Resources Connection, Inc.

What they do

RGP operates four reporting units: On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services (Countsy by RGP). It serves more than 1,500 clients with roughly 3,000 professionals engaged from 35 physical practice offices and multiple virtual offices, and states it has served 90% of the Fortune 100 as of May 2026. The firm derives revenue primarily from billable hours of consultants on client projects in North America, Europe and Asia Pacific. It divested its Sitrick crisis communications business on May 2, 2026.

Revenue drivers

• On-Demand Talent — Supplies agile project consultants, predominantly to the office of the CFO; management cites softer demand in traditional operational accounting skills in this segment.
• Consulting — Delivers transformation projects across finance, technology and digital, risk and compliance, and operational performance; the company is integrating acquired consulting assets such as Reference Point into one unit and cites longer sales cycles for projects.
• Europe & Asia Pacific — Geographically defined segment offering both on-demand and consulting services; management said Europe showed some weakness in the fourth quarter while Asia performed as expected.
• Outsourced Services (Countsy by RGP) — Provides outsourced finance, accounting and HR services to startups, spinouts and scale-up enterprises using a technology platform and fractional team; the company aims to expand Countsy beyond the start-up ecosystem into spin-outs and carve-outs.

Recent performance

Fiscal 2026 revenue was $452.0 million versus $551.3 million in fiscal 2025, with fourth-quarter revenue of $106.1 million versus $139.3 million. Fourth-quarter gross margin fell to 37.6% from 40.2%, and full-year gross margin was 37.5% versus 37.6%. Full-year net loss improved to $40.6 million (diluted loss per share of $1.21) from a $191.8 million net loss ($5.80 per share), and fourth-quarter net loss improved to $16.1 million from $73.3 million. Adjusted EBITDA for fiscal 2026 was $5.0 million (1.1% margin) versus $23.5 million (4.3% margin); fourth-quarter Adjusted EBITDA was $(0.6) million, and full-year operating cash flow was $1.4 million.

Strategy

Management's stated fiscal 2026 priorities were expanding cross-sell across On-Demand Talent, Consulting and Outsourced Services; scaling Consulting and refocusing On-Demand offerings; improving cost structure and simplifying the portfolio; and using value-based pricing to improve profitability. The company completed the integration of consulting assets including Reference Point, invested in sales capacity, and expanded capabilities in M&A, data analytics and AI. It sold Sitrick on May 2, 2026 to simplify the portfolio, and in the fourth quarter incurred severance and stock-based compensation tied to that sale and the separation of its former COO. Management says it continues to expect recent investments to drive revenue growth as they mature through an anticipated ramp-up period.

Risks

• Revenue decline and demand softness — Fiscal 2026 revenue fell to $452.0 million from $551.3 million, with the company citing softer demand in traditional operational accounting skills and longer Consulting sales cycles.
• Margin and utilization pressure — Fourth-quarter gross margin declined to 37.6% from 40.2% as lower consultant utilization and negative operating leverage outweighed a 31 basis point improvement in pay/bill ratio.
• Macroeconomic and tariff exposure — The 10-K risk factors cite slower growth or recession, inflation, elevated interest rates, geopolitical conflict, and new or increased U.S. tariffs against China, Mexico, Canada and other countries as factors that can reduce client spending on discretionary projects.
• Talent attraction and retention — The 10-Q risk factors include the loss of a significant number of consultants or an inability to attract and retain new consultants, and the loss of services of key senior management or key sales professionals.

Outlook

CEO Roger Carlile said fourth-quarter results were aligned with the company's outlook for revenue, gross margin, and run-rate SG&A expense. He said market conditions were broadly consistent with the third quarter, with North America and Asia performing as expected and Europe exhibiting some weakness. Priorities remain refocusing On-Demand Talent offerings, scaling Consulting, pursuing AI as both a client-service and internal opportunity, streamlining operations, and aligning cost structure with revenue levels. Management continues to expect recent investments to drive revenue growth as they mature through an anticipated ramp-up period.