NASDAQ:RGP Resources Connection Q3 2024 Earnings Report $5.36 -0.10 (-1.83%) Closing price 04/23/2025 04:00 PM EasternExtended Trading$5.36 0.00 (-0.09%) As of 04/23/2025 07:17 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Resources Connection EPS ResultsActual EPS$0.17Consensus EPS -$0.01Beat/MissBeat by +$0.18One Year Ago EPS$0.32Resources Connection Revenue ResultsActual Revenue$151.31 millionExpected Revenue$152.77 millionBeat/MissMissed by -$1.46 millionYoY Revenue Growth-19.00%Resources Connection Announcement DetailsQuarterQ3 2024Date4/3/2024TimeAfter Market ClosesConference Call DateWednesday, April 3, 2024Conference Call Time5:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfilePowered by Resources Connection Q3 2024 Earnings Call TranscriptProvided by QuartrApril 3, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to Resources Connections Inc. Conference Call. Currently, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. Operator00:00:17At this time, I would like to remind everyone that management will be commenting on results for the Q3 ended February 24, 2024. They will also refer to certain non GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today. Today's press release can be reviewed in the Investor Relations section of RGP's website and filed today with the SEC. Also during this call, management may make forward looking statements regarding plans, initiatives and strategies and the anticipated financial performance of the company. Operator00:01:01Such statements are predictions and actual events or results may differ materially. Please see the Risk Factors section in RGP's report on Form 10 ks for the year ended May 27, 2023 for a discussion of risks, uncertainties and other factors that may cause the company's business results of operations and financial condition to differ materially from what is expressed or implied by forward looking statements made during this call. I will now turn the call over to RGP's CEO, Kate Duchenne. Speaker 100:01:40Thank you, operator. Good afternoon, everyone, and thank you for joining us today. In Q3, we delivered solid performance across the enterprise despite a macro environment that continues to be sluggish and uncertain. In the quarter, client engagement extensions and client retention have been robust, with new project starts still taking longer to convert than previous cycles. On revenue, we performed consistent with expectations, while also continuing to deliver strong cash flow conversion this fiscal year. Speaker 100:02:16On SG and A and therefore adjusted EBITDA, we've well exceeded our expectations remaining disciplined on cost in this environment and driving efficiencies and headcount. Our balance sheet remains pristine. During Q3, we saw positive momentum in certain regions. Asia Pacific returned to growth from earlier quarters in the fiscal year. Our Mexico, India and Switzerland practices all grew year over year as we delivered long term projects for large strategic clients. Speaker 100:02:51North America reflected the overall choppy operating environment as clients want more confidence in lower interest rates and improving economic indicators before moving ahead with many major initiatives. Cowsey, which is our business unit delivering out sourced finance and accounting and HR services for start ups, scale ups and spin outs also grew in the quarter. In fact, County is seeing the strongest demand for services since the pandemic. Our pricing initiative in the U. S. Speaker 100:03:27Has progressed with a 1% increase in bill rate year over year. Overall, this quarter reflects success with what we can control, including superb customer service and client retention, improving operating efficiencies and maintaining a very strong balance sheet. This success will allow us to be fast and ready as soon as the broader buying environment improves. Turning to our operational metrics, we're pleased with that our pipeline remained resilient and steady through the quarter. The pipe is not created equal as we see growth in both healthcare and financial services opportunities, while other sectors are still cautious. Speaker 100:04:14Veracity, our full service digital transformation business added almost 100 new opportunities in its pipeline during Q3. We are laser focused on all the opportunities involving technology, digital and portfolio change. Such deals are non discretionary, longer term and require larger teams. For example, ERP cloud migration opportunities are on the rise and we've built consulting delivery and a talent pipeline ready to respond. We're also building thought leadership around SAP S4HANA migration, including hosting events like the webinar held last week, which drew over 600 registered attendees. Speaker 100:05:02Of the largest closed deal won this quarter, the majority involved SAP and Oracle Cloud Migration Services, digital and finance transformation. During the quarter, we also continued to focus on enhancing our consulting capabilities, which we first outlined strategically during our last Investor Day. Last week, we entered into a definitive agreement to acquire management consulting firm Reference Point. This accretive acquisition is expected to close by early summer subject to customary closing conditions. ReferencePoint is an advisory firm serving the financial services sector across four areas of focus: strategy and management, risk and regulatory compliance, digital and technology, and data and analytics. Speaker 100:05:57Under the leadership of its managing partner, Scott Godin, Reference Point employs a differentiated consulting delivery model where engagements are led by former industry executives with exceptional backgrounds in technology, digital and data and risk management. Like RGP, the company builds delivery teams using a combination of experienced bench and on demand talent. We believe this acquisition offers clear benefits to both organizations, allowing us to provide an integrated value proposition to accelerate the growth of our financial services business. With the largest consulting services spend, the financial services industry was one of the first sectors we invested in and has been a top 3 industry vertical for RGP since inception. This highly strategic acquisition will expand our portfolio of high value advisory services, particularly in the technology, data and risk management arena. Speaker 100:07:04We offer reference point instant access to RGP's expansive financial services client base and an expert sales team that knows how to effectively sell into this space. RGP's robust talent engine will help scale its delivery teams with expert on demand talent. We very much look forward to welcoming the Reference Point team into the RGP family. We feel fortunate to have once again found a business whose culture is well aligned with RGP's values and our focus on client centricity and client relationships and which expands our growth prospects moving forward. Next, I'm delighted to announce that Bijresh Patel will serve as our new Chief Operating Officer. Speaker 100:07:51Bijresh joined RGP in 2019 as the CEO of Veracity. He is an engineer by background and started his professional career at Anderson. He has more than 25 years of experience spanning top tier consulting firms and boutique specialized consulting firms. A successful entrepreneur, Vedrash has helped build 2 high growth digital transformation businesses over the last 10 years. In joining RGP, he has proven to be a critical member of our executive leadership team, serving as our Chief Digital Officer and Leading Project Phoenix, which as you know is RGP's technology transformation initiative. Speaker 100:08:34He is perfectly positioned for this role as we continue to evolve our business to lead with strategic advice and follow with seasoned consultants who execute with excellence. He knows our enterprise well, while also bringing innovative ideas to improve execution to drive sustainable growth. This evolution requires effective coordination across people, process and technology, domains that Badresh understands well. As we bring our core consulting capabilities together under a single umbrella, experience delivering with a bench plus on demand model is critical. In addition, in today's world where every client problem has an element of digital, automation, use of AI and or UX, Badrash's background and experience will be invaluable for