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HL

HOULIHAN LOKEY, INC. (HLI)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue was $605.3M and GAAP diluted EPS was $1.42; adjusted diluted EPS was $2.14, reflecting strong performance across Corporate Finance, Financial Restructuring, and FVA .
  • The company delivered a broad-based beat versus Wall Street consensus, with revenue above $580.0M* and adjusted EPS above $1.68*; both metrics surpassed estimates, a likely positive catalyst for the stock given recurring beats in recent quarters [GetEstimates Q1 2026]*.
  • Sequentially, revenue declined from Q4 FY25’s $666.4M as expected seasonality returned, but year-over-year revenue rose ~18% and adjusted EPS rose ~75% .
  • Management reiterated disciplined cost frameworks (adjusted comp ratio 61.5%) and guided FY26 adjusted effective tax rate to 25–26%, alongside a $0.60 dividend declaration for Q2 FY26 .

What Went Well and What Went Wrong

  • What Went Well

    • Corporate Finance revenue rose 21% YoY to $398.5M, with improving transaction size and average fee per transaction despite muted sponsor activity; “we are cautiously optimistic that this momentum will continue through fiscal 2026” — CEO .
    • Financial Restructuring revenue increased 9% YoY to $128.2M, with balanced debtor/creditor mix and expectations for elevated activity through FY26 .
    • FVA revenue grew 16% YoY to $78.6M, driven by non-cyclical service lines and rising fee events (957 vs. 847) .

  • What Went Wrong

    • Sequential revenue declined from $666.4M in Q4 FY25 to $605.3M in Q1 FY26, consistent with typical seasonality in Corporate Finance (Q4 to Q1) .
    • Adjusted non-compensation expense ratio rose to 15.6% in Q1 FY26, partly due to the Houlihan Lokey One conference; excluding the event, growth would have been in line with historical trends .
    • EMEA activity lagged the U.S. and is expected to remain slower through the summer, representing a regional headwind .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$634.4 $666.4 $605.3
Diluted EPS (GAAP, $)$1.39 $1.76 $1.42
Diluted EPS (Adjusted, $)$1.64 $1.96 $2.14
Adjusted Compensation Ratio (%)61.5% 61.5% 61.5%
Adjusted Non-Compensation Ratio (%)13.1% 12.8% 15.6%

Actual vs Wall Street Consensus (S&P Global) – Q1 FY26

MetricEstimate*Actual
Revenue ($USD)$580.0M*$605.3M
Primary EPS (Adjusted, $)$1.68*$2.14
# of Estimates (EPS)7*—
# of Estimates (Revenue)6*—

Values marked with * were retrieved from S&P Global.

Segment Revenues by Quarter

Segment ($USD Millions)Q3 2025Q4 2025Q1 2026
Corporate Finance (CF)$421.6 $412.7 $398.5
Financial Restructuring (FR)$130.9 $164.5 $128.2
Financial & Valuation Advisory (FVA)$81.9 $89.2 $78.6

KPIs

KPIQ3 2025Q4 2025Q1 2026
CF Closed Transactions (#)170 147 125
FR Closed Transactions (#)41 38 35
FVA Fee Events (#)1,005 1,224 957
CF Managing Directors (#)238 240 244
FR Managing Directors (#)57 57 58
FVA Managing Directors (#)42 42 45

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Compensation RatioFY26Target 61.5% reiterated in Q4 FY25 Maintain 61.5% for balance of year Maintained
Adjusted Non-Compensation Expense GrowthFY26High single-digit growth reiterated in Q4 FY25 High single-digit growth; Q1 elevated due to HL One conference Maintained (with timing impact)
Adjusted Effective Tax RateFY26Prior commentary indicated lower FY26 after policy change 25–26% FY26 guide Lowered vs FY25 baseline
Dividend per ShareQ2 FY26Raised to $0.60 in Q4 FY25 $0.60 declared, payable Sep 15, 2025 Maintained at higher level

