Resources Connection, Inc. (NASDAQ:RGP) stock fell 9.86% (As on October 6, 11:50:35 AM UTC-4, Source: Google Finance) after the company surpasses the analysts’ expectations for both the topline and bottom line. Demand remained healthy due to a shift in businesses adopting workforce agility and a persistently tight labor market. The Company’s ability to execute against market opportunities drove broad-based topline growth across most client segments, including strategic global accounts and regional accounts, in the majority of the Company’s markets and solution areas. The Company’s billable hours increased by 10.5% and average bill rate increased by 1.6% (or 3.2% on a constant currency basis) over the prior year quarter. Year-over-year improvement in average bill rate is attributable to an ongoing focus on value-based pricing. Gross margin was 40.9%, up from 39.0% in the first quarter of fiscal 2022. The increase was primarily due to a 230 basis point improvement in pay/bill ratio driven by ongoing efforts to enhance pricing while offering competitive consultant wages. This positive impact was partially offset by the increase in employee-related benefits, primarily vacation and self-insured medical costs.

RGP in the first quarter of FY 23 has reported the adjusted earnings per share of 60 cents, beating the analysts’ estimates for the adjusted earnings per share of 36 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 11.4 percent to $204.06 million in the first quarter of FY 23, beating the analysts’ estimates for revenue by 3.27%. Excluding taskforce, divested in the first quarter of fiscal 2023, same-day constant currency revenue, a non-GAAP measure, was up 17.0% from the prior year quarter. With continued revenue growth and improvement in gross margin and operating leverage, net income increased to $18.1 million (net income margin of 8.9%) for the first quarter of fiscal 2023, compared to $12.9 million (net income margin of 7.1%) in the prior year quarter. The Company delivered a record first quarter Adjusted EBITDA margin of 15.0%, an improvement of 280 basis points over the first quarter of fiscal 2022. SG&A for the first quarter of fiscal 2023 was $56.2 million, or 27.6% of revenue, compared to $51.4 million, or 28.1% of revenue, for the first quarter of fiscal 2022, reflecting an improvement of 50 basis points largely as a result of improved operating leverage.