Houlihan Lokey Inc (NYSE:HLI) Reports Strong Q3 Fiscal 2026 Results, Topping Analyst Estimates
Global investment bank Houlihan Lokey has delivered a robust set of financial results for its third quarter of fiscal 2026, ending December 31, 2025. The firm surpassed Wall Street's expectations on both the top and bottom lines, driven by growth across its core advisory segments amid what management described as improving market conditions.
Quarterly Performance vs. Estimates
The company reported revenues of $717.1 million for the quarter, a 13% increase compared to the $634.4 million generated in the same period last year. This result came in ahead of the analyst consensus estimate of approximately $708.3 million.
On a profitability basis, Houlihan Lokey posted adjusted net income of $133 million, or $1.94 per diluted share. This non-GAAP earnings per share figure exceeded the average analyst estimate of $1.89 per share.
The key quarterly comparisons are as follows:
- Reported Revenue: $717.1 million
- Estimated Revenue: ~$708.3 million
- Reported Adjusted EPS: $1.94
- Estimated Adjusted EPS: $1.89
Segment Breakdown and Growth Drivers
The revenue growth was broad-based, with all three of the firm's business segments posting year-over-year increases. Management attributed the performance to improving investor sentiment and an acceleration in private equity activity.
- Corporate Finance (CF): Revenues grew 12% to $473.7 million. The increase was driven by a higher number of closed transactions and a rise in the average transaction fee, the latter attributed to transaction mix rather than a sustained pricing trend.
- Financial Restructuring (FR): Revenues saw the strongest growth, rising 19% to $156.3 million. Similar to CF, this was fueled by a higher average transaction fee.
- Financial and Valuation Advisory (FVA): Revenues increased 6% to $87.1 million, supported by a higher number of fee events linked to improvements in the mergers and acquisitions markets.
Profitability and Expenses
The firm maintained disciplined cost management alongside its revenue growth. The adjusted compensation ratio held steady at 61.5% of revenues for the quarter. Adjusted non-compensation expenses increased, primarily due to higher spending on information technology and professional fees. The company's adjusted effective tax rate decreased to 30.6% from 33.3% in the prior-year quarter, benefiting from lower state taxes and non-deductible expenses.
Balance Sheet and Capital Allocation
Houlihan Lokey maintains a strong financial position. As of December 31, 2025, the company held $1.18 billion in unrestricted cash, cash equivalents, and investment securities. Demonstrating confidence in its financial health and commitment to shareholder returns, the Board of Directors declared a regular quarterly cash dividend of $0.60 per share. The firm also repurchased approximately 418,000 shares during the quarter under its existing share repurchase program.
Market Reaction and Forward Look
The market's immediate reaction to the earnings beat appears muted in after-hours trading. However, the company's performance over recent weeks suggests investors may have anticipated solid results. The lack of a dramatic move post-announceation could indicate the results were largely in line with or slightly better than elevated expectations.
Looking ahead, analysts currently project revenues of approximately $774.9 million for the upcoming fourth quarter (Q4 FY2026). For the full fiscal year 2026, the consensus sales estimate stands at around $2.76 billion. The press release did not provide specific quantitative financial guidance for the coming periods, which is typical for the firm.
Conclusion
Houlihan Lokey's third-quarter results underscore its resilience and competitive positioning in the investment banking sector. By exceeding revenue and profit expectations, the firm has demonstrated its ability to capitalize on a recovering advisory market. Its consistent performance across diverse segments—corporate finance, restructuring, and valuation—highlights a balanced business model. The strong balance sheet and ongoing capital returns via dividends and buybacks provide a solid foundation for future growth.
For a detailed look at Houlihan Lokey's upcoming earnings estimates and historical performance, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
