UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________________________________________________________________________________
FORM 10-Q
____________________________________________________________________________________________
(Mark One)
For the quarterly period ended February 28, 2026
OR
For the transition period from ______ to______
Commission File Number: 0-32113
____________________________________________________________________________________________
(Exact Name of Registrant as Specified in Its Charter)
____________________________________________________________________________________________
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (214 ) 777-0600
____________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | x | |||||||||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of March 31, 2026, 34,329,344 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
1
RESOURCES CONNECTION, INC.
INDEX
| Page | ||||||||
2
PART I—FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
RESOURCES CONNECTION, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value per share)
| February 28, 2026 | May 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Trade accounts receivable, net of allowances of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Income taxes receivable | |||||||||||
| Total current assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and other accrued expenses | $ | $ | |||||||||
| Accrued salaries and related obligations | |||||||||||
| Operating lease liabilities, current | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
| Deferred tax liabilities | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (see Note 12) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
Treasury stock at cost, | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of services | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
Goodwill impairment | |||||||||||||||||||||||
| Amortization expense | |||||||||||||||||||||||
| Depreciation expense | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Interest income, net | ( | ( | ( | ( | |||||||||||||||||||
| Other expense (income) | ( | ||||||||||||||||||||||
| Loss before income tax expense (benefit) | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss per common share: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average number of common and common equivalent shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Cash dividends declared per common share | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Foreign currency translation adjustment, net of tax | ( | ||||||||||||||||||||||
| Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share amounts)
(Unaudited)
| For the Three Months Ended February 28, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at November 29, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock purchased under Employee Stock Purchase Plan | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | - | - | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of equity awards, net of shares withheld to cover taxes | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents on equity awards | - | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended February 28, 2026 | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balances at February 28, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| For the Nine Months Ended February 28, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at May 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock purchased under Employee Stock Purchase Plan | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of equity awards, net of shares withheld to cover taxes | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents on equity awards | - | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the nine months ended February 28, 2026 | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balances at February 28, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended February 22, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at November 23, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock purchased under Employee Stock Purchase Plan | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of equity awards, net of shares withheld to cover taxes | - | - | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents on equity awards | - | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended February 22, 2025 | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balances at February 22, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
6
| For the Nine Months Ended February 22, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at May 25, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock purchased under Employee Stock Purchase Plan | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | ( | ( | - | ( | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of equity awards, net of shares withheld to cover taxes | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | - | - | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents on equity awards | - | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||||||||||||
| Net loss for the nine months ended February 22, 2025 | - | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Balances at February 22, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended | |||||||||||
| February 28, 2026 | February 22, 2025 | ||||||||||
| Cash flows (used in) provided by operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
Amortization of right-of-use assets | |||||||||||
| Stock-based compensation expense | |||||||||||
Goodwill impairment | |||||||||||
| Impairment on right-of-use asset | |||||||||||
| Gain on sale of assets | ( | ||||||||||
| Adjustment to allowances | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Other, net | |||||||||||
| Changes in operating assets and liabilities, net of acquisition: | |||||||||||
| Trade accounts receivable | |||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Income taxes | ( | ||||||||||
| Other assets | ( | ||||||||||
| Accounts payable and other accrued expenses | ( | ( | |||||||||
| Accrued salaries and related obligations | ( | ||||||||||
| Other liabilities | ( | ||||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Net proceeds from sale of assets | |||||||||||
| Acquisition of Reference Point, net of cash acquired | ( | ||||||||||
| Investments in property and equipment and internal-use software | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of common stock under Employee Stock Purchase Plan | |||||||||||
Payment of debt issuance costs | ( | ||||||||||
| Repurchase of common stock | ( | ||||||||||
| Payment of cash dividends | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow disclosures | |||||||||||
| Income taxes paid, net | $ | $ | |||||||||
| Interest paid | $ | $ | |||||||||
| Non-cash investing and financing activities | |||||||||||
| Dividends declared, not paid | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
RESOURCES CONNECTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization
Description of the Company and its Business
Resources Connection, Inc. (the “Company”), a Delaware corporation, was incorporated on November 16, 1998. The Company’s operating entities provide services primarily under the name Resources Global Professionals (“RGP”). RGP is a global professional services firm 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—the Company provides 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.
The Company’s fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31. The third quarters of fiscal 2026 and 2025 each consisted of 13 weeks. The Company’s fiscal year 2026 will consist of 52 weeks.
Company Management Changes
On October 30, 2025, the Board appointed Roger Carlile, a director of the Company, to succeed Kate W. Duchene as the Company’s President and Chief Executive Officer ("CEO"), effective November 3, 2025. Concurrently, 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 Ms. Duchene (the "Duchene Employment Agreement"), 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 its new President and CEO with the continuity of leadership. Ms. Duchene will continue to provide transition support to the Company as a consultant from January 4, 2026 through December 31, 2028.
2. Summary of Significant Accounting Policies
Basis of Presentation
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates and assumptions are adequate, actual results could materially differ from the estimates and assumptions used as new information is learned or upon the amounts becoming fixed or determinable.
9
The fiscal 2025 year-end balance sheet data was derived from audited consolidated financial statements, and certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to Securities and Exchange Commission (“SEC”) rules or regulations; however, the Company believes the disclosures made are adequate to make the information presented not misleading.
A complete listing of the Company’s significant accounting policies is discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in the Fiscal Year 2025 Form 10-K.
Reporting Segments
The Company's reportable segments are comprised of On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services. Sitrick, a crisis communications and public relations firm, does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the “All Other” segment. See Note 13 — Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements for additional information on these segments. Each segment reports through separate segment managers to the Company’s Chief Executive Officer and Chief Operating Officer, who are collectively designated as the Chief Operating Decision Maker (“CODM”) for segment reporting purposes. Each of these segments represents a reporting unit for the purposes of assessing goodwill for impairment.
Revenue Recognition
The Company generates substantially all of its revenues from providing professional consulting services to its clients. Revenues are recognized when control of the promised service is transferred to the Company’s clients, in an amount that reflects the consideration expected in exchange for the services rendered. Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities. Revenues for the vast majority of the Company's contracts are recognized over time, based on hours worked by the Company’s professionals. The performance of the agreed-to service over time is the single performance obligation for revenues. Certain clients may receive discounts (for example, volume discounts or rebates) to the amounts billed. These discounts or rebates are considered variable consideration. Management evaluates the facts and circumstances of each contract and client relationship to estimate the variable consideration assessing the most likely amount to recognize and considering management’s expectation of the volume of services to be provided over the applicable period. Rebates are the largest component of variable consideration and are estimated using the most-likely-amount method, contracts terms and estimates of revenue. Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods.
On a limited basis, the Company may have fixed-price contracts, for which revenues are recognized over time using the input method based on time incurred as a proportion of estimated total time. Time incurred represents work performed, which corresponds with, and therefore best depicts, the transfer of control to the client. Management uses significant judgments when estimating the total hours expected to complete the contract performance obligation. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate.
The Company recognizes revenues primarily on a gross basis as it acts as a principal for primarily all of its revenue transactions. The Company has concluded that gross reporting is appropriate because it controls the services before they are transferred to the customers. The Company a) has the risk of identifying and hiring qualified consultants; b) has the discretion to select the consultants and establish the price and responsibilities for services to be provided; c) is primarily responsible for fulfilling the promise to provide the service to the customer; and d) bears the risk for services provided that
10
are not fully paid for by clients. The Company recognizes all reimbursements received from clients for “out-of-pocket” expenses as revenue and all such expenses as cost of services.
Commissions earned by the Company’s sales professionals are considered incremental and recoverable costs of obtaining a contract with a customer. The Company elected to apply the practical expedient to expense sales commissions as incurred as the expected amortization period is one year or less. Sales commissions are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.
The Company’s clients are contractually obligated to pay the Company for all hours billed. The Company invoices most of its clients on a weekly basis or, in certain circumstances, on a bi-weekly or monthly basis, and its typical arrangement of payment is due within 30 days. To a much lesser extent, in certain circumstances, the Company also earns revenue if one of its consultants is hired by, or if the Company places an outside candidate with, its client. Conversion fees or permanent placement fees are recognized when one of the Company’s professionals, or a candidate identified by the Company, accepts an offer of permanent employment from a client and all requisite terms of the agreement have been met. Such conversion fees or permanent placement fees are recognized when the performance obligation is considered complete, which the Company considers a) when the consultant or candidate accepts the position; b) the consultant or candidate has notified either the Company or their current employer of their decision; and c) the start date is within the Company’s current quarter.
Per Share Information
The Company presents both basic and diluted earnings (loss) per share (“EPS”). Basic EPS is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted EPS is based upon the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive shares of common stock include the assumed exercise of outstanding in-the-money stock options, assumed issuance of common stock under the Company's 2019 Employee Stock Purchase Plan, as amended (“ESPP”), assumed release of outstanding restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) using the treasury stock method. However, potentially dilutive shares of common stock are excluded from the computation in periods in which they have an anti-dilutive effect.
During the three and nine months ended February 28, 2026 and February 22, 2025, the Company incurred a net loss, and as a result potentially dilutive common shares issuable from the assumed exercise of stock options and the assumed release of shares of common stock under the outstanding ESPP, RSAs, RSUs, and PSUs awards were not included in the diluted shares used to calculate net loss per share, as their inclusion would have been anti-dilutive.
The following table summarizes the calculation of net loss per common share for the three and nine months ended February 28, 2026 and February 22, 2025 (in thousands, except per share amounts):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted-average shares, basic and diluted | |||||||||||||||||||||||
Net loss per common share: | |||||||||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Anti-dilutive shares not included above | |||||||||||||||||||||||
11
Financial Instruments
The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:
Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets.
Level 3 – Unobservable inputs.
Long-lived Assets
During the third quarter of fiscal 2026, the Company entered into a sublease at one of its office locations in connection with its restructuring activities. Due to the change in future use of the office space, management assessed recoverability of the related right-of-use asset in accordance with the Company's policy on impairment of long-lived assets. Based on an analysis of future undiscounted cash flows associated with the sublease of the right-of-use asset, management determined that the carrying value was not recoverable. The fair value was based on observable market rates of the assets in the area of the office location. The Company recorded an impairment charge of $1.0 million to selling, general and administrative expenses in the accompanying Consolidated Statements of Operations in connection with the analysis. The Company did not
Goodwill and Intangible Assets
Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. Goodwill is not subject to amortization but the carrying value is tested for impairment on an annual basis, as of the first day of the fourth quarter, or more frequently if the Company believes indicators of impairment exist. There were no
Impairment testing is conducted at the reporting unit level. Under ASC 350, Intangibles - Goodwill and Other, the qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows or planned revenue or earnings of the reporting unit as potential indicators when determining the need for a quantitative assessment of impairment.
