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.
Resources Connection to Announce Q2 FY2026 Results on January 7, 2026
- Earnings Announcement Timing: Resources Connection will release its second quarter fiscal 2026 results after market close on January 7, 2026, reflecting the company's commitment to transparency and investor communication.
- Conference Call Arrangement: Following the release, a conference call is scheduled for 5:00 p.m. ET on January 7, enhancing investor engagement and improving information accessibility.
- Replay Availability: A limited-time replay of the webcast will be available post-conference, ensuring that investors who cannot participate live can still access key information, thereby enhancing interaction between the company and its investors.
- Company Background: RGP is a global consulting firm with three decades of experience, serving 88% of the Fortune 100, showcasing its leadership and market influence in the professional services sector.
RGP to Announce Q2 FY2026 Results and Host Conference Call on January 7, 2026
- Earnings Announcement Timing: RGP will release its Q2 FY2026 financial results on January 7, 2026, after market close, highlighting the company's commitment to transparency and investor communication.
- Conference Call Schedule: The subsequent conference call is set for January 7, 2026, at 5:00 PM ET, featuring a live webcast, demonstrating the company's ongoing dedication to investor relations.
- Participation Recommendation: The company advises participants to dial in 15 minutes early to avoid delays, reflecting its emphasis on efficient communication.
- Replay Availability: A replay of the call will be accessible on the company's Investor Events section, ensuring that investors who cannot attend live can still access critical information.
RGP Study Reveals Barriers to AI ROI in Finance
- Data Trust Deficiency: Over one-third of CFOs (35%) cite data trust as the top barrier to achieving AI ROI, yet investment in data foundations remains limited, creating a disconnect that may stall AI initiatives before they scale, undermining long-term impact.
- Uneven Governance Frameworks: While 69% of CFOs report having advanced or established AI risk governance frameworks, 31% are still developing or using informal frameworks, indicating a need for enhanced governance as AI becomes more embedded in operations and decision-making.
- Escalating Skills Gap: More than two-thirds of CFOs (68%) identify skills shortages as a significant challenge to achieving AI ROI, while weakened collaboration between CFOs and CHROs threatens the talent foundation necessary for AI transformation.
- Widening Competitive Divide: CFOs at companies with over $10 billion in revenue report stronger data foundations, more mature governance, and faster AI adoption, creating a competitive divide that mid-market firms must deliberately close.
Roger Carlile Assumes Role of CEO at Resources Connection Amid Leadership Transition
Leadership Change: Resources Connection Inc. has appointed Roger Carlile as President and CEO, succeeding Kate Duchene, who will remain as an executive advisor until January 2026 to facilitate the transition.
Carlile's Background: Roger Carlile, a board member since June 2024 and former CEO of Ankura Consulting Group, has been involved in RGP's growth strategy focusing on CFO Advisory and Digital Transformation.
Recent Financial Performance: RGP reported first-quarter earnings of 3 cents per share, exceeding expectations, with revenue of $120.2 million, slightly above estimates but down from the previous year.
Stock Performance: Following the announcement, RGP shares rose by 8.86%, trading at $4.790.
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.
Resources Connection to Announce Q2 FY2026 Results on January 7, 2026
- Earnings Announcement Timing: Resources Connection will release its second quarter fiscal 2026 results after market close on January 7, 2026, reflecting the company's commitment to transparency and investor communication.
- Conference Call Arrangement: Following the release, a conference call is scheduled for 5:00 p.m. ET on January 7, enhancing investor engagement and improving information accessibility.
- Replay Availability: A limited-time replay of the webcast will be available post-conference, ensuring that investors who cannot participate live can still access key information, thereby enhancing interaction between the company and its investors.
- Company Background: RGP is a global consulting firm with three decades of experience, serving 88% of the Fortune 100, showcasing its leadership and market influence in the professional services sector.
RGP to Announce Q2 FY2026 Results and Host Conference Call on January 7, 2026
- Earnings Announcement Timing: RGP will release its Q2 FY2026 financial results on January 7, 2026, after market close, highlighting the company's commitment to transparency and investor communication.
- Conference Call Schedule: The subsequent conference call is set for January 7, 2026, at 5:00 PM ET, featuring a live webcast, demonstrating the company's ongoing dedication to investor relations.
- Participation Recommendation: The company advises participants to dial in 15 minutes early to avoid delays, reflecting its emphasis on efficient communication.
- Replay Availability: A replay of the call will be accessible on the company's Investor Events section, ensuring that investors who cannot attend live can still access critical information.
RGP Study Reveals Barriers to AI ROI in Finance
- Data Trust Deficiency: Over one-third of CFOs (35%) cite data trust as the top barrier to achieving AI ROI, yet investment in data foundations remains limited, creating a disconnect that may stall AI initiatives before they scale, undermining long-term impact.
- Uneven Governance Frameworks: While 69% of CFOs report having advanced or established AI risk governance frameworks, 31% are still developing or using informal frameworks, indicating a need for enhanced governance as AI becomes more embedded in operations and decision-making.
- Escalating Skills Gap: More than two-thirds of CFOs (68%) identify skills shortages as a significant challenge to achieving AI ROI, while weakened collaboration between CFOs and CHROs threatens the talent foundation necessary for AI transformation.
- Widening Competitive Divide: CFOs at companies with over $10 billion in revenue report stronger data foundations, more mature governance, and faster AI adoption, creating a competitive divide that mid-market firms must deliberately close.
Roger Carlile Assumes Role of CEO at Resources Connection Amid Leadership Transition
Leadership Change: Resources Connection Inc. has appointed Roger Carlile as President and CEO, succeeding Kate Duchene, who will remain as an executive advisor until January 2026 to facilitate the transition.
Carlile's Background: Roger Carlile, a board member since June 2024 and former CEO of Ankura Consulting Group, has been involved in RGP's growth strategy focusing on CFO Advisory and Digital Transformation.
Recent Financial Performance: RGP reported first-quarter earnings of 3 cents per share, exceeding expectations, with revenue of $120.2 million, slightly above estimates but down from the previous year.
Stock Performance: Following the announcement, RGP shares rose by 8.86%, trading at $4.790.
