Resources Connection Reports 19.2% Revenue Decline in Q2 Fiscal 2026

Resources Connection, Inc. reported a significant decline in financial performance for the second quarter of fiscal 2026, with revenues falling to $117.7 million, a decrease of 19.2% from $145.6 million in the same period last year. For the first six months of the fiscal year, total revenue was $238.0 million, down 15.8% from $282.6 million. The company attributed this decline to an 18.4% decrease in billable hours, reflecting ongoing adjustments in its market strategy. The average bill rate saw a slight decrease of 1.2% year-over-year, although it improved by 2.5% in the U.S. market.

The company's cost of services also decreased, totaling $74.0 million for the second quarter, down 17.3% from the previous year, primarily due to the reduction in billable hours and a decline in average pay rates. However, the cost of services as a percentage of revenue increased to 62.9%, compared to 61.5% in the prior year, driven by higher healthcare expenses and increased holiday pay. Selling, general, and administrative expenses rose to $54.4 million, or 46.2% of revenue, largely due to severance and stock-based compensation costs associated with the transition of the former CEO, Kate W. Duchene.

In terms of operational changes, Resources Connection appointed Roger Carlile as the new President and CEO, effective November 3, 2025, following Duchene's departure. The company is also undergoing a transformation initiative aimed at streamlining operations and reducing costs, which has already led to workforce reductions. Restructuring costs related to this initiative amounted to $2.9 million for the quarter. The company expects these transformation efforts to continue throughout fiscal 2026, although the full impact remains uncertain.

Geographically, the company reported a mixed performance across its segments. The On-Demand Talent segment saw a revenue decline of 19.5%, while the Consulting segment experienced a more pronounced drop of 29.7%. Conversely, the Europe & Asia Pacific segment reported a slight revenue increase of 2.0%. The Outsourced Services segment's revenue remained relatively stable, with a minor decrease of 0.8%. The company continues to focus on enhancing its consulting capabilities and leveraging its diversified service offerings to improve client relationships and retention.

Looking ahead, Resources Connection remains cautious about the macroeconomic environment, which has introduced uncertainty in client spending. The company is committed to improving its cost structure and enhancing profitability through value-based pricing strategies. Despite the challenges, Resources Connection aims to leverage its operational changes and strategic initiatives to navigate the evolving market landscape effectively.