the future of the firm. Speaker 100:09:29Badresh will assume his position later this month. In his new role as COO, Badresh will continue to lead Project Phoenix. We completed wave 1 of the project in February with the implementation of our new talent acquisition software, our contract management software and the optimization of sales force for the go to market team. Our project team comprised of internal employees and our own expert consultants did a fantastic job in delivering wave 1. From my vantage point on the steering committee for Project Phoenix, I've seen our on demand talent model work brilliantly. Speaker 100:10:09Our consultants have taken lead roles in program management, change management, data migration, testing, cutover and functional expertise. For any company undergoing system transformation, having the right combination of insiders and on demand experts is critical. Most companies do not have the muscle they need solely in house. We offer clients on demand experts who deliver with excellent speed and efficiency. It is also a very differentiated client outcome when the on demand talent is experienced, has judgment and has been to the rodeo many times before. Speaker 100:10:50Finally, I'm pleased to share the results of a recent survey we commissioned with YouGov to discover what priorities financial decision makers are ready to fund when interest rates start to decline. We learned that more than 80% of the 200 financial decision makers who participated in the survey plan to increase investment in workforce development. Specifically, most are prioritizing reskilling, upskilling current employees and utilizing new engagement strategies to blend full time employees with external on demand resources. They desire knowledge transfer, independent perspective and financial flexibility. Also more than half said they would invest new capital in digital transformation and AI. Speaker 100:11:40In discussions last week with a global pharmaceutical and medical device client, I learned they are following this pattern exactly. They're funding a total talent initiative to inventory incumbent employee skill sets and development desires and capturing this data with new digital tools. They are also building execution teams related to strategic initiatives with a blend of internal employees and on demand experts to target exactly the skill sets needed for specific projects for specific periods of time. They are adamant about not caring full time employees for skill sets needed only on a fractional basis. In sum, we're working hard to close every business opportunity with creativity and grit. Speaker 100:12:30We are improving our operating model to align our consulting capabilities with more focus and under one leadership structure to also deliver scale with the on demand talent platform. We're improving brand positioning and training for all account development teams to enable more cross sell to drive growth. Far from standing still, we are aggressively optimizing our business to quickly capitalize on improving conditions to deliver long term shareholder value. I'll now turn the call over to Jen. Speaker 200:13:06Thank you, Kate, and good afternoon, everyone. This quarter, we achieved $151,300,000 of revenue, which was consistent with our outlook range provided in January. Both our gross margin of 37% and our run rate SG and A of $45,200,000 were significantly better than the favorable end of the outlook ranges provided. We produced solid adjusted EBITDA of $10,800,000 or a 7.1% adjusted EBITDA margin and have delivered $34,900,000 of free cash flow in the last 12 months. On a same day constant currency basis, revenue declined by 20% year over year as our clients continue to be cautious with the pace of spending in the face of uncertain macro conditions, particularly in North America and Europe. Speaker 200:13:57Our Asia Pacific region performed relatively better with a decline of 4% year over year on a same day constant currency basis. Markets such as India and the Philippines continue to perform well, primarily attributable to project opportunities with our large strategic clients as they continue to shift their spend to lower cost markets in an effort to advance transformation initiatives while containing costs. In addition, Singapore and Australia grew over the prior year from the expansion of our digital business with CloudGo. Operationally, as Kate mentioned, our growth pipeline remained resilient during the quarter. While the velocity of converting new opportunities in the pipeline to actual engagements remain slow, extensions on existing engagements were strong. Speaker 200:14:45We also saw an uptick in average deal size on closed deals during the Q3. While the current economic environment still lacks a bit of direction, we do believe we are starting to see more movement in the sales cycle in recent weeks. Consistent with our survey results that Kate highlighted earlier, conversations with our own clients suggest that budgets do exist and targeted investments are highly concentrated in technology upgrades and transformation. We have been laser focused on building our pipeline in this key area to grow our top line. Gross margin in the 3rd quarter was 37%, once again exceeding our 35.5% to 36% outlook range and reflecting a more normalized level of healthcare costs than we anticipated. Speaker 200:15:32Gross margin in the quarter also reflects the usual holiday seasonality and a heavier mix of business in Europe and Asia Pacific, where we tend to see higher pay bill ratios than in North America. As mentioned during our January call, the pricing environment across the globe has become increasingly competitive and this trend continued in the Q3. Furthermore, large multinational clients shifting work to lower cost markets such as India and the Philippines has shifted our global revenue mix and therefore weighted average bill rate. Enterprise average bill rate for the quarter was $119 constant currency, down from $1.29 a year ago. Despite the pricing pressure, our U. Speaker 200:16:15S. Standalone average bill rate was up 1% compared to the Q3 of fiscal 2023. We will continue to optimize our overall operating results by effectively balancing pricing and volume growth. Now on SG and A, our run rate SG and A expense for the quarter was $45,200,000 which as I noted was also significantly better than our outlook range. We have remained disciplined with cost management and the reduction in force we executed in late calendar 2023 contributed approximately $3,000,000 of SG and A savings over the prior year quarter. Speaker 200:16:51Variable compensation expense was also favorable in the Q3, reflecting a true up in bonus expense to align with the company's overall financial performance this fiscal year. Turning to liquidity. We continue to generate healthy free cash flow despite the macro environment. We ended the fiscal quarter with $114,000,000 of cash and cash equivalents and 0 outstanding debt. After distributing $4,700,000 of dividends and after $3,700,000 of continued investments in our technology implementation. Speaker 200:17:23With total available financial liquidity of $287,000,000 at the end of the quarter, we will continue to focus on investing in impactful areas of the business, including completing our technology transformation project and pursuing a disciplined M and A strategy to accelerate long term growth and profitability, while continuing to return cash to shareholders through dividends and by opportunistically repurchasing shares under our share repurchase program, which have $45,000,000 remaining at the end of the 3rd quarter. Now let me provide an update on the two areas of investment and capital deployment, our technology transformation project and strategic acquisition. We have made tremendous progress and launched our new talent management and contract management systems in North America during the quarter. Our financial systems go live is planned for later in the calendar year. We're already seeing immediate benefits, including enhanced speed and accuracy and talent matching, ease of talent marketing campaign and improved visibility into consultant and contract status. Speaker 200:18:30We will continue to extract value from the new platform as we optimize system functionalities and user adoption, and we believe this technology will enable us to achieve higher operating leverage and positions us