Houlihan Lokey, Inc. Earnings Recaps
With shares up 1.4% after earnings, the quarter was mixed: revenue rose 5% year over year to $692 million, while adjusted EPS was flat at $1.85. Higher average transaction fees supported Corporate Finance growth, but deal counts fell in both Corporate Finance and Restructuring, and adjusted non-compensation costs increased.
Key takeaways
- Corporate Finance revenue increased 10% to $481 million, despite transactions declining to 142 from 171; higher average fees reflected a greater share of high-fee deals.
- Restructuring revenue fell 12% to $118 million, with transactions down 27% to 27. Management cited record backlog and expects higher revenue in the second half and elevated restructuring revenue through fiscal 2028.
- Financial and Valuation Advisory revenue rose 7% to $93 million; fee events were nearly flat at 1,071 versus 1,075 a year earlier.
- Adjusted non-compensation expenses grew 11% to $91 million, lifting the expense ratio to 13.3% from 12.5%. The adjusted compensation ratio remained at 61.5%.
- Management described the market as normalizing but remained cautious about macro volatility, interest rates, geopolitical instability, and software-sector dislocation.
Shares rose modestly by 2.2% following earnings that showed steady revenue growth and record annual performance, but lingering geopolitical uncertainty and the delayed closing of key restructuring deals restrained a stronger market response.
Key takeaways
- Fiscal year 2026 revenue reached a record $2.6 billion, up 10% year-over-year; adjusted EPS rose 20% to $7.56.
- Fourth quarter revenue was $636 million with adjusted EPS of $1.63; Corporate Finance and Financial Valuation & Advisory posted their highest Q4 revenues ever.
- Financial Restructuring segment revenue declined 3% year-over-year for the full year; Q4 was impacted by delayed closings of two large transactions and a 21% drop in transaction volume.
- Corporate Finance closed 171 deals in Q4 (up from 147 last year) but average transaction fees decreased amid extended M&A timelines influenced by geopolitical tensions.
- Management expects variability in near-term Corporate Finance growth due to prolonged deal timelines but maintains a positive longer-term outlook supported by a record backlog and active pipeline.
Houlihan Lokey reported strong third-quarter fiscal 2026 results, with revenues of $717 million (up 13%) and adjusted earnings per share rising to $1.94 (up 18%), driven by robust corporate finance performance and increased investor sentiment.
Key takeaways
- Corporate Finance revenues reached $474 million, marking a 12% increase, with a rise in average fees and transaction activity.
- Financial Restructuring revenues surged 19% to $156 million, aided by accelerated transactions, defying typical seasonal trends.
- The firm remains the top M&A and financial restructuring investment bank globally, reinforcing its market leadership.
- Recent strategic acquisitions, including a controlling interest in O'Dare Partners, enhance Houlihan Lokey's European presence and capabilities.
- Continued positive outlook for fiscal 2027 driven by improving market conditions and strategic growth initiatives.