Under the quantitative analysis, the fair value of the reporting units is determined by using a market-based approach, an income-based approach or a combination thereof. The market-based approach estimates fair value by applying revenue and EBITDA multiples to each reporting unit’s operating performance. The multiples are derived from
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guideline public companies with similar operating and investment characteristics to the Company's reporting units, and are evaluated and adjusted, if needed, based on specific characteristics of the reporting units relative to the selected guideline companies. The market-based approach requires the Company to make a series of assumptions that involve significant judgment, such as the selection of comparable companies and the evaluation of the multiples. The income-based approach estimates fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects the relevant risks associated with each reporting unit and the time value of money. The income approach also requires a series of assumptions that involve significant judgment, such as revenue projections and Adjusted EBITDA margin projections, which are based on historical experience and internal forecasts about future performance.
While the Company believes that the assumptions underlying its quantitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and the magnitude of such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of the reporting units will be consistent with the Company’s projections.
See Note 5 – Goodwill and Intangible Assets for further information.
Capitalized Hosting Arrangements
The capitalized hosting arrangements costs are primarily related to the Company's implementation of a cloud-based enterprise resource planning system and talent acquisition and management system. Such costs include third party implementation costs and costs associated with internal resources directly involved in the implementation. Capitalized hosting arrangements are stated at historical cost and amortized on a straight-line basis over an estimated useful life of the expected term of the hosting arrangement, taking into consideration several other factors such as, but not limited to, options to extend the hosting arrangement or options to terminate the hosting arrangement. The amortization of capitalized implementation costs for hosting arrangements will commence when the systems are ready for their intended use and will be presented as operating expenses on the Company's Consolidated Statements of Operations consistent with the presentation for expensing the fees for the associated hosting arrangement.
As of February 28, 2026 and May 31, 2025, the capitalized costs related to hosting arrangements, net of accumulated amortization, were $16.5 million and $19.0 million, respectively. These capitalized hosting arrangements are included in prepaid expenses and other current assets and other non-current assets on the Consolidated Balance Sheets. The Company incurred $0.8 million and $2.5 million of amortization expense during the three and nine months ended February 28, 2026, and $0.7 million and $1.0 million of amortization expense during the three and nine months ended February 22, 2025, respectively, related to these arrangements.
Share Repurchases and Retirement of Treasury Shares
The Company’s stock repurchase programs authorize the Company to repurchase shares at the discretion of the Company’s senior executives based on numerous factors, including, without limitation, share price and other market conditions, the Company’s ongoing capital allocation planning, the levels of cash and debt balances, and other demands for cash. The Company records the shares repurchased as treasury stock based on the amount paid to repurchase its shares. Direct costs incurred to acquire treasury stock are treated like stock issue costs and added to the cost of the treasury stock.
The Company accounts for the retirement of treasury shares using the par-value method under which the cost of repurchased and retired treasury shares in excess of the par value is allocated between additional paid-in capital and retained earnings. When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings. The Company uses the weighted-average cost flow assumption to identify and assign the original issue proceeds to the cost of the repurchased and retired treasury shares. The Company believes that this allocation method is preferable because it more accurately reflects its paid-in capital balances by allocating the cost of the repurchased and retired treasury shares to paid-in capital in proportion to paid-in capital associated with the original issuance of those shares.
See Note 9 — Stockholders’ Equity for further information on the repurchase of shares.
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Restructuring Charges
Recently Issued Accounting Guidance
In December 2025, the FASB issued Accounting Standards Update ("ASU") 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11"), which clarifies interim disclosure requirements by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The standard is intended to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. ASU 2025-11 is effective for interim reporting periods within annual reporting period beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software ("ASU 2025-06"), which removes all references to prescriptive and sequential software development stages (referred to as "project stages"). An entity will be required to start capitalizing software costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual periods. Early adoption is permitted as of the beginning of the annual reporting period. The Company does not expect this guidance to have a material impact on its financial statements and disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company currently expects to adopt this guidance in its fiscal year beginning May 31, 2026. The Company is currently evaluating the impact of ASU 2025-05 on its financial statements and disclosures.
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Recently Adopted Accounting Guidance
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance is intended to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The guidance was effective for annual periods beginning after December 15, 2024. The Company adopted this guidance in the fiscal year ending May 30, 2026 and expects to implement the related income tax disclosure requirements in its annual report on Form 10-K. The Company does not anticipate the adopted guidance to have a material impact on the Company’s consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance is intended to improve reportable segment disclosure requirements for public entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit. This guidance was effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The Company adopted this guidance in the fiscal year ending May 31, 2025. For additional information, refer to Note 13 – Segment Information and Enterprise Reporting.
3. Revenues
The timing of revenue recognition, billings and cash collections affects the recognition of trade accounts receivable, contract assets and contract liabilities.
Contract assets represent the Company’s rights to consideration for completed performance under the contract (i.e., unbilled receivables), in which the Company has transferred control of the product or services before there is an unconditional right to payment. Contract assets were $22.2 million and $30.7 million as of February 28, 2026 and May 31, 2025, respectively, which were included in trade accounts receivable in the Consolidated Balance Sheets.
Contract liabilities represent deferred revenue when cash is received in advance of performance of services and are presented in other current liabilities in the Consolidated Balance Sheets. Contract liabilities were $8.3 million and $4.3 million as of February 28, 2026 and May 31, 2025, respectively. Revenue recognized during the three and nine months ended February 28, 2026 that was included in deferred revenue as of May 31, 2025 was $0.3 million and $3.1 million, respectively. Revenue recognized during the three and nine months ended February 22, 2025 that was included in deferred revenue as of May 25, 2024 was $0.9 million and $1.5 million, respectively.
4. Acquisitions and Disposals
Acquisition of Reference Point
On July 1, 2024, the Company entered into an Amended and Restated Membership Interest Purchase Agreement with Reference Point and the holder of all the outstanding membership interests of Reference Point, in which the Company acquired 100 % of the membership interests of Reference Point. Reference Point is a strategy, management, and technology consulting firm serving the financial services sector across four areas of focus: Strategy & Management, Risk & Regulatory Compliance, Digital & Technology and Data & Analytics. The Company paid cash consideration of $23.2 million (net of $0.2 million cash acquired).
Results of operations of Reference Point are included within the Consulting Services operating segment in the Consolidated Statements of Operations from the date of acquisition. During the three and nine months ended February 28, 2026, the Company incurred $0.3 million and $1.2 million, respectively, in acquisition costs consisting primarily of employee compensation costs related to the acquired business. During the three and nine months ended February 22, 2025, the Company incurred $0.5 million and $2.3 million, respectively, in acquisition costs, including professional services fees incurred in connection with the transaction and employee compensation costs. Acquisition costs were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations.
In accordance with ASC 805, Business Combinations, the Company made an allocation of the purchase price for Reference Point based on the fair value of the assets acquired and liabilities assumed, with the residual amount recorded as goodwill. The Company’s purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets. In connection with this acquisition, the Company recorded total intangible assets consisting of $14.4 million for customer relationships (to be amortized over 12 years), $0.7 million related to a non-compete agreement (to be amortized over 5 years) and $0.6 million for trade name (to be amortized over 1 year). The Company also recorded $6.9
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million of goodwill, which is expected to be deductible for tax purposes. The goodwill is attributable primarily to expected synergies and the assembled workforce of Reference Point.
The following table summarizes the consideration for the acquisition of Reference Point and the amounts of the identified assets acquired and liabilities assumed at the acquisition date:
Fair value of consideration transferred (in thousands):
| Cash | $ | ||||
The following table summarizes the amounts of identifiable assets acquired and liabilities assumed that were recognized at the acquisition date (in thousands):
| Cash and cash equivalents | $ | ||||
Trade accounts receivable (1) | |||||
| Prepaid expenses and other current assets | |||||
| Intangible assets | |||||
| Property and equipment | |||||
Other non-current assets | |||||
| Total identifiable assets | |||||
| Accounts payable and other accrued expenses | |||||
| Accrued salaries and related obligations | |||||
| Other liabilities | |||||
| Total liabilities assumed | |||||
| Net identifiable assets acquired | |||||
| Goodwill | |||||
| Net assets acquired | $ | ||||
(1)The gross contractual amount of accounts receivable of $2.0 million was fully collected during fiscal 2025.
The weighted-average useful life of all Reference Point's intangible assets is 11.3 years as of the date of acquisition.
Disposals
During the third quarter of fiscal 2026, the Company completed the dissolution of its foreign subsidiary, Resources Global Professionals Sweden AB. No gain/loss was recognized in connection with the dissolution. The Company recognized approximately $0.6 million related to the recognition of the accumulated translation adjustment associated with the subsidiary, which was reclassified from accumulated other comprehensive loss in the Company’s Consolidated Balance Sheet and included in other expense (income) in the Company’s Consolidated Statement of Operations for the three and nine months ended February 28, 2026.
5. Goodwill and Intangible Assets
As described in Note 2 – Summary of Significant Accounting Policies, the Company performs its annual impairment test for goodwill impairment in the fourth quarter, unless indicators of impairment exist, at which point the Company may perform interim quantitative goodwill impairment analysis. There were no impairment indicators for the three months ended February 28, 2026 and as such, the Company did not perform an interim goodwill impairment analysis in the third quarter of fiscal 2026. There were no changes in the carrying amount of goodwill during the nine months ended
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February 28, 2026 and all goodwill on the Company's Consolidated Balance Sheet is allocated to the Outsourced Services segment.
Fiscal Year 2025 Interim Impairment Assessments
During fiscal 2025, there were indicators of potential impairment in each of the fiscal quarters related to a combination of business performance and decline in share price. As a result, we performed interim quantitative goodwill impairment assessments for our reporting units, each of which is also a reporting segment, during the nine months ended February 22, 2025. The Company recorded an aggregate impairment charge of $125.4 million in connection with the impairment assessments.
The following table presents details of the Company’s intangible assets, estimated lives and related accumulated amortization (in thousands, except for estimated useful life):
| As of February 28, 2026 | As of May 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
| Customer contracts and relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Trade names | ( | ( | |||||||||||||||||||||||||||||||||||||||
Non-Compete Agreements | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
The Company recorded amortization expense of $0.7 million and $1.4 million for the three months ended February 28, 2026 and February 22, 2025, respectively, and $3.1 million and $4.5 million for the nine months ended February 28, 2026 and February 22, 2025, respectively.
The following table presents future estimated amortization expense based on existing intangible assets held for use (in thousands):
Fiscal Years:
| 2026 (remaining three months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 and thereafter | |||||
| Total | $ | ||||
Actual future estimated amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, impairments, and other factors or changes.
6. Leases
The Company currently leases office space, vehicles and certain equipment under operating leases. At February 28, 2026, the Company had no finance leases.
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The weighted-average lease term and weighted-average discount rate for operating leases as of February 28, 2026 and May 31, 2025 are presented in the following table:
| As of February 28, 2026 | As of May 31, 2025 | ||||||||||
| Weighted-average remaining lease term | |||||||||||
| Weighted-average discount rate | |||||||||||
Cash flow and other noncash information related to operating leases is included in the following table (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ | $ | $ | |||||||||||||||||||
7. Long-Term Debt
On July 2, 2025, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a credit agreement with the lenders party thereto and Bank of America, N.A. as administrative agent, L/C issuer and the swingline lender (the “2025 Credit Facility”), and concurrently terminated the 2021 Credit Facility (as defined below). The 2025 Credit Facility provides for a secured revolving loan, available in an amount up to the lesser of $50.0 million and a borrowing base formula tied to eligible receivables, which includes a $10.0 million sublimit for the issuance of standby letters of credit. The 2025 Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $15.0 million. The 2025 Credit Facility will mature on November 30, 2029. The obligations under the 2025 Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries.
