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Feb 25, 2023
Resources Connection Q3 2023 Earnings Report
Revenue exceeded outlook, and gross margin reached a 10-year high.
Key Takeaways
Resources Connection reported a revenue of $186.8 million, exceeding the high end of the outlook range. Gross margin improved to 38.3%, driven by pay/bill spread improvement. Net income was $7.0 million, impacted by a goodwill impairment charge.
Revenue was $186.8 million, compared to $204.6 million in the prior year quarter, with the prior year including $6.7 million from taskforce which was divested at the beginning of fiscal 2023.
Gross margin increased by 80 basis points to 38.3%.
SG&A expenses were $59.4 million, including $1.7 million in technology transformation costs.
Net income was $7.0 million, which included a $3.0 million goodwill impairment charge related to Sitrick.
Revenue by Geographic Location
Forward Guidance
Management expressed optimism about the company's positioning for future growth, citing investments in on-demand talent platform and digital consulting capabilities.
Positive Outlook
- Progress related to value-based pricing
- Number of extensions on existing engagements increase significantly
- Overall pipeline remains healthy
- Consultants are providing exceptional value
- RGP is a trusted partner to help clients execute their most important initiatives especially during times of uncertainty
Challenges Ahead
- Clients are taking longer with buying decisions related to new projects
- Softer topline revenue in the third quarter of fiscal 2023
- Higher SG&A as the Company continued to execute on its technology implementation project to drive efficiency in the long term
- One-time goodwill impairment charge related to Sitrick
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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