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Resources Connection revenue falls in ‘tepid’ environment

Resources Connection revenue falls in ‘tepid’ environment

July 19, 2024
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Resources Connection (NASDAQ: RGP) broader economic trends in its fiscal fourth quarter resulted in a “tepid demand environment” and clients were cautious when it came to spending. But the Irvine, California-based firm said revenue and gross margin were above the high end of guidance.

The professional staffing provider reported revenue fell 19.6% year over to $148.2 million its fiscal fourth quarter ended May 25. The decrease was on a constant currency, same-day basis.

“We are pleased to see stabilization in the business in the fourth quarter enabling us to deliver results above our outlook ranges, which is a testament to our people and their tenacity in a time of macro environment challenge,” CEO Kate Duchene said in a press release.

Billable hours fell by 13.0% and the average bill rate declined by 7.0%, according to the company. The decline in average bill rate reflected both a more competitive pricing environment and a shift in revenue mix to the Asia Pacific region which typically has a lower bill rate. In the US, the average bill rate rose by 1.3% year over year.

Resources Connection – Q4 2024

(US$ thousands)

Q4 2024

Q4 2023

% change

% constant currency, billing day adjusted

Revenue

148,198

184,449

-19.7%

-19.6%

Gross profit

59,583

75,718

-21.3%

-

Gross margin

40.2%

41.1%

-

-

Net income

10,472

11,768

-11.0%

-

Revenue by geography

(US$ thousands)

Q4 2024

Q4 2023

% change

% constant currency, billing day adjusted

North America

126,554

160,999

-21.40%

-21.60%

Europe

8,518

10,757

-20.80%

-22.80%

Asia Pacific

13,126

12,693

3.40%

8.80%

Full-year results

(US$ thousands)

FY 2024

FY 2023

% change

% constant currency, billing day adjusted

Revenue

632,801

775,643

-18.40%

-18.80%

Gross profit

246,068

313,142

-21.40%

-

Gross margin

38.90%

40.40%

-

-

Net income

21,034

54,359

-61.30%

-

Share price

Resources Connection shares closed at $10.62, 9.48% above its 52-week low of $9.70, set on 9 July 2024. The company has a market cap of $370.87 million.