perfectly to scale for growth. On the acquisition front, as Kate stated, we signed a definitive agreement to acquire Reference Point, a strategic advisory firm serving the financial services industry, which is an important vertical for RGP. We expect this acquisition to be accretive to our financial performance. I'll now close with our Q4 outlook. As we anticipated, the pace of revenue conversion for new opportunities in the pipeline remains sluggish in the 3rd quarter, putting pressure on early 4th quarter revenue trends. Speaker 200:19:14Coupled with the timing of completion for certain large engagements, early 4th quarter weekly revenue run rate has been modest compared to the 3rd quarter. We project 4th quarter revenues to be in the range of $137,000,000 to $142,000,000 Gross margin in Q4 will continue to reflect the competitive pricing environment and the current global revenue mix, with a higher proportion of revenue coming from Europe and Asia Pacific. We estimate gross margin in Q4 to be in the range of 37.5% to 38%. We expect our 4th quarter run rate SG and A expense to be in a range of $50,000,000 to $52,000,000 with more normalized variable compensation expense. Non run rate and non cash expenses for the Q4 will consist of technology transformation costs and stock compensation expense, both of which will be approximately $2,000,000 In closing, despite headwinds presented by the prolonged market uncertainty, we see compelling opportunities ahead as macro conditions start to recover and we're ready to execute and excited about our business model and longer term outlook. Speaker 200:20:27With a durable variable cost model, a pristine balance sheet, ample liquidity and impending accretive acquisition of reference points, we believe we are well positioned to continue driving long term value creation for our shareholders. This concludes our prepared remarks and we will now open the call for Q and Operator00:20:44A. Thank you so much. It is from Mark Marcon with Baird. Please proceed. Speaker 300:21:12Good afternoon and thanks for taking my questions. Can you give us a little more detail with regards to reference point like how large is it? What's the growth rate? How much did you are you anticipating spending? Speaker 100:21:39Sure. Hi, Mark. I'll start and then Jen is going to jump in. We did have one correction in our prepared earnings script that we want to clarify, which Jen will do in just a moment. With respect to reference point, we're not disclosing the size at this time. Speaker 100:21:54It is a boutique consulting firm and we expect to close this within the next 60 days. What this enables us to really do is bring together their strategic advisory work and then more fulsome execution. They have left opportunity on the table given that they don't have as much execution scale that we do, especially from a global perspective. For example, there's an opportunity that's already in front of us with an existing client actually of both firms, but our competitive bid will be stronger together because we allow reference point access to our center of excellence talent pool in Mumbai, for example. So we really are excited about bringing our capabilities together very synergistically to serve what you know has been a long term industry vertical for us and where we have a very strong sales team. Speaker 300:23:06Is there something that you wanted to correct from the transcript? Speaker 100:23:12Yes. Jen is trying to jump in. I can't hear you, Jen. Operator, can you make sure she is Operator00:23:20Jen is muted. Speaker 100:23:26Okay. I'll jump in and correct this. It was the disclosure we made about APAC being down constant currency 4%. That stat is actually much better and it's really a 1.8 percent decline constant currency. So we just want to call that out. Speaker 100:23:45It's not again a 4% decline, a 1.8%. Speaker 300:23:51Okay, great. Thanks. You're welcome. Can you talk a little bit about what you're seeing in North America, both in terms of the ability to close deals? So I'll start there and then want to ask about pricing and then the markets, specifically. Speaker 300:24:14But just in terms of like, Kate, you're close to your clients. What exactly do they need to see? Because GDP has been healthy, employment growth has been healthy. Obviously, interest rates are still high. But what exactly are they waiting for? Speaker 100:24:34I think broadly, they're waiting for the 1st interest rate decline that is going to show it's going to be a firm line in the sand that we're moving in the right direction. So I do think the Fed's decision will unlock more capital. I would say, I characterize my outlook as more bullish on opportunity right now, while remaining cautious on timing. So we are starting to see these green shoots, especially around technology migration. I was just reviewing prior to the call, both are closed won for Q3 and our biggest pipeline opportunities in Q4. Speaker 100:25:20Most involve technology change, most require project management, change management and then the wraparound services that I already talked about in my prepared remarks. So we are starting to feel more bullish about opportunity. It's really timing that's the challenge. I'd say the other thing, Mark, about revenue and we're conservative about that is that we do have a couple of major projects for in the energy sector that will roll or conclude in Q4. And so we've taken that into account. Speaker 100:26:04Now we've already identified new opportunities at those clients, But there may be a gap between the prior projects ending and the ramp up of the new projects that we have to take into consideration. Speaker 300:26:21Really appreciate that. And Kate, can you talk a little bit about like some of your major markets, whether it's the Tri Cities New York area or if we think about Northern or Southern California or Chicago, what are you seeing in those markets? And I'm just trying to factor in like, okay, you gave us the North America numbers, but like how are those biggest offices doing? And how would you compare and contrast that to some of your, not small offices, but smaller offices within the U. S? Speaker 300:27:00Yes. Speaker 100:27:00I think the smaller offices, which serve more middle market clients have been a little bit slower, because that buying base has been more conservative. I really look at it not as much territories, Mark, but industries like where are we starting to see momentum in industries. So we talked about financial services, pipeline is definitely growing in financial services. In healthcare, our longest standing client has we have 3 big proposals into that client right now. I feel bullish on our opportunities to continue to serve them, but it's just when those projects will start. Speaker 100:27:47The next category that we're starting to see spending again is in the retail or consumer goods space. That's particularly true because that's an important concentration of clients in Europe. And then last, I'd say, manufacturing is starting to come back a little bit. So that impacts more of the Chicago area, that central of the country base, probably impacts Atlanta a little bit more too. So that's really how we think about how we're gaining momentum. Speaker 100:28:21Let me also talk about technology because we mentioned on in our earnings call a couple of quarters ago that we were starting to see some movement in technology, which has also been a very strong sector for us. And I'd say that we're seeing kind of fits and starts. We'll see some momentum, then we'll see more layoffs. Then we'll see things get put on hold because nobody wants to start a big project with on demand talent when they've just done layoffs. So that's been a little bit, I'd say, herky jerky. Speaker 100:28:54But we're starting to see more momentum in the media and entertainment space, which is pretty exciting. And that will have some positive impact in Southern California, where we've had some leadership and turnover changes. So we're addressing those actively as we get ready for more opportunity there. So I hope this color has been helpful for you. Speaker 300:29:19Absolutely. And then can you just talk a little bit more about the pricing within North America? What are you seeing from the big four and other competitors? We've obviously been reading about some of the things that they've been doing. But just wondering, when you're competing