Resources Connection, Inc.: Form 10-Q for the period ended Nov 29, 2025

The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for three and six months ended November 29, 2025 should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended May 31, 2025 filed with the Securities and Exchange Commission (“SEC”).

Forward-Looking Statements

This discussion and analysis contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to expectations concerning matters that are not historical facts. For example, statements discussing, among other things, expectations regarding our operating segments, expectations regarding the macroeconomic environment, expected costs and liabilities, business strategies, growth strategies and initiatives, future revenues and future performance, are forward-looking statements. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “forecast,” “future,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,” “should,” “strategy,” “target,” or “will” or similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” or the negative of these terms or other comparable terminology. In this Quarterly Report on Form 10-Q, such statements include statements regarding our growth, operational and strategic plans.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, these statements and all phases of our operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include, but are not limited to, the following: risks related to an economic downturn or deterioration of general macroeconomic conditions, potential adverse effects to our and our clients' liquidity and financial performances from bank failures or other events affecting financial institutions, the highly competitive nature of the market for professional services, risks related to the loss of a significant number of our consultants, or an inability to attract and retain new consultants, the possible impact on our business from the loss of the services of one or more key members of our senior management or key sales professionals, risks related to potential significant increases in wages or payroll-related costs, our ability to secure new projects from clients, our ability to achieve or maintain a suitable pay/bill ratio, our ability to compete effectively in the competitive bidding process, risks related to unfavorable provisions in our contracts which may permit our clients to, among other things, terminate the contracts partially or completely at any time prior to completion, our ability to realize the level of benefit that we expect from our restructuring initiatives, risks that our recent digital expansion and technology transformation efforts may not be successful, our ability to use artificial intelligence ("AI") and machine learning in our business, our ability to build an efficient support structure as our business continues to grow and transform, our ability to grow our business, manage our growth or sustain our current business, our ability to serve clients internationally, additional operational challenges from our international activities, possible disruption of our business from our past and future acquisitions, the possibility that our recent rebranding efforts may not be successful, our potential inability to adequately protect our intellectual property rights, risks that our computer hardware and software and telecommunications systems are damaged, breached or interrupted, risks related to the failure to comply with data privacy laws and regulations and the adverse effect it may have on our reputation, results of operations or financial condition, our ability to comply with governmental, regulatory and legal requirements and company policies, the possible legal liability for damages resulting from the performance of projects by our consultants or for our clients’ mistreatment of our personnel, risks arising from changes in applicable tax laws or adverse results in tax audits or interpretations, the possible adverse effect on our business model from the reclassification of our independent contractors by foreign tax and regulatory authorities, the possible difficulty for a third party to acquire us and resulting depression of our stock price, the operating and financial restrictions from our credit facility, risks related to the variable rate of interest in our credit facility, the possible impact of activist shareholders, the possibility that we are unable to or elect not to pay our quarterly dividend payment, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 31, 2025, which was filed on July 28, 2025 ("Fiscal Year 2025 Form 10-K") and our other public filings made with the SEC (File No. 0-32113). Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not intend, and undertake no obligation, to update the forward-looking statements in this filing to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law to do so.

References in this filing to “Resources Global Professionals,” the “Company,” “we,” “us,” and “our” refer to Resources Connection, Inc. and its subsidiaries.

Overview

Resources Global Professionals (“RGP,” “we" or “us”) is a global professional services firm based in Dallas, Texas (with offices worldwide) focused on delivering flexible and high-impact solutions to businesses through three integrated offerings, on-demand resourcing, strategic and execution consulting, and fully outsourcing services. As a trusted human capital partner for our clients, we provide CFOs and other C-Suite leaders with the flexibility to solve today's most pressing challenges. Our core capabilities span Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance. We attract top-caliber professionals with in-demand skill sets who seek a workplace environment characterized by choice and control, collaboration and human connection. The trends in today’s marketplace favor flexibility and agility as businesses confront transformation pressures and skilled labor shortages in the face of protracted economic uncertainty. Our engagements are designed to leverage a combination of bench and agile talent that are highly experienced to deliver practical solutions and more impactful results.

The Company operates under the following business units: (i) On-Demand Talent, (ii) Consulting, (iii) Europe & Asia Pacific, (iv) Outsourced Services, and (v) Sitrick (disclosed as "All Other").

