Financial Data and Key Metrics Changes - Revenue for Q1 2026 was reported at $120.2 million, exceeding the high end of the outlook range, with a gross margin of 39.5%, which is 300 basis points higher than the prior year quarter [25][26] - SG&A expenses were $44.5 million, a 7% improvement from $47.7 million a year ago, primarily due to lower management compensation and reductions in other G&A expenses [27][28] - Adjusted EBITDA improved to $3.1 million, representing a 2.5% adjusted EBITDA margin [25] Business Line Data and Key Metrics Changes - Revenue from the on-demand segment was $44.4 million, a decline of 16% year-over-year, but segment-adjusted EBITDA improved to $4.4 million, or a margin of 10% [29] - Consulting segment revenue was $43.6 million, down 22% from the prior year, with segment-adjusted EBITDA at $5 million, or an 11.6% margin [29] - Europe and Asia-Pacific segment revenue grew by 5% year-over-year to $19.9 million, with segment-adjusted EBITDA of $0.8 million, or a 4.2% margin [30] Market Data and Key Metrics Changes - The company reported solid growth in Europe and Asia-Pacific, driven by strong client relationships and effective regional strategies [22][23] - Demand for CFO advisory and digital transformation offerings remains strong, with a focus on combining local delivery with scalable global delivery centers [23] Company Strategy and Development Direction - The company is transforming from a professional staffing organization to a diversified platform that combines on-demand talent with consulting and outsourced services [5][12] - Focus areas include CFO advisory and digital transformation, which are critical for driving client transformation from strategy to execution [5][8] - The company aims to increase its addressable market and improve return for shareholders through enhanced value creation and strategic investments [4][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macro environment remains uncertain, but they are positioning the company for an upturn [3] - The pipeline returned to growth during the quarter, with demand strengthening across CFO advisory and digital transformation [16] - Management expects continued revenue stability in Q2, with a revenue outlook of $115 to $120 million [31][32] Other Important Information - The company has a strong balance sheet with $77.5 million in cash and cash equivalents and no outstanding debt [30] - A reduction in force was implemented to streamline the organizational structure, expected to yield annual cost savings of $6 to $8 million [28] Q&A Session Summary Question: What is the trend in pricing? - Management indicated that while staffing rates have remained steady, there are pricing pressures in consulting, though value-added services are allowing for rate increases on new projects [36] Question: How much of the pipeline is attributed to cross-selling? - The company is still building its pipeline, but there is an increase in $1 million-plus deals, indicating positive momentum in cross-selling efforts [38] Question: Can you break down the revenue guide between segments? - The revenue guide for Q2 indicates continued strength in Europe and Asia-Pacific, while on-demand and consulting segments are expected to perform similarly to Q1 [40][41] Question: What is the general appetite for spending among clients? - Management noted that the environment remains choppy, with some interesting work progressing, but overall client spending appetite has not changed significantly [50][51]

PART I—FINANCIAL INFORMATION [ITEM 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Resources Connection, Inc. for the three months ended August 30, 2025, and August 24, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet Metrics (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | Change | % Change | | :-------------------- | :-------------- | :----------- | :----- | :------- | | Cash and cash equivalents | $77,518 | $86,147 | $(8,629) | -10.0% | | Trade accounts receivable, net | $93,555 | $99,210 | $(5,655) | -5.7% | | Total current assets | $188,248 | $203,686 | $(15,438) | -7.6% | | Total assets | $287,211 | $304,688 | $(17,477) | -5.7% | | Accrued salaries and related obligations | $32,207 | $47,931 | $(15,724) | -32.8% | | Total current liabilities | $58,614 | $75,402 | $(16,788) | -22.3% | | Total liabilities | $80,852 | $97,607 | $(16,755) | -17.2% | | Total stockholders' equity | $206,359 | $207,081 | $(722) | -0.3% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific periods, providing insight into operational performance Consolidated Statements of Operations Metrics (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Gross profit margin | 39.5% | 36.5% | +3.0 pp | | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Goodwill impairment | $0 | $3,855 | $(3,855) | -100.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Basic net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Diluted net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Cash dividends declared per common share | $0.07 | $0.14 | $(0.07) | -50.0% | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the total comprehensive loss, including net loss and other comprehensive income or loss items, for the specified periods Consolidated Statements of Comprehensive Loss Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Foreign currency translation adjustment gain, net of tax | $767 | $831 | $(64) | -7.7% | | Total comprehensive loss | $(1,638) | $(4,876) | $3,238 | -66.4% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and treasury stock Consolidated Statements of Stockholders' Equity Metrics (in thousands) | Metric (in thousands) | Balances at May 31, 2025 | Balances at August 30, 2025 | Change | | :-------------------- | :----------------------- | :-------------------------- | :----- | | Common Stock (Amount) | $370 | $373 | $3 | | Additional Paid-in Capital | $400,180 | $403,673 | $3,493 | | Accumulated Other Comprehensive Loss | $(17,863) | $(17,096) | $767 | | Accumulated Deficit | $(121,575) | $(126,881) | $(5,306) | | Treasury Stock (Amount) | $(54,031) | $(53,710) | $321 | | Total Stockholders' Equity | $207,081 | $206,359 | $(722) | - Key changes in stockholders' equity for the three months ended August 30, 2025, include a **$2.3 million increase** from stock-based compensation expense, **$1.1 million** from ESPP share issuance, a **$2.3 million decrease** from cash dividends, and a **$2.4 million net loss**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities, reflecting the company's liquidity and solvency Consolidated Statements of Cash Flows Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | | Net cash used in operating activities | $(7,832) | $(309) | $(7,523) | | Net cash used in investing activities | $(121) | $(10,924) | $10,803 | | Net cash used in financing activities | $(1,554) | $(7,685) | $6,131 | | Net decrease in cash and cash equivalents | $(8,629) | $(19,267) | $10,638 | | Cash and cash equivalents at end of period | $77,518 | $89,625 | $(12,107) | - The significant increase in cash used in operating activities for Q1 FY2026 was primarily due to a **$15.8 million decrease** in accrued salaries and related obligations, driven by the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) - The substantial reduction in cash used in investing activities in Q1 FY2026 was mainly because the prior year period included a **$23.0 million net cash outflow** for the Reference Point acquisition, partially offset by **$12.3 million** from the sale of the Irvine office building, with no comparable large transactions in the current period[187](index=187&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information regarding the figures presented in the consolidated financial statements [Note 1. Description of the Company and its Business](index=8&type=section&id=Note%201.