Resources

Los Angeles firefighters were hampered by a lack of resources for red flag weather conditions in their initial response to the Palisades fire, an internal after-action review report found.

The long-awaited 70-page report, produced by the Los Angeles Fire Department, was released late Wednesday afternoon on the heels of an announcement by federal prosecutors that they had arrested and charged a man with intentionally setting a fire on Jan. 1 that later reignited and became the Palisades fire.

Federal investigators determined that the Jan. 7 fire was a so-called holdover from the Jan. 1 fire, continuing to smolder and burn underground after firefighters thought they had extinguished it. The investigators said that heavy winds six days later caused the underground fire to surface and spread above ground in what became one of the costliest and most destructive disasters in city history.

In its after-action report, the Fire Department listed almost 100 challenges that firefighters faced during the Palisades fire, including an inability to secure the origin of the fire, an ineffective process for recalling firefighters who were off-duty to come back into work, and fire chiefs with little to no experience handling such a major incident. During the initial attack, the report said, most firefighters worked for more than 36 hours without rest.

The report cited a delay in communicating evacuation orders, which resulted in spontaneous evacuations without structured traffic control, causing people to block routes to the fire, the report said. The initial staging area, which was in the path of the evacuation route and the fire, was consumed by flames within 30 minutes, the report said.

The Palisades fire, which started at 10:30 a.m. Jan. 7, was one of the costliest and most destructive disasters in city history, leveling thousands of homes and killing 12 people.

A Times investigation found that LAFD officials did not pre-deploy any engines to the Palisades ahead of the fire, despite warnings about extreme weather. In preparing for the winds, the department staffed up only five of more than 40 engines available to supplement the regular firefighting force.

Those engines could have been pre-positioned in the Palisades and elsewhere, as had been done in the past during similar weather.

This is a developing story and will be updated.

Image source: The Motley Fool.

Date

Oct. 8, 2025 at 5 p.m. ET

Call participants

Chief Executive Officer — Kate W. Duchene

Chief Financial Officer — Jennifer Y. Ryu

Chief Operating Officer — Bhadreskumar Patel

Need a quote from a Motley Fool analyst? Email [email protected]

Takeaways

Revenue — $120.2 million in revenue for the fiscal first quarter ended Aug. 31, 2025, with outsourced services revenue up 4% year-over-year.

Gross margin — Gross margin was 39.5% for the fiscal first quarter ended Aug. 31, 2025. This was 300 basis points higher than the prior year quarter and significantly better than the high end of the company’s outlook range, supported by improved bill rates, benefits cost reductions, and higher consulting utilization.

Adjusted EBITDA — Adjusted EBITDA was $3.1 million.

On-demand segment — Revenue was $44.4 million, down 16% from the prior year; however, segment adjusted EBITDA rose to $4.4 million (10% margin), up from $2.6 million and a 4.9% margin in the prior year, driven by cost reduction.

Consulting segment — Revenue was $43.6 million, down 22% year-over-year; segment adjusted EBITDA totaled $5 million (11.6% margin), compared to $7.8 million and a 14.1% margin previously (non-GAAP).

Europe and Asia-Pacific segment — Revenue reached $19.9 million, up 5% year-over-year; segment adjusted EBITDA was $0.8 million (4.2% margin), up from $0.2 million and a 1.3% margin in the prior year.

Outsourced services segment — Revenue totaled $10 million, up 4% year-over-year, with segment adjusted EBITDA of $2.3 million (23.3% margin), compared to $1.4 million and a 14.7% margin in the prior year.

Average bill rate — Enterprise-wide average bill rate was $120 (constant currency), up from $118, while the consulting segment improved 11% from $144 to $160.

SG&A expense — $44.5 million, a 7% decrease from $47.7 million a year ago, due to reductions in management compensation, travel, and occupancy.

Balance sheet — $77.5 million in cash and cash equivalents; zero outstanding debt was reported.

Shareholder returns — Dividend distributions of $2.3 million; $79 million remained under the authorized repurchase program at quarter end.

Q2 revenue outlook — Guidance is $115 million to $120 million, with gross margin expected at 38%-39% and SG&A between $43 million and $45 million.

Annual cost savings — Management expects $6 million to $8 million in annual savings from the reduction in force initiated in early October 2025.

Consulting pricing — On new consulting projects, Patel said, “the value we’re bringing is warranting for us to be able to increase our rates, especially on net new projects,” despite ongoing pricing pressure in lower-value roles.

Summary

Resources Connection (RGP 2.47%) reported quarterly results for the fiscal first quarter ended Aug. 31, 2025, that outperformed its own expectations, credited to gross margin strength and cost controls rather than broad-based revenue growth. The company’s Europe, Asia-Pacific, and outsourced services segments posted year-over-year revenue growth and margin gains, differentiating from softness in U.S. consulting and on-demand. Management highlighted improved average bill rates and pipeline momentum in digital transformation and CFO advisory services, as well as strategic pipeline expansion through increased cross-selling initiatives across business lines.

Chief Financial Officer Jennifer Y. Ryu said business days, not foreign exchange, were the main factor in the reported year-over-year revenue decline, with currency accounting for “about a third of the business day impact.”

