Resources nection(RGP) - 2025 Q4 - Annual Results

Financial Performance Overview Management Commentary 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] - Strategic focus includes cross-selling, cost efficiency via new systems, and targeting larger sales opportunities[5] - Achieved sequential revenue growth and improved average bill rates across multiple segments[5] - Client retention rates remain steady and strong[5] Fourth Quarter Fiscal 2025 Highlights 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 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 Fourth Quarter Fiscal 2025 Results 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] - Average bill rate improved by 4.2% YoY due to value-based pricing, despite a 10.5% decrease in billable hours[7] - Gross margin remained strong and consistent at 40.2%[8] - SG&A expenses increased to $50.6 million due to a prior-year $4.4 million favorable adjustment from the CloudGo acquisition[9] - A non-cash goodwill impairment charge of $69.0 million was recorded in the Consulting segment[10] - 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] Full Fiscal Year 2025 Results 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] - Gross margin decreased to 37.6% from 38.9% due to lower salaried consultant utilization[14] - 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] - A total non-cash goodwill impairment charge of $194.4 million was recorded across On-Demand Talent, Consulting, and Europe & Asia segments[16] Consolidated Financial Statements Summary of Consolidated Financial Results 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 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 Segment Definitions 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] - On-Demand Talent provides businesses with expert consultants[49] - Consulting drives transformation in finance, technology, and supply chain across people, processes, and technology[49] - Outsourced Services (Countsy) offers finance, accounting, and HR services to startups and scaling enterprises[49] Segment Revenue and Performance 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 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] Non-GAAP Financial Measures Reconciliation of GAAP to Non-GAAP Measures (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) 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 About RGP 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] - The company has over 2,300 experts worldwide, engaging over 1,600 clients annually from 41 offices[22][23] - As of May 2025, RGP served 88% of the Fortune 100 and was recognized by Forbes as a top management consulting firm[23] Forward-Looking Statements 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] - These statements are subject to risks including economic downturns, market competition, consultant retention, and client project security[24] - Investors are cautioned against undue reliance, and the Company does not undertake an obligation to update these statements[25]