Houlihan Lokey Inc (HLI) Q4 2025 Earnings Call Highlights: Record Revenue and Strategic ...

Yahoo

08-05-2025

Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Houlihan Lokey Inc (NYSE:HLI) reported record annual revenue of $2.4 billion for fiscal year 2025, marking a 25% increase from the previous year.
The company achieved a 28% increase in quarterly revenue and a 54% rise in adjusted earnings per share compared to the same quarter last year.
HLI successfully executed three acquisitions during the year, expanding its industry, geographic, and product reach, which contributed significantly to its growth.
The Corporate Finance division saw a 44% increase in revenue for the quarter, with the average transaction fee and transaction size both growing.
The company rebranded its capital markets business to 'Capital Solutions,' reflecting its strategic expansion and diversification into high-growth, less volatile revenue streams.
Negative Points
The company faces challenges in forecasting due to current market volatility, making it difficult to predict future performance accurately.
Despite strong results, the financial restructuring business is subject to cyclical fluctuations, which could impact future revenue consistency.
Adjusted non-compensation expenses increased to $85 million for the quarter, reflecting higher costs associated with headcount growth and technology investments.
The adjusted compensation expense ratio remained high at 61.5%, indicating significant costs related to employee compensation.
The company anticipates high single-digit growth in adjusted non-compensation expenses for fiscal 2026, which could pressure profit margins if revenue growth does not keep pace.
Q & A Highlights
Q: Can you provide insights on how revenues have been tracking quarter-to-date and any differences between sponsor and strategic clients? A: Scott Adelson, CEO: It's too early to provide meaningful indications due to the volatile environment. However, pitch level activity and deals are moving at a normal rate. Certain sectors and geographies are more impacted than others.
Q: How do you view the restructuring market, particularly in terms of liability management versus Chapter 11? A: Scott Adelson, CEO: We expect restructuring to remain at elevated levels, and recent events have reinforced this outlook. The mix of restructuring types is less relevant as they are all considered restructurings.
Q: What are your thoughts on the fundraising trends for private equity, especially for smaller firms? A: Scott Adelson, CEO: The primary fundraising business has been constrained due to inadequate capital recycling. However, there are various ways to fill these voids, such as continuation funds and direct selling.