Resources Connection Inc.
07/24/2026 | Press release | Distributed by Public on 07/24/2026 12:59
Annual Report for Fiscal Year Ending May 30, 2026 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed in Part I, Item 1A "Risk Factors" and elsewhere in this Annual Report on Form 10 K. See "Forward Looking Statements" above for further explanation.
Overview
Resources Global Professionals ("RGP," "we" or "us") is a global professional services firm based in Dallas, Texas (with offices worldwide) with three decades of experience helping the world's top organizations navigate change and seize opportunity. With three integrated offerings - On-Demand Talent, Consulting, and Outsourced Services - we provide CFOs and other C-suite leaders with the flexibility to solve today's most pressing challenges. The Company's principal markets of operations are North America, Europe & Asia Pacific.
We operate under the following reporting units: (i) On-Demand Talent, (ii) Consulting, (iii) Europe & Asia Pacific, and (iv) Outsourced Services. Our previous reportable segments included Sitrick, a crisis communications and public relations firm, which did not individually meet the quantitative thresholds to qualify as a reportable segment (disclosed as "All Other"). On May 2, 2026, we completed the sale of 100% of the membership interests of Sitrick Group, LLC ("Sitrick"), to Sitrick, LLC, an entity owned by one of the original founders of Sitrick Group, LLC. The Company initiated the sale in connection with its broader transformation initiative to simplify its business portfolio..As a result of the sale of Sitrick, the All Other segment was eliminated as of May 30, 2026. The Company has presented the results of the All Other segment through the date the sale was completed for the year ended May 30, 2026. Following the sale, the Company received no new income from Sitrick, other than rent payments on sub-leased office buildings, and had no further involvement or continuing influence over its operations.
Fiscal 2026 Strategic Focus Areas
In fiscal 2026, we focused and executed upon the following enterprise growth drivers:
•Expand cross-sell opportunities through our diversified services platform;
•Scale our high-value Consulting solutions and refocus On-Demand Talent offerings to address the evolving needs of our clients;
•Drive improvement in cost structure, simplify and optimize our business portfolio; and
•Further leverage value-based pricing to improve profitability.
Expand cross-sell opportunities through our diversified services platform - We offer a unique blend of services in On-Demand Talent, Consulting, and Outsourced Services, enabling high flexibility and high impact solutions for enterprises worldwide. This unique model is designed to meet clients' evolving needs in a disrupted business environment. Our Consulting capability provides us with deeper visibility into our clients' transformation agendas to drive greater opportunities for our On-Demand execution capabilities, while our agile talent base within our On-Demand business provides greater financial flexibility and better skill set alignment for our Consulting business. In our Outsourced Services business, we have and will continue to expand Countsy's total addressable market beyond the start-up ecosystem to serve the finance, accounting and human resources needs surrounding spin-outs and carve-outs. In fiscal 2026, we made progress in broadening client relationships by cross-selling across our diversified service offerings and introducing complementary solutions as client needs evolve. We believe this will continue to enable us to deepen our partnerships with CFOs and other C-suite business leaders, strengthen client retention, and increase wallet share while positioning the Company as a long-term, trusted partner for transformation and performance improvement.
Scale our high-value Consulting solutions and refocus On-Demand offerings to address the evolving needs of our clients - In a volatile and rapidly shifting global economic environment, CFOs and business leaders need partners who combine expertise with flexibility. We continue to build strong relationships with C-suite leaders, to support their organizations' transformation journeys with specialized on-demand expertise, high-value consulting, and integrated outsourced delivery. In fiscal 2026, we completed the integration of our consulting assets including Reference Point LLC
("Reference Point") into one cohesive consulting business unit. In addition, we have made focused investments to bring more sales capacity and depth to the consulting team and to further expand our service capabilities in Mergers and Acquisitions, Data Analytics and artificial intelligence ("AI"). Our core solutions are: enterprise resource planning ("ERP") and cloud finance systems modernization, financial planning and analysis enhancement, accounting close process optimization, SEC compliance, post acquisitions integration, enterprise risk management, data strategy and analytics, AI adoption and enterprise digital transformation. Concurrent to evolving our solutions to meet market demand, we have also made progress to evolve our talent strategy to modernize and refresh the skillsets within our consultant base, both bench and agile, to serve our clients across On-Demand or Consulting engagements, particularly in the area of technology and AI fluency.
Drive improvement in cost structure, simplify and optimize our business portfolio - As we execute strategic initiatives to improve our topline, we have also prioritized reducing our cost structure and maintaining ongoing cost discipline to deliver improved profitability. In fiscal 2026, we performed a comprehensive review of our operating model to redesign and streamline our cost structure, including simplification of business processes. In connection with this effort, we completed two workforce reductions affecting management and administrative roles improving our annual selling, general and administrative expenses ("SG&A") by $12.0 million to $14.0 million. In addition, as the result of our business portfolio review, we completed the sale of Sitrick in May 2026. Finally, we continue to improve the functionalities and user adoption of our recently implemented technology to achieve further operating efficiencies.
Further leverage value-based pricing - Building on the progress we made in previous fiscal years, we continued to advance our value-based pricing strategy to improve bill rates and pricing leverage, particularly in the Consulting business, as we pursue larger-scale, higher-value engagements that deliver measurable impact for clients.
Fiscal 2026 Developments
Management Changes
Effective November 3, 2025, Roger Carlile, a director of the Company, was appointed as the Company's President and Chief Executive Officer ("CEO"). In connection with his appointment, the Company entered into an employment agreement with Mr. Carlile with a term that extends through November 3, 2028 and will automatically renew annually thereafter. In October 2025, the Company's Board of Directors elected not to renew the "Period of Employment" under the Company's existing Employment Agreement, dated February 3, 2020 and as subsequently amended, with Kate W. Duchene, the Company's former President and CEO. Ms. Duchene stepped down as the Company's President and CEO, and as a member of the Board, on November 2, 2025. She served as an Executive Advisor through January 3, 2026 to assist the Company and Mr. Carlile with the continuity of leadership. See Note 1 - Description of the Company and its Business in the Notes to Consolidated Financial Statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding the severance benefits paid to Ms. Duchene.