%20Description%20of%20the%20Company%20and%20its%20Business) This note describes Resources Connection, Inc.'s global professional services offerings and its primary markets of operation - Resources Connection, Inc. (RGP) is a global professional services firm offering On-Demand Talent, Consulting, and Outsourced Services, primarily serving CFOs and C-suite leaders[22](index=22&type=chunk) - The Company's principal markets of operations are North America, Europe & Asia Pacific[22](index=22&type=chunk) - The Company's fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31; fiscal 2026 will consist of **52 weeks**[23](index=23&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The unaudited financial statements are prepared in conformity with GAAP for interim financial information and include all necessary normal recurring adjustments[24](index=24&type=chunk) - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick disclosed under 'All Other'[29](index=29&type=chunk) - Revenue is primarily recognized over time based on hours worked, net of variable consideration, with fixed-price contracts using the input method[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company does not expect ASU 2025-06 (Intangibles — Goodwill and Other — Internal-Use Software) to have a material impact and is evaluating ASU 2025-05 (Financial Instruments – Credit Losses)[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 3. Revenues](index=14&type=section&id=Note%203.%20Revenues) This note provides details on contract assets and liabilities, and revenue recognized from deferred revenue Contract Assets and Liabilities (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | | :-------------------- | :-------------- | :----------- | | Contract assets | $25,100 | $30,700 | | Contract liabilities | $4,500 | $4,300 | Revenue Recognized from Deferred Revenue (in thousands) | Revenue Recognized from Deferred Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue recognized from deferred revenue | $1,800 | $600 | [Note 4. Acquisitions](index=14&type=section&id=Note%204.%20Acquisitions) This note details the acquisition of Reference Point LLC, including the cash consideration, recognized intangible assets, and goodwill - On July 1, 2024, the Company acquired Reference Point LLC, a strategy, management, and technology consulting firm for the financial services sector, for cash consideration of **$23.2 million** (net of cash acquired)[64](index=64&type=chunk) - The acquisition resulted in the recognition of **$15.7 million** in identifiable intangible assets (customer relationships, non-compete, trade name) and **$6.9 million** in goodwill, primarily attributable to expected synergies and the assembled workforce[66](index=66&type=chunk)[68](index=68&type=chunk) Acquisition Costs (in thousands) | Acquisition Costs (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------- | :--------------------------------- | :--------------------------------- | | Acquisition costs | $400 | $1,300 | [Note 5. Goodwill and Intangible Assets](index=15&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) This note provides information on goodwill impairment, allocation, and the net carrying amount and amortization of intangible assets - No goodwill impairment was recorded for the three months ended August 30, 2025. In the first quarter of fiscal 2025, a non-cash goodwill impairment charge of **$3.9 million** was recorded for the Europe & Asia Pacific segment due to a business segment reorganization[70](index=70&type=chunk)[71](index=71&type=chunk) - As of August 30, 2025, all goodwill on the Consolidated Balance Sheet is allocated to the Outsourced Services segment[73](index=73&type=chunk) Intangible Assets (in thousands) | Intangible Assets (in thousands) | August 30, 2025 (Net Carrying Amount) | May 31, 2025 (Net Carrying Amount) | | :------------------------------- | :------------------------------------ | :--------------------------------- | | Customer contracts and relationships | $17,233 | $18,340 | | Trade names | $0 | $50 | | Non-Compete Agreements | $552 | $588 | | Total Intangible Assets, net | $17,785 | $18,978 | Amortization Expense (in thousands) | Amortization Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------- | :--------------------------------- | :--------------------------------- | | Amortization expense | $1,200 | $1,500 | [Note 6. Leases](index=16&type=section&id=Note%206.%20Leases) This note details the components of lease cost, weighted-average lease terms, discount rates, and future operating lease liabilities Lease Cost Components (in thousands) | Lease Cost Components (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating lease cost | $1,774 | $1,727 | | Short-term lease cost | $56 | $79 | | Variable lease cost | $368 | $381 | | Sublease income | $(128) | $(179) | | Total lease cost | $2,070 | $2,008 | - As of August 30, 2025, the weighted-average remaining lease term for operating leases was **6.1 years**, and the weighted-average discount rate was **5.15%**[76](index=76&type=chunk) Future Operating Lease Liabilities (in thousands) | Future Operating Lease Liabilities (in thousands) | Amount | | :------------------------------------------------ | :----- | | 2026 (remaining nine months) | $4,891 | | 2027 | $5,149 | | 2028 | $4,727 | | 2029 | $3,879 | | 2030 | $3,148 | | Thereafter | $8,014 | | Total future lease payments | $29,808 | | Less: interest | $(4,455) | | Present value of operating lease liabilities | $25,353 | [Note 7. Long-Term Debt](index=17&type=section&id=Note%207.%20Long-Term%20Debt) This note describes the Company's new $50.0 million secured revolving credit facility, its maturity, and interest rate terms - On July 2, 2025, the Company entered into a new **$50.0 million** secured revolving credit facility (the '2025 Credit Facility') maturing on November 30, 2029, concurrently terminating the previous 2021 Credit Facility[77](index=77&type=chunk) - As of August 30, 2025, the Company had no debt outstanding under the 2025 Credit Facility and **$49.3 million** of potential remaining capacity, subject to terms and financial covenants[83](index=83&type=chunk) - The 2025 Credit Facility bears interest at Term SOFR plus a margin ranging from **1.25% to 2.50%** or Base Rate plus a margin of **0.25% to 1.50%**, depending on Consolidated EBITDA[79](index=79&type=chunk) [Note 8. Income Taxes](index=18&type=section&id=Note%208.%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and unrecognized tax benefits Income Tax Metrics | Income Tax Metric | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Income tax expense | $0.5 million | $1.1 million | | Effective tax rate | 24.7% | 22.7% | - The effective tax rate was negative in both quarters due to income tax expense measured against consolidated pretax losses, primarily driven by an increase in domestic and foreign valuation allowance in Q1 FY2026 and non-deductible tax adjustment on goodwill impairment in Q1 FY2025[85](index=85&type=chunk) - The Company's total liability for unrecognized gross tax benefits, including accrued interest and penalties, was **$1.1 million** as of August 30, 2025, with no anticipated cash payments within the next 12 months[87](index=87&type=chunk) [Note 9. Stockholders' Equity](index=18&type=section&id=Note%209.%20Stockholders'%20Equity) This note details the remaining availability for stock repurchases and the declared quarterly cash dividends - As of August 30, 2025, approximately **$79.2 million** remained available for future repurchases under the Company's Stock Repurchase Programs, with no shares purchased in Q1 FY2026[89](index=89&type=chunk) - The Board of Directors approved a regular quarterly dividend of **$0.07 per share** for Q1 FY2026, a **50% reduction** from the **$0.14 per share** declared in Q1 FY2025[13](index=13&type=chunk)[90](index=90&type=chunk) [Note 10. Stock-Based Compensation Plans](index=19&type=section&id=Note%2010.