RGP 10-K & 10-Q changes, risk factors and insider trading
Resources Connection, Inc. · Nasdaq · Services-Business Services, Nec · CIK 1084765 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may be unable to adequately meet the needs of our clients with our consultants, which can harm our reputation, affect our ability to win new business and have a material adverse effect on our financial results.”
New heading “In fiscal 2026, our management identified a material weakness in our internal control over financial reporting. If we do not effectively remediate this material weakness or if we experience additional material weaknesses or otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely impacted, which in turn may harm our business and adversely affect the market price of our common stock.”
Largest changes
“Management is in the process of implementing steps that it believes will remediate the material weakness it has identified. Implementing such changes may distract our officers and employees, entail substantial costs and take time to complete. …”see in full comparison
“In fiscal 2026, our management identified a material weakness in our internal control over financial reporting. If we do not effectively remediate this material weakness or if we experience additional material weaknesses or otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely impacted, which in turn may harm our business and adversely affect the market price of our common stock.”see in full comparison
In response to changes in industry and market conditions, we have undertaken in the past, and from time to time expect to undertake in the future, restructuring, reorganization, or other strategic initiatives and business transformation plans to realign our resources with our growth strategies, operate more efficiently and control costs. For example, in fiscalsee in full comparison2025,2026, weinitiatedbegan aglobaltransformation initiative to redesign and streamline our operating model to achieve a reduced costreductionstructure,planas well as integrate Reference Point's consulting capabilities into our existing consulting business to form a more cohesive consulting segment (the “20252026RestructuringTransformationPlanInitiative”),.includingInaconnectionreductionwith the 2026 Transformation Initiative we began certain workforce reductions inforceOctoberintended2025toandreduceJanuary 2026 affecting management and administrative roles, aimed at improving efficiency, reducing costs andstreamlinestreamlining operations.AdditionallyAs has occurred infiscal 2025, we completed a reorganization of our business, which included forming discrete operational business units, On-Demand Talent, Consulting, Outsourced Services, and Europe & Asia Pacific and implementing management organizational changes and new reporting modules and processes (the“2025past,Reorganization”). Thethe successful implementation of our transformation and restructuring activities may from time to time require us to effect business and asset dispositions, workforce reductions, management restructurings, decisions to limit investments in or otherwise exit businesses, office consolidations and closures, and other actions, each of which may depend on a number of factors that may not be within our control.
see in full comparisonPrior to July 2, 2025, we had a $175.0 million senior secured loan (the “2021 Credit Facility”) which was scheduled to mature on November 12, 2026.On July2,15,2025,2026, we entered into a new credit agreement that provides forasecured revolvingloan,loans, available in an amount up to the lesser of$50.0$30.0 million and a borrowing base formula tied to eligible receivables and eligible unbilled receivables and subject to established reserves, which includes a $5,000,000 sublimit for the issuance of standby letters of credit and a $15,000,000 sublimit for swing loans (the“New"2026 Credit Facility”"), maturing on November 30, 2029.. We are subject to various operating covenants under theNew2026 Credit Facility which restrict our ability to, among other things, incur additional liens, incur additional indebtedness, make certainrestricteddividendspayments,and distributions, merge or consolidate and make dispositions of assets. TheNew2026 Credit Facility also requires us tocomplymaintainwithafinancialminimumcovenantslevellimitingofourliquidity and, upon certain conditions, a minimum fixed charge coverageratio and maximum total net leverageratio. Any failure to comply with these covenants may constitute a breach under theNew2026 Credit Facility, which could result in the acceleration of all or a substantial portion of any outstanding indebtedness and termination of revolving credit commitments under theNew2026 Credit Facility. Our inability to maintain ourNew2026 Credit Facility could materially and adversely affect our liquidity and our business.
“We may be unable to adequately meet the needs of our clients with our consultants, which can harm our reputation, affect our ability to win new business and have a material adverse effect on our financial results.”see in full comparison
“We are subject to governmental, regulatory and legal requirements in each jurisdiction in which we operate. While we seek to remain in compliance with such legal and regulatory requirements, there may be changes to regulatory schemes in jurisdictions in which we operate that are outside our control and our efforts to remain in compliance with such changes may adversely affect our business and operating results. We must comply with professional or occupational licensing and certification requirements for some of our employees and consultants in foreign and domestic jurisdictions. …”see in full comparison
Full comparison: every changed paragraph (38)
An economic downturn or deterioration of general macroeconomic conditions could continue to adversely affect our global operations and financial condition.
We are exposed to the risk of an economic downturn or deterioration of general macroeconomic conditions, including slower growth or recession, inflation, or decreases in consumer spending power or confidence, which has had and could continue to have a significant impact on our business, financial condition, and results of operations. Recent inflationary conditions and the continue elevation of high interest rates, geopolitical conflicts as further discussed below and increasing diplomatic and trade friction, including as a result of new and increased tariffs imposed by the U.S. against China, Mexico, Canada and other countries, pandemics or public health crises, have caused disruptions in the U.S. and global economy, and uncertainty regarding general economic conditions within some regions and countries in which we operate, including concerns about a potential U.S. and/or global recession. These disruptions and uncertainties have led, and may continue to lead, to reluctance on the part of some companies to spend on discretionary projects. Deterioration of or prolonged uncertainty related to the global economy or tightening credit markets, including as a result of tariffstrade friction or other importgeopolitical restrictions,uncertainty, could cause some of our clients, particularly those reliant on global supply chains, to experience liquidity problems or other financial difficulties and could further reduce the demand for our services and adversely affect our business in the future.
TheGeopolitical militaryinstability, incursionincluding by Russia into Ukraine andthe conflict and unrest in the Middle EastEast, could continue to create global economic and market uncertainty in a manner that could adversely affect our operations. WarsSuch conflicts and instability divert international trade and capital flows, disrupt global supply chains, delay companies’ investment and hiring and erode consumer confidence, and periods of elevated geopolitical risks have historically been associated with negative effects on global economic activity. Although none of our operations are in Russia, Ukraine or areas of the Middle East experiencing conflict, the continuation or further escalation of geopolitical tensions, or future instances of political unrest in other geographies, could impact other markets where we do business, including Europe and Asia Pacific, or cause negative global economic effects which may adversely affect our business, financial condition, and results of operations.
We cannot provide assurance that we will be able to compete effectively against existing or future competitors. Many of our competitors have significantly greater financial resources, greater revenues and greater name recognition,recognition and enhanced technological capabilities, including the use of AI, which may afford them an advantage in attracting and retaining clients and consultants and in offering pricing concessions. Some of our competitors in certain markets do not provide medical insurance or other benefits to their consultants, thereby allowing them to potentially charge lower rates to clients. In addition, our competitors may be able to respond more quickly to changes in companies’ needs and developments in the professional services industry.
Bank failures or other eventsEvents affecting financial institutions could adversely affect our and our clients’ liquidity and financial performance.
We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks, which exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies. The failure of a bank, or eventsEvents involving limited liquidity, defaults, non-performance or other adverse conditions in the financial or credit markets impacting financial institutionsinstitutions, including bank failures, at which we maintain balances, or concerns or rumors about such events, may lead to disruptions in access to our bank deposits or otherwise adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis.
Our international operations increase our exposure to these risks due to differences in regulatory frameworks, levels of government support, and deposit protection regimes, as well as our reliance on local financial institutions and banking systems in the jurisdictions in which we operate. These factors may increase the likelihood or severity of disruptions in access to funds during periods of market stress or financial instability.
In addition, instability, liquidity constraints or other distress in the financial markets, including the effects of bank failures, defaults, non-performance or other adverse developments that affect financial institutions, could impair the ability of one or more of the banks participating in our current or any future credit agreement from honoring their commitments. This could have an adverse effect on our business if we were not able to replace those commitments or to locate other sources of liquidity on acceptable terms.]
We may be unable to adequately meet the needs of our clients with our consultants, which can harm our reputation, affect our ability to win new business and have a material adverse effect on our financial results.
Our business depends on providing the right talent to meet client demand and is exposed to sudden changes in type of demand, market trends and specialties of client needs. We may be unable to provide the right mix of talent to meet our clients’ demand in specialized areas, including in rapidly changing areas of emerging technologies such as AI. Our consultants may also have conflicts of interest that could prevent us from adequately meeting client demand, especially in concentrated specializations, which may adversely affect our revenue. In such situations clients may also choose our competitors, which may harm our reputation and have adverse effects on our financial results.
We generally do not have long-term agreements with our clients for the provision of services and our clients may terminate engagements with us at any time. The success of our business is dependent on our ability to secure new projects from clients or to renew expired or expiring contracts with clients. For example, our business is likely to be materially adversely affected if we are unable to secure new client projects because of improvements in our competitors’ service offerings, because of our customers’ use of technology or AI instead of external experts, because of a change in government regulatory requirements, because of an economic downturn decreasing the demand for outsourced professional services, or for other reasons. New impediments to our ability to secure projects from clients may develop over time, such as the increasing use by large clients of in-house procurement groups that manage their relationship with service providers.providers and potential of conflicts of interests given the nature of professional services.
As technology continues to evolve, more tasks currently performed by people have been and may continue to be replaced by automation, robotics, machine learning, AI and other technological advances outside of our control. These technological changes may (i) reduce demand for our services, (ii) enable the development of competitive products or services, or (iii) enable our current customers to reduce or bypass the use of our services, particularly in lower-skill job categories. Additionally, rapid changes in AI and generative AI which involves the use of advanced algorithms and machine learning techniques to create content, generate ideas, or simulate human-like behaviors and block chain-based technology are increasing theour competitivenessindustries' competitive landscape. We may not be successful in anticipating or responding to these changes and there can be no assurance that we can integrate other technologies we use with AI or that material additional monetary and time expenditures will not be required. In addition, demand for our services could be further reduced by advanced technologies being deployed by our competitors.
We may be unable to realize the level of the anticipated benefits that we expect from our transformation and restructuring initiatives, which may adversely impact our business and results of operations.