On March 3, 2026, the Company entered into a Separation and General Release Agreement with Bhadreskumar Patel, the Company's Chief Operating Officer ("COO"), that provided the last day of Mr. Patel's employment by the Company would be May 15, 2026. See Note 1 - Description of the Company and its Business in the Notes to Consolidated Financial Statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding the severance benefits paid to Mr. Patel.
Company Transformation Initiative - Cost Structure Improvement
In fiscal 2026, the Company began a transformation initiative to redesign and streamline its operating model to achieve a reduced cost structure, as well as integrate Reference Point's consulting capabilities into the existing consulting business to form a more cohesive consulting segment (the "2026 Transformation Initiative"). As part of this initiative, we engaged a third-party advisor to assist us in conducting a comprehensive review of our global operations. In October 2025, in connection with this effort, we began certain workforce reductions affecting management and administrative roles, aimed at improving efficiency, reducing costs and streamlining operations (the "October RIF"). As disclosed in the Company's Form 8-K filed with the SEC on January 28, 2026, the Company began a second reduction in force under the 2026 Transformation Initiative in January 2026 (the "January RIF"). In addition to these reductions in force, the Company identified an opportunity for cost savings through exiting and subleasing certain office space. The Company recorded an impairment charge of $1.0 million in connection with the sublease.
Restructuring costs were $8.4 million and $5.1 million for the year ended May 30, 2026 and May 31, 2025, respectively. We expect our transformation efforts to be substantially complete in the first half of fiscal 2027, though the scope, timing, and impact of such actions may evolve as the review progresses.
Company Transformation Initiative - Simplification and Optimization of Business Portfolio
As a part of the transformation to simplify and optimize our business portfolio, on April 27, 2026, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Sitrick and Sitrick, LLC (the "Buyer"), pursuant to which the Company agreed to sell 100% of the membership interests of Sitrick to the Buyer.
The Purchase Agreement provided for a cash purchase price equal to the agreed realizable value of Sitrick client receivables. The purchase price was subject to adjustments for the outstanding Sitrick client receivables as of the closing and the funding of certain Sitrick liabilities by the Company as of the closing. The purchase price amounted to $1.9 million. The Purchase Agreement also provided that the Company shall retain certain assets and liabilities of Sitrick, including all assets and liabilities related to certain office space lease agreements. The Company also agreed to pay Michael Sitrick, Sitrick's chief executive officer, a cash payment of $4.0 million, which is equivalent to the cash severance that would have been payable under the terms of the employment agreement with Sitrick, and in connection with the closing of the transaction, to accelerate the vesting of any equity awards granted by the Company to continuing employees of Sitrick that are unvested and outstanding immediately prior to the closing. The sale was completed on May 2, 2026.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations included in this Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
The following represents a summary of our accounting policies that involve critical accounting estimates, defined as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Revenue recognition - Revenue is recognized when control of the promised service is transferred to our clients, in an amount that reflects the consideration expected in exchange for the services. Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities. Revenues for the vast majority of our contracts are recognized over time, based on hours worked by our professionals. The performance of the agreed-upon service over time is the single performance obligation for revenues.
On a limited basis, the Company may have fixed-price contracts, for which revenue is recognized over time using the input method based on time incurred as a proportion of estimated total time. Time incurred represents work performed, which corresponds with, and therefore best depicts, the transfer of control to the client. Management uses significant judgments when estimating the total hours expected to complete the contract performance obligation. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate.
Certain clients may receive discounts (for example, volume discounts or rebates) to the amounts billed. These discounts or rebates are considered variable consideration. Management evaluates the facts and circumstances of each contract and client relationship to estimate the variable consideration, assessing the most likely amount to recognize and considering management's expectation of the volume of services to be provided over the applicable period. Rebates are the largest component of variable consideration and are estimated using the most-likely-amount method prescribed by Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, contracts terms and estimates of revenue. Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods. Changes in estimates would result in cumulative catch-up adjustments and
could materially impact our financial results. Rebates recognized as contra-revenue for the years ended May 30, 2026, May 31, 2025 and May 25, 2024 were $2.5 million, $2.2 million and $2.5 million, respectively.
Goodwill - Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. We evaluate goodwill for impairment annually as of the first day of the fourth quarter, and whenever events indicate that it is more likely than not that the fair value of a reporting unit could be less than its carrying amount. In assessing the recoverability of goodwill, we make a series of assumptions including forecasted revenue and costs, estimates of future cash flows, discount rates and other factors, which require significant judgment. A potential impairment in the future, although a non-cash expense, could materially affect our financial results and financial condition.
In testing the goodwill of our reporting units for impairment, we have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of each of our reporting units is less than their respective carrying amounts. If it is deemed more likely than not that the fair value of a reporting unit is greater than its carrying value, no further testing is needed and goodwill is not impaired. Otherwise, we perform a quantitative comparison of the fair value of the reporting unit to its carrying amount. We have the option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test. If a reporting unit's estimated fair value is equal to or greater than that reporting unit's carrying value, no impairment of goodwill exists and the testing is complete. If the reporting unit's carrying amount is greater than the estimated fair value, then a non-cash impairment charge is recorded for the amount of the difference, not exceeding the total amount of goodwill allocated to the reporting unit.
Under the quantitative analysis, the estimated fair value of goodwill is determined by using a combination of a market approach and an income approach. The market approach estimates fair value by applying revenue and EBITDA multiples to each reporting unit's operating performance. The multiples are derived from guideline public companies with similar operating and investment characteristics to our reporting units, and are evaluated and adjusted, if needed, based on specific characteristics of the reporting units relative to the selected guideline companies. The market approach requires us to make a series of assumptions that involve significant judgment, such as the selection of comparable companies and the evaluation of the multiples. The income approach estimates fair value based on our estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects the relevant risks associated with each reporting unit and the time value of money. The income approach also requires us to make a series of assumptions that involve significant judgment, such as discount rates, revenue, earnings and free cash flow projections. We estimate our discount rates on a blended rate of return considering both debt and equity for comparable guideline public companies. We forecast our revenue, earnings and free cash flows based on historical experience and internal forecasts about future performance. While we believe that the assumptions underlying our quantitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and the magnitude of such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of our reporting units will be consistent with the Company's projections.