%20Stock-Based%20Compensation%20Plans) This note outlines stock-based compensation expense, shares issued under the ESPP, and unrecognized compensation costs for various equity awards Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Stock-based compensation expense | $2,300 | $1,600 | - The Company issued **240,674 shares** under the Employee Stock Purchase Plan (ESPP) in Q1 FY2026, compared to **229,341 shares** in Q1 FY2025, with **589,714 shares** remaining available for issuance[98](index=98&type=chunk) Unrecognized Compensation Costs (in thousands) | Unrecognized Compensation Costs (in thousands) | Amount | Weighted-Average Recognition Period | | :--------------------------------------------- | :----- | :---------------------------------- | | Restricted Stock Awards (RSAs) | $1,900 | 1.53 years | | Equity-classified Restricted Stock Units (RSUs) | $8,100 | 2.07 years | | Liability-classified Restricted Stock Units (RSUs) | $500 | 1.70 years | | Performance Stock Units (PSUs) | $1,200 | 1.75 years | [Note 11. Commitments and Contingencies](index=22&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note addresses the company's legal matters and management's assessment of their potential financial impact - Management believes that all legal matters, if disposed of unfavorably, would not have a material adverse effect on the Company's financial position, cash flows, or results of operations[106](index=106&type=chunk) [Note 12. Segment Information and Enterprise Reporting](index=22&type=section&id=Note%2012.%20Segment%20Information%20and%20Enterprise%20Reporting) This note provides a breakdown of the company's reportable segments, including revenue and Adjusted EBITDA by segment and geographic revenue - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick reported as 'All Other'[109](index=109&type=chunk) Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :----------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $44,442 | $52,473 | $(8,031) | -15.3% | | Consulting | $43,641 | $55,025 | $(11,384) | -20.7% | | Europe & Asia Pacific | $19,888 | $17,983 | $1,905 | 10.6% | | Outsourced Services | $9,994 | $9,491 | $503 | 5.3% | | All Other | $2,264 | $1,963 | $301 | 15.3% | | Total consolidated revenue | $120,229 | $136,935 | $(16,706) | -12.2% | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $4,422 | $2,559 | $1,863 | 72.8% | | Consulting | $5,045 | $7,753 | $(2,708) | -34.9% | | Europe & Asia Pacific | $837 | $227 | $610 | 268.7% | | Outsourced Services | $2,330 | $1,394 | $936 | 67.1% | | All Other | $183 | $(467) | $650 | 139.2% | Geographic Revenue (in thousands) | Geographic Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | United States | $95,556 | $112,452 | | International | $24,673 | $24,483 | | Total | $120,229 | $136,935 | [Note 13. Subsequent Events](index=26&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses a global workforce reduction initiated after the reporting period and its expected financial charges - On September 30, 2025, the Company initiated a global reduction in its management and administrative workforce, expecting estimated charges of approximately **$2.1 million** in Q2 FY2026, primarily for one-time employee termination benefits[116](index=116&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and liquidity and capital resources for the three months ended August 30, 2025, compared to the prior year period. It covers strategic focus areas, market trends, critical accounting policies, non-GAAP financial measures, and a breakdown of operating results by segment and cash flow activities [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding expectations for operating segments, macroeconomic environment, costs, liabilities, business strategies, growth, and future performance, identified by words like 'anticipates,' 'expects,' 'will,' or similar terms[119](index=119&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including economic downturns, market competition, talent retention, and compliance risks[120](index=120&type=chunk) [Overview](index=28&type=section&id=Overview) This section provides a general description of RGP as a global professional services firm and outlines its strategic reorganization and focus areas - RGP is a global professional services firm delivering flexible solutions through on-demand resourcing, strategic and execution consulting, and fully outsourced services, with core capabilities spanning Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance[122](index=122&type=chunk) - In Q1 FY2025, the Company reorganized into distinct business units: On-Demand Talent, Consulting, Europe & Asia Pacific, Outsourced Services, and Sitrick (All Other), focusing on CFO Advisory and Digital, Data and Cloud, and completed technology modernization in North America[123](index=123&type=chunk) [Fiscal 2026 Strategic Focus Areas](index=28&type=section&id=Fiscal%202026%20Strategic%20Focus%20Areas) This section outlines the company's key strategic priorities for fiscal year 2026, including expanding cross-sell opportunities and optimizing high-growth solutions - The Company's fiscal 2026 strategic focus areas include expanding cross-sell opportunities across its diversified services platform (On-Demand Talent, Consulting, Outsourced Services)[124](index=124&type=chunk)[126](index=126&type=chunk) - Other key focus areas are optimizing high-growth solutions (e.g., ERP/cloud finance modernization, AI adoption) and evolving talent strategy, further leveraging value-based pricing, and driving improvement in cost structure[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Market Trends and Uncertainties](index=29&type=section&id=Market%20Trends%20and%20Uncertainties) This section discusses the impact of uncertain macroeconomic conditions on the company's financial results and professional services spending - Uncertain macroeconomic conditions, including ambiguity around interest rates, softening labor markets, currency fluctuations, and policy changes, have created significant uncertainty in the global economy and adversely impacted financial results[130](index=130&type=chunk) - The Company observes caution in professional services spending, and persistent adverse conditions could lead to further declines in billable hours and bill rates[130](index=130&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's critical accounting policies or estimates since the last annual report - There have been no material changes in the Company's critical accounting policies or underlying estimates and assumptions from those described in its Fiscal Year 2025 Form 10-K[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures such as Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to evaluate performance - The Company uses non-GAAP financial measures like Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess financial and operating performance and evaluate revenue trends on a comparable basis[133](index=133&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Non-GAAP Financial Metrics (in thousands, except %) | Non-GAAP Metric (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Same-day constant currency revenue | $117,969 | $136,935 | $(18,966) | -13.9% | | Adjusted EBITDA | $3,065 | $2,320 | $745 | 32.1% | | Adjusted EBITDA Margin | 2.5% | 1.7% | +0.8 pp | | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the consolidated operating results, including revenue, cost of services, gross profit, and selling, general and administrative expenses Consolidated Operating Results (in thousands, except %) | Consolidated Operating Results (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | - Revenue decreased by **12.2%** year-over-year, or **13.9%** on a same-day constant currency basis, primarily due to a **14.3% decline** in billable hours amidst a choppy demand environment, partially offset by a **2.2% increase** in average bill rates[145](index=145&type=chunk) - Cost of services as a percentage of revenue improved to **60.5%** from **63.5%** year-over-year, driven by an improved pay/bill ratio and lower consultant costs[147](index=147&type=chunk) - Selling, general and administrative expenses decreased by **$1.0 million**, primarily due to reduced employee compensation, technology transformation costs, and business support costs, partially offset by the absence of a gain on sale of assets recorded in the prior year[150](index=150&type=chunk) [Operating Results of Segments](index=34&type=section&id=Operating%20Results%20of%20Segments) This