In response to changes in industry and market conditions, we have undertaken in the past, and from time to time expect to undertake in the future, restructuring, reorganization, or other strategic initiatives and business transformation plans to realign our resources with our growth strategies, operate more efficiently and control costs. For example, in fiscal 2025,2026, we initiatedbegan a globaltransformation initiative to redesign and streamline our operating model to achieve a reduced cost reductionstructure, planas well as integrate Reference Point's consulting capabilities into our existing consulting business to form a more cohesive consulting segment (the “20252026 RestructuringTransformation PlanInitiative”),. includingIn aconnection reductionwith the 2026 Transformation Initiative we began certain workforce reductions in forceOctober intended2025 toand reduceJanuary 2026 affecting management and administrative roles, aimed at improving efficiency, reducing costs and streamlinestreamlining operations. AdditionallyAs has occurred in fiscal 2025, we completed a reorganization of our business, which included forming discrete operational business units, On-Demand Talent, Consulting, Outsourced Services, and Europe & Asia Pacific and implementing management organizational changes and new reporting modules and processes (the “2025past, Reorganization”). Thethe successful implementation of our transformation and restructuring activities may from time to time require us to effect business and asset dispositions, workforce reductions, management restructurings, decisions to limit investments in or otherwise exit businesses, office consolidations and closures, and other actions, each of which may depend on a number of factors that may not be within our control.
Our recent digital expansion and technology transformation efforts may not be successful, which could adversely impact our growth and profitability.
In fiscal 2025, we continued our Borderless Talent initiative to continue to evolve towards and facilitate a virtual operating model. With this initiative, we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on workload, not zip code. We continue to upgrade our cloud-based enterprise-wide operating and Enterprise Resource Planning system. The continued success of these initiatives requires adjusting and strengthening our business operations, financial and talent management systems, procedures, controls and compliance, which may increase our total operating costs and adversely impact our profitability and growth.
In fiscal 2025, we initiated the 2025 Restructuring Plan and completed the 2025 Reorganization. There can be no assurance we will be able to maintain or expand our market presence in our current locations, successfully enter other markets or locations or successfully operate our business virtually without a physical presence in all our markets. Our ability to continue to grow our business will depend upon an improving global economy and a number of factors, including our ability to:
•grow a new client base and penetrate our existing client base;
We believe establishing, maintaining and enhancing the RGP and Resources Global Professionals brand names are important to our business. We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand. We have undertaken global rebranding initiatives, including the launch of our tagline ― Dare to Work Differently in fiscal 2022. However, there can be no assurance that our rebranding initiative will result in a positive return on investment. In addition, thereThere can be no assurance that the actions we have taken to establish and protect our trademarks will be adequate to prevent use of our trademarks by others. Further, not all of our trademarks were successfully registered in all of our desired countries. Accordingly, we may not be able to claim or assert trademark or unfair competition claims against third parties for any number of reasons. For example, a judge, jury or other adjudicative body may find that the conduct of competitors does not infringe or violate our trademark rights. In addition, third parties may claim that the use of our trademarks and branding infringe, dilute or otherwise violate the common law or registered marks of that party, or that our marketing efforts constitute unfair competition. Such claims could result in injunctive relief prohibiting the use of our marks, branding and marketing activities as well as significant damages, fees and costs. If such a claim were made and we were required to change our name or any of our marks, the value of our brand may diminish and our results of operations and financial condition could be adversely affected.
In fiscal 2026, our management identified a material weakness in our internal control over financial reporting. If we do not effectively remediate this material weakness or if we experience additional material weaknesses or otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely impacted, which in turn may harm our business and adversely affect the market price of our common stock.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles in the U.S. (“GAAP”). We are required to furnish annually a report by management of its assessment of the effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year. In addition, our independent registered public accounting firm is required to provide a related attestation report on our internal control over financial reporting.
As described Part II Item 9A. “Controls and Procedures” of this Annual Report on Form 10-K, as of May 30, 2026, management concluded the Company did not have effective controls over Information Technology General Controls (“ITGC”) for information systems and applications that are relevant to the preparation of the consolidated financial statements. Management determined that we did not design and maintain effective controls to adequately restrict user and privileged access to financial applications, programs and data to the appropriate personnel. Management also determined that program change management controls were not designed and operating effectively to ensure that information technology (“IT”) program and configuration changes affecting IT applications and underlying accounting records were appropriately identified, tested, authorized and implemented. As a result, the related IT dependent manual and application controls that relied on the affected ITGCs, or on information generated by IT systems with affected ITGCs, were also deemed ineffective.
Management is in the process of implementing steps that it believes will remediate the material weakness it has identified. Implementing such changes may distract our officers and employees, entail substantial costs and take time to complete. If we are unable to successfully remediate the existing material weakness or prevent a future material weakness or other deficiencies in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected; our liquidity, our access to capital markets and the perceptions of our creditworthiness could be adversely affected; we may be unable to maintain compliance with applicable securities laws, Nasdaq listing requirements, and the covenants under any debt instruments regarding the timely filing of periodic reports; we may be subject to regulatory investigations and penalties; and investors may lose confidence in our financial reporting. If any such event or circumstance were to occur, our stock price could decline and our business, financial condition and results of operations could be materially adversely affected.
We use and rely on various computer, telecommunications and other information systems in the conduct and management of our business. These information systems are vulnerable to security breaches, cyber or other security incidents, natural disasters or other catastrophic events, or other interruptions or damage stemming from power outages, equipment failure or unintended orunintended, unauthorized usage by employees.employees or other system failures, including software failures or faulty system updates. We also rely on information systems and services provided by third parties. We rely on these information systems to process, transmit and store electronic information and to communicate among our locations around the world and with our clients, partners and consultants. From time to time, we or our third-party providers experience cybersecurity incidents, interruptions in our operations and system failures, and any loss or breach of data and interruptions or delays in our business or that of our clients, or both, resulting from such incidents, interruptions or failures could have a material impact on our business and operations and materially adversely affect our revenue, profits and operating results.
Our international operations further increase these risks due to differences in legal and regulatory standards across jurisdictions, varying levels of sophistication, resources and cooperation of foreign law enforcement, and reliance on local systems, infrastructure and third-party technology providers. In addition, geopolitical developments may heighten the risk of targeted cyberattacks against companies with global operations, including state-sponsored or affiliated actors seeking to exploit regional conflicts or tensions.
In addition, the transition of our workforce to a hybrid work environment, where our employees are often working remotely, has also increased our vulnerability to risks related to our hardware and software systems, including risks of phishing and other cybersecurity attacks. Our systems may be subject to additional risk introduced by software that we license from third parties. This licensed software may introduce vulnerabilities within our own operations as it is integrated with our systems, or as we provide client services through partnership agreements.
It is also possible that our security controls over personal and other data may not prevent unauthorized access to, or destruction, loss, theft, misappropriation or release of personally identifiable or other proprietary, confidential, sensitive or valuable information of ours or others; this access could lead to potential unauthorized disclosure of confidential, personal, Company or client information that others could use to compete against us or for other disruptive, destructive or harmful purposes and outcomes. Any such disclosure or damage to our networks and systems could subject us to third-party claims and governmental investigations and actions against us and reputational harm, including statutory damages under CaliforniaU.S. state or otherforeign state law, regulatory penalties and significant costs of incident investigation, remediation and notification. If these events occur, our ability to attract new clients or talent may be impaired or we may be subjected to damages or penalties.
We use AI and machine learning solutions in, and we may in the future integrate additional AI and/or machine learning solutions into, our service and solution offerings, and these AI applications may become more important in our operations over time. As an emerging technology, AI can be costly and difficult to implement and we cannot be sure that our use of AI will increase efficiency or provide any other benefits. The use of AI tools and technology presents many challenges and risks to our business, including the risk of hallucinations, bias, miscalculations, data errors and other unintended consequences. Our personnel may not have the skills to adequately utilize AI, understand AI’s limitations or maintain proficiency with AI’s rapid changes, increasing the potential for its unintended or improper use. Unintended or improper use of AIAI, including infringement of intellectual property, disclosure of our confidential business material or reliance on hallucinated results may lead to regulatory issues, reputational or financial harm, and operational disruptions. The rapid development and adoption of AI and AI-adjacent technology, and of AI’s competitive use cases, may make it more difficult for us to compete in our industry. Our competitors may have greater success implementing and using AI technology than us, which could harm our ability to compete effectively and could adversely affect our results of operations. Further, we may become reliant on AI technology and tools in the future. The legal, regulatory and compliance environment surrounding the design and use of AI technology is evolving and complex. Our obligation to comply with the evolving regulatory landscape could entail significant costs and negatively affect our business. In addition, there has been a significant increase in AI-related litigation and government regulatory actions targeting the design, deployment and other uses of AI, and claiming liability under numerous areas of the law, such as consumer protection, product liability, privacy, intellectual property, securities and defamation. The occurrence of any of these risks could have an adverse effect on our business, reputation and results of operations.
The rapid development and adoption of AI and AI-adjacent technology, and of AI’s competitive use cases, may make it more difficult for us to compete in our industry. Our competitors may have greater success implementing and using AI technology than us, which could harm our ability to compete effectively and could adversely affect our results of operations. The occurrence of any of these risks could have an adverse effect on our business, reputation and results of operations. Additionally, AI may accelerate the pace at which our clients can automate functions that would otherwise be performed by our consultants, which may reduce demand for our human capital solutions or exert downward pricing pressure on our services. Further, if agentic AI or similar technologies reduce the size of our clients' workforces or enable them to fulfill professional staffing needs without engaging our consultants, our revenue and operating results could be materially adversely affected.
As these laws continue to evolve, we may be required to make changes to our operations, systems, services, solutions and/or products to enable us and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our operations, contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations and our ability to market to customers. Changes in these laws, or the interpretation and application thereof, may also increase our potential exposure through significantly higher potential penalties for non-compliance. The costs of compliance with, and other burdens imposed by, such laws and regulations and client demand in this area may limit the use of, or demand for, our services, solutions and/or products, make it more difficult and costly to meet client expectations, or lead to significant fines, penalties or liabilities for noncompliance, any of which could adversely affect our business, financial condition, and results of operations.
We are subject to governmental, regulatory and legal requirements in each jurisdiction in which we operate. While we seek to remain in compliance with such legal and regulatory requirements, there may be changes to regulatory schemes in jurisdictions in which we operate that are outside our control and our efforts to remain in compliance with such changes may adversely affect our business and operating results. We must comply with professional or occupational licensing and certification requirements for some of our employees and consultants in foreign and domestic jurisdictions. Additionally, we must comply with laws and regulations regarding immigration and labor codes. Such laws, regulations and requirements may rapidly change. In recent periods, there have been trends towards immigration policies that have restricted immigration and work visas for foreign workers. Compliance with these laws, regulations and requirements can be costly, time-consuming and operationally burdensome, especially in a period of rapid legal changes. Failure to comply with these requirements may mean some of our consultants are ineligible to work on certain projects or expose us to private and government liability which may harm our reputation, operations and financial results.