Prior to July 2, 2025, the Company had a revolving credit facility with Bank of America, N.A., pursuant to the terms of the credit agreement dated November 12, 2021 by and among the Company and Resources Connection LLC, as borrowers, all of the Company’s domestic subsidiaries, as guarantors, the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “2021 Credit Facility”). The 2021 Credit Facility, which was originally set to mature on November 12, 2026, was terminated on July 2, 2025 in connection with entering into the 2025 Credit Facility.
Borrowings under the 2025 Credit Facility bear interest at a rate per annum of either, at the Company's election (i) Term SOFR (as defined in the 2025 Credit Facility) plus a margin ranging from 1.25 % to 2.50 % or (ii) the Base Rate (as defined in the 2025 Credit Facility), plus a margin of 0.25 % to 1.50 %, in either case, with the applicable margin depending on the Company's Consolidated EBITDA (as defined in the 2025 Credit Facility). The Company is also obligated to pay other customary facility fees for a credit facility of this size and type.
The 2025 Credit Facility contains customary covenants, including covenants that limit or restrict the Company’s and its subsidiaries’ ability to incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets and financial covenants to maintain a certain consolidated total net leverage ratio and a consolidated fixed charge coverage ratio. Upon the occurrence of an event of default under the 2025 Credit Facility, the lender may cease making loans, terminate the 2025 Credit Facility, and declare all amounts outstanding to be immediately due and payable. The 2025 Credit Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults.
On January 30, 2026, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a first amendment to the 2025 Credit Facility (the "First Amended Credit Facility").
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The purpose of the First Amended Credit Facility was to amend certain covenants related to the Company's definition of Consolidated EBITDA, as such term is defined in the 2025 Credit Facility. Except as expressly modified and amended in the First Amended Credit Facility, all terms, provisions, and conditions of the 2025 Credit Facility remain unchanged and in full force and effect.
As of February 28, 2026, the Company was compliant with all financial covenants under the 2025 Credit Facility. The Company had no debt outstanding under the 2025 Credit Facility as of February 28, 2026 and no debt outstanding under the 2021 Credit Facility as of May 31, 2025. However, the Company had $0.7 million and $1.0 million of outstanding letters of credit issued as of February 28, 2026 and May 31, 2025, respectively, under the 2025 Credit Facility and the 2021 Credit Facility, respectively. As of February 28, 2026, there was up to $49.3 million of potential remaining capacity under the 2025 Credit Facility subject to the terms of the 2025 Credit Facility and related financial covenants.
8. Income Taxes
For the three months ended February 28, 2026, the Company's income tax expense was $0.7 million with an effective tax rate of 7.9 %, and for the three months ended February 22, 2025, the Company's income tax benefit was $5.6 million with an effective tax rate of 11.3 %.
For the nine months ended February 28, 2026 the Company's income tax expense was $1.9 million with an effective tax rate of 8.3 %, and for the nine months ended February 22, 2025, the Company's income tax benefit was $12.3 million with an effective tax rate of 9.4 %. The income tax expense in fiscal 2026 was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions do not result in a tax benefit due to the existence of valuation allowances. The income tax benefit in fiscal 2025 was primarily attributed to the Company’s consolidated pretax loss, reduced by the permanent disallowance of a portion of the goodwill impairment for tax purposes and the establishment of a valuation allowance on the Company's UK entity.
Due to the sensitivity of the estimated annual effective tax rate to changes in estimated annual pretax results, the Company determined that the discrete method, whereby the year-to-date actual effective tax rate is applied, is the appropriate approach in its computation of the interim tax provision for the current fiscal year, as the use of the estimated annual effective tax rate would provide a distortive result.
The Company’s total liability for unrecognized gross tax benefits, including accrued interest and penalties, was $1.2 million as of February 28, 2026 and $1.1 million as of May 31, 2025, which, if ultimately recognized, would impact the effective tax rate in future periods. The unrecognized tax benefits are included in other long-term liabilities in the Consolidated Balance Sheets. None
9. Stockholders’ Equity
Stock Repurchase Program
The Company’s Board of Directors has previously approved two stock repurchase programs authorizing the repurchase, at the discretion of the Company’s senior executives, of the Company’s common stock for a designated aggregate dollar limit. In July 2015, the first program was authorized for an aggregate dollar limit not to exceed $150 million, and in October 2024, the second program was authorized for an additional dollar limit not to exceed $50 million (collectively, the “Stock Repurchase Programs”). Subject to the aggregate dollar limits, the currently authorized Stock Repurchase Programs do not have an expiration date. Repurchases under the programs may take place in the open market or in privately negotiated transactions and may be made pursuant to a Rule 10b5-1 plan. No 79.2 million remained available for future repurchases of the
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Company’s common stock under the Stock Repurchase Programs. During the three months ended February 22, 2025, the Company repurchased 354,505 shares of its common stock on the open market at an average price of $8.46 per share, for an aggregate total purchase price of approximately $3.0 million. During the nine months ended February 22, 2025, the Company repurchased 1,382,820 shares of its common stock on the open market at an average price of $9.40 per share, for an aggregate total purchase price of approximately $13.0 million.
Quarterly Dividend
Subject to approval each quarter by the Company's Board of Directors, the Company pays a regular dividend. On January 28, 2026, the Board of Directors approved a regular quarterly dividend of $0.07 per share of the Company’s common stock. The dividend was paid on March 20, 2026 to stockholders of record at the close of business on February 20, 2026. As of February 28, 2026 and May 31, 2025, $2.4 million and $2.3 million, respectively, were accrued and recorded in other current liabilities in the Company’s Consolidated Balance Sheets for dividends declared but not yet paid. Continuation of the quarterly dividend is at the discretion of the Board of Directors and depends upon the Company’s financial condition, results of operations, capital requirements, general business condition, contractual restrictions contained in the 2025 Credit Facility and other agreements, and other factors deemed relevant by the Board of Directors.
10. Restructuring and 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, the Company engaged a third-party advisor to assist it in conducting a comprehensive review of its global operations. In October 2025, in connection with this effort, the Company began certain workforce reductions affecting management and administrative roles, aimed at improving efficiency, reducing costs and streamlining operations (the "October RIF"). The Company began a second reduction in force under the Board approved 2026 Transformation Initiative in January 2026 (the "January RIF"). In addition to the reductions in force, the Company identified additional cost savings through exiting and subleasing a certain office space. The Company recorded an impairment charge of $1.0 million in connection with this sublease. See Note 2 – Summary of Significant Accounting Policies for further information.
Activity under the 2026 Transformation Initiative represents ongoing benefit arrangements, which are accounted for under ASC 712. All costs associated with the 2026 Transformation Initiative were recorded in selling, general and administrative expenses in the Company's Consolidated Statements of Operations. The components of the restructuring charges related to the 2026 Transformation Initiative are included in the table below (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||
| February 28, 2026 | ||||||||||||||
| Severance and benefits | $ | $ | ||||||||||||
| Professional fees | ||||||||||||||
| Right-of-use asset impairment | ||||||||||||||
| $ | $ | |||||||||||||
The liability for restructuring charges as of February 28, 2026 under the 2026 Transformation Initiative was related to severance and benefits costs incurred for the January RIF and was recorded in accounts payable and other accrued expenses on the Company's Consolidated Balance Sheets. The table below summarizes the restructuring liability (in thousands);
Employee Termination Costs | |||||
Balance as of May 31, 2025 | $ | ||||
| Restructuring charges (Severance and benefits) | |||||
Payments | ( | ||||
Balance as of February 28, 2026 | $ | ||||
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The Company currently expects its 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.
11. Stock-Based Compensation Plans
General
The Company's stockholders approved the Resources Connection, Inc. 2020 Performance Incentive Plan (the “2020 Plan”) on October 22, 2020, which replaced and succeeded in its entirety the Resources Connection, Inc. 2014 Performance Incentive Plan (the “2014 Plan”). On October 17, 2024, the Company’s stockholders approved an amendment and restatement of the 2020 Plan, which increased the maximum number of shares of the Company’s common stock authorized for issuance under the 2020 Plan by 815,000 shares. Executive officers and certain employees, as well as non-employee directors of the Company and certain consultants and advisors are eligible to participate in the 2020 Plan. The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2020 Plan equals: (1) 815,000 shares, plus (2) 1,797,440 (which represents the number of shares that were available for additional award grant purposes under the 2014 Plan immediately prior to the termination of the authority to grant new awards under the 2014 Plan as of October 22, 2020), plus (3) the number of any shares subject to stock options granted under the 2014 Plan or the Resources Connection, Inc. 2004 Performance Incentive Plan (together with the 2014 Plan, the “Prior Plans”) and outstanding as of October 22, 2020 which expire, or for any reason are cancelled or terminated, after that date without being exercised, plus (4) the number of any shares subject to RSA and RSU awards granted under the Prior Plans that are outstanding and unvested as of October 22, 2020 which are forfeited, terminated, cancelled, or otherwise reacquired after that date without having become vested.
Awards under the 2020 Plan may include, but are not limited to, stock options, stock appreciation rights, restricted stock, performance stock, stock units, stock bonuses and other forms of awards granted or denominated in shares of common stock or units of common stock, as well as certain cash bonus awards. Historically, the Company has granted RSA, RSUs and stock option awards under the 2020 Plan that typically vest in equal annual installments, and PSU awards under the 2020 Plan that vest upon the achievement of certain Company-wide performance targets at the end of the defined performance period. Stock option grants typically terminate ten years from the date of grant. Vesting periods for RSA, RSU and stock option awards range from to four years . The performance period for the PSU awards is three years . As of February 28, 2026, there were 838,382 shares available for further award grants under the 2020 Plan (with outstanding PSUs counted for this purpose based on the target number of shares granted).
Stock-Based Compensation Expense
The Company recognizes stock-based compensation expense on time-vesting equity awards ratably over the applicable vesting period based on the grant date fair value, net of estimated forfeitures. Expense related to the liability-classified awards reflects the change in fair value during the reporting period. The number of PSUs 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.
Stock-based compensation expense included in selling, general and administrative expenses was $1.0 million and $1.9 million for the three months ended February 28, 2026 and February 22, 2025, respectively, and $8.0 million and $5.4 million for the nine months ended February 28, 2026 and February 22, 2025, respectively. These amounts consisted of stock-based compensation expense related to employee stock options, RSAs, RSU awards and PSU awards under the 2020 Plan and Prior Plans, employee stock purchases made via the ESPP, and stock units credited under the Directors Deferred
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Compensation Plan. Stock-based compensation expense for the nine months ended February 28, 2026 also included the impact of accelerated expense recognition of stock awards related to the separation of the Company's former CEO pursuant to ASC 718 – Compensation - Stock Compensation (“ASC 718”).
