RGP Stock Analysis: Resources Connection FY2026 10-K, Revenue Down 18 Percent
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For three straight years, Resources Connection $RGP listed the same warning in its risk factors: that clients might use "technology or AI instead of external experts." Every consulting firm writes something like it. It is the kind of sentence lawyers add and nobody reads.
In the fiscal 2026 annual report, filed July 24, 2026, that sentence stopped being a risk factor and started being the explanation. Management's own words in the MD&A: the decline in billable hours was "primarily attributable to softer demand for traditional operational accounting skills within our On-Demand Talent segment as clients continue to adopt AI and automation." Revenue fell 18.0% to $452.0 million. Two years ago it was $632.8 million. The company that staffs the office of the CFO has lost 28.6% of its revenue, and this year it stopped blaming the macro environment.
Company Snapshot
RGP, which operates as Resources Global Professionals, is a global professional services firm headquartered in Dallas. It sells finance and accounting expertise three ways: On-Demand Talent (placing experienced professionals into client finance teams), Consulting (transformation projects), and Outsourced Services (running processes on the client's behalf), with Europe and Asia Pacific reported as its own geographic segment. Its customer is, almost by definition, the CFO.
This analysis covers the FY2026 Form 10-K, for the fiscal year ended May 30, 2026, filed July 24, 2026. All figures below come from that filing unless attributed otherwise.
The Financial Story
The top line is the whole story, and its composition matters more than its size. Revenue fell $99.3 million, or 18.0%. Billable hours fell 17.5%. The average bill rate fell 0.9%, and in the U.S. it actually rose 2.4%. So this is not a price war and RGP is not being undercut. Clients are buying fewer hours at the same or better rates. The demand for the labor itself is what contracted.
Segment detail localizes it precisely. On-Demand Talent, the business that rents out accountants, has gone from $272.6 million in FY2024 to $206.0 million to $168.8 million, down 38.1% in two years, with billable hours down another 19.8% this year against a 2.1% bill-rate increase. Outsourced Services, the business that takes the process off the client's hands entirely, did $38.1 million, then $39.6 million, then $39.2 million. Flat. Its segment adjusted EBITDA over the same three years was $7.641 million, $7.581 million, $7.568 million, which is as close to a straight line as operating results ever get.
| Segment | FY2024 | FY2025 | FY2026 | 2-yr change |
|---|---|---|---|---|
| On-Demand Talent | $272.6M | $206.0M | $168.8M | -38.1% |
| Consulting | $228.0M | $219.2M | $159.8M | -29.9% |
| Europe & Asia Pacific | $84.2M | $77.6M | $75.1M | -10.8% |
| Outsourced Services | $38.1M | $39.6M | $39.2M | +2.8% |
| Total revenue | $632.8M | $551.3M | $452.0M | -28.6% |
That contrast is the most interesting thing in the filing. Selling hours of accounting labor is collapsing. Selling the outcome of accounting labor is flat. If this were simply a weak economy, both would be down.
The cost base is the second story. Gross margin barely moved, 37.6% to 37.5%, because cost of services is mostly consultant pay and it falls with hours. What did not fall was SG&A: $202.0 million in FY2025, $202.8 million in FY2026. Flat, despite two workforce reductions during the year that management says improved annual SG&A by $12 million to $14 million, and despite management and administrative headcount dropping from 662 to 591. Gross profit of $169.7 million against SG&A of $202.8 million leaves a $33.1 million hole before a cent of depreciation or amortization; add those and you have the $38.3 million operating loss. The overhead was built for a $600 million company.
Adjusted EBITDA, the company's own preferred measure, tells it without the noise: $51.5 million in FY2024, $23.5 million in FY2025, $5.0 million in FY2026. A 90% decline in two years, to a 1.1% margin. Underneath it, the four segments still generated $38.4 million combined; unallocated corporate costs of $33.4 million consumed 87% of that.
One number deserves separating from the rest. FY2025's $191.8 million net loss was mostly a $194.4 million goodwill impairment, a non-cash writeoff that a patient investor could look through. FY2026 recorded no goodwill impairment at all and still lost $40.6 million, $38.3 million of it at the operating line. There is no longer a one-time item to look past.
