Summary of Houlihan Lokey's Q3 2026 Earnings Call

1Key Financial Results and Metrics

Revenues: $717 million, up 13% year-over-year.

Adjusted Earnings Per Share (EPS): $1.94, an 18% increase compared to the same quarter last year.

Corporate Finance Revenues: $474 million, a 12% increase, with 177 transactions closed (up from 170).

Financial Restructuring Revenues: $156 million, a 19% increase, with 41 transactions closed.

Financial and Valuation Advisory Revenues: $87 million, a 6% increase, with 1,103 fee events (up from 1,015).

Adjusted Compensation Expense Ratio: 61.5%, consistent with the previous year.

Cash and Investments: Approximately $1.2 billion, with share repurchases of about 418,000 shares.

2Strategic Updates and Business Highlights

Acquisitions: Closed the acquisition of Mellon Capital's real estate advisory business and announced a controlling interest in O'Dare Partners, enhancing European presence and capabilities.

Workforce Expansion: Hired six new managing directors and expanded teams in Europe.

M&A Activity: Stronger investor sentiment and expectations of declining interest rates are driving an increase in private equity activity and liquidity exploration among portfolio companies.

Recognition: Named the most active M&A investment bank and financial restructuring investment bank globally for 2025.

3Forward Guidance and Outlook

Corporate Finance: Positive outlook for fiscal 2027, with continued growth expected in M&A activity.

Financial Restructuring: Anticipated revenue pressures as the market improves, but geopolitical events may create new restructuring opportunities.

Overall Outlook: Confidence in future performance bolstered by strong visibility into deal activity and backlog.

4Bad News, Challenges, or Points of Concern

Restructuring Activity: While currently strong, there are concerns about potential revenue declines in restructuring as market conditions improve.

Geopolitical Risks: Ongoing geopolitical events could impact market stability and create uncertainty.

Market Conditions: The firm acknowledges pockets of opportunity but notes that visibility into consistent new restructuring opportunities is limited.

5Notable Q&A Insights

Restructuring Outlook: Management indicated that while restructuring activity may decline, there are still opportunities driven by specific sectors or geographies.

Corporate Finance Growth: The firm sees strong growth in corporate finance, particularly in private equity, and expects this trend to continue into the next fiscal year.

Geographical Growth: The U.S. remains the largest market, but European operations are growing rapidly, supported by recent acquisitions.

Capital Solutions: The firm is in early stages of building out its capital solutions business, with strong demand across various sectors.

Market Share: Management expressed confidence in their ability to continue gaining market share in the middle market, regardless of broader M&A market conditions. Overall, Houlihan Lokey reported solid financial performance in Q3 2026, with strategic expansions and a positive outlook for the future, despite some concerns regarding restructuring activity and geopolitical risks.