Resources Connection Inc: Navigating Growth Amidst Challenges in Q2 2025

Resources Connection Inc (RGP) recently held its Q2 2025 earnings call, providing insights into the company's performance and strategic initiatives. Despite facing challenges, RGP demonstrated resilience and a focus on growth. This article will delve into the key highlights from the earnings call and discuss the company's prospects for continued success.



Gross Margin Improvement and Adjusted EBITDA Growth

RGP reported a gross margin of 38.5% in Q2 2025, a slight decrease from the prior year quarter. However, the company attributed this to a better pay bill ratio, improved utilization of benched consultants, and favorable holiday impacts. Additionally, RGP's Adjusted EBITDA margin improved to 6.6% in Q2 2025, driven by increased cross-selling efforts, higher bill rates, and improved consultant utilization. These improvements indicate that RGP's strategic focus on operational efficiency and revenue growth is paying off.



Cross-selling Benefits and Early Successes

RGP's focus on digital transformation and employee experience has driven significant activity in finance transformation, digital transformation related to employee experience, and supply chain modernization. These areas align with the strategic focus and needs of clients, leading to increased demand for RGP's services. The company's strategic vision and execution, including increasing cross-selling efforts, pushing for higher bill rates, driving higher consultant utilization, and streamlining fixed costs, have yielded positive momentum. Based on pipeline activities and client dialogue, RGP is cautiously optimistic that the new calendar year will bring a stronger demand environment.



Expansion into Europe and Asia

RGP's expansion into Europe and Asia has contributed to the Consulting segment's sequential growth. The company is seeing increased demand in finance, accounting, digital transformation, and supply chain services in these regions. The pipeline is filling up with early-stage discussions across clients, indicating more activity than last quarter. This expansion aligns with RGP's strategic focus and client needs, further supporting the company's growth prospects.

Integration of Reference Point and Strategic Initiatives

The integration of Reference Point and other strategic initiatives have contributed to RGP's growth. The company is expanding its solutions into the client base, starting with financial services and exploring opportunities outside of this sector. RGP is seeing significant activity in finance transformation, digital transformation related to employee experience, and supply chain modernization, which align with its strategic focus and client needs. The integration of Reference Point and other strategic initiatives have also led to an improvement in gross margin and Adjusted EBITDA margin.



In conclusion, RGP's Q2 2025 earnings call highlights the company's resilience and focus on growth amidst challenges. The company's strategic vision, cross-selling benefits, expansion into Europe and Asia, and integration of Reference Point and other strategic initiatives have contributed to its growth and improved financial performance. As RGP continues to execute on its strategic initiatives and navigate the evolving market landscape, investors should remain optimistic about the company's prospects for continued success.