Consulting firm Resources Connection's Q2 revenue falls

Overview

• Professional services firm's fiscal Q2 revenue fell yr/yr, reflecting reduced demand

• Net loss for fiscal Q2 narrowed significantly compared to prior year

• Adjusted SG&A expenses improved 15% yr/yr

Outlook

• Company plans to align cost structure with current revenue levels

• Company aims to refocus On-Demand offerings to meet evolving client needs

• Company to scale Consulting business for high-value solutions

Result Drivers

• DEMAND SHIFT - Co reported reduced demand in traditional finance roles as clients increasingly adopt AI and automation, affecting On-Demand Talent segment

• BILLABLE HOURS DROP - Consulting segment revenue fell due to a 33.8% decrease in billable hours, partially offset by higher bill rates from value-based pricing

• EUROPEAN GROWTH - Europe & Asia Pacific segment saw revenue growth due to higher bill rates and increased billable hours in Europe

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the business support services peer group is "buy"

• Wall Street's median 12-month price target for Resources Connection Inc is $6.25, about 19.7% above its January 6 closing price of $5.22

Press Release: ID:nBw3SHcFSa

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