Resources Connection Reports Financial Results for First Quarter Fiscal 2026

About this update from Resources Connection, Inc.

— Revenue, Gross Margin and SG&A Expenses Beat Outlook Ranges — — Improving Profitability Year-Over-Year — DALLAS, October 08, 2025 --( BUSINESS WIRE )--Resources Connection, Inc. (Nasdaq: RGP) (the "Company"), a professional services firm, today announced its financial results for its first quarter of fiscal 2026 ended August 30, 2025. First Quarter Fiscal 2026 Highlights Compared to Prior Year Quarter: Management Commentary "First quarter results exceeded our outlook ranges on all fronts and we continue to make progress to transform our business to be more integrated, diversified and resilient," said Kate W. Duchene, Chief Executive Officer. "We are engaging with clients on more consulting opportunities which have higher bill rates, larger deal size and often create more extension and cross selling.  We are increasingly becoming a trusted partner for larger transformations, whether cost reduction, system migration or data modernization and automation-focused programs. We have a plan which we are executing with clarity and conviction in this new fiscal year; we will continue to deepen and expand our consulting capabilities in the focus areas of CFO Advisory & Digital Transformation while strengthening and evolving our on-demand business to be even more relevant in today’s marketplace. In addition, while the macro environment remains unpredictable, we are laser focused on redesigning our cost structure to deliver improved return to shareholders both in the short and long term. We remain confident in our strategy and optimistic about the future of this company. " First Quarter Fiscal 2026 Results Revenue in the first quarter of fiscal 2026 was $120.2 million compared to $136.9 million in the first quarter of fiscal 2025. On a same-day constant currency basis, revenue decreased by $19.0 million, or 13.9%. Average bill rates increased 2.2% year over year, reflecting continued pricing discipline and pursuit of higher-value engagements. Offsetting this increase, billable hours decreased 14.3% year-over-year, primarily due to choppy demand, as clients delayed transformation projects amid continued global economic uncertainty and soft labor markets. Gross margin improved to 39.5% compared to 36.5% in the first quarter of fiscal 2025. The increase was primarily due to an improvement in pay/bill ratio, higher consultant utilization and lower costs, including improvements in healthcare costs, and holiday pay reflecting one less holiday in the current fiscal quarter. SG&A for the first quarter of fiscal 2026 was $47.9 million, or 39.9% of revenue, an improvement from $48.9 million, or 35.7% of revenue, for the first quarter of fiscal 2025. The $1.0 million improvement was primarily driven by a $2.4 million reduction in employee compensation and benefits costs following the Company's restructuring activities in fiscal 2025, a $1.9 million reduction in technology transformation costs primarily associated with technology implementation during fiscal 2025, a $1.1 million reduction related to business support costs including travel and entertainment, a $0.8 million reduction in acquisition related costs, and a $0.4 million reduction in occupancy expenses. These improvements were partially offset by a $3.4 million gain on the sale of the Irvine office building recorded during the first quarter of fiscal 2025 with no comparable activity occurring during the first quarter of fiscal 2026, and a $0.9 million increase in professional services fees, a $0.7 million increase in stock-based compensation, and a $0.7 million increase in amortization of costs related to capitalized technology transformation costs. The remaining improvement was related to various general and overhead costs. Income tax expense for the first quarter of fiscal 2026 was $0.5 million, or an effective tax rate of 24.7%, compared to $1.1 million, or an effective tax rate of 22.7%, for the first quarter of fiscal 2025. The negative effective tax rates in both periods reflect the impact of recording tax expense against consolidated pretax losses. In fiscal 2026, the expense was driven primarily by an increase in the domestic and foreign valuation allowance, while in fiscal 2025 it was driven primarily by a non-deductible tax adjustment related to goodwill impairment. Net loss for the first quarter of fiscal 2026 was $2.4 million (net loss margin of 2.0%), an improvement from a net loss of $5.7 million (net loss margin of 4.2%) in the prior year quarter. This improvement was primarily driven by a reduction in SG&A expenses and the absence of goodwill impairment in the first quarter of fiscal 2026. The Company delivered an Adjusted EBITDA margin of 2.5% in the first quarter of fiscal 2026 up from 1.7% in the prior year quarter. First Quarter Fiscal 2026 Segment Revenue Results On-Demand Talent – Revenue in the On-Demand Talent segment was $44.4 million in the first quarter of fiscal 2026 compared to $52.5 million in the first quarter of fiscal 2025. On a same day currency basis, revenue decreased 16.4% in the first quarter of fiscal 2025. The variance was primarily due to lower demand for interim support amidst economic uncertainty as well as a