Stock-Based Award Acceleration
In connection with the separation of the Company's former CEO, Ms. Duchene's then-outstanding and unvested equity awards accelerated and vested upon her termination date of January 3, 2026. Her outstanding PSUs vested based on the applicable “target” number of shares subject to the award. The Company recognized all remaining fair value of Ms. Duchene's unvested equity awards in the second quarter of fiscal 2026, which totaled $3.1 million and is recorded in selling, general and administrative expenses in the Consolidated Statements of Operations.
Stock Options
The following table summarizes the stock option activity for the nine months ended February 28, 2026 (in thousands, except weighted-average exercise price):
| Number of Options | Weighted-Average Exercise Price | ||||||||||
| Awards outstanding at May 31, 2025 | $ | ||||||||||
| Exercised | $ | ||||||||||
| Forfeited | $ | ||||||||||
| Expired | ( | $ | |||||||||
| Awards outstanding at February 28, 2026 | $ | ||||||||||
| Exercisable at February 28, 2026 | $ | ||||||||||
Vested and expected to vest at February 28, 2026 (1) | $ | ||||||||||
Valuation and Expense Information for Stock Based Compensation Plans
There were no
Employee Stock Purchase Plan
On October 20, 2022, the Company’s stockholders approved an amendment and restatement of the ESPP that increased the number of shares authorized for issuance under the ESPP by 1,500,000 , resulting in a maximum number of shares of the Company’s common stock authorized for issuance under the ESPP of 3,325,000 shares.
The Company’s ESPP allows qualified employees (as defined in the ESPP) to purchase designated shares of the Company’s common stock at a price equal to 85 % of the lesser of the fair market value of common stock at the beginning or end of each semi-annual stock purchase period. The Company issued 527,119 and 492,858 shares of common stock pursuant to the ESPP during the nine months ended February 28, 2026 and February 22, 2025, respectively. There were 303,269 shares of common stock available for issuance under the ESPP as of February 28, 2026.
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Restricted Stock Awards
The following table summarizes the activities for the unvested RSAs for the nine months ended February 28, 2026 (in thousands, except weighted-average grant-date fair value):
| Shares | Weighted-Average Grant-Date Fair Value | ||||||||||
| Unvested at May 31, 2025 | $ | ||||||||||
| Granted | $ | ||||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
| Unvested as of February 28, 2026 | $ | ||||||||||
| Expected to vest as of February 28, 2026 | $ | ||||||||||
As of February 28, 2026, there was $1.7 million of total unrecognized compensation costs related to unvested RSAs. The cost is expected to be recognized over a weighted-average period of 1.68 years.
Restricted Stock Units
The Company may issue either equity-classified RSUs, which are awards granted to employees under the 2020 Plan that settle in shares of the Company’s common stock, or liability-classified RSUs, which are awards credited to Board of Director members under the Directors Deferred Compensation Plan that settle in cash.
The Company also grants RSUs to its employees under the 2020 Plan, which are classified as equity awards. The following table summarizes the activities for the unvested RSUs, including both equity- and liability-classified RSUs, for the nine months ended February 28, 2026 (in thousands, except weighted-average grant-date fair value):
| Equity-Classified RSUs | Liability-Classified RSUs | Total RSUs | |||||||||||||||||||||||||||||||||
| Shares | Weighted-Average Grant-Date Fair Value | Shares | Weighted-Average Grant-Date Fair Value | Shares | Weighted-Average Grant-Date Fair Value | ||||||||||||||||||||||||||||||
| Unvested at May 31, 2025 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted (1) | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Vested | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||
| Forfeited | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Unvested as of February 28, 2026 | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Expected to vest as of February 28, 2026 | $ | $ | $ | ||||||||||||||||||||||||||||||||
(1)Dividend equivalents are included in the granted shares.
As of February 28, 2026, there was $9.5 million of total unrecognized compensation costs related to unvested equity-classified RSUs. The cost is expected to be recognized over a weighted-average period of 1.75 years.
As of February 28, 2026, there was $0.5 million of total unrecognized compensation costs related to unvested liability-classified RSUs. The cost is expected to be recognized over a weighted-average period of 1.91 years.
Performance Stock Units
The Company granted PSUs to certain members of management and other select employees. The total number of shares that will vest under the PSUs will be determined at the end of the three-year performance period based on the Company’s achievement of certain revenue and Adjusted EBITDA percentage targets over the performance period. The
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total number of shares that may be earned for these awards based on performance over the performance period ranges from zero to 150 % of the target number of shares.
The following table summarizes the activities for the unvested PSUs for the nine months ended February 28, 2026 (in thousands, except weighted-average grant-date fair value):
Shares (1) | Weighted-Average Grant-Date Fair Value | ||||||||||
| Unvested at May 31, 2025 | $ | ||||||||||
Granted (2) | $ | ||||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
| Unvested as of February 28, 2026 | $ | ||||||||||
| Expected to vest as of February 28, 2026 | $ | ||||||||||
(1)Shares are presented at the stated target, which represents the base number of shares that would vest. Actual shares that vest may be zero to 150 % of the target based on the achievement of the specific company-wide performance targets.
(2)Dividend equivalents are included in the granted shares.
As of February 28, 2026, there was no unrecognized compensation costs related to unvested PSUs.
12. Commitments and Contingencies
Legal Proceedings
13. Segment Information and Enterprise Reporting
The Company's reportable segments are as follows:
•On-Demand Talent – provides businesses with a go-to source for bringing in experts when they need them, serving predominantly the office of the CFO.
•Consulting – drives transformation across people, processes and technology across domain areas including finance, technology and digital, risk and compliance and operational performance.
•Europe & Asia Pacific – a geographically defined segment that offers both on-demand and consulting services (excluding the digital consulting business, which is included in our Consulting segment) to clients throughout Europe & Asia Pacific.
•Outsourced Services – operating under the Countsy by RGPTM brand, this segment offers finance, accounting and HR services provided to startups, spinouts and scale-up enterprises, utilizing a technology platform and fractional team.
•Sitrick – a crisis communications and public relations firm that provides corporate, financial, transactional and crisis communication and management services.
The tables below reflect the operating results of the Company’s segments consistent with the management and performance measurement system utilized by the Company. Performance measurement is based on segment Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) before amortization expense, depreciation expense, interest and income taxes excluding stock-based compensation expense, amortized Enterprise Resource Planning (“ERP”) system costs, technology transformation costs, goodwill impairment, acquisition costs, gain on sale of assets, and restructuring
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costs. Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate. The Company’s CODMs do not evaluate segments using asset information. See Note 2 — Summary of Significant Accounting Policies for a description of the Company's CODMs.
The table below represents a reconciliation of the Company’s net loss to Adjusted EBITDA for all periods presented (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| On-Demand Talent | $ | $ | $ | $ | |||||||||||||||||||
| Consulting | |||||||||||||||||||||||
| Europe & Asia Pacific | |||||||||||||||||||||||
| Outsourced Services | |||||||||||||||||||||||
| All Other | |||||||||||||||||||||||
| Total consolidated revenue | $ | $ | $ | $ | |||||||||||||||||||
| Adjusted EBITDA: | |||||||||||||||||||||||
| On-Demand Talent | $ | $ | $ | $ | |||||||||||||||||||
| Consulting | |||||||||||||||||||||||
| Europe & Asia Pacific | |||||||||||||||||||||||
| Outsourced Services | |||||||||||||||||||||||
| All Other | ( | ( | ( | ( | |||||||||||||||||||
Unallocated items (1) | ( | ( | ( | ( | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | ( | ( | ( | ( | |||||||||||||||||||
Amortized ERP system costs (2) | ( | ( | ( | ( | |||||||||||||||||||
Technology transformation costs (3) | ( | ( | |||||||||||||||||||||
Acquisition costs (4) | ( | ( | ( | ( | |||||||||||||||||||
Goodwill impairment (5) | ( | ( | |||||||||||||||||||||
Gain on sale of assets (6) | |||||||||||||||||||||||
Restructuring costs (7) | ( | ( | ( | ( | |||||||||||||||||||
CEO transition costs (8) | ( | ||||||||||||||||||||||
| Amortization expense | ( | ( | ( | ( | |||||||||||||||||||
| Depreciation expense | ( | ( | ( | ( | |||||||||||||||||||
Interest income, net | |||||||||||||||||||||||
Loss before income tax expense (benefit) | ( | ( | ( | ( | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1) Unallocated items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
(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 expenses on the Consolidated Statement of Operations.
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(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.
(4) Acquisition costs primarily represent costs included in net loss related to the Company’s business acquisition. 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 4 – Acquisitions and Disposals in the Notes to Consolidated Financial Statements for further discussion.
(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 for further discussion.
(6) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.
(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 2025 Restructuring Plan.
The tables below disclose the Company’s revenue, gross profit, significant expenses, and Adjusted EBITDA by segment (in thousands):
Three Months Ended February 28, 2026 | |||||||||||||||||||||||||||||||||||
| On-Demand Talent | Consulting | Europe & Asia Pacific | Outsourced Services | All Other | |||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||||||||||||||
Compensation, bonus and commissions (1) | |||||||||||||||||||||||||||||||||||
Other segment expenses (2) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||
Three Months Ended February 22, 2025 | |||||||||||||||||||||||||||||||||||
| On-Demand Talent | Consulting | Europe & Asia Pacific | Outsourced Services | All Other | |||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||||||||||||||
Compensation, bonus and commissions (1) | |||||||||||||||||||||||||||||||||||
Other segment expenses (2) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||
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| Nine Months Ended February 28, 2026 | |||||||||||||||||||||||||||||||||||
| On-Demand Talent | Consulting | Europe & Asia Pacific | Outsourced Services | All Other | |||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||||||||||||||
Compensation, bonus and commissions (1) | |||||||||||||||||||||||||||||||||||
Other segment expenses (2) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||
| Nine Months Ended February 22, 2025 | |||||||||||||||||||||||||||||||||||
| On-Demand Talent | Consulting | Europe & Asia Pacific | Outsourced Services | All Other | |||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||||||||||||||
Compensation, bonus and commissions (1) | |||||||||||||||||||||||||||||||||||
Other segment expenses (2) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||
(1)The significant expense category and amounts align with the segment-level information that is regularly provided to the CODMs.
(2)Other segment expenses include occupancy expenses, business expenses, marketing expenses, recruiting expenses and other operating expenses.
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The table below represents the Company’s revenue by geographic location (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| International | $ | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The table below presents the Company's long-lived assets, which consist of property and equipment and right of use assets, by geographic location (in thousands):
Long-Lived Assets as of | |||||||||||
| February 28, 2026 | May 31, 2025 | ||||||||||
Long-lived assets: | |||||||||||
| United States | $ | $ | |||||||||
| International | |||||||||||
| Total | $ | $ | |||||||||
14. Subsequent Events
Sale of Sitrick Business
On April 7, 2026, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Sitrick Group, LLC (“Sitrick”) and Sitrick, LLC (the “Buyer”), pursuant to which the Company has agreed to sell 100 % of the membership interests of Sitrick to the Buyer. The Company initiated the sale in connection with its broader transformation initiative to simplify its business portfolio.
