Resources nection(US:RGP)2026-01-08 21:30Financial Performance - Revenue for the three months ended November 29, 2025, decreased by $27.9 million, or 19.2%, to $117.7 million compared to $145.6 million for the same period in 2024[159]. - On a same-day constant currency basis, revenue decreased by $26.8 million, or 18.4%[159]. - Total consolidated revenue for the six months ended November 29, 2025, was $237.961 million, down from $282.553 million in the same period of 2024[158]. - Revenue decreased by $44.6 million, or 15.8%, to $238.0 million for the six months ended November 29, 2025, compared to $282.6 million for the same period in 2024[161]. - Consulting segment revenue declined by $18.0 million or 29.7% to $42.6 million in Q2 FY2026 compared to $60.6 million in Q2 FY2025, driven by a 33.8% decrease in billable hours[185]. - For the six months ended November 29, 2025, Consulting segment revenue decreased by $29.4 million or 25.4% to $86.3 million compared to $115.7 million for the same period in the prior year[186]. Cost and Expenses - The company expects an annual reduction in SG&A expenses ranging from $6.0 million to $8.0 million due to workforce reductions[140]. - SG&A expenses increased by $2.1 million to $102.3 million, or 43.0% of revenue, for the six months ended November 29, 2025, compared to 35.5% of revenue for the same period in 2024[168]. - Cost of services for the three months ended November 29, 2025, was $74.026 million, accounting for 62.9% of revenue[158]. - Cost of services decreased by $29.7 million, or 16.8%, to $146.8 million for the six months ended November 29, 2025, compared to $176.5 million for the same period in 2024[165]. Profitability and Loss - The net loss for the three months ended November 29, 2025, was $12.661 million, representing a net loss margin of 10.8%[155]. - The company incurred a net loss of $15.1 million during the six months ended November 29, 2025[217]. - Adjusted EBITDA for the three months ended November 29, 2025, was $4.045 million, with an adjusted EBITDA margin of 3.4%[155]. - Adjusted EBITDA for the On-Demand Talent segment was $4.066 million for the three months ended November 29, 2025, down from $5.605 million for the same period in 2024[181]. - Adjusted EBITDA for the Consulting segment decreased by $5.2 million or 54.2% to $4.5 million in Q2 FY2026 compared to $9.7 million in Q2 FY2025[197]. Operational Metrics - Billable hours decreased by 18.4% year-over-year, indicating a need for improved go-to-market execution[159]. - The number of agile consultants on assignment decreased to 2,288 in the second quarter of fiscal 2026 from 2,758 in the second quarter of fiscal 2025[164]. - The average number of salaried consultants decreased to 400 in the second quarter of fiscal 2026 from 527 in the second quarter of fiscal 2025[164]. - Billable hours decreased by 16.4%, while the average bill rate increased by 0.4% for the six months ended November 29, 2025[161]. Strategic Initiatives - The fiscal 2026 strategic focus includes expanding cross-sell opportunities through diversified services, scaling high-value consulting solutions, and improving cost structure[136]. - The company aims to leverage value-based pricing to enhance profitability, particularly in the consulting business[141]. - Management anticipates that the transformation efforts will continue throughout fiscal 2026, with evolving scope and impact[143]. - The company is focused on integrating Reference Point's consulting capabilities to form a more cohesive consulting segment[143]. - The appointment of Roger Carlile as CEO is part of a leadership transition aimed at ensuring continuity and strategic direction[142]. Cash and Liquidity - The Company had $89.8 million in cash and cash equivalents as of November 29, 2025, including $40.6 million held in international operations[205]. - As of November 29, 2025, the company had approximately $89.8 million of cash and cash equivalents and no borrowings under its 2025 Credit Facility[222]. - Operating activities for the first six months of fiscal 2026 provided cash of $8.1 million, a significant increase from $1.5 million in the same period of fiscal 2025[216]. - The net cash used in investing activities was $0.4 million for the first six months of fiscal 2026, compared to $12.7 million in the same period of fiscal 2025[219]. - Net cash used in financing activities was $3.9 million for the first six months of fiscal 2026, down from $17.4 million in the first six months of fiscal 2025[220]. Market Conditions - Uncertain macroeconomic conditions have created significant volatility, adversely impacting financial results and client spending in professional services[145]. - Approximately 20.5% of the company's revenues for the six months ended November 29, 2025, were generated outside of the U.S., up from 18.2% in the same period of the previous year[224]. - A 10% decline in interest rates would reduce the company's interest income but would not materially impact its consolidated financial position[222]. - Approximately 54.8% of the company's cash and cash equivalents as of November 29, 2025, were denominated in U.S. dollars, down from 59.2% as of May 31, 2025[225].