen, this conference call will be available for replay for one week, starting today at 1:00 p.m. Eastern Standard Time, running through the day December13th, ending at midnight. You may access the AT&T Executive Playback Service by dialing 800-475-6701 and entering the access code of 458072. International participants may dial 320-365-3844. Additionally, the replay will be available for playback at the company's website, www.kornferry.com, in the Investor Relations section. That does conclude your conference for today. Thank you for your participation. You may now disconnect.
Duration: 50 minutes
Call participants:
Gary Burnison -- Chief Executive Officer
Robert Rozek -- Chief Financial Officer, Executive Vice President, and Chief Corporate Officer
Gregg Kvochak -- Senior Vice President, Investor Relations
George Tong -- Goldman Sachs Group, Inc. -- Analyst
Trevor Romeo -- William Blair & Company -- Analyst
Marc Riddick -- Sidoti & Company, LLC -- Analyst
Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst
Mark Marcon -- Robert W. Baird & Co. -- Analyst
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