Fiscal 2026 Strategic Focus Areas

Building upon the foundation we established in fiscal 2025, we are executing upon the following enterprise growth drivers in fiscal 2026:

• 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; 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 are expanding 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 are focused on broadening client relationships by cross-selling across our diversified service offerings and introducing complementary solutions as client needs evolve. We believe this will enable us to deepen our partnerships with CFOs and 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 the volatile and rapidly shifting global economic environment, CFOs and business leaders need partners who combine expertise with flexibility. We will maintain our commitment to building strong relationships with C-suite leaders, to support their organizations’ transformation journeys with specialized on-demand expertise, high-value consulting, and integrated outsourced delivery. The core solutions we will continue to build, integrate (through Reference Point) and scale 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 will also be keenly focused on evolving 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 – In the face of persistent macro-economic uncertainty and headwinds on client demand, we have prioritized reducing our cost structure and maintaining ongoing cost discipline to deliver improved profitability. During the second quarter of 2026, we began a comprehensive review of our operating model to redesign and streamline our cost structure. In connection with this effort, we acted on certain workforce reductions affecting management and administrative roles, with an expected reduction ranging from $6.0 million to $8.0 million in our annual run rate SG&A. We expect these transformation efforts to continue through the remainder of fiscal 2026, though the scope, timing, and impact of such actions may evolve as the review progresses. Furthermore, we expect to continue to leverage our newly implemented technology to achieve further operating efficiencies.

Further leverage value-based pricing – Building on the progress we made in fiscal 2025, we are continuing 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. Refer to the Company's Current Report on Form 8-K filed with the SEC on November 3, 2025 for additional information regarding the leadership transition and related compensation for Mr. Carlile and Ms. Duchene.

Company Transformation Initiative

In the first half of fiscal 2026, the Company began a transformation initiative to redesign and streamline its operating model to achieve a reduced cost structure, as well as integrating 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. Restructuring costs were $2.9 million for both the three and six months ended November 29, 2025. We expect our transformation efforts to continue through the remainder of fiscal 2026, though the scope, timing, and impact of such actions may evolve as the review progresses.

As we continue to evolve our consulting business to deliver higher value, larger and more complex work, we believe we will improve our ability to command higher bill rates; however, the sales cycle associated with such deal opportunities tends to be more elongated. As a result, revenue in the Consulting segment could be uneven in the near term as we continue to execute our strategy in this part of the business.

Market Trends and Uncertainties

Uncertain macroeconomic conditions including ambiguity around interest rates, softening labor markets, 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, volatility in the capital markets and recessionary pressures, which has adversely impacted our financial results. While we are not able to fully predict the potential impact, we continue to see caution in professional services spending within our client base. If these conditions or impacts persist or if a prolonged economic downturn or recession develops, it could result in a further decline in billable hours or negatively impact our bill rates which would adversely affect our financial results and operating cash flows.

Critical Accounting Policies and Estimates

The following discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial

Statements included in Item 8 of Part II of our Fiscal Year 2025 Form 10-K, and in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

There have been no material changes in our critical accounting policies, or in the estimates and assumptions underlying those policies, from those described under the heading “Critical Accounting Policies and Estimates” in Item 7 of Part II of our Fiscal Year 2025 Form 10-K.

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, CEO transition costs, and other items management believes 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 13 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q 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 management in evaluating revenue trends on a more comparable and consistent basis. We believe this measure also provides more clarity to our investors in evaluating our core operating performance and facilitates a comparison of such performance from period to period.

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).

Revenue by Segment

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(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 management 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).

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(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 a newly implemented ERP system, which was recorded within SG&A expenses on the Consolidated Statement of Operations.

(3) Technology transformation costs represent costs included in net 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 loss related to the Company’s business acquisition. 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 4 – Acquisitions in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q for further discussion.

(5) Goodwill impairment charges recognized during the three and six months ended November 23, 2024 were related to the On-Demand Talent and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q 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 three and six months ended November 29, 2025 represent employee termination costs incurred in the reduction in force and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs during the three and six months ended November 29, 2024 represent costs incurred in connection with the cost reduction plan, including a reduction in force intended to reduce costs and streamline operations (the "U.S. Restructuring Plan"), which was authorized in October 2023 and was substantially completed during fiscal 2024.

(8) CEO transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO. These costs include $5.9 million of cash severance and $3.1 million of non-cash stock compensation expense reflecting the acceleration of expense recognition of equity awards.

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 sets 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 (in thousands, except percentages).

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(1) The percentage of revenue may not foot due to rounding.