Outsourced services (County) is experiencing demand from venture-backed AI, fintech, and divestitures, combined with expanded AI and automation integration to extend client retention beyond early-stage companies.

New leadership was added in CFO advisory, with revenue pipeline described by management as benefiting from “a lot of momentum,” according to Kate W. Duchene, tied to leadership changes and ongoing pipeline development.

Ryu stated that the same day constant currency guide for the fiscal second quarter ending Nov. 30, 2025, implies a 16% decline at the top end of revenue guidance.

Recent board appointments added private equity perspective and transformation expertise, focusing the board on incentives, cross-team collaboration, and bottom-line optimization in a volatile market environment.

Industry glossary

Bill rate: The hourly charge to the client per professional deployed, inclusive of wage costs and overhead.

SG&A: Selling, general, and administrative expenses comprising all non-production operating costs.

Pipeline: The aggregate value or number of prospective client opportunities currently being pursued.

Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding certain one-time or non-cash items.

Constant currency: A metric that removes the impact of exchange rate changes to show financial performance as if foreign currencies had not changed in value.

Full Conference Call Transcript

Kate W. Duchene: Thank you, Operator, and welcome everyone to Resources Connection, Inc.’s Q1 earnings call. We continue to make progress in evolving the company to become more integrated, diversified, and resilient. While the global macro environment remains uncertain, disrupted, and slow-moving for professional services, we are working aggressively to evolve the business to be well-positioned for the upturn. Our activities are producing meaningful progress, which I’ll highlight in Q1. We delivered results better than our outlook for all measures. Revenue was above our outlook range. Gross margin was significantly better and G&A also came in better than our outlook. As a result, we achieved more profit than expected by a significant amount.

While we have more work to do, we have a clear plan to deliver enhanced value creation. Several parts of the business are growing, and I want to highlight those. Europe and Asia-Pacific achieved a solid quarter, delivering 5% growth, and have built a strong pipeline for Q2. Japan and India delivered growth in Q1, again with solid momentum moving into Q2. Revenue from our top ten clients also grew year over year, reflecting the global transformation and transaction work happening in the very large company client segment counts. Grew in Q1 and is busy with strong proposal activity in Q2.

Jen will share more details about our progress, especially around double-digit fill rate improvements in our consulting segment, increasing deal size, and pipeline momentum. These are the indicators that we closely monitor to track our continued progress against our strategic goals. We are engaged in our transformation to deliver more for our clients and colleagues while improving return for our shareholders. We are transforming purposefully to increase our addressable market while becoming known for a focused set of solutions. We’ve taken the company from a professional staffing organization to a diversified platform combining on-demand talent with consulting and outsourced services. We are focused on two critical solution areas across all delivery models: CFO advisory and Digital Transformation.

These services are relevant to every business today, large and small. In these areas, we help our clients drive transformation from strategy through to execution by providing heightened value and impact. Our unique value proposition is built on five key differentiators. First, we bring agility, expertise, and experience. Unlike Big Four and large consultancies, we deploy skilled, analytical consultants paired with highly experienced professionals who can plug into client teams quickly without the heavy overhead, long timelines, or rigid methodologies. Clients value this model when they need execution and results fast, not just advisory. Also, our global Talent Network is unmatched.

Our experienced professionals tend to be mid to senior-level practitioners, with 10 to 20 plus years of experience who have worked in industry, not just consulting, and have operated in our client seats. This makes them credible to the client teams immediately. Second, our diversified services model is a strength. We serve clients across consulting, professional staffing, and managed solutions or outsourcing, giving clients flexibility in how they engage. Few firms combine all three effectively, especially on a global stage like ours. Clients increasingly want more choice, including blended delivery teams that can operate around the world.

In addition, with the US changing the H1-B availability and cost model, our global delivery centers in India and Asia-Pacific allow us to quickly access outstanding global talent without extra complexity or cost. Third, our focus on CFO advisory and digital transformation is right on target for the next several years. We specialize in the high-demand areas of finance transformation, including AI and data, risk and compliance, transaction integration, supply chain optimization, digital and cloud transformation. This is a sweet spot where clients need both deep functional expertise and execution support. Our pipeline of opportunities is growing in the digital finance, ERP, and data space, and we expect that to continue.

We have accordingly upskilled our talent communities to deliver the specialized skills clients need today. Fourth, our diversified model is scalable. Our clients can flex our team up or down depending on project demand. This gives clients more control over cost and outcomes compared with traditional consulting engagements. In today’s macro environment, cost efficiency and flexibility are critical considerations for clients in making procurement decisions. The models of yesterday with large, layered teams or inflexible playbook delivery are declining. This shift will play in our favor because we don’t deliver services with layers of inexperienced generalists or juniors, often learning skills on the client’s dime. We know that much of that work is being actively disrupted by automation and AI.

Our sweet spot is in the delivery of consulting and on-demand, specialized talent that embraces AI and automation to streamline, enhance, and cost optimize the delivery of complex change and transformation work. We take pride in knowing that when our clients demand teams and talent that have been in their shoes and had experienced the problems they faced, we can quickly provide that solution anywhere in the world. In digital finance work, for example, our consultants work collaboratively with modern tools for automating, processing, and analyzing, allowing focus to shift to capturing insights and designing innovative new processes and technical architectures that enable the use of these tools at scale.