section analyzes the revenue and Adjusted EBITDA performance of the On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services segments - On-Demand Talent revenue declined by **15.3%** due to lower demand and a softer labor market, while Adjusted EBITDA increased by **72.8%** due to decreased segment expenses[162](index=162&type=chunk)[167](index=167&type=chunk) - Consulting revenue decreased by **20.7%** due to a **28.4% decrease** in billable hours, despite an **11.1% increase** in average bill rates from value-based pricing, leading to a **34.9% decrease** in Adjusted EBITDA[163](index=163&type=chunk)[168](index=168&type=chunk) - Europe & Asia Pacific revenue increased by **10.6%** (**5.4%** on a same-day constant currency basis), driven by a **9.6% increase** in average bill rates and growing client demand in Europe, resulting in a **268.7% increase** in Adjusted EBITDA[164](index=164&type=chunk)[169](index=169&type=chunk) - Outsourced Services revenue grew by **5.3%** (**3.7%** on a same-day constant currency basis) due to increased billable hours, and Adjusted EBITDA increased by **67.1%** primarily from higher gross profit[165](index=165&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash position, new credit facility, purchase obligations, and future funding outlook - Primary liquidity sources include cash from operating activities and the senior secured revolving credit facility. As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents, with **$41.3 million** held in international operations[172](index=172&type=chunk) - The Company entered into a new 2025 Credit Facility on July 2, 2025, providing a secured revolving loan up to **$50.0 million**, maturing on November 30, 2029, with no debt outstanding as of August 30, 2025[174](index=174&type=chunk)[176](index=176&type=chunk) - Non-cancellable purchase obligations total **$8.5 million**, primarily for licensing arrangements, with **$4.0 million** due in fiscal 2026[178](index=178&type=chunk)[179](index=179&type=chunk) - The Company believes current cash, ongoing cash flows from operations, and the 2025 Credit Facility will provide sufficient funds for working capital and capital expenditure needs for at least the next 12 months, despite macroeconomic uncertainties[181](index=181&type=chunk) [Operating Activities](index=38&type=section&id=Operating%20Activities) This section analyzes the net cash used in operating activities and the primary drivers of changes between periods Cash Flow from Operating Activities (in thousands) | Cash Flow from Operating Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash used in operating activities | $(7,832) | $(309) | - The increase in cash used in operating activities was primarily driven by a **$15.8 million decrease** in accrued salaries and related obligations due to the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) This section details the net cash used in investing activities, highlighting the impact of acquisitions and asset sales Cash Flow from Investing Activities (in thousands) | Cash Flow from Investing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in investing activities | $(121) | $(10,924) | - Net cash used in investing activities significantly decreased from **$10.9 million** in Q1 FY2025 to **$0.1 million** in Q1 FY2026. The prior period included a **$23.0 million net cash outflow** for the Reference Point acquisition and **$12.3 million net proceeds** from the sale of the Irvine office building[187](index=187&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) This section analyzes the net cash used in financing activities, focusing on changes related to dividends and stock repurchases Cash Flow from Financing Activities (in thousands) | Cash Flow from Financing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in financing activities | $(1,554) | $(7,685) | - Net cash used in financing activities decreased significantly, primarily due to lower cash dividend payments (**$2.3 million** vs **$4.7 million**) and the absence of common stock repurchases (**$0** vs **$5.0 million**) compared to the prior year[188](index=188&type=chunk)[189](index=189&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates, and discusses how these risks are managed [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate fluctuations on its cash and borrowings, and the expected impact of rate changes - The Company is exposed to market risks from fluctuations in interest rates affecting its cash and cash equivalents and borrowings under the 2025 Credit Facility[190](index=190&type=chunk) - As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents and no outstanding borrowings under its 2025 Credit Facility, with a **10% decline** in interest rates not expected to materially impact financial position or results[191](index=191&type=chunk)[192](index=192&type=chunk) [Foreign Currency Exchange Rate Risk](index=39&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section details the company's exposure to foreign currency exchange rate fluctuations due to international operations and cash holdings - Approximately **20.5%** of the Company's revenues for Q1 FY2026 were generated outside the U.S., making operating results subject to foreign currency exchange rate fluctuations[193](index=193&type=chunk) - As of August 30, 2025, **53.3%** of cash and cash equivalents were denominated in foreign currencies (Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling)[194](index=194&type=chunk) - The Company does not currently use financial hedges to mitigate foreign currency fluctuation risks, believing its economic exposure has not been material[195](index=195&type=chunk) [ITEM 4. Controls and Procedures](index=41&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by its principal officers - As of August 30, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective[197](index=197&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the fiscal quarter - There has been no material change in the Company's internal control over financial reporting during the fiscal quarter ended August 30, 2025[198](index=198&type=chunk) PART II—OTHER INFORMATION [ITEM 1A. Risk Factors](index=42&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the Company's risk factors since its last annual report - There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A of its Fiscal Year 2025 Form 10-K[200](index=200&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and use of proceeds during the reporting period[201](index=201&type=chunk) [ITEM 5. Other Information](index=42&type=section&id=ITEM%205.%20Other%20Information) This section confirms that there are no other material information or insider trading arrangements to report - There were no insider trading arrangements to report[202](index=202&type=chunk) [ITEM 6. Exhibits](index=43&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference in this Quarterly Report on Form 10-Q, including certifications and financial statements in Inline XBRL format - The report includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and unaudited interim consolidated financial statements formatted in Inline XBRL (Exhibit 101)[204](index=204&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the duly authorized signatures of the Company's President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, affirming the filing of the report - The report is signed by Kate W. Duchene, President and Chief Executive Officer, and Jennifer Ryu, Executive Vice President and Chief Financial Officer, on October 8, 2025[208](index=208&type=chunk)

Resources Connection Reports Financial Results for First Quarter Fiscal 2026 Management Commentary "First quarter results exceeded our outlook ranges on all fronts and we continue to make progress to transform our business to be more integrated, diversified and resilient," said Kate W. Duchene, Chief Executive Officer. "We are engaging with clients on more consulting opportunities which have higher bill rates, larger deal size and often create more extension and cross selling. We are increasingly becoming a ...

