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Resources Connection (RGP) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Aug 2026 (Q1 FY27)· Industrials· Oct 7, 2026

Source: earnings call transcript

Executive summary

RGP Q1 FY27 — Within outlook, SG&A beat, but revenue and Consulting volume remain depressed

A multi-year demand slump persists: management reports stabilization and healthy pipeline creation, yet conversion to project starts is slow and Consulting utilization is the key weakness. The guide implies no near-term sequential recovery, so the story rests on cost simplification and sales-hire ramp in the second half. Leadership change adds execution uncertainty.

Highlights

4

  • SG&A (run rate/adjusted) came in at $40.3M, a 9.4% improvement YoY and better than the July outlook

  • Strategic client accounts portfolio grew sequentially and performed better than anticipated; North America pipeline creation rose sequentially

  • On-Demand Talent average bill rate rose to $145 from $140; Consulting bill rate rose to $162 from $160

  • Balance sheet: $61.2M cash, no debt, $24.1M available revolver capacity; Outsourced Services stable with revenue up 0.2% YoY

Concerns

5

  • Revenue $98.1M, down 18.5% YoY on a same-day constant currency basis; Adjusted EBITDA negative $3.6M

  • Gross margin 37.4% vs 39.5% a year ago on less favorable indirect cost leverage and lower consultant utilization

  • Consulting revenue $32.4M, down 25.8% YoY and ~11.6% sequentially; billable hours down 27.1%; segment margin 5.1% vs 11.6%

  • Closed-won dollars stagnated and project starts lagged; Q2 revenue guided flat at $95M-$100M with gross margin lowered to 36%-37%

  • CFO transition: Jenn Ryu departed, Jessica Block now Interim CFO

Guidance & targets

CategoryTargetConfidence
Q2 FY27 revenue
$95 million to $100 million
high materiality
High
Q2 FY27 gross margin
36% to 37%
high materiality
High
Q2 FY27 run rate SG&A expense
$40 million to $42 million
high materiality
High
Q2 FY27 non-run rate and noncash expenses
$2 million to $3 million
low materiality
High
Sales hire ramp benefit
Majority of impact in the latter 2 quarters of FY27
medium materiality
Medium
Sequential revenue trend
Bottoming out; some sequential growth expected going forward
low materiality
Low
Additional cost actions / SG&A
Further actions to lower SG&A and improve consulting utilization (unquantified)
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
On-Demand Talent
Decline volume related; pricing solid; bill rate increases exceeded pay rate increases; lower operating leverage drove EBITDA decline.
Average bill rate: $145 vs $140 a year agoAverage bill rate growth: approximately 4.1% YoY
$38.6M-13.2% (same-day constant currency)—Segment adjusted EBITDA $2.1M, 5.3% margin vs $4.4M, 10% margin
Consulting
Lower project volume, slower conversion and reduced utilization drove margin decline.
Billable hours: -27.1% YoYAverage bill rate: $162 vs $160; approximately +2.2%Salaried consultant utilization: high 50s
$32.4M-25.8%approximately -11.6%Segment adjusted EBITDA $1.7M, 5.1% margin vs $5.1M, 11.6% margin
Europe and Asia Pacific
Mixed by market; slower onboarding and delayed starts in some; geographic mix pulls on bill rate.
$17.1M-14%approximately flatSegment adjusted EBITDA near breakeven vs $0.8M, 4.2% margin
Outsourced Services
Prior year had stronger utilization and project-specific factors that did not repeat.
$10.0M+0.2%—Segment adjusted EBITDA $1.5M, 15.3% margin vs $2.3M, 23.3%

RGP operating KPIs by quarter

RGP operating KPIs stated on its earnings calls, by fiscal quarter
KPI May 2026 Q4 FY26This call Aug 2026 Q1 FY27Change vs prior quarter
Average bill rate
$120 Enterprise-wide average bill rate was $120 on a constant currency basis compared to $125 a year ago, with results reflecting the geographic mix of revenue during the quarter, including a greater contribution from the Asia-Pacific region. Source: earnings call transcript
$114 Enterprise-wide average bill rate was $114 on a constant currency basis compared with $121 a year ago. Source: earnings call transcript
-5%
Average bill rate On-Demand Talent
$145 On-Demand Talent's average bill rate grew to $145 from $143 a year ago, while Consulting's average bill rate grew to $163 from $159. Source: earnings call transcript
$145 On-Demand Talent average bill rate increased to $145 from $140 a year ago, while consulting increased to $162 from $160. Source: earnings call transcript
0%
Average bill rate Consulting
$163 On-Demand Talent's average bill rate grew to $145 from $143 a year ago, while Consulting's average bill rate grew to $163 from $159. Source: earnings call transcript
$162 On-Demand Talent average bill rate increased to $145 from $140 a year ago, while consulting increased to $162 from $160. Source: earnings call transcript
-0.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Sitrick Divestiture of Sitrick business

Divested May 2026.