In fiscal 2025, due to the presence of indicators of potential impairment, we performed quantitative goodwill impairment assessments in each of the fiscal quarters. See Note 4 - Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further discussion.
Market Trends and Uncertainties
The Company continues to operate in a macroeconomic environment characterized by moderate but uneven global growth. While demand for professional services remains resilient, clients are increasingly selective, prioritizing projects with near-term, measurable returns on investment, with some focus on AI, digital transformation, and cost optimization, which has resulted in some variability in demand across service offerings. Additionally, heightened geopolitical tensions (including the recent Iran conflict), fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have caused economic disruption and uncertainty, which may impact client spending, project timing and overall demand for the Company's services. These factors may continue to negatively affect our financial results and operating cash flows.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures to assess our financial and operating performance that are not defined by or calculated in accordance with GAAP. A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented.
Our primary non-GAAP financial measures are listed below and reflect how we evaluate our operating results:
•Same-day constant currency revenue is adjusted for the following items:
◦Currency impact. In order to remove the impact of fluctuations in foreign currency exchange rates, we calculate same-day constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
◦Business days impact. In order to remove the fluctuations caused by comparable periods having a different number of business days, we calculate same-day revenue as current period revenue (adjusted for currency impact) divided by the number of business days in the current period, multiplied by the number of business days in the comparable prior period. The number of business days in each respective period is provided in the "Number of Business Days" section in the table below.
•EBITDA is calculated as net income (loss) before amortization expense, depreciation expense, interest and income taxes.
•Adjusted EBITDA is calculated as EBITDA excluding stock-based compensation expense, amortized ERP system costs, technology transformation costs, goodwill impairment, acquisition costs, gain on sale of assets, restructuring costs, executive transition costs, Sitrick related transaction costs, contingent consideration adjustment and other items we believe are not representative of the Company's core operations. We also present herein Adjusted EBITDA at the segment level as a measure used to assess the performance of our segments. Segment Adjusted EBITDA excludes certain shared corporate administrative costs that are not practical to allocate. See Note 18 - Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further information.
•Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue.
Same-Day Constant Currency Revenue
Same-day constant currency revenue assists us in evaluating revenue trends on a more comparable and consistent basis. Revenue performance is primarily driven by change in billable hours and average bill rates; same-day constant currency revenue is presented to provide better comparability between reporting periods by eliminating the effects of foreign currency fluctuations and fiscal calendar differences. We believe this measure provides more clarity to our investors in evaluating our core operating performance.
The following table presents a reconciliation of same-day constant currency revenue, a non-GAAP financial measure, to revenue as reported in the Consolidated Statements of Operations, the most directly comparable GAAP financial measure, by segment (in thousands, except number of business days).
| For the Years Ended | |||||||||||||||||||||||||||||
|
May 30, 2026 |
May 31, 2025 |
||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| As reported (GAAP) | Currency impact | Business days impact | Same-day constant currency revenue | As reported (GAAP) | |||||||||||||||||||||||||
| On-Demand Talent | $ | 168,796 | $ | (367) | $ | 2,009 | $ | 170,438 | $ | 205,976 | |||||||||||||||||||
| Consulting | 159,796 | (541) | 1,882 | 161,137 | 219,215 | ||||||||||||||||||||||||
| Europe & Asia Pacific | 75,139 | (1,717) | 1,320 | 74,742 | 77,602 | ||||||||||||||||||||||||
| Outsourced Services | 39,206 | - | 467 | 39,672 | 39,618 | ||||||||||||||||||||||||
| All Other | 9,069 | - | 108 | 9,177 | 8,920 | ||||||||||||||||||||||||
| Total Consolidated | $ | 452,006 | $ | (2,625) | $ | 5,786 | $ | 455,166 | $ | 551,331 | |||||||||||||||||||
| For the Years Ended | ||||||||||||||
| Number of Business Days |
May 30, 2026 |
May 31, 2025 |
||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
|
On-Demand Talent (1)
|
252 | 255 | ||||||||||||
|
Consulting (1)
|
252 | 255 | ||||||||||||
|
Europe & Asia Pacific (2)
|
250 | 254 | ||||||||||||
|
Outsourced Services (1)
|
252 | 255 | ||||||||||||
|
All Other (1)
|
252 | 255 | ||||||||||||
(1) This represents the number of business days in the U.S.
(2) The business days in international regions represent the weighted average number of business days.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist us in assessing our core operating performance. We also believe these measures provide investors with a useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period. The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net loss and net loss margin, the most directly comparable GAAP financial measures (in thousands, except percentages).
