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Houlihan Lokey, Inc.: Q1 FY2027 earnings call

What management said about Q1 FY2027, from the documents filed with the SEC on 30 July 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Key takeaways

  • Revenue fell to $511 million: Revenues were $511 million, against $605 million a year earlier. Net income attributable to Houlihan Lokey was $78 million, against $98 million. Source
  • Adjusted EPS fell to $1.35: Adjusted diluted EPS was $1.35, against $2.14 a year earlier. Adjusted net income was $91 million, against $148 million. Source
  • Corporate Finance fell on lower fees: Corporate Finance revenue was $303 million, against $398 million, on a lower average fee per closed transaction. Management attributed this to transaction mix and said it does not represent a short-term trend. Source
  • Management calls headwinds temporary: Management said it believes the headwinds are temporary and do not represent a cyclical downturn, citing the general health of the economy and public market valuations. Source
  • Adjusted compensation ratio held at 61.5%: Adjusted compensation was $314 million, against $372 million, with the adjusted ratio at 61.5% in both quarters. GAAP compensation was $328 million, a 64.3% ratio, against 64.9%. Source
  • Cash and investments $797 million: At June 30, 2026 the company had $797 million of cash and cash equivalents and investment securities, against $1.36 billion of unrestricted cash and securities at March 31, 2026. Source

“Our first quarter results reflected ongoing headwinds in our Corporate Finance business which started last quarter, including instability in the Middle East and disruptions in the technology sector, specifically in software.”

Scott Adelson, Chief Executive Officer of Houlihan Lokey

Guidance

AreaPeriodFigureAgainst last quarter
Quarterly cash dividend Sourcesecond quarter of fiscal 2027, payable September 15, 2026$0.70 per shareKept

What changed from last quarter

  • New: Corporate Finance headwinds, which management said started last quarter. The prior release had reported Corporate Finance revenue up 5% in the fourth quarter. Source
  • Guidance kept: Quarterly dividend held at $0.70 per share, the amount declared in the prior release. Source

Quarter results and per-share earnings

  • Revenue fell to $511 million: Revenues were $511 million, against $605 million a year earlier. Net income attributable to Houlihan Lokey was $78 million, against $98 million. Source
  • Diluted EPS fell to $1.15: GAAP diluted EPS was $1.15, against $1.42 a year earlier, on net income attributable to Houlihan Lokey of $78 million. Source
  • Adjusted EPS fell to $1.35: Adjusted diluted EPS was $1.35, against $2.14 a year earlier. Adjusted net income was $91 million, against $148 million. Source
  • Segments moved in opposite directions: Corporate Finance revenue decreased 24%, Financial Restructuring decreased 8%, and Financial and Valuation Advisory increased 13% against the prior-year quarter. Source

Segments and deal activity

  • Corporate Finance fell on lower fees: Corporate Finance revenue was $303 million, against $398 million, on a lower average fee per closed transaction. Management attributed this to transaction mix and said it does not represent a short-term trend. Source
  • Restructuring fell on fewer closings: Financial Restructuring revenue was $119 million, against $128 million, with closed transactions at 23 against 35. Management attributed the lower volume to timing of closings. Source
  • Advisory revenue rose on fee events: Financial and Valuation Advisory revenue was $89 million, against $79 million, with fee events at 1,042 against 957 and managing directors at 47 against 45. Source

“Given the general health of the economy and strong public market valuations, we believe these headwinds are temporary in nature and do not represent a cyclical downturn.”

Scott Adelson, Chief Executive Officer of Houlihan Lokey

Demand and the headwinds

  • Management calls headwinds temporary: Management said it believes the headwinds are temporary and do not represent a cyclical downturn, citing the general health of the economy and public market valuations. Source
  • Timing of easing uncertain: Management said it is difficult to tell when the current headwinds will subside, while describing continued support for improved performance later in the year. Source
  • Headwinds sourced to Middle East: Management named instability in the Middle East and disruption in the software part of the technology sector as sources of the Corporate Finance headwinds. Source

Compensation and non-compensation costs

  • Adjusted compensation ratio held at 61.5%: Adjusted compensation was $314 million, against $372 million, with the adjusted ratio at 61.5% in both quarters. GAAP compensation was $328 million, a 64.3% ratio, against 64.9%. Source
  • Adjusted non-compensation costs rose: Adjusted non-compensation expenses were $100 million, against $94 million. Management attributed the increase mainly to higher professional fees; the ratio to revenues was 19.5%, against 15.6%. Source
  • GAAP non-compensation expenses declined: GAAP non-compensation expenses were $105 million, against $122 million, as lower revaluation of acquisition contingent consideration and lower depreciation and amortization outweighed higher professional fees. Source

“We continue to see strong support for improved performance for the balance of the year, but it is difficult to tell when the current headwinds will subside,”

Scott Adelson, Chief Executive Officer of Houlihan Lokey

Tax rate and adjusted measures

  • GAAP tax rate rose to 9.8%: The effective tax rate was 9.8%, against 0.5% a year earlier. Management attributed the increase to decreased stock-based compensation deductions. Source
  • Adjusted tax rate was 12.6%: The adjusted effective tax rate was 12.6%, against (0.8)% a year earlier. Source
  • Adjusted operating income fell to $97 million: GAAP operating income was $78 million, against $90 million. Adjusted operating income was $97 million, against $139 million, after $19 million of adjustments. Source

Cash, dividend and share count

  • Cash and investments $797 million: At June 30, 2026 the company had $797 million of cash and cash equivalents and investment securities, against $1.36 billion of unrestricted cash and securities at March 31, 2026. Source
  • Balance sheet cash fell to $745 million: Cash and cash equivalents were $745 million at June 30, 2026, against $1,189 million at March 31, 2026. Investment securities were $52 million, against $170 million. Source
  • Accrued salaries and bonuses fell: Accrued salaries and bonuses were $589 million at June 30, 2026, against $1,077 million at March 31, 2026. Source
  • Quarterly dividend held at $0.70: The Board declared a regular quarterly cash dividend of $0.70 per share of Class A and Class B common stock, the same amount declared in the prior release. Source
  • Repurchases of 348 thousand shares: The company repurchased 348 thousand shares under its share repurchase program during the quarter, against 301 thousand in the fourth quarter of fiscal 2026. Source
  • Fully diluted shares 67.6 million: Weighted average fully diluted shares were 67.6 million, against 68.9 million. Basic shares were 66.5 million, against 66.2 million. Source

Coming up, as management said on 30 July 2026

  • Dividend payment date set: Dividend of $0.70 per share is payable September 15, 2026 to holders of record on September 1, 2026. Source
  • Improved performance expected later in year: Management said it continues to see support for improved performance for the balance of the year, and gave no figures for it. Source

Figures management reported

FigureReported
Corporate Finance managing directors Source260 (244 a year earlier)
Corporate Finance closed transactions Source127 (125 a year earlier)
Financial Restructuring managing directors Source58 (58 a year earlier)
Financial Restructuring closed transactions Source23 (35 a year earlier)
Financial and Valuation Advisory managing directors Source47 (45 a year earlier)
Financial and Valuation Advisory fee events Source1,042 (957 a year earlier)

Risks management discussed

  • External: Instability in the Middle East and disruption in the software sector were cited as headwinds to Corporate Finance. Source
  • Demand: Management said it cannot tell when the current headwinds will subside, so the timing of a recovery is uncertain. Source
  • Operational: Timing of transaction closings reduced restructuring transaction volume, which management described as a timing matter. Source

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.