Resources Connection, Inc. reported a significant decline in financial performance for the third quarter and first nine months of fiscal 2026, as detailed in its latest 10-Q filing. For the three months ended February 28, 2026, the company generated revenue of $107.9 million, a decrease of 16.6% from $129.4 million in the same period last year. The nine-month revenue also fell by 16.0%, totaling $345.9 million compared to $412.0 million in the prior year. The decline in revenue was attributed to a 16.3% decrease in billable hours and a slight drop in average bill rates, reflecting a shift in client demand and longer sales cycles for consulting projects.
The company's cost of services also decreased, amounting to $69.4 million for the third quarter, down 17.5% from $84.1 million a year earlier. This reduction was primarily due to the same decline in billable hours and a decrease in average pay rates. Gross profit for the quarter was $38.6 million, representing 35.7% of revenue, compared to 35.1% in the previous year. However, selling, general, and administrative (SG&A) expenses were $45.8 million, or 42.5% of revenue, up from 39.5% a year ago, largely due to restructuring costs and severance payments related to workforce reductions.
In terms of strategic developments, Resources Connection has been undergoing a transformation initiative aimed at streamlining operations and reducing costs. This includes workforce reductions initiated in late 2025 and early 2026, which are expected to yield annual savings of $12 million to $14 million in SG&A expenses. The company also appointed Roger Carlile as the new CEO in November 2025, following the departure of former CEO Kate Duchene. Additionally, the company is integrating its consulting capabilities with those of Reference Point, acquired in July 2024, to enhance service offerings.
Operationally, the company reported a decrease in the number of agile consultants on assignment, which fell to 2,086 from 2,709 year-over-year. The average number of salaried consultants also declined from 493 to 394. Despite these reductions, the company is focusing on evolving its talent strategy to align with market demands, particularly in technology and AI. The company’s cash and cash equivalents stood at $82.8 million as of February 28, 2026, with no outstanding debt under its credit facility, providing a stable liquidity position.
Looking ahead, Resources Connection anticipates that its transformation efforts will be substantially complete by the first quarter of fiscal 2027. The company aims to improve profitability through value-based pricing strategies and by expanding cross-sell opportunities across its diversified service offerings. However, it remains cautious about the macroeconomic environment, which could impact client spending and project timing. The company is committed to maintaining operational efficiency and adapting to changing market conditions as it navigates these challenges.
About RESOURCES CONNECTION, INC.
Resources Connection, Inc. is a professional services firm providing flexible consulting, on-demand talent, outsourcing, and crisis communication services. Serving over 1,600 clients worldwide, including most Fortune 100 companies, it specializes in business transformation, regulatory compliance, digital and finance transformation, and strategic project execution. Its competitive advantage lies in highly qualified talent, relationship-driven approach, and agile delivery models across multiple industries and geographies.
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