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Item 7. Management’s Discussion and Analysis

2025-07-28 compared with 2024-07-22 · 302 added, 245 removed, 255 unchanged (68% of the section changed)

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See “Forward Looking Statements” above for further explanation.

Resources Global Professionals (“RGP”) is a global consulting firm based in Irvine, California (with offices worldwide) focused on delivering consulting services that power clients’ operational needs and change initiatives utilizing a combination of bench and on-demand, expert and diverse talent.

As a next-generation human capital partner for our clients, we specialize in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change.

Resources Global Professionals (“RGP”) is a professional services firm based in Dallas, Texas (with offices worldwide) focused on delivering consulting execution services that power clients’ operational needs and change initiatives utilizing a combination of bench and on-demand, expert and diverse talent.

As a next-generation human capital partner for our clients, we specialize in leadership and co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change.

Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, employees’ and partners’ success.

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The trends in today’s marketplace favor flexibility and agility as businesses confront transformation pressures and skilled labor shortages even in the face of protracted economic uncertainty.

Our client engagement and talent delivery model offer speed and agility, strongly positioning us to help our clients transform their businesses and workplaces.

Our client engagement and talent delivery model offers speed and agility, strongly positioning us to help clients transform their businesses and workforce.

Our model is especially relevant at a time where cost reduction initiatives drive an enhanced reliance on a flexible workforce to execute transformational projects.

We are laser-focused on driving long-term growth in our business by seizing favorable macro shifts in workforce strategies and preferences, building an efficient and scalable operating model, and maintaining a distinctive culture and approach to professional services.

Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, building and commercializing our digital engagement platform, enhancing our consulting capabilities in digital transformation to align with market demand, improving operating leverage through pricing, operating efficiency and cost reduction, and driving growth through strategic acquisitions.

Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, enhancing our consulting capabilities in digital transformation to align with market demand, improving operating leverage through pricing, operating efficiency and cost reduction, and driving growth through strategic acquisitions.

We believe our focus and execution on these initiatives will serve as the foundation for growth ahead.

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In fiscal 2025, our strategic focus areas were:

• Transform digitally;

• Amplify brand voice and clarify solution offerings;

• Evolve operating model;

• Migrate to value-based pricing;

• Pursue targeted mergers and acquisitions.

Transform digitally – Our first area of focus was to embrace continued digital transformation to improve operational efficiency, scale business growth, transform stakeholder experience and create long-term sustainability and stockholder value.

In fiscal 2022, we launched a multi-year global technology transformation project which includes replacing our core financial and talent software systems and optimizing our existing systems including Salesforce and Workday Human Capital Management.

We have made significant progress to date and launched a new talent management system in North America in February 2024.

We believe our investment in this important modernization initiative will enhance the experience for all of our core constituents and drive improved financial metrics through automation, better data analytics and faster global collaboration.

Seamless global execution capability will enhance our competitive advantage as a preferred partner for global transformation projects.

Around the end of calendar year 2024, we plan to launch the new enterprise financial system, Workday Financial Management, in North America.

We believe the use of technology platforms to match clients and talent is the future of professional staffing.

HUGO by RGP ® (“HUGO”), our digital engagement platform, allows clients and talent in the professional staffing space to connect, engage and even transact directly.

We completed our pilot in three primary markets – New York/New Jersey, Southern California and Texas, and received positive and encouraging feedback from clients and talent alike.

We are now ready to pursue a more aggressive digital marketing plan to accelerate commercialization and achieve broader adoption.

With the accounting profession losing talent in unprecedented numbers, we believe HUGO offers these professionals a platform to pursue an alternative to the traditional accounting firm career path – one founded on flexibility, choice and career-control.

Over time, we expect to be able to drive volume through the HUGO platform by attracting more small- and medium-sized businesses looking for interim support and by serving a larger percentage of our current interim business, which we believe will not only drive top-line growth but also enhance profitability given the digital self-service model.

Amplify brand voice and clarify solution offerings – Our second focus area for fiscal year 2024 was to sustain effort to enhance and amplify our brand in the marketplace .

We were focused on driving toward a refreshed view of our business, serving clients in three areas:

(1) the core is our white-glove on-demand talent business of deep functional experts that execute mission-critical projects for our clients.

We empower expert, diverse professionals with ultimate career control and offer them access to opportunities to work with top enterprise brands.

Our on-demand talent business also includes HUGO, which focuses on offe ring clients direct access to earlier career Accounting and Finance professionals through a digital self-service model;

(2) our consulting business today consists largely of Veracity, our end-to-end digital transformation firm, and Sitrick and Company, a top crisis communications and public relations firm.

We are actively working to grow our capabilities in the consulting arena both organically and through targeted mergers and acquisitions ("M&A"), with a special focus on digital transformation, financial advisory and operational excellence;

(3) Countsy is our outsourced services business, offering finance, accounting, and HR solutions to venture-backed start-up clients or post carve-out clients through a unique combination of on-demand fractional leadership and a streamlined technology platform.

Our investment in the RGP brand notably includes the development of fresh thought leadership content based on RGP’s own market research studie s.

Evolve operating model – The third area of focus for fiscal 2024 was to continue to evolve our operating model to optimally organize the company in view of the operational efficiencies we are gaining through our global technology transformation initiative and with a view to align resources in the right way to support our strategic vision.

Operating model evolution will also include better definition and structure of our offerings to clearly articulate our value proposition, differentiators versus competition, and client segment focus.

We will be announcing the outcomes of this work in early fiscal 2025.

Migrate to value-based pricing – Fourth, we have made solid progress in evolving and enhancing our pricing strategy towards a value-based approach for our project execution services, which has become a more relevant secular trend.

As we deepen our client relationships and raise our clients’ perception of our ability to add value through our services, we anticipate further increasing bill rates for our services to appropriately capture the value of the talent and solutions delivered.

As part of our pricing strategy implementation, we created more centralized pricing governance, strategy and approach;

we conducted a deep pricing analysis to identify and develop areas that need improvement;

and we instituted new pricing training for all sales, talent and other go-to-market team members.

Through these actions, we have been able to achieve higher bill rates across a majority of the markets in the current fiscal year, which is foundational to drive topline revenue and profitability.

Pursue targeted mergers and acquisitions – Lastly, we have been actively seeking to accelerate growth through strategic M&A that drive additional scale or expand and complement our existing core capabilities, as demonstrated through our acquisition of CloudGo Pte Ltd.

and its subsidiaries (collectively, “CloudGo”) and the recently completed acquisition of Reference Point LLC (“Reference Point”).

Our M&A strategy is focused on expanding our consulting capabilities, with a special interest in financial advisory firms as well as digital transformation firms that serve to add scale and/or accelerate growth for our existing business.

We believe that we are well positioned to grow and scale a boutique consulting firm through access to both our robust enterprise client base and our expansive on-demand talent pool.

As noted above, in November 2023, we acquired CloudGo.

Headquartered in Singapore, CloudGo is a digital transformation firm and a fast growing Elite ServiceNow Partner.

CloudGo has been integrated into Veracity’s digital business and we believe that it will continue to accelerate the expansion of our digital presence across the Asia Pacific region.

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

Additionally, we entered into a Membership Interest Purchase Agreement, dated as of March 27, 2024, and as amended and restated as of June 30, 2024 (the “Reference Point MIPA”) with Reference Point to acquire 100% of the membership interests of Reference Point.

Reference Point is a strategy, management, and technology consulting firm serving the financial services sector and is headquartered in New York.

The acquisition closed on July 1, 2024.

