Houlihan Lokey’s Record Revenue Highlights Earnings Call

Houlihan Lokey Inc. ((HLI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Houlihan Lokey’s recent earnings call painted a picture of robust financial health, underscored by record revenue achievements and strategic growth through acquisitions. Despite the optimism surrounding these accomplishments, the company acknowledged the challenges posed by market volatility, which have impacted forecasting and increased expenses. Overall, the sentiment was one of cautious optimism, with strong performance metrics providing a solid foundation for future growth.

Record Annual Revenue

Houlihan Lokey reported a record $2.4 billion in annual revenue for fiscal year 2025, marking the highest in the firm’s history. This represents a 25% increase compared to the previous year, showcasing the company’s ability to generate significant growth despite challenging market conditions.

Strong Fourth Quarter Performance

The fourth quarter was particularly strong for Houlihan Lokey, with revenues reaching $666 million, a 28% increase from the same quarter last year. Adjusted earnings per share also saw a substantial rise, up by 54%, reflecting the company’s effective management and operational efficiency.

Corporate Finance Growth

Corporate Finance revenues experienced a remarkable 44% increase to $413 million in the fourth quarter compared to the same period last year. The number of closed transactions rose from 121 to 147, indicating robust activity and demand in this sector.

Acquisition Strategy Success

The company successfully closed three acquisitions in fiscal year 2025, significantly expanding its industry, geographic, and product reach. These strategic moves contributed to record revenues in financial restructuring and advisory, highlighting the effectiveness of Houlihan Lokey’s acquisition strategy.

Capital Markets Business Rebranding

The rebranding of the Capital Markets business to Capital Solutions underscores its strategic importance. This move is expected to contribute to diversified, high-growth, and less volatile revenues, aligning with the company’s long-term growth objectives.

Increased Dividend

Reflecting confidence in its financial position, Houlihan Lokey’s Board approved a 5.3% increase to the quarterly dividend, raising it to $0.60 per share. This decision underscores the company’s commitment to returning value to shareholders.

Volatility and Uncertainty in Forecasting

Despite the positive financial results, the company noted that current market volatility makes meaningful forecasting difficult. This uncertainty impacts the ability to predict near-term financial performance, necessitating a cautious approach to future projections.

Seasonality in Corporate Finance

Corporate Finance exhibited typical seasonality with a slight decline in revenues compared to the third quarter. The company anticipates similar patterns in fiscal year 2026, suggesting a need for strategic planning to mitigate seasonal impacts.

Increased Expenses

Adjusted compensation expenses rose to $410 million from $320 million the previous year, while adjusted non-compensation expenses increased to $85 million from $81 million. These rising costs highlight the need for careful expense management moving forward.

Forward-Looking Guidance

Looking ahead, Houlihan Lokey remains optimistic about its growth prospects, driven by strong performances in financial restructuring, financial and valuation advisory, and the rebranded Capital Solutions business. The company closed 147 transactions in Q4 within Corporate Finance, a 21% increase from the previous year. Financial Restructuring revenues rose by 6% year-over-year, while Financial and Valuation Advisory saw a 15% increase in revenue. Despite the challenges posed by market volatility, the company ended the fiscal year with $1.2 billion in unrestricted cash and equivalents, providing a solid financial foundation for future growth.

In conclusion, Houlihan Lokey’s earnings call reflects a company in a strong financial position, with record revenues and strategic growth initiatives driving optimism. While market volatility presents challenges, the company’s robust performance metrics and strategic initiatives position it well for continued success. Investors can take confidence in Houlihan Lokey’s ability to navigate uncertainty and deliver value.