Houlihan Lokey Q2 2027 Revenue Rises 5% as First-Half Earnings Fall

Houlihan Lokey Inc. (NYSE: HLI) reported higher revenue and operating income for its fiscal second quarter ended September 30, 2026, although first-half revenue, margins and earnings remained below the prior-year period. Quarterly revenue rose 4.8% to $692 million, while six-month revenue declined 4.9% to $1.20 billion.

GAAP operating income for the quarter increased to $154 million from $151 million a year earlier. Adjusted operating income, which excludes certain acquisition-related and other items, rose to $175 million from $171 million. The improvement came despite higher compensation and non-compensation expenses.

Quarterly GAAP net income attributable to Houlihan Lokey was $109 million, compared with $111 million in the prior-year quarter. Diluted GAAP earnings per share edged up to $1.64 from $1.63, reflecting a lower diluted share count. Adjusted net income declined to $124 million from $127 million, while adjusted diluted EPS increased by one cent to $1.85.

First-Half Revenue and Margin Decline

For the six months ended September 30, revenue fell to $1.20 billion from $1.27 billion. GAAP operating income decreased to $232 million from $241 million, and GAAP net income attributable to the company declined to $187 million from $209 million. Diluted GAAP EPS was $2.78, down from $3.04.

The first-half adjusted figures showed a larger earnings decline. Adjusted operating income fell to $272 million from $310 million, while adjusted net income dropped to $215 million from $275 million. Adjusted diluted EPS decreased to $3.20 from $3.98.

Houlihan Lokey’s adjusted pre-tax margin was 23.7% for the six-month period, compared with 25.9% a year earlier. Adjusted compensation expense declined to $740 million from $778 million, but adjusted non-compensation expense increased to $191 million from $177 million.

Financial and Valuation Advisory Gains Revenue Mix

Corporate Finance remained Houlihan Lokey’s largest business, accounting for 65% of first-half revenue, compared with 66% in the prior-year period. Financial Restructuring contributed 20%, down from 21%, while Financial and Valuation Advisory increased its share to 15% from 13%.

For the 12 months ended September 30, 2026, Corporate Finance generated $1.69 billion of revenue, or 66% of the total, from 617 closed transactions or fee events. Financial Restructuring produced $503 million, representing 20%, from 121 transactions. Financial and Valuation Advisory generated $361 million, or 14%, and recorded 2,567 fee events.

The company reported approximately $2.6 billion of total revenue over that trailing 12-month period. As of September 30, it had 2,937 employees, including 370 managing directors, across 34 locations worldwide.

Growth Strategy Remains Focused on Hiring and Acquisitions

Houlihan Lokey said its long-term expansion strategy centers on developing internal talent, hiring senior industry and product bankers, pursuing strategic acquisitions and joint ventures, and using technology and data to support its advisory services.

In Corporate Finance, the firm is focused on expanding industry expertise and geographic coverage, building its Capital Solutions platform, and increasing transaction size and fees. Financial Restructuring growth priorities include broader use of leverage globally, increasingly complex balance sheets and continued globalization of restructuring advice. In Financial and Valuation Advisory, the company plans to expand geographically, add higher-value services and deepen client relationships across their lifecycle.

Houlihan Lokey has completed 21 acquisitions over the past 15 years to broaden its industry coverage, geographic reach and service offerings. Its latest listed transaction was the September 2026 acquisition of an energy-sector-focused investment bank. The company describes acquisitions as a complement to organic growth and structures transactions using combinations of upfront and contingent consideration.

The firm said it operates with low debt and maintains a $150 million revolving credit facility that remains undrawn. Its capital-allocation priorities include growing the quarterly dividend as the business expands, using excess cash for strategic and accretive acquisitions when possible, and returning accumulated excess cash to shareholders efficiently.

Management’s expectations remain subject to market, execution and acquisition-related risks. The presentation cautioned that actual results could differ materially from forward-looking statements because of known and unknown risks and uncertainties, including factors detailed in the company’s regulatory filings. Its adjusted measures also exclude acquisition-related compensation, integration costs, intangible-asset amortization and certain tax effects, and may not be comparable with similarly named measures used by other companies.