See Note 19 – Subsequent Event in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

• Evolve and execute under our new business segments

• Launch and activate new brand identity;

• Enhance digital and artificial intelligence (“AI”) capabilities

Evolve and execute under our new business segments – Our first area of focus for fiscal 2025 has been to evolve our business by focusing on three core engagement models:

On-Demand Talent, Consulting, and Outsourced Services.

This shift has enabled us to better serve our clients along their transformation journey by providing targeted skill sets, high value consulting services, and outsourced delivery under a single umbrella.

Our approach combines flexibility, best of breed technology, and human-centered design with functional and subject matter expertise.

This fiscal year, we have made tremendous progress in clarifying and operationalizing these models to unlock the cross selling of our diversified capabilities throughout our blue-chip, loyal and longstanding client base.

Our growing consulting capability provides us with deeper visibility into our clients’ transformation agendas to drive greater opportunity 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 expanded 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.

Europe and Asia has continued to operate in the geographic regions as one business segment, serving our clients with consulting capabilities and on-demand experts.

Evolving our business through this reorganization ensures that we are well positioned to execute and succeed as the macro environment recovers.

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Launch and activate new brand – In connection with the evolution of our business segments, we also evolved and aligned our brand identity to clarify to our stakeholders what we do, who we serve, when to call us, and the impact we deliver.

We believe the added brand clarity will strengthen our market position and is a critical part of our long-term value creation.

Enhance digital and AI capabilities – Our third focus area for fiscal 2025 has been continuing to expand and enhance our technology, digital and data capabilities across all business units.

The increased adoption of digital tools, remote work styles, generative AI, and globalization is driving new areas of need within our client base.

We are actively adding skilled on-demand and consulting professionals in areas such as technology migration, data modernization and data privacy, and user experience to proactively meet these evolving client needs.

Our Digital/Technology and Data practices bring together the unique combination of technology transformation and the deep functional expertise within our consulting practice.

We believe this combined offering will uniquely position us to offer our clients integrated end-to-end consulting solutions in the digital arena.

We have historically accelerated growth through strategic acquisitions that drive additional scale or expand and complement our existing core capabilities.

In addition to enhancing our digital and AI capabilities organically, we acquired Reference Point LLC (“Reference Point”) in July 2024, a management consulting firm with deep technology and data capabilities.

We believe the added capabilities from Reference Point has accelerated growth in the existing consulting business and contributed favorably to the execution of our cross selling strategy.

Critical Accounting Policies and Estimates

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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 — Revenues are 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 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.

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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 revenues are recognized over time using the input method based on time incurred as a proportion of estimated total time.

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.

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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.

Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of

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revenues will not occur in subsequent periods.

Changes in estimates would result in cumulative catch-up adjustments and could materially impact our financial results.

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As of May 31, 2025 and May 25, 2024, a valuation allowance of $29.4 million and $8.6 million was established on deferred tax assets totaling $44.4 million and $34.2 million, respectively.

Our income tax for the years ended May 25, 2024, May 27, 2023 and May 28, 2022 was an expense of $8.8 million, $18.3 million and $15.8 million, respectively.

Our income tax for the years ended May 31, 2025, May 25, 2024 and May 27, 2023 was a benefit of $4.3 million, an expense of $8.8 million, and an expense of $18.3 million, respectively.

As of May 31, 2025 and May 25, 2024, our total liability for unrecognized tax benefits was $1.1 million and $1.0 million, respectively.

Stock-based compensation — Under our 2020 Performance Incentive Plan, officers, employees, and outside directors have received or may receive grants of restricted stock awards, restricted stock units, performance stock units, options to purchase common stock or other stock or stock-based awards.

Under our ESPP, eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan.

During fiscal 2024, the Company issued performance stock unit awards under the 2020 Performance Incentive Plan that will vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period.

Under our 2019 Employee Stock Purchase Plan, as amended (“ESPP”), eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan.

Performance stock unit awards granted under the 2020 Performance Incentive Plan vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period.

Vesting periods for restricted stock awards, restricted stock units and stock option awards range from three to four years.

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We estimate the fair value of stock-based payment awards on the date of grant as described below.

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The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options.

The impact of expected dividends ($0.14 per share for each quarter during fiscal 2024, 2023, and 2022) is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.

The impact of expected dividends is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.

Such dividends are subject to quarterly Board of Directors’ approval.

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We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, ROU assets outside of exited under the real estate exit initiatives taken, and definite-lived intangible assets.

We determined that for such long-lived assets, no impairment indicators were present as of May 25, 2024, and no impairment charge was recorded during fiscal 2024.

We determined that for such long-lived assets, no impairment indicators were present as of May 31, 2025, and no impairment charge was recorded during fiscal 2025 for long-lived assets.

Estimating future cash flows requires significant judgment, and our projections may vary from the cash flows eventually realized.

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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 a reporting unit’s estimated

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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.

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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 projections and Adjusted EBITDA margin projections.

estimate our discount rates on a blended rate of return considering both debt and equity for comparable guideline public companies.

We forecast our revenue and Adjusted EBITDA margin based on historical experience and internal forecasts about future performance.

The following is a discussion of our goodwill impairment tests performed during fiscal 2024.

2024 Annual Goodwill Impairment Analysis

On the first day of the fourth quarter of fiscal 2024, we performed our annual goodwill impairment assessment on our RGP reporting unit.

During the fourth quarter, we voluntarily changed the date of the annual impairment test from the last day of the fourth quarter to the first day of the fourth quarter.

This voluntary change is preferable under the circumstances as it results in better alignment with our business operating process.

This change was applied prospectively and was not material to the Company’s consolidated financial statements as it did not delay, accelerate or avoid an impairment charge.

We elected to perform a quantitative goodwill impairment analysis using widely accepted valuation techniques as described above to determine if the fair value of any of our reporting unit is less than its respective carrying amount.

Based on our quantitative assessment performed, the fair value of our RGP reporting unit exceed their carrying values and we concluded that there was no goodwill impairment as of February 25, 2024.

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 RGP reporting unit will be consistent with our projections.

We will continue to monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods.

Furthermore, there have been no changes in facts, circumstances or events, since the date of our goodwill impairment test through May 25, 2024 that would give rise to modifying this conclusion regarding our goodwill impairment assessment or require further testing.

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 2024, we voluntarily changed the date of the annual impairment test from the last day of the fourth quarter to the first day of the fourth quarter to better align with our internal operations.

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 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

Business combinations — We allocate the fair value of the purchase consideration of our acquisitions to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values.

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We utilize the Monte Carlo simulation model and estimate fair value of the contingent consideration based on unobservable input variables related to meeting the applicable contingency conditions as per the applicable agreements.

There are no contingent consideration liabilities as of May 25, 2024 and May 27, 2023.

The contingent consideration adjustment was a benefit of $4.4 million and zero, for the years ended May 25, 2024 and May 27, 2023, respectively, and an expense of $0.2 million for the year ended May 28, 2022.

There were no contingent consideration liabilities as of May 31, 2025 and May 25, 2024.

There was no contingent consideration adjustment for the year ended May 31, 2025.

The contingent consideration adjustment was a benefit of $4.4 million for the year ended May 25, 2024.

Market Trends and Uncertainties

On a macro level, 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.

Additionally, in connection with recent actions we have taken to execute on our diversified services strategy for long term growth and stability, we have experienced both voluntary and involuntary attrition, including within our sales team, which have and may continue to affect our near-term revenue performance.

If these conditions or impacts persist or if

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a prolonged economic downturn or recession develops, it could result in further decline in billable hours and negatively impact our bill rates which would adversely affect our financial results and operating cash flows.