We are subject to governmental, regulatory and legal requirements in each jurisdiction in which we operate. While we seek to remain in compliance with such legal and regulatory requirements, there may be changes to regulatory schemes in jurisdictions in which we operate that are outside our control and our efforts to remain in compliance with such changes may adversely affect our business and operating results.
We have a Code of Business Conduct and Ethics, Compliance Policy for Anti-Bribery and Anti-Corruption Laws, Insider Trading Policy, Code of Vendor Conduct and Ethics and other policies and procedures that are designed to educate and establishenforce the standards of conduct that we expect from our executive officers, outside directors, employees, consultants, independent contractors and vendors. These policies require strict compliance with U.S. and local laws and regulations applicable to our business operations, including those laws and regulations prohibiting improper payments to government officials. In addition, under U.S. federal securities laws, our executive officers, outside directors, employees, consultants and independent contractors are required to comply with the prohibitions against insider trading of our securities.
Because we are in the business of placing our personnel in the workplaces of other companies, we are subject to possible claims by our personnel alleging discrimination, sexual harassment, negligence and other similar activities by our clients. We may also be subject to similar claims from our clients based on activities by our personnel. We may also be subject to claims of or relating to wrongful termination, violation of employment rights related to employment screening or privacy issues; misclassification of workers as employees or independent contractors; violation of wage and hour requirements and other labor laws; employment of undocumented noncitizens; criminal activity; torts; breach of contract; failure to protect confidential personal information; intentional criminal misconduct; misuse or misappropriation of client intellectual property; employee benefits; or other claims.claims by both our personnel and clients. In some cases, we are contractually obligated to indemnify our clients against such risks. The cost of defending such claims, even if groundless, could be substantial and the associated negative publicity could adversely affect our ability to attract and retain personnel and clients. We could also be subject to injunctive relief, criminal investigations and/or charges, monetary damages or fines that may be significant, or other material adverse effects on our business.
We are subject to income and other taxes in the U.S. at the federal and state level and also in foreign jurisdictions. Future changes in applicable tax laws and regulations, including changes in tax rates or on tax benefits that we currently rely on in the jurisdictions in which we operate, are outside our control and are difficult to predict given the political, budgetary and other challenges. Such changes could adversely affect our business and operating results.
Prior to July 2, 2025, we had a $175.0 million senior secured loan (the “2021 Credit Facility”) which was scheduled to mature on November 12, 2026. On July 2,15, 2025,2026, we entered into a new credit agreement that provides for a secured revolving loan,loans, available in an amount up to the lesser of $50.0$30.0 million and a borrowing base formula tied to eligible receivables and eligible unbilled receivables and subject to established reserves, which includes a $5,000,000 sublimit for the issuance of standby letters of credit and a $15,000,000 sublimit for swing loans (the “New"2026 Credit Facility”"), maturing on November 30, 2029.. We are subject to various operating covenants under the New2026 Credit Facility which restrict our ability to, among other things, incur additional liens, incur additional indebtedness, make certain restricteddividends payments,and distributions, merge or consolidate and make dispositions of assets. The New2026 Credit Facility also requires us to complymaintain witha financialminimum covenantslevel limitingof ourliquidity and, upon certain conditions, a minimum fixed charge coverage ratio and maximum total net leverage ratio. Any failure to comply with these covenants may constitute a breach under the New2026 Credit Facility, which could result in the acceleration of all or a substantial portion of any outstanding indebtedness and termination of revolving credit commitments under the New2026 Credit Facility. Our inability to maintain our New2026 Credit Facility could materially and adversely affect our liquidity and our business.
OurThe New2026 Credit Facility bears a variable rate of interest that is based on the Secured Overnight Financing Rate (“SOFR”) which may have consequences for us that cannot be reasonably predicted and may adversely affect our liquidity, financial condition, and earnings.
Borrowings under ourthe 2026 Credit Facility bear interest at a variable rate per annum of either, at our election, (i) Term SOFR (as defined in the New2026 Credit Facility) plus a margin ranging from 1.25%1.75% to 2.5%2.25% or (ii) the Alternate Base Rate (as defined in the New2026 Credit Facility), plus a margin rangingof from 0.25%0.75% to 1.5%,1.25%, in either case, with the applicable margin depending on ourthe Company's Consolidated EBITDA (as defined in the New2026 Credit Facility). SinceAccordingly, the initial publication of SOFR, daily changesincreases in thebenchmark rateinterest have, on occasion, been more volatile than daily changes in comparable benchmarkrates or marketcredit rates,spreads increase our interest expense and SOFRdebt overservice timeobligations. may bear little or no relation to the historical actual or historical indicative data. It is possible that the volatility of SOFR and the applicable credit adjustment could result in higherHigher borrowing costs could reduce cash flows available for us,operations, capital expenditures, strategic investments and other corporate purposes. In addition, increases in interest rates may make it more difficult or more expensive to refinance existing indebtedness or incur additional indebtedness on commercially reasonable terms. Any of these factors could adversely affect our liquidity, financial condition,condition and earnings.
Management's Discussion & Analysis (MD&A)
New heading “Fiscal 2026 Developments”
New heading “Management Changes”
New heading “Company Transformation Initiative — Cost Structure Improvement”
New heading “Company Transformation Initiative — Simplification and Optimization of Business Portfolio”
New heading “(8) Executive transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO and former COO. These costs include $7.6 million of cash severance and $4.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards pursuant to ASC 718 – Compensation - Stock Compensation (“ASC 718”).”
New heading “(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.”
New heading “Cost of Services”
New heading “Selling, General and Administrative Expenses”
New heading “Goodwill Impairment”
New heading “(8) Executive transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO and former COO. These costs include $7.6 million of cash severance and $4.6 million of non-cash stock compensation expense reflecting the acceleration equity awards pursuant to ASC 718.”
New heading “(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.”
New heading “Year Ended May 31, 2025 Compared to Year Ended May 25, 2024”
New heading “Financing Activities, Fiscal 2026 and 2025”
Removed heading “The restructuring credits for the year ended May 27, 2023 related to the release of accrued restructuring liabilities upon completion of the global restructuring and business transformation plans from fiscal 2021.”
Removed heading “Year Ended May 25, 2024 Compared to Year Ended May 27, 2023”
Removed heading “Revenue by Segment”
Removed heading “Adjusted EBITDA by Segment”
Removed heading “Financing Activities, Fiscal 2025 and 2024”
Largest changes
(see in full comparison67) Restructuring costs during the year ended May 30, 2026 include employee termination costs incurred in workforce reductions, impairment of ROU asset, and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs for the year ended May 31, 2025 related to the2025Company'sRestructuringglobalPlan,cost reduction plan, including a reduction in force intended to reduce costs and streamline operations, whichwaswere authorized in December 2024 and May2025.2025 (the "2025 Restructuring Plan"). Restructuring costs for the year ended May 25, 2024 related to the Company's cost reduction plan, including a reduction in force, which was authorized in October2024,2023, and was substantially completed during fiscal2024.2024The restructuring credits for(theyear"U.S.endedRestructuringMay 27, 2023 related to the release of accrued restructuring liabilities upon completion of the global restructuring and business transformation plans from fiscal 2021.Plan").
(7) Restructuring costs during the year ended May 30, 2026 include employee termination costs incurred in workforce reductions, impairment of ROU asset in connection with reduction in office footprint, and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs for the year ended May 31, 2025 related to the 2025 Restructuringsee in full comparisonPlan, which was authorized in December 2024 and May 2025.Plan. Restructuring costs for the year ended May 25, 2024 related toourthe Company's cost reduction plan, including a reduction in force, which was authorized in October2024,2023, and was substantially completed during fiscal 2024.
“On a macro level, uncertain macroeconomic conditions including ambiguity around interest rates, softening labor markets, fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have created significant uncertainty in the global economy, volatility in the capital markets and recessionary pressures, which has adversely impacted our financial results. …”see in full comparison
“(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.”see in full comparison
“(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.”see in full comparison
Full comparison: every changed paragraph (164)
Resources Global Professionals (“RGP,” “we" or “us”) is a global professional services firm based in Dallas, Texas (with offices worldwide) with three decades of experience helping the world’s top organizations navigate change and seize opportunity. With three integrated offerings — On-Demand Talent, Consulting, and Outsourced Services — we provide CFOs and other C-suite leaders with the flexibility to solve today's most pressing challenges. The Company’s principal markets of operations are North America, Europe & Asia Pacific.
We operate under the following reporting units: (i) On-Demand Talent, (ii) Consulting, (iii) Europe & Asia Pacific, and (iv) Outsourced Services. Our previous reportable segments included Sitrick, a crisis communications and public relations firm, which did not individually meet the quantitative thresholds to qualify as a reportable segment (disclosed as "All Other"). On May 2, 2026, we completed the sale of 100% of the membership interests of Sitrick Group, LLC (“Sitrick”), to Sitrick, LLC, an entity owned by one of the original founders of Sitrick Group, LLC. The Company initiated the sale in connection with its broader transformation initiative to simplify its business portfolio..As a result of the sale of Sitrick, the All Other segment was eliminated as of May 30, 2026. The Company has presented the results of the All Other segment through the date the sale was completed for the year ended May 30, 2026. Following the sale, the Company received no new income from Sitrick, other than rent payments on sub-leased office buildings, and had no further involvement or continuing influence over its operations.
Resources Global Professionals (“RGP”) is a professional services firm based in Dallas, Texas (with offices worldwide) focused on delivering consulting execution services that power clients’ operational needs and change initiatives utilizing a combination of bench and on-demand, expert and diverse talent. As a next-generation human capital partner for our clients, we specialize in leadership and co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change. Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, employees’ and partners’ success.
We attract top-caliber professionals with in-demand skill sets who seek a workplace environment characterized by choice and control, collaboration and human connection. The trends in today’s marketplace favor flexibility and agility as businesses confront transformation pressures and skilled labor shortages even in the face of protracted economic uncertainty. Our client engagement and talent delivery model offers speed and agility, strongly positioning us to help clients transform their businesses and workforce. Our model is especially relevant at a time where cost reduction initiatives drive an enhanced reliance on a flexible workforce to execute transformational projects.
