훌리한 로키(HLI) 2027 회계연도 2분기 실적 발표 회의: 매출 5% 증가

훌리한 로키는 2027 회계연도 2분기 매출이 전년 동기 대비 5% 증가한 6억 9,200만 달러를 기록했다고 발표했으며, 조정 주당순이익(EPS)은 1.85달러로 보합세를 유지했습니다. 기업금융 부문은 성장세로 돌아섰으며, 경영진은 시장 상황에 따라 하반기 활동이 더 활발해질 것으로 전망하고 있습니다.

핵심 요약

• 2027 회계연도 2분기 매출은 전년 동기 대비 5% 증가한 6억 9,200만 달러를 기록했습니다. 조정 주당순이익(EPS)은 1.85달러로 변동이 없었습니다.
• 기업금융 매출은 거래 종결 건수가 171건에서 142건으로 줄었음에도 불구하고 완료된 거래당 평균 수수료가 상승한 것을 반영해 10% 증가한 4억 8,100만 달러를 기록했습니다.
• 재무자문 및 구조조정 매출은 1억 1,800만 달러로 12% 감소했지만, 경영진은 2027년 진입 시점의 수주 잔고가 역대 최고치를 기록했다고 밝혔으며 2028 회계연도까지 높은 매출 수준이 유지될 것으로 예상하고 있습니다.
• 재무 및 가치평가 자문 매출은 포트폴리오 가치평가 사업의 성장에 힘입어 7% 증가한 9,300만 달러를 기록했습니다.
• 경영진은 금융시장의 협조적 환경 여부에 달려 있지만, 2027 회계연도 하반기 실적이 평년 수준을 상회할 것으로 전망하고 있습니다.
• 훌리한 로키는 이번 분기를 약 8억 8,800만 달러의 비제한성 현금 및 투자증권으로 마감했으며, 약 5,000만 달러를 들여 자사주 약 397,000주를 매입했습니다.

핵심 재무 데이터

사업 및 영업 실적

기업금융

기업금융 부문은 10% 증가한 4억 8,100만 달러의 매출을 올렸습니다. 경영진은 고금리 환경에도 불구하고 거래 파이프라인이 종결을 향해 지속적으로 진행되고 있다고 밝혔습니다. 또한 중견기업 시장(middle market)에서 자금 조달이 여전히 원활하게 이루어지고 있어, 현재의 차입 비용보다는 지정학적 충격이 더 큰 교란 요인이라고 보고 있습니다.

회사는 중견기업 시장 중심 전략을 변경하지 않았습니다. 거래는 주로 수억 달러 규모에서 약 20억 달러 이하 범위에 집중되어 있습니다. 훌리한 로키는 대형주 거래로 방향을 전환하기보다 자체 내부 데이터를 활용해 성사 가능성이 높은 자문 수임건에 우선순위를 두고 있습니다.

소프트웨어 부문은 부진을 이어갔으며, 헬스케어 부문의 약세는 시점상의 문제로 평가되었습니다. 경영진은 2027 회계연도 소프트웨어 매출이 전년 수준에 미치지 못할 것으로 예상하고 있습니다. 자본 솔루션을 포함한 M&A 및 비M&A 기업금융 활동은 회계연도 말까지 유사한 실적을 보일 것으로 기대됩니다. 경영진은 또한 그때까지 유럽과 미국 시장이 비슷한 성장세를 기록할 것으로 예상하고 있습니다.

재무자문 및 구조조정

재무자문 및 구조조정 매출은 27건의 거래가 완료되면서 12% 감소한 1억 1,800만 달러를 기록했습니다. 그럼에도 불구하고 이번 분기 동안 향후 전망에 대한 경영진의 자신감은 더욱 강화되었습니다. 회사는 사상 최대 규모의 수주 잔고와 활발한 영업활동 수준을 유지하며 2027년(달력 기준)에 진입했습니다.

소프트웨어 분야는 유일한 동인은 아니지만 새로운 구조조정 자문 수임의 주요 원천입니다. 훌리한 로키는 관련 프로젝트가 파이프라인을 거쳐 진행됨에 따라 2027년부터 매출에 기여하기 시작해 2027년과 2028년에 걸쳐 더 큰 영향을 미칠 것으로 기대하고 있습니다. 경영진은 또한 부채 만기 도래 시점이 다가옴에 따라 미국과 유럽 모두에서 구조조정 기회에 대해 긍정적으로 평가하고 있습니다.