The Purchase Agreement provides for a cash purchase price equal to the agreed realizable value of Sitrick client receivables and is expected to be between $1.4 million and $2.3 million. The purchase price is 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 Agreement also provides 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 has also agreed to pay Michael Sitrick, Sitrick’s chief executive officer, a cash payment of $4,000,000 , 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 Purchase Agreement provides that the sale shall be completed within 45 days.
Departure of the Company's Chief Operating Officer
On March 3, 2026, the Company entered into a Separation and General Release Agreement with Bhadreskumar Patel, the Company’s Chief Operating Officer, (the “Separation Agreement”) that provides the last day of Mr. Patel’s employment by the Company will be May 15, 2026 (the “Separation Date”). The Separation Agreement provides that Mr. Patel will receive the following severance benefits, provided he executes and delivers a general release of claims in favor of the Company: (i) a lump sum cash payment of $1,650,000 ; (ii) a lump sum cash payment that approximates Mr. Patel’s cost to continue healthcare coverage under COBRA for eighteen months following the Separation Date; and (iii) accelerated vesting of all of Mr. Patel’s then-outstanding and unvested Company equity awards, including restricted stock
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units and performance-based restricted stock units (with performance-based restricted stock units vesting at the applicable “target” number of shares subject to the award), and the full term to exercise any outstanding Company stock options.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for three and nine months ended February 28, 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, 2025 filed with the Securities and Exchange Commission (“SEC”).
Forward-Looking Statements
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,” “plans,” “potential,” “predicts,” “remain,” “should,” “strategy,” “target,” or “will” 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, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 31, 2025, which was filed on July 28, 2025 ("Fiscal Year 2025 Form 10-K") and our other public filings made with the 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, which speak only as of the date hereof. 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 hereof or to reflect the occurrence of unanticipated events, unless required by law to do so.
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References in this filing to “Resources Global Professionals,” the “Company,” “we,” “us,” and “our” refer to Resources Connection, Inc. and its subsidiaries.
Overview
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").
Fiscal 2026 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 refocus On-Demand Talent offerings to address the evolving needs of our clients;
•Drive improvement in cost structure; and
•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 refocus On-Demand offerings to address the evolving needs of our clients – In the 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. Through the third quarter of fiscal 2026, we have substantially completed the integration of our consulting 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. 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 been keenly focused on evolving 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.
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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.
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 – 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.
Market Trends and Uncertainties
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,
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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.
Critical Accounting Policies and Estimates
The following discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Item 8 of Part II of our Fiscal Year 2025 Form 10-K, and in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
There have been no material changes in our critical accounting policies, or in the estimates and assumptions underlying those policies, from those described under the heading “Critical Accounting Policies and Estimates” in Item 7 of Part II of our Fiscal Year 2025 Form 10-K.
Non-GAAP Financial Measures
We use 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:
•Same-day constant currency revenue is adjusted for the following items:
◦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.
•EBITDA is calculated as net income (loss) before amortization expense, depreciation expense, interest and income taxes.
•Adjusted EBITDA is calculated as EBITDA excluding stock-based compensation expense, amortized ERP system costs, technology transformation costs, goodwill impairment, acquisition costs, 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 13 – 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.
•Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue.
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Same-Day Constant Currency Revenue
Same-day constant currency revenue assists us 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 additional context by eliminating the effects of foreign currency fluctuations and fiscal calendar differences. We believe this measure provides more clarity to our investors in evaluating our core operating performance.
The following table presents a reconciliation of 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).
Revenue by Segment
| Three Months Ended | |||||||||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | ||||||||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
| As reported (GAAP) | Currency impact | Business days impact | Same-day constant currency revenue | As reported (GAAP) | |||||||||||||||||||||||||
| On-Demand Talent | $ | 40,917 | $ | (180) | $ | (1,342) | $ | 39,395 | $ | 47,089 | |||||||||||||||||||
| Consulting | 36,911 | (241) | (1,164) | 35,506 | 52,597 | ||||||||||||||||||||||||
Europe & Asia Pacific | 18,066 | (761) | 188 | 17,493 | 18,576 | ||||||||||||||||||||||||
| Outsourced Services | 9,516 | — | (312) | 9,204 | 9,367 | ||||||||||||||||||||||||
| All Other | 2,520 | — | (83) | 2,437 | 1,809 | ||||||||||||||||||||||||
| Total Consolidated | $ | 107,930 | $ | (1,182) | $ | (2,713) | $ | 104,035 | $ | 129,438 | |||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | ||||||||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
| As reported (GAAP) | Currency impact | Business days impact | Same-day constant currency revenue | As reported (GAAP) | |||||||||||||||||||||||||
| On-Demand Talent | $ | 128,383 | $ | (229) | $ | (1366) | $ | 126,788 | $ | 153,014 | |||||||||||||||||||
| Consulting | 123,165 | (314) | (1,264) | 121,587 | 168,265 | ||||||||||||||||||||||||
Europe & Asia Pacific | 58,052 | (1740) | 109 | 56,421 | 56,260 | ||||||||||||||||||||||||
| Outsourced Services | 28,862 | — | (307) | 28,555 | 28,284 | ||||||||||||||||||||||||
| All Other | 7,429 | — | (79) | 7,350 | 6,168 | ||||||||||||||||||||||||
Total Consolidated | $ | 345,891 | $ | (2,283) | $ | (2,907) | $ | 340,701 | $ | 411,991 | |||||||||||||||||||
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The Company's 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 very between periods due to holidays. The table below sets forth the number of business days in each period by segment
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| Number of Business Days | February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||
On-Demand Talent (1) | 61 | 59 | 188 | 186 | |||||||||||||||||||
Consulting (1) | 61 | 59 | 188 | 186 | |||||||||||||||||||
Europe & Asia Pacific (2) | 61 | 62 | 188 | 188 | |||||||||||||||||||
Outsourced Services (1) | 61 | 59 | 188 | 186 | |||||||||||||||||||
All Other (1) | 61 | 59 | 188 | 186 | |||||||||||||||||||
(2) The business days in international regions represent the weighted-average number of business days.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist us 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 loss and net loss margin, the most directly comparable GAAP financial measures (in thousands, except percentages).
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| February 28, 2026 | % of Revenue (1) | February 22, 2025 | % of Revenue (1) | February 28, 2026 | % of Revenue (1) | February 22, 2025 | % of Revenue (1) | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | $ | (9,467) | (8.8 | %) | $ | (44,052) | (34.0 | %) | $ | (24,533) | (7.1 | %) | $ | (118,474) | (28.8 | %) | |||||||||||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization expense | 746 | 0.7 | % | 1,407 | 1.1 | % | 3,083 | 0.9 | % | 4,461 | 1.1 | % | |||||||||||||||||||||||||||||||||||
| Depreciation expense | 328 | 0.3 | % | 464 | 0.4 | % | 1,015 | 0.3 | % | 1,466 | 0.4 | % | |||||||||||||||||||||||||||||||||||
Interest income, net | (178) | (0.2 | %) | (106) | (0.1 | %) | (348) | (0.1 | %) | (469) | (0.1 | %) | |||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 696 | 0.6 | % | (5,589) | (4.3 | %) | 1,887 | 0.5 | % | (12,267) | (3.0 | %) | |||||||||||||||||||||||||||||||||||
| EBITDA | (7,875) | (7.3 | %) | (47,876) | (37.0 | %) | (18,896) | (5.5 | %) | (125,283) | (30.4 | %) | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 1,031 | 1.0 | % | 1,908 | 1.5 | % | 4,937 | 1.4 | % | 5,417 | 1.3 | % | |||||||||||||||||||||||||||||||||||
Amortized ERP system costs (2) | 700 | 0.6 | % | 609 | 0.5 | % | 2,104 | 0.6 | % | 609 | 0.1 | % | |||||||||||||||||||||||||||||||||||
Technology transformation costs (3) | — | — | % | 1,574 | 1.2 | % | — | — | % | 5,475 | 1.3 | % | |||||||||||||||||||||||||||||||||||
Acquisition costs (4) | 320 | 0.3 | % | 492 | 0.4 | % | 1,218 | 0.4 | % | 2,296 | 0.6 | % | |||||||||||||||||||||||||||||||||||
Goodwill Impairment (5) | — | — | % | 42,039 | 32.5 | % | — | — | % | 125,376 | 30.4 | % | |||||||||||||||||||||||||||||||||||
Gain on sale of assets (6) | — | — | % | — | — | % | — | — | % | (3,420) | (0.8 | %) | |||||||||||||||||||||||||||||||||||
Restructuring costs (7) | 4,377 | 4.1 | % | 2,905 | 2.2 | % | 7,271 | 2.1 | % | 3,157 | 0.8 | % | |||||||||||||||||||||||||||||||||||
CEO transition costs (8) | $ | — | — | % | $ | — | — | % | 9,029 | 2.6 | % | $ | — | — | % | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (1,447) | (1.3 | %) | $ | 1,651 | 1.3 | % | $ | 5,663 | 1.6 | % | $ | 13,627 | 3.3 | % | |||||||||||||||||||||||||||||||
(1)The percentage of revenue may not foot due to rounding.
(2)Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to a newly implemented ERP system, which was recorded within SG&A expenses on the Consolidated Statements of Operations.
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(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.
(4)Acquisition costs primarily represent costs included in net loss related to the Company’s business acquisition. 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 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.
(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.
(6)Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.
(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.
Our 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 financial measures is they exclude items detailed above that have an impact on our GAAP reported results. Other companies in our industry may calculate these non-GAAP financial measures differently than we do, limiting 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 addition to performance measures calculated in accordance with GAAP.
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Results of Operations
The following table sets forth, for the periods indicated, our Consolidated Statements of Operations data. These historical results are not necessarily indicative of future results. Our operating results for the periods indicated are expressed as a percentage of revenue below (in thousands, except percentages).
