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    RGP
    Earnings call· May 2026(Q4 FY26)

    RESOURCES CONNECTION, INC. RGP

    Jul 22, 2026 Source

    Executive summary

    Resources Connection, Inc. Q4 FY26 — Cost Structure Alignment and Strategic Investments

    Resources Connection, Inc. reported Q4 FY26 results largely in line with expectations, with revenue and run-rate SG&A meeting guidance, and gross margin exceeding the high end. The company is focusing on strategic priorities, including refocusing on-demand talent, scaling consulting, pursuing AI, and streamlining operations, with initial investments for FY27 largely complete. While market conditions show some stability, the company continues to navigate revenue declines and aims for improved efficiency and long-term growth.

    Highlights

    5

    • Consolidated revenue and run rate SG&A expense were both within outlook ranges, while gross margin beat the high end of the range.

    • Run rate SG&A expense improved 12% year-over-year to $40.5 million.

    • The company ended the quarter with $82.4 million of cash and cash equivalents and no outstanding debt.

    • 95% of customers indicated their intent to increase or maintain their level of engagement based on a recent survey.

    • North America's revenue was flat on a GAAP basis compared to the prior quarter.

    Concerns

    5

    • Consolidated revenue for the quarter was $106.1 million, representing an 18.3% decline on a same-day constant currency basis compared to the prior year quarter.

    • Adjusted EBITDA for the quarter was negative $0.6 million.

    • Gross margin for the fourth quarter was 37.6% compared to 40.2% in the prior year.

    • Consulting revenue was down 23% year-over-year, with segment adjusted EBITDA at 6.3% compared to 16.3% in the prior year.

    • Europe and Asia Pacific revenue was down 14% year-over-year, with segment adjusted EBITDA at 2.1% compared to 9% in the prior year.

    Guidance & targets

    7
    CategoryTargetConfidence
    First quarter revenue
    $97 million to $102 million
    high materiality
    High
    First quarter gross margin
    37% to 38%
    medium materiality
    High
    First quarter run-rate SG&A expense
    $41 million to $43 million
    medium materiality
    High
    First quarter non-run rate and non-cash expense
    $2 million to $3 million
    low materiality
    High
    Completion of FY27 strategic investments
    Largely complete
    high materiality
    High
    Payoff of FY27 strategic investments
    Drive revenue growth
    high materiality
    Medium
    Long-term incremental margin
    6% to 8%
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    On-Demand Talent
    Revenue decline is on a same-day constant currency basis compared to the prior year quarter. Segment adjusted EBITDA margin was 12.1% in the prior year quarter.
    Segment adjusted EBITDA: $3.1 millionAverage bill rate: $145 (up from $143 a year ago)
    		$40.4 million-18%—7.6%
    Consulting
    Revenue decline is on a same-day constant currency basis compared to the prior year quarter, which continued to pressure utilization and therefore gross margin and segment EBITDA. Segment adjusted EBITDA margin was 16.3% in the prior year quarter.
    Segment adjusted EBITDA: $2.3 millionAverage bill rate: $163 (up from $159 a year ago)
    		$36.6 million-23%—6.3%
    Europe and Asia Pacific
    Revenue decline is on a same-day constant currency basis compared to the prior year quarter. Europe continued to experience choppiness in project timing at several large clients. Segment adjusted EBITDA margin was 9% in the prior year quarter.
    Segment adjusted EBITDA: $0.4 millionAverage bill rate: $57 (down from $64 last year on a constant currency basis)
    		$17.1 million-14%—2.1%
    Outsourced Services
    Revenue decline is on a same-day constant currency basis compared to the prior year quarter. Segment adjusted EBITDA margin was 27.8% in the prior year quarter.
    Segment adjusted EBITDA: $2.1 million
    		$10.3 million-1.6%—20.2%

    Operational metrics

    12
    Consolidated revenue
    $106.1 million-18.3% YoY
    Q4 FY26

    Consolidated revenue for the fourth quarter.

    Adjusted EBITDA
    -$0.6 million
    Q4 FY26

    Adjusted EBITDA for the quarter.

    Gross margin
    37.6%down from 40.2% YoY
    Q4 FY26

    Gross margin for the fourth quarter, primarily reflecting less favorable leverage of indirect cost of services and lower consultant utilization.

    Run-rate SG&A expense
    $40.5 million-12% YoY
    Q4 FY26

    Run-rate SG&A expense, reflecting the benefit of cost actions executed over the past fiscal year.

    Non-run rate SG&A expense
    $14.1 million
    Q4 FY26

    Non-run rate SG&A expense, primarily related to the Sitrick divestiture and employee termination costs.

    Cash and cash equivalents
    $82.4 million
    Q4 FY26

    Cash and cash equivalents at the end of the quarter.

    Outstanding debt
    $0
    Q4 FY26

    No outstanding debt at the end of the quarter.

    Quarterly dividend payments
    $2.3 million
    Q4 FY26

    Total dividend payments for the quarter, representing a 6% annualized yield based on stock price at quarter end.

    Share repurchase authorization remaining
    $79.2 million
    Q4 FY26

    Amount remaining available under the share repurchase program at quarter end.