softer and more stagnant labor market, with a 0.4% (or 0.7% on a constant currency basis) increase in average bill rate, which was more than offset by a 15.8% decline in billable hours. Consulting – Revenue in the Consulting segment was $43.6 million in the first quarter of fiscal 2026 compared to $55.0 million in the first quarter of fiscal 2025. On a same day currency basis, revenue decreased 21.7% in the first quarter of fiscal 2025. The variance was primarily due to a 28.4% decrease in billable hours, partially offset by a 11.1% (or 11.4% on a constant currency basis) increase in the average bill rate largely as a result of the Company’s value-based pricing initiative. As the Company continues to evolve its consulting business to deliver higher value, larger and more complex work, it has improved its ability to command higher bill rates; however, the sales cycle associated with such deal opportunities tends to be more elongated. As a result, revenues in the Consulting segment could be uneven in the near term as the Company continues to execute its strategy in this part of the business. Europe & Asia Pacific – Revenue in the Europe & Asia Pacific segment increased by $1.9 million or 10.6%, to $19.9 million in the first quarter of fiscal 2026 compared to $18.0 million in the first quarter of fiscal 2025. On a same-day constant currency basis, revenue increased 5.4% in the first quarter of fiscal 2025. The increase was primarily due to a 0.5% increase in billable hours and a 9.6% (or 4.6% on a constant currency basis) increase in the average bill rate. The improvement in average bill rates was driven by the Company’s value-based pricing initiative and a shift in geographic revenue mix towards Europe where average bill rates are higher. Billable hours in Europe increased 21.0% year-over-year, primarily due to growing client demand and project expansions with key accounts, while billable hours in the Asia Pacific region declined 2.6% primarily due to reduction in client spend and the competitive landscape in the region. Outsourced Services – Revenue in the Outsourced Services segment increased by $0.5 million or 5.3% compared to the prior year quarter, to $10.0 million. On a same-day constant currency basis, revenue increased 3.7% in the first quarter of fiscal 2025. The increase was primarily due to an increase in billable hours of 2.1%. All Other – Revenue in the All Other segment increased by $0.3 million or 15.3%, to $2.3 million in the first quarter of fiscal 2026 compared to $2.0 million in the first quarter of fiscal 2025. On a same-day constant currency basis, revenue increased 13.6%  in the first quarter of fiscal 2025. The increase was primarily due to an increase in billable hours and an average bill rate increase of 2.7%. Conference Call Information RGP will hold a conference call for analysts and investors at 5:00 p.m., ET, today, October 8, 2025. A live webcast of the call will be available on the Events section of the Company’s Investor Relations website. To access the call by phone, please go to this link ( registration link ) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time by visiting the Company's Investor Relations website. About RGP RGP (Nasdaq: RGP) is an award-winning global professional services firm with three decades of experience helping the world’s top organizations navigate change and seize opportunity. With three integrated offerings—On-Demand Talent, Consulting, and Outsourced Services—we provide CFOs and other C-suite leaders with the flexibility to solve today’s most pressing challenges on their terms, uniting strategy, execution, and talent across accounting and finance, digital transformation, data, and cloud, at global scale. Our people-first approach continues to drive innovation across industries worldwide. Based in Dallas, Texas, with offices worldwide, we annually engage with over 1,600 clients around the world from 41 physical practice offices and multiple virtual offices. As of May 2025, RGP is proud to have served 88 percent of the Fortune 100 and has been recognized by U.S. News & World Report (2024–2025 Best Companies to Work For) and Forbes (America’s Best Management Consulting Firms 2025, America’s Best Midsize Employers 2025, World’s Best Management Consulting Firms 2024). RGP is listed on the Nasdaq Global Select Market, the exchange’s highest tier by listing standards. To learn more about RGP, visit: http://www.rgp.com . Forward-Looking Statements Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to expectations concerning matters that are not historical facts. Such forward-looking statements may be identified by words such as "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "forecast," "future," "intends," "may," "plans," "potential," "predicts," "remain," "should," "strategy" or "will" or the negative of these terms or other comparable terminology. In this press release, such statements include statements regarding our growth and operational plans including expectations about our Consulting and On-Demand businesses and plans regarding our cost structure. Such statements and all phases of the Company’s operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include, but are not limited to, the following: risks related to an economic downturn or