Resources Connection Stock Tumbles as First Quarter Revenue Declines Sharply Year-Over-Year

Resources Connection reported first-quarter revenue of $98.1 million, falling short of the $101.0 million consensus estimate and declining 18.4% compared to the prior-year quarter. The company posted an adjusted loss per share of $0.16, marginally better than expected estimates, with cost reductions reflecting workforce reductions and lower compensation expenses. Shares dropped 12.5% in after-hours trading following the earnings release, with negative EBITDA and deteriorating margins signaling operational headwinds.

Resources Connection operates across multiple staffing and consulting divisions, with the most severe pressure appearing in its core consulting unit, which saw revenues drop by more than a quarter. The company's challenges stem from client-side hesitation, with businesses delaying project launches and stretching decision timelines. Meanwhile, demand for specialized accounting roles—a historically stable revenue stream—has softened, though management indicated signs of stabilization emerging.

The firm has responded through aggressive cost restructuring, including workforce reductions completed during the prior fiscal year and office consolidations. Despite these measures, profitability metrics deteriorated sharply, with adjusted EBITDA swinging negative and gross margins compressing due to underutilized salaried consultants unable to maintain historical billing ratios.