As the on-demand environment improves and clients are reintroduced to the capabilities of our GP, today, we believe the market opportunity ahead is significant. The fifth differentiator is our client-centric approach. We partner to truly integrate with client teams. We do not engage as an external firm dictating solutions. Our model is designed to be collaborative, outcome-oriented, and more cost-effective than large consultancies. As one client buyer from a $6 billion enterprise undergoing finance transformation recently shared, Resources Connection, Inc. is positively unique because you deliver strategy when I need it and specialized talent when I need it. You are a trusted partner for both types of services, providing greater control and efficiency as every day brings something new.

Next, I want to comment on the qualitative aspects of our transformation as they are important to unlocking cross-sell and upsell opportunities in our exceptional client base. We are working more collaboratively across the Enterprise’s one GP and are accelerating the integration of our consulting capabilities. The mindset and attitude of our organization have significantly changed to understand the importance of sales, delivery, and talent working together. This mindset shift and accompanying behavioral changes are beginning to produce the right results. In sum, we’re transforming to build a more stable and profitable business. The past three years have been volatile and disrupted, especially in the staffing market.

During this time, we have been building our talent base and solutions to bring to market a new model of consulting that is more affordable, more flexible, and more impactful. Larger consulting projects are already beginning to help us create stickier business and higher-level client relationships. This new playing field and approach will pay dividends quickly in an improving global environment. We’re also building more outsourced services capabilities with County as it fits into our diversification strategy and the CFO and digital agendas. County is an outsourced finance and accounting service, combining automation, AI, and highly specialized fractional CFO talent to serve startups, scale-ups, and divested assets of larger enterprises and private equity firms.

We are currently expanding our offerings to incorporate more AI and automation in these outsourced services, in turn driving growth and longer-term revenue opportunity. We believe we will increase the market opportunity for County in two ways: one, adding clients that are divested assets of larger enterprises or private equity portfolios, and two, by maintaining clients longer as they mature. County is not just a solution for the startup and scale-up stage, but a long-term solution for finance and accounting services for a broader range of clients. For example, County’s newest client base is AI technology and fintech, who want FNA as an outsourced solution long-term.

County also delivers our strongest operating margins, which will continue to benefit our consolidated results and drive shareholder value. Finally, I want to share an update on our cost structure, which we are actively redesigning to fit the current size and scale of the business, our current technology platform, and our diversified services strategy. We are streamlining organizational structure, simplifying processes, embracing automation and AI, and evaluating all functions to ensure they are strategically aligned to what we need today and where we’re headed. We’ve made good progress in reducing our run rate and will continue to do so at a meaningful level.

From a holistic point of view, we will report continued progress throughout the fiscal year as we fully optimize our technology investments to simplify processes and drive efficiency. Jen will share more on our cost structure improvements in a moment. In closing, we have a clear strategy we are executing to allow us to rebound quickly as the demand environment improves. We believe the improvements we are making in the business today will enable us to return to double-digit profitability. Our strengths, including our brand, people, client base, technology, and flexible solutions, will allow us to capitalize on the opportunities ahead, driving long-term shareholder value. With that, I’ll turn it over to Bhadresh.

Bhadreskumar Patel: Thank you and good afternoon, everyone. We are pleased to report another quarter of progress in advancing our transformation strategy, positioning Resources Connection, Inc. at the intersection of professional staffing, consulting, and outsourced services. Our flexible, client-centric offerings continue to resonate with clients, supporting both their transformation and operational priorities. In the first quarter, we delivered results ahead of expectations in both revenue and gross margin. This performance reflects the ongoing stabilization of our operating model, stronger cross-practice collaboration, continued focus on value-based pricing within consulting, and disciplined cost management. Together, these actions are driving stronger bottom-line performance, which Jen will cover in more detail shortly.

Despite the still choppy demand environment that Kate referred to, our pipeline returned to growth during the quarter. Demand is strengthening across CFO advisory and digital transformation, directly aligned to client priorities around cost efficiency and process automation. This demand underscores the alignment between our sales organization and practice leaders, and our positioning at the intersection of staffing, consulting, and outsourced services. Europe and Asia, as well as outsourced services, continue to deliver year-over-year growth. On-demand is stabilizing, and consulting is building pipeline while achieving higher bill rates. We are making targeted investments in leadership and services to further accelerate this momentum. With that, let me turn to our performance by segment.

For the consulting segment, revenue declined year-over-year, but we did achieve revenue growth in a few areas, including ServiceNow, project and change management, and our federal digital offerings. Additionally, we saw meaningful improvement in bill rates and utilization compared to the same quarter last year. And importantly, we’re achieving notably higher bill rate increases on new projects. This validates client demand for our specialized solutions, supports our value-based pricing initiative, and contributed to the gross margin improvement year-over-year. In addition, stronger collaboration between our sales and consulting teams is expanding the pipeline with larger, more strategic transformation opportunities, particularly in our focus areas of CFO advisory and digital transformation.

