Resources Connection Inc

Resources Connection, Inc. guided second-quarter revenue to $95 million to $100 million, broadly consistent with first-quarter levels, as the company reported Q1 revenue of $98.1 million, an 18.5% decline on a same-day constant currency basis from the prior year quarter. Interim CFO Jessica Block said Q2 gross margin is expected between 36% and 37%, reflecting the impact of the Thanksgiving holiday, with run-rate SG&A expense of $40 million to $42 million and non-run rate and noncash expenses of $2 million to $3 million. Q1 gross margin was 37.4% and adjusted SG&A expense was $40.3 million, while adjusted EBITDA for the quarter was negative $3.6 million. Segment revenue included $38.6 million from On-Demand Talent, $32.4 million from Consulting, $17.1 million from Europe and Asia Pacific, and $10 million from Outsourced Services, and the company ended the quarter with $61.2 million in cash and cash equivalents and no outstanding debt. CEO Roger Carlile said revenue and profitability remain below the company's long-run potential, citing cautious client decision-making, longer sales cycles and Consulting segment utilization in the high 50s, and announced that Trisha Jenks was promoted to Chief Accounting Officer while Jessica Block stepped in as Interim Chief Financial Officer following Jenn Ryu's 6.5 years as CFO.

Resources Connection guided first-quarter fiscal 2027 revenue to a range of $97 million to $102 million, with gross margin expected between 37% and 38% and run-rate SG&A expense of $41 million to $43 million. CFO Jennifer Ryu said the revenue outlook is relatively consistent with fourth-quarter levels after adjusting for normal summer seasonality and the Sitrick divestiture. Management also disclosed that consulting utilization currently sits in the low 60s and is targeting above 75% to 80%, which Ryu noted would imply roughly 200-plus basis points of gross margin improvement. CEO Roger Carlile reiterated that the payoff from completed fiscal 2027 investments is expected in the latter half of the year, citing a ramp-up period for new sales hires. Fourth-quarter consolidated revenue was $106.1 million with gross margin of 37.6%, and the company ended the quarter with $82.4 million in cash and no outstanding debt.