RGP Narrows Losses Despite Revenue Dip, Cuts Dividend

TL;DR

**RGP's loss narrowed, but revenue is shrinking and they cut the dividend in half – proceed with caution.**

AI Summary

RESOURCES CONNECTION, INC. (RGP) reported a net loss of $2.405 million for the three months ended August 30, 2025, a significant improvement from the $5.707 million net loss in the prior-year period. Revenue decreased by 12.2% to $120.229 million from $136.935 million year-over-year. Gross profit also declined to $47.469 million from $49.987 million. Selling, general and administrative expenses saw a slight reduction to $47.916 million from $48.910 million. The company's loss from operations narrowed to $1.988 million compared to a $4.803 million loss in the same quarter last year, partly due to the absence of a goodwill impairment charge, which was $3.855 million in the prior period. Cash and cash equivalents decreased to $77.518 million from $86.147 million at May 31, 2025. The company declared cash dividends of $0.07 per share, half of the $0.14 per share declared in the prior year. The acquisition of Reference Point LLC on July 1, 2024, is now reported as part of the Consulting segment.

Why It Matters

RGP's ability to significantly reduce its net loss, even with a revenue decline, suggests improved operational efficiency or cost control, which is crucial for investor confidence. However, the 12.2% revenue drop indicates potential challenges in demand for its professional services, impacting future growth prospects. The halving of the cash dividend from $0.14 to $0.07 per share could signal a more conservative capital allocation strategy or a response to the revenue pressures, potentially deterring income-focused investors. In a competitive professional services market, RGP's performance reflects broader economic trends affecting consulting and on-demand talent, with competitors likely facing similar headwinds.

Risk Assessment

Risk Level: medium — The company experienced a 12.2% decline in revenue, from $136.935 million to $120.229 million, indicating a weakening top-line performance. While net loss improved from $5.707 million to $2.405 million, this was partly due to the absence of a $3.855 million goodwill impairment charge present in the prior year, rather than solely organic operational improvements. The reduction of cash dividends from $0.14 to $0.07 per share also suggests financial prudence in a challenging environment.

Analyst Insight

Investors should closely monitor RGP's revenue trends in upcoming quarters to assess if the decline is a temporary blip or a sustained challenge. Given the dividend cut, income-focused investors might reconsider their position, while growth investors should look for clear signs of revenue stabilization and organic growth drivers beyond cost-cutting measures.

Financial Highlights

revenue

$120.229M

total Assets

$287.211M

net Income

$(2.405)M

eps

$(0.07)

gross Margin

39.47%

cash Position

$77.518M

revenue Growth

-12.2%

Revenue Breakdown

Key Numbers

• $120.229M — Revenue (Decreased from $136.935M in prior year, a 12.2% decline)
• $(2.405)M — Net Loss (Improved from $(5.707)M in prior year, a 57.8% reduction)
• $0.07 — Cash Dividends Declared per Share (Halved from $0.14 in prior year)
• $77.518M — Cash and Cash Equivalents (Decreased from $86.147M at May 31, 2025)
• $(1.988)M — Loss from Operations (Improved from $(4.803)M in prior year, a 58.6% reduction)
• $3.855M — Goodwill Impairment (Present in prior year, absent in current quarter, contributing to loss reduction)
• 33,390,494 — Shares Outstanding (As of September 30, 2025)
• $47.469M — Gross Profit (Decreased from $49.987M in prior year)

Key Players & Entities

• RESOURCES CONNECTION, INC. (company) — Registrant as Specified in Its Charter
• RGP (company) — Trading Symbol
• Reference Point LLC (company) — Acquired company, reported in Consulting segment
• Nasdaq Global Select Market (regulator) — Exchange where RGP common stock is registered
• SEC (regulator) — Securities and Exchange Commission
• $120.229 million (dollar_amount) — Revenue for the three months ended August 30, 2025
• $136.935 million (dollar_amount) — Revenue for the three months ended August 24, 2024
• $2.405 million (dollar_amount) — Net loss for the three months ended August 30, 2025
• $5.707 million (dollar_amount) — Net loss for the three months ended August 24, 2024
• $0.07 (dollar_amount) — Cash dividends declared per common share for August 30, 2025

