Resources Connection Inc. (NASDAQ: RGP), which operates as RGP, yesterday reported revenue declined by 19.2% on a constant currency basis to $163.1 million in its fiscal second quarter ended 25 November 2022. 

The decrease reflected the impact of a persistently challenging macroeconomic environment.

Gross margin was 38.9% compared to 41.1% in the second quarter of fiscal 2023. The reduction in gross margin was due to a higher pay/bill ratio and a spike in healthcare costs that contributed approximately 130-basis points of adverse impact.

Net income was $4.9 million (net income margin of 3.0%), compared to $17.4 million (net income margin of 8.7%) in the prior year quarter, due primarily to lower gross profit resulting from the overall macro-environment. The company reported an adjusted EBITDA margin of 9.8% in the second quarter of fiscal 2024 compared to 14.8% in the prior year comparable quarter.

Revenue by Geography

“We are pleased to deliver top line revenue and SG&A results toward the favourable end of our outlook ranges provided in October,” said Kate W. Duchene, CEO. “We worked diligently throughout the quarter to extend engagements and close new business in a persistently uncertain macro environment. In general, clients continued to take longer to approve budgets and green light significant new projects so we are staying very close to be ready when the pent-up demand releases.”

“Given our strong client retention and the depth of conversations we are having with our largest clients, we are cautiously optimistic that the buying environment and our own revenue growth will improve in calendar 2024,” Duchene said. “In the meantime, we are laser focused on expanding our consulting capabilities in digital transformation and technology services, extending offshore talent strategies by building Centres of Excellence in India and the Philippines to blend project teams, and delivering on our technology transformation project to drive even better operating efficiency, all of which will position the Company for strength as economic conditions gradually recover.”

Resources Connection shares closed at $13.69, down 2.07% on the day and 5.31% above its 52-week low of $13.00, set on 5 October 2023. The company has a market cap of $461.32 million.