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Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to assess our financial and operating performance that are not defined by or calculated in accordance with GAAP.

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.

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.

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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 before amortization expense, depreciation expense, interest and income taxes.

• Adjusted EBITDA is calculated as EBITDA plus or minus stock-based compensation expense, technology transformation costs, goodwill impairment, acquisition costs, restructuring costs, and contingent consideration adjustments.

Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate.

• 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 Enterprise Resource Planning (“ERP”) system costs, technology transformation costs, goodwill impairment, acquisition costs, gain on sale of assets, restructuring costs, and contingent consideration adjustments.

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 of this Annual Report on Form 10-K for further information.

• Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue.

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Same-Day Constant Currency Revenue

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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 geography (In thousands, except number of business days).

Three Months Ended For the Years Ended

Revenue by Geography May 25,

(Unaudited) (Unaudited) (Unaudited, except for GAAP amounts)

North America

As reported (GAAP) $ 126,554 $ 160,999 $ 543,926 $ 680,993

Currency impact (359) (2,153)

Business days impact - -

Same-day constant currency revenue $ 126,195 $ 541,773

As reported (GAAP) $ 8,518 $ 10,757 $ 38,383 $ 42,509

Currency impact (105) (1,687)

Business days impact (109) (639)

Same-day constant currency revenue $ 8,304 $ 36,057

As reported (GAAP) $ 13,126 $ 12,693 $ 50,492 $ 52,141

Currency impact 734 1,915

Business days impact (46) (624)

Same-day constant currency revenue $ 13,814 $ 51,783

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

(Unaudited) (Unaudited)

As reported (GAAP) Currency impact Business days impact Same-day constant currency revenue As reported (GAAP)

On-Demand Talent $ 205,976 $ 959 $ (3,231) $ 203,704 $ 272,600

Consulting 219,215 922 (3,492) 216,645 227,967

Europe and Asia Pacific 77,602 151 (1,214) 76,539 84,207

Outsourced Services 39,618 - (621) 38,997 38,122

All Other 8,920 - (140) 8,780 9,905

Total Consolidated $ 551,331 $ 2,032 $ (8,698) $ 544,665 $ 632,801

As reported (GAAP) $ 148,198 $ 184,449 $ 632,801 $ 775,643

Currency impact 270 (1,925)

Business days impact (155) (1,263)

Same-day constant currency revenue $ 148,313 $ 629,613

Number of Business Days

North America (1)

65 65 251 251

62 61 253 248

Asia Pacific (2)

61 61 248 245

(1) This represents the number of business days in the United States.

For the Years Ended

Number of Business Days May 31,

(Unaudited) (Unaudited)

On-Demand Talent (1)

Consulting (1)

Europe & Asia (2)

Outsourced Services (1)

All Other (1)

(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.

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EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

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We also believe these measures provide investors with 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 income, the most directly comparable GAAP financial measure (in thousands, except percentages).

The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net income (loss) and net income (loss) margin, the most directly comparable GAAP financial measures (in thousands, except percentages).

For the Years Ended

Revenue May 27,

Revenue May 28,

Net income $ 21,034 3.3 % $ 54,359 7.0 % $ 67,175 8.3 %

Net income (loss) $ (191,780) (34.8) % $ 21,034 3.3 % $ 54,359 7.0 %

Amortization expense 5,880 1.1 5,378 0.9 5,018 0.6

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Interest (income) expense, net (544) (0.1) (1,064) (0.2) 552 0.1

Income tax expense 8,795 1.4 18,259 2.4 15,793 2.0

Income tax expense (benefit) (4,295) (0.8) 8,795 1.4 18,259 2.4

EBITDA (188,871) (34.3) 37,193 5.9 81,727 10.5

Stock-based compensation expense 6,754 1.2 5,732 0.9 9,521 1.2

Amortized ERP system costs (2)

1,287 0.2 - - - -

Technology transformation costs (3)

5,474 1.0 6,901 1.1 6,355 0.8

Acquisition costs (4)

2,763 0.5 1,970 0.3 - -

Goodwill impairment (5)

194,409 35.3 - - 2,955 0.4

Acquisition costs (3)

Gain on sale of assets (6)

(3,420) (0.6) - - - -

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Contingent consideration adjustment (8)

- - (4,400) (0.7) - -

Adjusted EBITDA $ 23,457 4.3 % $ 51,483 8.1 % $ 100,194 12.9 %

(1) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management systems.

(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 Selling, General, and Administrative expenses on the Consolidated Statement 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.

(2) The effect of the goodwill impairment charge recognized during the year ended May 27, 2023 was related to the Sitrick operating segment.

(3) Acquisition costs primarily represent one-time costs included in net income related to the Company’s business acquisitions, which include fees paid to the Company’s other professional services firms.

(4) Acquisition costs primarily represent costs included in net income (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 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

(4) The Company initiated the cost reduction plan (the “U.S.

Restructuring Plan”) in October 2023 and substantially completed the U.S.

Restructuring Plan during fiscal 2024.

In addition, the Company substantially completed its global restructuring and business transformation plans in North America, Asia Pacific and Europe in fiscal 2021 and the remaining accrued restructuring liability was released in fiscal 2023.

(5) The effect of the goodwill impairment charge recognized during the year ended May 31, 2025 was related to the On-Demand Talent, Consulting, Europe and Asia Pacific segments and during the year ended May 27, 2023 related to the Sitrick segment.

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(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.

(6) Restructuring costs for the year ended May 31, 2025 related to the 2025 Restructuring Plan, which was authorized in December 2024 and May 2025.

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 2024, and was substantially completed during fiscal 2024.

The restructuring credits for the year ended May 27, 2023 related to the release of accrued restructuring liabilities upon completion of the global restructuring and business transformation plans from fiscal 2021.

(7) 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 or other measures of financial performance or financial condition prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity.

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Our operating results for the periods indicated are expressed as a percentage of revenue below.

The fiscal years ended May 25, 2024, May 27, 2023 and May 28, 2022 all consisted of 52 weeks (in thousands, except percentages).

The fiscal year ended May 31, 2025 consisted of 53 weeks, and the fiscal years ended May 25, 2024 and May 27, 2023 consisted of 52 weeks (in thousands, except percentages).

For the Years Ended

Revenue May 27,

Revenue May 28,

Revenue $ 551,331 100.0 % $ 632,801 100.0 % $ 775,643 100.0 %

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Selling, general and administrative expenses 202,024 36.6 208,864 33.0 228,842 29.5

Amortization expense 5,378 0.9 5,018 0.6 4,908 0.6

Depreciation expense 3,050 0.5 3,539 0.4 3,575 0.4

Goodwill impairment 194,409 35.3 - - 2,955 0.4

Income from operations 28,776 4.5 72,788 9.5 83,438 10.4

Amortization 5,880 1.1 5,378 0.9 5,018 0.6

Depreciation expense 1,868 0.3 3,050 0.5 3,539 0.4

Income (loss) from operations (196,757) (35.7) 28,776 4.5 72,788 9.5

Interest (income) expense, net (544) (0.1) (1,064) (0.2) 552 0.1

Other expense (income) 11 - (382) - (594) (0.1)

Income before income tax expense

Other (income) expense (138) - 11 - (382) -

Income (loss) before income tax expense

(196,075) (35.6) 29,829 4.7 72,618 9.4

Income tax expense 8,795 1.4 18,259 2.4 15,793 2.0

Net income $ 21,034 3.3 % $ 54,359 7.0 % $ 67,175 8.3 %

Income tax (benefit) expense (4,295) (0.8) 8,795 1.4 18,259 2.4

Net income (loss) $ (191,780) (34.8) % $ 21,034 3.3 % $ 54,359 7.0 %

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

Year Ended May 31, 2025 Compared to Year Ended May 25, 2024

Percentage change computations are based upon amounts in thousands.