Core Insights - Resources Connection, Inc. reported a revenue of $120.2 million for the first quarter of fiscal 2026, a decrease from $136.9 million in the same quarter of the previous year [1] - The same-day constant currency revenue, a non-GAAP measure, declined by 13.9% compared to the prior year quarter [1] - The company achieved a significant improvement in gross margin, increasing to 39.5% from 36.5% [1]

Core Insights - The U.S. stock market showed strong performance on October 8, 2025, with major indexes rebounding from earlier losses, driven by bullish sentiment in the technology sector, particularly artificial intelligence [1][3][12] - The Nasdaq Composite and S&P 500 reached new all-time highs, indicating a focus on corporate developments despite the ongoing government shutdown [1][2] Major Index Performance - The S&P 500 rose by 0.6% to 6,757 points, continuing its winning streak [2] - The Nasdaq Composite increased by 0.7-0.9%, achieving a fresh record, led by large-cap technology stocks [2] - The Dow Jones Industrial Average gained approximately 0.2-0.6%, nearly 100 points, while small-cap stocks in the Russell 2000 added 0.6% [2] Sectoral Insights - The Technology Select Sector SPDR ETF (XLK) showed significant gains, reflecting enthusiasm for AI and innovation-focused companies [4] - The Energy and Real Estate sectors underperformed, while Consumer Staples, Financials, Health Care, Industrials, Materials, and Utilities generally saw gains [4] Upcoming Market Events - Investors are focused on the release of the Federal Reserve's September policy meeting minutes, expected to provide insights into monetary policy and interest rate trajectories [5] - Several Federal Reserve officials are scheduled to speak, with their comments anticipated to offer further clues on economic outlook and policy direction [5] Corporate Developments - Nvidia (NVDA) shares rose between 1.5% and 4.5% as the company invests $2 billion in Elon Musk's AI venture, xAI, as part of a larger $20 billion funding round [9] - Advanced Micro Devices (AMD) stock advanced by 3.8% to 10% following a significant chip deal with OpenAI [10] - Tesla (TSLA) shares declined by 1.6% after announcing lower-cost Model Y and Model 3 vehicles, raising concerns about profit margins [10] - Dell Technologies (DELL) climbed 9%, while Confluent (CFLT) surged between 10% and 19.8% amid potential sale discussions [11] - Other notable stock movements included Apple (AAPL) up 3.2%, Microsoft (MSFT) gaining 2.8%, and Meta Platforms (META) increasing by 3.0% [11] Economic Indicators - The ongoing government shutdown has delayed key economic data releases, leading market participants to rely on alternative indicators [6] - Recent housing data indicated a decline in mortgage applications, reflecting tighter mortgage rates and hesitancy among homebuyers [6] Earnings Season - The third-quarter earnings season is approaching, with Delta Air Lines (DAL) set to report its Q3 earnings, followed by other companies like AZZ Inc. (AZZ) and Resources Connection, Inc. (RGP) [7]

Core Viewpoint - Resources Connection has experienced a significant decline in value over the past two years, leading to the perception that it is more of a value trap than a genuine investment opportunity [1]. Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on companies with a strong margin of safety and growth catalysts [1]. - The strategy is influenced by legendary investors such as Benjamin Graham, Warren Buffett, Charlie Munger, and Joel Greenblatt, with an emphasis on long-term investment [1]. - The analysis primarily targets microcap and small cap value stocks, although larger companies are considered if they meet value criteria [1]. Group 2: Investment Activity - The initial purchase of Resources Connection (RGP) occurred on August 31, 2023, with the position closed on September 9, 2025 [2].

Part I [Business](index=4&type=section&id=ITEM%201.%20BUSINESS) RGP is a global professional services firm specializing in consulting, on-demand talent, and outsourced services, serving over 1,600 clients and reorganizing into new operating segments - RGP is a professional services firm specializing in consulting, on-demand resourcing, and outsourced services for clients navigating transformation, transactions, or compliance[17](index=17&type=chunk) - The company serves over **1,600 clients** globally, including **88% of the Fortune 100**, with a team of approximately **3,100 professionals** as of May 2025[19](index=19&type=chunk) - In fiscal 2025, the company reorganized its business into four main reportable segments: On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services[20](index=20&type=chunk)[21](index=21&type=chunk) - On July 1, 2024, RGP acquired Reference Point LLC, an advisory firm for financial institutions, which is now part of its Consulting segment[22](index=22&type=chunk) - The company's growth strategy focuses on increasing penetration of its existing client base, growing its client base, optimizing service offerings with a focus on digital capabilities, and engaging in strategic acquisitions[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) [Risk Factors](index=13&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from economic downturns, intense competition, human capital challenges, operational issues, cybersecurity threats, and evolving data privacy regulations - Economic downturns, inflation, geopolitical conflicts (such as in Ukraine and the Middle East), and trade friction could reduce demand for the company's services and adversely affect financial results[77](index=77&type=chunk)[78](index=78&type=chunk) - The professional services market is highly competitive and fragmented, with competitors including consulting firms, accounting firms, independent contractors, and staffing firms, some of whom have greater financial resources and name recognition[81](index=81&type=chunk)[83](index=83&type=chunk) - The business depends on attracting and retaining highly qualified consultants, and failure to do so could be caused by an inability to offer challenging projects or competitive compensation[87](index=87&type=chunk) - Technological advances, particularly in AI and automation, may reduce demand for the company's services or enable competitors to develop new offerings, potentially bypassing the need for external experts[92](index=92&type=chunk)[93](index=93&type=chunk) - Cybersecurity incidents, such as data breaches or ransomware attacks, could disrupt business operations, damage the company's reputation, and result in significant costs for remediation and potential legal penalties[114](index=114&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - Failure to comply with evolving and complex data privacy laws, such as GDPR and various U.S. state laws, could result in significant civil and criminal penalties and damage the company's reputation[124](index=124&type=chunk)[126](index=126&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - Not applicable[148](index=148&type=chunk) [Cybersecurity](index=25&type=section&id=ITEM%201C.%20CYBERSECURITY) The company manages cybersecurity risks through an enterprise-wide strategy, governed by a CSIRT and Board oversight, employing various risk management practices - The company has an enterprise-wide strategy to manage cybersecurity risks, including an Information Assurance Program and a Cybersecurity Incident Response Plan[149](index=149&type=chunk)[150](index=150&type=chunk) - Cybersecurity governance is managed by a Cybersecurity Incident Response Team (CSIRT) led by the Chief Information Officer (CIO) and overseen by the Board's Audit Committee, which receives quarterly updates[157](index=157&type=chunk)[158](index=158&type=chunk) - Risk management practices include third-party penetration testing, cybersecurity awareness training for employees, and phishing test campaigns[153](index=153&type=chunk) - As of the report date, the company states that known risks from cybersecurity threats have not materially affected its business, operations, or financial condition[155](index=155&type=chunk) [Properties](index=26&type=section&id=ITEM%202.