Risks & headwinds

Prolonged weak demand and slow conversion of pipeline into project starts Near term / Q2 FY27

Revenue -18.5% YoY; Q2 guided $95M-$100M, flat vs Q1

Mitigation:Sales hires, pipeline management, strategic account focus

Low Consulting utilization and margin compression Ongoing

Consulting revenue -25.8% YoY; hours -27.1%; margin 5.1% vs 11.6%; salaried utilization high 50s

Mitigation:Improved staffing and resource management; align capacity with demand

Gross margin pressure Q2 FY27

37.4% vs 39.5%; Q2 guide 36%-37% including Thanksgiving

Mitigation:Utilization improvement; cost alignment

Leadership transition (interim CFO) Ongoing

Not quantified

Mitigation:Jessica Block interim CFO; Trisha Jenks promoted to CAO

Cash drawdown and negative EBITDA Ongoing

Cash $61.2M; adjusted EBITDA -$3.6M; dividends $2.4M per quarter

Mitigation:No debt; $24.1M revolver availability

What to watch in Q2 FY27

Q2 revenue vs guide

Q2 FY27
Current Q1 revenue $98.1M
Target Within $95M-$100M; sequential growth signs

Why it matters

Tests whether activity is truly bottoming

We expect second quarter revenue to be broadly consistent with first quarter levels, ranging from $95 million to $100 million.

Find out whether RGP delivers this. Inve re-checks your case every morning.

Q&A highlights

After a multiyear decline with no improvement in Q2 guide, when does recovery come?

Carlile acknowledged the elongated downturn, said competitors face similar conditions, and said activity appears to be bottoming with some sequential growth expected, though uncertain.

“It remains to be seen if that plays out that way, but it feels like we're experiencing that type of environment.”

asked by Joseph Gomes · answered by Roger Carlile

2 min read 7 chapters

Detailed narrative

Q1 results vs outlook

Revenue and gross margin landed within the July outlook ranges, while run rate SG&A beat. Management called the quarter in line with expectations and normal summer seasonality. Consulting volume and utilization were the largest source of revenue pressure; On-Demand Talent volume was also lower, and Outsourced Services was stable.

Demand environment

Conditions are mixed: demand for finance, risk, technology, data, AI and transformation expertise persists, but clients scrutinize discretionary spend, lengthen approvals, phase large programs, and delay starts. North America pipeline creation rose sequentially, including Consulting, but closed-won dollars stagnated and starts did not support sequential revenue growth. Strategic client accounts grew sequentially and beat expectations.

On-Demand Talent execution

The challenge is volume, not rate. Management added sales capacity, clarified regional accountability, aligned talent with sales leadership, added training and is rebuilding metrics (request volume, response speed, submissions, fill rates, time to fill). Sales hires from the first half of calendar 2026 are ramping, with some early wins, and more business development investment is underway.

Consulting segment and utilization

Consulting is the most urgent area of work, with lower project volume, slower conversion, and project completions. Salaried consultant utilization was in the high 50s, similar to or slightly lower than last quarter's low 60s per the analyst. Management will align capacity with demand and act where capacity lacks a credible pipeline. Wins spanned technology, data, finance transformation, supply chain and transaction work.

Cost structure and operating model

Fiscal 2026 cost actions reduced employee-related and corporate spend. Management plans a simpler, more scalable model: clearer roles, less duplication, better systems, aligned incentives, and more technology use, while retaining targeted client-facing investment. Cost actions may both lower SG&A and lift gross margin via utilization.

Leadership transition and AI

Jenn Ryu left after 6.5 years as CFO; Jessica Block (Chief AI Officer since March) is Interim CFO, and Trisha Jenks was promoted to Chief Accounting Officer. AI is a strategic priority both as a client offering and for internal productivity, including finance and accounting processes.

Balance sheet and divestiture effects

Cash declined sequentially on annual bonus payments, nonrecurring executive transition and restructuring costs, and operating results. Enterprise bill rate comparisons are affected by the May 2026 divestiture of Sitrick (higher bill rate) and a greater Asia Pacific mix, so YoY enterprise comparisons are not like-for-like.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.