재무 및 가치평가 자문

재무 및 가치평가 자문 매출은 7% 증가한 9,300만 달러를 기록했습니다. 성장은 포트폴리오 가치평가가 주도했으며, 경영진은 이 분야를 경기 비동시적이며 신규 이니셔티브의 지원을 받는 사업으로 설명했습니다. 공정성 의견서(opinion) 및 자문 사업 역시 성장했지만 M&A 활동과 더 밀접하게 연계되어 있습니다.

인재 및 자본 배치

훌리한 로키는 이번 분기 9월에 완료된 인트레피드 파이낸셜 파트너스(Intrepid Financial Partners) 인수를 통해 합류한 8명을 포함해 총 12명의 매니징 디렉터(MD)를 영입했습니다. 경영진은 인수 파이프라인이 여전히 견고하다고 밝혔으나, 시점을 예측하기 어렵고 기업 문화적 적합성이 여전히 필수적임을 강조했습니다.

회사는 11월에 2026 회계연도 관련 이연 현금 보너스를 지급할 예정이며, 이에 따라 대차대조표상 현금이 감소할 것입니다. 경영진은 잉여 자본을 집행할 때 자사주 매입과 인수 기회 간의 형량을 지속적으로 고심할 것입니다.

경영진 가이던스

• 경영진은 시장 상황이 뒷받침된다면 2027 회계연도 하반기에 평년 수준을 상회하는 계절성을 보이며 견조한 실적을 거둘 것으로 기대하고 있습니다.
• 2027 회계연도 조정 보수 비용 비율은 장기 목표 수준인 61.5%를 유지할 것으로 예상됩니다.
• 연간 조정 실효세율은 26%에서 28% 사이가 될 것으로 예상됩니다.
• 2027 회계연도 비보수 비용 증가율은 전년도의 연간 증가율과 유사한 수준일 것으로 예상됩니다.
• 재무자문 및 구조조정 매출은 하반기에 강화되고 2028 회계연도까지 높은 수준을 유지할 것으로 예상됩니다.
• 경영진은 2분기 기업금융 매출 4억 8,100만 달러를 성장을 위한 견조한 기반이라고 설명했습니다.

리스크 및 주요 관전 포인트

경영진은 거시경제적 변동성, 지정학적 불안정성, 고금리, 소프트웨어 부문의 교란 등을 이유로 신중한 태도를 유지하고 있습니다. 금리 인상이 중견기업 시장의 거래 활동을 실질적으로 훼손하지는 않았지만, 갑작스러운 지정학적 사건은 거래를 지연시킬 수 있습니다.

하반기 전망은 지속적인 시장 협조 환경에 달려 있습니다. 소프트웨어 부문의 약세는 기업금융에 압박을 가하고 있지만, 동시에 재무자문 및 구조조정 부문에는 장기적인 기회를 제공하고 있습니다. 또한 구조조정 매출은 거래 시점과 거래 규모에 따라 기간별로 크게 달라질 수 있습니다.

애널리스트 Q&A 하이라이트

• 거래 활동: 경영진은 거시경제 및 지정학적 교란으로 거래가 지연된 이후, 고객들의 거래 진행 의지가 점점 더 높아지고 있다고 밝혔습니다. 스폰서 주도 활동도 개선되고 있으나, 출자자(LP)들의 압박은 새로운 촉매제라기보다는 오랜 기간 지속되어 온 요인으로 설명되었습니다.
• 거래 구성: 종결 건수 감소에도 불구하고 기업금융 매출이 증가한 것은 시점 차이와 고수수료 거래의 비중 확대가 반영된 결과입니다. 경영진은 이것이 중견기업 시장에서 벗어나는 행보를 의미하는 것은 아니라고 설명했습니다.
• 구조조정 파이프라인: 사전 논의와 진행 중인 자문 수임건 모두 증가하고 있습니다. 현재 소프트웨어 부문이 가장 두드러진 동인이며, 2027년부터 매출 기여가 시작되어 2028 회계연도에는 더 큰 효과가 나타날 것으로 기대됩니다.
• 지역별 전망: 경영진은 유럽에서 매력적인 구조조정 환경이 조성되고 있는 것으로 보고 있으며, 회계연도 말까지 유럽과 미국의 기업금융 성장률이 비슷한 수준을 보일 것으로 예상하고 있습니다.
• 인수합병: 훌리한 로키는 인수 대상 검토에 여전히 적극적이지만, 경영진은 인수 시점이 현재의 소프트웨어 부문 교란과 특별히 연계되어 있지는 않다고 설명했습니다.