As Kate mentioned, these areas remain directly relevant to client priorities, but the longer sales cycles and slower project starts in the current environment often translate into elongated revenue conversion. While this impacts near-term quarterly revenue, we believe these engagements represent durable demand that, over time, will translate into meaningful opportunity at increasingly higher margins. Notable wins this quarter include execution of a technology strategy across multiple work streams for a Fortune 500 financial services company, a master data management implementation for a multibillion-dollar food processing company, and employee experience modernization for a large multinational technology company.

On the pipeline side, we added several significant opportunities, including global program management support for a Fortune 500 energy company, finance transformation stabilization pods for cutover support and data validation for a complex, best-in-breed ERP and data platform deployment for a large energy distributor, and transformation advisor and implementation support of the source-to-pay function for an independent business unit of a FTSE 100 global consumer goods company. Many of these wins and pipeline additions are with clients we have historically served through our on-demand talent channel, which is a testament to our unwavering focus on the value of our integrated go-to-market strategy.

Finally, on consulting, as announced in August, I’d like to welcome Scott Rottman as our new leader for CFO advisory. Scott will oversee finance transformation, risk assurance, tax and treasury, and M&A offerings. He brings deep expertise from the Big Four and Morgan Franklin, a boutique transformation-focused consultancy with a proven track record of building practices and trusted teams, and helping clients navigate complex transformation agendas. Turning to on-demand, revenue declined year-over-year, but is showing signs of stabilization over the first quarter, with improved gross margins supported by moderate fill rate increases. After the expected seasonality of summer, the pipeline returned to growth in the quarter, driven by more net new opportunities and continued focus on extension management.

Pivoting away from operational accounting as these roles will continue to be replaced by AI and automation. We remain disciplined in pipeline management and qualification, with a particular focus in the areas of ERP, finance transformation, data, and supply chain, which are more relevant in today’s marketplace. In addition, as we continue to build leadership and capabilities in consulting, we’re increasingly positioning on-demand talent alongside consulting opportunities and engagements. This integrated approach not only strengthens client impact but also creates revenue growth across our service lines. Moving to international, our Europe and Asia segment delivered solid first-quarter year-over-year revenue growth.

Europe and Asia led the way with revenue gains, higher run rates, and stronger bill rates versus last year, underscoring the strength of client relationships and the effectiveness of our regional strategy. Growth in Europe and Asia-Pacific has been driven by a dual focus on deepening multilateral client relationships and expanding our local client base. Demand for our CFO advisory and digital transformation offerings remains strong, and our ability to combine local delivery with scalable global delivery centers continues to differentiate us. Together with management and ongoing optimization initiatives, these actions position us to maintain margins and sustain growth despite longer sales cycles and competitive dynamics. Lastly, on outsourced services, we delivered year-over-year revenue growth with continued gross margin expansion.

We added new clients to our platform while also exhibiting strong retention. While bottom-line performance benefited from both operating leverage and disciplined cost management. While our outsourced services focus continues to be on startups, scale-ups, and spin-outs, we are capitalizing on the broader venture funding environment by targeting venture-backed AI startups, where demand is increasingly robust. At the same time, we are advancing our AI strategy to support a rapidly expanding client base with scalable technology-enabled solutions. This includes enhancing internal tools, evolving our go-to-market approach, and exploring new delivery models such as AI-enabled accounting agents and innovative pricing structures.

To conclude, we remain focused on disciplined execution and delivering meaningful value for our clients as we wait for the demand environment to turn. With a diversified portfolio, strong client relationships, and a winning strategy, we are positioning Resources Connection, Inc. for sustained long-term growth and profitability. With that, I’ll now turn the call over to Jen.

Jennifer Y. Ryu: Thank you and good afternoon, everyone. We delivered strong performance this quarter against our expectations. Revenue of $120.2 million, gross margin of 39.5%, and expense of $44.5 million all beat the favorable end of our outlook ranges. We also delivered improved adjusted EBITDA of $3.1 million, or a 2.5% adjusted EBITDA margin. We’re pleased to see the return to growth in revenue for both our Europe and Asia-Pacific segment, and outdoor services segment, with 5% and 4% growth over the prior year quarter. Revenue within the on-demand and consulting segments continued to be soft as the operating environment in the US remains choppy this quarter.

Our continued focus on the number and quality of client outreaches and meetings, pipeline management, and cross-sell collaboration have yielded growth in the pipeline. Importantly, we believe the positive progress in our key operating metrics will lead to tangible improvement in revenue over time. Turning to profitability metrics, we achieved strong gross margin for the quarter at 39.5%, 300 basis points higher than the prior year quarter, and significantly better than the high end of our outlook range. Contributing to the strong gross margin are one, continued improvement in our average bill rate and expansion of the pay bill spread.

Two, significant reduction in employee benefit costs, including health care costs, holiday, and paid time off, and three, strategic management of our bench consultants. Utilization. Enterprise-wide average bill rate increased to $120 constant currency from $118 a year ago. The improvement came despite the revenue mix weighing more toward the Asia-Pacific region, and of note, we saw an 11% improvement in average bill rate in consulting from $144 to $160. As we continue to execute our pricing strategy and move up the value chain to deliver higher value, larger scale engagement, we expect more upside in bill rates, especially in the consulting business. Now on to SG&A.