FAQ

Risk Factors

• Economic Downturns [medium — market]: The company's performance is sensitive to general economic conditions. A significant downturn could reduce demand for its services, impacting revenue and profitability. The report notes a 12.2% decrease in revenue for the quarter ended August 30, 2025, indicating sensitivity to current economic pressures.
• Talent Acquisition and Retention [medium — operational]: As a professional services firm, RGP relies on skilled professionals. Difficulty in attracting and retaining qualified talent could hinder its ability to meet client demands and execute projects, impacting service delivery and growth.
• Cash Flow Management [low — financial]: The company's cash and cash equivalents decreased to $77.518 million from $86.147 million. While still substantial, this reduction warrants monitoring, especially if revenue trends continue downward or significant investments are planned.
• Compliance and Data Privacy [low — regulatory]: Operating globally requires adherence to various regulations, including data privacy laws. Non-compliance could lead to fines and reputational damage. The company's reliance on technology and client data makes this a persistent concern.

Industry Context

Resources Connection, Inc. operates in the global professional services sector, providing on-demand talent, consulting, and outsourced services. The industry is characterized by its reliance on skilled professionals and its sensitivity to economic cycles. Companies in this space compete on expertise, responsiveness, and the ability to scale resources to meet client needs.

Regulatory Implications

As a global entity, RGP must navigate diverse regulatory landscapes, including labor laws, tax regulations, and data privacy requirements (e.g., GDPR, CCPA). Compliance is crucial to avoid penalties and maintain client trust. The company's financial reporting is subject to SEC regulations and GAAP standards.

What Investors Should Do

1. Monitor revenue trends closely.
2. Assess the impact of the Reference Point LLC acquisition.
3. Evaluate cost management strategies.
4. Observe dividend policy.

Key Dates

• 2025-08-30: End of Fiscal Q1 2026 — Reporting period for the unaudited consolidated financial statements, showing a reduced net loss and revenue decline.
• 2024-07-01: Acquisition of Reference Point LLC — This acquisition is now reflected in the Consulting segment's performance, impacting the company's service offerings and revenue mix.
• 2025-05-31: End of Fiscal Year 2025 — Balance sheet date for comparison of cash and cash equivalents and other assets/liabilities.

Glossary

Goodwill Impairment

A reduction in the carrying value of goodwill on the balance sheet when its fair value is determined to be less than its carrying amount. This indicates that the acquired business is not performing as expected. (The absence of a $3.855 million goodwill impairment charge in the current quarter significantly contributed to the improved net loss compared to the prior year.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income. It represents retained earnings that are negative. (The company has an accumulated deficit of $126.881 million as of August 30, 2025, indicating a history of net losses.)

Operating lease right-of-use assets

Assets recognized under accounting standards for leases, representing the right to use an underlying asset for the lease term. (These assets, along with corresponding liabilities, are part of the company's long-term operational structure, totaling $22.365 million as of August 30, 2025.)

Weighted-average number of common shares outstanding

The average number of a company's common shares outstanding during a reporting period, used for calculating earnings per share. (The diluted weighted-average shares outstanding were 33,062 for the three months ended August 30, 2025, used to calculate the net loss per share.)

Year-Over-Year Comparison

Compared to the prior year's quarter, Resources Connection, Inc. has significantly reduced its net loss from $5.707 million to $2.405 million, largely due to the absence of a $3.855 million goodwill impairment charge. However, revenue declined by 12.2% to $120.229 million, and gross profit also decreased. Operating expenses were managed down slightly, contributing to the narrowed loss from operations. Cash reserves have also decreased, and the dividend payout was halved, reflecting a more conservative financial posture amidst revenue challenges.

