Resources Connection (RGP) Q2 2026 earnings review
Revenue Slide Deepens as New CEO Takes the Helm
RGP is in the middle of a painful contraction. Revenue fell 19.2% YoY to $117.7M, marking a continued deceleration from previous quarters. The decline was broad-based but most acute in the U.S. Consulting segment, which plummeted nearly 29%—a severe blow to the company's 'high-value' transformation thesis. New CEO Roger Carlile acknowledged a 'continued lack of positive momentum' and signaled decisive cost-cutting actions. While Adjusted EBITDA remained positive at $4.0M (3.4% margin), it is less than half of last year's level ($9.7M). The firm remains profitable with a clean balance sheet, but the core business is shrinking rapidly.
🐂 Bull Case
Despite top-line pressure, management reduced Adjusted SG&A by 15% YoY to $39.7M. The company is actively realigning costs to the lower revenue baseline, aiming to protect profitability.
The Europe & Asia Pacific segment bucked the negative trend, growing revenue to $20.1M (+0.6% constant currency) with billable hours in Europe up 12.6%. This diversification is providing a floor against U.S. weakness.
🐻 Bear Case
The 28.8% constant currency decline in Consulting and 18.4% decline in On-Demand Talent indicate that RGP is losing volume faster than it can raise prices. The 'shift to value' strategy is not offsetting the volume collapse.
Management explicitly linked the decline in On-Demand Talent to clients adopting AI and automation for traditional finance roles. This suggests a structural, not just cyclical, headwind for their legacy staffing business.
⚖️ Verdict: 🔴
Bearish. The revenue decline is accelerating, not stabilizing. The collapse in the Consulting segment is particularly worrying as it undermines the 'transformation' narrative. While the balance sheet buys time, the new CEO has a massive task to arrest the slide.
Key Themes
Consulting Segment Collapse
The Consulting segment, previously touted as the growth engine for high-value transformation work, posted a shocking 28.8% decline in same-day constant currency revenue. Billable hours in this segment dropped 33.8%. This suggests that client discretionary spending on projects has dried up significantly or RGP is losing market share.
Structural AI Headwinds
For the first time, the press release explicitly cited 'reduced demand in traditional finance roles as clients increasingly adopt artificial intelligence and automation' as a driver for the decline in billable hours. This confirms a long-held bear thesis: technology is permanently displacing the need for temporary operational finance staff.
Aggressive Cost Realignment
New leadership is cutting deep. Adjusted SG&A fell 15% YoY. The company incurred $2.6M in restructuring charges and $9M in CEO transition costs this quarter, but the underlying run-rate is coming down. This is critical: with revenue at $117M, the old cost structure was unsustainable.
Pricing Power in the U.S.
Despite volume declines, the U.S. average bill rate improved by 2.5%. Management continues to prune low-margin work. However, the consolidated bill rate fell 1.2% due to geographic mix shift (more revenue coming from Europe/Asia where rates are lower).
Europe & Asia Resilience
While the U.S. bleeds, Europe & Asia Pacific remains stable, growing revenue slightly (+0.6% constant currency) and increasing billable hours in Europe by 12.6%. This segment is benefiting from project extensions with key accounts.
Other KPIs
Stable. Up from $86.1M at the end of FY25 (May 2025). The company maintains a strong balance sheet with no long-term debt, which allows them to pay dividends ($0.07/share) despite the net loss.
Driven by $9.0M in CEO transition costs and $2.9M in restructuring. Excluding these 'non-run-rate' items, the company is profitable on an Adjusted EBITDA basis ($4.0M), but the GAAP bottom line is messy.
Accelerating decline. Compare to -14.3% in Q1 and -10.5% in Q4 FY25. The volume trend is worsening sequentially.
Guidance
The press release text did not contain specific numeric guidance tables for Q3. Management commentary emphasized 'lack of positive momentum' and that 'decisive actions' will require time, implying continued near-term weakness.
Key Questions
Consulting Segment Deterioration
Consulting revenue dropped nearly 29% in constant currency, with billable hours down 34%. This is a sharp acceleration from the declines seen in prior quarters. Is this driven by the loss of a specific large client, or a broad-based pause in transformation spending?
AI Impact Quantification
You explicitly mentioned AI adoption reducing demand for traditional finance roles. Can you quantify what percentage of your On-Demand revenue is exposed to these displaceable roles (e.g., transactional accounting) versus higher-level advisory work?
Restructuring Roadmap
With the new CEO citing the need for 'decisive actions' on cost structure, should we expect further restructuring charges in Q3 and Q4? What is the target SG&A run-rate needed to support the current $115M-$120M quarterly revenue baseline?
Salesforce Attrition
In previous quarters, sales force attrition was cited as a headwind. Has the sales headcount stabilized, and what is the productivity ramp time for the new go-to-market structure?