Resources Connection Reports Significant Revenue Decline and Net Loss in Latest Financial Results

Resources Connection, Inc. reported a significant decline in financial performance for the third quarter and nine months ended February 22, 2025, as detailed in its latest 10-Q filing. The company generated revenue of $129.4 million for the third quarter, a decrease of 14.5% from $151.3 million in the same period last year. For the nine-month period, revenue fell to $412.0 million, down 15.0% from $484.6 million. The decline in revenue was attributed to reduced client spending amid a challenging macroeconomic environment, with billable hours decreasing by 17.0% in the third quarter and 14.4% for the nine months.

The company's gross profit also suffered, dropping to $45.4 million in the third quarter, compared to $56.0 million a year earlier. This decline was exacerbated by a substantial goodwill impairment charge of $42.0 million recorded in the third quarter, which contributed to a net loss of $44.1 million, compared to a net income of $2.6 million in the prior year. For the nine-month period, the net loss reached $118.5 million, compared to a net income of $10.6 million in the same period last year. The company’s basic loss per share was $(1.34) for the third quarter and $(3.58) for the nine months.

In terms of operational changes, Resources Connection has undergone a strategic reorganization, creating five distinct operating segments: On-Demand Talent, Consulting, Europe & Asia Pacific, Outsourced Services, and All Other. This restructuring aims to enhance service delivery and align with market demands. The company also completed the acquisition of Reference Point LLC on July 1, 2024, which is expected to bolster its consulting capabilities. Reference Point contributed $4.0 million in revenue during the third quarter and $11.5 million for the nine months.

The company reported a decrease in its consultant headcount, with 2,514 consultants on assignment at the end of the third quarter, down from 2,765 a year earlier. Selling, general, and administrative expenses increased to $51.2 million, or 39.5% of revenue, compared to 32.8% in the prior year, largely due to restructuring costs and increased technology expenses. The company’s cash and cash equivalents stood at $72.5 million as of February 22, 2025, down from $108.9 million at the end of the previous fiscal year, reflecting the impact of operational challenges and strategic investments.

Looking ahead, Resources Connection anticipates continued challenges due to uncertain macroeconomic conditions, including fluctuating interest rates and labor market dynamics. The company is focused on executing its strategic initiatives, including enhancing its digital capabilities and leveraging its new brand identity to drive growth. However, the ongoing economic environment may affect client spending and project timelines, potentially impacting future revenue and profitability.