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| February 28, 2026 | % of Revenue (1) | February 22, 2025 | % of Revenue (1) | February 28, 2026 | % of Revenue (1) | February 22, 2025 | % of Revenue (1) | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 107,930 | 100.0 | % | $ | 129,438 | 100.0 | % | $ | 345,891 | 100.0 | % | $ | 411,991 | 100.0 | % | |||||||||||||||||||||||||||||||
| Cost of services | 69,351 | 64.3 | % | 84,064 | 64.9 | % | 216,138 | 62.5 | % | 260,544 | 63.2 | % | |||||||||||||||||||||||||||||||||||
| Gross profit | 38,579 | 35.7 | % | 45,374 | 35.1 | % | 129,753 | 37.5 | % | 151,447 | 36.8 | % | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 45,849 | 42.5 | % | 51,189 | 39.5 | % | 148,159 | 42.8 | % | 151,404 | 36.7 | % | |||||||||||||||||||||||||||||||||||
Goodwill impairment | — | — | % | 42,039 | 32.5 | % | — | — | % | 125,376 | 30.4 | % | |||||||||||||||||||||||||||||||||||
| Amortization expense | 746 | 0.7 | % | 1,407 | 1.1 | % | 3,083 | 0.9 | % | 4,461 | 1.1 | % | |||||||||||||||||||||||||||||||||||
| Depreciation expense | 328 | 0.3 | % | 464 | 0.4 | % | 1,015 | 0.3 | % | 1,466 | 0.4 | % | |||||||||||||||||||||||||||||||||||
| Loss from operations | (8,344) | (7.8 | %) | (49,725) | (38.4 | %) | (22,504) | (6.5 | %) | (131,260) | (31.8 | %) | |||||||||||||||||||||||||||||||||||
| Interest income, net | (178) | (0.1 | %) | (106) | — | % | (348) | (0.1 | %) | (469) | (0.1 | %) | |||||||||||||||||||||||||||||||||||
| Other income | 605 | — | % | 22 | — | % | 490 | — | % | (50) | — | % | |||||||||||||||||||||||||||||||||||
| Loss before income tax expense (benefit) | (8,771) | (8.1 | %) | (49,641) | (38.4 | %) | (22,646) | (6.5 | %) | (130,741) | (31.7 | %) | |||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | 696 | 0.6 | % | (5,589) | (4.3 | %) | 1,887 | 0.6 | % | (12,267) | (2.9 | %) | |||||||||||||||||||||||||||||||||||
| Net loss | $ | (9,467) | (8.8 | %) | $ | (44,052) | (34.0 | %) | $ | (24,533) | (7.1 | %) | $ | (118,474) | (28.8 | %) | |||||||||||||||||||||||||||||||
(1)The percentage of revenue may not foot due to rounding.
Consolidated Operating Results – Three and Nine Months Ended February 28, 2026 Compared to Three and Nine Months Ended February 22, 2025
Revenue
Three Months Ended
Revenue decreased $21.5 million, or 16.6%, to $107.9 million in the third quarter of fiscal 2026 from $129.4 million in the third quarter of fiscal 2025. On a same-day constant currency basis, revenue decreased by $25.4 million, or 19.6%. Billable hours decreased 16.3% year-over-year and the average bill rate for the third quarter of fiscal 2026 decreased 1.0% year over year, or 2.1% on a constant currency basis. The average bill rate reflects a continued shift in the geographic revenue mix towards regions with lower bill rates, whereas the average bill rate in the U.S. improved by 2.8% compared to the third quarter of fiscal 2025.
Nine Months Ended
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
Three Months Ended
Cost of services decreased $14.7 million, or 17.5%, to $69.4 million for the third quarter of fiscal 2026 from $84.1 million in the third quarter of fiscal 2025. The decrease in cost of services was primarily attributable to a 16.3% decline in billable hours and a 1.2% decline in average pay rate.
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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 third quarter of fiscal 2026 was 2,086 compared to 2,709 during the third quarter of fiscal 2025. The average number of salaried consultants during the third quarter of fiscal 2026 was 394 compared to 493 during the third quarter of fiscal 2025.
Nine Months Ended
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.
Selling, General and Administrative Expenses
Three Months Ended
SG&A expenses were $45.8 million, or 42.5% of revenue, for the third quarter of fiscal 2026 compared to $51.2 million, or 39.5% of revenue, for the third quarter of fiscal 2025. The $5.3 million improvement in SG&A expenses year-over-year was primarily driven by a $1.9 million decrease in employee compensation and benefits costs following the reduction in force in fiscal 2025 and most recently in the October RIF and the January RIF, a $1.6 million decrease in technology transformation costs, primarily associated with the completion of the Company's North America technology implementation during fiscal 2025, a $0.9 million decrease in stock-based compensation, a $1.4 million decrease in consulting services and professional services fees, and a $1.6 million decrease related to other general and administrative costs due to our efforts to achieve an improved cost structure. These improvements were partially offset by a $1.5 million increase in restructuring costs primarily related to a non-cash impairment charge on a right-of-use asset in connection with the exit and sublease of certain office space, and a $1.0 million increase related to bad debt expense.
Nine Months Ended
SG&A expenses were $148.2 million, or 42.8% of revenue, for the nine months ended February 28, 2026 compared to $151.4 million, or 36.7% of revenue, for the nine months ended February 22, 2025. The $3.2 million improvement in SG&A expenses year-over-year was primarily attributed to a $7.1 million decrease in employee compensation and benefits costs following the reduction in force in fiscal 2025 and most recently in the October RIF and the January RIF, a $5.5 million decrease in technology transformation costs primarily associated with the completion of our North America technology implementation during fiscal 2025, a $1.8 million decrease in costs associated with the internal use of consultants that supported our business through the North American technology implementation, a $1.7 million decrease in reimbursable employee expenses, a $1.0 million decrease in acquisition costs, a $1.0 million decrease in occupancy expenses, a $0.9 million decrease in variable employee compensation as a result of financial performance, a $0.8 decrease in severance costs, and a $1.4 million decrease related to other general and administrative costs due to our efforts to achieve an improved cost structure. These improvements were partially offset by increases of $5.9 million and $3.1 million in severance and stock-based compensation costs, respectively, associated with the separation of the Company's former CEO, a $3.4 million gain on the sale of the Irvine office building during fiscal 2025 with no comparable activity occurring during fiscal 2026, a $4.1 million increase in restructuring charges primarily related to the January RIF, and a $1.5 million increase in the amortization of costs associated with our technology transformation initiative.
Management and administrative headcount was 614 at the end of the third quarter of fiscal 2026 and 680 at the end of the third quarter of fiscal 2025.
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Goodwill Impairment
Three and Nine Months Ended
No goodwill impairment was recorded during the first, second or third quarters of fiscal 2026. In the third quarter of fiscal 2025, due to the slow recovery in business performance within the Company’s On-Demand Talent and Consulting segments, the Company conducted a goodwill impairment analysis and recorded a non-cash impairment charge of $42.0 million, which included $12.4 million for the On-Demand Talent segment and $29.6 million for the Consulting segment. Additionally, in the second quarter of fiscal 2025, in light of the decline in the Company's market capitalization, along with slower than expected recovery in business performance within the Company’s On-Demand Talent segment and Europe & Asia Pacific segment, the Company conducted a goodwill impairment analysis and recorded a non-cash impairment charge of $79.5 million in the On-Demand Talent segment. During the first quarter of fiscal 2025, the Company completed a goodwill impairment assessment concurrent with its segment change and concluded that the carrying value of the Europe & Asia Pacific segment was in excess of its fair value. As a result, the Company recorded a non-cash impairment charge of $3.9 million. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Income Taxes
Due to the sensitivity of the estimated annual effective tax rate to minor changes in estimated annual pretax results, the Company determined that the discrete method, whereby the year-to-date actual effective tax rate is applied, is the appropriate approach in its current computation of the interim tax provision, as the use of the estimated annual effective tax rate would provide a distortive result.
There can be no assurance that our effective tax rate will remain constant in the future because of factors such as changes in valuation allowance positions of our deferred tax assets and liabilities or changes in tax law or tax rates in jurisdictions that we operate in. Based upon future economic outlook and operating results of certain jurisdictions, it is reasonably possible that the current valuation allowance positions of certain jurisdictions could be adjusted within the next 12 months.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Among other changes, OBBBA makes permanent several expiring provisions from the Tax Cuts and Jobs Act of 2017, restores favorable tax treatment of various business provisions, and modifies the international tax regime. The legislation has varying effective dates, with certain provisions effective retrospectively starting January 1, 2025. The tax effects of the enacted legislation are reflected in the period of enactment ended August 30, 2025, and there was no material impact on our effective tax rate as of February 28, 2026. We will continue to monitor and assess the impact of OBBBA on our consolidated financial statements.
Three Months Ended
Income tax expense was $0.7 million for the third quarter of fiscal 2026, reflecting an effective tax rate of 7.9%, compared to an income tax benefit of $5.6 million, or an effective tax rate of 11.3%, for the third quarter of fiscal 2025. The income tax expense in the quarter ended February 28, 2026 was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions did not result in a tax benefit due to the existence of valuation allowances. The income tax benefit in the quarter ended February 22, 2025 was primarily attributed to the Company’s consolidated pretax loss, reduced by the permanent disallowance of a portion of the goodwill impairment for tax purposes and the establishment of a valuation allowance on the Company’s UK entity.
Nine Months Ended
Income tax expense was $1.9 million for the nine months ended February 28, 2026, reflecting an effective tax rate of 8.3%, compared to an income tax benefit of $12.3 million, or an effective tax rate of 9.4%, for the nine months ended February 22, 2025. The income tax expense in the nine months ended February 28, 2026 was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions did not result in a tax benefit due to the existence of valuation allowances. The income tax benefit in the nine months ended February 22, 2025 was primarily attributed to the Company’s consolidated pretax loss, reduced by the permanent disallowance of a portion of the goodwill impairment for tax purposes and the establishment of a valuation allowance on the Company’s UK entity.
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 2025 Form 10-K and our other public filings made with the SEC. Due to these and other factors,
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we believe quarter-to-quarter comparisons of our results of operations may not be meaningful indicators of future performance.
Operating Results of Segments
The Company's reportable segments are as follows:
•On-Demand Talent – provides businesses with a go-to source for bringing in experts when they need them, serving predominately the office of the CFO.
•Consulting – drives transformation across people, processes and technology across domain areas including finance, technology and digital, risk and compliance and operational performance.
•Europe & Asia Pacific – is a geographically defined segment that offers both on-demand and consulting services (excluding the digital consulting business, which is included in our Consulting segment) to clients throughout Europe & Asia Pacific.
•Outsourced Services – operating under the Countsy by RGP™ brand, this segment offers finance, accounting and human resource services provided to startups, spinouts and scale-up enterprises, utilizing a technology platform and fractional team.
•Sitrick – a crisis communications and public relations firm that provides corporate, financial, transactional and crisis communication and management services.
Each of these segments reports through separate segment managers to the Company's Chief Executive Officer and Chief Operating Officer, who are collectively designated as the Chief Operating Decision Maker for segment reporting purposes. The Company's reportable segments are comprised of On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services. Sitrick does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the “All Other” segment. Each of these segments represents a reporting unit for the purposes of assessing goodwill for impairment.
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The following table presents our operating results by segment for the three and nine months ended February 28, 2026 and February 22, 2025, respectively (in thousands). Revenue information by segment, on a GAAP basis and on a same-day constant currency basis, is set forth above under "Non-GAAP Financial Measures — Same-Day Constant Currency Revenue."