실적 발표 전화회의 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Houlihan Lokey's Second Quarter Fiscal Year 2027 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, October 28, 2026. I will now turn the call over to the company.

Prabha Bhandari

Thank you, operator, and hello, everyone. By now, everyone should have access to our second quarter fiscal year 2027 earnings release, which can be found on the Houlihan Lokey website at www.hl.com in the Investor Relations section. Please note that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as indicate, suggest, see, will, expect, believe or other words or phrases of similar meaning are not guarantees of future performance.

These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore, you should exercise caution when interpreting and relying on them. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Except as required by applicable securities laws, Houlihan Lokey is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change.

We encourage investors to review our regulatory filings, including our Form 10-Q for the quarter ended September 30, 2026, when it is filed with the SEC. During today's call, we will discuss non-GAAP financial measures. These non-GAAP measures are not intended to be considered in isolation from, as a substitute for or as more important than the financial information prepared and presented in accordance with GAAP.

In addition, these non-GAAP measures have limitations in that they do not reflect all the items associated with the company's results of operations as determined in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release and our investor presentation, which can be found on the hl.com website. Hosting the call today, we have Scott Adelson, Houlihan Lokey's Chief Executive Officer; and Lindsey Alley, Chief Financial Officer. They will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Scott.

Scott Joseph Adelson

Thank you, Sipi. Welcome, everyone, to our second quarter fiscal 2027 earnings call. We ended the quarter with revenues of $692 million and adjusted earnings per share of $1.85. Revenues were up 5% and adjusted earnings per share were flat compared to the same period last year. Our results for the quarter reflect a normalizing market environment, which continued into October. Key metrics indicate solid performance for the remainder of the year across all 3 of our businesses, and we have seen a return to growth in both Europe and the U.S. and across our industry groups, except technology and health care.

We do, however, remain cautious given the volatility of the macro environment. We continue to see headwinds from interest rates, ongoing geopolitical instability and dislocation in the software sector. Our Corporate Finance business produced $481 million in revenue for the quarter, driven by higher average transaction fees. Heading into the third quarter, our backlog and activity levels suggest growth for the balance of the year, even as we remain mindful of the macro volatility. Despite the higher interest rate environment of the last few months, transactions continue to move through the pipeline to closing, which tells us that the stronger economic fundamentals are outweighing macro uncertainty.

Financial Restructuring produced $118 million in revenues for the second quarter, performing in line with our expectations. Based on our current backlog and new deal activity levels over the last several months, we see a stronger second half of the year and elevated restructuring revenues through fiscal 2028. Our reputation and experience in the software space has led to significant wins in the sector, and we expect these engagements to begin contributing to revenues in calendar '27. Financial and Valuation Advisory produced $93 million of revenues for the second quarter. Growth was primarily driven by our portfolio valuation business.

We added 12 new managing directors in the second quarter, including 8 who joined us through our acquisition of Intrepid Financial Partners, which closed in September. We're excited to welcome our new partners to Houlihan Lokey. Also in the second quarter, we welcome our new Chief Legal Officer, Sipi Bhandari, who you heard from earlier on the call. We are all delighted to have Sipi on board. I would like to extend my sincere gratitude to Christopher Crain, who served as our General Counsel and a member of our executive team for 22 years and who fortunately will remain a senior adviser.

In terms of acquisitions, our pipeline remains strong, and we are confident that our combination of organic growth and strategic acquisitions will continue to deepen and expand and strengthen our talent base around the world. I want to thank our shareholders for their support, especially during a volatile first half of the fiscal year. We continue to execute our long-term business plan and believe that we are the best positioned investment banking advisory firm to capitalize on our industry trends over the next decade. With that, I'll turn it over to Lindsey.

