Houlihan Lokey Posts Record Annual Revenues, Boosts Dividend, and Expands Corporate Finance Amid Mixed Segment Growth

Annual Records Set While Quarterly Results Reflect Market Realities

Houlihan Lokey (NYSE: HLI) has delivered another record-breaking fiscal year, with total revenues reaching $2.62 billion for 2026, marking a 9.5% increase over the prior year. Yet, quarterly trends were more nuanced: Q4 revenues fell to $636 million, down from $666 million in the same period last year, reflecting uneven growth across business lines and a more challenging deal environment as the company heads into fiscal 2027.

Corporate Finance Drives Growth, While Restructuring Lags

Corporate Finance (CF) was the engine behind this year's outperformance, posting $1.74 billion in annual revenues—a 14% year-over-year jump. The segment closed 644 transactions, versus 564 last year, driven by increased deal flow amid generally favorable M&A conditions. Fourth-quarter CF revenues also rose by 5% compared to Q4 2025.

Conversely, Financial Restructuring (FR) saw a 3% decline in fiscal 2026 revenues, sliding to $528.66 million. Fourth-quarter FR revenues dropped a significant 33% year-over-year, hurt by fewer closed deals and changes in transaction mix that weighed on average fees.

Financial and Valuation Advisory (FVA) provided steady support, notching 8% annual growth with revenues hitting $344.23 million, benefiting from a rise in fee-generating engagements as M&A activity improved.

Key Segment Data Snapshot

Earnings Per Share, Dividend, and Shareholder Returns Show Strength

Diluted EPS came in at $6.22 for the year and $1.47 for the fourth quarter. Adjusted annual EPS was $7.56, up from $6.29 a year ago. Reflecting its confidence, the firm announced a 16.7% hike in the quarterly dividend to $0.70 per share, alongside active share repurchases and a strong cash position of $1.36 billion in unrestricted cash, cash equivalents, and investment securities as of March 31, 2026.

Expense Control and Margins: Adjusted Metrics Paint a Clearer Picture

Expense discipline remains a focus amid rising revenues. For fiscal 2026, adjusted compensation expenses were $1.61 billion, or 61.5% of revenues—the same ratio as last year—while adjusted non-compensation expenses rose to $365 million. The GAAP compensation ratio was 64.3%, in line with comparable advisory peers, and the adjusted effective tax rate fell notably from 29.8% to 23.7% due to changes in policy around stock-based compensation deductions.

Balance Sheet Positions HLI for Flexibility and Growth

HLI's balance sheet remains robust, with total assets climbing to $4.31 billion and stockholders’ equity up to $2.34 billion. Cash and equivalents alone grew to $1.19 billion, arming the firm for further buybacks, dividends, or investments despite potential headwinds as fiscal 2027 unfolds.

CEO’s Outlook: Optimism Tempered by Uncertainty

Looking forward, CEO Scott Adelson remains cautiously optimistic about HLI’s diversified business model and prospects across all three business lines. However, commentary acknowledges the external uncertainties likely to shape the fiscal 2027 landscape—including transaction timing and market sentiment, especially in the restructuring segment.

Key Takeaway: HLI Demonstrates Resilience, But Investors Should Watch Segment Momentum

Houlihan Lokey enters its next fiscal year from a position of strength: record revenues, rising dividend, and solid balance sheet. But the mixed momentum between business segments serves as a reminder that not all engines are firing in sync. For those tracking the investment bank sector, segment performance and deal environment will bear close watch in the months to come.

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