Houlihan Lokey Revenue Reaches $692 Million, Adjusted EPS $1.85
Key Facts
Houlihan Lokey reported on October 28 second-quarter fiscal 2027 results for the period ended September 30, with revenue of $692 million and adjusted diluted EPS of $1.85. Revenue exceeded analysts’ estimate of $627.39 million, while EPS also beat their estimate of $1.63. Chief Executive Scott Adelson said revenue rose 5% from the same period last year, while adjusted EPS was unchanged. He described the quarter’s results as reflecting "a normalizing market environment," adding that this trend continued through October. The results came amid mixed performance across the company’s units, with growth in corporate finance, financial advisory and valuation offset by a decline in financial restructuring.
The corporate finance unit recorded revenue of $481 million, up 10% year over year, although the company closed 142 transactions compared with 171 in the same period. The chief financial officer said average fees on closed transactions increased as higher-fee transactions made up a larger share of the mix than lower-fee transactions. The company described the divergence between revenue growth and a lower transaction count as unusual for the business. Management said timing and unusual conditions in the first and second quarters contributed to the gap. This means higher revenue was tied to the transaction and fee mix, despite a decline in completed transactions.
By contrast, financial restructuring revenue fell 12% to $118 million, and the company closed 27 transactions in the unit, down 27% from the same period. Management linked its improved outlook for activity to pressure in the software sector, higher interest rates and geopolitical disruptions. It said it expects higher restructuring revenue in the second half of the fiscal year and is entering calendar 2027 with a record backlog and strong activity. The company also sees elevated restructuring revenue through fiscal 2028, with software-sector engagements beginning to contribute to revenue during 2027. These expectations frame the quarter’s decline as part of a trend management expects to improve later.
Financial advisory and valuation revenue rose 7% to $93 million, with management saying investment portfolio valuations were the main driver of growth. At the company level, Adelson said indicators support solid performance for the rest of the year across all three businesses. He added that growth had returned in Europe, the United States and most industry groups, except technology and healthcare. He remained cautious about macroeconomic volatility, however, citing interest rate pressures, continued geopolitical instability and disruption in the software sector. The company also projected an adjusted effective tax rate of 26% to 28% for fiscal 2027.
The stock moved in both directions during the October 28 results session, rising 3.8% in regular trading to $137.38 before falling 3.55% in after-hours trading to $132.50. The stock had closed at $132.35 on October 27. The report said investors were weighing revenue growth and unchanged adjusted EPS against declining restructuring revenue and higher expenses. The report did not identify a confirmed reason for the after-hours decline. The move came as management pointed to the market’s continued normalization while maintaining caution about macroeconomic factors.