J. Alley

Thank you, Scott. Revenues in Corporate Finance were $481 million for the quarter, up 10% compared to the same period last year. We closed 142 transactions this quarter, down from 171 for the same period last year. However, our average transaction fee on closed deals increased as there was a disproportionate number of higher fee transactions relative to lower-fee transactions for the quarter, the reverse of what we saw last quarter. Financial Restructuring revenues were $118 million for the quarter, down 12% compared to the same period last year.

We closed 27 transactions this quarter, down 27% from the same quarter last year, but our average transaction fee on closed deals increased. We expect to see higher revenues for the second half of the year, and we approach calendar 2027 with record backlog and strong activity levels. For Financial and Valuation Advisory, revenues were $93 million for the quarter, a 7% increase from the same period last year. The number of fee events remained relatively flat at 1,071 during the quarter compared to 1,075 in the same period last year.

And turning to expenses. Our adjusted compensation expense ratio for the second quarter in both fiscal 2027 and 2026 remained constant at 61.5%. We expect to maintain our long-term target of 61.5% for our adjusted compensation expense ratio for fiscal 2027. Our adjusted non-compensation expenses grew 11% to $91 million for the quarter compared to $83 million for the same period last year. Our adjusted non-compensation expense ratio for the second quarter was 13.3% compared to 12.5% in the same period last year.

Our other income and expense produced income of approximately $5 million versus income of approximately $9 million in the same period last year. The decrease was primarily driven by lower cash balances for the quarter and lower return on our investment securities. Our adjusted effective tax rate for the quarter was 30%, remaining flat compared to the same quarter last year. We expect to see a fiscal 2027 full year adjusted effective tax rate of between 26% and 28%.

Turning to the balance sheet. We ended the quarter with approximately $888 million of unrestricted cash and investment securities. As a reminder, we will pay our deferred cash bonuses related to fiscal 2026 in November, which will reduce our balance sheet cash. Also in our second quarter, we repurchased approximately 397,000 shares as part of our share repurchase program for a total of approximately $50 million. We will continue to evaluate balance sheet flexibility for acquisitions versus excess cash for share repurchases. And with that, operator, we can open the line for questions.

Operator

[Operator Instructions]

And our first question here will come from Brennan Hawken with BMO Capital Markets.

질의응답

Brennan Hawken

So nice to see the recovery in Corporate Finance revenues this quarter. Scott, your comments sounded a little mixed, although maybe just recognizing some volatility in the marketplace. So should we expect to be able to build on that on the results that you put up here this quarter? And we've seen rates back up. Has there been any impact on the higher rates in the dialogue that you've seen?

Scott Joseph Adelson

As always, thanks. Good question. The rate question, really not. As we've talked about before, rates in the mid-cap space really, unless they are accelerating greatly, don't have a dramatic impact. Things aren't priced quite to the same perfection that they are in large-cap world. So that, as long as capital is available, which it is very plentiful today, that is really not an issue. I would say the geopolitical shocks have been more important from our perspective. And I think our hesitation is we just never know what's around the corner. But based upon everything we're seeing from our dialogues, from our metrics, we're feeling good about the back half of the year.

Brennan Hawken

Excellent. And you had spoken previously about restructuring and that those pipelines rebuilding. Are you continuing to see that? And what additional color could you give us about how that outlook is shaping up?

Scott Joseph Adelson

Yes. And that is, as we've talked about, I think when we originally started the year, we were actually a little concerned about the growth in restructuring. That has really turned around, particularly with the fallout from software is a significant driver of that. It's certainly not the only one. Higher interest rates help as well. Some of the geopolitical dislocation helps. I mean all of that has helped restructuring, and we're at the margin as Corporate Finance, exactly the way the model is supposed to work. But at this point, we feel much better than we did at the beginning or the end of last year about restructuring this year, but even more importantly, probably next year.

J. Alley

Yes. Our confidence in restructuring is at or better than it was last quarter.

Brennan Hawken

So it's continued to improve.

Scott Joseph Adelson

Yes, thanks, Brennan.

Operator

And our next question will come from Nathan Stein with Deutsche Bank.

