Resources Connection (RGP) Q4 2026 earnings summary

Executive summary

• Fourth quarter revenue declined to $106.1 million, down 18.3%-23.8% year-over-year, reflecting softer demand and longer sales cycles, especially in On-Demand Talent and Consulting segments.

• Net loss improved to $16.1 million in Q4 (from $73.3 million), with adjusted EBITDA at negative $0.6 million.

• Investments in sales, consulting talent, AI initiatives, and operational streamlining are expected to drive future growth, with most planned investments for FY 2027 now complete.

• Customer survey revealed strong Net Promoter Score and high client intent to maintain or increase engagement, highlighting trusted partnership and service quality.

• Management is focused on refocusing On-Demand Talent, scaling Consulting, leveraging AI, and aligning costs with revenue.

Financial highlights

• Q4 gross margin was 37.6%, down from 40.2% in the prior year, mainly due to lower consultant utilization and less favorable cost leverage.

• Q4 SG&A expenses rose to $54.6 million, mainly due to severance, executive separation, and Sitrick sale costs; adjusted SG&A improved to $40.5 million.

• Ended the quarter with $82.4 million in cash and no debt; quarterly dividends totaled $2.3-$2.4 million.

• Q4 GAAP diluted loss per share improved to $0.47 (from $2.23).

• Cash from operations was $1.4 million for the year, down from $18.9 million.

Outlook and guidance

• Q1 FY 2027 revenue expected between $97 million and $102 million, reflecting normal seasonality and the Sitrick divestiture.

• Gross margin guidance for Q1 is 37%-38%; run rate SG&A expected at $41 million-$43 million.

• Non-run rate and non-cash expenses projected at $2 million-$3 million for Q1, with similar levels expected for the rest of the year.

• Management expects investments to begin paying off in the latter half of FY 2027.

• Market conditions are expected to remain broadly consistent, with North America and Asia stable and Europe showing some weakness.