Resources Connection (RGP, Financial), a consulting and workforce staffing company, faced a challenging 2024 with its stock plummeting nearly 40%. However, the company has started 2025 on a positive note by surpassing expectations in its Q2 results. Despite a volatile demand environment, RGP showed sequential improvements in revenue, gross margin, adjusted EBITDA, and SG&A expenses. Factors such as interest rate cuts and reduced election uncertainty, along with strategic company actions, contributed to these results.

• On December 6, RGP reaffirmed its Q2 guidance, projecting revenue of $135-$140 million and a gross margin of 36-37%. The company exceeded these expectations, driven by a revenue rebound in Europe (up 18% quarter-over-quarter) and price hikes in the Consulting segment. Revenue increased by 6.3% quarter-over-quarter to $145.6 million, with gross margin expanding by 200 basis points to 38.5%.
• In October, RGP reorganized into three business units: On-Demand, Consulting, and Outsourced Services. This diversification aims to enhance performance in varying economic conditions and expand market opportunities. CEO Kate Duchene noted successful execution of this strategy in Q2, with clients transforming their operations in supply chain management, human resources, technology, and finance.
• RGP also streamlined its operations and reduced costs, including workforce reductions. In December, the company announced job cuts expected to save $4-$5 million in the second half of 2025. This followed an October 2023 restructuring plan, which lowered SG&A expenses by 3.2% in Q2 to $51.3 million. These efforts, coupled with revenue growth, boosted adjusted EBITDA by 322% quarter-over-quarter to $9.7 million.
• Though RGP did not provide formal guidance, CFO Bhadresh Patel expressed optimism about the company's stable pipeline and steady opportunities. He highlighted notable rate increases, reflecting the improving demand for RGP's services.

The key takeaway is that while conditions remain challenging, demand is gradually improving, and RGP's reorganization and cost-cutting measures are yielding positive results.