| For the Years Ended | |||||||||||||||||||||||||||||||||||
|
May 30, 2026 |
% of
Revenue (1)
|
May 31, 2025 |
% of
Revenue (1)
|
May 25, 2024 |
% of Revenue (1) |
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| Net income (loss) | $ | (40,601) | (9.0) | % | $ | (191,780) | (34.8) | % | $ | 21,034 | 3.3 | % | |||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization expense | 3,829 | 0.8 | 5,880 | 1.1 | 5,378 | 0.9 | |||||||||||||||||||||||||||||
| Depreciation expense | 1,325 | 0.3 | 1,868 | 0.3 | 3,050 | 0.5 | |||||||||||||||||||||||||||||
| Interest income, net | (615) | (0.1) | (544) | (0.1) | (1,064) | (0.2) | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,458 | 0.5 | (4,295) | (0.8) | 8,795 | 1.4 | |||||||||||||||||||||||||||||
| EBITDA | (33,604) | (7.5) | (188,871) | (34.3) | 37,193 | 5.9 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 6,356 | 1.4 | 6,754 | 1.2 | 5,732 | 0.9 | |||||||||||||||||||||||||||||
|
Amortized ERP system costs (2)
|
2,807 | 0.6 | 1,287 | 0.2 | - | - | |||||||||||||||||||||||||||||
|
Technology transformation costs (3)
|
- | - | 5,474 | 1.0 | 6,901 | 1.1 | |||||||||||||||||||||||||||||
|
Acquisition costs (4)
|
1,667 | 0.4 | 2,763 | 0.5 | 1,970 | 0.3 | |||||||||||||||||||||||||||||
|
Goodwill impairment (5)
|
- | - | 194,409 | 35.3 | - | - | |||||||||||||||||||||||||||||
|
Gain on sale of assets (6)
|
- | - | (3,420) | (0.6) | - | - | |||||||||||||||||||||||||||||
|
Restructuring costs (7)
|
8,446 | 1.9 | 5,061 | 0.9 | 4,087 | 0.6 | |||||||||||||||||||||||||||||
|
Executive transition costs (8)
|
12,232 | 2.7 | - | - | - | - | |||||||||||||||||||||||||||||
|
Sitrick related transaction costs (9)
|
7,142 | 1.6 | - | - | - | - | |||||||||||||||||||||||||||||
|
Contingent consideration adjustment (10)
|
- | - | - | - | (4,400) | (0.7) | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 5,046 | 1.1 | % | $ | 23,457 | 4.3 | % | $ | 51,483 | 8.1 | % | |||||||||||||||||||||||
(1) The percentage of revenue may not foot due to rounding.
(2) Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to newly implemented ERP system, which was recorded within SG&A expenses on the Consolidated Statements of Operations.
(3) Technology transformation costs represent costs included in net income (loss) related to the Company's initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.
(4) Acquisition costs primarily represent costs included in net income (loss) related to the Company's business acquisition of Reference Point. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms. See Note 3 - Acquisitions and Dispositions in the Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplemental Data" for further discussion.
(5) Goodwill impairment charges recognized during the year ended May 31, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 4 - Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplemental Data" for further discussion.
(6) Gain on sale of assets was related to the Company's sale of its Irvine office building, which was completed on August 15, 2024.
(7) Restructuring costs during the year ended May 30, 2026 include employee termination costs incurred in workforce reductions, impairment of ROU asset, and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs for the year ended May 31, 2025 related to the Company's global cost reduction plan, including a reduction in force intended to reduce costs and streamline operations, which were authorized in December 2024 and May 2025 (the "2025 Restructuring Plan"). Restructuring costs for the year ended May 25, 2024 related to the Company's cost reduction plan, including a reduction in force, which was authorized in October 2023, and was substantially completed during fiscal 2024 (the "U.S. Restructuring Plan").
(8) Executive transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO and former COO. These costs include $7.6 million of cash severance and $4.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards pursuant to ASC 718 - Compensation - Stock Compensation ("ASC 718").
(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.
(10) Contingent consideration adjustment related to the remeasurement of contingent liabilities related to the acquisition of CloudGo Pte Ltd. and its subsidiaries (collectively, "CloudGo").
Our non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net income (loss) or other measures of financial performance or financial condition prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity. Further, a limitation of our non-GAAP financial measures is they exclude items detailed above that have an impact on our GAAP reported results. Other companies in our industry may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. Because of these limitations, these non-GAAP financial measures should not be considered a substitute but rather considered in addition to performance measures calculated in accordance with GAAP.
Results of Operations
The following table set forth, for the periods indicated, our Consolidated Statements of Operations data. These historical results are not necessarily indicative of future results. Our operating results for the periods indicated are expressed as a percentage of revenue below. The fiscal year ended May 30, 2026 consisted of 52 weeks, the fiscal year ended May 31, 2025 consisted of 53 weeks, and the fiscal year ended May 25, 2024 consisted of 52 weeks (in thousands, except percentages).
| For the Years Ended | |||||||||||||||||||||||||||||||||||
|
May 30, 2026 |
% of
Revenue (1)
|
May 31, 2025 |
% of
Revenue (1)
|
May 25, 2024 |
% of
Revenue (1)
|
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| Revenue | $ | 452,006 | 100.0 | % | $ | 551,331 | 100.0 | % | $ | 632,801 | 100.0 | % | |||||||||||||||||||||||
| Cost of services | 282,326 | 62.5 | 343,907 | 62.4 | 386,733 | 61.1 | |||||||||||||||||||||||||||||
| Gross profit | 169,680 | 37.5 | 207,424 | 37.6 | 246,068 | 38.9 | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 202,791 | 44.9 | 202,024 | 36.6 | 208,864 | 33.0 | |||||||||||||||||||||||||||||
| Goodwill impairment | - | - | 194,409 | 35.3 | - | - | |||||||||||||||||||||||||||||
| Amortization expense | 3,829 | 0.8 | 5,880 | 1.1 | 5,378 | 0.9 | |||||||||||||||||||||||||||||
| Depreciation expense | 1,325 | 0.3 | 1,868 | 0.3 | 3,050 | 0.5 | |||||||||||||||||||||||||||||
| Income (loss) from operations | (38,265) | (8.5) | (196,757) | (35.7) | 28,776 | 4.5 | |||||||||||||||||||||||||||||
| Interest income, net | (615) | (0.1) | (544) | (0.1) | (1,064) | (0.2) | |||||||||||||||||||||||||||||
| Other (income) expense | 493 | 0.1 | (138) | - | 11 | - | |||||||||||||||||||||||||||||
|
Income (loss) before income tax expense (benefit)
|
(38,143) | (8.4) | (196,075) | (35.6) | 29,829 | 4.7 | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,458 | 0.5 | (4,295) | (0.8) | 8,795 | 1.4 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | (40,601) | (9.0) | % | $ | (191,780) | (34.8) | % | $ | 21,034 | 3.3 | % | |||||||||||||||||||||||
(1) The percentage of revenue may not foot due to rounding.