Our enterprise run rate, SG&A expense for the quarter was $44.5 million, a 7% improvement from $47.7 million a year ago, primarily driven by lower management compensation expense and reductions in other G&A spend, such as travel and occupancy. Subsequent to the quarter, at the beginning of October, we further streamlined our organizational structure to rightsize leadership layers and headcount through a reduction in force. We expect approximately $6 to $8 million of annual cost savings associated with this effort. Going forward, we will continue to pull the cost levers within our control to improve operating leverage. Next, I’ll provide some additional color on segment performance. All year-over-year percentage comparisons for revenue are adjusted for business days and currency impact.

And as a reminder, segment adjusted EBITDA excludes certain shared corporate costs. Revenue for on-demand segment was $44.4 million, a decline of 16% versus prior year. However, segment adjusted EBITDA improved to $4.4 million, or a margin of 10%, from $2.6 million, or a 4.9% margin in the prior year quarter. The notable improvement is primarily driven by our cost reduction effort in this segment. For our consulting segment was $43.6 million, a decline of 22% from the prior year. First quarter segment adjusted EBITDA was $5 million, or an 11.6% margin, compared to $7.8 million, or 14.1% margin in the prior year quarter.

Turning to our Europe and Asia-Pacific segment, revenue was $19.9 million, a 5% growth from a prior year quarter. Segment adjusted EBITDA was $0.8 million, or a 4.2% margin. Both up from $0.2 million and a 1.3% margin in the prior year. Finally, our outsourced services segment revenue was $10 million, up 4% compared to the prior year quarter. Segment adjusted EBITDA was $2.3 million, or a 23.3% margin, up from $1.4 million, or a 14.7% margin driven by significant improvement in its gross margin as a result of more effective management of consulting utilization. Turning to liquidity, our balance sheet remains pristine, with $77.5 million of cash and cash equivalents and zero outstanding debt.

Quarterly dividend distributions totaled $2.3 million, with cash on hand. Combined with available borrowing capacity under our credit facility, we will continue to take a balanced approach to capital allocation between investing in the business to drive growth and returning cash to shareholders through dividends and opportunistic share buybacks. Under our repurchase program, which had $79 million remaining at the end of the quarter, I’ll now close with our second quarter outlook. Early second quarter, weekly revenue run rate has been largely stable compared to the first quarter. We expect to maintain revenue stability through the second quarter while continuing to push forward the momentum in the sales pipeline.

I’ll also note that while we have very limited U.S. government exposure and therefore are not materially impacted directly by our clients in the sector, the current government shutdown could lead to additional disruption in the operating environment. With that in mind, and based on our current revenue backlog and expectations on late-stage pipeline deals, our outlook calls for revenue of $115 to $120 million for the second quarter. On the gross margin front, we also expect similar trends to the first quarter with an outlook range of 38 to 39%, with Thanksgiving adding one additional holiday in the US compared to Q1.

Second quarter run rate SG&A expense is expected to be in a range of $43 to $45 million, reflecting the benefit from our cost reduction efforts. Non-run rate and non-cash expenses will be around $5 million, consisting primarily of non-cash stock compensation and approximately $2 million of restructuring expense associated with the reduction in force. In closing, we continue to be laser-focused on improving our sales execution as well as driving an efficient cost structure to deliver more value. Even in this operating environment, as better economic clarity emerges for our customers and new business prospects, we will be well-positioned for return to consolidated growth, accompanied by even stronger profitability.

This concludes our prepared remarks, and we will now open the call for Q&A.

Operator: Thank you. As a reminder to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. One moment for questions. Our first question comes from Jessica Lewis with Northcoast Research. You may proceed.

Jessica Lewis: Hi. Good evening. Thank you for taking my questions. First, I would like to congratulate you on such a positive first quarter. Amazing results. And second, I have a question for you. And then one brief follow-up. To start, what would you say regarding the trend in pricing? Are you seeing pricing pressure in any particular business?

Bhadreskumar Patel: Yeah. Hi Jessica, this is Bhadresh. From a trending perspective on our staffing business, we have been able to keep our rates pretty steady. However, in the consulting side, while we do see pricing pressures, the value we’re bringing is warranting for us to be able to increase our rates, especially on net new projects that we’re selling to our clients, which, you know, ultimately is bringing a different value to our clients than what we have historically. From a professional staffing perspective, because we’re bringing thought leadership to those projects. So there are pricing pressures for sure. Roles like operational accounting and things like that face a lot more pricing pressures from our space.

But we’re also pivoting away from those roles as AI and automation take over. And we’re focused on more high-value roles, especially around ERP data supply chain, digital transformation really aligned to the strategy that we’ve laid forth for our business.

Jessica Lewis: All right. Perfect. That’s very helpful. Thank you. And then as for the follow-up question, I know that you guys are having success with cross-selling. Looking at your pipeline now, how much of the pipeline would you attribute to cross-selling?

Bhadreskumar Patel: I mean, you know, we’re still building that pipeline, but the good news is that we continue to increase million-plus dollar deals into our pipeline. And we anticipate that with the motions we’re playing across both our sales teams and our practice leaders and consulting that pipeline will increase. And then, you know, for us to see the conversion as it relates to that increase.