We are laser-focused on driving long-term growth in our business by seizing favorable macro shifts in workforce strategies and preferences, building an efficient and scalable operating model, and maintaining a distinctive culture and approach to professional services. Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, enhancing our consulting capabilities in digital transformation to align with market demand, improving operating leverage through pricing, operating efficiency and cost reduction, and driving growth through strategic acquisitions. We believe our focus and execution on these initiatives will serve as the foundation for growth ahead. See Part 1, Item 1 “Business” for further discussions about our business and operations.
In fiscal 2026, we focused and executed upon the following enterprise growth drivers:
•Expand cross-sell opportunities through our diversified services platform;
•Scale our high-value Consulting solutions and refocus On-Demand Talent offerings to address the evolving needs of our clients;
•Drive improvement in cost structure, simplify and optimize our business portfolio; and
•Further leverage value-based pricing to improve profitability.
In fiscal 2025, our strategic focus areas were:
•Evolve and execute under our new business segments
•Launch and activate new brand identity; and
•EnhanceExpand digitalcross-sell andopportunities artificial intelligence (“AI”) capabilities Evolve and execute underthrough our newdiversified businessservices segmentsplatform – OurWe firstoffer areaa unique blend of focusservices for fiscal 2025 has been to evolve our business by focusing on three core engagement models:in On-Demand Talent, Consulting, and Outsourced Services.Services, enabling high flexibility and high impact solutions for enterprises worldwide. This shiftunique hasmodel enabledis usdesigned to bettermeet serveclients’ ourevolving clientsneeds along their transformation journey by providing targeted skill sets, high value consulting services, and outsourced delivery underin a singledisrupted umbrella.business environment. Our approach combines flexibility, best of breed technology, and human-centered design with functional and subject matter expertise. This fiscal year, we have made tremendous progress in clarifying and operationalizing these models to unlock the cross selling of our diversified capabilities throughout our blue-chip, loyal and longstanding client base. Our growing consultingConsulting capability provides us with deeper visibility into our clients’ transformation agendas to drive greater opportunityopportunities for our on-demandOn-Demand execution capabilities, while our agile talent base within our on-demandOn-Demand business provides greater financial flexibility and better skill set alignment for our consultingConsulting business. In our outsourcedOutsourced servicesServices business, we have expandedand will continue to expand Countsy’s total addressable market beyond the start-up ecosystem to serve the finance, accounting and human resources needs surrounding spin-outs and carve-outs. EuropeIn fiscal 2026, we made progress in broadening client relationships by cross-selling across our diversified service offerings and Asiaintroducing hascomplementary continuedsolutions as client needs evolve. We believe this will continue to operateenable inus to deepen our partnerships with CFOs and other C-suite business leaders, strengthen client retention, and increase wallet share while positioning the geographic regionsCompany as onea businesslong-term, segment,trusted servingpartner ourfor clients with consulting capabilitiestransformation and on-demandperformance experts. Evolving our business through this reorganization ensures that we are well positioned to execute and succeed as the macro environment recovers.improvement.
Scale our high-value Consulting solutions and refocus On-Demand offerings to address the evolving needs of our clients – In a volatile and rapidly shifting global economic environment, CFOs and business leaders need partners who combine expertise with flexibility. We continue to build strong relationships with C-suite leaders, to support their organizations’ transformation journeys with specialized on-demand expertise, high-value consulting, and integrated outsourced delivery. In fiscal 2026, we completed the integration of our consulting assets including Reference Point LLC ("Reference Point") into one cohesive consulting business unit. In addition, we have made focused investments to bring more sales capacity and depth to the consulting team and to further expand our service capabilities in Mergers and Acquisitions, Data Analytics and artificial intelligence ("AI"). Our core solutions are: enterprise resource planning ("ERP") and cloud finance systems modernization, financial planning and analysis enhancement, accounting close process optimization, SEC compliance, post acquisitions integration, enterprise risk management, data strategy and analytics, AI adoption and enterprise digital transformation. Concurrent to evolving our solutions to meet market demand, we have also made progress to evolve our talent strategy to modernize and refresh the skillsets within our consultant base, both bench and agile, to serve our clients across On-Demand or Consulting engagements, particularly in the area of technology and AI fluency.
Drive improvement in cost structure, simplify and optimize our business portfolio – As we execute strategic initiatives to improve our topline, we have also prioritized reducing our cost structure and maintaining ongoing cost discipline to deliver improved profitability. In fiscal 2026, we performed a comprehensive review of our operating model to redesign and streamline our cost structure, including simplification of business processes. In connection with this effort, we completed two workforce reductions affecting management and administrative roles improving our annual selling, general and administrative expenses ("SG&A") by $12.0 million to $14.0 million. In addition, as the result of our business portfolio review, we completed the sale of Sitrick in May 2026. Finally, we continue to improve the functionalities and user adoption of our recently implemented technology to achieve further operating efficiencies.
Further leverage value-based pricing – Building on the progress we made in previous fiscal years, we continued to advance our value-based pricing strategy to improve bill rates and pricing leverage, particularly in the Consulting business, as we pursue larger-scale, higher-value engagements that deliver measurable impact for clients.
Fiscal 2026 Developments
Management Changes
Effective November 3, 2025, Roger Carlile, a director of the Company, was appointed as the Company's President and Chief Executive Officer ("CEO"). In connection with his appointment, the Company entered into an employment agreement with Mr. Carlile with a term that extends through November 3, 2028 and will automatically renew annually thereafter. In October 2025, the Company's Board of Directors elected not to renew the "Period of Employment" under the Company's existing Employment Agreement, dated February 3, 2020 and as subsequently amended, with Kate W. Duchene, the Company's former President and CEO. Ms. Duchene stepped down as the Company’s President and CEO, and as a member of the Board, on November 2, 2025. She served as an Executive Advisor through January 3, 2026 to assist the Company and Mr. Carlile with the continuity of leadership. See Note 1 – Description of the Company and its Business in the Notes to Consolidated Financial Statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding the severance benefits paid to Ms. Duchene.
On March 3, 2026, the Company entered into a Separation and General Release Agreement with Bhadreskumar Patel, the Company’s Chief Operating Officer ("COO"), that provided the last day of Mr. Patel’s employment by the Company would be May 15, 2026. See Note 1 – Description of the Company and its Business in the Notes to Consolidated Financial Statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding the severance benefits paid to Mr. Patel.
Company Transformation Initiative — Cost Structure Improvement
In fiscal 2026, the Company began a transformation initiative to redesign and streamline its operating model to achieve a reduced cost structure, as well as integrate Reference Point's consulting capabilities into the existing consulting business to form a more cohesive consulting segment (the "2026 Transformation Initiative"). As part of this initiative, we engaged a third-party advisor to assist us in conducting a comprehensive review of our global operations. In October 2025, in connection with this effort, we began certain workforce reductions affecting management and administrative roles, aimed at improving efficiency, reducing costs and streamlining operations (the "October RIF"). As disclosed in the Company's Form 8-K filed with the SEC on January 28, 2026, the Company began a second reduction in force under the 2026 Transformation Initiative in January 2026 (the "January RIF"). In addition to these reductions in force, the Company identified an opportunity for cost savings through exiting and subleasing certain office space. The Company recorded an impairment charge of $1.0 million in connection with the sublease.
Restructuring costs were $8.4 million and $5.1 million for the year ended May 30, 2026 and May 31, 2025, respectively. We expect our transformation efforts to be substantially complete in the first half of fiscal 2027, though the scope, timing, and impact of such actions may evolve as the review progresses.
Company Transformation Initiative — Simplification and Optimization of Business Portfolio
As a part of the transformation to simplify and optimize our business portfolio, on April 27, 2026, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Sitrick and Sitrick, LLC (the “Buyer”), pursuant to which the Company agreed to sell 100% of the membership interests of Sitrick to the Buyer.
The Purchase Agreement provided for a cash purchase price equal to the agreed realizable value of Sitrick client receivables. The purchase price was subject to adjustments for the outstanding Sitrick client receivables as of the closing and the funding of certain Sitrick liabilities by the Company as of the closing. The purchase price amounted to $1.9 million. The Purchase Agreement also provided that the Company shall retain certain assets and liabilities of Sitrick, including all assets and liabilities related to certain office space lease agreements. The Company also agreed to pay Michael Sitrick, Sitrick’s chief executive officer, a cash payment of $4.0 million, which is equivalent to the cash severance that would have been payable under the terms of the employment agreement with Sitrick, and in connection with the closing of the transaction, to accelerate the vesting of any equity awards granted by the Company to continuing employees of Sitrick that are unvested and outstanding immediately prior to the closing. The sale was completed on May 2, 2026.
Launch and activate new brand – In connection with the evolution of our business segments, we also evolved and aligned our brand identity to clarify to our stakeholders what we do, who we serve, when to call us, and the impact we deliver. We believe the added brand clarity will strengthen our market position and is a critical part of our long-term value creation.
Enhance digital and AI capabilities – Our third focus area for fiscal 2025 has been continuing to expand and enhance our technology, digital and data capabilities across all business units. The increased adoption of digital tools, remote work styles, generative AI, and globalization is driving new areas of need within our client base. We are actively adding skilled on-demand and consulting professionals in areas such as technology migration, data modernization and data privacy, and user experience to proactively meet these evolving client needs. Our Digital/Technology and Data practices bring together the unique combination of technology transformation and the deep functional expertise within our consulting practice. We believe this combined offering will uniquely position us to offer our clients integrated end-to-end consulting solutions in the digital arena.
We have historically accelerated growth through strategic acquisitions that drive additional scale or expand and complement our existing core capabilities. In addition to enhancing our digital and AI capabilities organically, we acquired Reference Point LLC (“Reference Point”) in July 2024, a management consulting firm with deep technology and data capabilities. We believe the added capabilities from Reference Point has accelerated growth in the existing consulting business and contributed favorably to the execution of our cross selling strategy.
Allowance for credit losses — We maintain an allowance for credit losses for estimated losses resulting from our clients failing to make required payments for services rendered. We estimate this allowance based upon our knowledge of the financial condition of our clients (which may not include knowledge of all significant events), review of historical receivable and reserve trends and other pertinent information. While such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates we have in the past. As of May 31, 2025 and May 25, 2024, we had an allowance for credit losses of $2.6 million and $2.8 million, respectively. A significant change in the liquidity or financial position of our clients could cause unfavorable trends in receivable collections and additional allowances may be required. These additional allowances could materially affect our future financial results.