Consolidated Operating Results – Three and Six Months Ended November 29, 2025 Compared to Three and Six Months Ended November 23, 2024

Revenue

Three Months Ended

Revenue decreased $27.9 million, or 19.2%, to $117.7 million in the second quarter of fiscal 2026 from $145.6 million in the second quarter of fiscal 2025. On a same-day constant currency basis, revenue decreased by $26.8 million, or 18.4%. Billable hours decreased 18.4% year-over-year, as the Company continues to hone its go-to-market execution for a multi-segment business. The average bill rate for the second quarter of fiscal 2026 decreased 1.2% year over year, or 1.6% on a constant currency basis. While the decrease was driven by a shift in the geographic revenue mix towards regions with lower bill rates, the average bill rate in the U.S. improved by 2.5% compared to the second quarter of fiscal 2025.

Six Months Ended

Revenue decreased $44.6 million, or 15.8%, to $238.0 million for the six months ended November 29, 2025 from $282.6 million for the six months ended November 23, 2024. On a same-day constant currency basis, revenue for the six months ended November 29, 2025 decreased by $45.8 million, or 16.2%, compared to the six months ended November 23, 2024. Billable hours decreased by 16.4%, as the Company continues to hone its go-to-market execution for a multi-segment business. The average bill rate increased by 0.4% (or remained flat on a constant currency basis) from the six months ended November 23, 2024, reflecting progress in our ongoing value-based pricing initiative and a gradual shift to higher-value projects.

Cost of Services

Three Months Ended

Cost of services decreased $15.5 million, or 17.3%, to $74.0 million for the second quarter of fiscal 2026 from $89.5 million in the second quarter of fiscal 2025. The decrease in cost of services was primarily attributable to a 18.4% decline in billable hours and a 3.2% decline in average pay rate.

Cost of services as a percentage of revenue was 62.9% for the second quarter of fiscal 2026 compared to 61.5% for the second quarter of fiscal 2025. While the Company continues to make progress in improving bill rates, cost of service as a percentage of revenue increased compared to the prior year quarter primarily due to higher healthcare expenses under the Company's self-insured medical program, increased holiday pay due to one additional holiday in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025and lower utilization of salaried consultants.

The number of agile consultants on assignment during the second quarter of fiscal 2026 was 2,288 compared to 2,758 during the second quarter of fiscal 2025. The average number of salaried consultants during the second quarter of fiscal 2026 was 400 compared to 527 during the second quarter of fiscal 2025.

Six Months Ended

Cost of services decreased $29.7 million, or 16.8%, to $146.8 million for the six months ended November 29, 2025 from $176.5 million for the six months ended November 23, 2024. The decrease in cost of services was primarily attributable to a 16.4% decline in billable hours and a decrease of 2.0% in the average pay rate in the six months ended November 29, 2025 compared to the six months ended November 23, 2024.

Cost of services as a percentage of revenue was 61.7% for the six months ended November 29, 2025 compared to 62.5% for the six months ended November 23, 2024. The decreased percentage was primarily driven by an improved pay/bill ratio for the six months ended November 29, 2025 compared to the six months ended November 23, 2024.

Selling, General and Administrative Expenses

Three Months Ended

Selling, general and administrative expenses (“SG&A”) were $54.4 million, or 46.2% of revenue, for the second quarter of fiscal 2026 compared to $51.3 million, or 35.2% of revenue, for the second quarter of fiscal 2025. The $3.1 million increase in SG&A year-over-year was primarily driven by $5.9 million in cash severance and $3.1 million in stock-based compensation costs associated with the separation of the Company's former CEO, and a $2.6 million increase in restructuring charges in connection with a reduction in force executed in October 2025. These increases were partially offset by a $2.9 million decrease in employee compensation and benefits costs following the reduction in force in fiscal 2025 and most recently in October 2025, a $0.9 million decrease in costs associated with the internal use of consultants, $0.8 million decrease in variable employee compensation as a result of financial performance, a $2.0 million decrease in technology transformation costs primarily associated with the completion of the Company's North America technology implementation during fiscal 2025, a $0.8 million decrease related to bad debt expense, and a $0.4 million decrease in occupancy expenses. The remaining SG&A reduction was related to various general and overhead costs.