with them, how does that come through? Speaker 300:29:44Would you anticipate that pricing would actually continue to stay up year over year in North America? Or how are you thinking about that? Speaker 100:29:53Yes. So Jen? Yes, I'm back, you guys. I'm so sorry. Speaker 200:29:57I was having some technical difficulties. I think I heard Mark, I think I heard Kate correct the one of the stats that I said in Asia Pac instead of a decline of 4% is actually an increase of 1.8% on a constant currency basis. Yes, so I want to make sure that we clear that up. And then maybe I'll take a stab at the pricing question, Mark, and then Kate, feel free to jump in. I mean, what we're seeing from the big four, we talked about this at the last in the last call, obviously, the big four, they deploy bench resources. Speaker 200:30:32And when they have some bench resources, they can kind of deploy for free and they're certainly doing that. And they also have deployed offshore resources. Therefore, they can blend the rates down. And there's a lot of competition when we compete with the boutique staffing firms too. For sure, we they tend to want to race to the bottom in terms of pricing. Speaker 200:30:56It's combative. I mean, we're actively we talked about this last quarter, actively building our own kind of offshore talent delivery hubs and then using them as much as we can in order to blend down the rate while protecting our margin. Obviously, we got to now strike a balance between volume and pricing to maintain our market share. But the good news is given our predominantly variable cost model, even with lower bill rates, we're still able to maintain our margin. So that's what we're seeing. Speaker 200:31:27Hopefully that helps. Mark, hopefully that answers your question. Speaker 100:31:31Yes. I would just add that we remain very focused on value based pricing, Mark. That is not changing. But when you have the big four giving their bench resources away for free, it puts your rational pressure in the short term, not the long term. Speaker 300:31:51Understood. Really appreciate all the comments. Thank you. Speaker 100:31:55You're welcome. Operator00:31:56Thank you. One moment for our next question please. All right. And it comes from the line of Andrew Steinerman with JPMorgan. Please proceed. Speaker 400:32:12Hi, Jen. Thanks for the revenue guide for the 4th quarter. Could you just go over what that would be on an organic constant currency basis year over year in terms of a percentage change on a same day basis? And if you could mention if there's a difference in days in this Q4 versus the year ago Q4? Yes. Speaker 200:32:32Sure. The full quarter guidance at the top at $142,000,000 which is the top end of the range, it's about a 23% down compared to year over year on the same day constant currency basis. And there is no in the U. S, there is no business day difference. Speaker 500:32:52Okay. Thank you very much. Operator00:32:54Thank you. One moment for our next question. And it comes from the line of Marc Riddick with Sidoti. Please proceed. Speaker 500:33:09Hi, good evening. Speaker 100:33:12Hi, Marc. Speaker 500:33:13So I think you mentioned in your prepared remarks, financial services and healthcare. I was wondering if you could touch a little bit on those, particularly maybe starting with Financial Services, maybe what maybe some of those drivers are? Is that a regulatory driver? Is that a maybe are you seeing a little bit of a pickup from improved M and A out there, which seems to be off to a decent start so far this year? Speaker 100:33:38Yes, I'd say primarily it's tied to regulatory requirements. Some technology investment and change, in financial services that have grown with a lot of consolidation, System alignment is something that we're starting to see those large organizations address. And I think there is some activity related to M and A, and we're starting to see an uptick in request for project management type resources, Mark. Speaker 500:34:17Okay, great. And then it was very encouraging to see the launch in North America around the talent management system. I was wondering if you could I think you mentioned in Jen, I think you mentioned in your prepared remarks that the financial system launch, I wasn't sure if you said calendar year or fiscal year, is there sort of a ballpark timeframe we should be thinking about for that? Speaker 200:34:39Yes. The financial systems will go live later this calendar year. Speaker 500:34:43Calendar year. Okay. Okay, excellent. And then I was sort of thinking about, I guess maybe sort of circling back to the M and A question, but in a different way. So, the I appreciate the commentary around reference points. Speaker 500:34:56So there's now been a couple of transactions during the year. Could you maybe sort of give your thoughts and views as to are things getting to be more attractive out there as far as potential acquisition targets and maybe the volume of what's out there, the quality of what's out there and the valuation? Speaker 100:35:15Yes. So we're very much focused on continuing to invest in our digital capabilities and looking at companies that bring, I would say, more forward looking capabilities to bear, because we're so strong in functional expertise here. And so investing in more of the Veracity type platform is something that we're looking at and looking globally. We did CloudGo, which is now part of the Veracity brand in late calendar 2023. We've been looking to add to that platform as well and valuations are getting more reasonable. Speaker 100:35:58So, our pipeline of companies that we're looking at has grown. We're also though looking very in a very targeted way at capability to add to what we might have. So think about the procurement supply chain space. That seems to be gaining some momentum in terms of project attention and budget in our client base. And we'd like to grow our capabilities there. Speaker 500:36:32Okay, great. Then the last thing, I know you had made commentary around the fits and starts around technology activity. And I was wondering, do you get any sense that some of that is maybe tied to some of the regulatory pressures, whether they be home or abroad or whether or not the tech customers are more sort of tied to the interest rate discussion that you mentioned earlier? Speaker 100:37:06Yes. I think it's tied to interest rate and I think headcount decisions that those firms are making. I don't know that I would say it's so tied to regulatory. I don't feel qualified, Mark, to answer that question fully. But I do think that at our largest account, for example, that is a technology company, we had been worried about some roles that we knew were coming and those folks have all been extended and we see now growing opportunity in that account again. Speaker 100:37:46So I think it's a matter of those firms tended to over hire more coming out of the pandemic. And now that they're rightsizing or justifying more of that headcount, it's really a matter of timing again, more than I think opportunity. Speaker 500:38:05Got you. That's right. Thank you very much. Speaker 100:38:08You're welcome, Mark. Thank you. Operator00:38:11Thank you. And as I see no further questions in the queue, I will turn it back to Kate for final comments. Speaker 100:38:18Thank you, operator. Well, thank you everyone for attending the call. We'll look forward to adding the Dresh to our earnings call following the end of our fiscal year and talking to you all again then. Thank you very much. Operator00:38:32And with that, I conclude the conference. Thank you all for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallResources Connection Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Resources Connection Earnings HeadlinesResources Connection (RGP) Gets a Buy from Noble FinancialApril 5, 2025 | markets.businessinsider.comResources Connection reports Q3 adjusted EPS (8c) vs 17c last yearApril 3, 2025 | markets.businessinsider.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 24, 2025 | Paradigm Press (Ad)Resources Connection sees Q4 revenue $132M-$137M, consensus $147.2MApril 3, 2025 | markets.businessinsider.comResources Connection, Inc. (RGP): Among the Best Consulting Stocks to Buy According to Hedge FundsApril 3, 2025 | finance.yahoo.comResources Connection, Inc. (RGP): Among the Best Consulting Stocks to Buy According to Hedge FundsApril 3, 2025 | finance.yahoo.comSee More Resources Connection Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Resources Connection? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Resources Connection and other key companies, straight to your email. Email Address About Resources ConnectionResources Connection (NASDAQ:RGP) provides consulting services to business customers under the Resources Global Professionals name in North America, Europe, and the Asia Pacific. The company offers services in the areas of transactions, including integration and divestitures, bankruptcy/restructuring, going public readiness and support, financial process optimization, and system implementation; and regulations, such as accounting regulations, internal audit and compliance, data privacy and security, healthcare compliance, and regulatory compliance. It provides transformations services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics. The company was formerly known as RC Transaction Corp. and changed its name to Resources Connection, Inc. in August 2000. Resources Connection, Inc. was founded in 1996 and is headquartered in Irvine, California.View Resources Connection ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InCan IBM’s Q1 Earnings Spark a Breakout for the Stock?Genuine Parts: Solid Earnings But Economic Uncertainties RemainBreaking Down Taiwan Semiconductor's Earnings and Future UpsideArcher Aviation Unveils NYC Network Ahead of Key Earnings Report Upcoming Earnings AbbVie (4/25/2025)AON (4/25/2025)Colgate-Palmolive (4/25/2025)HCA Healthcare (4/25/2025)NatWest Group (4/25/2025)Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to Resources Connections Inc. Conference Call. Currently, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. Operator00:00:17At this time, I would like to remind everyone that management will be commenting on results for the Q3 ended February 24, 2024. They will also refer to certain non GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today. Today's press release can be reviewed in the Investor Relations section of RGP's website and filed today with the SEC. Also during this call, management may make forward looking statements regarding plans, initiatives and strategies and the anticipated financial performance of the company. Operator00:01:01Such statements are predictions and actual events or results may differ materially. Please see the Risk Factors section in RGP's report on Form 10 ks for the year ended May 27, 2023 for a discussion of risks, uncertainties and other factors that may cause the company's business results of operations and financial condition to differ materially from what is expressed or implied by forward looking statements made during this call. I will now turn the call over to RGP's CEO, Kate Duchenne. Speaker 100:01:40Thank you, operator. Good afternoon, everyone, and thank you for joining us today. In Q3, we delivered solid performance across the enterprise despite a macro environment that continues to be sluggish and uncertain. In the quarter, client engagement extensions and client retention have been robust, with new project starts still taking longer to convert than previous cycles. On revenue, we performed consistent with expectations, while also continuing to deliver strong cash flow conversion this fiscal year. Speaker 100:02:16On SG and A and therefore adjusted EBITDA, we've well exceeded our expectations remaining disciplined on cost in this environment and driving efficiencies and headcount. Our balance sheet remains pristine. During Q3, we saw positive momentum in certain regions. Asia Pacific returned to growth from earlier quarters in the fiscal year. Our Mexico, India and Switzerland practices all grew year over year as we delivered long term projects for large strategic clients. Speaker 100:02:51North America reflected the overall choppy operating environment as clients want more confidence in lower interest rates and improving economic indicators before moving ahead with many major initiatives. Cowsey, which is our business unit delivering out sourced finance and accounting and HR services for start ups, scale ups and spin outs also grew in the quarter. In fact, County is seeing the strongest demand for services since the pandemic. Our pricing initiative in the U. S. Speaker 100:03:27Has progressed with a 1% increase in bill rate year over year. Overall, this quarter reflects success with what we can control, including superb customer service and client retention, improving operating efficiencies and maintaining a very strong balance sheet. This success will allow us to be fast and ready as soon as the broader buying environment improves. Turning to our operational metrics, we're pleased with that our pipeline remained resilient and steady through the quarter. The pipe is not created equal as we see growth in both healthcare and financial services opportunities, while other sectors are still cautious. Speaker 100:04:14Veracity, our full service digital transformation business added almost 100 new opportunities in its pipeline during Q3. We are laser focused on all the opportunities involving technology, digital and portfolio change. Such deals are non discretionary, longer term and require larger teams. For example, ERP cloud migration opportunities are on the rise and we've built consulting delivery and a talent pipeline ready to respond. We're also building thought leadership around SAP S4HANA migration, including hosting events like the webinar held last week, which drew over 600 registered attendees. Speaker 100:05:02Of the largest closed deal won this quarter, the majority involved SAP and Oracle Cloud Migration Services, digital and finance transformation. During the quarter, we also continued to focus on enhancing our consulting capabilities, which we first outlined strategically during our last Investor Day. Last week, we entered into a definitive agreement to acquire management consulting firm Reference Point. This accretive acquisition is expected to close by early summer subject to customary closing conditions. ReferencePoint is an advisory firm serving the financial services sector across four areas of focus: strategy and management, risk and regulatory compliance, digital and technology, and data and analytics. Speaker 100:05:57Under the leadership of its managing partner, Scott Godin, Reference Point employs a differentiated consulting delivery model where engagements are led by former industry executives with exceptional backgrounds in technology, digital and data and risk management. Like RGP, the company builds delivery teams using a combination of experienced bench and on demand talent. We believe this acquisition offers clear benefits to both organizations, allowing us to provide an integrated value proposition to accelerate the growth of our financial services business. With the largest consulting services spend, the financial services industry was one of the first sectors we invested in and has been a top 3 industry vertical for RGP since inception. This highly strategic acquisition will expand our portfolio of high value advisory services, particularly in the technology, data and risk management arena. Speaker 100:07:04We offer reference point instant access to RGP's expansive financial services client base and an expert sales team that knows how to effectively sell into this space. RGP's robust talent engine will help scale its delivery teams with expert on demand talent. We very much look forward to welcoming the Reference Point team into the RGP family. We feel fortunate to have once again found a business whose culture is well aligned with RGP's values and our focus on client centricity and client relationships and which expands our growth prospects moving forward. Next, I'm delighted to announce that Bijresh Patel will serve as our new Chief Operating Officer. Speaker 100:07:51Bijresh joined RGP in 2019 as the CEO of Veracity. He is an engineer by background and started his professional career at Anderson. He has more than 25 years of experience spanning top tier consulting firms and boutique specialized consulting firms. A successful entrepreneur, Vedrash has helped build 2 high growth digital transformation businesses over the last 10 years. In joining RGP, he has proven to be a critical member of our executive leadership team, serving as our Chief Digital Officer and Leading Project Phoenix, which as you know is RGP's technology