Income taxes — In order to prepare our Consolidated Financial Statements, we are required to make estimates of income taxes, if applicable, in each jurisdiction in which we operate. The process incorporates an assessment of any income subject to taxation in each jurisdiction together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. These differences result in deferred tax assets and liabilities that are included in our Consolidated Balance Sheets. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent recovery is not likely, we will establish a valuation allowance. An increase in the valuation allowance results in recording additional tax expense and any such adjustment may materially affect our future financial results. If the ultimate tax liability differs from the amount of tax expense we have reflected in the Consolidated Statements of Operations, an adjustment of tax expense may need to be recorded and this adjustment may materially affect our future financial results and financial condition.
We evaluate the realizability of our deferred tax assets based on all available evidence and establish a valuation allowance to reduce deferred tax assets when it is more likely than not that they will not be realized. When all available evidence indicates that the deferred tax assets are more likely than not to be realized, a valuation allowance is not required to be recorded or an existing valuation allowance is reversed. Management assesses all available positive and negative evidence, including (1) three-year cumulative pre-tax income or loss adjusted for permanent tax differences, (2) history of operating losses and of net operating loss carryforwards expiring unused, (3) evidence of future reversal of existing taxable temporary differences, (4) availability of sufficient taxable income in prior years, (5) tax planning strategies, and (6) projection of future taxable income, to determine the need to establish or release a valuation allowance on the deferred tax assets. An increase or decrease in valuation allowance will result in a corresponding increase or decrease in tax expense, and any such adjustment may materially affect our future financial results.
We also evaluate our uncertain tax positions and only recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50 percentage likelihood of being realized upon settlement. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Any change in judgment related to the expected ultimate resolution of uncertain tax positions is recognized in earnings in the period in which such change occurs.
As of May 31, 2025 and May 25, 2024, a valuation allowance of $29.4 million and $8.6 million was established on deferred tax assets totaling $44.4 million and $34.2 million, respectively. Our income tax for the years ended May 31, 2025, May 25, 2024 and May 27, 2023 was a benefit of $4.3 million, an expense of $8.8 million, and an expense of $18.3 million, respectively. As of May 31, 2025 and May 25, 2024, our total liability for unrecognized tax benefits was $1.1 million and $1.0 million, respectively.
Stock-based compensation — Under our 2020 Performance Incentive Plan, officers, employees, and outside directors have received or may receive grants of restricted stock awards, restricted stock units, performance stock units, options to purchase common stock or other stock or stock-based awards. Under our 2019 Employee Stock Purchase Plan, as amended (“ESPP”), eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan. Performance stock unit awards granted under the 2020 Performance Incentive Plan vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period. Vesting periods for restricted stock awards, restricted stock units and stock option awards range from three to four years.
We estimate the fair value of stock-based payment awards on the date of grant as described below. We determine the estimated value of restricted stock awards, restricted stock unit and performance stock unit awards using the closing price of our common stock on the date of grant. We have elected to use the Black-Scholes option-pricing model for our stock options and stock purchased under our ESPP which takes into account assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Additional variables to be considered are the expected term, expected dividends and the risk-free interest rate over the expected term of our employee stock options.
We use our historical volatility over the expected life of the stock option award and ESPP award to estimate the expected volatility of the price of our common stock. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The impact of expected dividends is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP. Such dividends are subject to quarterly Board of Directors’ approval. Our expected life of stock option grants is 5.6 years for non-officers and 8.1 years for officers, and the expected life of grants under our ESPP is 6 months.
In addition, because stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates, and in the case of performance stock units, based on the actual performance. The number of performance stock units earned at the end of the performance period may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met. During each reporting period, the Company uses the latest forecasted results to estimate the number of shares to be issued at the end of the performance period. Any resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur. Forfeitures are estimated based on historical experience.
We review the underlying assumptions related to stock-based compensation at least annually or more frequently if we believe triggering events exist. If facts and circumstances change and we employ different assumptions in future periods, the compensation expense recorded may differ materially from the amount recorded in the current period. Stock-based compensation expense for the years ended May 31, 2025, May 25, 2024 and May 27, 2023 was $6.8 million, $5.7 million and $9.5 million, respectively.
Valuation of long-lived assets — For long-lived tangible and intangible assets other than goodwill, including property and equipment, right-of-use (“ROU”) assets, and definite-lived intangible assets, we assess the potential impairment periodically or whenever events or changes in circumstances indicate the carrying value may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition. In cases where the estimated undiscounted expected future cash flows are less than the net book value, an impairment loss is recognized equal to the amount by which the net book value exceeds the estimated fair value of assets. We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, ROU assets outside of exited under the real estate exit initiatives taken, and definite-lived intangible assets. We determined that for such long-lived assets, no impairment indicators were present as of May 31, 2025, and no impairment charge was recorded during fiscal 2025 for long-lived assets.
Estimating future cash flows requires significant judgment, and our projections may vary from the cash flows eventually realized. Future events and unanticipated changes to assumptions could result in an impairment in the future. Although any impairment is a non-cash expense, it could materially affect our future financial results and financial condition.
Goodwill — Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. We evaluate goodwill for impairment annually,annually as of the first day of the fourth quarter, and whenever events indicate that it is more likely than not that the fair value of a reporting unit could be less than its carrying amount. In assessing the recoverability of goodwill, we make a series of assumptions including forecasted revenue and costs, estimates of future cash flows, discount rates and other factors, which require significant judgment. A potential impairment in the future, although a non-cash expense, could materially affect our financial results and financial condition.
In fiscal 2024, we voluntarily changed the date of the annual impairment test from the last day of the fourth quarter to the first day of the fourth quarter to better align with our internal operations. In fiscal 2025, due to the presence of indicators of potential impairment, we performed quantitative goodwill impairment assessments in each of the fiscal quarters. See Note 54 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 88, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further discussion.
Business combinations — We allocate the fair value of the purchase consideration of our acquisitions to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values. Purchase price allocations for business acquisitions require significant judgments, particularly with regard to the determination of the value of identifiable assets, liabilities, and goodwill. Often third-party specialists are used to assist in valuations requiring complex estimation. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
Purchase agreements related to certain business acquisitions may include provisions for the payment of additional cash consideration if certain future performance conditions are met. These contingent consideration arrangements are recognized at their acquisition date fair value and included as part of the purchase price at the acquisition date. These contingent consideration arrangements are classified as contingent consideration liabilities or other long-term liabilities in our Consolidated Balance Sheets and are remeasured to fair value at each reporting period, with any change in fair value being recognized in the applicable period’s results of operations. Measuring the fair value of contingent consideration at the acquisition date, and for all subsequent remeasurement periods, requires a careful examination of the facts and circumstances to determine the probable resolution of the contingency(ies). We utilize the Monte Carlo simulation model and estimate fair value of the contingent consideration based on unobservable input variables related to meeting the applicable contingency conditions as per the applicable agreements. There were no contingent consideration liabilities as of May 31, 2025 and May 25, 2024. There was no contingent consideration adjustment for the year ended May 31, 2025. The contingent consideration adjustment was a benefit of $4.4 million for the year ended May 25, 2024.
The Company continues to operate in a macroeconomic environment characterized by moderate but uneven global growth. While demand for professional services remains resilient, clients are increasingly selective, prioritizing projects with near-term, measurable returns on investment, with some focus on AI, digital transformation, and cost optimization, which has resulted in some variability in demand across service offerings. Additionally, heightened geopolitical tensions (including the recent Iran conflict), fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have caused economic disruption and uncertainty, which may impact client spending, project timing and overall demand for the Company's services. These factors may continue to negatively affect our financial results and operating cash flows.
On a macro level, uncertain macroeconomic conditions including ambiguity around interest rates, softening labor markets, fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have created significant uncertainty in the global economy, volatility in the capital markets and recessionary pressures, which has adversely impacted our financial results. While we are not able to fully predict the potential impact, we continue to see caution in professional services spending within our client base. Additionally, in connection with recent actions we have taken to execute on our diversified services strategy for long term growth and stability, we have experienced both voluntary and involuntary attrition, including within our sales team, which have and may continue to affect our near-term revenue performance. If these conditions or impacts persist or if a prolonged economic downturn or recession develops, it could result in further decline in billable hours and negatively impact our bill rates which would adversely affect our financial results and operating cash flows.
TheWe Company usesuse certain non-GAAP financial measures to assess our financial and operating performance that are not defined by or calculated in accordance with GAAP. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented.
Our primary non-GAAP financial measures are listed below and reflect how we evaluate our operating results.results:
•◦Currency impact. In order to remove the impact of fluctuations in foreign currency exchange rates, we calculate same-day constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
•◦Business days impact. In order to remove the fluctuations caused by comparable periods having a different number of business days, we calculate same-day revenue as current period revenue (adjusted for currency impact) divided by the number of business days in the current period, multiplied by the number of business days in the comparable prior period. The number of business days in each respective period is provided in the “Number of Business Days” section in the table below.
•Adjusted EBITDA is calculated as EBITDA excluding stock-based compensation expense, amortized Enterprise Resource Planning (“ERP”) system costs, technology transformation costs, goodwill impairment, acquisition costs, gain on sale of assets, restructuring costs, andexecutive transition costs, Sitrick related transaction costs, contingent consideration adjustments.adjustment and other items we believe are not representative of the Company's core operations. We also present herein Adjusted EBITDA at the segment level as a measure used to assess the performance of our segments. Segment Adjusted EBITDA excludes certain shared corporate administrative costs that are not practical to allocate. See Note 18 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 88, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further information.
Same-day constant currency revenue assists managementus in evaluating revenue trends on a more comparable and consistent basis. Revenue performance is primarily driven by change in billable hours and average bill rates; same-day constant currency revenue is presented to provide better comparability between reporting periods by eliminating the effects of foreign currency fluctuations and fiscal calendar differences. We believe this measure also provides more clarity to our investors in evaluating our core operating performance and facilitates a comparison of such performance from period to period.performance.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist managementus in assessing our core operating performance. We also believe these measures provide investors with a useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period. The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net income (loss) and net income (loss) margin, the most directly comparable GAAP financial measures (in thousands, except percentages).