Jessica Lewis: Okay. Awesome. I appreciate it. Thank you again for answering my questions. And another congratulations to the company on a great first quarter.

Bhadreskumar Patel: Thank you, Jessica.

Operator: Thank you. And as a reminder to ask a question, please press star one on your telephone. One moment for questions. Our next question comes from Mark Marcon with Robert W. Baird. You may proceed.

Mark Steven Marcon: Good afternoon. I was just wondering with regards to the revenue guide that you gave us, Jen, can you break that out between the segments and specifically, you know, what are you seeing for consulting and on-demand talent?

Jennifer Y. Ryu: Yeah. Hi, Mark. Sure. The revenue guide for Q2, we’re expecting across our business units, you know, our Europe and Asia-Pacific region will continue to show strength as they did in Q1. So we expect continued strength in that, if not, it might even get better than Q1. And the other two segments, on-demand and consulting, you know, the trend is going to be more or less the same. It really depends on especially on the consulting side, some of the deals in the pipeline in late stage and the timing of conversion of that. So I would say across all of our business units, performance in Q2 will be somewhat consistent with what you’re seeing in Q1.

Kate W. Duchene: Yeah, Mark, it’s Kate. Can I just add I think it really depends on how quickly we can get some of this pipeline, especially the improving pipeline. And CFO advisory. You know, we do have, as Bhadresh shared, a new leader who’s very dynamic and has a very clear plan to improve our performance there. So, you know, he has shared that there’s a lot of momentum right now. It just depends on how quickly I think we can move that through the pipeline.

Mark Steven Marcon: Great. And then just with regards to on-demand and consulting within the US, any regional differences that you’re seeing, either from your West Coast operations or Chicago or the tri-state area?

Bhadreskumar Patel: Yeah, I mean, we are, you know, we are seeing a lot of demand in the West Coast and the southeast as well. And I think it’s really attributed to the teams and the tenure of the teams there overall in the market. We’re seeing consistent kind of demand across our core offerings. You know, we’ve aligned in CFO advisory and digital transformation for a reason because those are the two agendas that are moving in client spaces. And, you know, we’re balancing this across, you know, the tenure and the leadership that we have in other markets. And really building pipeline. And, you know, work across those markets as well.

Mark Steven Marcon: Great. And your new leader, where is he going to be based?

Bhadreskumar Patel: He’s based in Washington, DC, Northern Virginia, actually.

Mark Steven Marcon: Okay. Great. Thank you.

Bhadreskumar Patel: Thanks, Mark.

Operator: Thank you. Our next question comes from Judson Lindley with J.P. Morgan. You may proceed.

Judson Garrett Lindley: Hi, guys. Thanks for taking my question. Maybe just the first one on this quarter’s revenue. I know, same day constant currency revenues were down 13.9%. So could you maybe break out for me the delta between same day constant currency and reported revenue growth? How much of that was from FX and how much was the days impact?

Jennifer Y. Ryu: Yeah. More days impact, business day impact. There are some currency impacts, but it’s probably about a third of the business day impact. Most of it is, as you know. The first quarter we have I think we have one less day in business days this quarter compared to last year.

Judson Garrett Lindley: Okay, great. Thank you very much. And then maybe as a follow-up, if there was any acquired revenue in the quarter. And if you could maybe those same three components for the second quarter guide.

Jennifer Y. Ryu: Yeah. In the first quarter, year over year, there’s very little acquired, as you know, we acquired reference point last year in the first quarter a month into the first quarter last year. So the inorganic piece is minimal.

Judson Garrett Lindley: And then for the second quarter, if you could.

Jennifer Y. Ryu: Yeah. For the second quarter compared. Year over year at the top end of the guidance range, it’s a 16% decline. On the same day constant currency basis.

Judson Garrett Lindley: Great. Thank you very much.

Operator: Thank you. Our next question comes from Joe Gomes with Noble Capital. You may proceed.

Joseph Anthony Gomes: Good evening.

Bhadreskumar Patel: Hi, Joe.

Joseph Anthony Gomes: Just a quick question. You know, when you talk to clients or potential clients. You know, what are they saying in terms of their general appetite to move forward and spend? And how has that changed over the past year? If it’s changed?

Kate W. Duchene: I would say it hasn’t changed much, Joe. I think we’re still, you know, in a choppy environment. As we’ve said before, I expect there’s probably more of the same for the next couple of quarters. Every time I think people feel like we’re getting more stability and the foundation is getting stable, then it seems like something else happens. You know, as Jen said, we don’t have a lot of exposure to federal government or federal work, but, you know, it feels destabilizing when there’s that level of uncertainty. And so we’ve reflected that in our outlook because we’re just uncertain. As I said before, there is work that’s progressing. I mean, there’s some really interesting work.

We’re talking to clients about right now. It just depends on how quickly we can progress that work through our pipeline. I’m very impressed with some of the new talent we’ve brought into the organization, especially around, you know, whether you call it Finance 4.0, which includes ERP, cloud migration, digital finance, automation, AI data work, everything that’s happening there that work is progressing. I mean, it’s happening in our client base right now. So again, I think a lot of it is timing and making sure we’re positioned and having the right conversations with clients.