Nathan Stein

Would you just unpack a little more what caused the drop in transactions versus a year ago in both the Corporate Finance and the Financial Restructuring business? I just feel like there's a big difference between the higher revenues and the lower number of deals.

J. Alley

There is, and we figured we would get this question. Restructuring, I think we've seen this before. It is a lumpy business, and you do see that those, that disconnect between transaction volume and revenues occur a lot more often than you do in Corporate Finance. So that is not an unusual set of circumstances for us. With respect to Corporate Finance, it is unusual. If you look at the year-to-date, it's a better indication of the reality. Year-to-date, the number of transactions, our revenue is down roughly 6% and our number of transactions closed is down roughly 9%. So they tend to follow each other on a year-to-date basis.

It was a very unique first quarter and a unique second quarter in this regard. If you remember, first quarter, I think we were down 25% in revenues, and we had a flat number of transactions. It really is just, I think, the timing and the unusual circumstances in Q1 that sort of drove the disconnect in Q2. I wouldn't read into it any further than that.

Having said that, and Scott has said this in the past, we are much more intentional in the types of transactions that we will take on, which has resulted in us, generally speaking, taking on larger transactions with generally speaking, higher fees. And so you may not, in the future, see quite as strong a correlation between transaction volume and revenues. Not saying that you won't see it for the foreseeable future, but that you might start to see that as we continue to.

Scott Joseph Adelson

To be clear, all still squarely in the, this is not by the companies that you guys are following. This is not, when we say larger, that kind of scale, it's still squarely in our marketplace.

Nathan Stein

Yes. I guess just following up on that, that is, it sounds like a total shift in how you guys have talked about deal size that you'd like to target in the past. What really drove, what drove the decision to start leaning more into bigger deals even within your...

Scott Joseph Adelson

No, no, no. That's what I wanted, I thought I was being clear. I was a little concerned you were going to take that away from Lindsey's statement. That is not at all what that means. This is all squarely within the middle market, all squarely sub couple of billion dollars, mostly in the kind of few hundred million dollar range, a few less deals that we think are more speculative in nature in that size range than those that we think have a higher probability of closing.

And so just as we've always talked about using our data to our advantage, we are able to analyze things better than we ever have. We have enormous amounts of information about really what closes and what doesn't close. And therefore, we're being smarter, if you will, about that. And that is a long-term trend that is not something that is just this quarter. But there's no decision to move away from our mid-market focus. There's no decision to do bigger deals, none of that. A little clearer than where Lindsey left you.

Operator

And our next question will come from Devin Ryan with Citizens Bank.

Devin Ryan

Good to see the Corporate Finance get back to kind of, as you said, more normal levels of activity and the outlook as well there. It still sounds like the tech space, maybe software specifically remains challenging. And so I'm just curious, is it just not as challenging as it was last quarter? Or are there other sectors that are just maybe picking up more and carrying more of the weight here for the overall business? Just trying to think about the mix, maybe some sector dynamics as well.

Scott Joseph Adelson

Yes. I think we called out both software or tech, but it's mostly software and health care in the written remarks. And I think that health care is realistically just a timing issue. Software is down. That is just a reality. It is not as bad as it was from a market standpoint, it has continued to improve. They're beginning to realize there are good software companies and bad software companies. I do believe it will come back. Having said that, there is no world where I envision us doing the same amount of software revenue this year than we did last year.

Devin Ryan

Yes. Of course, makes sense. And then as a follow-up on just the kind of the non-M&A advisory elements of Corporate Finance, like capital solutions or private capital. Can you just give a sense of like the baseline for those businesses? And are they flat? Are they accelerating? And just a little bit more flavor for what you're seeing there and the outlook as well?

J. Alley

I mean I think the expectations are that capital solutions and what I would call the non-M&A businesses will perform similarly by the end of the year. And so we don't, we're not necessarily differentiating between the 2 in terms of how those businesses look for the balance of the year. And similar to our comments last quarter about Europe, I think we had some concerns about growth in Europe. We started to see that come back and now expectations Europe and the U.S. by the end of the year will look about the same. So I'd say, yes, we don't see a divergence between M&A and non-M&A businesses through fiscal '27.

Operator

Our next question will come from Gabriel Angelini with Bank of America.