transformation initiative. Speaker 100:08:34He is perfectly positioned for this role as we continue to evolve our business to lead with strategic advice and follow with seasoned consultants who execute with excellence. He knows our enterprise well, while also bringing innovative ideas to improve execution to drive sustainable growth. This evolution requires effective coordination across people, process and technology, domains that Badresh understands well. As we bring our core consulting capabilities together under a single umbrella, experience delivering with a bench plus on demand model is critical. In addition, in today's world where every client problem has an element of digital, automation, use of AI and or UX, Badrash's background and experience will be invaluable for the future of the firm. Speaker 100:09:29Badresh will assume his position later this month. In his new role as COO, Badresh will continue to lead Project Phoenix. We completed wave 1 of the project in February with the implementation of our new talent acquisition software, our contract management software and the optimization of sales force for the go to market team. Our project team comprised of internal employees and our own expert consultants did a fantastic job in delivering wave 1. From my vantage point on the steering committee for Project Phoenix, I've seen our on demand talent model work brilliantly. Speaker 100:10:09Our consultants have taken lead roles in program management, change management, data migration, testing, cutover and functional expertise. For any company undergoing system transformation, having the right combination of insiders and on demand experts is critical. Most companies do not have the muscle they need solely in house. We offer clients on demand experts who deliver with excellent speed and efficiency. It is also a very differentiated client outcome when the on demand talent is experienced, has judgment and has been to the rodeo many times before. Speaker 100:10:50Finally, I'm pleased to share the results of a recent survey we commissioned with YouGov to discover what priorities financial decision makers are ready to fund when interest rates start to decline. We learned that more than 80% of the 200 financial decision makers who participated in the survey plan to increase investment in workforce development. Specifically, most are prioritizing reskilling, upskilling current employees and utilizing new engagement strategies to blend full time employees with external on demand resources. They desire knowledge transfer, independent perspective and financial flexibility. Also more than half said they would invest new capital in digital transformation and AI. Speaker 100:11:40In discussions last week with a global pharmaceutical and medical device client, I learned they are following this pattern exactly. They're funding a total talent initiative to inventory incumbent employee skill sets and development desires and capturing this data with new digital tools. They are also building execution teams related to strategic initiatives with a blend of internal employees and on demand experts to target exactly the skill sets needed for specific projects for specific periods of time. They are adamant about not caring full time employees for skill sets needed only on a fractional basis. In sum, we're working hard to close every business opportunity with creativity and grit. Speaker 100:12:30We are improving our operating model to align our consulting capabilities with more focus and under one leadership structure to also deliver scale with the on demand talent platform. We're improving brand positioning and training for all account development teams to enable more cross sell to drive growth. Far from standing still, we are aggressively optimizing our business to quickly capitalize on improving conditions to deliver long term shareholder value. I'll now turn the call over to Jen. Speaker 200:13:06Thank you, Kate, and good afternoon, everyone. This quarter, we achieved $151,300,000 of revenue, which was consistent with our outlook range provided in January. Both our gross margin of 37% and our run rate SG and A of $45,200,000 were significantly better than the favorable end of the outlook ranges provided. We produced solid adjusted EBITDA of $10,800,000 or a 7.1% adjusted EBITDA margin and have delivered $34,900,000 of free cash flow in the last 12 months. On a same day constant currency basis, revenue declined by 20% year over year as our clients continue to be cautious with the pace of spending in the face of uncertain macro conditions, particularly in North America and Europe. Speaker 200:13:57Our Asia Pacific region performed relatively better with a decline of 4% year over year on a same day constant currency basis. Markets such as India and the Philippines continue to perform well, primarily attributable to project opportunities with our large strategic clients as they continue to shift their spend to lower cost markets in an effort to advance transformation initiatives while containing costs. In addition, Singapore and Australia grew over the prior year from the expansion of our digital business with CloudGo. Operationally, as Kate mentioned, our growth pipeline remained resilient during the quarter. While the velocity of converting new opportunities in the pipeline to actual engagements remain slow, extensions on existing engagements were strong. Speaker 200:14:45We also saw an uptick in average deal size on closed deals during the Q3. While the current economic environment still lacks a bit of direction, we do believe we are starting to see more movement in the sales cycle in recent weeks. Consistent with our survey results that Kate highlighted earlier, conversations with our own clients suggest that budgets do exist and targeted investments are highly concentrated in technology upgrades and transformation. We have been laser focused on building our pipeline in this key area to grow our top line. Gross margin in the 3rd quarter was 37%, once again exceeding our 35.5% to 36% outlook range and reflecting a more normalized level of healthcare costs than we anticipated. Speaker 200:15:32Gross margin in the quarter also reflects the usual holiday seasonality and a heavier mix of business in Europe and Asia Pacific, where we tend to see higher pay bill ratios than in North America. As mentioned during our January call, the pricing environment across the globe has become increasingly competitive and this trend continued in the Q3. Furthermore, large multinational clients shifting work to lower cost markets such as India and the Philippines has shifted our global revenue mix and therefore weighted average bill rate. Enterprise average bill rate for the quarter was $119 constant currency, down from $1.29 a year ago. Despite the pricing pressure, our U. Speaker 200:16:15S. Standalone average bill rate was up 1% compared to the Q3 of fiscal 2023. We will continue to optimize our overall operating results by effectively balancing pricing and volume growth. Now on SG and A, our run rate SG and A expense for the quarter was $45,200,000 which as I noted was also significantly better than our outlook range. We have remained disciplined with cost management and the reduction in force we executed in late calendar 2023 contributed approximately $3,000,000 of SG and A savings over the prior year quarter. Speaker 200:16:51Variable compensation expense was also favorable in the Q3, reflecting a true up in bonus expense to align with the company's overall financial performance this fiscal year. Turning to liquidity. We continue to generate healthy free cash flow despite the macro environment. We ended the fiscal quarter with $114,000,000 of cash and cash equivalents and 0 outstanding debt. After distributing $4,700,000 of dividends and after $3,700,000 of continued investments in our technology implementation. Speaker 200:17:23With total available financial liquidity of $287,000,000 at the end of the quarter, we will continue to focus on investing in impactful areas of the business, including completing our technology transformation project and pursuing a disciplined M and A strategy to accelerate long term growth and profitability, while continuing to return cash to shareholders through dividends and by opportunistically repurchasing shares under our share repurchase program, which have $45,000,000 remaining at the end of the 3rd quarter. Now let me