Executive Summary
Houlihan Lokey reported a strong Q4 2025 performance, with revenues hitting $666.4 million, representing an increase of 28% year-over-year. This marks the highest annual revenue in the firm's history, totaling $2.4 billion for the fiscal year 2025, up 25% compared to the prior year. Management credited growth to successful acquisitions and a diversified service offering that is positioned well despite economic volatility. Looking ahead, the firm remains optimistic about maintaining momentum across its core business lines amid uncertain market conditions.
CEO Scott Adelson highlighted the firm's adaptability and strength in managing through complex markets, stating, "These results are a testament to our business strategy, our diversified business model, and the perseverance of our colleagues around the globe." Linday Alley, CFO, outlined expectations for continued growth driven by increased headcount and ongoing investment in technology and branding, despite predicting high-single-digit growth in adjusted non-compensation expenses for the upcoming fiscal year.
Key Performance Indicators
Key Insights
**Revenue Performance**: Q4 2025 revenues reached $666.4 million, a 28.05% increase year-over-year and 5.04% quarter-over-quarter growth. Operating income stood at $139.2 million with an operating margin of 20.89%.
**Profitability Metrics**: Net income was $121.9 million, reflecting growth of 50.38% compared to Q4 2024, with an EPS of $1.84. The firm maintained solid gross and operating margins at 33.09% and 20.89% respectively, suggesting strong cost management.
**Balance Sheet Overview**: Ho...
Financial Highlights
Revenue Performance: Q4 2025 revenues reached $666.4 million, a 28.05% increase year-over-year and 5.04% quarter-over-quarter growth. Operating income stood at $139.2 million with an operating margin of 20.89%.
Profitability Metrics: Net income was $121.9 million, reflecting growth of 50.38% compared to Q4 2024, with an EPS of $1.84. The firm maintained solid gross and operating margins at 33.09% and 20.89% respectively, suggesting strong cost management.
Balance Sheet Overview: Houlihan Lokey’s cash reserves increased to $975.58 million, supporting a strong current ratio of 26.07, indicating excellent liquidity. Total liabilities amounted to $1.645 billion against total assets of $3.819 billion, resulting in a debt-to-equity ratio of 0.201, demonstrating manageable leverage.
Cash Flow Analysis: The company noted a free cash flow of $343.9 million, indicating robust cash generation capabilities amidst sizable investments.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
666.42M |
28.05% |
5.04% |
| Gross Profit |
220.51M |
15.49% |
8.07% |
| Operating Income |
139.21M |
35.55% |
2.28% |
| Net Income |
121.92M |
50.38% |
27.93% |
| EPS |
1.84 |
46.03% |
26.90% |
Key Financial Ratios
operatingProfitMargin
20.9%
operatingCashFlowPerShare
$5.41
freeCashFlowPerShare
$5.19
dividendPayoutRatio
31.6%
Management Commentary
- Acquisitions as Growth Drivers: CEO Scott Adelson noted, "This year was our most active year ever, closing three acquisitions that altogether expanded our industry, geographic and product reach."
- Operational Resilience: Adelson stated, "We begin the new fiscal year with momentum across all our product lines even as the early weeks have been marked by turmoil in global markets and the economy."
- Continuous Improvement: CFO Lindsey Alley elaborated on anticipated future trends, stating, "We expect our adjusted non-compensation expense to grow in the high-single-digits for fiscal 2026 as we continue to increase headcount...."
"A significant driver of our growth has been our ability to execute on acquisitions. This year was our most active year ever..." - Scott Adelson
— Scott Adelson
"As we continue to increase headcount, make investments in technology, and invest in our brand across the globe." - Lindsey Alley
— Lindsey Alley
Forward Guidance
Management remains cautiously optimistic for Fiscal Year 2026, signaling potential continuity in elevated revenues from financial restructuring services. The firm’s ability to navigate a turbulent economic landscape will be crucial, especially as it balances investments in headcount and technology while experiencing potential revenue seasonality akin to fiscal 2025's ranking. Key factors to monitor include interest rates and their influence on investment and restructuring activity.