Fiscal 2024 and fiscal 2023 consisted of 52 weeks.

Revenue decreased $81.5 million, or 12.9%, to $551.3 million for the year ended May 31, 2025 from $632.8 million for the year ended May 25, 2024.

On a same-day constant currency basis, revenue during fiscal 2024 decreased $146.0 million, or 18.8% , compared to fiscal 2023 .

Billable hours decreased 13.8% and the average bill rate declined 4.7% (5.5% on a constant currency basis) during fiscal 2024 compared to fiscal 2023 .

The decrease in billable hours is due to reduced client spending, in part due to uncertainty in the global macroeconomic environment and the lower average bill rate during fiscal 2024 was due to an increasingly competitive pricing environment as well as the ongoing shift in revenue mix to the Asia Pacific region which carries a lower average bill rate.

On a same-day constant currency basis, revenue during fiscal 2025

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decreased $88.1 million, or 13.9% , compared to fiscal 2024 .

Billable hours decrease d 13.5% while the average bill rate remained flat (or increased 0.8% o n a constant currency basis) during fiscal 2025 compared to fiscal 2024 .

The decrease in billable hours is due to reduced client spending, in part due to uncertainty in the global macroeconomic environment, as a result of interest rate ambiguity and softening labor markets, as well as developments in U.S.

trade policy and geo-political conflicts.

To a lesser extent, in connection with recent actions we have taken to execute on our diversified services strategy for long term growth and stability, we have experienced both voluntary and involuntary attrition in the third quarter of fiscal 2025, including within our sales team, which affected our revenue performance and billable hours in the second half of fiscal 2025.

The following table represents our GAAP consolidated revenues by geography (in thousands, except percentages):

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Total $ 551,331 100.0 % $ 632,801 100.0 %

Revenue declined in all geographic regions during fiscal 2024 compared to the same period in fiscal 2023 reflecting reduced client spending across a majority of our markets, client segments and solution offerings as a result of the continued uncertainty in the global macroeconomic environment.

Gross pipeline has soften slightly compared to a year ago;

however, the time to close opportunities in the pipeline continued to be protracted, which is typical in a tougher macro environment when clients are more hesitant and slow down the pace of spend on professional services.

North America was most impacted by these conditions and experienced a revenue decline of 20.1%, or 20.4% on a same-day constant currency

basis, from fiscal 2023.

Europe revenue decreased 9.7%, or 15.2% on a same-day constant currency basis, as compared to fiscal 2023.

Asia Pacific revenue declined 3.2%, or 0.7% on a same-day constant currency basis, compared to fiscal 2023.

Large multinational clients continue to shift work to lower cost markets such as India and the Philippines, creating demand in India and the Philippines, which partially mitigated the impact of softer markets in the rest of Asia Pacific.

In addition, CloudGo, our recent acquisition completed in the second fiscal quarter of 2024, contributed $4.2 million of revenue to the Asia Pacific region.

North America experienced a revenue decline of 14.1% during fiscal 2025 compared to the same period in fiscal 2024.

This North America revenue decline reflected reduced client spending across a majority of these markets, client segments and solution offerings as a result of the continued uncertainty in the global macroeconomic environment.

The time to close opportunities in the pipeline continued to be protracted, which is typical in a tougher macro environment when clients are more hesitant and slow down the pace of spend on professional services.

To a lesser extent, North America revenue also declined due to the voluntary and involuntary attrition in the third quarter that primarily occurred in North America.

This revenue decline was offset by Reference Point, our recent acquisition completed in the first fiscal quarter of 2025, which contributed $16.1 million of North America revenue during fiscal 2025.

Europe revenue decreased 12.0%, during fiscal 2025 compared to fiscal 2024, primarily due to a decrease in billable hours.

Revenue in the Asia Pacific region decreased 0.3% compared to fiscal 2024.

Large multinational clients continue to shift work to lower cost markets in the Asia Pacific region, such as India and the Philippines, creating demand in those geographies, which partially mitigated the impact of softer markets in the rest of Asia Pacific.

Our acquisition of CloudGo, which was completed during the second quarter of fiscal 2024, contributed $6.5 million to Asia Pacific revenue in fiscal 2025 compared to $4.2 million in fiscal 2024 due to the full year impact of the acquisition.

We continued to focus on improving pricing during fiscal 2025.

Despite the competitive pricing environment, the U.S.

and Europe average bill rates increased by 1.4% and 2.7% on a constant currency basis, respectively, compared to the prior year.

Average bill rate in the Asia Pacific region declined by 4.3% on a constant currency basis during fiscal 2024 compared to fiscal 2023 due to a shift in revenue mix to India and the Philippines which have lower average bill rates.

Direct Cost of Services .

Direct cost of services decreased $42.8 million, or 11.1%, to $343.9 million during fiscal 2025 from $386.7 million for fiscal 2024.

The decrease in direct cost of services year over year was primarily attributable to a 13.8% decrease in billable hours as a result of reduced client spending as noted above, and a 4.9% decrease in average pay rate during fiscal 2024 compared to the same period in fiscal 2023 .

Average pay rates decreased as a result of the shift in business mix towards Asia Pacific where pay rates are typically lower.

The decrease in direct cost of services year over year was primarily attributable t o a 13.5% decreas e in billable hours as a result of reduced client spending as noted above, partially offset by a 1.7 % increase in average pay rate during fiscal 2025 compared to the same period in fiscal 2024 .

Direct cost of services as a percentage of revenue was 62.4% for fiscal 2025 compared to 61.1% for fiscal 2024.

The slight increased percentage compared to the prior year was partial ly attributable to a nearly 60 basis point increase in employee health benefit expenses as a percentage of revenue and a 20 basis point increase in the pay/bill ratio.

The increased percentage compared to the prior year period was primarily due to lower utilization of salaried consultants.

We continue to seek improvement in the overall pay/bill ratio and indirect cost leverage through strategic pricing, while offering competitive compensation and benefits to our consultants to attract and retain the best talent in the marketplace.

The number of consultants on assignment at the end of fiscal 2025 was 2,368 compared to 2,585 at the end of fiscal 2024.

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Selling, general and administrative expenses (“SG&A”) was $202.0 million, or 36.6% of revenue, for the year ended May 31, 2025 compared to $208.9 million, or 33.0% of revenue, for the year ended May 25, 2024.

The $20.0 million decrease in SG&A year-over-year was primarily attributed to a reduction in bonuses and commissions by $ 17.1 million, primarily related to lower revenue and profitability achievement compared to incentive compensation targets, a $4.4 million favorable non-cash adjustment on contingent consideration related to the CloudGo acquisition, a decrease of $3.8 m illion in stock-based compensation expense as a result of forfeitures and remeasurement of achievement associated with performance based equity awards, and lower management compensation expense of $3.5 million partially attributable to the U.S.

Restructuring Plan initiated in October 2023.

These reductions were partially offset by $4.5 million related to employee termination benefits in connection with the actions taken under the U.S.

Restructuring Plan during fiscal 2024 , a $2.2 million increase in computer software and certain professional services fees, and $2.0 m illion of acquisition related costs in connection with the acquisitions of CloudGo and Reference Point.

The $6.8 million decrease in SG&A year-over-year was primarily attributed to lower net employee compensation expense of $9.2 million largely resulting from the restructuring plans and ongoing alignment of resource capacity to demand, a $3.4 million gain on the sale of the Irvine office building and a $1.4 million decrease in technology transformation costs.

