Resources Connection Q3 2025: Navigating Client Delays, Revenue Uncertainty, and Dividend Sustainability

These are the key contradictions discussed in Resources Connection, Inc.'s latest 2025 Q3 earnings call, specifically including: Client Engagement and Project Delays, Revenue Guidance and Economic Uncertainty, Dividend Sustainability, and Client Decision-Making and Pipeline Stability:



Revenue Stability and Gross Margin Improvement:
- RGP reported total revenue of $129.4 million for Q3, in line with expectations.
- Gross margin and SG&A beat the favorable end of their outlook ranges, with gross margin at 35.1%.
- The improvement was due to a more favorable mix of bill rates and project size, as well as cost management efforts.

Operational Efficiency Improvements:
- RGP lowered its run-rate SG&A by 8% since the first fiscal quarter, driven by optimized headcount and reduced real estate spending.
- The company also achieved an improved pay bill ratio, with an average bill rate increase to $124 constant currency from $119 a year ago.
- These efficiencies were part of a strategy to lower fixed costs and leverage technology for operational improvements.

International Revenue and Client Engagement:
- RGP's practices in Europe, Japan, and the Philippines improved, with bill rate increases and a significant expansion in the pipeline.
- The company doubled the number of $1 million plus engagements won compared to the previous year.
- This growth was driven by international client demand and RGP's flexible engagement models and diversified service offerings.

Challenging U.S. Market Conditions:
- The U.S. market remained sluggish due to increased uncertainty and decreased consumer confidence.
- RGP experienced delays in client decision-making and budget constraints, impacting revenue expectations for the fourth quarter.
- These challenges were attributed to macroeconomic conditions and government policies affecting client spending and project start dates.