Resources Connection NASDAQ: RGP executives told investors the company’s fiscal third-quarter results were in line with prior expectations and highlighted continued progress on a multi-part turnaround plan aimed at stabilizing revenue, simplifying operations, and returning the business to growth in fiscal 2027.
On the earnings call covering the quarter ended Feb. 28, 2026, CEO Roger Carlile said he remained “optimistic regarding the future of our business” five months into the role, citing what he described as strong client relationships, employee quality, and service offerings. Carlile reiterated that RGP’s three delivery modes—on-demand talent, consulting, and managed services—represent a “competitive differentiator.”
Quarterly results track outlook; adjusted EBITDA negative
CFO Jen Rue said consolidated revenue and gross margin were within the company’s outlook, while run-rate SG&A expenses were “better than expected.” Adjusted EBITDA for the quarter was -$1.4 million.
Rue reported consolidated revenue of $107.9 million, representing a 19.6% decline on a same-day constant currency basis compared to the prior year. Gross margin was 35.7%, up from 35.1% in the year-ago quarter. Rue attributed the gross margin improvement to “modest enhancement in paid-to-bill ratio” and favorable consultant benefit costs, including “lower healthcare expenses and fewer holidays during the quarter.”
Enterprise-wide average bill rate was $120 on a constant currency basis, compared to $123 a year ago, which Rue said primarily reflected a revenue mix shift toward the Asia Pacific region. By segment, average bill rates rose in on-demand talent and consulting.
Strategic priorities: hires, consulting integration, portfolio simplification
Carlile said the company remains focused on four strategic priorities:
- Refocusing the on-demand talent segment
- Scaling the consulting segment
- Simplifying how RGP operates
- Aligning the cost structure with current revenue levels
Management pointed to targeted hiring as a key component of its plan. Carlile said RGP made “focused hires” in both the on-demand talent and consulting segments, which it expects to “drive revenue growth as they ramp up.” He also highlighted two additions to the executive leadership team: Jessica Block as Chief Artificial Intelligence Officer and Prashant Lamba as Chief Information Officer. Carlile said Block will focus on building “real AI capability across the firm,” while Lamba’s mandate extends beyond traditional IT to simplifying how employees engage with technology and strengthening operational performance.
On the on-demand talent business, Carlile said RGP added new sales leadership in the Central and Northeastern U.S. regions, with anticipated additions in the Southeastern U.S. and Mexico regions. He said the company is also adding sales professionals across North America and expanding on-demand capabilities in areas including ERP, finance transformation, data, supply chain, and AI.
Within consulting, Carlile said RGP has “completed the significant organizational and operational aspects of integrating” legacy consulting units—previously operated as three distinct practices—into a single cohesive segment led by Scott Rotman. The integration is expected to be completed by the end of the fiscal year in May, with the go-to-market strategy focused on client needs “at the intersection of the modern CFO and CIO.”
As part of its simplification effort, Carlile said RGP signed a binding agreement to dispose of the Sitrick crisis communications business. Rue later described Sitrick as approximately “$9-ish million on an annual basis” in revenue and said the disposal is not expected to have a material profitability impact.
Cost actions drive lower SG&A; savings partly reinvested
Rue said RGP launched an organization-wide review to simplify the business and align costs with current revenue levels, including an additional reduction in force in January. Combined with prior actions in fiscal 2026, the company expects $12 million to $14 million in total annualized cost savings, with a portion “selectively reinvested to support growth in fiscal 2027.”
Enterprise run-rate SG&A expenses were $39.4 million, down from $43.7 million a year ago, a 10% improvement. Rue said about $2 million of the improvement came from lower management compensation tied to structural headcount reductions and the partial impact of January’s action. The remaining improvement came from “disciplined spending” across travel, occupancy, and professional services.
Segment performance mixed; stabilization signs in on-demand talent
Rue said on-demand talent showed “continued signs of revenue stabilization,” with a moderating year-over-year decline. Segment revenue was $40.9 million, down 16.3% year-over-year. Despite the decline, segment adjusted EBITDA rose to $2.9 million (a 7% margin) from $2.6 million (a 5.5% margin) a year ago, driven by improved bill rates, lower sales and talent headcount, and cost discipline.
Consulting revenue was $36.9 million, down 32.5% year-over-year. Rue said longer sales cycles pressured utilization, gross margin, and segment EBITDA. Segment adjusted EBITDA fell to $1.7 million (a 4.6% margin) from $5.9 million (an 11.2% margin) a year ago. Still, Rue said the company expects integration and leadership onboarding to contribute to “more consistent conversion and improved utilization” as it moves through fiscal 2027.
In Europe and Asia Pacific, revenue was $18.1 million versus $18.6 million a year ago, a 5.8% decline on a same-day constant currency basis. Rue said the segment’s go-to-market activities remained healthy and cited solid year-over-year growth in Japan, India, and the Netherlands, while quarterly revenue was impacted by the timing of project starts at a handful of clients. Segment adjusted EBITDA was $0.8 million in both periods.
Outsource services revenue was $9.5 million, down 1.7% on a same-day basis, with segment adjusted EBITDA of $1.4 million (a 15.1% margin) compared to $1.5 million (a 15.9% margin) a year ago.
Outlook: Q4 revenue expected down; management points to fiscal 2027 growth
Rue said early fourth-quarter weekly revenue trends were tracking below third-quarter levels. For fiscal Q4, RGP expects revenue of $104 million to $109 million and growth margin of 36.5% to 37.5%. Run-rate SG&A is expected to be $39 million to $41 million, reflecting further realization of cost savings “largely offset by reinvestments.”
Rue also guided to $13 million to $15 million of non-run-rate and non-cash expenses, primarily related to charges associated with the Sitrick disposition, separation costs tied to the COO departure, and non-cash stock compensation expense.
On liquidity, Rue said RGP ended the quarter with $82.8 million in cash and cash equivalents and no outstanding debt. Dividend payments totaled $2.3 million for the quarter, which she said represented a 7.4% annualized yield based on the stock price at quarter end. Rue added that $79 million remained available under the company’s share repurchase program, though management said it is still assessing the timing of buybacks as it evaluates liquidity and reinvestment needs.
In Q&A, Rue confirmed there was no M&A revenue in the quarter, and said the top end of the Q4 revenue range implies about a 16% year-over-year decline on an organic constant currency same-day basis.
Carlile told analysts he believes fiscal 2027 will show top-line growth versus fiscal 2026, with improvement more likely in the latter half of fiscal 2027 as investments mature. He estimated maturation periods for many hires and initiatives at roughly “6-ish to 9-month” timeframes, while noting some AI-related efforts could move faster.
On AI’s impact, Carlile said AI is currently a “tailwind” for RGP, both for internal efficiency and client work ranging from data preparation to implementation decisions. He acknowledged that some traditional finance roles—particularly operational accounting—have seen reduced demand as clients install AI tools, but said there has been “no acceleration” in that trend versus the prior quarter.
About Resources Connection NASDAQ: RGP
Resources Connection, Inc NASDAQ: RGP is a publicly traded professional services firm that specializes in providing independent consulting and project-based teams to help organizations manage critical business challenges. Operating under the RGP brand, the company connects highly skilled consultants with clients seeking support in areas such as finance and accounting, legal and risk management, supply chain optimization, technology implementation, and digital transformation.
RGP's consultants bring specific industry and functional expertise to engagements, working on a flexible basis that allows clients to scale resources up or down as needed.
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