Six Months Ended

SG&A expenses were $102.3 million, or 43.0% of revenue, for the six months ended November 29, 2025 compared to $100.2 million, or 35.5% of revenue, for the six months ended November 23, 2024. The $2.1 million increase in SG&A year-over-year was primarily attributed to $5.9 million and $3.1 million in severance and stock based compensation costs, respectively, associated with the separation of the Company's former CEO, a $3.4 million gain on the sale of the Irvine office building during fiscal 2025 with no comparable activity occurring during fiscal 2026, and a $2.6 million increase in restructuring charges. These increases were partially offset by a $5.2 million decrease in employee compensation and benefits costs following the reduction in force in fiscal 2025 and most recently in October 2025, a $1.1 million decrease in costs associated with the internal use of consultants, a $0.9 million decrease in variable employee compensation as a result of financial performance, a $3.9 million decrease in technology transformation costs primarily associated with the completion of our North America technology implementation during fiscal 2025, a $0.7 million decrease related to bad debt expense, a $0.9 million decrease in acquisition costs, and a $0.7 million decrease in occupancy expenses. The remaining SG&A reduction was related to various general and overhead costs.

Management and administrative headcount was 632 at the end of the second quarter of fiscal 2026 and 754 at the end of the second quarter of fiscal 2025.

Goodwill Impairment

Three and Six Months Ended

No goodwill impairment was recorded during the first or second quarters of fiscal 2026. In the second quarter of fiscal 2025, in light of the decline in the Company's market capitalization, along with slower than expected recovery in business performance within the Company’s On-Demand Talent segment and Europe & Asia Pacific segment, the Company conducted a goodwill impairment analysis and recorded a non-cash impairment charge of $79.5 million in the On-Demand Talent segment. Additionally, during the first quarter of fiscal 2025, the Company completed a goodwill impairment assessment concurrent with its segment change and concluded that the carrying value of the Europe & Asia Pacific segment was in excess of its fair value. As a result, the Company recorded a non-cash impairment charge of $3.9 million. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Income Taxes

Due to the sensitivity of the estimated annual effective tax rate to minor changes in estimated annual pretax results, the Company determined that the discrete method, whereby the year-to-date actual effective tax rate is applied, is the appropriate approach in its current computation of the interim tax provision, as the use of the estimated annual effective tax rate would provide a distortive result.

There can be no assurance that our effective tax rate will remain constant in the future because of factors such as changes in valuation allowance positions of our deferred tax assets and liabilities or changes in tax law or tax rates in jurisdictions that we operate in. Based upon future economic outlook and operating results of certain jurisdictions, it is reasonably possible that the current valuation allowance positions of certain jurisdictions could be adjusted within the next 12 months.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Among other changes, OBBBA makes permanent several expiring provisions from the Tax Cuts and Jobs Act of 2017, restores favorable tax treatment of various business provisions, and modifies the international tax regime. The legislation has varying effective dates, with certain provisions effective retrospectively starting January 1, 2025. The tax effects of the enacted legislation are reflected in the period of enactment ended August 30, 2025, and there was no material impact on our effective tax rate as of November 29, 2025. We will continue to monitor and assess the impact of OBBBA on our consolidated financial statements.

Three Months Ended

Income tax expense was $0.7 million for the second quarter of fiscal 2026, reflecting an effective tax rate of 6.0%, compared to an income tax benefit of $7.7 million, or an effective tax rate of 10.1%, for the second quarter of fiscal 2025. The income tax expense in the quarter ended November 29, 2025 was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions did not result in a tax benefit due to the existence of valuation allowances. The income tax benefit in the quarter ended November 23, 2024 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.

Six Months Ended

Income tax expense was $1.2 million for the six months ended November 29, 2025, reflecting an effective tax rate of 8.6%, compared to an income tax benefit of $6.7 million, or an effective tax rate of 8.2%, for the six months ended November 23, 2024. The income tax expense in the six months ended November 29, 2025 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 the six months ended November 23, 2024 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.

Comparability of Quarterly Results. Our quarterly results have fluctuated in the past and we believe they will continue to do so in the future. Certain factors that could affect our quarterly operating results are described in Item 1A of Part I of our Fiscal Year 2025 Form 10-K and our other public filings made with the SEC. Due to these and other factors, we believe quarter-to-quarter comparisons of our results of operations may not be meaningful indicators of future performance.

Operating Results of Segments

The Company's reportable 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 – is 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 RGP™ 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 and Chief Operating Officer, who are collectively 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 does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the “All Other” segment. 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 the three and six months ended November 29, 2025 and November 23, 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."

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(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 a newly implemented ERP system, which was recorded within SG&A on the Consolidated Statement of Operations.

(3) Technology transformation costs represent costs included in net 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 loss related to the Company’s business acquisition. 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 4 – Acquisitions in the Notes to Consolidated Financial Statements in Item I of Part I of the Quarterly Report on Form 10-Q for further discussion.

