Executive Summary
Houlihan Lokey, Inc. (NYSE: HLI) reported compelling financial performance in Q3 2025, with revenues reaching $634.4 million, a 24% increase year-over-year. Adjusted earnings per share (EPS) surged 34% to $1.64, indicating substantial profitability growth. The company's Corporate Finance and Financial Valuation Advisory segments benefited from a revitalized M&A market, while Financial Restructuring demonstrated resilience amid persistent high interest rates. Management expressed optimism for the remainder of the fiscal year and into 2026, citing expected improvements in market conditions and increased deal activity as key contributors to growth.
Key Performance Indicators
Key Insights
The Q3 results showcased the following key metrics:
**Revenue:** $634.4 million, a 24% YoY increase and a 10.3% QoQ increase.
**Gross Profit:** $204.1 million, with a gross profit margin of 32.2%.
**Operating Income:** $136.1 million, reflecting a robust operating income margin of 21.5%.
**Net Income:** $95.3 million, resulting in a net profit margin of 15.0%.
**Adjusted EPS:** $1.64, demonstrating a 34% increase compared to last year.
Management highlighted ongoing improvements across al...
Financial Highlights
The Q3 results showcased the following key metrics:
Revenue: $634.4 million, a 24% YoY increase and a 10.3% QoQ increase.
Gross Profit: $204.1 million, with a gross profit margin of 32.2%.
Operating Income: $136.1 million, reflecting a robust operating income margin of 21.5%.
Net Income: $95.3 million, resulting in a net profit margin of 15.0%.
Adjusted EPS: $1.64, demonstrating a 34% increase compared to last year.
Management highlighted ongoing improvements across all business lines, with Corporate Finance revenues growing by 36% year-over-year. Financial and Valuation Advisory rose 14%, supported by a stronger M&A environment. These metrics underpin the firm's solid operational health and strategic positioning.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
634.43M |
24.12% |
10.34% |
| Gross Profit |
204.05M |
9.07% |
-7.82% |
| Operating Income |
136.10M |
40.98% |
4.16% |
| Net Income |
95.30M |
34.60% |
1.87% |
| EPS |
1.45 |
31.82% |
2.11% |
Key Financial Ratios
operatingProfitMargin
21.5%
operatingCashFlowPerShare
$4.03
freeCashFlowPerShare
$3.97
dividendPayoutRatio
38.9%
Management Commentary
Key insights from management during the earnings call include:
Market Conditions and Performance: Scott Adelson, CEO, stated, "We have entered our last fiscal quarter with continued momentum across all three of our business lines... interest rates and inflation appear stable, and the results of the US election have improved confidence.Γ’β¬Β The overall sentiment reflects optimism about market conditions improving.
Corporate Finance Dynamics: "Corporate Finance produced $422 million of revenue for the quarter, representing a 36% increase over last year's third quarter,Γ’β¬Β Adelson added. This growth is attributed to increases in transaction volume, which suggests a robust recovery in M&A activities.
Acquisitions Impact: Lindsey Alley, CFO, noted, "We closed our acquisition of Waller Helms in early December, and our new partners are off to a strong start, contributing to our results," highlighting the strategic integration of new talent and capabilities.
"Revenues were up 24% and adjusted earnings per share were up 34% compared to the same period last year." - Scott Adelson, CEO
β Scott Adelson
"We have ongoing optimism about the balance of this fiscal year, as we believe the markets will continue to improve given a stronger macro environment." - Scott Adelson, CEO
β Scott Adelson
Forward Guidance
Looking ahead, management is optimistic about fiscal 2026, anticipating continued growth fueled by improving M&A market sentiments, increased private equity activity, and a sustained demand for restructuring services. According to Adelson, "Improving M&A market sentiment, an increase in private equity activity, and continued strength in our restructuring business are all encouraging indicators for continued growth." Investors should monitor interest rates and macroeconomic conditions closely, as these could significantly impact performance.