Joseph Anthony Gomes: Okay. Great. Thanks for that. And one follow-up in the summer, you guys, you did a board refresh and added two new members to the board. I was wondering, you know, what, if anything, they’ve brought to the board here that is kind of new or different ways of thinking or different approaches that would be attributable to them.

Kate W. Duchene: Yeah. So let me speak to that. We have welcomed, I think, two strong board members. One brings more of a, I would say, private equity lens, if you will, to what we’re doing. Especially as we look at optimizing our bottom-line performance. Given that we all recognize the macro environment is difficult and difficult. Really across professional services. So that has been, I think, instructive for us to look at things with a fresh set of eyes. Our other board member brings a lot of operating experience and operating experience through transformation.

And I think what we’re learning from his experience is the importance of the behavioral changes that I’ve talked about, making sure that we’re getting incentive comp right, making sure that we are creating collaborative teams to hunt and farm together, and not creating silos or competitive, you know, mindset. So competitive. I by that I mean against each other and not competitive to the broader marketplace. So I think they’re both good adds to our board. And the work that we’re undertaking right now.

Joseph Anthony Gomes: Okay. Great. Thanks for that. Appreciate it. I’ll get back to queue.

Kate W. Duchene: Okay. Thanks, Joe.

Operator: Thank you. I would now like to turn the call back over to Kate Duchene for any closing remarks.

Kate W. Duchene: Yes. Thank you, thank you, everyone for joining us today. I want to highlight that we will be participating in the Noble Capital Markets Emerging Growth Virtual Equity Conference tomorrow. So we hope to engage further with investors. Then we’ll also look forward to updating you on our strategic progress and results following Q2 in early January. Thanks again, everyone. Good night.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

At 3:25 in the morning of July 24, Milagro Solis Portillo was woken up and booked out of B-18, ICE’s basement detention facility in the downtown L.A. courthouse. She was not told where she was headed as she was put onto a commercial flight along with two immigration officer escorts. A few hours later, she was booked into the Clark County Jail in Jefferson, Ind.

Ming Tanigawa-Lau, an attorney at Immigrant Defenders Law Center representing Portillo, said her transfer was retaliatory, especially when there was open space at nearby facilities. The 36-year-old’s encounters with ICE had caused a local stir. She suffered a medical incident during her arrest outside her home in Sherman Oaks that required treatment at Glendale Memorial Hospital.

While at the hospital, she was monitored constantly by immigration officers. Local activists and representatives held events protesting her treatment. After two weeks, ICE forcibly removed her from the hospital against the advice of her medical team and sent her to B-18 and then across the country.

State Sen. Sasha Renée Perez (D-Alhambra) speaks at a news conference in front of Glendale Memorial Hospital where Milagro Solis Portillo was treated after being arrested by ICE on July 7.

(Carlin Stiehl / Los Angeles Times)

Portillo isn’t the only detained immigrant flown across the country. The Times analyzed ICE data obtained through the Freedom of Information Act by the Deportation Data Project and found that transfers between facilities in the first half of this year are happening faster and more frequently compared with the same period last year. The typical detainee is transferred at least once. From January through July, 12% of those detained have been transferred at least four times. In the first half of 2024, 6% of detainees were transferred 4 or more times.

Setareh Ghandehari, advocacy director at Detention Watch Network, said transfers have been used as a retaliatory tactic for those who make requests, file complaints or stage protests such as hunger strikes. Transfers move people from places where they may already have an attorney or where there are established legal-services organizations to a place that is unfamiliar and where there may be fewer resources for detained migrants.

ICE moves people from temporary holding spaces to more long-term housing as they prepare detainees for deportation. But, as a result, they could be sent far from loved ones, professional organizations, church groups and other community networks. They miss out on in-person visits from family and instead have to pay for phone or video calls. Ghandehari said she believes this isolation is deliberate.

“Conditions are bad because it’s meant to be a deterrent,” Ghandehari said. “So it’s also part of the way the system is set up. And I think transfers play into that more than people realize.”

On July 18, a 20-year-old man was deported from the Alexandria Staging Facility to Honduras. Two months prior, on May 13, he was arrested outside of Orlando and then transferred 15 times back and forth across the country between facilities in Florida, California, Arizona, Hawaii and finally Louisiana.

He had no criminal history. Public ICE data do not show whether he had an attorney or was fighting his case to remain in the country.

15 transfers. 11 facilities. 4,800 miles.

A man first detained in Florida spent 30 days in a federal detention center in Hawaii.

Broward Transitional Center, Fla.

Alexandria Staging Facility, La.

Florence Staging Facility, Ariz.

Florence Service Processing Center, Ariz.

Golden State Annex, Calif.

Bakersfield hold room, Calif.

Honolulu Federal Detention Center, Hawaii

Arizona Removal Operations

Coordination Center, Ariz.

July 18 – Deported to Honduras

Arizona Removal Operations

Arizona Removal Operations

Facility placement is not to scale.