Gabriel Angelini

I think historically the second half tends to be stronger than the first half from a revenue perspective. And obviously, first half was a little bit weaker this year just because of the first quarter. With conditions improving, should we expect a little bit stronger than normal seasonality in the second half of this year? Or should we interpret the caution to suggest that it's something closer to a typical year in terms of seasonality?

J. Alley

I mean it's, the answer is based on all the metrics and all the things Scott suggested, yes, we should see an unseasonably higher seasonality in our second half. But again, that it's, we need cooperation in the market. But yes, we do expect a good solid second half that's better than normal for us, but we need that, we need the cooperation.

Gabriel Angelini

Got it. And maybe just given the disruption we're seeing across the industry right now, I imagine software is putting pressure on a lot of smaller boutiques. Is now the right time to lean in on acquisitions? And maybe are there any sectors that you're particularly focused on?

Scott Joseph Adelson

Yes. It's safe to say and we've talked about it before. We have a very robust process to go after acquisitions. And it isn't honestly time sensitive. We are in the market constantly. And I wish I could do a better job of predicting when things are going to close, but it is safe to say that we, as I said in my remarks, we are feeling good about what that pipeline looks like and more to come. But it's not just because software is difficult or anything like that. There are just, we constantly talk about it, it needs to be a good cultural fit for us.

Operator

And our next question will come from Ryan Kenny with Morgan Stanley.

Ryan Kenny

So on the restructuring side, it sounds like you're a little bit more positive with higher interest rates. Any sectors in particular driving the bigger pipeline there? And is it more speculative where conversations are increasing or actual mandates increasing?

Scott Joseph Adelson

It is both. I will call it verbally mandated, actively mandated, both and software is clearly one of the driving sectors, not, by far not the only sector. But typically, when we have an increasing restructuring cycle, it is driven by an industry or another. And right now, it is software.

Ryan Kenny

Got it. And then just to be very clear on the earlier discussion about transaction size. So you would still stay within below $2 billion in value. And is that right?

Scott Joseph Adelson

Yes. 100%.

Ryan Kenny

And then does that number move up over time as the market inflates?

Scott Joseph Adelson

Yes. 100%, we have not moved our strategy one bit. This is not a strategic focus. This is about being better utilizing our information to make more calculated decisions within our market that we play in.

Ryan Kenny

And does that number move up over time as the economy grows or no?

J. Alley

Yes. It's moved up over time historically. I mean just we, just on average, it's not about the economy. We went from average transaction sizes of $100 million many, many, many years ago, and now we're closer to $200 million to $300 million. And we expect that number over time to continue to go up, but in baby steps.

Scott Joseph Adelson

And I think the only other comment I want to make is on the restructuring question. I mean I think that we will, we're seeing some of that this year. We believe we will see more of that in fiscal '28 just because it takes time for those deals to work their way through the pipeline.

Ryan Kenny

And so was the $481 million in revenues a good base to grow off of? Or was it positively impacted by that timing that you mentioned that resulted in higher fees per deal?

J. Alley

I would say it's a good solid base to grow off of.

Operator

And our next question will come from Alex Bond with KBW.

Alexander Bond

Maybe I just want to follow up on, again on the larger deals that did get across the line this quarter. Maybe if you could just comment if you're seeing more willingness from clients to push through some of the macro and geopolitical volatility that may have deterred some of the activity earlier in the year. I think you had mentioned some elongated deal timelines for those deals, again, in the earlier portion of the year. So are clients more willing to sort of look through that, what's going on, on the macro and geopolitical fronts there?

Scott Joseph Adelson

Yes. I think we've talked about it before. When these things happen, they have created speed bumps or traffic jams or whatever you want to call it, that have slowed things down. And then it has settled in and people go, okay, the sky is not going to fall. And then they keep to mix my metaphors, and then they keep on with the deals. And that is what we are seeing. And right now, we are seeing a willingness to do deals. And I just was in a meeting with somebody, they were commenting on, we're getting to a point where people are like, look, I just want to get this done. And that is a good sign when people start saying that for things just moving through the pipeline.

Operator

And our next question will come from James Yaro with Goldman Sachs.

