Resources Connection Reports Q4 and Full Fiscal Year 2026 Financial Results
Resources Connection reported Q4 FY26 revenue of $106.1 million, down 23.84% year-over-year, with Adjusted EBITDA of $(0.6) million and a GAAP diluted loss of $0.47 per share. Full fiscal year 2026 revenue declined 18.0% to $452.0 million, with net loss improving to $40.6 million from $191.8 million in FY25. The company ended the period with $82.4 million in cash, entered a new $30.0 million credit facility, and guided Q1 FY27 revenue of $97–$102 million.
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Resources Connection, Inc. (RGP), a professional services firm, reported its financial results for the fourth quarter and full fiscal year ended May 30, 2026. Quarterly revenue of $106.115 million missed the analyst consensus estimate of $106.767 million by 0.61%, representing a 23.84% decrease compared to $139.340 million in the same period last year. The company recorded an adjusted diluted loss per share of $(0.07), beating the analyst consensus estimate of $(0.08) by 12.50%. On a same-day constant currency basis, quarterly revenue was down 18.3% compared to the prior year quarter, with billable hours decreasing 20.9%, partly attributable to one less week in the fourth quarter and the sale of Sitrick, LLC on May 2, 2026.
"Consistent with the prior quarter, fourth quarter results were aligned with our outlook for revenue, gross margin, and run rate SG&A expense," said Roger Carlile, Chief Executive Officer. "Market conditions also remain broadly consistent to the third quarter with our North America and Asia markets performing as expected while Europe exhibited some weakness. As a result, our priorities continue to be refocusing our On-Demand Talent segment offerings, scaling our Consulting segment, pursuing AI as both a client-service and an internal opportunity, streamlining how we operate and aligning our cost structure with our revenue levels."
Q4 Fiscal 2026 Financial Performance
The following table summarizes key financial metrics for the fourth quarter compared to the prior year quarter:
| Metric: | Q4 FY26 | Q4 FY25 |
|---|---|---|
| Revenue: | $106.1 million | $139.3 million |
| Gross Margin: | 37.6% | 40.2% |
| GAAP SG&A Expenses: | $54.6 million | $50.6 million |
| Adjusted SG&A (Run-Rate): | $40.5 million | $46.2 million |
| Net Loss: | $16.1 million (15.1% margin) | $73.3 million (52.6% margin) |
| GAAP Diluted Loss per Share: | $(0.47) | $(2.23) |
| Adjusted EBITDA: | $(0.6) million (-0.6% margin) | $9.8 million (7.1% margin) |
Gross margin declined to 37.6% from 40.2%, as lower consultant utilization and negative operating leverage continued to weigh on results, partially offset by a 31 basis point improvement in the pay bill ratio. GAAP SG&A expenses of $54.6 million included $4.6 million of severance and stock-based compensation related to the Sitrick sale, $3.2 million of severance and stock-based compensation tied to the separation of the company's former COO, and a $2.4 million loss on the Sitrick sale. Income tax expense for the quarter was $0.6 million, reflecting an effective tax rate of 3.7%.
Full Fiscal Year 2026 Financial Performance
Full year results are summarized below:
| Metric: | FY26 | FY25 |
|---|---|---|
| Revenue: | $452.0 million | $551.3 million |
| Gross Margin: | 37.5% | 37.6% |
| GAAP SG&A Expenses: | $202.8 million | $202.0 million |
| Adjusted SG&A (Run-Rate): | $164.1 million | $184.1 million |
| Net Loss: | $40.6 million (9.0% margin) | $191.8 million (34.8% margin) |
| GAAP Diluted Loss per Share: | $(1.21) | $(5.80) |
| Adjusted EBITDA: | $5.0 million (1.1% margin) | $23.5 million (4.3% margin) |
Full year revenue declined 18.0% (17.4% on a same-day constant currency basis), driven by a 17.5% decrease in billable hours and a 0.9% decline in average bill rate. Gross margin remained relatively flat at 37.5%. The $0.8 million year-over-year increase in SG&A was primarily attributable to $12.2 million in costs related to the separation of the company's former CEO and former COO, $4.6 million in Sitrick-related severance and stock-based compensation, and a $2.4 million loss on the Sitrick sale, largely offset by a $9.5 million reduction in employee compensation and benefits costs. Income tax expense for the full year was $2.5 million, reflecting an effective tax rate of 6.4%.
Segment Results
Revenue performance across segments for the fourth quarter and full fiscal year is presented below:
| Segment: | Q4 FY26 Revenue | Q4 FY25 Revenue | Q4 YoY Change | FY26 Revenue | FY25 Revenue |
|---|---|---|---|---|---|
| On-Demand Talent: | $40.4 million | $53.0 million | -23.7% | $168.8 million | $206.0 million |
| Consulting: | $36.6 million | $51.0 million | -28.1% | $159.8 million | $219.2 million |
| Europe & Asia Pacific: | $17.1 million | $21.3 million | -19.9% | $75.1 million | $77.6 million |
| Outsourced Services: | $10.3 million | $11.3 million | -1.6% | $39.2 million | $39.6 million |
| All Other: | $1.6 million | $2.8 million | N/A | $9.1 million | $8.9 million |
In the fourth quarter, On-Demand Talent segment Adjusted EBITDA margin was 7.6%, Consulting was 6.3%, Europe & Asia Pacific was 2.2%, and Outsourced Services was 20.2%. The On-Demand Talent and Consulting segments each reflected 13 weeks of billable activity in Q4 FY26 compared to 14 weeks in Q4 FY25. The decline in the All Other segment was related to the sale of Sitrick on May 2, 2026.
Cash Position and Capital Allocation
As of May 30, 2026, cash and cash equivalents totaled $82.4 million with no outstanding debt. The company generated $1.4 million in cash from operations during the full fiscal year, compared to $18.9 million in the prior year. The company was not in compliance with all financial covenants under its credit facility as of May 30, 2026; the facility was subsequently terminated on July 13, 2026. On July 15, 2026, the company entered into a new credit facility providing for secured revolving loans up to the lesser of $30.0 million and a borrowing base tied to eligible receivables. A quarterly dividend of $0.07 per share was paid on June 19, 2026, totaling $2.4 million in aggregate. As of May 30, 2026, approximately $79.2 million remained available for future repurchases under the company's Stock Repurchase Programs.
Outlook
For the first quarter of fiscal 2027, Resources Connection expects revenue between $97 million and $102 million, adjusting for normal summer seasonality and the impact of the Citrix divestiture. Gross margin is projected between 37% and 38%. Run-rate SG&A expense is forecasted to range from $41 million to $43 million, reflecting targeted reinvestments. Non-run-rate and non-cash expenses are expected to range from $2 million to $3 million.
How will the transition to the new asset-based credit facility impact the company's financial flexibility compared to the previous covenant-based facility?
What specific AI initiatives is the company pursuing to drive growth in client services, and when are these expected to contribute materially to revenue?
With the new credit facility capped at $30 million against a borrowing base, does the company anticipate any constraints on funding its strategic reinvestments or stock repurchase program?
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