These reductions were partially offset by a $4.4 million favorable non-cash adjustment on contingent consideration related to the CloudGo acquisition recognized in fiscal 2024, a $1.0 million increase in restructuring costs, $1.0 million increase in stock compensation costs and $1.3 million of amortization related to the newly launched ERP systems in the third fiscal quarter.

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Management and administrative headcount was 687 at the end of fiscal 2025 and 791 at the end of fiscal 2024.

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Any unutilized time is converted to full-time equivalent headcount.

Goodwill Impairment.

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, we performed four interim quantitative goodwill impairment assessments for our reporting units, each of which is also a reporting segment, during the year ended May 31, 2025, from which we recorded an aggregate impairment charge of $194.4 million.

See Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion information.

Contingent Consideration Adjustment.

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decreases may have the opposite effect.

We remeasure our contingent consideration liabilities each reporting period and recognize the change in the liabilities' fair value within the selling, general and administrative expenses in our Consolidated Statements of Operations.

During the year ended May 25, 2024 and May 27, 2023, we recorded $(4.4) million and zero of contingent consideration adjustments, respectively.

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion information.

We remeasure our contingent consideration liabilities each reporting period and recognize the change in the liabilities' fair value within SG&A in our Consolidated Statements of Operations.

During the year ended May 25, 2024, we recorded a $4.4 million reduction in contingent consideration related to our acquisition of CloudGo.

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.

Income Taxes.

I ncome tax expense was $8.8 million (effective tax rate of 29.5%) for the year ended May 25, 2024 compared to $18.3 million (effective tax rate of 25.1%) for the year ended May 27, 2023 .

The higher effective tax rate during fiscal 2024 was attributed primarily to a non-recurring increase in forfeiture of stock options in connection with an employee termination during the fiscal year.

The higher effective tax rate was partially

offset by rate benefits from the nontaxable income on the reversal of CloudGo's contingent liability, a foreign exchange loss as a result of the repatriation of funds from our Japan subsidiary and a partial release of valuation allowance on domestic capital loss carryforwards in relation to the pending sale of the Company's Irvine building.

Additionally, the lower effective tax rate during fiscal 2023 resulted from a number of one-time tax benefits recognized, including the release of valuation allowance in a couple of our foreign subsidiaries .

We recognized a tax benefit of approximately $1.3 million and $2.1 million for the years ended May 25, 2024 and May 27, 2023, respectively, associated with the exercise of nonqualified stock options, vesting of restricted stock awards, restricted stock units, and disqualifying dispositions by employees of shares acquired under the ESPP.

Income tax benefit was $4.3 million (effective tax rate of 2.2%) for the year ended May 31, 2025 compared to income tax expense of $8.8 million (effective tax rate of 29.5%) for the year ended May 25, 2024.

The income tax benefit in fiscal 2025 was primarily attributed to the Company's pretax loss.

The lower effective tax rate in fiscal 2025 was due to the non-deductible portion of the goodwill impairment, coupled with the establishment of valuation allowances on the Company’s domestic and United Kingdom net deferred tax assets.

The effective tax rate in fiscal 2024 was attributed primarily to a non-recurring increase in forfeiture of stock options in connection with an employee termination during the fiscal year, which was partially offset by rate benefits from the nontaxable income on the reversal of CloudGo's contingent liability, a foreign exchange loss as a result of the repatriation of funds from our Japan subsidiary and a partial release of a valuation allowance on domestic capital loss carryforwards in relation to the then-pending sale of the Company's former Irvine building.

We recognized a tax benefit of approximately $1.5 million and $1.3 million for the years ended May 31, 2025 and May 25, 2024, respectively, associated with the exercise of stock options, vesting of restricted stock awards, restricted stock units, performance-based stock units, and disqualifying dispositions by employees of shares acquired under our ESPP.

We reviewed the components of both book and taxable income to prepare the tax provision.

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statutory rate for losses in certain foreign jurisdictions, the limitation on the benefit for losses in jurisdictions in which a valuation allowance for operating loss carryforwards has previously been established, and the unpredictability of timing and the amount of disqualifying dispositions of certain stock options.

Based upon current economic circumstances and our business performance, management will continue to monitor the need to record additional or release existing valuation allowances in the future, primarily related to deferred tax assets in certain foreign jurisdictions and on domestic capital loss carryforwards.

Based upon ongoing economic circumstances and our business performance, along with the recent goodwill impairment charges, 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.

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Management’s indefinite reinvestment position is supported by:

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• RGP in the U.S.

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• The consequences of distributing foreign earnings have historically been deemed to be tax-inefficient for RGP or not materially beneficial.

We repatriated $10.2 million from our Japan subsidiary during fiscal 2024.

Remaining unremitted earnings as of May 25, 2024 in our Japan subsidiary are intended to be indefinitely reinvested in our Japan subsidiary's operations and growth, and no deferred tax liability has been established on the remaining unremitted earnings.

Although we repatriated $2.9 million from our Japan subsidiary during fiscal 2025, the remaining unremitted earnings as of May 31, 2025 in our Japan subsidiary are intended to be indefinitely reinvested in our Japan subsidiary's operations and growth, and no deferred tax liability has been established on the remaining unremitted earnings.

Going forward, the indefinite reversal criteria will apply only to the portion of our Japan subsidiary’s unremitted earnings that are needed for its ongoing operations and growth.

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Operating Results of Segments

Effective May 31, 2022, the Company’s operating segments consist of the following:

• RGP – a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent;

• Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services.

RGP is the Company’s only operating segment that meets the quantitative threshold of a reportable segment.

During the first quarter of fiscal 2025, the Company completed its assessment of the Company's operating segments and identified the following newly defined operating segments:

• On-Demand Talent – this segment provides businesses with a go-to source for bringing in experts when they need them.

• Consulting – this segment drives transformation across people, processes and technology across domain areas including finance, technology and digital, risk and compliance and supply chain transformation.

• 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 and Asia Pacific.

• Outsourced Services – operating under the Countsy by RGP TM 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 a separate segment manager to the Company’s Chief Executive Officer and Chief Operating Officer, who are collectively designated as the CODMs 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 the only entity disclosed in Other Segments for fiscal 2024 and fiscal 2023.

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.

On November 15, 2023, the Company acquired CloudGo.

CloudGo is reported as part of the RGP operating segment.

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

During the first quarter of fiscal 2025, the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker, announced a decision to reorganize the Company’s business by forming multiple discrete operational business units.

To align the new operating model and business structure, the Company is making management organizational changes and implementing new reporting modules and processes to provide discrete information to manage the business.

Management expects to finalize its assessment of its operating segments when the implementations and transitions are completed, which is expected to be in the first quarter of fiscal 2025.

The following table presents our current operating results by segment (in thousands, except percentages):

For the Years Ended

Revenue May 27,

RGP $ 622,895 98.4 % $ 764,511 98.6 %

Other Segments 9,906 1.6 11,132 1.4

Total revenue $ 632,801 100.0 % $ 775,643 100.0 %

On July 1, 2024, the Company acquired Reference Point.

CloudGo and Reference Point are both reported as part of the Consulting reporting segment.

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.

The following table presents our operating results by segment for years ended May 31, 2025, May 25, 2024, and May 27, 2023 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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For the Years Ended

Adjusted EBITDA:

Adj EBITDA May 27,

RGP $ 84,677 164.5 % $ 132,377 132.1 %

Other Segments (676) (1.3) 1,179 1.2

Reconciling Items (1)

On-Demand Talent

$ 17,116 $ 31,673 $ 60,484

Total Adjusted EBITDA (2)

Consulting 31,718 38,420 53,477

Europe & Asia Pacific 4,478 5,289 9,913

Outsourced Services 7,581 7,641 7,408

All Other (1,838) (675) 1,131

Unallocated items (1)

(35,598) (30,865) (32,219)

(1) Reconciling items are generally comprised of u nallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.