Year Ended May 30, 2026 Compared to Year Ended May 31, 2025
Revenue
Revenue decreased $99.3 million, or 18.0%, to $452.0 million for the year ended May 30, 2026 from $551.3 million for the year ended May 31, 2025. On a same-day constant currency basis, revenue during fiscal 2026 decreased 17.4%, compared to fiscal 2025. Billable hours decreased 17.5% and the average bill rate decreased 0.9% (or 1.5% on a constant currency basis) during the year ended May 30, 2026 compared to the year ended May 31, 2025.
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 as well as longer sales cycle within our Consulting projects. While enterprise average bill rate declined year over year driven by a shift in revenue mix towards regions with lower average bill rates, average bill rates in the U.S. improved by 2.4% reflecting our continued focus on value-based pricing and increased pricing power within our consulting segment as we expand our service capabilities to deliver more impactful solutions.
Cost of Services
Cost of services decreased $61.6 million, or 17.9%, to $282.3 million during fiscal 2026 from $343.9 million for fiscal 2025. The decrease in cost of services was primarily attributable to a 17.5% decline in billable hours and a decrease of 2.4% in the average pay rate during the year ended May 30, 2026.
Cost of services as a percentage of revenue was 62.5% for fiscal 2026 compared to 62.4% for fiscal 2025.
The number of agile consultants on assignment as of May 30, 2026 was 2,026 compared to 2,445 as of May 31, 2025. The average number of salaried consultants as of the year ended May 30, 2026 was 389 compared to 438 as of the year ended May 31, 2025.
Selling, General and Administrative Expenses
SG&A expenses were $202.8 million, or 44.9% of revenue, for the year ended May 30, 2026 compared to $202.0 million, or 36.6% of revenue, for the year ended May 31, 2025. The $0.8 million increase in SG&A expenses year-over-year was primarily attributed to $12.2 million of costs associated with the separation of the Company's former Chief Executive Officer and former COO, and $4.6 million of severance and stock-based compensation expense incurred in connection with the sale of Sitrick, a $3.4 million gain on the sale of the Irvine office building during fiscal 2025 with no comparable activity occurring during fiscal 2026, a $3.4 million increase in restructuring charges primarily related to an additional RIF in fiscal 2026, and a $2.4 million loss on the sale of Sitrick. These increases were largely offset by a $9.5 million decrease in employee compensation and benefits costs following the reduction in force in fiscal 2025 and most recently in connection with the October RIF and the January RIF, a $5.5 million decrease in technology transformation costs primarily associated with the completion of our North America technology implementation during fiscal 2025, a $3.3 million decrease in costs associated with the internal use of consultants that supported various internal business initiatives, a $1.8 million decrease in travel related expenses, a $1.6 million decrease in occupancy expenses, a $1.0 million decrease in acquisition costs a $0.9 million decrease in variable employee compensation as a result of financial performance, a $0.9 million decrease in professional services fees, and a $0.8 million decrease related to other general and administrative costs due to our efforts to achieve an improved cost structure.
Management and administrative headcount was 591 at the end of fiscal 2026 and 662 at the end of fiscal 2025. Management and administrative headcount includes full-time equivalent headcount for our seller-doer group, which is determined by utilization levels achieved by the seller-doers. Any unutilized time is converted to full-time equivalent headcount.
Goodwill Impairment
No goodwill impairment was recorded during fiscal 2026. During the year ended May 31, 2025, there were indicators of potential impairment in each of the fiscal quarters related to a combination of business performance and decline in share price. As a result, the Company conducted four interim quantitative goodwill impairment assessments for each reporting segment during the year ended May 31, 2025, as a result of which the Company recorded an aggregate impairment charge of $194.4 million. See Note 4 - Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further information.
Income Taxes
Income tax expense was $2.5 million (effective tax rate of 6.4%) for the year ended May 30, 2026 compared to income tax benefit of $4.3 million (effective tax rate of 2.2%) for the year ended May 31, 2025.
The income tax expense in fiscal 2026 was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions do not result in a tax benefit due to the existence of valuation allowances. The income tax benefit in fiscal 2025 was primarily attributed to the Company's consolidated pretax loss, reduced by the permanent disallowance of a portion of the goodwill impairment for tax purposes and the establishment of a valuation allowance on the Company's domestic and United Kingdom net deferred tax assets.
We reviewed the components of both book and taxable income to prepare the tax provision. There can be no assurance that our effective tax rate will remain constant in the future due to changes in the mix of income earned or losses incurred in jurisdictions with differing statutory tax rates, changes in the valuation of our deferred tax assets or liabilities, and the fluctuations in our stock price and stock-based compensation expense. Based upon ongoing economic circumstances and our business performance, management has currently reserved against deferred tax assets in our domestic and certain foreign jurisdictions, and will continue to monitor the need to record additional or release existing valuation allowances in the future. Realization of the currently reserved deferred tax assets is dependent upon generating sufficient future taxable income of the appropriate character in the domestic and foreign territories.
As of May 30, 2026, we have recorded an estimated deferred tax liability of approximately $0.2 million in relation to the portion of undistributed earnings that are expected to be repatriated in the foreseeable future. We have maintained the
position of being indefinitely reinvested in the remainder of our foreign subsidiaries' earnings. Management's indefinite reinvestment position is supported by:
•RGP in the U.S. has generated more than enough cash to fund operations and expansion, including acquisitions. RGP uses its excess cash to, at its discretion, return cash to stockholders through dividend payments and stock repurchases.
•RGP has sufficient cash flow from operations in the U.S. to service its debt and other current or known obligations without requiring cash to be remitted from foreign subsidiaries.
•Management's growth objectives include allowing cash to accumulate in RGP's profitable foreign subsidiaries with the expectation of finding strategic expansion plans to further penetrate RGP's most successful locations.
•The consequences of distributing foreign earnings have historically been deemed to be tax-inefficient for RGP or not materially beneficial.
Operating Results of Segments
The Company's operating segments are as follows:
•On-Demand Talent - provides businesses with a go-to source for bringing in experts when they need them, serving predominately the office of the CFO.
•Consulting - drives transformation across people, processes and technology across domain areas including finance, technology and digital, risk and compliance and operational performance.