(5) Goodwill impairment charges recognized during the three and six months ended November 23, 2024 were related to the On-Demand Talent and Europe & Asia Pacific segments. See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements in Item I of Part I of this Quarterly Report on Form 10-Q 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 three and six months ended November 29, 2025 represent employee termination costs incurred in the reduction in force and non-recurring third-party consulting costs associated with the 2026 Transformation Initiative. Restructuring costs during the three and six months ended November 29, 2024 represent costs incurred in connection with the U.S. Restructuring Plan, which was authorized in October 2023 and was substantially completed during fiscal 2024.

(8) CEO transition costs represent non-recurring costs incurred in connection with the separation of the Company's former CEO. These costs include $5.9 million of cash severance and $3.1 million of non-cash stock compensation expense reflecting the accelerated expense recognition of equity awards during three and six months ended November 29, 2025.

Revenue by Segment

On-Demand Talent – Revenue in the On-Demand Talent segment declined by $10.5 million or 19.5% (18.4% on a constant currency basis), to $43.0 million in the second quarter of fiscal 2026 compared to $53.5 million in the second quarter of fiscal 2025, while billable hours decreased 21.5% and average bill rate increased by 2.6% (or 2.4% on a constant currency basis).

For the six months ended November 29, 2025, On-Demand Talent segment revenue decreased by $18.4 million or 17.4% (17.5% on a constant currency basis), to $87.5 million compared to $105.9 million for the six months ended November 23, 2024, primarily as a result of a 18.7% decrease in billable hours partially offset by a 1.5% (or 1.4% on a constant currency basis) increase in average bill rate.

The decline in billable hours reflected reduced demand in traditional finance roles as clients increasingly adopt artificial intelligence and automation. The improvement of average bill rate was the result of our continued focus on pricing to value.

Consulting – Revenue in the Consulting segment declined by $18.0 million or 29.7% (28.8% on a constant currency basis), to $42.6 million in the second quarter of fiscal 2026 compared to $60.6 million in the second quarter of fiscal 2026 due to a 33.8% decrease in billable hours, partially offset by a 6.6% (or 6.4% on a constant currency basis) increase in the average bill rate largely as a result of the Company’s value-based pricing initiative.

For the six months ended November 29, 2025, Consulting segment revenue decreased by $29.4 million or 25.4% (25.5% on a constant currency basis), to $86.3 million compared to $115.7 million for the six months ended November 23, 2024. The decline was primarily due to a 31.1% decrease in billable hours, partially offset by a 8.7% (or 8.6% on a constant currency basis) increase in the average bill rate.

Europe & Asia Pacific – Revenue in the Europe & Asia Pacific segment increased by $0.4 million or 2.0% (0.6% on a constant currency basis), to $20.1 million in the second quarter of fiscal 2026 compared to $19.7 million in the second quarter of fiscal 2025. The increase was primarily due to a 3.4% (or 2.4% on a constant currency basis) increase in the average bill rate partially offset by a 0.5% decrease in billable hours.

For the six months ended November 29, 2025, Europe & Asia Pacific segment revenue increased by $2.3 million or 6.1% (3.3% on a constant currency basis), to $40.0 million compared to $37.7 million for the six months ended November 23, 2024. The increase was primarily due to a 6.4% (or 3.8% on a constant currency basis) increase in the average bill rate while billable hours remained flat.

The increase in the average bill rate was primarily driven by our value-based pricing initiative and a shift in geographic revenue mix towards Europe, where average bill rates are higher. Billable hours in Europe increased 12.6% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 and 16.5% for the six months ended November 29, 2025 compared to the six months ended November 23, 2024, primarily due to project extensions with key accounts in Europe. Billable hours in the Asia Pacific region decreased 2.9% for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 and 2.7% for the six months ended November 29, 2025 compared to the six months ended November 23, 2024 primarily due to results in China.

Outsourced Services – Revenue in the Outsourced Services segment decreased by $0.1 million or 0.8% to $9.4 million in the second quarter of fiscal 2026 compared to $9.5 million the second quarter of fiscal 2025. Billable hours increased 1.3% and the average bill rate declined 5.0% on a reported basis, primarily due to a higher mix of offshore delivery.

For the six months ended November 29, 2025, Outsourced Services segment revenue increased by $0.4 million or 2.3%, to $19.3 million compared to $18.9 million for the six months ended November 23, 2024, primarily as a result of a 1.7% increase in billable hours partially offset by a 3.6% (also 3.6% on a constant currency basis) decrease in average bill rate year-over-year.

