Houlihan Lokey’s first quarter saw revenues decline compared to the previous year, missing Wall Street’s expectations. Nevertheless, the market responded positively, reflecting optimism about underlying business activity and future prospects. Management attributed the shortfall to the timing of deal closings, particularly in the Financial Restructuring segment, and volatility in the software sector. CEO Scott Adelson noted, “Our quarterly results are typically more volatile than our annual results due to both external macro events and the timing of revenues.” He emphasized that Corporate Finance and Financial Valuation and Advisory still achieved their highest fourth quarter revenues ever, despite external disruptions.
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Houlihan Lokey (HLI) Q1 CY2026 Highlights:
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Revenue: $635.6 million vs analyst estimates of $679.4 million (4.6% year-on-year decline, 6.4% miss)
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Adjusted EPS: $1.63 vs analyst expectations of $1.79 (8.9% miss)
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Adjusted EBITDA: $158.6 million vs analyst estimates of $172.8 million (24.9% margin, 8.2% miss)
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Operating Margin: 19.7%, down from 21.2% in the same quarter last year
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Market Capitalization: $10.39 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Houlihan Lokey’s Q1 Earnings Call
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Brennan Hawken (BMO): Asked if the improved restructuring outlook means revenue pressures have faded. CEO Scott Adelson said activity has picked up due to market dislocation and recent wins, supporting elevated expectations for the year.
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Devin Ryan (Citizens Bank): Inquired about the magnitude of pent-up private equity deal activity and potential pricing mismatches. Alley commented that over half of sponsor-backed assets are aging, indicating pent-up demand, but acknowledged some assets may face valuation challenges.
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Brendan O’Brien (Wolfe Research): Asked about the sustainability of international growth, especially in Europe. Adelson said their differentiated business and recent acquisitions support continued growth, though regional headwinds persist.
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Brendan O’Brien (Wolfe Research): Queried about AI’s impact on pricing and profitability in Financial and Valuation Advisory. Adelson and Alley explained that while pricing pressure exists, technology investments and market expansion should outpace any declines.
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James Yaro (Goldman Sachs): Sought clarification on whether recent deal delays in Corporate Finance and Restructuring were temporary. Alley responded that deal timing is unpredictable, but expects delayed transactions to close in the coming quarters, supporting ongoing elevated activity.
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