Resources Connection, Inc. (RGP) Q1 2026 Earnings Call Transcript
Revenue Revenue of $120.2 million, a decline in On-Demand segment revenue by 16% year-over-year to $44.4 million, Consulting segment revenue declined by 22% year-over-year to $43.6 million, Europe and Asia Pac segment revenue grew by 5% year-over-year to $19.9 million, and Outsourced Services segment revenue grew by 4% year-over-year to $10 million. Reasons for changes include a choppy operating environment in the U.S., stabilization in On-Demand, improved bill rates, and strong client relationships in Europe and Asia Pac.
Gross Margin Gross margin of 39.5%, which is 300 basis points higher than the prior year quarter. Reasons for the increase include improvement in average bill rate, reduction in employee benefit costs, and strategic management of bench consultants' utilization.
SG&A Expense SG&A expense of $44.5 million, a 7% improvement from $47.7 million a year ago. Reasons for the decrease include lower management compensation expense and reductions in other G&A spend such as travel and occupancy.
Adjusted EBITDA Adjusted EBITDA of $3.1 million or a 2.5% adjusted EBITDA margin, with improvements driven by cost reduction efforts and better gross margin performance.
Average Bill Rate Enterprise-wide average bill rate increased to $120 constant currency from $118 a year ago, with an 11% improvement in consulting bill rates from $144 to $160. Reasons include execution of pricing strategy and delivering higher-value engagements.
Segment Adjusted EBITDA On-Demand segment adjusted EBITDA improved to $4.4 million or a margin of 10% from $2.6 million or a 4.9% margin in the prior year quarter. Consulting segment adjusted EBITDA was $5 million or an 11.6% margin compared to $7.8 million or a 14.1% margin in the prior year quarter. Europe and Asia Pac segment adjusted EBITDA was $0.8 million or a 4.2% margin, up from $0.2 million and a 1.3% margin in the prior year. Outsourced Services segment adjusted EBITDA was $2.3 million or a 23.3% margin, up from $1.4 million or a 14.7% margin. Reasons include cost reduction efforts, improved gross margins, and effective management of consultant utilization.
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RGP (RGP) Q2 2026 Earnings Call Transcript
Resources Connection, Inc. Reports 18.4% Revenue Decline in Q2 FY2026
- Revenue Decline: Resources Connection, Inc. reported Q2 revenue of $117.7 million, down 18.4% from $145.6 million year-over-year, indicating a lack of positive momentum in market execution that could impact future market share.
- Gross Margin Decline: Gross margin decreased from 38.5% to 37.1%, primarily due to rising healthcare costs and increased holiday pay, highlighting challenges in cost control that may affect profitability.
- Net Loss Improvement: The net loss for Q2 was $12.7 million, significantly improved from $68.7 million in the prior year, with the net loss margin decreasing from 47.2% to 10.8%, indicating progress in aligning cost structure with revenue levels.
- Adjusted EBITDA Decline: Adjusted EBITDA was $4.0 million, down 58.8% from $9.7 million year-over-year, reflecting ongoing challenges in restoring profitability, which may affect investor confidence.
