Resources Connection, Inc. (NASDAQ:RGP) Q3 2023 Earnings Conference Call April 4, 2023 5:00 PM ET

Company Participants

Kate Duchene - CEO

Tim Brackney - President & COO

Jenn Ryu - CFO

Conference Call Participants

Mark Marcon - Robert W. Baird

Stephanie Yee - JPMorgan

Marc Riddick - Sidoti

Operator

Good afternoon, ladies and gentlemen, and welcome to the Resources Connection, Inc. Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Joining from management are Kate Duchene, Chief Executive Officer; Tim Brackney, President and Chief Operating Officer; and Jim Ryu -- Jennifer Ryu, Chief Financial Officer. As a reminder, today's conference call is being recorded.

At this time, I would like to remind everyone that management will be commenting on results for the third quarter ending February 25, 2023. They will also refer to certain non-GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today. Today’s press release can be viewed in the Investor Relations section of RGP’s website and also filed today with the SEC.

Also during this call, management may make forward-looking statements regarding plans, initiatives and strategies and anticipated financial performance of the company. Such statements are predictions, and actual event or result may differ materially. Please see the Risk Factors section in RGP’s report on Form 10-K for the year ended May 28, 2022, for a discussion of risks, uncertainties and other factors that may cause the company’s business, results or operation and financial conditions to differ materially from what is expressed or implied by forward-looking statements made during this call.

I would now like to turn the call over to RGP’s CEO, Kate Duchene.

Kate Duchene

Thank you, operator. Good afternoon, everyone. Thanks for being with us. We're pleased to report solid financial performance in Q3 despite the macro environment. We exceeded the high-end of our guidance on top line revenue and gross margin was towards the high-end of our guidance range and at more than a 10-year high for the third quarter. Our SG&A cost containment efforts surpassed guidance expectations as well as we remain focused on delivering value for our shareholders.

Taking a closer look. Q3 revenue was almost $187 million with our digital consulting business Veracity, delivering year-over-year and sequential growth. Gross margin improved 80 basis points over prior year to 38.3% as we continue to roll out our value based pricing initiative. This improvement represents our strongest third quarter performance since 2010. Given that the talent crisis, especially in the professional arena remains acute, we see this pricing initiative as a continuing opportunity to improve both the top line and gross margin.