Resources nection(RGP) - 2025 Q2 - Quarterly Report

Revenue Performance by Segment - Revenue in the On-Demand Talent segment declined by $17.5 million or 24.7$53.5 million in Q2 FY2025 compared to $70.9 million in Q2 FY2024, primarily due to lower demand and a 2.8$0.4 million or 4.0% to $9.4 million in Q2 FY2025 compared to$9.1 million in Q2 FY2024, driven by a 2.2% increase in average bill rate and a 1.7% increase in billable hours[289] - Revenue in the Europe and Asia Pacific segment declined by $2.1 million or 9.6$19.7 million in Q2 FY2025 compared to $21.8 million in Q2 FY2024, with a 3.3$1.6 million (2.7%) to $60.6 million in Q2 fiscal 2025, driven by a 6.2$0.4 million or 2.3% to $18.9 million for the six months ended November 23, 2024, driven by a 1.5$1.2 million or 11.0% to $9.7 million in Q2 FY2025, despite a$1.6 million revenue increase, due to higher cost of services and SG&A expenses[311] - The Europe & Asia Pacific segment's Adjusted EBITDA decreased by $0.2 million or 13.0$1.5 million in Q2 FY2025, driven by a 2.1 million revenue decline partially offset by lower cost of services and SG&A expenses[312] - The Outsourced Services segment's Adjusted EBITDA declined by 0.2 million or 13.0% to $1.5 million in Q2 FY2025, primarily due to increased cost of services[313] - On-Demand Talent segment's Adjusted EBITDA decreased by$3.1 million (35.3%) to $5.6 million in Q2 fiscal 2025, with revenue declining by$17.5 million[341] - Consulting segment's Adjusted EBITDA decreased by $2.0 million (10.2$17.5 million for the six months ended November 23, 2024[343] - Europe & Asia Pacific segment's Adjusted EBITDA decreased by $1.7 million (49.9$1.7 million for the six months ended November 23, 2024[344] - Outsourced services segment's Adjusted EBITDA declined by $0.4 million (11.6$2.9 million for the six months ended November 23, 2024[345] - All Other segment's Adjusted EBITDA declined by $0.5 million (114.5$(1.0) million for the six months ended November 23, 2024[346] Business Reorganization and Strategic Focus - The company reorganized its business into three core engagement models: On-Demand Talent, Consulting, and Outsourced Services, aiming to reduce market confusion and enhance client engagement[253][254] - The company's fiscal 2025 strategic focus areas include evolving business segments, launching a new brand identity, and enhancing digital and AI capabilities[297][299] - The company's consulting business, Veracity by RGP, is focused on digital transformation, combining digital expertise with legacy Project Consulting Services to offer integrated solutions[280] - The company is enhancing its digital and AI capabilities, focusing on areas such as technology migration, cybersecurity, and data modernization to meet evolving client needs[280] Share Issuance and Compensation Costs - The company issued 229,341 shares of common stock under the ESPP during the six months ended November 23, 2024, compared to 198,150 shares in the same period in 2023[261] - The company has $0.5 million of total unrecognized compensation costs related to unvested liability-classified RSUs, expected to be recognized over a weighted-average period of 1.65 years[263] - The company's PSUs allow for vesting of shares ranging from zero to 150$23.0 million (net of $0.2 million cash acquired) on July 1, 2024, adding technology and data modernization offerings for financial services clients[300][321] - The company capitalized$20.1 million related to its technology platform initiative as of November 23, 2024, with non-cancellable purchase obligations totaling $8.0 million for future licensing payments[320] Cash Flow and Financial Position - Operating activities provided$1.5 million in cash for the first six months of FY2025, driven by $80.3 million in non-cash adjustments (primarily goodwill impairment), offset by a$74.4 million net loss and unfavorable changes in operating assets and liabilities[325] - The company has $173.5 million remaining capacity under its Credit Facility as of November 23, 2024, with no debt outstanding[318] - Cash and cash equivalents as of November 23, 2024, were$78.2 million, with $42.1 million held in international operations[328][347] - The company has a$175.0 million senior secured revolving credit facility, with an option to increase by an additional $75.0 million[349] - Net cash used in investing activities for the first six months of fiscal 2025 was$12.7 million, primarily due to $23.0 million spent on the acquisition of Reference Point and$2.0 million for internal-use software and property development, offset by $12.3 million from the sale of the Irvine office building[358] - Net cash used in financing activities totaled$17.4 million in the first six months of fiscal 2025, compared to $11.2 million in the same period of fiscal 2024[359] Dividends and Share Repurchases - A dividend of$0.14 per share was paid on December 16, 2024, to stockholders of record as of November 15, 2024[352] - The company purchased 598,031 shares at an average price of $8.36 per share between September 22, 2024, and October 19, 2024, as part of publicly announced plans[368] Macroeconomic and Market Risks - The company expects macroeconomic uncertainty, including interest rate ambiguity, softening labor markets, and currency fluctuations, to continue through FY2025, potentially impacting billable hours and bill rates[301] - Approximately 18.2$8.0 million, with non-cash adjustments of $8.6 million and unfavorable changes in operating assets and liabilities totaling$18.4 million[357]