RGP Navigates Challenging Economic Landscape, Focuses on Diversification and Operational Efficiency

Resources Connection, Inc. (RGP), a leading professional services firm, has reported its financial results for the first quarter of fiscal 2025, showcasing a resilient response to a persistently choppy demand environment. Despite facing headwinds, the company has remained steadfast in its commitment to diversifying its service offerings and optimizing its operations to drive long-term growth and profitability.

Navigating Turbulent Times with Strategic Agility

Adapting to Evolving Market Dynamics

The first quarter of fiscal 2025 saw RGP's revenue decline by 19.5% compared to the prior year quarter, reflecting the broader economic trends that have led clients to adopt a cautious approach. Clients have been hesitant to move forward with transformation projects, resulting in extended timelines for opportunities to close in the pipeline. This has translated into a 15.3% decrease in billable hours and a 5.0% decline in the average bill rate.

Diversifying Service Offerings for Sustained Growth

In response to the changing market landscape, RGP has reorganized its business segments to better align with its internal management framework and reporting of financial information. The company now operates under three distinct engagement brands: On-Demand by RGP, Veracity by RGP, and Countsy by RGP. This strategic move enables RGP to serve its clients in a more focused and tailored manner, addressing their evolving needs across on-demand talent solutions, consulting services, and outsourced accounting, HR, and equity management.

Driving Operational Efficiency and Cost Discipline

Despite the revenue decline, RGP has demonstrated its commitment to cost discipline and operational efficiency. The company's selling, general, and administrative (SG&A) expenses improved by 18.4% year-over-year, primarily due to lower management compensation, a gain on the sale of the Irvine office building, and reduced bonuses and commissions. These cost-saving initiatives have helped offset the impact of lower revenue and profitability, positioning RGP to weather the current economic challenges.

Navigating Challenges with Resilience and Agility

While the first quarter of fiscal 2025 presented significant challenges, RGP has shown its ability to adapt and pivot its business model to address the evolving market dynamics. The company's diversification strategy, coupled with its focus on operational efficiency, has enabled it to maintain a strong financial position, with cash and cash equivalents plus borrowings available under its senior secured revolving loan facility totaling $263.2 million as of the end of the quarter.

Investing in the Future: Technology Transformation and Brand Refresh

Amidst the current headwinds, RGP has continued to invest in strategic initiatives that will position the company for long-term success. The company's technology transformation efforts, including the implementation of a cloud-based enterprise resource planning system and talent acquisition and management systems, are designed to improve speed to market, extend buying centers, and strengthen brand recognition. Additionally, RGP's recent brand refresh has reinforced its strategy to cross-sell its service offerings as a trusted partner to its exceptional client base, enabling the company to deliver on its growth and profitability goals.

Navigating Challenges, Embracing Opportunities

Despite the challenges faced in the first quarter of fiscal 2025, RGP remains steadfast in its commitment to navigating the evolving market landscape and delivering value to its clients and shareholders. The company's diversification strategy, operational efficiency initiatives, and strategic investments in technology and brand positioning have laid the foundation for long-term success. As RGP continues to adapt and innovate, it is well-positioned to capitalize on emerging opportunities and drive sustainable growth in the years to come.