%20PROPERTIES) The company sold its Irvine building for **$13.0 million**, relocated its principal office to Dallas, and maintains leased offices in over 38 cities globally - The company sold its building in Irvine, California for **$13.0 million** in August 2024 and entered into a new lease in Irvine effective November 1, 2024[159](index=159&type=chunk) - Effective November 1, 2024, the company's principal executive office was relocated to Dallas, Texas[160](index=160&type=chunk) - As of May 31, 2025, the company leases facilities in over **38 cities** in **14 countries**, including major business centers such as New York, London, Tokyo, and Shanghai[161](index=161&type=chunk) [Legal Proceedings](index=26&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[163](index=163&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[164](index=164&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, with a reduced quarterly dividend and **$79.2 million** remaining for repurchases, while stock performance has underperformed benchmarks - The company's common stock is listed on The Nasdaq Global Select Market under the symbol "RGP"[166](index=166&type=chunk) - The quarterly dividend was reduced from **$0.14 per share** to **$0.07 per share**, approved on April 29, 2025[167](index=167&type=chunk) - As of May 31, 2025, approximately **$79.2 million** remained available for future stock repurchases under the company's authorized programs, with no shares repurchased in the fourth quarter of fiscal 2025[169](index=169&type=chunk)[170](index=170&type=chunk) 5-Year Cumulative Total Return Comparison | | May 29, 2020 | May 31, 2025 | | :--- | :--- | :--- | | **Resources Connection, Inc.** | $100.00 | $57.82 | | **Russell 3000** | $100.00 | $204.11 | | **SIC Code 8742 - Management Consulting** | $100.00 | $191.50 | | **Peer Group** | $100.00 | $204.25 | [Reserved](index=29&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal 2025 saw a **12.9% revenue decrease** to **$551.3 million** and a **$191.8 million net loss** due to goodwill impairment, with strategic focus on new segments and digital capabilities Fiscal Year 2025 vs. 2024 Financial Performance | Metric | FY 2025 | FY 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $551.3M | $632.8M | ($81.5M) | (12.9)% | | **Gross Profit** | $207.4M | $246.1M | ($38.7M) | (15.7)% | | **Net Income (Loss)** | ($191.8M) | $21.0M | ($212.8M) | (1013.3)% | | **Adjusted EBITDA** | $23.5M | $51.5M | ($28.0M) | (54.4)% | - The significant net loss in fiscal 2025 was primarily driven by a non-cash goodwill impairment charge of **$194.4 million**[240](index=240&type=chunk) - Revenue decline was attributed to reduced client spending due to global macroeconomic uncertainty, protracted sales cycles, and attrition within the sales team following strategic changes[233](index=233&type=chunk) - The company's strategic focus in fiscal 2025 was on evolving its new business segments (On-Demand Talent, Consulting, Outsourced Services), launching a new brand identity, and enhancing digital and AI capabilities, including the acquisition of Reference Point[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - As of May 31, 2025, the company had **$86.1 million** in cash and cash equivalents, and subsequently entered into a new **$50.0 million** secured revolving loan facility on July 2, 2025[280](index=280&type=chunk)[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are from interest rate fluctuations on cash and variable-rate debt, and foreign currency exposure from **18.2%** international revenue - The company's primary market risks are from fluctuations in interest rates and foreign currency exchange rates[302](index=302&type=chunk)[305](index=305&type=chunk) - Interest rate risk exposure relates to earnings on **$86.1 million** of cash and cash equivalents and potential borrowings under its new variable-rate credit facility, with no borrowings outstanding as of May 31, 2025[303](index=303&type=chunk)[304](index=304&type=chunk) - Approximately **18.2%** of fiscal 2025 revenues were generated outside the U.S., exposing operating results to foreign currency fluctuations, though the company does not currently use financial hedges to mitigate this risk[305](index=305&type=chunk)[307](index=307&type=chunk) [Financial Statements and Supplementary Data](index=50&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the company's audited consolidated financial statements for fiscal year 2025, including balance sheets, income statements, and cash flow statements, along with notes Consolidated Balance Sheet Summary (in thousands) | | May 31, 2025 | May 25, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $203,686 | $240,755 | | **Goodwill** | $28,757 | $216,579 | | **Total Assets** | $304,688 | $510,914 | | **Total Current Liabilities** | $75,402 | $72,433 | | **Total Liabilities** | $97,607 | $92,151 | | **Total Stockholders' Equity** | $207,081 | $418,763 | Consolidated Statement of Operations Summary (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Revenue** | $551,331 | $632,801 | $775,643 | | **Gross Profit** | $207,424 | $246,068 | $313,142 | | **Goodwill Impairment** | $194,409 | $0 | $2,955 | | **Income (Loss) from Operations** | ($196,757) | $28,776 | $72,788 | | **Net Income (Loss)** | ($191,780) | $21,034 | $54,359 | Consolidated Statement of Cash Flows Summary (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $18,899 | $21,919 | $81,636 | | **Net Cash from Investing Activities** | ($13,571) | ($8,554) | $3,943 | | **Net Cash from Financing Activities** | ($27,731) | ($20,709) | ($71,914) | | **Net (Decrease) Increase in Cash** | ($22,745) | ($7,892) | $12,560 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=90&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[509](index=509&type=chunk) [Controls and Procedures](index=90&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of May 31, 2025, a conclusion audited by RSM US LLP - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2025[510](index=510&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of May 31, 2025, based on the 2013 COSO framework[513](index=513&type=chunk) - The independent registered public accounting firm, RSM US LLP, audited and confirmed the effectiveness of the company's internal control over financial reporting as of May 31, 2025[514](index=514&type=chunk) [Other Information](index=91&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no other information to report in this section - None[515](index=515&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=91&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - Not applicable[516](index=516&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=91&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[519](index=519&type=chunk) [Executive Compensation](index=91&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information on executive and director compensation is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[520](index=520&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=91&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Security ownership information is incorporated by reference, with **3,547,662** securities issuable under equity plans and **2,138,601** remaining for future issuance - Information on security ownership is incorporated by reference from the 2025 proxy statement[521](index=521&type=chunk) Equity Compensation Plan Information as of May 31, 2025 | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | **Approved by Security Holders** | 3,547,662 | $16.89 | 2,138,601 | | **Not Approved by Security Holders** | - | - | - | | **Total** | 3,547,662 | $16.89 | 2,138,601 | [Certain Relationships and Related Transactions, and Director Independence](index=92&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on related party transactions and director independence is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[526](index=526&type=chunk) [Principal Accountant Fees and Services](index=92&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information on principal accountant fees and services from RSM US LLP is incorporated by reference from the 2025 proxy statement - The company's independent registered public accounting firm is RSM US LLP[527](index=527&type=chunk) - Information regarding principal accountant fees and services is incorporated by reference from the 2025 proxy statement[528](index=528&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=93&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements and exhibits filed as part of the Form 10-K, with consolidated financial statements in Item 8 - This section includes the list of financial statements filed in Item 8 and the Exhibit Index[531](index=531&type=chunk)[532](index=532&type=chunk) [Form 10-K Summary](index=95&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable - Not applicable[536](index=536&type=chunk)

