icon
icon
icon
icon
Upgrade
icon

Resources Connection (RGP) Begins 2025 with Strong Momentum Following Upside Q2 Results

AInvestFriday, Jan 3, 2025 3:07 pm ET
1min read

Resources Connection, a consulting and workforce staffing company, has started 2025 on a more optimistic note after reporting better-than-expected second-quarter results. Following a tough 2024 that saw the stock decline nearly 40 percent, the company demonstrated sequential improvements across revenue, gross margin, adjusted EBITDA, and SG&A expense.

Both macroeconomic factors, such as easing interest rates and post-election clarity, and internal strategic shifts contributed to the stronger performance.

For the second quarter, Resources Connection exceeded its guidance, driven by a significant rebound in European markets and effective price increases in its Consulting segment. Quarterly revenue grew 6.3 percent to $145.6 million, surpassing the $135-$140 million guidance range, while gross margin improved by 200 basis points to 38.5 percent. These metrics reflected the company’s ability to navigate ongoing demand challenges effectively.

A key driver of the improved performance has been Resources Connection’s October 2024 reorganization, which restructured the company into three business units: On-Demand, Consulting, and Outsourced Services. This strategic move aimed to diversify its offerings, expand its addressable market, and create cross-selling opportunities.

The company reported success in these areas, with CEO Kate Duchene highlighting demand in supply chain management, human resources, technology, and finance transformation as clients adapted to evolving business needs.

Cost control also played a significant role. Resources Connection implemented workforce reductions and other streamlining measures, including a restructuring plan initiated in October 2023.

These efforts helped reduce SG&A expenses by 3.2 percent to $51.3 million during the quarter. Combined with revenue growth, these efficiencies drove a sharp 322 percent sequential increase in adjusted EBITDA to $9.7 million.

Encouragingly, the company reported a stable project pipeline and favorable rate increases, signaling growing demand for its services. CFO Bhadresh Patel noted cautious optimism about the macroeconomic environment, supported by steady opportunities across its business units.

Despite lingering uncertainties in the broader economic landscape, Resources Connection’s reorganization and cost-saving initiatives are yielding positive results. The company is better positioned to adapt to varying market conditions, with improved financial metrics reflecting the early success of its strategic transformation.

As Resources Connection progresses through 2025, its ability to maintain this momentum and capitalize on stabilizing demand will be critical. While challenges remain, the company’s proactive steps provide a foundation for sustained growth, making it a stock to watch in the consulting and workforce solutions sector.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.