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Houlihan Lokey, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 31 October 2025: press release. Guidance figures: 1 kept. The quarter’s numbers.

Key takeaways

  • Revenue rose to $659 million: Revenues were $659 million, compared with $575 million a year earlier; all three segments reported higher revenue. Source
  • GAAP net income and diluted EPS: Net income was $112 million, or $1.63 per diluted share, against $94 million and $1.37 a year earlier. Source
  • Corporate Finance revenue up 21%: CF revenues were $439 million, against $364 million a year earlier, reflecting a higher number of closed transactions. Source
  • Financial Restructuring revenue up 2%: FR revenues were $134 million, against $132 million a year earlier; the prior quarter's release had reported FR growth of 9%. Source
  • Adjusted compensation ratio held at 61.5%: The adjusted compensation ratio was 61.5% in both the quarter and the prior-year quarter; the GAAP ratio was 64.2%, against 62.7%. Source
  • Capital Solutions and M&A conditions cited: Management attributed the CF revenue increase to market conditions in M&A and Capital Solutions. Source
  • Cash and investments of $1.11 billion: The company held $1.11 billion of unrestricted cash and cash equivalents and investment securities at September 30, 2025. Source

“Our results for the quarter reflect our strong business model and improving market conditions. We enter the second half of the year with optimism for continued momentum.”

Scott Adelson, Chief Executive Officer of Houlihan Lokey

Guidance

AreaPeriodFigureAgainst last quarter
Dividend SourceThird quarter of fiscal 2026$0.60 per shareKept

Results and growth drivers

  • Revenue rose to $659 million: Revenues were $659 million, compared with $575 million a year earlier; all three segments reported higher revenue. Source
  • GAAP net income and diluted EPS: Net income was $112 million, or $1.63 per diluted share, against $94 million and $1.37 a year earlier. Source
  • Adjusted net income and diluted EPS: Adjusted net income was $127 million, or $1.84 per diluted share, against $100 million and $1.46 a year earlier. Source
  • GAAP operating income increased: GAAP operating income was $151 million, against $131 million a year earlier. Source

Segment revenue results

  • Corporate Finance revenue up 21%: CF revenues were $439 million, against $364 million a year earlier, reflecting a higher number of closed transactions. Source
  • Financial Restructuring revenue up 2%: FR revenues were $134 million, against $132 million a year earlier; the prior quarter's release had reported FR growth of 9%. Source
  • Financial and Valuation Advisory revenue up 10%: FVA revenues were $87 million, against $79 million a year earlier. Source

Costs, margins and tax

  • Adjusted compensation ratio held at 61.5%: The adjusted compensation ratio was 61.5% in both the quarter and the prior-year quarter; the GAAP ratio was 64.2%, against 62.7%. Source
  • Acquisition pay lifts GAAP compensation: GAAP compensation was $423 million, against $406 million adjusted; the difference is acquisition-related compensation and benefits of $17.6 million. Source
  • Non-compensation expenses broadly flat: Non-compensation expenses were $85 million, against $84 million; adjusted non-compensation expenses were $82 million, against $81 million. Source
  • Lower average fee on closed transactions: The average transaction fee on closed transactions fell in CF and FR, which the company attributed to transaction mix and said does not represent a trend. Source
  • Effective tax rates were 30.2% and 29.7%: GAAP effective tax rate was 30.2%, against 31.3% a year earlier; the adjusted rate was 29.7%, against 31.3%. Source

Demand and market conditions

  • Capital Solutions and M&A conditions cited: Management attributed the CF revenue increase to market conditions in M&A and Capital Solutions. Source
  • Restructuring market conditions cited: Management attributed the increase in FR closed transactions to market conditions for restructuring transactions. Source
  • Advisory fee events tied to M&A markets: Management tied the increase in FVA Fee Events to improvements in M&A markets. Source

Capital and shareholder returns

  • Cash and investments of $1.11 billion: The company held $1.11 billion of unrestricted cash and cash equivalents and investment securities at September 30, 2025. Source
  • Class A shares outstanding increased: Class A shares outstanding rose to 54.6 million from 53.8 million at March 31, 2025, while Class B shares fell to 15.6 million from 16.0 million. Source
  • Weighted diluted share count rose: Fully diluted weighted average shares were 68.6 million, against 68.4 million a year earlier. Source

Balance sheet movements

  • Accrued salaries and bonuses declined: Accrued salaries and bonuses were $823 million at September 30, 2025, against $937 million at March 31, 2025. Source
  • Unbilled work in process increased: Unbilled work in process was $191 million, against $158 million at March 31, 2025; accounts receivable were $251 million, against $257 million. Source
  • Goodwill and intangible assets balances: Goodwill was $1.29 billion and other intangible assets, net were $201 million, against $213 million at March 31, 2025. Source

Adjusted results and reconciling items

  • Operating income adjustments of $20 million: Adjustments to operating income were $20 million for the quarter and $69 million for the six months, all from compensation and non-compensation lines. Source
  • Contingent consideration revaluation in six months: The revaluation of acquisition contingent consideration was $17.9 million in the six-month period and nil in the quarter. Source
  • Six-month adjusted EPS $3.98: Adjusted diluted EPS for the six months was $3.98, against $2.68 a year earlier. Source

Market standing and self-description

  • Ranked No. 1 for global M&A transactions: The company states it was the No. 1 investment bank for all global M&A transactions over the past two years, by number of transactions per LSEG data. Source
  • Restructuring and fairness rankings cited: Also cited are No. 1 rankings for global restructuring advice over 11 years and global M&A fairness opinions over 25 years. Source
  • Describes itself as global investment bank: The company describes itself as a global investment bank with expertise in M&A, capital solutions, financial restructuring, and financial and valuation advisory. Source

Coming up, as management said on 31 October 2025

  • Third-quarter dividend payment: Dividend is payable December 15, 2025 to stockholders of record at the close of business on December 1, 2025. Source

Figures management reported

FigureReported
Corporate Finance managing directors, period end Source242 (224 a year earlier)
Corporate Finance closed transactions, quarter Source171 (131 a year earlier)
Financial Restructuring managing directors, period end Source58 (58 a year earlier)
Financial Restructuring closed transactions, quarter Source37 (33 a year earlier)
Financial and Valuation Advisory managing directors, period end Source45 (41 a year earlier)
Financial and Valuation Advisory Fee Events, quarter Source1,075 (903 a year earlier)

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.