8-K: Houlihan Lokey Reports Strong Q2 FY26 Financial Growth

Houlihan Lokey, Inc. announced robust financial results for its second fiscal quarter ended September 30, 2025, with significant revenue and earnings per share increases.

Summary

• Revenues for the second fiscal quarter ended September 30, 2025, increased to $659 million, up from $575 million in the prior year's comparable quarter.
• GAAP diluted earnings per share (EPS) rose to $1.63, compared to $1.37 in the second quarter of fiscal 2025.
• Adjusted diluted EPS reached $1.84, an increase from $1.46 in the same period last year.
• Net income for the quarter was $112 million (GAAP) and $127 million (Adjusted), up from $94 million and $100 million, respectively, year-over-year.
• The Board of Directors declared a regular quarterly cash dividend of $0.60 per share for Class A and Class B common stock, payable on December 15, 2025, to stockholders of record as of December 1, 2025.
• Corporate Finance revenues grew by 21%, Financial Restructuring revenues by 2%, and Financial and Valuation Advisory revenues by 10% compared to the prior year's second quarter.

Sentiment

Score: 9

Explanation: The filing reports strong financial performance across all key metrics, including significant revenue and earnings growth, coupled with a positive outlook and a declared dividend, indicating robust health and strategic execution.

Positives

• Total revenues increased by 14.6% to $659 million for Q2 FY26, demonstrating strong top-line growth.
• GAAP net income increased by 19.5% to $112 million, reflecting improved profitability.
• Adjusted net income increased by 27% to $127 million, indicating strong underlying operational performance.
• GAAP diluted EPS grew by 19% to $1.63, and adjusted diluted EPS increased by 26% to $1.84, showing enhanced shareholder value.
• Corporate Finance segment revenues surged by 21% to $439 million, driven by an increase in closed transactions due to favorable M&A and Capital Solutions market conditions.
• Financial Restructuring revenues increased by 2% to $134 million, benefiting from more closed transactions in favorable market conditions.
• Financial and Valuation Advisory revenues rose by 10% to $87 million, attributed to an increase in Fee Events and improvements in M&A markets.
• The company maintains a strong balance sheet with $1.11 billion in unrestricted cash and cash equivalents and investment securities as of September 30, 2025.
• A quarterly cash dividend of $0.60 per share was declared, indicating confidence in future cash flows and commitment to shareholder returns.

Negatives

• The GAAP compensation ratio increased to 64.2% for Q2 FY26, up from 62.7% in Q2 FY25, indicating a higher proportion of revenues allocated to compensation.
• A decrease in the average transaction fee on closed transactions was noted for both Corporate Finance and Financial Restructuring segments, although management stated this was driven by transaction mix and does not represent a trend.

Risks

• Forward-looking statements involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements.

Future Outlook

Management expresses optimism for continued momentum in the second half of the fiscal year, reflecting strong business model performance and improving market conditions.

Management Comments

• "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."

Industry Context

The company's strong performance is attributed to improving market conditions in M&A and Capital Solutions, as well as favorable market conditions for restructuring transactions. This suggests a broader positive trend in the investment banking sector, particularly in advisory services.

Comparison to Industry Standards

• Houlihan Lokey is recognized as the No. 1 investment bank for all global M&A transactions for the past two years, based on the number of transactions and data provided by LSEG.
• The firm is the No. 1 M&A advisor for the past 10 years in the U.S., based on the number of transactions and data provided by LSEG.
• Houlihan Lokey holds the position of the No. 1 global restructuring advisor for the past 11 years, based on the number of transactions and data provided by LSEG.
• The company is the No. 1 global M&A fairness opinion advisor over the past 25 years, based on the number of transactions and data provided by LSEG.

Corporate Governance

Stakeholder Impact

• Shareholders: Positive impact due to increased earnings per share, strong financial performance, and the declaration of a quarterly cash dividend.
• Employees: Compensation expenses increased in line with revenue growth, suggesting continued investment in human capital.
• Customers: Strong performance across advisory segments indicates continued client engagement and successful transaction closures.

Next Steps

• The company will host an investor conference call and live webcast on October 30, 2025, to discuss the results.
• A regular quarterly cash dividend of $0.60 per share will be paid on December 15, 2025.

Key Dates

Recommendation

The company delivered exceptional Q2 FY26 results, significantly exceeding prior year figures in revenues, net income, and EPS across both GAAP and adjusted metrics. All core business segments demonstrated robust growth, driven by favorable market conditions and increased transaction volumes. The declaration of a consistent dividend, coupled with management's optimistic outlook for continued momentum, reinforces confidence in the company's strategic positioning and execution. Its sustained leadership as a top-ranked investment bank further solidifies its competitive advantage, making it a compelling 'strong buy' for investors seeking growth and stability in the financial services sector.

Keywords

Houlihan Lokey, HLI, financial results, Q2 FY26, earnings, investment banking, M&A, financial restructuring, valuation advisory, dividend, corporate finance, capital solutions