Group 1 - Resources Connection (RGP) reported quarterly earnings of $0.16 per share, significantly exceeding the Zacks Consensus Estimate of $0.01 per share, although this is a decrease from $0.28 per share a year ago, representing an earnings surprise of +1,500.00% [1] - The company posted revenues of $139.34 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 3.75%, but down from $148.2 million year-over-year [2] - Resources Connection has outperformed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Group 2 - The stock has underperformed the market, losing about 35.5% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.03 on revenues of $130.5 million, and for the current fiscal year, it is $0.46 on revenues of $564.76 million [7] Group 3 - The Zacks Industry Rank indicates that the Staffing Firms industry is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $139.3 million, with a gross margin of 40.2%, both exceeding the high end of the outlook range [29][36] - Adjusted EBITDA was $9.8 million, representing a 7.1% adjusted EBITDA margin, marking the strongest quarterly performance in fiscal 2025 [29] - Average bill rate increased by 4% year over year, with the enterprise-wide average bill rate reaching $125, reflecting a disciplined value-based pricing strategy [11][32] Business Line Data and Key Metrics Changes - Consulting segment revenue was $51 million, a decline of 14% year over year, with adjusted EBITDA of $8.3 million, a margin of 16% [34] - On-demand segment revenue was $53 million, down 16% compared to the prior year, with adjusted EBITDA of $6.4 million, maintaining a 12% margin [35] - Outsourced services segment revenue grew by 4% year over year to $11.3 million, with adjusted EBITDA of $3.1 million, a margin of 28% [35] Market Data and Key Metrics Changes - Europe and Asia Pacific segment revenue was $21.3 million, flat compared to the prior year, with adjusted EBITDA of $1.9 million, a margin of 9% [35] - The UK was highlighted as a strong market within Europe, contributing to revenue stability and high client retention at 90% year over year [13] - Asia Pacific revenue growth was 3% sequentially, primarily driven by Japan, despite challenges in China [13] Company Strategy and Development Direction - The company is focused on evolving from a staffing-centric model to a value-added consulting and digital solutions firm, enhancing shareholder value through disciplined operations and capital allocation strategies [17] - There is a strong emphasis on integrating AI technologies to improve operational efficiency and client engagement [10] - The strategy includes deepening client relationships and expanding cross-selling opportunities, particularly in consulting and outsourced services [22][26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the professional services marketplace in North America, anticipating growth driven by digital transformation initiatives [9] - The company is focused on pipeline generation and conversion, with expectations for revenue in Q1 2026 to be between $115 million and $120 million [38] - Management acknowledged macroeconomic uncertainties but remains committed to executing their strategy to deliver value to clients [28] Other Important Information - The company appointed two new board members to strengthen alignment with long-term investors and support its strategic evolution [16] - A non-cash goodwill impairment charge of $69 million was recorded in the consulting segment due to business performance and market capitalization reduction [36] Q&A Session Summary Question: Can you provide more color on the gross margin beat? - Management attributed the gross margin improvement to higher average bill rates and favorable medical claims [44][47] Question: How is cross-selling progressing? - Management noted an uplift in existing clients where on-demand talent has transitioned to deeper consulting capabilities, indicating potential for future growth [49][50] Question: What are the expected trends for consulting and on-demand talent? - Management expects stability in the on-demand segment but acknowledges that consulting is impacted by project delays [60][62] Question: Can you clarify the pipeline shrinkage? - Management explained that the pipeline contracted due to a focus on funnel discipline and the abandonment of deals as clients reassess their needs [66]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Kate W. Duchene noted Q4 revenue and gross margin exceeded expectations, driven by sequential growth, improved bill rates, and strong client retention - The company **exceeded its outlook** for revenue and gross margin despite market challenges[5](index=5&type=chunk) - Strategic focus includes cross-selling, cost efficiency via new systems, and targeting larger sales opportunities[5](index=5&type=chunk) - Achieved **sequential revenue growth** and **improved average bill rates** across multiple segments[5](index=5&type=chunk) - **Client retention rates** remain **steady and strong**[5](index=5&type=chunk) [Fourth Quarter Fiscal 2025 Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Highlights) Q4 FY2025 revenue was **$139.3 million**, with a **$73.3 million net loss** due to goodwill impairment, but **gross margin remained 40.2%** Q4 FY2025 Key Financial Metrics (vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | | :--- | :--- | :--- | | Revenue | $139.3 million | $148.2 million | | Gross Margin | 40.2% | 40.2% | | Net Income (Loss) | $(73.3) million | $10.5 million | | Goodwill Impairment | $69.0 million | - | | GAAP Diluted EPS | $(2.23) | $0.31 | | Adjusted Diluted EPS | $0.16 | $0.28 | | Adjusted EBITDA | $9.8 million | $13.1 million | [Full Fiscal Year 2025 Highlights](index=1&type=section&id=Full%20Fiscal%20Year%202025%20Highlights) FY2025 revenue was **$551.3 million**, with a **$191.8 million net loss** due to goodwill impairment, while **SG&A decreased 3.3%** Full Year FY2025 Key Financial Metrics (vs. FY2024) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | $551.3 million | $632.8 million | | Gross Margin | 37.6% | 38.9% | | Net Income (Loss) | $(191.8) million | $21.0 million | | Goodwill Impairment | $194.4 million | - | | GAAP Diluted EPS | $(5.80) | $0.62 | | Adjusted Diluted EPS | $0.23 | $0.93 | | Adjusted EBITDA | $23.5 million | $51.5 million | | Cash & Equivalents | $86.1 million | $108.9 million | [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) [Fourth Quarter Fiscal 2025 Results](index=2&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Results) Q4 FY2025 revenue declined to **$139.3 million** due to demand issues, with a **$73.3 million net loss** from a **$69.0 million goodwill impairment** - Revenue was **$139.3 million**, a **YoY decrease** of **11.4%** on a same-day constant currency basis, due to challenging demand[7](index=7&type=chunk) - Average bill rate **improved by 4.2% YoY** due to value-based pricing, despite a **10.5% decrease in billable hours**[7](index=7&type=chunk) - Gross margin remained **strong and consistent** at **40.2%**[8](index=8&type=chunk) - SG&A expenses increased to **$50.6 million** due to a prior-year **$4.4 million favorable adjustment** from the CloudGo acquisition[9](index=9&type=chunk) - A **non-cash goodwill impairment charge** of **$69.0 million** was recorded in the