provide an update on the two areas of investment and capital deployment, our technology transformation project and strategic acquisition. We have made tremendous progress and launched our new talent management and contract management systems in North America during the quarter. Our financial systems go live is planned for later in the calendar year. We're already seeing immediate benefits, including enhanced speed and accuracy and talent matching, ease of talent marketing campaign and improved visibility into consultant and contract status. Speaker 200:18:30We will continue to extract value from the new platform as we optimize system functionalities and user adoption, and we believe this technology will enable us to achieve higher operating leverage and positions us perfectly to scale for growth. On the acquisition front, as Kate stated, we signed a definitive agreement to acquire Reference Point, a strategic advisory firm serving the financial services industry, which is an important vertical for RGP. We expect this acquisition to be accretive to our financial performance. I'll now close with our Q4 outlook. As we anticipated, the pace of revenue conversion for new opportunities in the pipeline remains sluggish in the 3rd quarter, putting pressure on early 4th quarter revenue trends. Speaker 200:19:14Coupled with the timing of completion for certain large engagements, early 4th quarter weekly revenue run rate has been modest compared to the 3rd quarter. We project 4th quarter revenues to be in the range of $137,000,000 to $142,000,000 Gross margin in Q4 will continue to reflect the competitive pricing environment and the current global revenue mix, with a higher proportion of revenue coming from Europe and Asia Pacific. We estimate gross margin in Q4 to be in the range of 37.5% to 38%. We expect our 4th quarter run rate SG and A expense to be in a range of $50,000,000 to $52,000,000 with more normalized variable compensation expense. Non run rate and non cash expenses for the Q4 will consist of technology transformation costs and stock compensation expense, both of which will be approximately $2,000,000 In closing, despite headwinds presented by the prolonged market uncertainty, we see compelling opportunities ahead as macro conditions start to recover and we're ready to execute and excited about our business model and longer term outlook. Speaker 200:20:27With a durable variable cost model, a pristine balance sheet, ample liquidity and impending accretive acquisition of reference points, we believe we are well positioned to continue driving long term value creation for our shareholders. This concludes our prepared remarks and we will now open the call for Q and Operator00:20:44A. Thank you so much. It is from Mark Marcon with Baird. Please proceed. Speaker 300:21:12Good afternoon and thanks for taking my questions. Can you give us a little more detail with regards to reference point like how large is it? What's the growth rate? How much did you are you anticipating spending? Speaker 100:21:39Sure. Hi, Mark. I'll start and then Jen is going to jump in. We did have one correction in our prepared earnings script that we want to clarify, which Jen will do in just a moment. With respect to reference point, we're not disclosing the size at this time. Speaker 100:21:54It is a boutique consulting firm and we expect to close this within the next 60 days. What this enables us to really do is bring together their strategic advisory work and then more fulsome execution. They have left opportunity on the table given that they don't have as much execution scale that we do, especially from a global perspective. For example, there's an opportunity that's already in front of us with an existing client actually of both firms, but our competitive bid will be stronger together because we allow reference point access to our center of excellence talent pool in Mumbai, for example. So we really are excited about bringing our capabilities together very synergistically to serve what you know has been a long term industry vertical for us and where we have a very strong sales team. Speaker 300:23:06Is there something that you wanted to correct from the transcript? Speaker 100:23:12Yes. Jen is trying to jump in. I can't hear you, Jen. Operator, can you make sure she is Operator00:23:20Jen is muted. Speaker 100:23:26Okay. I'll jump in and correct this. It was the disclosure we made about APAC being down constant currency 4%. That stat is actually much better and it's really a 1.8 percent decline constant currency. So we just want to call that out. Speaker 100:23:45It's not again a 4% decline, a 1.8%. Speaker 300:23:51Okay, great. Thanks. You're welcome. Can you talk a little bit about what you're seeing in North America, both in terms of the ability to close deals? So I'll start there and then want to ask about pricing and then the markets, specifically. Speaker 300:24:14But just in terms of like, Kate, you're close to your clients. What exactly do they need to see? Because GDP has been healthy, employment growth has been healthy. Obviously, interest rates are still high. But what exactly are they waiting for? Speaker 100:24:34I think broadly, they're waiting for the 1st interest rate decline that is going to show it's going to be a firm line in the sand that we're moving in the right direction. So I do think the Fed's decision will unlock more capital. I would say, I characterize my outlook as more bullish on opportunity right now, while remaining cautious on timing. So we are starting to see these green shoots, especially around technology migration. I was just reviewing prior to the call, both are closed won for Q3 and our biggest pipeline opportunities in Q4. Speaker 100:25:20Most involve technology change, most require project management, change management and then the wraparound services that I already talked about in my prepared remarks. So we are starting to feel more bullish about opportunity. It's really timing that's the challenge. I'd say the other thing, Mark, about revenue and we're conservative about that is that we do have a couple of major projects for in the energy sector that will roll or conclude in Q4. And so we've taken that into account. Speaker 100:26:04Now we've already identified new opportunities at those clients, But there may be a gap between the prior projects ending and the ramp up of the new projects that we have to take into consideration. Speaker 300:26:21Really appreciate that. And Kate, can you talk a little bit about like some of your major markets, whether it's the Tri Cities New York area or if we think about Northern or Southern California or Chicago, what are you seeing in those markets? And I'm just trying to factor in like, okay, you gave us the North America numbers, but like how are those biggest offices doing? And how would you compare and contrast that to some of your, not small offices, but smaller offices within the U. S? Speaker 300:27:00Yes. Speaker 100:27:00I think the smaller offices, which serve more middle market clients have been a little bit slower, because that buying base has been more conservative. I really look at it not as much territories, Mark, but industries like where are we starting to see momentum in industries. So we talked about financial services, pipeline is definitely growing in financial services. In healthcare, our longest standing client has we have 3 big proposals into that client right now. I feel bullish on our opportunities to continue to serve them, but it's just when those projects will start. Speaker 100:27:47The next category that we're starting to see spending again is in the retail or consumer goods space. That's particularly true because that's an important concentration of clients in Europe. And then last, I'd say, manufacturing is starting to come back a little bit. So that impacts more of the Chicago area, that central of the country base, probably impacts Atlanta a little bit more too. So that's really how we think about how we're gaining momentum. Speaker 100:28:21Let me also talk about technology because we mentioned on in our earnings call a couple of quarters ago that we were starting to see some movement in technology, which has also been a very strong sector for us. And I'd say that we're seeing kind of fits and starts. We'll see some momentum, then we'll see more layoffs. Then we'll see things get put on hold because nobody wants to start a