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25)Previous Mentions (Q4 FY25)Current Period (Q1 FY26)Trend
Tariffs/Macro VolatilityConfidence improving post-election; steady QoQ improvement; elevated FR backdrop Sector/geography impacts; mid-market more resilient; animal spirits returning Cautious optimism amid volatility; mindful of headwinds incl. tariffs/inflation Improving but volatile
Sponsor ActivityDialogue and sentiment picking up; backlog maintained Backlogs strong; velocity improving Muted but improving; post-Labor Day expected inflection Gradual recovery
Regional Trends (U.S. vs EMEA)Broad pickup across geographies Non-U.S. stepwise stronger vs few years ago U.S. outpacing EMEA; EMEA slower through summer U.S. stronger
Capital Solutions (Private Capital)Strategic expansion; strong contribution; ecosystem growth Record year; rebranded Cap Solutions; strategic pillar Integrated approach serving GP stakes/LP stakes/directs; “a lot more to come” Structural growth
Restructuring Mix & CycleElevated; rates higher-for-longer; balanced pipeline Strong Q4 seasonality; conversations increasing Elevated; balanced in-court/out-of-court; potential “new trough” if rates ease Elevated for longer
Cost DisciplineAdjusted comp ratio at 61.5%; adjusted non-comp ~13.1% Adjusted comp ratio 61.5%; adjusted non-comp 12.8%; FY26 high single-digit non-comp Adjusted comp 61.5%; adjusted non-comp 15.6% (HL One impact) Maintained (event timing)
Tax Policy/ETRFY25 adjusted ETR guided 31–32% Policy change: stop excluding stock-vesting benefit; lowers FY26 ETR FY26 adjusted ETR guided 25–26% Lowering trajectory

Management Commentary

  • “We began fiscal 2026 with momentum across our business… solid performance by all three of our business lines… cautiously optimistic that we can continue to build on this momentum in fiscal 2026.” — CEO .
  • “We expect to maintain our long-term target of 61.5% for our adjusted compensation expense ratio for the balance of the year.” — CFO .
  • “We expect to continue to see elevated restructuring revenues throughout fiscal 2026.” — CEO .
  • “Revenues and activity levels in the U.S. continue to outpace those in EMEA and we expect this regional dynamic to persist through the summer.” — CFO .
  • “Our pipeline of acquisition opportunities remains robust… organic hires and strategic acquisitions will continue to help us expand our workforce across industry, service line, and geography.” — CEO .

Q&A Highlights

  • Corporate Finance momentum and backlog: Management sees quarter-by-quarter improvement, with sponsor activity expected to inflect post-Labor Day; avoids specific backlog metrics but notes steady progress and U.S. leading EMEA .
  • Non-compensation expenses: FY26 high single-digit growth re-affirmed; Q1 elevated due to HL One conference; per-employee adjusted non-comp rose to $35k .
  • Restructuring mix: Active in both in-court and out-of-court; liability management remains strong; elevated activity expected to persist through FY26 .
  • Capital Solutions: Integrated secondaries and broader private capital offerings are scaling well; viewed as structural growth vector .
  • Tone: “Cautiously optimistic” due to volatile macro; measured stance despite markets at highs and tariff headlines .

Estimates Context

  • Q1 FY26 beat vs consensus: Revenue $605.3M vs $580.0M*; adjusted EPS $2.14 vs $1.68*; 6–7 estimates contributed to consensus, indicating broad analyst coverage [GetEstimates Q1 2026]*.
  • Prior quarters also beat: Q4 FY25 revenue $666.4M vs $628.3M*; adjusted EPS $1.96 vs $1.62* [GetEstimates Q4 2025]. Q3 FY25 revenue $634.4M vs $604.1M; adjusted EPS $1.64 vs $1.52* [GetEstimates Q3 2025]*.
  • Implication: Consecutive beats across revenue and EPS increase the probability of upward estimate revisions for FY26, particularly if CF momentum and elevated FR persist (Street will likely revisit comp/non-comp assumptions and ETR trajectory) .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based beat with adjusted EPS and revenue above consensus; CF fee metrics improved despite muted sponsors — a favorable setup as sponsor activity returns post-Labor Day [GetEstimates Q1 2026]*.
  • Elevated restructuring appears durable; mixed in-/out-of-court work and “higher-for-longer” rate backdrop support sustained contribution through FY26 .
  • Cost discipline intact (adjusted comp 61.5%); near-term non-comp pressure tied to flagship HL One event; underlying trajectory remains within high single-digit growth guidance .
  • Lower FY26 adjusted ETR (25–26%) is a tailwind to net income vs FY25 baseline as policy change cascades through the year .
  • U.S. strength vs slower EMEA suggests regional mix will matter; exposure diversification across industries/geographies continues to be an asset .
  • Capital Solutions is scaling and strategically important; continued integration of secondaries and private capital solutions broadens revenue sources .
  • Dividend maintained at $0.60, reinforcing capital return while pursuing organic and inorganic growth .

Notes and cross-references:

  • Q1 FY26 figures (Revenue, GAAP EPS, Adjusted EPS, segment revenues, expense ratios, tax rate, dividend) from the 8-K and press release .
  • Prior quarters (Q4 FY25, Q3 FY25) data for trends and comparisons from the respective 8-Ks and call transcripts .
  • Consensus estimates from S&P Global via GetEstimates; values marked with * and noted as “Values retrieved from S&P Global.”