•Europe & Asia Pacific - a geographically defined segment that offers both on-demand and consulting services (excluding the digital consulting business, which is included in our Consulting segment) to clients throughout Europe & Asia Pacific.
•Outsourced Services - operating under the Countsy by RGPTM brand, this segment offers finance, accounting and human resource services provided to startups, spinouts and scale-up enterprises, utilizing a technology platform and fractional team.
•Sitrick - a crisis communications and public relations firm that provides corporate, financial, transactional and crisis communication and management services.
Each of these segments reports through separate segment managers to the Company's Chief Executive Officer, who is designated as the Chief Operating Decision Maker for segment reporting purposes. The Company's reportable segments are comprised of On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services. Sitrick did not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the "All Other" segment. The Company has presented the results of the All Other segment through the date the sale of Sitrick was completed for the year ended May 30, 2026. Following the sale, the Company received no new income from Sitrick, other than rent received for the sub-lease of office buildings, and had no further involvement or continuing influence over its operations. Each of these segments represents a reporting unit for the purposes of assessing goodwill for impairment.
The following table presents our operating results by segment for years ended May 30, 2026, May 31, 2025, and May 25, 2024 respectively (in thousands). Revenue information by segment, on a GAAP basis and on a same-day constant currency basis, is set forth above under "Non-GAAP Financial Measures - Same Day Constant Currency Revenue."
| For the Years Ended | |||||||||||||||||
|
May 30, 2026 |
May 31, 2025 |
May 25, 2024 |
|||||||||||||||
| Adjusted EBITDA: | |||||||||||||||||
|
On-Demand Talent
|
$ | 14,415 | $ | 17,116 | $ | 31,673 | |||||||||||
| Consulting | 13,502 | 31,718 | 38,420 | ||||||||||||||
| Europe & Asia Pacific | 3,470 | 4,478 | 5,289 | ||||||||||||||
| Outsourced Services | 7,568 | 7,581 | 7,641 | ||||||||||||||
| All Other | (519) | (1,838) | (675) | ||||||||||||||
|
Unallocated items (1)
|
(33,390) | (35,598) | (30,865) | ||||||||||||||
| Adjustments: | |||||||||||||||||
| Stock-based compensation expense | (6,356) | (6,754) | (5,732) | ||||||||||||||
|
Amortized ERP system costs (2)
|
(2,807) | (1,287) | - | ||||||||||||||
|
Technology transformation costs (3)
|
- | (5,474) | (6,901) | ||||||||||||||
|
Acquisition costs (4)
|
(1,667) | (2,763) | (1,970) | ||||||||||||||
|
Goodwill impairment (5)
|
- | (194,409) | - | ||||||||||||||
|
Gain on sale of assets (6)
|
- | 3,420 | - | ||||||||||||||
|
Restructuring costs (7)
|
(8,446) | (5,061) | (4,087) | ||||||||||||||
|
Executive transition costs (8)
|
(12,232) | - | - | ||||||||||||||
|
Sitrick related transaction costs (9)
|
(7,142) | - | - | ||||||||||||||
|
Contingent consideration adjustment (10)
|
- | - | 4,400 | ||||||||||||||
| Amortization expense | (3,829) | (5,880) | (5,378) | ||||||||||||||
| Depreciation expense | (1,325) | (1,868) | (3,050) | ||||||||||||||
| Interest income, net | 615 | 544 | 1,064 | ||||||||||||||
|
Income (loss) before income tax expense (benefit)
|
(38,143) | (196,075) | 29,829 | ||||||||||||||
|
Income tax expense (benefit)
|
(2,458) | 4,295 | (8,795) | ||||||||||||||
|
Net income (loss)
|
$ | (40,601) | $ | (191,780) | $ | 21,034 | |||||||||||
(1) Unallocated items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
(2) Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to newly implemented ERP system, which was recorded within SG&A expenses on the Consolidated Statements of Operations.
(3) Technology transformation costs represent costs included in net income (loss) related to the Company's initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.
(4) Acquisition costs primarily represent costs included in net income (loss) related to the Company's business acquisition of Reference Point. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms. See Note 3 - Acquisitions and Dispositions in the Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplemental Data"for further discussion.
(5) Goodwill impairment charges recognized during the year ended May 31, 2025 were related to the On-Demand Talent, Consulting and Europe & Asia Pacific segments. See Note 4 - Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplemental Data" for further discussion.
(6) Gain on sale of assets was related to the Company's sale of its Irvine office building, which was completed on August 15, 2024.
(7) Restructuring costs during the year ended May 30, 2026 include employee termination costs incurred in workforce reductions, impairment of ROU asset in connection with reduction in office footprint, and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs for the year ended May 31, 2025 related to the 2025 Restructuring Plan. Restructuring costs for the year ended May 25, 2024 related to the Company's cost reduction plan, including a reduction in force, which was authorized in October 2023, and was substantially completed during fiscal 2024.
(8) Executive transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO and former COO. These costs include $7.6 million of cash severance and $4.6 million of non-cash stock compensation expense reflecting the acceleration equity awards pursuant to ASC 718.
(9) Sitrick related transaction costs represent $4.1 million of severance expense incurred in connection with the sale of Sitrick, $2.4 million of loss on the sale of Sitrick, consisting of a $1.5 million non-cash impairment on right-of-use assets and a $0.9 million loss, and $0.6 million of non-cash stock compensation expense reflecting the acceleration of equity awards.
(10) Contingent consideration adjustment related to the remeasurement of contingent liabilities related to the acquisition of CloudGo Pte Ltd. and its subsidiaries (collectively, "CloudGo").
Revenue by Segment
On-Demand Talent - Revenue in the On-Demand Talent segment declined by $37.2 million or 18.1% (17.3% on a constant currency basis), to $168.8 million during the year ended May 30, 2026 compared to $206.0 million during the year ended May 31, 2025 due primarily to a decrease of 19.8% in billable hours partially offset by a 2.1% (or 1.9% on a constant currency basis) increase in average bill rate.
