Resources Connection, Inc. (RGP): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Resources Connection, Inc. (RGP) through the BCG lens, so let's map their portfolio based on market growth and relative competitive position. The picture shows high-potential Stars in digital transformation, backed by a stable Cash Cow base serving 88% of the Fortune 100, but this stability is offset by Dogs like the On-Demand Talent segment, which saw a 26.6% revenue drop and contributed to a $191.8 million GAAP net loss for FY2025. Still, the company is pouring resources into Question Marks like international growth and the HUGO platform, making the next few quarters critical for resource allocation-find out below where RGP needs to invest, hold, or divest.

Background of Resources Connection, Inc. (RGP)

Resources Connection, Inc. (RGP) is a professional services firm that has been operating since 1996. You'll find their headquarters are now in Dallas, Texas, though they have a global footprint. They focus on helping top organizations navigate change and seize opportunities using an agile, client-centric model. To be fair, RGP has a deep history of serving major clients, having engaged with 88% of the Fortune 100 as of May 2025.

RGP structures its work around three integrated offerings: On-Demand Talent, Consulting, and Outsourced Services. They aim to unite strategy, execution, and talent across areas like digital transformation, data, and cloud initiatives. The firm has also been recognized by Forbes as one of the World's Best Management Consulting Firms in 2025.

Looking at the most recent full fiscal year data, for the fiscal year ended May 31, 2025, Resources Connection, Inc. reported total revenue of $551.3 million. This represented a decline from the prior fiscal year's revenue of $632.8 million. That same fiscal year, the company recorded a net loss of $191.8 million, which notably included a significant non-cash goodwill impairment charge of $194.4 million.

For the start of the current fiscal year, the first quarter of fiscal 2026, which ended August 30, 2025, revenue came in at $120.2 million. This figure reflected a year-over-year decline of 13.9% when measured on a same-day constant currency basis. The company reports its operations across several segments, which were reorganized for fiscal 2025 reporting, including On-Demand Talent, Consulting, Outsourced Services, and geographic segments like Europe and Asia Pacific.

Resources Connection, Inc. (RGP) - BCG Matrix: Stars

The Star quadrant represents the business units or services within Resources Connection, Inc. (RGP) that operate in a high-growth market and possess a strong market share, demanding significant investment to maintain leadership. For RGP, this focus is clearly on its higher-value consulting services, particularly those aligned with enterprise transformation.

The market context supports this classification, as digital transformation and AI consulting is a high-growth area; for instance, you noted that nearly 70% of CFOs are planning new capital investment in 2025 for such initiatives. This external growth pressure necessitates internal investment to capture that market share, which is the defining characteristic of a Star.

RGP's strategic pivot is evidenced by concrete financial results in its Consulting segment, which is the primary vehicle for these high-value services. The commitment to this area is driving better pricing, even as overall volume (billable hours) remains choppy due to client uncertainty. This focus is what analysts believe will fuel future profitability.

The performance metrics for the Consulting segment in the first quarter of fiscal 2026 illustrate this Star dynamic:

The 11.1% increase in the average bill rate for the Consulting segment in Q1 FY2026 directly reflects RGP's successful pursuit of higher-value engagements, such as ERP cloud migration and data modernization. This pricing power is key to turning this segment into a Cash Cow when market growth stabilizes.

The high-growth, high-investment nature of these services is directly tied to the company's long-term financial expectations. These services are the engine for the projected turnaround, which is significant:

• Expected annual earnings growth forecast over the next three years is 134.11%.
• Profit margins are forecast to swing from a current negative -34.8% to a positive 4.5% in three years.
• The company is targeting annual cost savings of $6-8 million through organizational restructuring.

You're looking at a business unit that is currently consuming cash to build market position in areas like data modernization, but the expected payoff is substantial. If RGP maintains its market share in these high-growth areas, the current investment phase should transition into strong cash generation.

Finance: draft 13-week cash view by Friday.

Resources Connection, Inc. (RGP) - BCG Matrix: Cash Cows

You're looking at the core engine of Resources Connection, Inc. (RGP) here, the business units that have achieved a high market share in mature service lines. Consider the Core Finance & Accounting project execution; this area serves a massive 88% of the Fortune 100 as of May 2025. That kind of entrenched client base in established service offerings is exactly what defines a Cash Cow in the Boston Consulting Group framework.

This established client base provides a stable, recurring revenue stream, which is crucial when other parts of the business might be facing headwinds. For context, Resources Connection, Inc. (RGP) saw its total annual revenue for Fiscal Year 2025 settle at $551.3 million, representing a 12.9% decrease from the prior year's $632.8 million. Still, the consistent demand from these market leaders helps smooth out the overall financial performance.

Here's a quick look at some of the financial underpinning supporting this segment's strength:

The stability is also evident in the dedicated recurring revenue models, such as the Outsourced Services segment operating under the Countsy by RGP brand. This segment is a stable, recurring revenue model, growing 5.3% in Q1 FY2026 to reach $10.0 million. That growth, even modest, in a segment designed for recurring service delivery, shows the value of that high market share position.

