Why Consulting Firm Resources Connection Shares Are Sliding Today?

Resources Connection Inc RGP shares are trading lower by around 8% after the company reported Q1 FY24 results.

The company reported revenue of $170.2 million, marginally beating the consensus of $170.14 million. The company posted $204.1 million revenue in the prior year period. 

Same-day constant currency revenue fell 17.0%, reflecting the impact of a continued challenging macroeconomic environment.

The gross margin of 39.4% came below 40.9% a year ago due to a higher pay/bill ratio and a decrease in leverage on cost of service as a result of lower topline revenue.

Adjusted EPS of $0.20 missed the street view of $0.23. 

Adjusted EBITDA stood at $11.5 million, with an adjusted EBITDA margin of 6.8% vs. 15.0% a year ago.

As of August 26, 2023, cash and cash equivalents stood at $112.6 million.

"Our team produced revenue and profitability that was ahead of expectations, despite the ongoing pressures from the macro-environment and our typical, seasonally impacted first quarter. While project extensions have increased, new project wins remain challenged as clients continue to operate with increased conservatism. As we look ahead, we are highly focused on sourcing and closing every revenue opportunity, while remaining vigilant on improving our cost structure to better align with market conditions. We are primed to execute as the market conditions improve," said Kate W. Duchene, Chief Executive Officer.

Price Action: RGP shares are down 7.46% at $13.40 on the last check Thursday.