(2) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented above under “Non-GAAP Financial Measures.”

Stock-based compensation expense (6,754) (5,732) (9,521)

Amortized ERP system costs (2)

Technology transformation costs (3)

(5,474) (6,901) (6,355)

Acquisition costs (4)

(2,763) (1,970) -

Goodwill impairment (5)

(194,409) - (2,955)

Gain on sale of assets (6)

Restructuring cost (7)

(5,061) (4,087) 364

Amortization expense (5,880) (5,378) (5,018)

Depreciation expense (1,868) (3,050) (3,539)

Contingent consideration adjustment (8)

Interest income, net 544 1,064 (552)

Income (loss) before income tax benefit (expense)

(196,075) 29,829 72,618

Income tax benefit (expense)

4,295 (8,795) (18,259)

Net income (loss)

$ (191,780) $ 21,034 $ 54,359

(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 on the Consolidated Statement of Operations for the year ended May 31, 2025.

(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.

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 included in Part II, Item 8 of this Annual Report on Form 10-K 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 for the year ended May 31, 2025 related to the 2025 Restructuring Plan, which was authorized in December 2024 and May 2025.

Restructuring costs for the year ended May 25, 2024 related to our cost reduction plan, including a reduction in force, which was authorized in October 2024, and was substantially completed during fiscal 2024.

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(8) Contingent consideration adjustment related to the remeasurement of contingent liabilities related to the CloudGo acquisition during the year ended May 25, 2024.

Revenue by Segment

RGP – RGP revenue decreased $141.6 million, or 18.5% to $622.9 million in fiscal 2024 compared to $764.5 million in fiscal 2023, primarily as a result of a 13.8% decrease in billable hours and a 5.5% decrease in average bill rate year over year, as discussed in the consolidated operating results discussion above .

Revenue from RGP represents more than 95% of total consolidated revenue and generally reflects the overall consolidated revenue trend.

The number of consultants on assignment under the RGP segment as of May 25, 2024 was 2,572 compared to 3,131 as of May 27, 2023.

Other Segments – Other Segments’ revenue decreased $1.2 million, or 11.0% , to $9.9 million in fiscal 2024 compared to $11.1 million in fiscal 2023 , primarily as a result of a $1.0 million decline in Sitrick revenue.

Sitrick continued to be affected by delays in court proceedings and more settlements, hindering leads for revenue generation in the business.

The number of consultants on assignment under Other Segments as of May 25, 2024 was 13 compared to 14 as of May 27, 2023.

On-Demand Talent – Revenue in the On-Demand Talent segment declined by $66.6 million or 24.4%, to $206.0 million in fiscal 2025 compared to $272.6 million in fiscal 2024.

The decline was primarily due to lower demand across solution areas amongst economic uncertainty, with billable hours decreasing by 22.7% and a 1.4% (or 1.4% on a constant currency basis) decline in average bill rate.

Demand for interim support remained challenged in the year due in part to the labor market trend with less talent movement across employers, which has historically been a generator for demand in this segment.

Consulting – Revenue in the Consulting segment declined by $8.8 million or 3.8%, to $219.2 million in fiscal 2025 compared to $228.0 million in fiscal 2024.

The decline was primarily due to an 11.0% decrease in billable hours, partially offset by a 7.7% (or 8.5% on a constant currency basis) increase in the average bill rate largely as a result of the Company’s value-based pricing initiative as well as a change in both service and geographic revenue mix.

Additionally, the current year results include the addition of Reference Point (acquired in the first fiscal quarter of 2025), which contributed $16.1 million of revenue during fiscal year 2025.

Europe and Asia Pacific – Revenue in the Europe and Asia Pacific segment declined by $6.6 million or 7.8%, to $77.6 million in fiscal 2025 compared to $84.2 million in fiscal 2024.

The decline was primarily due to a 4.5% decrease in billable hours, as well as a 3.3% (also 3.3% on a constant currency basis) decrease in the average bill rate largely as a result of a shift in geographic revenue mix toward Asia Pacific where bill rates are lower than Europe.

The regions continued to experience delays in decision making and project starts as clients sorted through their own organizational challenges amidst economic uncertainty.

Outsourced Services – Revenue in the Outsourced Services segment increased by $1.5 million or 3.9% to $39.6 million in fiscal 2025 compared to $38.1 million in fiscal 2024.

The increase is primarily due to a 2.3% increase in billable hours, partially offset by a 0.7% decline (or 0.7% on a constant currency basis) decrease in the average bill rate.

All Other – Revenue in the All Other segment declined by $1.0 million or 9.9% to $8.9 million in fiscal 2025 compared to $9.9 million in the prior year.

The billable hours decreased by 16.3%, partially offset by an increase in average bill rate by 8.4%, partially due to lower fee discounts.

Adjusted EBITDA by Segment

RGP – RGP Adjusted EBITDA decreased $47.7 million, or 36.0% , to $84.7 million in fiscal 2024 compared to $132.4 million in fiscal 2023 .

The decrease was primarily attributable to the $ 141.6 million decrease in revenue during fiscal 2024 , which was partially offset by the decrease in the cost of services of $75.5 mi llion and the increase in other income of $0.4 m illion.

Additionally, SG&A costs attributed to RGP decreased $18.8 million during fiscal 2024 as compared to fiscal 2023 primarily due to the decrease in bonuses and commissions of $12.5 million as a result of lower revenue and profitability achievement compared to incentive compensation targets, decreases in management compensation expense of $3.9 million partially due to the U.S.

Restructuring Plan, net of decrease in seller/doer utilization, a $1.8 m illion decrease in bad debt expense, and a $ 0.9 mi llion reduction in recruiting expenses.

These reductions were offset by a $0.3 million increase in all other general and administration expenses to support the business.

During fiscal 2024, the material costs and expenses attributable to the RGP segment that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expenses of $8.3 million and stock-based compensation expense o f $4.5 million.

The trend in revenue, cost of services, and other costs and expenses at RGP year over year are generally consistent with those at the consolidated level, as discussed above, with the exception that the SG&A used to derive segment Adjusted EBITDA does not include certain unallocated corporate administrative costs.

Other Segments – Other Segments’ Adjusted EBITDA declined $1.9 million to $(0.7) million in fiscal 2024 compared to $1.2 million in fiscal 2023 due to lower revenue performance .

For fiscal 2024 , the material costs and expenses attributable to the Other Segments that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expenses of $0.1 million and stock-based compensation expense o f $1.3 million.

On-Demand Talent – The On-Demand Talent segment’s Adjusted EBITDA decreased by $14.6 million or 46.0%, to $17.1 million in fiscal 2025, compared to $31.7 million in fiscal 2024.

The decrease is primarily attributed to the decrease in revenue of $66.6 million as a result of the factors discussed above, partially offset by a decrease in expenses of $11.5 million.

Consulting – The Consulting segment’s Adjusted EBITDA decreased by $6.7 million or 17.4%, to $31.7 million in fiscal 2025, compared to $38.4 million in fiscal 2024.

The decrease is primarily attributed to a decrease in revenue of $8.8 million as a result of the factors discussed above, partially offset by a decrease in expenses of $1.6 million.

