Resources Connection Q2 Earnings Call Highlights

Core Insights - The company is adapting its strategy to address changing client needs driven by artificial intelligence (AI) and automation, focusing on cost alignment, refining on-demand talent offerings, and scaling consulting capabilities [1][5][20] Financial Performance - For the second quarter ended November 29, 2025, the company reported revenue of $117.7 million, with a gross margin of 37.1%, and an adjusted EBITDA of $4.0 million, reflecting a margin of 3.4% [2][6][7] - The company incurred a GAAP net loss of $12.7 million, primarily due to $11.9 million in one-time charges related to CEO transition and workforce reduction [6][7] - Revenue declined 18.4% year-over-year on a constant-currency basis, with on-demand and consulting revenues remaining soft, while Europe and Asia Pacific showed growth [8][18] Cost Management and Outlook - The company ended the quarter with $89.8 million in cash and zero debt, and it expects third-quarter revenue between $105 million and $110 million, with a gross margin of 35% to 36% [4][15] - Cost actions include a reduction in force targeting $6 million to $8 million in annual savings, with a focus on streamlining structure and adopting automation and AI [13][14] Segment Performance - On-demand revenue was $43.0 million, down 18.4% year-over-year, while consulting revenue was $42.6 million, down 28.8% [18] - Europe and Asia Pacific revenue was $20.1 million, up 0.6%, and outsourced services revenue was $9.4 million, up 0.8% [18] Client Demand and AI Impact - The company is observing early impacts of AI on client staffing needs, particularly in operational accounting roles, with a shift towards higher-skilled professionals who understand AI's implications [16][19] - Clients are navigating choices between embedded AI features in enterprise systems and standalone technologies, prompting the company to adjust its skill base accordingly [19]