All Other – Revenue in the All Other segment increased by $0.2 million or 10.4% (12.1% on a same-day constant currency basis), to $2.6 million in the second quarter of fiscal 2026 compared to $2.4 million in the second quarter of fiscal 2025. The increase was primarily due to an increase in average bill rate of 2.9% partially offset by a 6.6% decrease in billable hours.

For the six months ended November 29, 2025, All Other segment revenue increased by $0.5 million or 12.6% (also 12.6% on a same-day constant currency basis), to $4.9 million compared to $4.4 million for the six months ended November 23, 2024. The increase was primarily due to an increase in billable hours of 10.6% and an increase in average bill rate of 2.7% (also 2.7% on a constant currency basis).

Adjusted EBITDA by Segment

On-Demand Talent – The On-Demand Talent segment’s Adjusted EBITDA decreased by $1.5 million or 27.5%, to $4.1 million for the second quarter of fiscal 2026, compared to $5.6 million for the second quarter of fiscal 2025. The decrease is primarily attributed to a decrease in gross profit of $5.0 million partially offset by a decrease in segment expenses of $3.5 million.

For the six months ended November 29, 2025, the On-Demand Talent segment’s Adjusted EBITDA increased by $0.3 million or 4.0%, to $8.5 million, compared to $8.2 million for the six months ended November 23, 2024. Compared to the prior year period, SG&A costs decreased by $6.9 million for the six months ended November 29, 2025 as compared to the six months ended November 23, 2024 primarily due to decreases in employee compensation and variable employee compensation as a result of financial performance, following our reduction in force in fiscal 2025 and most recently in October 2025. The improvements in SG&A costs was partially offset by a $6.6 million reduction in gross profit.

Consulting – The Consulting segment’s Adjusted EBITDA decreased by $5.2 million or 54.2%, to $4.5 million for the second quarter of fiscal 2026, compared to $9.7 million for the second quarter of fiscal 2025. The decrease is primarily attributed to a decrease in gross profit of $7.9 million, which was partially offset by a decrease in segment expenses of $2.6 million.

For the six months ended November 29, 2025, the Consulting segment’s Adjusted EBITDA decreased by $8.0 million or 45.7%, to $9.5 million, compared to $17.5 million for the six months ended November 23, 2024. Compared to the prior year period, revenue decreased by $29.4 million, which was partially offset by the decrease in related cost of services of $18.3 million. Additionally, SG&A costs decreased by $3.1 million for the six months ended November 29, 2025 as compared to the six months ended November 23, 2024 primarily due to the decrease in employee compensation expense following our reduction in force in fiscal 2025 and most recently in October 2025.

Europe & Asia Pacific – The Europe & Asia Pacific segment’s Adjusted EBITDA in the second quarter of fiscal 2026 remained relatively flat compared to the second quarter of fiscal 2025.

For the six months ended November 29, 2025, the Europe & Asia Pacific segment’s Adjusted EBITDA increased by $0.6 million or 35.3%, to $2.3 million, compared to $1.7 million for the six months ended November 23, 2024. Compared to the prior year period, gross profit increased $0.8 million. Additionally, SG&A expenses increased by $0.2 million for the six months ended November 29, 2025 as compared to the six months ended November 23, 2024 primarily due to increases in employee compensation expense.

Outsourced Services – The Outsourced Services segment’s Adjusted EBITDA increased by $0.2 million, or 11.2% to $1.7 million in the second quarter of fiscal 2026 compared to $1.5 million for the second quarter of fiscal 2025. The increase is primarily attributed to an increase in gross profit of $0.2 million.

For the six months ended November 29, 2025, the Outsourced services segment's Adjusted EBITDA increased by $1.1 million or 37.7%, to $4.0 million compared to $2.9 million for the six months ended November 23, 2024 due primarily to a $1.2 million in gross profit.

All Other – The All Other segment's Adjusted EBITDA increased by $0.9 million or 167.3% to $0.4 million for the second quarter of fiscal 2026 compared to $(0.5) million for the second quarter of fiscal 2025. The increase is attributed to an increase in gross profit of $0.2 million and a decrease in segment expenses of $0.7 million.

For the six months ended November 29, 2025, the All Other segment's Adjusted EBITDA increased by $1.5 million or 154.1%, to $0.5 million compared to $(1.0) million for the six months ended November 23, 2024 due to the $0.8 million decrease in SG&A costs, resulting primarily from lower bad debt expense, and the $0.7 million increase in gross profit.

