Resources Connection's Consulting Collapse Widens Loss
First-quarter fiscal 2027 revenue was $98.1 million, down 18.4% on a same-day constant-currency basis, and adjusted EBITDA swung to a $3.6 million loss.
Resources Connection, Inc. (RGP), a Dallas-based professional services firm, reported first-quarter fiscal 2027 revenue of $98.1 million, down 18.4% on a same-day constant-currency basis from $120.2 million a year earlier.
The decline extended a three-quarter run of year-over-year contraction. In the quarter ended May 30, 2026, revenue was $106.1 million, down 18.3% on the same footing. Sequential same-day constant-currency revenue was $97.3 million.
Billable hours fell 13.2% year over year and the average bill rate declined 5.8%, or 5.6% in constant currency. The hours drop reflected longer client decision cycles, delayed project starts, and lower Consulting volume, with On-Demand Talent demand still below prior-year levels but showing signs of stabilization. The rate decline reflected a geographic mix shift toward lower-rate regions and the May 2026 sale of Sitrick Group.
Consulting was the steepest break. Segment revenue was $32.4 million, down 25.8% (26.2% constant currency), on a 27.1% drop in billable hours partly offset by a 2.2% rise in the average bill rate. Clients remained cautious about new projects. Consulting adjusted EBITDA was $1.7 million, or 5.1% of segment revenue.
On-Demand Talent revenue was $38.6 million, down 13.2% (13.4% constant currency), on a 16.4% drop in billable hours partly offset by a 4.1% (3.9% constant currency) increase in the average bill rate attributed to pricing discipline. Segment adjusted EBITDA was $2.1 million, or 5.3% of revenue.
Europe & Asia Pacific revenue was $17.1 million, down 13.9% (13.3% constant currency), on a 12.2% (9.8% constant currency) drop in the average bill rate from a mix shift to lower-cost Asia Pacific markets and a 1.3% drop in hours. Segment adjusted EBITDA was a $0.1 million loss. Outsourced Services revenue was $10.0 million, with hours up 4.9% and the rate down 1.0%; segment adjusted EBITDA was $1.5 million, or 15.3% of revenue. All Other revenue was zero after the Sitrick sale and the segment’s elimination as of May 30, 2026.
Gross margin compressed to 37.4% from 39.5%, primarily due to lower utilization of salaried consultants; the pay/bill ratio declined 70 basis points.
GAAP SG&A improved to $43.1 million, or 43.9% of revenue, from $47.9 million, or 39.9% of revenue. Adjusted SG&A improved to $40.3 million from $44.5 million. The $4.8 million GAAP improvement came mainly from a $2.5 million cut in employee compensation after fiscal 2026 reductions in force, a $0.9 million drop in stock-based compensation after executive separations, a $1.2 million reduction in external and internal consultants, and a $0.5 million cut in facilities costs from exiting offices, partly offset by higher meeting expenses and $0.4 million of restructuring costs.
Net loss widened to $8.0 million, or an 8.1% margin, from $2.4 million, or a 2.0% margin. Diluted loss was $0.23 a share. Adjusted EBITDA was a $3.6 million loss, or a 3.7% margin, versus $3.1 million, or a 2.5% margin.
President and Chief Executive Officer Roger Carlile said first-quarter results were within the revenue and gross-margin ranges communicated in July, with adjusted SG&A better than the outlook, and that revenue and profitability remained below potential, driven primarily by lower Consulting volume and utilization and ongoing caution in client decision-making. He said the company is strengthening sales execution, improving Consulting staffing, and reducing costs, and pointed to disciplined On-Demand Talent pricing, pipeline opportunities, and several strategic client relationships.
Cash and cash equivalents were $61.2 million as of August 29, 2026, down from $82.4 million at May 30, 2026. The company had up to $24.1 million of borrowing capacity under its PNC credit agreement. Cash used in operations was $18.9 million in the three months ended August 29, 2026, versus $7.8 million a year earlier, driven by annual incentive payouts, first-quarter operating results, and executive-transition and restructuring payments. Agile consultant headcount on assignment was 1,976 and average salaried consultant headcount was 373. The company paid a $0.07 a share quarterly dividend, or $2.4 million in the aggregate, on October 1, 2026.