The company's strong gross margin of 37.6% for FY2025 defintely supported by established, high-utilization projects within these core areas. You see this margin strength reflected in the latest quarter, where Q4 FY2025 gross margin was 40.2%, even as overall revenue declined. Companies are advised to invest in cash cows to maintain the current level of productivity or to 'milk' the gains passively, and the consistent margins suggest Resources Connection, Inc. (RGP) is effectively managing these mature assets.

Key indicators of Cash Cow status for Resources Connection, Inc. (RGP):

• Serving 88% of the Fortune 100 as of May 2025.
• FY2025 Gross Margin of 37.6%.
• Outsourced Services revenue reached $10.0 million in Q1 FY2026.
• Outsourced Services grew 5.3% in Q1 FY2026.
• The business unit generates more cash than it consumes.

Finance: draft 13-week cash view by Friday.

Resources Connection, Inc. (RGP) - BCG Matrix: Dogs

Dogs, are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

The overall Resources Connection, Inc. FY2025 performance signals this low-growth, cash-consuming position. The overall Resources Connection, Inc. FY2025 revenue declined 12.9% to $551.3 million, signaling a low-growth position in the overall market. This segment is a drag, contributing to the full-year 2025 GAAP net loss of $191.8 million. Expensive turn-around plans usually do not help, and Dogs should be avoided and minimized.

Here's the quick math on the key indicators pointing to the Dogs classification for certain business areas within Resources Connection, Inc. as of fiscal year 2025:

You're seeing clear evidence of contraction in the areas that fit the Dog profile. Specifically, the On-Demand Talent segment, which is often associated with more flexible, lower-commitment staffing, showed significant weakness. This segment saw a sharp revenue decline of 26.6% in Q3 FY2025.

The underlying volume pressure in this area is stark. The traditional interim staffing roles, which fall under this segment, experienced a substantial drop in utilization. Billable hours dropped 24.8% in Q3 FY2025 due to a soft labor market. This indicates low market share maintenance in a low-growth or declining market for that specific service type.

The specific performance metrics for the Q3 FY2025 period that characterize these Dogs include:

• On-Demand Talent segment revenue: $47.1 million.
• Billable hours decrease in that segment: 24.8%.
• Average bill rate decline in that segment: 2.1% (or 1.4% on a constant currency basis).
• Goodwill impairment charge in Q3 FY2025: $42.0 million, with $12.4 million attributed to On-Demand.

Resources Connection, Inc. (RGP) - BCG Matrix: Question Marks

Question Marks in the Boston Consulting Group Matrix represent business units or products operating in high-growth markets but currently holding a low market share. These areas consume significant cash for investment but have not yet generated substantial returns, posing a critical decision point for Resources Connection, Inc. (RGP): invest heavily to capture share or divest.

The international expansion efforts in Europe and the Asia Pacific region fit this profile. While the Asia Pacific market is characterized by high-growth potential, with a market CAGR forecast of 8.5% mentioned for this area, the performance within RGP's segment shows mixed results. The Europe & Asia Pacific segment revenue grew by 10.6% year-over-year in the first quarter of fiscal 2026, reaching $19.9 million.

However, the underlying volume dynamics suggest uncertainty, which is characteristic of a Question Mark. For instance, billable hours in Europe increased by a strong 21.0%, yet billable hours in the Asia Pacific region declined by 2.6% in the same period, indicating that market penetration is not uniform across the high-growth geography. This split performance requires focused capital allocation.

The core Consulting segment itself exhibits classic Question Mark behavior: high potential market (digital transformation, data modernization) but low volume execution currently. Revenue for the Consulting segment was $43.6 million in the first quarter of fiscal 2026, a significant drop from $55.0 million in the prior year quarter. This revenue erosion is directly tied to volume uncertainty, as billable hours plummeted by 28.4%. To counter this, RGP is pushing for higher value, evidenced by an average bill rate increase of 11.1%.

The proprietary HUGO by RGP®, the AI accelerator and digital engagement platform, represents a significant, unproven investment area. While the concept is designed to capture the digital frontier, specific financial data on its investment consumption or return in fiscal 2025 is not publicly detailed, positioning it as a high-risk, high-reward proposition. This aligns with the need for significant investment in technology to capture the high-growth digital market, which pressures short-term margins. Globally, IT spending is forecast to reach $5.74 trillion in 2025, with AI and automation spending projected to surpass $200 billion globally, underscoring the necessary scale of investment RGP must undertake to compete in this space.

The overall financial picture for Q1 FY2026 shows these high-investment areas are currently consuming cash, resulting in a net loss of $2.4 million, though this is an improvement from the $5.7 million net loss in the prior year quarter. The gross margin did improve to 39.5% from 36.5%, suggesting that pricing discipline is helping offset some of the volume and investment pressures.

• Consulting segment billable hours declined by 28.4% in Q1 FY2026.
• Europe & Asia Pacific segment revenue grew by 10.6% to $19.9 million in Q1 FY2026.
• Europe billable hours increased by 21.0%, while Asia Pacific hours declined by 2.6%.
• Overall net loss narrowed to $2.4 million in Q1 FY2026 from $5.7 million in Q1 FY2025.