Resources Connection cites ‘choppy demand environment’ in Q1
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A difficult environment weighed on revenue as clients remained in a holding pattern, Resources Connection (NASDAQ: RGP) reported. Revenue fell 19.5% in its fiscal first quarter ended Aug. 24. The firm also announced a brand refresh and reorganized its business segments. The company’s operating subsidiary, RGP, is now positioned as a parent company to three brands:
- On-Demand by RGP, which provides on-demand talent.
- Veracity by RGP, representing the firm’s consulting business.
- Countsy by RGP, the company’s outsourced services offering, which includes accounting and HR.
“Our new organizational structure and intentional brand architecture create a unified ecosystem that better showcases the full value that RGP brings to our stakeholders,” CEO Kate Duchene said in a press release.
Resources Connection announced the brand refresh on Oct. 1 and earnings for its fiscal first quarter in a separate press release.
The 19.5% decrease in revenue to $136.9 million was 19.1% when measured on a constant currency, billing-day adjusted basis.
“These declines reflected a persistently choppy demand environment driven by broader economic trends,” according to the company. “Clients continue to be in a holding pattern, restrained in their decision to move forward with transformation projects which has resulted in extended timelines for opportunities to close in the pipeline.”
Billable hours decreased by 15.3% during the first quarter, and the average bill rate fell by 5.0% (or 4.7% on a constant currency basis).
Resources Connection noted the decline in the average bill rate reflects a shift in the revenue mix in the Asia Pacific region, which typically carries a lower average bill rate. US and Europe average bill rates increased by 2.3% and 4.6%, respectively (up 2.3% and 4.5% on a constant currency basis).
Gross margin narrowed to 36.5% in the first quarter, and the company posted a net loss of $5.7 million. A goodwill impairment charge of nearly $3.9 million in the first quarter of 2025 was related to the Europe Asia Pacific segment.
Resources Connection - Q1 2025
(US$ thousands) | Q1 2025 | Q1 2024 | % change | % constant currency, billing day adjusted |
Revenue | 136,935 | 170,169 | -19.5% | -19.1% |
Gross profit | 49,987 | 67,001 | -25.4% | - |
Gross margin | 36.5% | 39.4% | - | - |
Net loss/net income | -5,707 | 3,117 | nm | - |
Revenue by segment
(US$ thousands) | Q1 2025 | Q1 2024 | % change | % constant currency, billing day adjusted |
On-demand talent | 52,473 | 77,974 | -32.7% | -32.5% |
Consulting | 55,025 | 56,845 | -3.2% | -3.0% |
Europe & Asia Pacific | 17,983 | 23,267 | -22.7% | -20.8% |
Outsourced services | 9,491 | 9,418 | 0.8% | 0.8% |
All other | 1,963 | 2,665 | -26.3% | -26.3% |
Share price
Shares in Resources Connection were down 10.77% to $8.45 as of noon Eastern time today. They set a new 52-week low today when they reached $8.45.