deterioration of general macroeconomic conditions, potential adverse effects to our and our clients’ liquidity and financial performances from bank failures or other events affecting financial institutions, the highly competitive nature of the market for professional services, risks related to the loss of a significant number of our consultants, or an inability to attract and retain new consultants, the possible impact on our business from the loss of the services of one or more key members of our senior management or key sales professionals, risks related to potential significant increases in wages or payroll-related costs, our ability to secure new projects from clients, our ability to achieve or maintain a suitable pay/bill ratio, our ability to compete effectively in the competitive bidding process, risks related to unfavorable provisions in our contracts which may permit our clients to, among other things, terminate the contracts partially or completely at any time prior to completion, our ability to realize the level of benefit that we expect from our restructuring initiatives, risks that our recent digital expansion and technology transformation efforts may not be successful, our ability to build an efficient support structure as our business continues to grow and transform, our ability to grow our business, manage our growth or sustain our current business, our ability to serve clients internationally, additional operational challenges from our international activities possible disruption of our business from our past and future acquisitions, the possibility that our recent rebranding efforts may not be successful, our potential inability to adequately protect our intellectual property rights, risks that our computer hardware and software and telecommunications systems are damaged, breached or interrupted, risks related to the failure to comply with data privacy laws and regulations and the adverse effect it may have on our reputation, results of operations or financial condition, our ability to comply with governmental, regulatory and legal requirements and company policies, the possible legal liability for damages resulting from the performance of projects by our consultants or for our clients’ mistreatment of our personnel, risks arising from changes in applicable tax laws or adverse results in tax audits or interpretations, the possible adverse effect on our business model from the reclassification of our independent contractors by foreign tax and regulatory authorities, the possible difficulty for a third party to acquire us and resulting depression of our stock price, the operating and financial restrictions from our credit facility, risks related to the variable rate of interest in our credit facility, the possible impact of activist shareholders, the possibility that we are unable to or elect not to pay our quarterly dividend payment, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 31, 2025, which was filed on July 28, 2025 and our other public filings made with the Securities and Exchange Commission (File No. 0-32113). Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not intend, and undertakes no obligation, to update the forward-looking statements in this press release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law to do so. Non-GAAP Financial Measures The Company uses certain non-GAAP financial measures to assess our financial and operating performance that are not defined by or calculated in accordance with accounting principles generally accepted in the U.S. ("GAAP") to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented. The following non-GAAP measures are presented in this press release: We believe the above-mentioned non-GAAP financial measures, which are used by management to assess the core performance of our Company, provide useful information and additional clarity of our operating results to our investors in their own evaluation of the core performance of our Company and facilitate a comparison of such performance from period to period. These are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity. These measures should be considered in addition to, and not as a substitute for, revenue, net income (loss), earnings (loss) per share, cash flows or other measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently. RESOURCES CONNECTION, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except number of business days) Segment Results The Company's reportable segments are as follows: The Company's reportable segments are comprised of On-Demand, Consulting, Outsourced Services, and Europe & Asia Pacific. Sitrick does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the "All Other" Segment. On July 1, 2024, the Company acquired Reference Point LLC, which is reported within the Consulting segment from the date of acquisition. The following table discloses the Company’s average bill rate by segment for the last five quarters ended:   View source version on businesswire.com: https://www.businesswire.com/news/home/20251008056558/en/ Contacts Analyst Contact : Jennifer Ryu Chief Financial Officer (US+) 1-714-430-6500 [email protected] Media Contact: Pat Burek Financial Profiles (US+) 1-310-622-8244 [email protected]

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