Resources Connection stock tumbles 10% as lower project volumes drive Q1 loss
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Investing.com -- Resources Connection Inc (NASDAQ: RGP) reported a wider-than-expected loss for its first quarter of fiscal 2027, sending shares down 10.6% in after hours trading following the results.
The professional services firm posted an adjusted loss per share of -$0.16, significantly worse than the analyst estimate of -$0.02. Revenue came in at $98.1 million, missing the consensus estimate of $106.0 million and down 18.4% YoY on a same-day constant currency basis.
The company attributed the shortfall to lower project volume and utilization in Consulting and ongoing caution in client decision-making, which led to longer decision cycles and delayed project starts.
"Our first-quarter results were within the revenue and gross margin ranges we communicated in July, with adjusted SG&A expense better than our outlook," said Roger Carlile, President and Chief Executive Officer of RGP. "However, our revenue and profitability remained below our potential, driven primarily by lower project volume and utilization in Consulting and ongoing caution in client decision-making."
Gross margin declined to 37.4% from 39.5% in the prior year quarter, primarily due to lower utilization of salaried consultants. The company reported a net loss of $8.0 million, or -$0.23 per diluted share on a GAAP basis, compared to a net loss of $2.4 million, or -$0.07 per share, in the same quarter last year. Adjusted EBITDA was -$3.6 million compared to $3.1 million in the prior year period.
Billable hours decreased 13.2% YoY, while the average bill rate declined 5.8%, reflecting a shift in geographic revenue mix and the May 2026 sale of Sitrick Group. The Consulting segment was particularly weak, with revenue falling 25.8% to $32.4 million.
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