Resources nection(US:RGP)2022-07-29 19:21Financial Data and Key Metrics Changes - Q4 revenue was $217 million, representing a 28% year-over-year growth after adjusting for currency and business day impact, exceeding the high-end of guidance [36][44] - Gross margin improved by 170 basis points to 41.3%, while adjusted EBITDA margin increased by 340 basis points to 15.4%, marking the highest levels in over a decade [7][38] - SG&A expenses for the quarter were $56.3 million, or 25.9% of revenue, reflecting a 190 basis point improvement compared to the same period a year ago [41] Business Line Data and Key Metrics Changes - Revenue from on-demand talent (professional staffing) increased by 37% year-over-year, while project consulting revenue grew by 21% [38] - Revenue from strategic client accounts increased by 17% over the prior year quarter, with strong growth across finance and accounting, risk and compliance, and business transformation, all growing approximately 30% year-over-year [38][39] Market Data and Key Metrics Changes - Revenue growth in healthcare, financial services, and technology industries exceeded 30% compared to the prior year quarter [39][71] - Geographically, revenue in North America improved by 30% year-over-year, while Europe and Asia-Pacific grew by 9% and 29% on a same-day constant currency basis, respectively [39] Company Strategy and Development Direction - The company made a strategic decision to divest the taskforce business in Germany to focus on project execution for large global enterprises [11] - The strategic plan for the next three years includes five core pillars: digital transformation, brand enhancement, operational excellence, and strategic pricing [13][17] - The company aims to pursue strategic and disciplined tuck-in M&A to strengthen areas of practice with enhanced market opportunities [17] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across the portfolio despite recessionary concerns, with a robust pipeline and deal flow [23][25] - The company expects continued near- to mid-term revenue growth, with a range of 6% to 9% revenue CAGR from fiscal 2022 to 2025 [44] - Management highlighted the shift in talent strategy towards greater resiliency as a favorable tailwind for the business [18] Other Important Information - The company generated $27 million of cash from operations during Q4 and ended the fiscal year with $104 million in cash and cash equivalents [43] - The divestiture of the taskforce business is expected to adversely impact top-line revenue in fiscal 2023 but will favorably impact enterprise profitability [43] Q&A Session Summary Question: Expectations for seasonal trends in Q1 - Management expects more summer impact this year due to increased travel [50] Question: Initial performance of HUGO in the Tri-State market - Talent adoption is up, and favorable feedback has been received, with plans to roll out in California and Texas [51] Question: Bill rates and pay rate inflation outlook - Bill rates increased by 4%, while pay rates have remained consistent; management believes bill rate upside will outpace pay rate increases [56][59] Question: Sustainability of EBITDA margin expansion - Q4 performance is not expected to be replicated in Q1 due to seasonal impacts, but SG&A leverage is expected to remain favorable [60][61] Question: Pipeline composition and customer mix - The pipeline is strong, with on-demand talent being particularly hot; most work is generated from Fortune 1000 clients [62][64] Question: Update on investment spending and technology modernization - Total investment planned is between $25 million to $30 million, with implementation beginning in Q2 of fiscal 2023 [74] Question: Digital transformation project scope - The focus remains on transformational initiatives, with projects lengthening and increasing in value [76]