Immigration and Customs Enforcement data from the Deportation Data Project

LOS ANGELES TIMES

The journeys from one facility to another can be difficult. On Aug. 15, ICE moved Portillo from Clark County Jail to Louisiana through a flight out of Chicago. First, she spent about 12 hours in a holding room in the nearby Clay County Justice Center without access to communicate with anyone. Around 1:30 a.m. the next day, she and nine other women were put into a van headed to Chicago, five to a bench on either side.

“It was a very scary trip,” Portillo said, speaking with The Times through a translator. “We couldn’t be comfortable because our hands and feet were handcuffed. It was dangerous because it seemed like the officials driving were falling asleep. We could feel that the van would sway one way and another way at dawn.”

According to Tanigawa-Lau, it can take days after a transfer for family and legal representatives to find out that a person has been moved. The online system that is meant to show where detainees are located is not updated right away. The families of detainees typically find out where their loved one has been sent from the detained person — once they are able to place a phone call.

The abrupt relocations of her clients have led to missed appointments and court hearings, Tanigawa-Lau said. When a client is transferred, it becomes more difficult to mount a legal defense.

In the Los Angeles area, Tanigawa-Lau and her organization have knowledge of the judges and how to contact detention facilities to communicate with clients.

States such as Louisiana don’t have the same kind of immigration defense infrastructure. On the Immigration Advocates Network site, California has 205 resources listed to help migrants and their representatives find local legal services. Indiana has 16. Louisiana has 10. The Alexandria Staging Facility in Louisiana, which has deported the most immigrants this year, routinely limits access to attorneys, according to reporting by the Guardian.

Portillo recounted a comment made on the flight from California to Chicago by one of the ICE agents escorting her that it was thanks to the laws in California that she was being brought to Indiana. Indiana’s Republican Gov. Mike Braun is a strong supporter of the Trump administration’s immigration strategy.

ICE did not respond to questions about what considerations are made when transferring detainees or about why Portillo was sent to the Indiana facility.

Jason Houser, former ICE chief of staff during the Biden administration, said the goal of transfers is to optimize for removals, which typically happen from Louisiana and the Rio Grande Valley in Texas.

They also have to consider facility capacity. ICE is operating under a policy to fill all beds. Additionally, with bond hearings being denied, immigrants are stuck waiting for their cases to be resolved in detention. As many facilities reach, and even exceed, their bed capacity, Houser said this means that folks that need to get to Louisiana are stuck because there aren’t open beds along the way.

“If you fill every bed, can I move somebody from Northern Virginia through Tennessee to Louisiana? No, because the Tennessee field director will tell the Virginia field director, ‘I have no empty beds.’ Your person must just continue to sit there,” Houser said.

Most detention stays for those arrested in 2025 lasted about 24 days and resulted in removal. So far, 63% of those booked into a detention facility were deported. But some are held in detention much longer. More than a quarter of those booked into a detention center this year are still in custody. About 24% were held for more than two months. Nearly 9% for more than five months.

“If there is someone in an ICE bed that isn’t a convicted criminal and has no foreseeable way to be removed within 30 days, that isn’t a criminal, they should not be in a … bed,” Houser said. “They should be out at their job being a thriving member of the community until they’re humanly able to be removed. But that’s not what this administration is about.”

In the first half of 2024, more than 45,500 immigrants were released from detention on bond, through parole or under supervision while they went through immigration proceedings. This year, 13,800 received similar treatment. The vast majority have had to wait for their cases to conclude while in detention.

Portillo still gets emotional talking about her experience in ICE detention. She had been in California for 15 years. Her family was in Los Angeles. When she was transferred to Indiana, she lost all hope of winning her case and returning to them.

Upon arrival at the jail, it was clear to her that this was not a detention center. She was being held with people who had committed crimes. For weeks, as her mental health declined, she felt like she was being tortured.

Milagro Solis Portillo was transferred 2,000 miles away from her family and her attorney

Glendale Memorial Hospital, Calif.

Anaheim Global Medical Center, Calif.

Clay County Justice Center, Ind.

South Louisiana ICE Processing Center, La.

Aug. 29 – Deported to El Salvador

Clay County Justice Center

Glendale Memorial Hospital

Anaheim Global Medical Center

South Louisiana ICE Processing Center

Clay County Justice Center

Glendale Memorial Hospital

Anaheim Global Medical Center

South Louisiana ICE Processing Center

Facility placement is not to scale.

Immigration and Customs Enforcement data from the Deportation Data Project

LOS ANGELES TIMES

Ghandehari says that the transfers create an environment of “fear and anxiety” as a tactic to encourage people to self-deport. She says that it is an explicit strategy for this administration but it is not new. This year, however, the number of voluntary returns and departures more than doubled.

“It is about efficiency for ICE on their end, but with a total disregard for the people that they’re detaining and ripping apart from their loved ones,” Ghandehari said.

For Portillo, her treatment in detention became too much to endure.

“I decided to give up. We weren’t going to keep fighting … not because I didn’t want to stay but because of health reasons. … My mental health since being in Indiana started to suffer. When I was in L.A., it was one thing. I knew that my family was close and I had access to my attorney,” she said.

Ultimately, she decided it would be better to return to El Salvador.