James Yaro

I was hoping you might be... Just hoping you might expand a little bit on the FVA business outlook from here. Perhaps if you could just comment on the cyclical versus noncyclical parts of the business? And then also if you could just comment on some of the newer initiatives in that business that you've been working on the past few quarters and years.

Scott Joseph Adelson

Yes. Great. Thanks, James. The growth, as I mentioned in my comments, is really largely, not exclusively, but largely coming from our portfolio valuation business, and that is a noncyclical business and has been growing very strongly at this point for a very long time. And some of those new initiatives that we are pushing into are in that arena as well, and we feel very good about where that business is heading and like that a lot. Our other 2 businesses, our opinion business and our advisory business are more tied towards, are more cyclical and more tied to the M&A environment, not exclusively, but are more tied to that. And while they are up, they haven't been driving the growth quite as much.

James Yaro

Okay. Great. I was hoping perhaps you could just touch a little bit on the non-comp expense trajectory. Obviously, I thought very well managed non-comps this quarter. So I was hoping you might be able to just update us on how you're thinking about the trajectory for that going forward.

J. Alley

I think, James, for now, we're kind of at where we were at last quarter. I still think last year's annual growth is a decent proxy. We had a good first quarter relative to that. Second quarter is kind of right on track. Second half of the year may sort of make up for the better first quarter a little bit. But I think you can expect non-comp to grow similarly to last year by the time we reach the end of the fiscal year.

Operator

[Operator Instructions]

Our next question will come from Mike Brown with UBS.

Michael Brown

I guess if I use your analogy from last quarter, I think you called it a bit of a rain delay. So the middle market activity has clearly rebounded. Maybe just narrow in on the sponsor space, specifically. Obviously, that's a big cohort in the middle market. We saw some life coming back kind of later in the summer. It sounds like things are continuing to progress for your business there. Maybe just talk a little bit about that cohort though specifically. Is the conviction levels that you kind of referenced previously, is that also apply here for this group? And are you starting to see, are LPs starting to kind of drive more of that urgency to act? Has that been a bit of a catalyst for activity recently?

Scott Joseph Adelson

So that's, given the importance of that cohort for us, it absolutely is part of it. I mean that is the largest part of our client base does tend to be sponsor driven. So it absolutely is driving that return. And yes, we are seeing a growing willingness to do transactions in the sponsor community, and that has been ramping. And again, whether you get another rain delay or we hopefully don't, we don't know, but it is all headed in that correct direction.

J. Alley

And the limited partner pressure has been in place for years. So it hasn't changed.

Scott Joseph Adelson

I don't think that all of a sudden, they're succumbing to that. That has been around for quite a while, and it is much more, they're just ready to get on.

Michael Brown

Okay. Understood. Understood. Okay. And then maybe just to double-click on the financial restructuring side of the business. You talked about a lot of the strength you're seeing there and some growth potential that can come through. Can you maybe just talk a little bit about some of the opportunities outside of the U.S. and maybe specifically Europe? And then on the software restructuring opportunity, you talked about that's been driving activity. I guess when can that really move the needle? Is that going to be a 2027 story? Or is that going to be more like a '28 story? And then how would you maybe size the quantum of opportunity there in a base case maybe compared to prior restructuring cycles?

J. Alley

So I think, look, we think we are extraordinarily well positioned in restructuring in Europe. And so we, and we think there are it is a very attractive environment in Europe in restructuring today. And so we're, I think, quite bullish on both the U.S. and the European restructuring market really over the next couple of years as we see these debt maturity walls approach us. With respect to software, I don't want to size it, but it is going to be a huge opportunity for those who are in software restructuring. So it's not just going to be Houlihan Lokey.

Your best proxy is if you go back to the oil and gas dislocation that occurred in our fiscal 2017 and got a sense of how that impacted our restructuring business in a single year, software is much larger than that. And so that's not a bad way to think about it. We don't think that probably starts for us from a revenue standpoint until calendar '27, but we think that is calendar '27 and calendar '28 that you're going to see revenues from software activity that we're seeing today really start to translate into closed transactions.

Operator

And this concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Scott Joseph Adelson

I want to thank you all for participating in our second quarter fiscal 2027 earnings call. We look forward to updating everyone on our progress when we discuss our third quarter results for fiscal 2027 this winter. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.