Resources nection(US:RGP)2021-10-07 00:04Financial Data and Key Metrics Changes - Revenue for Q1 2022 reached $183.1 million, representing a 25% year-over-year growth and an 8.5% sequential increase, marking the highest revenue in over ten years for a fiscal first quarter [7][44] - Adjusted EBITDA margin improved to 12.2%, up 530 basis points from the previous year, driven by an improved fixed cost structure and strong gross margin performance [9][43] - Adjusted diluted EPS rose to $0.43 per share compared to $0.14 in Q1 of fiscal 2021 [53] Business Line Data and Key Metrics Changes - Strategic client accounts grew by 26% year-over-year, with professional staffing revenue increasing by 36% year-over-year [45] - Revenue growth was consistent across core markets, with North America seeing a 28% year-over-year increase and Veracity growing by 45% year-over-year [46][17] - Europe achieved 10% growth year-over-year, while Asia Pacific experienced a 17% year-over-year revenue increase [47][48] Market Data and Key Metrics Changes - North America led growth with tri-state and California markets growing by 41% and 30% respectively [46] - The demand for contingent talent and a shift towards agile workforce models were identified as significant tailwinds for revenue growth [45][19] Company Strategy and Development Direction - The company is focused on digital transformation, launching the HUGO platform to enhance client and consultant interactions [13][15] - There is an emphasis on pricing discipline and increasing bill rates to capitalize on the tight labor market [11][67] - The company plans to invest in new ERP and talent management systems to improve operational efficiency [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, citing strong pipeline activity and a favorable macroeconomic environment [38][56] - The company anticipates a potential impact from seasonal trends and holiday effects on revenue in Q2 [70][92] - Management highlighted the importance of adapting to a hybrid work model, which is expected to be a permanent shift in the industry [34][80] Other Important Information - The effective tax rate improved to 29% from 46% in the prior year, primarily due to better operating results in European entities [52] - The company remains committed to M&A opportunities, particularly in technology and healthcare sectors [94] Q&A Session Summary Question: Clarification on SG&A run rate - Management clarified that the run rate SG&A of $50 million to $53 million excludes stock compensation and restructuring costs [59][62] Question: Impact of HUGO on SG&A and revenue - Management indicated that while HUGO will add to SG&A, it is expected to contribute to revenue, though specifics are still uncertain until the pilot launch [60] Question: Size of Veracity's contribution - Veracity currently accounts for about 5% of overall enterprise revenue [65] Question: Pricing expectations in a tight labor market - Management expects to push through bill rate increases, particularly for new engagements, due to the tight labor market [67][68] Question: Seasonal revenue patterns - Management anticipates some seasonal effects in Q3 due to holidays but believes the strong pipeline may mitigate the impact [91] Question: Digital transformation services contribution - Digital transformation services account for about 10% of the business beyond Veracity, with total digital-related services around 14% to 15% [85][88] Question: Future M&A activity - The company is interested in pursuing M&A opportunities to fill gaps in technology and healthcare capabilities [94]