Key Financial Figures

• $0.01 — ich Registered Common stock, par value $0.01 per share RGP The Nasdaq Stock Market

Filing Documents

• rgp-20250830.htm (10-Q) — 1045KB
• rgp-2025830xexx311.htm (EX-31.1) — 10KB
• rgp-2025830xexx312.htm (EX-31.2) — 10KB
• rgp-2025830xexx321.htm (EX-32.1) — 5KB
• rgp-2025830xexx322.htm (EX-32.2) — 5KB
• 0001084765-25-000152.txt ( ) — 6496KB
• rgp-20250830.xsd (EX-101.SCH) — 38KB
• rgp-20250830_cal.xml (EX-101.CAL) — 77KB
• rgp-20250830_def.xml (EX-101.DEF) — 211KB
• rgp-20250830_lab.xml (EX-101.LAB) — 595KB
• rgp-20250830_pre.xml (EX-101.PRE) — 440KB
• rgp-20250830_htm.xml (XML) — 839KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Balance Sheets as of August 30, 2025 and May 31, 2025 3 Consolidated Statements of Operations for the Three Months Ended August 30, 2025 and August 24, 2024 4 Consolidated Statements of Comprehensive L oss for the Three Months Ended August 30, 2025 and August 24, 2024 5 Consolidated Statements of Stockholders' Equity for the Three Months Ended August 30, 2025 and August 24, 2024 6 Consolidated Statements of Cash Flows for the Three Months Ended August 30, 2025 and August 24, 2024 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 38 ITEM 4.

Controls and Procedures

Controls and Procedures 40

—OTHER INFORMATION

PART II—OTHER INFORMATION ITEM 1A.

Risk Factors

Risk Factors 41 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 ITEM 5. Other Information 41 ITEM 6. Exhibits 42

Signatures

Signatures 43 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS. RESOURCES CONNECTION, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value per share) August 30, 2025 May 31, 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 77,518 $ 86,147 Trade accounts receivable, net of allowances of $ 2,562 and $ 2,603 as of August 30, 2025 and May 31, 2025, respectively 93,555 99,210 Prepaid expenses and other current assets 9,448 10,246 Income taxes receivable 7,727 8,083 Total current assets 188,248 203,686 Goodwill 28,757 28,757 Intangible assets, net 17,785 18,978 Property and equipment, net 4,213 4,423 Operating lease right-of-use assets, net 22,365 22,551 Deferred tax assets 9,526 9,280 Other non-current assets 16,317 17,013 Total assets $ 287,211 $ 304,688 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued expenses $ 12,398 $ 13,902 Accrued salaries and related obligations 32,207 47,931 Operating lease liabilities, current 5,135 5,149 Other current liabilities 8,874 8,420 Total current liabilities 58,614 75,402 Operating lease liabilities, non-current 20,218 20,156 Deferred tax liabilities 19 92 Other non-current liabilities 2,001 1,957 Total liabilities 80,852 97,607 Commitments and contingencies (see Note 11) Stockholders' equity: Preferred stock, $ 0.01 par value, 5,000 shares authorized; zero shares issued and outstanding – – Common stock, $ 0.01 par value, 70,000 shares authorized; 37,324 and 37,027 shares issued, and 33,391 and 33,075 shares outstanding as of August 30, 2025 and May 31, 2025, respectively 373 370 Additional paid-in capital 403,673 400,180 Accumulated other comprehensive loss ( 17,096 ) ( 17,863 ) Accumulated deficit ( 126,881 ) ( 121,575 ) Treasury stock at cost, 3,933 and 3,952 shares as of August 30, 2025 and May 31, 2025, respectively ( 53,710 ) ( 54,031 ) Total stockholders' equity 206,359 207,081 Total liabilities and stockholders' equity $ 287,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Description of the Company and its Business Resources Connection, Inc. (the "Company"), a Delaware corporation, was incorporated on November 16, 1998. The Company's operating entities provide services primarily under the name Resources Global Professionals ("RGP"). RGP is a global professional services firm with three decades of experience helping the world's top organizations navigate change and seize opportunity. With three integrated offerings—On-Demand Talent, Consulting, and Outsourced Services—the Company provides CFOs and other C-suite leaders with the flexibility to solve today's most pressing challenges. The Company's principal markets of operations are North America, Europe & Asia Pacific. The Company's fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31. The first quarters of fiscal 2026 and 2025 each consisted of 13 weeks. The Company's fiscal year 2026 will consist of 52 weeks. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited financial statements of the Company as of and for the three months ended August 30, 2025 and August 24, 2024 have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements include all adjustments (consisting only of normal recurring adjustments) the Company's management considers necessary for a fair presentation of its financial position at such dates and the operating results and cash flows for those periods. The financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

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