    Consulting utilization rate
    low 60s
    Q4 FY26

    Current utilization rate for salary consultants in the Consulting segment.

    Target Consulting utilization rate
    above 75% to 80%
    Long-term

    Target utilization rate for full-time delivery consultants, which would improve gross margin by over 200 basis points.

    Enterprise-wide average bill rate
    $120vs $125 a year ago
    Q4 FY26

    Enterprise-wide average bill rate on a constant currency basis, reflecting geographic mix of revenue.

    Industry KPIs

    1
    MetricValueDetails
    Retention rate95%%

    Deals & partnerships

    2
    SitrickDivestiture of Sitrick to simplify business and reduce cost structure.

    Additional step taken to simplify the business and further reduce cost structure.

    Not specified (bank group)Replacement of previous credit facility with a new revolving credit facility.

    Designed to provide increased flexibility within the covenant structure and better align to capital needs, especially with respect to shareholder returns (dividend and share repurchases).

    Risks & headwinds

    3
    Weakness in European marketsQ4 FY26

    Europe and Asia Pacific revenue down 14% year-over-year; Europe experienced some choppiness in the timing of projects at several large clients.

    Mitigation: Trends appear to be non-systemic situations within specific clients rather than larger economic or geopolitical issues.

    Longer sales cycle for Consulting dealsOver the last two quarters or more

    Sales cycle has gotten longer, especially as the company focuses on selling more Consulting work.

    Mitigation: Focus on accelerating the ramp of recently hired go-to-market professionals and strengthening sales execution under new sales leadership.

    Lower consultant utilization in Consulting segmentQ4 FY26

    Consulting utilization rate is in the low 60s%.

    Mitigation: Target utilization rate for full-time delivery consultants is above 75% to 80%, which would improve gross margin by over 200 basis points.

    What to watch in Q1 FY27

    5

    Revenue

    Q1 FY27
    Current$106.1 million
    Target$97 million to $102 million

    Why it matters

    To assess if the company can stabilize revenue and meet its short-term outlook despite ongoing market challenges🌐 and divestiture impact.

    We expect first quarter revenue to be relatively consistent with fourth quarter levels, adjusting for normal summer seasonality and the impact of the Sitrick divestiture. As a result, we expect revenue in the range of $97 to $102 million.

    Q&A highlights

    7

    How far along are the four strategic priorities (refocusing on-demand talent, scaling consulting, pursuing AI, streamlining operations), and what percentage complete are they?

    Roger Carlile stated that most of these initiatives are ongoing, but the initially planned investments for FY27 are largely complete. He expects these investments to pay off in the latter half of the year.

    “for FY'27, we are basically complete with those investments. Now we need to see those pay off, we expect that to occur in the latter half of the year.”

    asked by Joe Gomes · answered by Roger Carlile

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Priorities & Investments

    RGP is executing on four strategic priorities: refocusing on-demand talent segment offerings, scaling the consulting segment, pursuing AI as both a client service and internal opportunity, and streamlining operations. The company has completed the initially planned level of investment for FY27 to support these goals, including adding 7 new sales professionals and additional senior professionals to the Consulting segment. These investments are expected to drive revenue growth in the latter half of the year as they mature through their anticipated ramp-up period.

    02

    Market Conditions & Customer Feedback

    Global market conditions are broadly consistent with the prior quarter, with North America revenue flat on a GAAP basis quarter-over-quarter, though modestly down when adjusting for business days and currency fluctuations. Europe experienced choppiness due to client-specific issues, while Asia Pacific performed in line with expectations. A recent voice of the customer survey indicated that 95% of clients intend to increase or maintain engagement, with RGP rated strong against staffing competitors but needing work against larger traditional consultancies.

    03

    Cost Management & Efficiency

    RGP has largely completed significant cost actions over the past fiscal year, resulting in a 12% year-over-year improvement in run-rate SG&A. Additional cost reduction initiatives are planned for FY27, focusing on simplifying operations through process and technology modifications, which have longer implementation periods. Non-run rate charges are expected to normalize📎 to $2 million to $3 million per quarter, primarily consisting of non-cash stock compensation and amortization.

    04

    AI Strategy

    AI is an important strategic priority for RGP, seen as fundamentally changing how work gets done across finance, risk, technology, and transformation. The company's approach is practical and disciplined, focusing on improving internal productivity and accelerating delivery, while building AI-enabled solutions, talent, and partnerships for clients. RGP believes the greatest value will come from combining AI with deep functional expertise and strong governance, enabling responsible AI adoption and measurable business outcomes.

    05

    Capital Allocation & Liquidity

    The company maintains a strong balance sheet with $82.4 million in cash and no outstanding debt. A new revolving credit facility was established to provide increased flexibility within its covenant structure and better align with capital needs, particularly for shareholder returns. RGP plans a balanced approach to capital allocation, investing in the business for long-term growth while returning capital through dividends and opportunistic share repurchases, with $79.2 million remaining under the share repurchase program.

    AI-generated summary of the company’s earnings call. Not investment advice.