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Resources Connection shares fell in after-hours trading on Wednesday, October 7, after the professional-services firm reported first-quarter fiscal 2027 revenue below analyst expectations and a wider loss. The company said lower consulting project volume, delayed client decisions and reduced consultant utilization weighed on results for the quarter ended August 29.
Resources Connection reported revenue of $98.1 million, down from $120.2 million a year earlier and below the roughly $106 million consensus cited by Investing.com. Adjusted loss was 16 cents per share, compared with an analyst estimate of a 2-cent loss. Investing.com reported shares down about 10% after the results.
Revenue and profitability weakened
The company’s net loss widened to $8.0 million, or 23 cents per diluted share, from $2.4 million, or 7 cents per share, in the year-earlier quarter. Adjusted EBITDA—a non-GAAP measure—shifted to a loss of $3.6 million from positive EBITDA of $3.1 million.
Gross margin fell to 37.4% from 39.5%. Resources Connection attributed the decline primarily to lower utilization of salaried consultants. While selling, general and administrative expenses decreased to $43.1 million from $47.9 million, they rose as a share of revenue to 43.9% from 39.9%, as the sales decline outpaced the cost reduction.
Revenue was down 18.4% year over year on the company’s same-day, constant-currency basis. Billable hours decreased 13.2%, while the average bill rate fell 5.8%—a combination that points to fewer hours of work as well as a lower overall realized rate.
Consulting was the largest pressure point
Consulting revenue dropped 25.8% to $32.4 million. Billable hours in the segment fell 27.1%, partly offset by a 2.2% increase in the average bill rate. The company said cautious client commitments led to longer decision cycles and delayed project starts.
On-Demand Talent revenue decreased 13.2% to $38.6 million, mainly because billable hours fell 16.4%. Its average bill rate increased 4.1%, which Resources Connection said reflected continued pricing discipline; the company also said demand for operational accounting roles remained below the year-earlier level but was showing signs of stabilization.
Europe and Asia Pacific revenue declined 13.9% to $17.1 million, primarily as the average bill rate fell amid a shift toward lower-cost markets in Asia Pacific. Outsourced Services revenue was flat year over year, with billable hours up 4.9% and average bill rates down 1.0%.
Management points to execution and cost control
Chief Executive Roger Carlile said results were within the revenue and gross-margin ranges the company had communicated in July, while adjusted SG&A expense was better than its outlook. He also said revenue and profitability remained below the company’s potential, citing lower consulting volume and utilization alongside cautious client decisions.
Resources Connection said it is working to strengthen sales execution, improve consulting staffing and utilization, and reduce its cost structure. Carlile also pointed to opportunities in the company’s pipeline, several strategic client relationships and disciplined pricing in On-Demand Talent. Those observations are management’s assessment; the quarter’s reported figures show that the operating improvements have not yet offset weak demand and project activity.
Cash use and leadership context
The company ended August 29 with $61.2 million in cash and cash equivalents and up to $24.1 million of borrowing capacity under its PNC Bank credit agreement. It used $18.9 million in operating cash during the quarter, compared with $7.8 million a year earlier. The company said the outflow reflected, among other factors, July incentive payments, operating results, and executive-transition and restructuring costs.
The results followed a previously announced finance leadership change: Jennifer Y. Ryu’s CFO resignation took effect October 2, and Jessica Block, formerly the company’s chief AI officer, became interim CFO on October 3. The transition was disclosed in September, before the earnings announcement. Resources Connection paid a quarterly dividend of 7 cents per share on October 1, according to its earnings release.
Company’s next update
Resources Connection scheduled a conference call for analysts and investors at 5 p.m. Eastern Time on October 7 to discuss the quarter. The company said the webcast replay would be available for 30 days. Its release did not specify a date for its next earnings announcement, so the next scheduled investor update beyond that call was not established in the reported materials.