Consulting segment[10](index=10&type=chunk) - The company reported a **net loss of $73.3 million**, primarily due to the goodwill impairment, compared to **$10.5 million net income** prior year[12](index=12&type=chunk) [Full Fiscal Year 2025 Results](index=2&type=section&id=Full%20Fiscal%20Year%202025%20Results) FY2025 revenue **decreased 12.9%** to **$551.3 million**, with a **$194.4 million goodwill impairment** driving the net loss despite **3.3% lower SG&A** - Annual revenue was **$551.3 million**, a **12.9% decrease** from prior year (**13.9%** on a same-day constant currency basis)[13](index=13&type=chunk) - Gross margin **decreased to 37.6%** from **38.9%** due to lower salaried consultant utilization[14](index=14&type=chunk) - SG&A expenses **improved by 3.3%** to **$202.0 million**, driven by lower compensation and a **$3.4 million gain** on asset sale[15](index=15&type=chunk) - A total **non-cash goodwill impairment charge** of **$194.4 million** was recorded across On-Demand Talent, Consulting, and Europe & Asia segments[16](index=16&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Summary of Consolidated Financial Results](index=5&type=section&id=Summary%20of%20Consolidated%20Financial%20Results) FY2025 consolidated results show a significant profitability decline, with revenue falling to **$551.3 million** and a **$191.8 million net loss** due to impairment Consolidated Income Statement (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Revenue | $551,331 | $632,801 | | Gross Profit | $207,424 | $246,068 | | Goodwill Impairment | $194,409 | $0 | | Income (Loss) from Operations | $(196,757) | $28,776 | | Net Income (Loss) | $(191,780) | $21,034 | | Diluted EPS | $(5.80) | $0.62 | [Selected Balance Sheet and Cash Flow Information](index=24&type=section&id=Selected%20Balance%20Sheet%20and%20Cash%20Flow%20Information) As of May 31, 2025, total assets significantly decreased to **$304.7 million** due to impairment, with **cash at $86.1 million** and **operating cash flow of $18.9 million** Selected Balance Sheet Data (in thousands) | Line Item | May 31, 2025 | May 25, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $86,147 | $108,892 | | Total assets | $304,688 | $510,914 | | Total liabilities | $97,607 | $92,151 | | Total stockholders' equity | $207,081 | $418,763 | Selected Cash Flow Data (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Cash flow -- operating activities | $18,899 | $21,919 | | Cash flow -- investing activities | $(13,571) | $(8,554) | | Cash flow -- financing activities | $(27,731) | $(20,709) | [Segment Analysis](index=20&type=section&id=Segment%20Analysis) [Segment Definitions](index=20&type=section&id=Segment%20Definitions) The company operates four segments: On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick in 'All Other' - The company's reportable segments include **On-Demand Talent**, **Consulting**, **Outsourced Services**, and **Europe & Asia Pacific**[48](index=48&type=chunk) - **On-Demand Talent** provides businesses with expert consultants[49](index=49&type=chunk) - **Consulting** drives transformation in finance, technology, and supply chain across people, processes, and technology[49](index=49&type=chunk) - **Outsourced Services** (Countsy) offers finance, accounting, and HR services to startups and scaling enterprises[49](index=49&type=chunk) [Segment Revenue and Performance](index=5&type=section&id=Segment%20Revenue%20and%20Performance) FY2025 saw revenue declines in On-Demand Talent and Consulting, while Outsourced Services grew; Consulting was largest at **$219.2 million** revenue Revenue by Segment (in thousands) | Segment | FY 2025 | FY 2024 | | :--- | :--- | :--- | | On-Demand Talent | $205,976 | $272,600 | | Consulting | $219,215 | $227,967 | | Europe & Asia Pacific | $77,602 | $84,207 | | Outsourced Services | $39,618 | $38,122 | Adjusted EBITDA by Segment (in thousands) | Segment | FY 2025 | FY 2024 | | :--- | :--- | :--- | | On-Demand Talent | $17,116 | $31,673 | | Consulting | $31,718 | $38,420 | | Europe & Asia Pacific | $4,478 | $5,289 | | Outsourced Services | $7,581 | $7,641 | [Key Operating Metrics by Segment](index=23&type=section&id=Key%20Operating%20Metrics%20by%20Segment) Q4 FY2025 average consolidated bill rate increased to **$125**, with Consulting highest at **$158**; total consultant headcount was **2,368** Average Bill Rate by Segment | Segment | Q4 FY2025 | Q4 FY2024 | | :--- | :--- | :--- | | Consolidated | $125 | $120 | | On-Demand Talent | $143 | $142 | | Consulting | $158 | $142 | | Europe & Asia Pacific | $64 | $58 | | Outsourced Services | $140 | $142 | - Consultant headcount at Q4 FY2025 end was **2,368**, a decrease from **2,585** in Q4 FY2024[59](index=59&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of GAAP to Non-GAAP Measures (Q4)](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Q4)) Q4 FY2025 GAAP net loss of **$73.3 million** adjusted to **$9.8 million Adjusted EBITDA**; GAAP diluted EPS of **$(2.23)** adjusted to **$0.16** non-GAAP Reconciliation of Net Loss to Adjusted EBITDA (Q4 FY2025, in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | $(73,306) | | Goodwill impairment | $69,032 | | Restructuring costs | $1,904 | | Stock-based compensation expense | $1,337 | | **Adjusted EBITDA (Non-GAAP)** | **$9,830** | Reconciliation of Diluted EPS (Q4 FY2025) | Description | Per Share Amount | | :--- | :--- | | Diluted loss per common share (GAAP) | $(2.23) | | Goodwill impairment | $2.10 | | Restructuring costs | $0.06 | | Income tax impact of adjustments | $0.16 | | **Adjusted diluted earnings per common share (Non-GAAP)** | **$0.16** | [Reconciliation of GAAP to Non-GAAP Measures (Full Year)](index=16&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Full%20Year)) Full-year FY2025 GAAP net loss of **$191.8 million** adjusted to **$23.5 million Adjusted EBITDA**; GAAP diluted EPS of **$(5.80)** adjusted to **$0.23** non-GAAP Reconciliation of Net Loss to Adjusted EBITDA (Full Year FY2025, in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | $(191,780) | | Goodwill impairment | $194,409 | | Stock-based compensation expense | $6,754 | | Technology transformation costs | $5,474 | | Restructuring costs | $5,061 | | Gain on sale of assets | $(3,420) | | **Adjusted EBITDA (Non-GAAP)** | **$23,457** | Reconciliation of Diluted EPS (Full Year FY2025) | Description | Per Share Amount | | :--- | :--- | | Diluted loss per common share (GAAP) | $(5.80) | | Goodwill impairment | $5.88 | | Stock-based compensation expense | $0.20 | | Technology transformation costs | $0.17 | | Restructuring costs | $0.15 | | Gain on sale of assets | $(0.10) | | Income tax impact of adjustments | $(0.39) | | **Adjusted diluted earnings per common share (Non-GAAP)** | **$0.23** | [Company and Investor Information](index=7&type=section&id=Company%20and%20Investor%20Information) [About RGP](index=7&type=section&id=About%20RGP) RGP is a global professional services firm with **over 2,300 experts**, serving **88% of Fortune 100** companies, recognized as a top consulting firm - RGP is a global professional services firm offering high-impact solutions across **Finance, HR, Operations, and Technology**[22](index=22&type=chunk) - The company has **over 2,300 experts** worldwide, engaging **over 1,600 clients annually** from **41 offices**[22](index=22&type=chunk)[23](index=23&type=chunk) - As of May 2025, RGP served **88% of the Fortune 100** and was recognized by Forbes as a **top management consulting firm**[23](index=23&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks like economic downturns and market competition, which may cause actual results to differ - The press release contains forward-looking statements regarding **expected recovery, growth, and operational plans**[24](index=24&type=chunk) - These statements are subject to risks including **economic downturns, market competition, consultant retention**, and **client project security**[24](index=24&type=chunk) - Investors are cautioned against undue reliance, and the Company does not undertake an obligation to update these statements[25](index=25&type=chunk)