The Company experienced softer demand in traditional accounting and finance roles as clients increasingly adopt AI and automation, although the market for on-demand resourcing showed signs of stabilization in the second half of the fiscal year. The Company remains focused on evolving the on-demand talent base and skillset to align with changing market demand. The improvement in average bill rate was the result of the Company's continued focus on pricing discipline.
Consulting - Revenue in the Consulting segment declined by $59.4 million or 27.1% (26.5% on a constant currency basis), to $159.8 million during the year ended May 30, 2026 compared to $219.2 million during the year ended May 31, 2025. The decline was primarily due to a 31.0% decrease in billable hours, partially offset by a 5.7% (or 5.4% on a constant currency basis) increase in the average bill rate. The decline in billable hours reflected slower sale execution during the fiscal year coupled with longer sales cycles for consulting projects, while average bill rates continue to increase due to pricing discipline and higher value consulting projects.
Europe & Asia Pacific - Revenue in the Europe & Asia Pacific segment declined by $2.5 million or 3.2% (3.7% on a constant currency basis), to $75.1 million during the year ended May 30, 2026 compared to $77.6 million during the year ended May 31, 2025. The decline was primarily due to a 3.8% decrease in billable hours, partially offset by a 0.5% increase in the average bill rate. Adjusting for currency impact, average bill rate decreased by 1.8% year over year, reflecting pricing pressure in Europe.
Outsourced Services - Revenue in the Outsourced Services segment decreased by $0.4 million or 1.0% to $39.2 million during the year ended May 30, 2026 compared to $39.6 million during the year ended May 31, 2025. The decrease is primarily due to a 2.3% decrease in the average bill rate, partially offset by a 0.2% increase in billable hours.
All Other - Revenue in the All Other segment increased by $0.1 million or 1.7% to $9.1 million during the year ended May 30, 2026 compared to $8.9 million during the year ended May 31, 2025
Adjusted EBITDA by Segment
On-Demand Talent - The On-Demand Talent segment's Adjusted EBITDA decreased by $2.7 million or 15.8%, to $14.4 million for the year ended May 30, 2026, compared to $17.1 million for the year ended May 31, 2025. The decrease is attributed to a decrease in gross profit of $13.5 million largely resulting from revenue decline, partially offset by a decrease in segment expenses of $10.8 million. The improvement in SG&A expenses was primarily due to lower employee compensation expense, following our reductions in force in fiscal 2025 and most recently in connection with the January RIF and the October RIF.
Consulting - The Consulting segment's Adjusted EBITDA decreased by $18.2 million or 57.4%, to $13.5 million for the year ended May 30, 2026, compared to $31.7 million for the year ended May 31, 2025. The decrease is attributed to a decrease in gross profit of $24.7 million largely resulting from revenue decline, partially offset by a decrease in segment expenses of $6.5 million. This improvement in SG&A expenses was primarily due to lower employee compensation expense following our reduction in force in fiscal 2025 and most recently in connection with the January RIF and the October RIF.
Europe & Asia Pacific - The Europe & Asia Pacific segment's Adjusted EBITDA decreased by $1.0 million or 22.5%, to $3.5 million for the year ended May 30, 2026, compared to $4.5 million for the year ended May 31, 2025. The decrease is attributed to a decrease in gross profit of $0.7 million and an increase in segment expenses of $0.3 million.
Outsourced Services - The Outsourced Services segment's Adjusted EBITDA of $7.6 million for the year ended May 30, 2026 remained flat compared to the year ended May 31, 2025.
All Other - The All Other segment's Adjusted EBITDA improved by $1.3 million or 71.8% to $(0.5) million for the year ended May 30, 2026 compared to $(1.8) million for the year ended May 31, 2025. The increase is attributed to a decrease in segment expenses of $0.6 million and an increase in gross profit of $0.7 million.
Year Ended May 31, 2025 Compared to Year Ended May 25, 2024
For a comparison of our results of operations at the consolidated level for the years ended May 31, 2025 and May 25, 2024, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 28, 2025 (File No. 0-32113).
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operating activities, our senior secured revolving credit facility (as discussed further below) and historically, to a lesser extent, stock option exercises and purchases under the Company's ESPP. During fiscal 2026, we generated positive cash flow from operations and have generated positive cash flows from operations on an annual basis since inception. Our ability to generate positive cash flows from operations in the future will depend, at least in part, on customer demand and global economic conditions and our ability to remain resilient during periods of deteriorating macroeconomic conditions and any economic downturns. As of May 30, 2026, we had $82.4 million of cash and cash equivalents, including $34.4 million held in international operations.
From November 12, 2021 to July 2, 2025, the Company had a revolving credit facility with Bank of America, N.A., pursuant to the terms of the credit agreement dated November 12, 2021 by the Company and Resources Connection LLC, as borrowers, and all of the Company's domestic subsidiaries, as guarantors, with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the "2021 Credit Facility"). The Company terminated the 2021 Credit Facility on July 2, 2025 and entered into a new credit agreement dated July 2, 2025 by and among the Company and Resources Connection LLC, as borrowers, and all of the Company's domestic subsidiaries, as guarantors, with the lenders that are party thereto and Bank of America, N.A. as administrative agent, L/C issuer and swingline lender (the "2025 Credit Facility") As of May 30, 2026, the Company had no debt outstanding under the 2025 Credit Facility, had $0.7 million of letters of credit outstanding under the 2025 Credit Facility and was not in compliance with all financial covenants under the 2025 Credit Facility as of such date.
The Company terminated the 2025 Credit Facility on July 13, 2026 and on July 15, 2026, the Company and Resources Connection LLC, as borrowers, and all of the Company's other domestic subsidiaries, as guarantors, entered into a Revolving Credit, Guaranty and Security Agreement with the lenders that are party thereto and PNC Bank, National Association, as agent for the Lenders (the "2026 Credit Facility"). See Note 19 - Subsequent Events in the Notes to
Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further information regarding the 2026 Credit Facility. As of July 15, 2026, no borrowings were outstanding under the 2026 Credit Facility.