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| February 28, 2026 | February 22, 2025 | February 28, 2026 | February 22, 2025 | ||||||||||||||||||||
| Adjusted EBITDA: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
On-Demand Talent | $ | 2,859 | $ | 2,567 | $ | 11,343 | $ | 10,731 | |||||||||||||||
| Consulting | 1,682 | 5,914 | 11,179 | 23,390 | |||||||||||||||||||
| Europe & Asia Pacific | 785 | 841 | 3,096 | 2,549 | |||||||||||||||||||
| Outsourced Services | 1,434 | 1,493 | 5,483 | 4,434 | |||||||||||||||||||
| All Other | (839) | (727) | (304) | (1,720) | |||||||||||||||||||
Unallocated items (1) | (7,368) | (8,437) | (25,134) | (25,757) | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | (1,031) | (1,908) | (4,937) | (5,417) | |||||||||||||||||||
Amortized ERP system costs (2) | (700) | (609) | (2,104) | (609) | |||||||||||||||||||
Technology transformation costs (3) | — | (1,574) | — | (5,475) | |||||||||||||||||||
Acquisition costs (4) | (320) | (492) | (1,218) | (2,296) | |||||||||||||||||||
Goodwill impairment (5) | — | (42,039) | — | (125,376) | |||||||||||||||||||
Gain on sale of assets (6) | — | — | — | 3,420 | |||||||||||||||||||
Restructuring cost (7) | (4,377) | (2,905) | (7,271) | (3,157) | |||||||||||||||||||
CEO transition costs (8) | — | — | (9,029) | — | |||||||||||||||||||
| Amortization expense | (746) | (1,407) | (3,083) | (4,461) | |||||||||||||||||||
| Depreciation expense | (328) | (464) | (1,015) | (1,466) | |||||||||||||||||||
Interest income, net | 178 | 106 | 348 | 469 | |||||||||||||||||||
Loss before income tax expense (benefit) | (8,771) | (49,641) | (22,646) | (130,741) | |||||||||||||||||||
Income tax expense (benefit) | (696) | 5,589 | (1,887) | 12,267 | |||||||||||||||||||
Net loss | $ | (9,467) | $ | (44,052) | $ | (24,533) | $ | (118,474) | |||||||||||||||
(1) Unallocated items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
(2) Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to a newly implemented ERP system, which was recorded within SG&A on the Consolidated Statement 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.
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(4) Acquisition costs primarily represent costs included in net loss related to the Company’s business acquisition. 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 4 – Acquisitions and Disposals in the Notes to Consolidated Financial Statements in Item I of Part I of the Quarterly Report on Form 10-Q for further discussion.
(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.
(6) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.
(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 2025 Restructuring Plan.
(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.
Revenue by Segment
On-Demand Talent – Revenue in the On-Demand Talent segment declined by $6.2 million or 13.1% (16.3% on a constant currency basis), to $40.9 million in the third quarter of fiscal 2026 compared to $47.1 million in the third quarter of fiscal 2025 due primarily to a decrease in billable hours of 17.1%, partially offset by an increase in the average bill rate of 4.5% (or 4.0% on a constant currency basis).
For the nine months ended February 28, 2026, On-Demand Talent segment revenue decreased by $24.6 million or 16.1% (17.1% on a constant currency basis), to $128.4 million compared to $153.0 million for the nine months ended February 22, 2025, primarily as a result of a 18.2% decrease in billable hours partially offset by a 2.4% (or 2.2% on a constant currency basis) increase in average bill rate.
The Company continued to experience reduced demand in traditional finance roles as clients increasingly adopt AI and automation. The Company remains focused on evolving the on-demand talent base and skillset to align with changing market demand. The improvement in average bill rate was the result of the Company’s continued focus on pricing discipline.
Consulting – Revenue in the Consulting segment declined by $15.7 million or 29.8% (32.5% on a constant currency basis), to $36.9 million in the third quarter of fiscal 2026 compared to $52.6 million in the third quarter of fiscal 2025 due to a 31.5% decrease in billable hours, partially offset by a 2.3% (or 1.6% on a constant currency basis) increase in the average bill rate.
For the nine months ended February 28, 2026, Consulting segment revenue decreased by $45.1 million or 26.8% (27.7% on a constant currency basis), to $123.2 million compared to $168.3 million for the nine months ended February 22, 2025. The decline was primarily due to a 31.2% decrease in billable hours, partially offset by a 6.7% (or 6.4% on a constant currency basis) increase in the average bill rate.
The decline in billable hours for the three and nine months ended February 28, 2026 compared to the prior year periods reflected longer sales cycles for consulting projects, while average bill rates continue to increase due to pricing discipline and higher value consulting projects.
Europe & Asia Pacific – Revenue in the Europe & Asia Pacific segment decreased by $0.5 million or 2.7% (5.8% on a constant currency basis), to $18.1 million in the third quarter of fiscal 2026 compared to $18.6 million in the third quarter of fiscal 2025. The decrease was primarily due to a 3.6% decrease in billable hours as a result of delayed project starts, and a 3.9% decrease in the average bill rate on a constant currency basis due to a mix shift to lower cost markets in the Asia Pacific region.
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For the nine months ended February 28, 2026, Europe & Asia Pacific segment revenue increased by $1.8 million or 3.2% (0.3% on a constant currency basis), to $58.1 million compared to $56.3 million for the nine months ended February 22, 2025. The increase was primarily due to a 4.4% (or 1.3% on a constant currency basis) increase in the average bill rate due to geographical revenue shift toward Europe, which tends to have a higher bill rate as compared to Asia Pacific.
Outsourced Services – Revenue in the Outsourced Services segment increased by $0.1 million or 1.6% to $9.5 million in the third quarter of fiscal 2026 compared to $9.4 million in the third quarter of fiscal 2025. Billable hours increased 2.3% and the average bill rate declined 1.3%.
For the nine months ended February 28, 2026, Outsourced Services segment revenue increased by $0.6 million or 2.0%, to $28.9 million compared to $28.3 million for the nine months ended February 22, 2025, primarily as a result of a 1.9% increase in billable hours partially offset by a 2.8% (also 2.8% on a constant currency basis) decrease in average bill rate.
All Other – Revenue in the All Other segment increased by $0.7 million or 39.3% (34.7% on a same-day constant currency basis), to $2.5 million in the third quarter of fiscal 2026 compared to $1.8 million in the third quarter of fiscal 2025. The increase was primarily due to an increase in billable hours of 51.1% partially offset by a 9.9% decrease in average bill rate.
For the nine months ended February 28, 2026, All Other segment revenue increased by $1.3 million or 20.4% (19.2% on a same-day constant currency basis), to $7.4 million compared to $6.2 million for the nine months ended February 22, 2025. The increase was primarily due to an increase in billable hours of 21.2% partially offset by a 1.5% (also 1.5% on a constant currency basis) decrease in average bill rate.
Adjusted EBITDA by Segment
On-Demand Talent – The On-Demand Talent segment’s Adjusted EBITDA increased by $0.3 million or 11.4%, to $2.9 million for the third quarter of fiscal 2026, compared to $2.6 million for the third quarter of fiscal 2025. The increase is attributed to a reduction in segment expenses of $1.6 million primarily as a result of our reduction in force in fiscal 2025 and fiscal 2026, partially offset by a decrease in gross profit of $1.3 million.
For the nine months ended February 28, 2026, the On-Demand Talent segment’s Adjusted EBITDA increased by $0.6 million or 5.7%, to $11.3 million, compared to $10.7 million for the nine months ended February 22, 2025. The increase is attributed to a reduction in segment expenses of $8.4 million, partially offset by a decrease in gross profit of $7.8 million. The improvement in SG&A expenses was primarily due to lower employee compensation expense, following our reductions in force in fiscal 2025 and most recently in connection with the January RIF and the October RIF and lower variable compensation as a result of decreased financial performance.
Consulting – The Consulting segment’s Adjusted EBITDA decreased by $4.2 million or 71.6%, to $1.7 million for the third quarter of fiscal 2026, compared to $5.9 million for the third quarter of fiscal 2025. The decrease is primarily attributed to a decrease in gross profit of $6.4 million, which was partially offset by a reduction in segment expenses of $2.2 million primarily related to variable employee compensation as a result of financial performance.
For the nine months ended February 28, 2026, the Consulting segment’s Adjusted EBITDA decreased by $12.2 million or 52.2%, to $11.2 million, compared to $23.4 million for the nine months ended February 22, 2025. Compared to the prior year period, gross profit declined by $17.5 million, which was partially offset by a $5.3 million improvement in SG&A expenses for the nine months ended February 28, 2026 as compared to the nine months ended February 22, 2025. This improvement in SG&A expenses was primarily due to lower employee compensation expense following our reduction in force in fiscal 2025 and most recently in connection with the January RIF and the October RIF and lower variable compensation as a result of decreased financial performance.
Europe & Asia Pacific – The Europe & Asia Pacific segment’s Adjusted EBITDA in the third quarter of fiscal 2026 remained relatively flat compared to the third quarter of fiscal 2025.
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For the nine months ended February 28, 2026, the Europe & Asia Pacific segment’s Adjusted EBITDA improved by $0.5 million or 21.5%, to $3.1 million, compared to $2.5 million for the nine months ended February 22, 2025. Compared to the prior year period, gross profit increased $0.8 million, offset by a $0.3 million increase in SG&A expenses for the nine months ended February 28, 2026 as compared to the nine months ended February 22, 2025 primarily due to increases in employee compensation expense.
Outsourced Services – The Outsourced Services segment’s Adjusted EBITDA decreased by $0.1 million, or 4.0% to $1.4 million in the third quarter of fiscal 2026 compared to $1.5 million for the third quarter of fiscal 2025.
For the nine months ended February 28, 2026, the Outsourced services segment's Adjusted EBITDA increased by $1.0 million or 23.7%, to $5.5 million compared to $4.4 million for the nine months ended February 22, 2025 due primarily to a $1.2 million increase in gross profit, partially offset by a $0.2 million increase in segment expenses.
All Other – The All Other segment's Adjusted EBITDA decreased by $0.1 million or 15.4% to $(0.8) million for the third quarter of fiscal 2026 compared to $(0.7) million for the third quarter of fiscal 2025. The decrease is attributed to a $1.2 million increase in bad debt expense, which was offset by other improvements in SG&A expenses and an increase in gross profit of $0.8 million.
For the nine months ended February 28, 2026, the All Other segment's Adjusted EBITDA increased by $1.4 million or 82.3%, to $(0.3) million compared to $(1.7) million for the nine months ended February 22, 2025 due to a $1.4 increase in gross profit.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operating activities, our senior secured revolving credit facility (as discussed further below) and historically, to a lesser extent, stock option exercises and purchases under the Company's 2019 Employee Stock Purchase Plan, as amended (the "ESPP"). While during the three months ended February 28, 2026, we did not generate positive cash flow from operations, we have historically generated positive cash flows from operations on an annual basis since inception. Our ability to generate positive cash flows from operations in the future will depend, at least in part, on customer demand and global economic conditions and our ability to remain resilient during periods of deteriorating macroeconomic conditions and any economic downturns. As of February 28, 2026, we had $82.8 million of cash and cash equivalents, including $37.3 million held in international operations.
Prior to July 2, 2025, the Company had a revolving credit facility with Bank of America, N.A., pursuant to the terms of the credit agreement dated November 12, 2021 by the Company and Resources Connection LLC, as borrowers, and all of the Company's domestic subsidiaries, as guarantors, with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “2021 Credit Facility").