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 2019 Employee Stock Purchase Plan, as amended (the "ESPP"). During the six months ended November 29, 2025, we generated positive cash flow from operations and have historically 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 November 29, 2025, we had $89.8 million of cash and cash equivalents, including $40.6 million held in international operations.

Prior 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").

On July 2, 2025, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a credit agreement 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”), and concurrently terminated the 2021 Credit Facility. The 2025 Credit Facility provides for a secured revolving loan, available in an amount up to the lesser of $50.0 million and a borrowing base formula tied to eligible receivables, which includes a $10.0 million sublimit for the issuance of standby letters of credit. The 2025 Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $15.0 million. The 2025 Credit Facility will mature on November 30, 2029. The obligations under the 2025 Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries.

Borrowings under the 2025 Credit Facility bear interest at a rate per annum of either, at the Company's election (i) Term SOFR (as defined in the 2025 Credit Facility) plus a margin ranging from 1.25% to 2.50% or (ii) the Base Rate (as defined in the 2025 Credit Facility), plus a margin of 0.25% to 1.50%, in either case, with the applicable margin depending on the Company's Consolidated EBITDA (as defined in the 2025 Credit Facility). The Company is also obligated to pay other customary facility fees for a credit facility of this size and type.

The 2025 Credit Facility is available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases. Additional information regarding the 2025 Credit Facility is included in Note 7 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Item I of Part I of this Quarterly Report on Form 10-Q.

On November 2, 2022, Resources Global Enterprise Consulting (Beijing) Co., Ltd, (a wholly owned subsidiary of the Company), as borrower, and the Company, as guarantor, entered into a RMB 13.4 million (USD $1.8 million based on the prevailing exchange rate on November 2, 2022) revolving credit facility with Bank of America, N.A. (Beijing) as the lender (the “Beijing Revolver”). The Beijing Revolver bears interest at a loan prime rate plus 0.80%. Interest incurred on borrowings will be payable monthly in arrears. As of November 29, 2025, 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 2025 Credit Facility will provide sufficient funds for these initiatives. As of November 29, 2025, we have non-cancellable purchase obligations totaling $11.5 million, which primarily consist of payments pursuant to the licensing arrangements that we have entered into: $3.6 million due during the remainder of fiscal 2026; $4.2 million due during fiscal 2027; $3.3 million due during fiscal 2028; and $0.4 million due thereafter. The $3.0 million increase in non-cancellable purchase obligations from the first quarter of 2026 is related to the renewal of a three-year licensing arrangement. 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 Item 1 of Part I of this Quarterly Report on Form 10-Q for our future minimum commitments related to our operating leases.

In addition, we pay a regular quarterly dividend to our stockholders, subject to approval each quarter by our Board of Directors. Most recently, on December 12, 2025, we paid a dividend of $0.07 per share of our common stock to stockholders of record at the close of business on November 14, 2025. 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 2025 Credit Facility and other agreements, and other factors deemed relevant by our Board of Directors.

As described under “Market Trends and Uncertainties” above, uncertain macroeconomic conditions including ambiguity around interest rates, softening labor markets, 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, volatility in the capital markets and recessionary pressures, 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 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 2025 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 2025 Credit Facility, expand the size of our 2025 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 2025 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.

Other than as described herein, there have been no material changes to our material cash requirements, including commitments for capital expenditures, described under the heading “Liquidity and Capital Resources” in Item 7 of Part II of our Fiscal Year 2025 Form 10-K.

Operating Activities

Operating activities for the first six months of fiscal 2026 provided cash of $8.1 million compared to $1.5 million of cash provided in the first six months of fiscal 2025. The cash provided by operations for the first six months of fiscal 2026 was primarily driven by net favorable changes in operating assets and liabilities of $10.2 million and non-cash adjustments of $12.9 million (resulting primarily from $7.0 million adjustment in non-cash stock-based compensation).

The net favorable changes in operating assets and liabilities were driven by a $12.7 million decrease in trade accounts receivable, a $6.6 million increase in other liabilities, a $1.5 million decrease in other assets, a $0.9 million decrease in prepaid expenses and other current assets and a $0.4 million decrease in net income taxes receivable. Partially offsetting these favorable changes were a $9.8 million decrease in accrued salaries and related obligations due mainly to the payout of the annual incentive compensation and a $2.1 million decrease in accounts payable and other accrued expenses. The Company incurred a net loss of $15.1 million during the six months ended November 29, 2025.