The balance sheet, to be fair, is genuinely sound: $82.4 million of cash, no meaningful debt, $169.8 million of equity, and total liabilities of just $87.6 million. But operating cash flow for the year was $1.4 million, against $9.4 million paid out in dividends. The dividend is being funded from the balance sheet, and the declared rate has already been cut from $0.49 to $0.28 per share.
Valuation
At $3.90 per share on July 27, 2026 (stockanalysis.com), the market capitalization is roughly $134 million against 34.44 million shares outstanding. Strip out $82.4 million of cash and no debt, and the enterprise value is about $52 million. The market is paying roughly $52 million for a business that booked $452 million of revenue and $169.7 million of gross profit.
Read one way that is absurd: 0.11x revenue, and 0.79x book value. Read another way it is coherent. Cash and receivables alone total $154.3 million against $87.6 million of total liabilities, so the liquid assets net of every liability are worth about $66.7 million, more than the entire enterprise value. The market is not calling RGP cheap. It is valuing the operating business at less than zero and paying for the balance sheet. On EV to adjusted EBITDA the stock is about 10x, which is not a bargain at all.
| Scenario | Revenue path | Adj. EBITDA margin | Implied EV | Implied per share |
|---|---|---|---|---|
| Bear | declines to ~$390M and stays | 1% (~$4M) | $28-32M | ~$3.26 |
| Base | stabilizes ~$450M | 5% (~$23M) | $161-184M | ~$7.40 |
| Bull | recovers past $500M | 8% (~$40M) | $280-320M | ~$11.10 |
Assumptions, stated plainly: a 7x to 8x EV/adjusted-EBITDA multiple typical of small-cap staffing and professional services, cash held at $82.4 million with no debt, and share count flat at 34.44 million. Per-share figures are the midpoint of that multiple range, with cash added back. The base case requires only that revenue stop falling and that the $12 million to $14 million of SG&A reductions the filing says were completed this year show up in a full year of results. Neither is heroic; both are unproven. The spread between bear and bull is enormous relative to a $3.90 share price, which is the honest characterization: this is a binary on whether the hours come back, not a valuation debate. These are implied values under stated assumptions, not price targets and not investment advice.
Risks
The central risk is that the base case has the causation backwards. If declining demand for "traditional operational accounting skills" is structural rather than cyclical, then revenue does not stabilize at $450 million, the overhead problem never gets solved by growth, and the $12 million to $14 million of cost cuts already taken were the easy ones. Two workforce reductions and a headcount cut from 662 to 591 still left SG&A flat year over year, which is the uncomfortable version of the same point: the cuts so far have only offset other cost growth, not reduced the base. Note also that the Consulting segment's 27% FY2026 decline is harder to read cleanly, because the company reorganized its consulting units and sold Sitrick during the year.
Second, the dividend. A 7.2% yield funded by $1.4 million of operating cash flow is not a yield, it is a return of capital, and the payout has already been reduced once. Third, goodwill: $28.8 million remains after the FY2025 writedown, and the company ran quantitative impairment tests in all four quarters of FY2025 because indicators were present. Fourth, this is a $134 million company whose stock has traded between $3.06 and $5.75 over the past year, so the liquidity and volatility are what you would expect at that size.
The Bottom Line
RGP is the cleanest public read available on a question everyone in finance is asking and almost nobody can measure: whether AI is actually reducing demand for accounting labor, or just generating conference talks. Here is a company whose entire product is accounting hours, telling the SEC in a signed filing that clients are buying fewer of those hours because they are adopting AI and automation, while the same clients pay slightly more per hour for the ones they still buy, and while the segment that sells outcomes instead of hours stays perfectly flat.
Whether that makes the stock cheap depends on something the filing cannot tell you. What it does tell you is which line item to watch: On-Demand Talent billable hours. If they flatten, the balance sheet makes the equity interesting. If they keep sliding, $82 million of cash is just a slower clock.
Every figure in this analysis was pulled directly from RGP's SEC filings via the RoboSystems shared data repository. Run your own queries on any public company at robosystems.ai.
This is not investment advice. No price targets. Implied values are illustrative under the stated assumptions.