(2) Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to newly implemented ERP system, which was recorded within Selling, General, and AdministrativeSG&A expenses on the Consolidated StatementStatements of Operations.
(4) Acquisition costs primarily represent costs included in net income (loss) related to the Company’s business acquisition.acquisition of Reference Point. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms. See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 88, of"Financial thisStatements Annualand ReportSupplemental on Form 10-KData" for further discussion.
(5) The effect of the goodwillGoodwill impairment chargecharges recognized during the year ended May 31, 2025 waswere related to the On-Demand Talent, Consulting,Consulting and Europe and& Asia Pacific segmentssegments. See Note 4 – Goodwill and duringIntangible Assets in the year ended May 27, 2023 relatedNotes to theConsolidated SitrickFinancial segment.Statements in Part II, Item 8, "Financial Statements and Supplemental Data" for further discussion.
(67) Restructuring costs during the year ended May 30, 2026 include employee termination costs incurred in workforce reductions, impairment of ROU asset, and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs for the year ended May 31, 2025 related to the 2025Company's Restructuringglobal Plan,cost reduction plan, including a reduction in force intended to reduce costs and streamline operations, which waswere authorized in December 2024 and May 2025.2025 (the "2025 Restructuring Plan"). Restructuring costs for the year ended May 25, 2024 related to the Company's cost reduction plan, including a reduction in force, which was authorized in October 2024,2023, and was substantially completed during fiscal 2024.2024 The restructuring credits for (the year"U.S. endedRestructuring May 27, 2023 related to the release of accrued restructuring liabilities upon completion of the global restructuring and business transformation plans from fiscal 2021.Plan").
(8) Executive transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO and former COO. These costs include $7.6 million of cash severance and $4.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards pursuant to ASC 718 – Compensation - Stock Compensation (“ASC 718”).
What changed in the latest 10-Q
Risk Factors
There have been no material changes in our risk factors from those disclosed in Item 1A of Part I of our Fiscal Year 2026 Form 10-K, which was filed with the SEC on July 24 2026. See “Risk Factors” in Item 1A of Part I of such Fiscal Year 2026 Form 10-K for a complete description of the material risks we face.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “(5)Restructuring costs during the three months ended August 29, 2026 include employee termination costs incurred in connection with the reduction in force associated with the 2026 Transformation Initiative.”
Removed heading “Company Transformation Initiative”
Removed heading “(3)Technology transformation costs represent costs included in net loss related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.”
Removed heading “(5)Goodwill impairment charges recognized during the three and nine months ended February 22, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.”
Removed heading “(7)Restructuring costs during the three and nine months ended February 28, 2026 include employee termination costs incurred in the reductions in force, impairment of right-of-use asset, and third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs during the three and nine months ended February 22, 2025 represent costs incurred in connection with the cost reduction plan, including a reduction in force intended to reduce costs and streamline operations (the "2025 Restructuring Plan"), which was authorized in December 2024.”
Removed heading “(8)CEO transition costs represent costs incurred in connection with the separation of the Company's former CEO. These costs include $5.9 million of cash severance and $3.1 million of non-cash stock compensation expense reflecting the acceleration of expense recognition of equity awards.”
Removed heading “Goodwill Impairment”
Removed heading “Three and Nine Months Ended”
Removed heading “(3) Technology transformation costs represent costs included in net loss related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.”
Removed heading “(5) Goodwill impairment charges recognized during the three and nine months ended February 22, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.”
Removed heading “(8) CEO transition costs represent costs incurred in connection with the separation of the Company's former CEO. These costs include $5.9 million of cash severance and $3.1 million of non-cash stock compensation expense reflecting the accelerated expense recognition of equity awards during the nine months ended February 28, 2026.”
Largest changes
“(7)Restructuring costs during the three and nine months ended February 28, 2026 include employee termination costs incurred in the reductions in force, impairment of right-of-use asset, and third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs during the three and nine months ended February 22, 2025 represent costs incurred in connection with the cost reduction plan, including a reduction in force intended to reduce costs and streamline operations (the "2025 Restructuring Plan"), which was authorized in December 2024.”see in full comparison
“(5)Goodwill impairment charges recognized during the three and nine months ended February 22, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.”see in full comparison
“(5) Goodwill impairment charges recognized during the three and nine months ended February 22, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.”see in full comparison
(see in full comparison75) Restructuring costs during the threeand ninemonths endedFebruaryAugust28,29, 2026 include employee termination costs incurred in connection with thereductionsreduction inforce, impairment of right-of-use asset, and third-party consulting costsforce associated with the 2026 Transformation Initiative.Restructuring costs during the three and nine months ended February 22, 2025 represent costs incurred in connection with the 2025 Restructuring Plan.
“(5)Restructuring costs during the three months ended August 29, 2026 include employee termination costs incurred in connection with the reduction in force associated with the 2026 Transformation Initiative.”see in full comparison
Full comparison: every changed paragraph (129)
The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for three and nine months ended FebruaryAugust 28,29, 2026 should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended May 31,30, 20252026 filed with the Securities and Exchange Commission (“SEC”).
This discussion and analysis contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to expectations concerning matters that are not historical facts. For example, statements discussing, among other things, expectations regarding our operating segments, expectations regarding our transformation efforts and the macroeconomic environment, expected costs and liabilities, business strategies, growth strategies and initiatives, future revenues and future performance, are forward-looking statements. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “forecast,” “future,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “remain,” “should,” “strategy,” “target,” or“will,” “willwould,” or similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” or the negative of these terms or other comparable terminology. In this Quarterly Report on Form 10-Q, such statements include statements regarding our growth, operational and strategic plans.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, these statements and all phases of our operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include, but are not limited to, the following: risks related to an economic downturn or deterioration of general macroeconomic conditions, potential adverse effects to our and our clients' liquidity and financial performances from bank failures or other events affecting financial institutions, the highly competitive nature of the market for professional services, risks related to the loss of a significant number of our consultants, or an inability to attract and retain new consultants, the possible impact on our business from the loss of the services of one or more key members of our senior management or key sales professionals, risks related to potential significant increases in wages or payroll-related costs, our ability to secure new projects from clients, our ability to achieve or maintain a suitable pay/bill ratio, our ability to compete effectively in the competitive bidding process, risks related to unfavorable provisions in our contracts which may permit our clients to, among other things, terminate the contracts partially or completely at any time prior to completion, our ability to realize the level of benefit that we expect from our restructuring initiatives, risks that our recent digital expansion and technology transformation efforts may not be successful, our ability to use artificial intelligence ("AI") and machine learning in our business, our ability to build an efficient support structure as our business continues to grow and transform, our ability to grow our business, manage our growth or sustain our current business, our ability to serve clients internationally, additional operational challenges from our international activities, possible disruption of our business from our past and future acquisitions, the possibility that our recent rebranding efforts may not be successful, our potential inability to adequately protect our intellectual property rights, risks that our computer hardware and software and telecommunications systems are damaged, breached or interrupted, risks related to the failure to comply with data privacy laws and regulations and the adverse effect it may have on our reputation, results of operations or financial condition, our ability to comply with governmental, regulatory and legal requirements and company policies, the possible legal liability for damages resulting from the performance of projects by our consultants or for our clients’ mistreatment of our personnel, risks arising from changes in applicable tax laws or adverse results in tax audits or interpretations, the possible adverse effect on our business model from the reclassification of our independent contractors by foreign tax and regulatory authorities, the possible difficulty for a third party to acquire us and resulting depression of our stock price, the operating and financial restrictions from our credit facility, risks related to the variable rate of interest in our credit facility, the possible impact of activist shareholders, the possibility that we are unable to or elect not to pay our quarterly dividend payment, our ability to establish and maintain effective internal control over financial reporting, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 31,30, 2025,2026, which was filed on July 28,24, 20252026 ("Fiscal Year 20252026 Form 10-K") and our other public filings made with the Securities and Exchange Commission ("SEC") (File No. 0-32113). Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results. Readers are cautioned not to place undue reliance on these forward-looking statements,statements included herein, which speak only as of the date hereof.of this Quarterly Report. We do not intend, and undertake no obligation, to update the forward-looking statements in this filing to reflect events or circumstances after the date hereofof this Quarterly Report or to reflect the occurrence of unanticipated events, unless required by law to do so.
Resources Connection, Inc. (“RGP,” “we" or “us”) is a global professional services firm based in Dallas, Texas (with offices worldwide) with three decades of experience helping the world’s top organizations navigate change and seize opportunity. With three integrated offerings — On-Demand Talent, Consulting, and Outsourced Services — we provide CFOs and other C-suite leaders with the flexibility to solve today's most pressing challenges. The Company’s principal markets of operations are North America, Europe & Asia Pacific.
We operate under the following reporting units: (i) On-Demand Talent, (ii) Consulting, (iii) Europe & Asia Pacific, and (iv) Outsourced Services. Our previous reportable segments included Sitrick, a crisis communications and public relations firm, which did not individually meet the quantitative thresholds to qualify as a reportable segment (disclosed as "All Other"). On May 2, 2026, we completed the sale of 100% of the membership interests of Sitrick Group, LLC (“Sitrick”), to Sitrick, LLC, an entity owned by one of the original founders of Sitrick Group, LLC. The Company initiated the sale in connection with its broader transformation initiative to simplify its business portfolio. As a result of the sale of Sitrick, the All Other segment was eliminated as of May 30, 2026.
Resources Global Professionals (“RGP,” “we" or “us”) is a global professional services firm based in Dallas, Texas (with offices worldwide) focused on delivering flexible and high-impact solutions to businesses through three integrated offerings, on-demand resourcing, and fully outsourcing services. As a trusted human capital partner for our clients, we provide CFOs and other C-Suite leaders with the flexibility to solve today's most pressing challenges spanning across Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance — connecting advisory to execution at global scale. We attract top-caliber professionals with in-demand skill sets who seek a workplace environment characterized by choice and control, collaboration and human connection. The trends in today’s marketplace favor flexibility and agility as businesses confront transformation pressures and skilled labor shortages in the face of protracted economic uncertainty. Our engagements are designed to leverage a combination of bench and agile talent that are highly experienced to deliver practical solutions and more impactful results.
The Company operates under the following business units: (i) On-Demand Talent, (ii) Consulting, (iii) Europe & Asia Pacific, (iv) Outsourced Services, and (v) Sitrick (disclosed as "All Other").