On July 2, 2025, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a credit agreement with the lenders that are party thereto and Bank of America, N.A. as administrative agent, L/C issuer and swingline lender (the “2025 Credit Facility”), and concurrently terminated the 2021 Credit Facility. The 2025 Credit Facility provides for a secured revolving loan, available in an amount up to the lesser of $50.0 million and a borrowing base formula tied to eligible receivables, which includes a $10.0 million sublimit for the issuance of standby letters of credit. The 2025 Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $15.0 million. The 2025 Credit Facility will mature on November 30, 2029. The obligations under the 2025 Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries.
Borrowings under the 2025 Credit Facility bear interest at a rate per annum of either, at the Company's election (i) Term SOFR (as defined in the 2025 Credit Facility) plus a margin ranging from 1.25% to 2.50% or (ii) the Base Rate (as defined in the 2025 Credit Facility), plus a margin of 0.25% to 1.50%, in either case, with the applicable margin depending on the Company's Consolidated EBITDA (as defined in the 2025 Credit Facility). The Company is also obligated to pay other customary facility fees for a credit facility of this size and type.
On January 30, 2026, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a first amendment to the 2025 Credit Facility (the "First Amended Credit Facility"). The purpose of the First Amended Credit Facility was to amend certain covenants related to the Company's definition of Consolidated EBITDA, as such term is defined in the credit agreement. Except as expressly modified and amended in the
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First Amended Credit Facility, all terms, provisions, and conditions of the 2025 Credit Facility remain unchanged and in full force and effect.
The 2025 Credit Facility is available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases. Additional information regarding the 2025 Credit Facility is included in Note 7 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Item I of Part I of this Quarterly Report on Form 10-Q.
On November 2, 2022, Resources Global Enterprise Consulting (Beijing) Co., Ltd, (a wholly owned subsidiary of the Company), as borrower, and the Company, as guarantor, entered into a RMB 13.4 million (USD $1.8 million based on the prevailing exchange rate on November 2, 2022) revolving credit facility with Bank of America, N.A. (Beijing) as the lender (the “Beijing Revolver”). The Beijing Revolver bears interest at a loan prime rate plus 0.80%. Interest incurred on borrowings will be payable monthly in arrears. As of February 28, 2026, the Company had no debt outstanding under the Beijing Revolver.
In addition to cash needs for ongoing business operations, from time to time, we have strategic initiatives that could generate significant additional cash requirements. Such costs primarily include software licensing fees and other costs in areas including change management and training. We believe our current cash, ongoing cash flows from our operations and funding available under our 2025 Credit Facility will provide sufficient funds for these initiatives. As of February 28, 2026, we have non-cancellable purchase obligations totaling $11.0 million, which primarily consist of payments pursuant to the licensing arrangements that we have entered into: $1.5 million due during the remainder of fiscal 2026; $3.6 million due during fiscal 2027; $4.6 million due during fiscal 2028; and $1.2 million due thereafter. The $3.0 million increase in non-cancellable purchase obligations from the first quarter of 2026 is related to the renewal of a three-year licensing arrangement. We lease office space under non-cancelable operating leases with various expiration dates. See Note 6 - Leases in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for our future minimum commitments related to our operating leases.
In addition, we pay a regular quarterly dividend to our stockholders, subject to approval each quarter by our Board of Directors. Most recently, on March 20, 2026, we paid a dividend of $0.07 per share of our common stock to stockholders of record at the close of business on February 20, 2026. Continuation of the quarterly dividend is at the discretion of the Board of Directors and depends upon our financial condition, results of operations, capital requirements, general business condition, contractual restrictions contained in the 2025 Credit Facility and other agreements, and other factors deemed relevant by our Board of Directors.
As described under “Market Trends and Uncertainties” above, demand for professional services has become increasingly selective, which has resulted in variability in demand across service offering and uncertain macroeconomic conditions, including heightened geopolitical tensions, 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, which have adversely impacted, and may continue to adversely impact, our financial results, operating cash flows and liquidity needs. If we are required to raise additional capital or incur additional indebtedness for our operations or to invest in our business, we can provide no assurances that we would be able to do so on acceptable terms or at all. Our ongoing operations and growth strategy may require us to continue to make investments in critical markets and further expand our internal technology and digital capabilities. In addition, we may consider making additional strategic acquisitions or dispositions or initiating additional restructuring initiatives, which could require significant liquidity and adversely impact our financial results due to higher cost of borrowings. We believe that our current cash, ongoing cash flows from our operations and funding available under our 2025 Credit Facility will be adequate to meet our working capital and capital expenditure needs for at least the next 12 months.
Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisitions, we may seek to sell additional equity securities, increase the use of our 2025 Credit Facility, expand the size of our 2025 Credit Facility or raise additional debt. In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or the use of our 2025 Credit Facility. The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders. Our ability to secure additional financing in the future, if needed, will depend on several factors. These include our future profitability and the overall condition of the credit markets. Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
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Other than as described herein, there have been no material changes to our material cash requirements, including commitments for capital expenditures, described under the heading “Liquidity and Capital Resources” in Item 7 of Part II of our Fiscal Year 2025 Form 10-K.
Operating Activities
Operating activities for the first nine months of fiscal 2026 used cash of $0.7 million compared to $2.1 million of cash provided in the first nine months of fiscal 2025. The cash used in operations for the nine months ended February 28, 2026 was primarily driven by a net loss of $24.5 million, offset by non-cash adjustments of $18.4 million (resulting primarily from $8.0 million adjustment in non-cash stock-based compensation). In addition, the changes in operating assets and liabilities amounted to a net cash inflow of $5.4 million, primarily driven by an $18.7 million decrease in trade accounts receivable and a $4.9 million increase in other liabilities, partially offset by a $16.5 million decrease in accrued salaries and related obligations due mainly to the payout of the annual incentive compensation and payments made in connection with our restructuring activities and a $2.4 million decrease in accounts payable and other accrued expenses.
The cash provided by operations for the nine months ended February 22, 2025 was primarily driven by a net loss of $118.5 million, offset by non-cash adjustments of $125.4 million (primarily due to the non-cash goodwill impairment). In addition, the changes in operating assets and liabilities amounted to a net cash outflow of $4.8 million, driven by a $5.8 million increase in prepaid expenses and other current assets, a $2.0 million decrease in accounts payable and other accrued expenses, a $1.6 million increase in prepaid income taxes, and a $1.3 million increase in other assets largely related to the investments in our technology implementation, partially offset by a $7.4 million decrease in trade accounts receivable, a $2.8 million decrease in other liabilities, and a $1.2 million increase in accrued salaries and related obligations, mainly due to the timing of our pay cycle.
Investing Activities
Net cash used in investing activities was $0.5 million for the first nine months of fiscal 2026 compared to $13.1 million for the first nine months of fiscal 2025. Net cash used in investing activities for the first nine months of fiscal 2026 was primarily related to $0.5 million of cash used for leasehold improvements and to acquire computer equipment. Net cash used in investing activities for the nine months ended February 22, 2025 was primarily related to $23.0 million of net cash used towards the acquisition of Reference Point and $2.4 million of cash used for the development of internal-use software and acquisition of property and equipment, partially offset by the $12.3 million in net proceeds from the sale of the Irvine office building.
Financing Activities
Net cash used in financing activities was $5.1 million for the first nine months of fiscal 2026 compared to $23.1 million for the first nine months of fiscal 2025. Net cash used in financing activities during the first nine months of fiscal 2026 consisted of cash dividend payments of $7.0 million, which were partially offset by $2.2 million in proceeds received from ESPP share purchases. Net cash used in financing activities during the nine months ended February 22, 2025 consisted of $13.0 million to purchase 1,382,820 shares of common stock on the open market and cash dividend payments of $14.0 million; these uses were partially offset by $3.9 million in proceeds received from ESPP share purchases.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk. We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under the 2025 Credit Facility that bear interest at a variable market rate.
As of February 28, 2026, we had approximately $82.8 million of cash and cash equivalents and no borrowings under our 2025 Credit Facility. The earnings on cash and cash equivalents are subject to changes in interest rates; however, assuming a constant balance available for investment, a 10% decline in interest rates would reduce our interest income but would not have a material impact on our consolidated financial position or results of operations.
We may become exposed to interest rate risk related to fluctuations in the Term SOFR rate under our 2025 Credit Facility. See “Liquidity and Capital Resources” above and Note 7 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further discussion about the interest rate on our 2025 Credit Facility. As of February 28, 2026, we had no borrowing outstanding and $0.7 million of outstanding letters of credit issued under our 2025 Credit Facility.
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Foreign Currency Exchange Rate Risk. For the nine months ended February 28, 2026, approximately 20.3% of our revenues were generated outside of the U.S. compared to approximately 18.3% of our revenues for the nine months ended February 22, 2025. As a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period. Thus, as the value of the U.S. dollar fluctuates relative to the currencies in our non-U.S.-based operations, our reported results may vary.
Assets and liabilities of our non-U.S.-based operations are translated into U.S. dollars at the exchange rate effective at the end of each monthly reporting period. Approximately 54.9% of our cash and cash equivalents balances as of February 28, 2026 were denominated in U.S. dollars. The remaining amount of approximately 45.1% was comprised primarily of cash balances translated from Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling, This compares to approximately 59.2% of our cash and cash equivalents balances as of May 31, 2025 that were denominated in U.S. dollars and approximately 40.8% that were comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan, and Canadian Dollars. The difference resulting from the translation in each period of assets and liabilities of our non-U.S.-based operations is recorded as a component of stockholders’ equity in accumulated other comprehensive income or loss.
Although we monitor our exposure to foreign currency fluctuations, we do not currently use financial hedges to mitigate risks associated with foreign currency fluctuations including in a limited number of circumstances when we may be asked to transact with our client in one currency but are obligated to pay our consultants in another currency. Our foreign entities typically transact with clients and consultants in their local currencies and generate enough operating cash flows to fund their own operations. We believe our economic exposure to exchange rate fluctuations has not been material. However, we cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As required by SEC Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of February 28, 2026. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of February 28, 2026.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended February 28, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II—OTHER INFORMATION
ITEM 1A. 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 2025 Form 10-K, which was filed with the SEC on July 28 2025. See “Risk Factors” in Item 1A of Part I of such Fiscal Year 2025 Form 10-K for a complete description of the material risks we face.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 5. OTHER INFORMATION.
Insider Trading Arrangements
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ITEM 6. EXHIBITS.
The following exhibits are filed with, or incorporated by reference in, this Quarterly Report on Form 10-Q.
| Exhibit Number | Description of Document | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.1+ | ||||||||
| 10.2+ | ||||||||
10.3* | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
| 32.2** | ||||||||
| 101* | The following unaudited interim consolidated financial statements from the Company’s Quarterly Report on Form 10‑Q for the fiscal quarter ended February 29, 2026, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. | |||||||
| 104* | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | |||||||
______
*Filed herewith.
**Furnished herewith.
+ Indicates a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| RESOURCES CONNECTION, INC. | |||||
Date: April 8, 2026 | /s/ ROGER CARLILE | ||||
Roger Carlile | |||||
President and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer) | |||||
Date: April 8, 2026 | /s/ JENNIFER RYU | ||||
| Jennifer Ryu | |||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||
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