Houlihan Lokey, Inc. Q2 FY2026 earnings call

Key Points

• Corporate Finance: Revenues up 21%, highest completed transactions since late 2021, new business strong, Q4 expected strong.
• Financial Restructuring: Revenue up 2%, backlog robust despite slowdown in new business pace due to easing rates and improving macro environment.
• Financial and Valuation Advisory: Revenue up 10%, benefiting from improving M&A market with stronger performance in M&A-related service lines and continued growth in non-cyclical services.
• Hiring: Hired 5 new managing directors, progress on acquisition pipeline, non-US business showing solid growth in EMEA and APAC.

Corporate Finance produced $439 million in revenues for the quarter, a 21% increase over the prior year. Financial Restructuring had $134 million in revenues, a 2% increase versus the same period last year. Financial and Valuation Advisory generated $87 million in revenues, a 10% increase versus the same period last year. Non-U.S. business performed notably well with solid growth in EMEA and Asia Pacific regions.

Forward-Looking

• Outlook for second half of fiscal 2026 is positive with better macro environment than the last 6 months; expects year-over-year growth if current conditions persist.

Risks

• Volatility of tariff policies.
• Interest rate changes impacting business activity.
• Economic uncertainties affecting deal-making appetite.
• Competitive hiring environment potentially impacting acquisition pricing.

Q: Brennan Hawken from BMO asked about slowdown in restructuring new business activity.

A: Scott Adelson said pace has slowed but backlog remains robust, and things could spike.

Q: Brennan Hawken further asked about sponsors in corporate finance.

A: Scott Adelson said activity is getting better quarter-by-quarter, with sponsor community back since the start of the year.

Q: James Yaro from Goldman Sachs asked about Financial and Valuation Advisory growth profile.

A: Scott Adelson said it's a mix of non-cyclical, opinion, and transaction advisory services; J. Alley added it follows Corporate Finance direction but less volatile.

Q: James Yaro asked about corporate finance timing.

A: Scott Adelson said second half historically stronger, J. Alley noted mix and timing factors.

Q: Devin Ryan from Citizens Bank asked about restructuring trends and non-US banker productivity.

A: Scott Adelson said restructuring has episodic growth across sectors, non-US banker productivity lags US.

Q: Brendan O'Brien from Wolfe Research asked about Europe vs US trends and restructuring deal flow.

A: Scott Adelson and J. Alley discussed Europe growth potential and restructuring deal flow mix.

Q: Ryan Kenny from Morgan Stanley asked about client sentiment and sponsor sensitivity to rates.

A: Scott Adelson said uncertainty weighs on clients but capital is plentiful; J. Alley added large cap vs middle market impact.

Q: Alex Bond from KBW asked about acquisitions and Capital Solutions.

A: Scott Adelson said acquisition pipeline remains strong; J. Alley said Capital Solutions is strong, contributing over 20% to Corporate Finance.

Q: Nathan Stein from Deutsche Bank asked about macro headlines and share repurchases.

A: Scott Adelson said macro headlines not materially impacting, J. Alley said share repurchases based on acquisition strategy and excess capital.