HLI — Houlihan Lokey, Inc.

Summary of HLI Q4 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Record $2.6 billion for FY 2026, up 10% year-over-year; Q4 revenue of $636 million.
• Adjusted EPS: $7.56 for FY 2026, up 20% year-over-year; Q4 adjusted EPS of $1.63.
• Segments:
  • Corporate Finance: $434 million in Q4, up 5% year-over-year; 171 transactions closed.
  • Financial Restructuring: $110 million in Q4, down 3% year-over-year; 30 transactions closed, down 21%.
  • Financial Valuation and Advisory: $91 million in Q4, up 3% year-over-year; 1,248 fee events.
• Expenses: Adjusted compensation expenses were $391 million in Q4, with a ratio of 61.5%. Non-compensation expenses grew 10.5% to $94 million.
• Cash Position: Approximately $1.4 billion in cash and investments at quarter-end.

2. Strategic Updates and Business Highlights

• Both Corporate Finance and Financial Valuation Advisory achieved record revenues for the year.
• The Financial Restructuring business had one of its strongest years, with expectations for continued elevated performance in FY 2027.
• The company has a record level of backlog and pipeline, with strong hiring trends (33 managing directors added in FY 2026).
• Successful acquisitions of Audere Partners and Mellum Capital were completed in Q4.
• The quarterly dividend was increased by 17% to $0.70 per share.

3. Forward Guidance and Outlook

• Corporate Finance: Expected to face variability in Q1 FY 2027 due to extended deal timelines influenced by geopolitical uncertainties.
• Financial Restructuring: Improved outlook with expectations for elevated activity levels driven by market dislocations.
• General Outlook: Anticipation of strong M&A activity as geopolitical uncertainty subsides, with a focus on pent-up demand from private equity sponsors.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: Geopolitical uncertainties, particularly from the conflict in the Middle East, have impacted transaction timelines and overall market conditions.
• Sector-Specific Issues: The technology sector, particularly software, is experiencing pressures that may affect transaction volumes and valuations.
• Financial Restructuring: Despite an improved outlook, Q4 results reflected a decline in average transaction fees and a decrease in closed transactions compared to the previous year.

5. Notable Q&A Insights

• Restructuring Outlook: Management expressed confidence in the Financial Restructuring business, citing increased activity levels due to market conditions.
• Sponsor Activity: There is a strong desire among sponsors to transact, with expectations for increased deal flow despite some pricing pressures on certain assets.
• AI and Technology Investments: The company is actively investing in technology to enhance productivity and maintain competitiveness, particularly in the Financial Valuation Advisory segment.
• Capital Allocation: The company aims to balance acquisitions, share repurchases, and dividends, with a strong focus on maintaining cultural fit in potential acquisitions.

Overall, Houlihan Lokey reported robust financial performance in FY 2026, with strategic initiatives positioning the firm for continued growth despite facing some market challenges.