Houlihan Lokey (HLI) Q1 2027 earnings summary

Executive summary

• Q1 FY2027 revenues were $511 million, down 15.5% year-over-year, with adjusted EPS of $1.35 and net income of $78 million, reflecting macro headwinds and delays in large Corporate Finance transactions.

• Adjusted net income was $91 million, or $1.35 per diluted share, versus $148 million, or $2.14 per diluted share, year-over-year.

• Financial and Valuation Advisory (FVA) performed strongly, while Financial Restructuring was in line with expectations; Corporate Finance saw significant revenue decline.

• Delays in deal closings, especially in consumer-facing and software sectors, led to a business mix shift toward lower-fee advisory products.

• Acquisition of Intrepid Financial Partners announced, expected to close by end of Q2, adding 32 colleagues and strengthening the energy sector presence.

Financial highlights

• Corporate Finance revenues were $303 million, down 24% year-over-year; 127 transactions closed, flat year-over-year, but with lower average fees.

• Financial Restructuring revenues were $119 million, down 8% year-over-year, with 23 transactions closed and higher average fees.

• FVA revenues grew 13% year-over-year to $89 million, with 1,042 fee events (up 9%).

• Adjusted compensation expense ratio held steady at 61.5% for Q1 FY2027 and FY2026; GAAP compensation ratio was 64.3%.

• Adjusted non-compensation expenses rose 6% to $100 million; GAAP non-compensation expenses were $105 million.

Outlook and guidance

• Management expects deal closings to remain uneven in the near term due to ongoing macro uncertainty, but medium-term outlook is positive given strong backlog and pipeline.

• Restructuring activity expected to remain elevated, especially if sector-specific challenges persist.

• Non-compensation expense growth for FY2027 expected to be similar to last year.

• Long-term compensation expense ratio target of 61.5% reaffirmed.

• Management does not view current headwinds as indicative of a cyclical downturn.