The change described above reflects the Company's ongoing transformation efforts and are relevant to the trends affecting our current results. For fiscal 2027, our strategy is organized around the following strategic focus areas:
Building upon the foundation we established in fiscal 2025, we are executing upon the following enterprise growth drivers in fiscal 2026:
•Expand cross-sell opportunities through our diversified services platform;
•Scale our high-value Consulting solutions and refocuscontinue evolving On-Demand Talent offerings to address the evolving needs of our clients;
•Ramp the investments we have made to strengthen go-to-market execution;
•DriveContinue improvementto insimplify and optimize our business portfolio and cost structure; and
•Accelerate AI adoption to drive productivity internally and deliver greater value to our clients.
•Further leverage value-based pricing to improve profitability.
Expand cross-sell opportunities through our diversified services platform – We offer a unique blend of services in On-Demand Talent, Consulting, and Outsourced Services, enabling high flexibility and high impact solutions for enterprises worldwide. This unique model is designed to meet clients’ evolving needs in a disrupted business environment. Our Consulting capability provides us with deeper visibility into our clients’ transformation agendas to drive greater opportunities for our On-Demand execution capabilities, while our agile talent base within our On-Demand business provides greater financial flexibility and better skill set alignment for our Consulting business. In our Outsourced Services business, we are expanding Countsy’s total addressable market beyond the start-up ecosystem to serve the finance, accounting and human resources needs surrounding spin-outs and carve-outs. In fiscal 2026, we are focused on broadening client relationships by cross-selling across our diversified service offerings and introducing complementary solutions as client needs evolve. We believe this has enabled us to deepen our partnerships with CFOs and other C-suite business leaders, strengthen client retention, and increase wallet share while positioning the Company as a long-term, trusted partner for transformation and performance improvement.
Scale our high-value Consulting solutions and refocuscontinue evolving On-Demand Talent offerings to address the evolving needs of our clients – InAs thebusiness volatilepriorities continue to change, organizations are increasingly seeking support across finance, technology, data, AI and rapidlyoperational shiftingtransformation global economic environment, CFOs and business leaders need partners who combine expertise with flexibility.initiatives. We continue to buildalign strongand relationshipsexpand withour C-suiteConsulting leaders,and On-Demand Talent capabilities to support theirthese organizations’priorities transformationwhile journeys with specialized on-demand expertise, high-value consulting, and integrated outsourced delivery. Throughleveraging the third quarter of fiscal 2026, we have substantially completed the integrationflexibility of our consultingdelivery assets including Reference Point into one cohesive consulting business unit. In addition, we have made focused investments to bring more depth in the consulting leadership team and to further expand our service capabilities in Mergers and Acquisitions, Data Analytics and AI.model. Our core solutions areinclude: enterprise resource planning ("ERP") and cloud finance systems modernization, financial planning and analysis enhancement, accounting close process optimization, SECtechnical compliance,accounting, post acquisitions integration, enterprise risk management, data strategy and analytics, and AI adoption and enterprise digital transformation. ConcurrentWe also continue to evolving our solutions to meet market demand, we have also been keenly focused on evolving our talent strategy to modernizeexpand and refreshbroaden the skillsetsskillset withinof our consultant base, both bench and agile,base to servesupport ourareas clientsof acrossclient On-Demand or Consulting engagements,demand, particularly in the area of technology and AIAI-related fluency.disciplines.
Ramp the investments we have made to strengthen go-to-market execution — We made targeted investments beginning in the second half of fiscal 2026 to expand sales capacity and to enhance our consulting capabilities in areas including mergers and acquisitions, data analytics and AI. These investments are intended to strengthen our ability to support the evolving needs of our clients, broaden our service capabilities, and improve the effectiveness of our go-to-market efforts across our business.
Continue to simplify and optimize our business portfolio and cost structure – During fiscal 2026, we took action to simplify our operations and align our cost structure with market conditions. As we build on that progress in fiscal 2027, we remain focused on streamlining our operating model, aligning resources with our core service offerings and growth opportunities, and improving scalability across the organization. In May 2026, we completed the sale of the Sitrick practice following a review of our business portfolio. We will continue to improve the functionality, adoption and utilization of our recently implemented technology to drive further operating efficiencies.
Accelerate AI adoption to drive productivity internally and deliver greater value to our clients — During fiscal 2027, we are continuing to invest in AI capabilities that support our operations and client service offerings. Internally, we are continuing to leverage and implement new technology intended to improve productivity and accelerate delivery. Our focus is not only on AI adoption itself, but also on helping clients manage the broader business changes that AI creates. We are doing that through a combination of AI-specific offerings and our existing expertise in transformation, operations, talent, and governance.
Against this strategic backdrop, the Company continues to operate in a macroeconomic environment characterized by moderate but uneven global growth. While demand for professional services remains resilient, clients are increasingly selective, prioritizing projects with near-term, measurable returns, particularly in areas such as AI, digital transformation, and cost optimization. This selectivity has contributed to variability in demand across service offerings. Additionally, heightened geopolitical tensions, fluctuations in currency exchange rates, recent U.S. government and policy changes, and tariff actions and broader trade-related uncertainty have contributed to economic disruption and uncertainty, which may impact client spending, project timing and overall demand for the Company's services. These factors may continue to negatively affect our financial results and operating cash flows.
Drive improvement in cost structure – In the face of persistent macro-economic uncertainty and headwinds on client demand, we have prioritized reducing our cost structure and maintaining ongoing cost discipline to deliver improved profitability. During the second quarter of 2026, we began a comprehensive review of our operating model to redesign and streamline our cost structure, including simplification of business processes. In connection with this effort, we acted on certain workforce reductions affecting management and administrative roles in both the second and third quarters of this fiscal year, with an expected reduction ranging from $12.0 million to $14.0 million in our annual selling, general and administrative ("SG&A") expenses on a run rate basis. We expect these transformation efforts to continue through the remainder of fiscal 2026, though the scope, timing, and impact of such actions may evolve as the review progresses. Furthermore, we expect to continue to leverage our newly implemented technology to achieve further operating efficiencies.
Further leverage value-based pricing – Building on the progress we made in fiscal 2025, we are continuing to advance our value-based pricing strategy to improve bill rates and pricing leverage, particularly in the Consulting business, as we pursue larger-scale, higher-value engagements that deliver measurable impact for clients.
On September 1, 2026, Jennifer Y. Ryu submitted her resignation from her position as Executive Vice President and Chief Financial Officer of the Company effective October 2, 2026. Ms. Ryu will not receive severance benefits in connection with her separation. Effective October 3, 2026, Ms. Jessica Block, currently the Company’s Chief AI Officer, assumed the role of the Company’s Interim Chief Financial Officer to ensure continuity and continued focus on the Company's strategic priorities. Ms. Block will continue to report to the Company’s Chief Executive Officer.
On September 17, 2026, the Board of Directors appointed Ms. Trisha Jenks as the Company’s Chief Accounting Officer and principal accounting officer of the Company, effective October 3, 2026.
Effective November 3, 2025, Roger Carlile, a director of the Company, was appointed as the Company's President and Chief Executive Officer ("CEO"). In connection with his appointment, the Company entered into an employment agreement with Mr. Carlile with a term that extends through November 3, 2028 and will automatically renew annually thereafter. In October 2025, the Company's Board of Directors elected not to renew the "Period of Employment" under the Company's existing Employment Agreement, dated February 3, 2020 and as subsequently amended, with Kate W. Duchene, the Company's former President and CEO. Ms. Duchene stepped down as the Company’s President and CEO, and as a member of the Board, on November 2, 2025. She served as an Executive Advisor through January 3, 2026 to assist the Company and Mr. Carlile with the continuity of leadership. See Note 1 – Organization in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding the severance benefits paid to Ms. Duchene.
On March 3, 2026, the Company entered into a Separation and General Release Agreement with Bhadreskumar Patel, the Company’s Chief Operating Officer, that provides the last day of Mr. Patel’s employment by the Company will be May 15, 2026. See Note 14 – Subsequent Events in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding the severance benefits that will be paid to Mr. Patel.
Company Transformation Initiative
In fiscal 2026, the Company began a transformation initiative to redesign and streamline its operating model to achieve a reduced cost structure, as well as integrate Reference Point's consulting capabilities into the existing consulting business to form a more cohesive consulting segment (the "2026 Transformation Initiative"). As part of this initiative, we engaged a third-party advisor to assist us in conducting a comprehensive review of our global operations. In October 2025, in connection with this effort, we began certain workforce reductions affecting management and administrative roles, aimed at improving efficiency, reducing costs and streamlining operations (the "October RIF"). As disclosed in the Company's Form 8-K filed with the SEC on January 28, 2026, the Company began a second reduction in force under the Board approved 2026 Transformation Initiative in January 2026 (the "January RIF"). In addition to these reductions in force, the Company identified an opportunity for cost savings through exiting and subleasing certain office space. The Company recorded an impairment charge of $1.0 million in connection with the sublease.
Restructuring costs were $4.4 million and $7.3 million for the three and nine months ended February 28, 2026. We expect our transformation efforts to be substantially complete by the first quarter of fiscal 2027, though the scope, timing, and impact of such actions may evolve as the review progresses.
The Company continues to operate in a macroeconomic environment characterized by moderate but uneven global growth. While demand for professional services remains resilient, clients are increasingly selective, prioritizing projects with near-term, measurable returns on investment, with some focus on AI, digital transformation, and cost optimization, which has resulted in some variability in demand across service offerings. Additionally, heightened geopolitical tensions (including the recent Iran conflict), fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have caused economic disruption and uncertainty, which may impact client spending, project timing and overall demand for the Company's services. These factors may continue to negatively affect our financial results and operating cash flows.
We use certain non-GAAP financial measures that are not calculated in accordance with GAAP to assesssupplement the evaluation of our financial and operating performanceperformance. thatThese arenon-GAAP financial measures should be considered in addition to, and not definedas bysubstitute orfor, calculatedthe most directly comparable measures prepared in accordance with GAAP. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented.
Our primaryThe non-GAAP financial measures arewe listeduse below and reflect how weto evaluate our operating results are described below:
•Same-day constant currency revenue isadjusts adjustedreported revenue for the followingimpact itemsof foreign currency fluctuations and differences in the number of business days between comparable periods:
◦Currency impact. In order toTo remove the impact of fluctuations in foreign currency exchange rates, we calculate same-day constant currency revenue, whichby representsapplying the outcome that would have resulted had exchange rates in the current period been the same as those in effect induring the comparable prior period.period to the current period revenue.