As of May 30, 2026, Resources Global Enterprise Consulting (Beijing) Co., Ltd, (a wholly owned subsidiary of the Company), as borrower, and the Company, as guarantor, had another revolving credit facility with Bank of America, N.A. (Beijing) as the lender (the "Beijing Revolver"). The Company terminated the Beijing Revolver on July 13, 2026. As of May 30, 2026, the Company had no debt outstanding under the Beijing Revolver.
In addition to cash needs for ongoing business operations, from time to time, we have strategic initiatives that could generate significant additional cash requirements. Such costs primarily include software licensing fees and other costs in areas including change management and training. We believe our current cash, ongoing cash flows from our operations and funding available under our 2026 Credit Facility will provide sufficient funds for these initiatives. As of May 30, 2026, we have non-cancellable purchase obligations totaling $9.5 million, which primarily consist of payments pursuant to the licensing arrangements that we have entered into: $3.6 million due during fiscal 2027; $4.6 million due during fiscal 2028; and $1.2 million due during fiscal 2029. We lease office space under non-cancelable operating leases with various expiration dates. See Note 6 - Leases in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for our future minimum commitments related to our operating leases.
We pay a regular quarterly dividend to our stockholders, subject to approval each quarter by our Board of Directors. Most recently, on April 28, 2026, our Board of Directors approved a cash dividend of $0.07 per share of our common stock, payable on June 19, 2026 to stockholders of record at the close of business on May 21, 2026. Continuation of the quarterly dividend is at the discretion of the Board of Directors and depends upon our financial condition, results of operations, capital requirements, general business condition, contractual restrictions contained in the 2026 Credit Facility and other agreements, and other factors deemed relevant by our Board of Directors.
As described under "Market Trends and Uncertainties" above, demand for professional services has become increasingly selective, which has resulted in variability in demand across service offerings and uncertain macroeconomic conditions including heightened geopolitical tensions (including the recent Iran conflict), fluctuations in currency exchange rates, recent government and policy changes implemented in the United States, and tariff actions and uncertainties related to trade wars have created significant uncertainty in the global economy, which have adversely impacted, and may continue to adversely impact, our financial results, operating cash flows and liquidity needs. If we are required to raise additional capital or incur additional indebtedness for our operations or to invest in our business, we can provide no assurances that we would be able to do so on acceptable terms or at all. Our ongoing operations and growth strategy may require us to continue to make investments in critical markets and further expand our internal technology and digital capabilities. In addition, we may consider making additional strategic acquisitions or dispositions or initiating additional restructuring initiatives, which could require significant liquidity and adversely impact our financial results due to higher cost of borrowings. We believe that our current cash, ongoing cash flows from our operations and funding available under our 2026 Credit Facility will be adequate to meet our working capital and capital expenditure needs for at least the next 12 months.
Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisitions, we may seek to sell additional equity securities, increase the use of our 2026 Credit Facility, expand the size of our 2026 Credit Facility or raise additional debt. In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or the use of our 2026 Credit Facility. The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders. Our ability to secure additional financing in the future, if needed, will depend on several factors. These include our future profitability and the overall condition of the credit markets. Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
Operating Activities, Fiscal 2026 and 2025
Operating activities provided cash of $1.4 million in fiscal 2026 compared to $18.9 million in fiscal 2025. The cash provided by operations during fiscal 2026 was primarily due to a net loss of $40.6 million, which was partially offset by non-cash adjustments of $27.3 million (resulting primarily from $11.6 million adjustment in non-cash stock-based compensation). Additionally, during fiscal 2026, net favorable changes in operating assets and liabilities totaled $14.8 million, primarily consisting of a $23.4 million decrease in trade accounts receivable, a $3.2 million decrease in income taxes receivable and a $3.2 million decrease in other assets. This favorable change was partially offset by a $12.5 million
decrease in accrued salaries and related obligations, mainly due to the timing of our pay cycle and a $1.8 million decrease in accounts payable and accrued expenses.
During fiscal 2025, cash provided by operations was primarily due to a net loss of $191.8 million, offset by non-cash adjustments of $206.6 million, which included a $194.4 million non-cash goodwill impairment charge. Additionally, during fiscal 2025, net favorable changes in operating assets and liabilities totaled $4.0 million, primarily consisting of a $10.4 million decrease in trade accounts receivable and a $3.1 million increase in accrued salaries and related obligations, mainly due to the timing of our pay cycle. This favorable change was partially offset by a $4.0 million decrease in other liabilities, a $3.6 million increase in prepaid expenses and other assets and a $1.2 million decrease in accounts payable and accrued expenses.
Investing Activities, Fiscal 2026 and 2025
Net cash provided by investing activities was $1.1 million in fiscal 2026 compared to net cash used of $13.6 million in fiscal 2025. Net cash provided by investing activities during fiscal 2026 was primarily related to $1.9 million in net proceeds from the sale of Sitrick assets, partially offset by $0.8 million of cash used for leasehold improvements and computer equipment.
Net cash used in investing activities during fiscal 2025 was primarily related to the net $23.2 million of cash used for the acquisition of Reference Point and $2.7 million of cash used for the development of internal-use software and acquisition of property and equipment, partially offset by the $12.3 million in net proceeds from the sale of the Irvine office building.
Financing Activities, Fiscal 2026 and 2025
Net cash used in financing activities totaled $7.5 million during fiscal 2026 compared to $27.7 million during fiscal 2025. Net cash used in financing activities during fiscal 2026 consisted of cash dividend payments of $9.4 million and $0.3 million of debt issuance costs, which were partially offset by $2.2 million in proceeds received from ESPP share purchases and employee stock option exercises.
Net cash used in financing activities during fiscal 2025 consisted of $13.0 million to purchase 1,382,820 shares of common stock on the open market and cash dividend payments of $18.6 million; these uses were partially offset by $3.9 million in proceeds received from ESPP share purchases and employee stock option exercises.
For a comparison of our cash flow activities for the years ended May 31, 2025 and May 25, 2024, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 28, 2025 (File No. 0-32113).
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements is contained in Note 2 - Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
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