Europe and Asia Pacific – The Europe and Asia Pacific segment’s Adjusted EBITDA decreased by $0.8 million or 15.3%, to $4.5 million in fiscal 2025, compared to $5.3 million in fiscal 2024.

The decrease is primarily attributed to a decrease in gross margin of 1.5%, offset by a decrease in expenses of $2.8 million.

Outsourced Services – The Outsourced Services segment’s Adjusted EBITDA of $7.6 million in fiscal 2025 remained relatively flat compared to fiscal 2024.

All Other – The All Other segment's Adjusted EBITDA declined by $1.2 million or 172.3% to $(1.8) million in fiscal 2025 compared to $(0.7) million in fiscal 2024 due to lower revenue performance due to the decrease in billable hours

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Year Ended May 25, 2024 Compared to Year Ended May 27, 2023

For a comparison of our results of operations at the consolidated and segment level for the fiscal years ended May 27, 2023 and May 28, 2022, 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 27, 2023, filed with the SEC on July 25, 2023 (File No.

For a comparison of our results of operations at the consolidated level for the fiscal years ended May 25, 2024 and May 27, 2023, 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 25, 2024, filed with the SEC on July 22, 2024 ( File No.

Due to the change in the Company’s operating segments during the first quarter of fiscal 2025 as described above, we have presented below a comparison of our results of operations at the segment level based on this new segment presentation for the fiscal years ended March 25, 2024 and March 27, 2023.

Revenue by Segment

On-Demand Talent – Revenue in the On-Demand Talent segment declined by $100.1 million or 26.9%, to $272.6 million in fiscal 2024 compared to $372.7 million in fiscal 2023.

The decline was primarily due to lower demand across solution areas, with billable hours decreasing in fiscal 2024.

Demand for interim support remained challenged in fiscal 2024 compared to fiscal 2023 due in part to continued uncertainty in the macroeconomic environment.

Consulting – Revenue in the Consulting segment declined by $32.0 million or 12.3%, to $228.0 million in fiscal 2024 compared to $259.9 million in fiscal 2023.

The decline was primarily due to a decrease in billable hours, partially offset by the acquisition of CloudGo (acquired in the second fiscal quarter of 2024), which contributed $4.2 million of revenue during fiscal year 2024.

Europe and Asia Pacific – Revenue in the Europe and Asia Pacific segment declined by $9.0 million or 9.6%, to $84.2 million in fiscal 2024 compared to $93.2 million in fiscal 2023.

The decline was primarily due to a decrease in the average bill rate as a result of as a result of a shift in revenue mix to regions which have lower average bill rates.

Outsourced Services – .Revenue in the Outsourced Services segment decreased by $0.8 million or 2.1% to $38.1 million in fiscal 2024 compared to $39.0 million in fiscal 2023.

The decrease is primarily due to a 3.3% decrease in billable hours, partially offset by a 4.0% increase in the average bill rate.

All Other – Revenue in the All Other segment declined by $1.0 million or 9.1% to $9.9 million in fiscal 2024 compared to $10.9 million in fiscal 2023.

The decrease is primarily due to a 7.8% decrease in billable hours and a 5.3% decrease in the average bill rate.

Revenue was impacted by delays in court proceedings and more settlements, hindering leads for revenue generation in this segment.

Adjusted EBITDA by Segment

On-Demand Talent –The On-Demand Talent segment’s Adjusted EBITDA decreased by $28.8 million or 47.6%, to $31.7 million in fiscal 2024, compared to $60.5 million in fiscal 2023.

The decrease is primarily attributed to a decrease in gross profit of $45.3 million, partially offset by a decrease in segment expenses of $16.5 million.

Consulting – The Consulting segment’s Adjusted EBITDA decreased by $15.1 million or 28.2%, to $38.4 million in fiscal 2024, compared to $53.5 million in fiscal 2023.

The decrease is primarily attributed to a decrease in gross profit of $17.2 million.

Europe and Asia Pacific – The Europe and Asia Pacific segment’s Adjusted EBITDA decreased by $4.6 million or 46.6%, to $5.3 million in fiscal 2024, compared to $9.9 million in fiscal 2023.

The decrease is primarily attributed to a decrease in gross profit of $3.6 million, as well as an increase in expenses of $1.1 million.

Outsourced Services – The Outsourced Services segment’s Adjusted EBITDA of $7.6 million in fiscal 2024 remained relatively flat compared to $7.4 million in fiscal 2023.

All Other – The All Other segment's Adjusted EBITDA declined by $1.8 million to $(0.7) million in fiscal 2024 compared to $1.1 million in fiscal 2023, primarily due to lower revenue performance due to the decrease in billable hours and average bill rate described above.

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Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operating activities, our $175.0 million senior secured revolving credit facility (as discussed further below) and historically, to a lesser extent, stock option exercises and ESPP purchases.

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 ESPP purchases.

During fiscal 2025, we generated positive cash flow from operations and have generated positive cash flows from operations on an annual basis since inception.

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As of May 31, 2025, we had $86.1 million of cash and cash equivalents, including $39.4 million held in international operations.

On November 12, 2021, the Company and 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 for the lenders (the “Credit Agreement”).

The Credit Agreement provides for a $175.0 million senior secured revolving loan (the “Credit Facility”), which includes a $10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $20.0 million.

The Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $75.0 million, subject to the terms of the Credit Agreement.

The Credit Facility matures on November 12, 2026.

The obligations under the Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries.

Future borrowings under the Credit Facility bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 1.25% to 2.00% or (ii) the Base Rate (as defined in the Credit Agreement), plus a margin of 0.25% to 1.00% with the applicable margin depending on the Company’s consolidated leverage ratio.

In addition, the Company pays an unused commitment fee on the average daily unused portion of the Credit Facility, which ranges from 0.20% to 0.30% depending upon the Company’s consolidated leverage ratio.

Prior to July 2, 2025, the Company had a revolving credit facility with Bank of America, 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 2021 Credit Facility provided for a $175.0 million senior secured revolving loan, including a $10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $20.0 million.

The 2021 Credit Facility also included an option to increase the amount of the revolving loan up to an additional $75.0 million, subject to the terms of the 2021 Credit Facility.

The 2021 Credit Facility was set to mature on November 12, 2026.

The obligations under the 2021 Credit Facility were secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries.

Borrowings under the 2021 Credit Facility bore interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the 2021 Credit Facility) plus a margin ranging from 1.25% to 2.00% or (ii) the Base Rate (as defined in the 2021 Credit Facility), plus a margin of 0.25% to 1.00% with the applicable margin depending on the Company’s consolidated leverage ratio.

In addition, the Company paid an unused commitment fee on the average daily unused portion of the 2021 Credit Facility, which ranged from 0.20% to 0.30% depending upon the Company’s consolidated leverage ratio.

As of May 31, 2025, we had no debt outstanding and $1.0 million of outstanding letters of credit issued under the 2021 Credit Facility.

As of May 31, 2025, there was $174.0 million remaining capacity under the 2021 Credit Facility.

The Credit Facility is available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases.

The 2021 Credit Facility was available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases.

Additional information regarding the 2021 Credit Facility is included in Note 8 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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 ($1.8 million based on the prevailing exchange rate on November 2, 2022) revolving credit facility with Bank of America, N.A.

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 “New Credit Facility”), and concurrently terminated the 2021 Credit Facility.

The New 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 New Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $15.0 million.

The New Credit Facility will mature on November 30, 2029.

The obligations under the New 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 New Credit Facility bear interest at a rate per annum of either, at the Company's election (i) Term SOFR (as defined in the New Credit Facility) plus a margin ranging from 1.25% to 2.50% or (ii) the Base Rate (as defined in the New 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 New Credit Facility).