The cash provided by operations for the first six months of fiscal 2025 was primarily driven by the non-cash adjustments of $83.2 million (primarily due to the non-cash goodwill impairment), which was offset by a net loss of $74.4 million and net unfavorable changes in operating assets and liabilities of $4.4 million. These net unfavorable changes in operating assets and liabilities were driven by a $3.7 million increase in other assets largely related to the investments in our technology implementation, a $2.1 million decrease in other liabilities, a $1.7 million decrease in accounts payable and other accrued expenses, a $1.5 million increase in prepaid expenses and other current assets, and a $0.7 million increase in prepaid income taxes. Offsetting these unfavorable changes were a $1.8 million decrease in trade accounts receivable and a $0.7 million increase in accrued salaries and related obligations, mainly due to the timing of our pay cycle.

Investing Activities

Net cash used in investing activities was $0.4 million for the first six months of fiscal 2026 compared to $12.7 million for the first six months of fiscal 2025. Net cash used in investing activities for the first six months of fiscal 2026 was primarily related to $0.4 million of cash used for leasehold improvements and to acquire computer equipment. Net cash used in investing activities for the first six months of fiscal 2025 was primarily related to $23.0 million of net cash used towards the acquisition of Reference Point and $2.0 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

Net cash used in financing activities was $3.9 million for the first six months of fiscal 2026 compared to $17.4 million for the first six months of fiscal 2025. Net cash used in financing activities during the first six months of fiscal 2026 consisted of cash dividend payments of $4.7 million, which were partially offset by $1.1 million in proceeds received from ESPP share purchases. Net cash used in financing activities during the first six months of fiscal 2025 consisted of $10.0 million to purchase 1,028,315 shares of common stock on the open market and cash dividend payments of $9.4 million; these uses were partially offset by $2.0 million in proceeds received from ESPP share purchases.

Interest Rate Risk. We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under the 2025 Credit Facility that bear interest at a variable market rate.

As of November 29, 2025, we had approximately $89.8 million of cash and cash equivalents and no borrowings under our 2025 Credit Facility. The earnings on cash and cash equivalents are subject to changes in interest rates; however, assuming a constant balance available for investment, a 10% decline in interest rates would reduce our interest income but would not have a material impact on our consolidated financial position or results of operations.

We may become exposed to interest rate risk related to fluctuations in the Term SOFR rate under our 2025 Credit Facility. See “Liquidity and Capital Resources” above and Note 7 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further discussion about the interest rate on our 2025 Credit Facility. As of November 29, 2025, we had no borrowing outstanding and $0.7 million of outstanding letters of credit issued under our 2025 Credit Facility.

Foreign Currency Exchange Rate Risk. For the six months ended November 29, 2025, approximately 20.5% of our revenues were generated outside of the U.S. compared to approximately 18.2% of our revenues for the six months ended November 23, 2024. As a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period. Thus, as the value of the U.S. dollar fluctuates relative to the currencies in our non-U.S.-based operations, our reported results may vary.

Assets and liabilities of our non-U.S.-based operations are translated into U.S. dollars at the exchange rate effective at the end of each monthly reporting period. Approximately 54.8% of our cash and cash equivalents balances as of November 29, 2025 were denominated in U.S. dollars. The remaining amount of approximately 45.2% was comprised primarily of cash balances translated from Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling, This compares to approximately 59.2% of our cash and cash equivalents balances as of May 31, 2025 that were denominated in U.S. dollars and approximately 40.8% that were comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan, and Canadian Dollars. The difference resulting from the translation in each period of assets and liabilities of our non-U.S.-based operations is recorded as a component of stockholders’ equity in accumulated other comprehensive income or loss.

Although we monitor our exposure to foreign currency fluctuations, we do not currently use financial hedges to mitigate risks associated with foreign currency fluctuations including in a limited number of circumstances when we may be asked to transact with our client in one currency but are obligated to pay our consultants in another currency. Our foreign entities typically transact with clients and consultants in their local currencies and generate enough operating cash flows to fund their own operations. We believe our economic exposure to exchange rate fluctuations has not been material. However, we cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future.

Evaluation of Disclosure Controls and Procedures

As required by SEC Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of November 29, 2025. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of November 29, 2025.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended November 29, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes in our risk factors from those disclosed in Item 1A of Part I of our Fiscal Year 2025 Form 10-K, which was filed with the SEC on July 28 2025. See “Risk Factors” in Item 1A of Part I of such Fiscal Year 2025 Form 10-K for a complete description of the material risks we face.