◦Business days impact. In order toTo remove the effect of fluctuations caused by comparable periods having a different number of business days, we calculate same-day revenue as current period revenuerevenue, (adjusted for currency impact)impact, divided by the number of business days in the current period,period and multiplied by the number of business days in the comparable prior period. The number of business days in each respective period is provided in the “Number of Business Days” section in the table below.
•Adjusted EBITDA is calculated as EBITDA excluding stock-based compensation expense, amortized ERP system costs, technology transformation costs, goodwill impairment, acquisition costs, loss (gain) on sale of assets, restructuring costs, CEO transition costs, and other items we believe are not representative of the Company's core operations. We also present herein Adjusted EBITDA at the segment level as a measure used to assess the performance of our segments. Segment Adjusted EBITDA excludes certain shared corporate administrative costs that are not practical to allocate. See Note 1311 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Same-dayWe use same-day constant currency revenue assiststo us in evaluatingevaluate revenue trends on a more comparable and consistent basis. Revenue performance is primarily driven by change in billable hours and average bill rates;rates. same-dayThis constant currency revenuemeasure is presentedintended to provideimprove additional contextcomparability by eliminatingexcluding the effects of foreign currency fluctuations and fiscaldifferences calendarin differences.the number of business days between periods. We believe this measure provides more clarity to our investors in evaluating our core operating performance.
The following table presents a reconciliation ofreconciles same-day constant currency revenue, a non-GAAP financial measure, to revenue as reported in the Consolidated Statements of Operations, the most directly comparable GAAP financial measure, by segment (in thousands, except number of business days).
The Company'sOur fiscal quarters generally consist of 13 weeks each, except in fiscal years that include a 53rd week, during which we have one 14 week quarter. Despite the consistent number of weeks, the number of business days may veryvary between periods due to holidays. The table below sets forth the number of business days in each period by segment
We use EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assistto us in assessing ourassess core operating performance. We also believe these measures provide investors with a useful perspectivesupplemental oninformation underlyingto business results and trends and facilitate a comparison ofevaluate our performance fromacross period to period.periods. The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includesreconciles a reconciliation of suchthese measures to net loss and net loss margin, the most directly comparable GAAP financial measures (in thousands, except percentages).
(2)Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to a newly implemented ERP system, which was recorded within selling, general, and administrative ("SG&A") expenses on the Consolidated Statements of Operations.
(3)Technology transformation costs represent costs included in net loss related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.
(43)Acquisition costs primarily represent costs included in net loss related to the Company’s business acquisition.acquisition of Reference Point. These costs include transaction bonuses,bonuses and cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms. See Note 4 – Acquisitions and Disposals in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.accruals.
(5)Goodwill impairment charges recognized during the three and nine months ended February 22, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.
(64) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.Sitrick.
(5)Restructuring costs during the three months ended August 29, 2026 include employee termination costs incurred in connection with the reduction in force associated with the 2026 Transformation Initiative.
(7)Restructuring costs during the three and nine months ended February 28, 2026 include employee termination costs incurred in the reductions in force, impairment of right-of-use asset, and third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs during the three and nine months ended February 22, 2025 represent costs incurred in connection with the cost reduction plan, including a reduction in force intended to reduce costs and streamline operations (the "2025 Restructuring Plan"), which was authorized in December 2024.
(8)CEO transition costs represent costs incurred in connection with the separation of the Company's former CEO. These costs include $5.9 million of cash severance and $3.1 million of non-cash stock compensation expense reflecting the acceleration of expense recognition of equity awards.
OurThese non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net income (loss) or other measures of financial performance or financial condition prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity. Further, a limitation of our non-GAAP financialThese measures ishave limitations because they exclude items detailed above that have an impact onaffect our GAAP reportedresults results.and Otherother companies in our industry may calculate these non-GAAP financial measures differentlydifferently, thanwhich wemay do, limitinglimit their usefulness as a comparative measure. Because of these limitations, these non-GAAP financial measures should not be considered a substitute but rather considered in additionsupplemental to performance measures calculated in accordance with GAAP.
Comparability of Quarterly Results. Our quarterly results have fluctuated in the past and we believe they will continue to do so in the future. Certain factors that could affect our quarterly operating results are described in Item 1A of Part I of our Fiscal Year 2026 Form 10-K and our other public filings made with the SEC. Due to these and other factors, we believe quarter-to-quarter comparisons of our results of operations may not be meaningful indicators of future performance.
Consolidated Operating Results – Three and Nine Months Ended FebruaryAugust 28,29, 2026 Compared to Three and Nine Months Ended FebruaryAugust 22,30, 2025
Revenue decreased $21.5$22.1 million, or 16.6%,18.4%, to $107.9$98.1 million in the thirdfirst quarter of fiscal 20262027 from $129.4$120.2 million in the thirdfirst quarter of fiscal 2025.2026. On a same-day constant currency basis, revenue decreased by $25.4$22.3 million, or 19.6%.18.5%. Billable hours decreased 16.3%13.2% year-over-year and the average bill rate for the thirdfirst quarter of fiscal 20262027 decreased 1.0%5.8% year over year, or 2.1%5.6% on a constant currency basis. The decline in billable hours reflects longer client decision-making timelines, delayed project starts, and lower project volume in Consulting, together with On-Demand Talent demand that remained below prior year levels but continued to show signs of stabilization. The average bill rate reflects a continued shift in the geographic revenue mix towards regions with lower bill rates,rates whereasand the averageMay bill2026 rate in the U.S. improved by 2.8% compared to the third quartersale of fiscalSitrick 2025.Group, LLC ("Sitrick").
Revenue decreased $66.1 million, or 16.0%, to $345.9 million for the nine months ended February 28, 2026 from $412.0 million for the nine months ended February 22, 2025. On a same-day constant currency basis, revenue for the nine months ended February 28, 2026 decreased by $71.3 million, or 17.3%, compared to the nine months ended February 22, 2025. Billable hours decreased by 16.4% reflecting a shift in demand away from traditional operational accounting skills and longer sales cycle for Consulting projects. The average bill rate remained flat compared to the nine months ended February 22, 2025.
Cost of services decreased $14.7$11.3 million, or 17.5%,15.6%, to $69.4$61.4 million for the thirdfirst quarter of fiscal 20262027 from $84.1$72.8 million in the thirdfirst quarter of fiscal 2025.2026. The decrease in cost of services was primarily attributable to a 16.3%13.2% decline in billable hours and a 1.2%5.1% decline in average pay rate.
Cost of services as a percentage of revenue was 62.6% for the first quarter of fiscal 2027 compared to 60.5% for the first quarter of fiscal 2026. The increase was primarily driven by lower utilization of salaried consultants, and to a lesser extent, a 0.2 percentage point increase in pay/bill ratio to 47.4% in the first quarter of fiscal 2027 from 47.2% in the first fiscal quarter of 2026.
Cost of services as a percentage of revenue was 64.3% for the third quarter of fiscal 2026 compared to 64.9% for the third quarter of fiscal 2025. The decreased percentage compared to the prior year quarter was primarily due to lower pay bill ratio, improved consultant utilization and lower consultant benefit costs, including lower medical insurance and holiday pay.
The number of agile consultants on assignment during the thirdfirst quarter of fiscal 20262027 was 2,0861,976 compared to 2,7092,231 during the thirdfirst quarter of fiscal 2025.2026. The average number of salaried consultants during the thirdfirst quarter of fiscal 20262027 was 394373 compared to 493418 during the thirdfirst quarter of fiscal 2025.2026.
Cost of services decreased $44.4 million, or 17.0%, to $216.1 million for the nine months ended February 28, 2026 from $260.5 million for the nine months ended February 22, 2025. The decrease in cost of services was primarily attributable to a 16.4% decline in billable hours and a decrease of 1.8% in the average pay rate in the nine months ended February 28, 2026 compared to the nine months ended February 22, 2025.
Cost of services as a percentage of revenue was 62.5% for the nine months ended February 28, 2026 compared to 63.2% for the nine months ended February 22, 2025. The decreased percentage was primarily driven by lower pay bill ratio, lower healthcare costs and holiday pay for the nine months ended February 28, 2026 compared to the nine months ended February 22, 2025.
RGP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Ryu Jennifer Y |
Grant/award | 2,505 | — | — |
| 2026-10-01 | Rottmann Scott Glenn |
Grant/award | 3,560 | — | — |
| 2026-10-01 | Lane Michael Wayne |
Grant/award | 3,616 | — | — |
| 2026-10-01 | Iyer Venkataraman Ramaswamy |
Grant/award | 1,480 | — | — |
| 2026-10-01 | Carlile Roger D |
Grant/award | 13,167 | — | — |
| 2026-08-10 | Rottmann Scott Glenn |
Shares withheld for tax | 4,739 | $4.20 | $19.9K |
| 2026-06-19 | Carlile Roger D |
Grant/award | 11,728 | — | — |
| 2026-06-19 | Iyer Venkataraman Ramaswamy |
Grant/award | 1,318 | — | — |
| 2026-06-19 | Lane Michael Wayne |
Grant/award | 3,221 | — | — |
| 2026-06-19 | Rottmann Scott Glenn |
Grant/award | 3,428 | — | — |
| 2026-06-19 | Ryu Jennifer Y |
Grant/award | 2,231 | — | — |
| 2026-06-10 | Lane Michael Wayne |
Shares withheld for tax | 1,481 | $4.71 | $7.0K |
| 2026-06-01 | Pisano A Robert |
Gift | 112,371 | — | — |
| 2026-06-01 | Pisano A Robert |
Gift | 112,371 | — | — |
Well-known investors holding RGP (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 844,437 | $3.6M | 0.0% | Added 8% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 350,553 | $1.5M | 0.0% | Added 255% |
| Renaissance Technologies | 2026-06-30 | 310,100 | $1.3M | 0.0% | No change |
| Two Sigma Investments | 2026-06-30 | 170,476 | $724.5K | 0.0% | Added 80% |
| Millennium Management (Israel Englander) | 2026-06-30 | 138,195 | $587.3K | 0.0% | New position |
| D. E. Shaw & Co. | 2026-06-30 | 48,034 | $179.2K | — | Sold out |