In This Article:
Release Date: April 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Resources Connection Inc (NASDAQ:RGP) reported total revenue of $129.4 million, which was in line with expectations.
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The company saw strengthening across its practices in Europe, Japan, and the Philippines, with Europe showing key performance improvements.
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RGP doubled the number of $1 million plus engagements won this quarter compared to a year ago.
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The company has enhanced its client offerings with a diversified services platform, providing flexibility and value-based execution support.
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RGP has improved operational efficiency by lowering its cost structure, optimizing headcount, and reducing discretionary spending.
Negative Points
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The operating environment in the US remains sluggish due to increased uncertainty and decreased consumer confidence.
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RGP's on-demand and consulting segments, predominantly US-based, were impacted by macroeconomic conditions, leading to revenue declines.
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The company recorded a non-cash goodwill impairment charge of $42 million due to sluggish demand in its on-demand and consulting segments.
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RGP experienced a slowdown in growth in its Europe and Asia segments, with Europe impacted by consultant holidays and APAC by macroeconomic challenges in China.
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The company anticipates delays in client decision-making to continue, affecting early fourth-quarter revenue.
Q & A Highlights
Q: How high priority are the transformational activities for clients, and how long can they hold off without starting these activities? A: (Kate Duchaine, CEO) The pent-up demand in Europe has started to open up, leading to project movements, such as M&A activity and technology transformations. However, in the US, uncertainty, especially around tariffs, is causing hesitancy in making firm decisions. This has led to delays in decision-making rather than cancellations, with budget constraints often cited as reasons for delays.
Q: How is RGP retaining consultants during these challenging times? A: (Kate Duchaine, CEO) Retention is crucial, and RGP is working hard to engage consultants with prior clients and maintain competitive pricing. The company stays connected with consultants through alumni activities, ensuring they feel valued, which will be beneficial when the market environment improves.
Q: What measures are being taken to improve operational efficiency, and how much more can be cut without affecting the business? A: (Jen, CFO) RGP is focusing on reducing fixed costs and leveraging new technology for efficiency. Real estate optimization and tighter discretionary spending are key areas. While protecting profitability in the near term, the company is also investing in key business areas for long-term growth.