10-K: Houlihan Lokey Reports Strong Fiscal 2026 Growth

Houlihan Lokey reported a 10% increase in annual revenue to $2.62 billion for fiscal 2026, driven by strong performance in its Corporate Finance segment.

Summary

• Annual revenue reached $2.62 billion, a 10% increase from $2.39 billion in fiscal 2025.
• Net income attributable to Houlihan Lokey, Inc. was $425.7 million, up 7% from the prior year.
• Corporate Finance segment revenue grew 14% to $1.74 billion, supported by 644 closed transactions.
• Financial Restructuring revenue decreased 3% to $529 million due to less favorable market conditions for restructuring.
• Financial and Valuation Advisory revenue increased 8% to $344 million.
• The company maintained a 64% compensation ratio for both fiscal 2026 and 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a solid performance, reflecting the firm's ability to grow revenue and maintain profitability despite a complex global economic environment.

Positives

• 10% year-over-year revenue growth to $2.62 billion.
• Strong growth in Corporate Finance segment profit, up 23% to $581 million.
• Increased number of closed transactions in Corporate Finance (644 vs 564 in 2025).
• Solid balance sheet with $1.19 billion in cash and cash equivalents.
• Continued commitment to regular quarterly dividends.

Negatives

• Financial Restructuring segment revenue declined 3% and segment profit fell 14%.
• Non-compensation expenses increased 12% to $407.1 million.
• Corporate expenses rose 21% to $326.9 million.
• Net bad debt expense of $7.7 million recorded for the year.

Risks

• Volatility in revenue due to reliance on contingent advisory fees.
• Sensitivity to global market conditions, interest rates, and geopolitical instability.
• Intense competition from bulge-bracket firms and other independent advisors.
• Potential impairment of goodwill and intangible assets, which total $1.60 billion.
• Concentration of voting power in the HL Voting Trust (74% of voting power).
• Cybersecurity threats and potential for data breaches.

Future Outlook

Management expects a relatively stable environment for M&A and capital markets, though uncertainty remains due to elevated interest rates, inflation, and geopolitical conflicts. The firm continues to see sustained restructuring and liability management activity.

Management Comments

• Management remains positive regarding client dialogue concerning strategic alternatives.
• The firm continues to focus on organic growth and strategic acquisitions to expand its platform.

Industry Context

StockSavvy.ai notes that Houlihan Lokey continues to outperform as a leading independent advisor, successfully navigating a mixed macroeconomic environment where M&A activity has recovered while restructuring demand remains steady due to high leverage and interest rates.

Comparison to Industry Standards

• Maintains a strong competitive position in the mid-cap M&A market compared to bulge-bracket firms.
• Continues to be a market leader in financial restructuring, serving as a countercyclical hedge against M&A volatility.

Corporate Governance

Legal Proceedings

• The company is involved in various routine legal actions arising in the normal course of business, none of which are expected to have a material adverse effect.

Related Party Transactions

• Loans receivable from certain employees totaling $35.9 million as of March 31, 2026.

Stakeholder Impact

• Shareholders benefit from continued dividend payments and share repurchase programs.
• Employees benefit from broad-based ownership and competitive compensation structures.

Next Steps

• File definitive proxy statement for the 2026 annual meeting of stockholders.
• Continue execution of growth initiatives and strategic hiring.
• Maintain regular quarterly dividend payments.

Key Dates

Recommendation

The company is performing well and growing, but the stock is likely fairly valued given the current market environment and the inherent volatility of contingent advisory fees.

Keywords

investment banking, mergers and acquisitions, financial restructuring, valuation advisory, capital markets, HLI, 10-K