Resources Connection (RGP) Q3 2025 earnings summary

Executive summary

• Q3 revenue was $129.4 million, down 14.5% year-over-year, impacted by macroeconomic uncertainty, client budget constraints, and holiday disruptions.

• Net loss for Q3 was $44.1 million, driven by a $42 million non-cash goodwill impairment charge; nine-month net loss was $118.5 million.

• Gross margin and SG&A expenses outperformed the favorable end of outlook ranges, but SG&A rose to 39.5% of revenue due to restructuring and technology costs.

• Management highlighted improved pricing, larger deal sizes, and better win ratios, with enterprise-wide engagement sizes up over 20% and the number of $1 million-plus engagements doubling year-over-year.

• Focus remains on diversified services, operational efficiency, technology transformation, and targeted investments in talent.

Financial highlights

• Q3 revenue: $129.4 million; Adjusted EBITDA: $1.7 million (1.3% margin), down from $13.6 million (9.0%) prior year.

• Gross margin: 35.1%, down from 37.0% year-over-year, mainly due to holiday timing and lower consultant utilization.

• Net loss margin was (34.0%) versus net income margin of 1.7% a year ago.

• Cash and equivalents at quarter-end were $72.5 million, with no debt and $246 million in total liquidity.

• Quarterly dividend of $0.14 per share declared and paid; $13 million spent on share repurchases year-to-date.

Outlook and guidance

• Q4 revenue expected between $132 million and $137 million, with gross margin anticipated at 36%-37% as holiday seasonality subsides.

• SG&A expense projected at $45 million-$47 million for Q4, reflecting a 14-week quarter.

• On an organic, constant currency, same-day basis, Q4 revenue expected to decline 17% year-over-year at midpoint, excluding Reference Point.

• Management expects continued macroeconomic uncertainty and cautious client spending through at least the remainder of FY2025.

• Liquidity is expected to be sufficient for at least the next 12 months, with ongoing investments in technology and potential for further acquisitions.