big project with on demand talent when they've just done layoffs. So that's been a little bit, I'd say, herky jerky. Speaker 100:28:54But we're starting to see more momentum in the media and entertainment space, which is pretty exciting. And that will have some positive impact in Southern California, where we've had some leadership and turnover changes. So we're addressing those actively as we get ready for more opportunity there. So I hope this color has been helpful for you. Speaker 300:29:19Absolutely. And then can you just talk a little bit more about the pricing within North America? What are you seeing from the big four and other competitors? We've obviously been reading about some of the things that they've been doing. But just wondering, when you're competing with them, how does that come through? Speaker 300:29:44Would you anticipate that pricing would actually continue to stay up year over year in North America? Or how are you thinking about that? Speaker 100:29:53Yes. So Jen? Yes, I'm back, you guys. I'm so sorry. Speaker 200:29:57I was having some technical difficulties. I think I heard Mark, I think I heard Kate correct the one of the stats that I said in Asia Pac instead of a decline of 4% is actually an increase of 1.8% on a constant currency basis. Yes, so I want to make sure that we clear that up. And then maybe I'll take a stab at the pricing question, Mark, and then Kate, feel free to jump in. I mean, what we're seeing from the big four, we talked about this at the last in the last call, obviously, the big four, they deploy bench resources. Speaker 200:30:32And when they have some bench resources, they can kind of deploy for free and they're certainly doing that. And they also have deployed offshore resources. Therefore, they can blend the rates down. And there's a lot of competition when we compete with the boutique staffing firms too. For sure, we they tend to want to race to the bottom in terms of pricing. Speaker 200:30:56It's combative. I mean, we're actively we talked about this last quarter, actively building our own kind of offshore talent delivery hubs and then using them as much as we can in order to blend down the rate while protecting our margin. Obviously, we got to now strike a balance between volume and pricing to maintain our market share. But the good news is given our predominantly variable cost model, even with lower bill rates, we're still able to maintain our margin. So that's what we're seeing. Speaker 200:31:27Hopefully that helps. Mark, hopefully that answers your question. Speaker 100:31:31Yes. I would just add that we remain very focused on value based pricing, Mark. That is not changing. But when you have the big four giving their bench resources away for free, it puts your rational pressure in the short term, not the long term. Speaker 300:31:51Understood. Really appreciate all the comments. Thank you. Speaker 100:31:55You're welcome. Operator00:31:56Thank you. One moment for our next question please. All right. And it comes from the line of Andrew Steinerman with JPMorgan. Please proceed. Speaker 400:32:12Hi, Jen. Thanks for the revenue guide for the 4th quarter. Could you just go over what that would be on an organic constant currency basis year over year in terms of a percentage change on a same day basis? And if you could mention if there's a difference in days in this Q4 versus the year ago Q4? Yes. Speaker 200:32:32Sure. The full quarter guidance at the top at $142,000,000 which is the top end of the range, it's about a 23% down compared to year over year on the same day constant currency basis. And there is no in the U. S, there is no business day difference. Speaker 500:32:52Okay. Thank you very much. Operator00:32:54Thank you. One moment for our next question. And it comes from the line of Marc Riddick with Sidoti. Please proceed. Speaker 500:33:09Hi, good evening. Speaker 100:33:12Hi, Marc. Speaker 500:33:13So I think you mentioned in your prepared remarks, financial services and healthcare. I was wondering if you could touch a little bit on those, particularly maybe starting with Financial Services, maybe what maybe some of those drivers are? Is that a regulatory driver? Is that a maybe are you seeing a little bit of a pickup from improved M and A out there, which seems to be off to a decent start so far this year? Speaker 100:33:38Yes, I'd say primarily it's tied to regulatory requirements. Some technology investment and change, in financial services that have grown with a lot of consolidation, System alignment is something that we're starting to see those large organizations address. And I think there is some activity related to M and A, and we're starting to see an uptick in request for project management type resources, Mark. Speaker 500:34:17Okay, great. And then it was very encouraging to see the launch in North America around the talent management system. I was wondering if you could I think you mentioned in Jen, I think you mentioned in your prepared remarks that the financial system launch, I wasn't sure if you said calendar year or fiscal year, is there sort of a ballpark timeframe we should be thinking about for that? Speaker 200:34:39Yes. The financial systems will go live later this calendar year. Speaker 500:34:43Calendar year. Okay. Okay, excellent. And then I was sort of thinking about, I guess maybe sort of circling back to the M and A question, but in a different way. So, the I appreciate the commentary around reference points. Speaker 500:34:56So there's now been a couple of transactions during the year. Could you maybe sort of give your thoughts and views as to are things getting to be more attractive out there as far as potential acquisition targets and maybe the volume of what's out there, the quality of what's out there and the valuation? Speaker 100:35:15Yes. So we're very much focused on continuing to invest in our digital capabilities and looking at companies that bring, I would say, more forward looking capabilities to bear, because we're so strong in functional expertise here. And so investing in more of the Veracity type platform is something that we're looking at and looking globally. We did CloudGo, which is now part of the Veracity brand in late calendar 2023. We've been looking to add to that platform as well and valuations are getting more reasonable. Speaker 100:35:58So, our pipeline of companies that we're looking at has grown. We're also though looking very in a very targeted way at capability to add to what we might have. So think about the procurement supply chain space. That seems to be gaining some momentum in terms of project attention and budget in our client base. And we'd like to grow our capabilities there. Speaker 500:36:32Okay, great. Then the last thing, I know you had made commentary around the fits and starts around technology activity. And I was wondering, do you get any sense that some of that is maybe tied to some of the regulatory pressures, whether they be home or abroad or whether or not the tech customers are more sort of tied to the interest rate discussion that you mentioned earlier? Speaker 100:37:06Yes. I think it's tied to interest rate and I think headcount decisions that those firms are making. I don't know that I would say it's so tied to regulatory. I don't feel qualified, Mark, to answer that question fully. But I do think that at our largest account, for example, that is a technology company, we had been worried about some roles that we knew were coming and those folks have all been extended and we see now growing opportunity in that account again. Speaker 100:37:46So I think it's a matter of those firms tended to over hire more coming out of the pandemic. And now that they're rightsizing or justifying more of that headcount, it's really a matter of timing again, more than I think opportunity. Speaker 500:38:05Got you. That's right. Thank you very much. Speaker 100:38:08You're welcome, Mark. Thank you. Operator00:38:11Thank you. And as I see no further questions in the queue, I will turn it back to Kate for final comments. Speaker 100:38:18Thank you, operator. Well, thank you everyone for attending the call. We'll look forward to adding the Dresh to our earnings call following the end of our fiscal year and talking to you all again then. Thank you very much. Operator00:38:32And with that, I conclude the conference. Thank you all for participating. You may now disconnect.Read morePowered by