Resources Connection 2025 Q4 Earnings Misses Targets as Net Income Declines 800%

Resources Connection (RGP) reported its fiscal 2025 Q4 earnings on July 28th, 2025. The results revealed a significant miss against expectations, with a net loss of $73.3 million or $2.23 per share. This contrasts sharply with the $0.31 profit per share recorded in Q4 2024. Despite the revenue decline to $139.3 million, the gross margin held steady at 40.2%, showcasing operational discipline. The company has adjusted its guidance for Q1 2026, reflecting anticipated challenges in the upcoming quarter.

Revenue

Resources Connection's Q4 revenue reached $139.3 million, a 6% decline from $148.2 million in 2024 Q4. The On-Demand Talent segment contributed $52.96 million, while the Consulting segment generated $50.95 million. The Europe & Asia Pacific segment saw revenue of $21.34 million, and Outsourced Services added $11.33 million. Other segments collectively accounted for $2.75 million.

Earnings/Net Income

Resources Connection reported a net loss of $73.31 million in 2025 Q4, a stark contrast to the $10.47 million net income in 2024 Q4. The EPS swung to a loss of $2.22 per share from a profit of $0.31 per share last year, indicating a challenging quarter for the company.

Post-Earnings Price Action Review

The strategy of buying RGP stocks after a revenue beat and holding for 30 days yielded a -6.40% return, significantly lagging behind the benchmark return of 72.92%. While there was a maximum drawdown of 0.00%, indicating no significant losses, the strategy showed a Sharpe ratio of -0.04 and volatility of 30.39%. This suggests moderate risk and considerable volatility. Despite these challenges, the absence of major losses during the backtest period highlights some resilience in the stock's performance. However, the negative Sharpe ratio signals potential inefficiency in the strategy, emphasizing the need for a reassessment of investment tactics. Investors should consider the broader market conditions and the company's strategic adjustments in this volatile environment.

CEO Commentary

Kate W. Duchene, Chief Executive Officer, highlighted the challenging global marketplace, noting the decline in revenue but emphasizing that the company surpassed its revenue and gross margin outlooks. She pointed out the strategic pivot towards higher-value consulting work and the importance of cross-selling to bolster client relationships. Duchene acknowledged extended client decision-making cycles and attrition in the sales team but expressed confidence in stabilizing the workforce and focusing on quality pipeline growth. She reiterated the commitment to unlocking future growth through a diversified services strategy, underscoring team resilience amidst adversity.

Guidance

For Q1 2026, Resources Connection anticipates revenue between $115 million and $120 million, reflecting caution due to the expected summer slowdown and project delays. The CEO mentioned efforts to improve sales team stability and enhance pipeline quality, crucial for sustainable growth. While acknowledging upcoming challenges, management remains optimistic about leveraging cross-selling opportunities and potential synergies from recent acquisitions to drive future performance.

Additional News

Recently, Resources Connection announced the appointment of Jennifer Jones as its first Chief Marketing Officer, effective immediately. Jones, who joined through the acquisition of Veracity Consulting Group, previously served as Senior Vice President of Brand, Marketing, and Sales. In her new role, she will lead strategic marketing initiatives and report directly to CEO Kate Duchene. Additionally, the company declared a quarterly cash dividend of $0.07 per share, payable on July 21, 2025, to stockholders of record as of June 23, 2025. This decision aims to provide meaningful returns while maintaining liquidity for growth initiatives. Furthermore, Resources Connection is set to participate in the Noble Capital Markets 2025 Emerging Growth Virtual Equity Conference, with CEO Kate Duchene and CFO Jennifer Ryu engaging in a fireside chat.