The Company is also obligated to pay other customary facility fees for a credit facility of this size and type.

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”).

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As of May 31, 2025, the Company had no debt outstanding under the Beijing Revolver.

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In addition to cash needs for ongoing business operations, from time to time, we have strategic initiatives that could generate significant additional cash requirements.

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Such costs primarily include software licensing fees, third-party implementation and consulting fees, incremental costs associated with additional internal resources needed on the project and other costs in areas including change management and training.

The actual amount of investment and the timing will depend on a number of variables, including progress made on the implementation.

As of May 31, 2025, we capitalized $20.8 million related to the technology platform initiative;

in addition, we recorded $5.5 million of expenses relating to these investments during fiscal 2025.

As of May 25, 2024, the remaining investments required for this multi-year initiative is estimated to be in the range of $10.0 million to $20.0 million.

We expect a large portion of the remaining investment will take place in fiscal 2025.

In addition to our technology transformation initiative, we expect to continue to invest in digital pathways to enhance the experience and touchpoints with our end users, including current and prospective employees (consultants and management employees) and clients.

Such efforts will require additional cash outlay and could further elevate our capital expenditures in the near term.

We launched the new technology platform in most of North America in December 2024.

We believe our current cash, ongoing cash flows from our operations and funding available under our Credit Facility will provide sufficient funds for these initiatives.

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$2.9 million due during fiscal 2027;

$2.1 million due during fiscal 2027;

and $1.4 million due thereafter.

In addition, we pay a regular quarterly dividend to our stockholders, subject to approval each quarter by our Board of Directors.

Most recently, on June 13, 2024 we paid a dividend of $0.14 per share of our common stock to stockholders of record at the close of business on May 16, 2024.

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 Credit Facility and other agreements, and other factors deemed relevant by our Board of Directors.

Most recently, on April 29, 2025, our Board of Directors approved a cash dividend of $0.07 per share of our common stock, payable on July 21, 2025 to stockholders of record at the close of business on June 23, 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 New Credit Facility and other agreements, and other factors deemed relevant by our Board of Directors.

On November 15, 2023, the Company acquired CloudGo pursuant to the terms of a Share Purchase Agreement entered into by and between the Company, CloudGo, and the shareholders of CloudGo (the “CloudGo SPA”).

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See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

The Company entered into a Membership Interest Purchase Agreement, dated as of March 27, 2024, and as amended and restated as of June 30, 2024 (the “Reference Point MIPA”) with Reference Point LLC (“Reference Point”) and the sole member of Reference Point, pursuant to which the Company agreed to acquire 100% of the membership

interests of Reference Point.

See Note 19 – Subsequent Event in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

Uncertain macroeconomic conditions and increases in interest rates 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.

On July 1, 2024, the Company entered into an Amended and Restated Membership Interest Purchase Agreement (the “Reference Point MIPA”) with Reference Point and the holder of all the outstanding membership interests of Reference Point, in which the Company acquired 100% of the membership interests of Reference Point.

The Company paid cash consideration of $23.2 million (net of $0.2 million cash acquired).

See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

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.

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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 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 Credit Facility, expand the size of our 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 Credit Facility.

We believe that our current cash, ongoing cash flows from our operations and funding available under our New 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 New Credit Facility, expand the size of our New 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 New Credit Facility.

The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders.

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Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.

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Operating Activities, Fiscal 2025 and 2024

Operating activities provided cash of $18.9 million in fiscal 2025 compared to $21.9 million in fiscal 2024.

The cash provided by operations during fiscal 2025 was primarily due to a net loss of $191.8 million, offset by non-cash adjustments of $200.8 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 $9.9 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, and a $1.9 million change in other liabilities.

This favorable change was partially offset by a $3.6 million increase in prepaid expenses and other assets and a $1.2 million decrease in accounts payable and accrued expenses.

During fiscal 2024, cash provided from operations resulted from net income of $21.0 million and non-cash adjustments of $11.2 million.

Additionally, during fiscal 2024, net unfavorable changes in operating assets and liabilities totaled $10.4 million, primarily consisting of a $24.5 million decrease in accrued salaries and related obligations, mainly due to the timing of our pay cycle and the payout of the annual incentive compensation during fiscal 2024, a $9.9 million increase in other assets largely related to the investments in our technology implementation, a $3.3 million increase in prepaid income taxes, a $1.9 million decrease in other liabilities, and a $0.8 million increase in prepaid expenses and other assets.

These unfavorable changes are partially offset by a $29.6 million decrease in trade accounts receivable.

In fiscal 2023, cash provided by operations resulted from net income of $54.4 million and non-cash adjustments of $12.8 million.

Additionally, net favorable changes in operating assets and liabilities totaled $14.5 million, primarily consisting of a $30.0 million decrease in income taxes (which included $35.5 million in U.S.

federal income tax refunds including interest income), a $13.6 million decrease in trade accounts receivable and a $1.6 million increase in accounts payable and other accrued expenses.

These favorable changes are partially offset by a $21.5 million decrease in accrued salaries and related obligations, mainly due to the timing of our pay cycle and the payout of the annual incentive compensation during fiscal 2023, a $5.3 million decrease in other liabilities and a $4.1 million increase in other assets attributed primarily to the capitalized cost of implementing our technology transformation.

Investing Activities, Fiscal 2025 and 2024

Net cash used in investing activities was $8.6 million in fiscal 2024 compared to net cash provided of $3.9 million in fiscal 2023.

Net cash used in investing activities during fiscal 2024 was primarily related to the acquisition of CloudGo and costs incurred for the development of internal-use software and acquisition of property and equipment.

Net cash provided by investing activities during fiscal 2023 was primarily related to the cash proceeds from the divestiture of taskforce partially offset by the costs incurred for the development of internal-use software and acquisition of property and equipment.

Net cash used in investing activities was $13.6 million in fiscal 2025 compared to net cash used of $8.6 million in fiscal 2024.

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.

Net cash used in investing activities during fiscal 2024 was primarily related to the net $7.4 million acquisition of CloudGo and $1.1 million of costs incurred for the development of internal-use software and acquisition of property and equipment.

Financing Activities, Fiscal 2025 and 2024

The primary sources of cash in financing activities are borrowings under our Credit Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.

The primary uses of cash in financing activities are repayments under the Credit Facility, payment of contingent consideration, repurchases of our common stock and cash dividend payments to our stockholders.

Net cash used in financing activities totaled $20.7 million fiscal 2024 compared to $71.9 million during fiscal 2023.

Net cash used in financing activities during fiscal 2024 consisted of cash dividend payments of $18.8 million and $8.0 million to purchase 606,254 shares of common stock on the open market;

For the past three fiscal years, the primary sources of cash in financing activities are borrowings under our 2021 Credit Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.

The primary uses of cash in financing activities are repayments under the 2021 Credit Facility, repurchases of our common stock and cash dividend payments to our stockholders.

Net cash used in financing activities totaled $27.7 million during fiscal 2025 compared to $20.7 million during fiscal 2024.

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.

Net cash used in financing activities during fiscal 2023 consisted of net repayments on the Credit Facility of $54.0 million (consisting of $69.0 million of repayments and $15.0 million of proceeds from borrowing), cash dividend payments of $18.8 million, and $15.2 million to purchase 914,809 shares of common stock on the open market.

Net cash used in financing activities during fiscal 2024 consisted of $8.0 million to purchase 606,254 shares of common stock on the open market and cash dividend payments of $18.8 million;

these uses were partially offset by $6.1 million in proceeds received from ESPP share purchases and employee stock option exercises.

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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 of this Annual Report on Form 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis