Oct 28, 2026 earnings call — Restructuring strength and Corporate Finance recovery
Houlihan Lokey reported revenues of $692 million and adjusted EPS of $1.85 for the quarter.
Revenue $0.7B (est $0.6B) · EPS $1.85 (est $1.63)
Key quotes
"Based on our current backlog and new deal activity levels over the last several months, we see a stronger second half of the year and elevated restructuring revenues through fiscal 2028."
"We added 12 new managing directors in the second quarter, including 8 who joined us through our acquisition of Intrepid Financial Partners, which closed in September."
Analyst Q&A 8
Impact of rates and restructuring outlook
Q (Brennan Hawken · BMO): Will the Corporate Finance recovery continue and have higher rates affected deal activity? Are restructuring pipelines rebuilding and how does that outlook look?
A: Management said higher rates have not been a meaningful issue because capital is plentiful, and geopolitical shocks matter more. They said restructuring has turned around, driven significantly by software and helped by higher rates, and they feel better about the back half of the year and next year.
"That has really turned around, particularly with the fallout from software is a significant driver of that." — Scott Joseph Adelson (CEO)
Why fewer deals but higher revenues
Q (Nathan Stein · Deutsche Bank): Why did transactions fall year-over-year in Corporate Finance and Restructuring despite higher revenues? And why are you taking on larger deals now?
A: They said restructuring is lumpy, so transaction counts and revenues can disconnect often, while Corporate Finance saw unusual timing in Q1 and Q2 that created the disconnect. They also said they are being more intentional and are taking on somewhat larger, higher-fee mid-market deals based on better data, but remain focused on the middle market.
"This is not, when we say larger, that kind of scale, it's still squarely in our marketplace." — Scott Joseph Adelson (CEO)
Sector mix and non-M&A business health
Q (Devin Ryan · Citizens Bank): Is software still challenging and are other sectors carrying the business? How are capital solutions and private capital performing?
A: They said software remains down but is improving and health care is mainly a timing issue; they do not expect to match last year's software revenue. They said non-M&A businesses (capital solutions) are expected to perform similarly to M&A by year end, and Europe and the U.S. should look about the same.
"There is no world where I envision us doing the same amount of software revenue this year than we did last year." — Scott Joseph Adelson (CEO)
Second-half seasonality and M&A buys
Q (Gabriel Angelini · BofA): Should we expect stronger-than-normal seasonality in the second half? Is now a good time to pursue acquisitions and any sector focus?
A: They expect an unseasonably stronger second half based on metrics, but say it requires market cooperation. On acquisitions, they said they have a constant, robust process, are in-market all the time, feel good about their pipeline, and will only pursue deals that are a good cultural fit.
"I mean it's, the answer is based on all the metrics and all the things Scott suggested, yes, we should see an unseasonably higher seasonality in our second half." — J. Alley (CFO)
Restructuring drivers and deal size limits
Q (Ryan Kenny · Morgan Stanley): Which sectors drive the larger restructuring pipeline and are conversations or mandates increasing? Will you stay below $2 billion deal size and does that limit move over time? Was recent revenue a good base to grow from?
A: They said restructuring activity includes both speculative conversations and active mandates, with software clearly a key driver among several sectors. They confirmed they stay below $2 billion, that the size threshold has moved up historically and will continue in small steps, and that the recent revenue level is a good base to grow from.
"I will call it verbally mandated, actively mandated, both and software is clearly one of the driving sectors, not, by far not the only sector." — Scott Joseph Adelson (CEO)
Clients willing to push deals through volatility
Q (Alexander Bond · KBW): Are clients now more willing to push deals through macro and geopolitical volatility after earlier delays?
A: They said earlier shocks created speed bumps that slowed deals, but those issues have settled and they are now seeing a willingness among clients to do deals. They cited signs that people increasingly want to get deals done and that this is a positive indicator for pipeline movement.
"And right now, we are seeing a willingness to do deals." — Scott Joseph Adelson (CEO)
FVA business and non-comp expense outlook
Q (James Yaro · Goldman Sachs): Can you expand on the FVA business split between cyclical and noncyclical parts and new initiatives? Also, what is the outlook for non-comp expenses?
A: They said growth is largely from the portfolio valuation (FVA) business, which is noncyclical and has grown strongly, while the opinion and advisory parts are more cyclical and tied to M&A. For non-comp expenses, they expect them to grow similarly to last year by fiscal year end and to be roughly on track with prior guidance.
"that is a noncyclical business and has been growing very strongly at this point for a very long time." — Scott Joseph Adelson (CEO)
Sponsor activity, Europe, and software restructuring timing
Q (Michael Brown · UBS): Are sponsors and LP pressure driving urgency and activity? What are the restructuring opportunities outside the U.S., especially Europe, and when will software restructuring start to drive revenue? How big could that opportunity be?
A: They said sponsor clients are a large part of their base and are increasingly willing to transact, and LP pressure has been in place for years. They said they are very well positioned in European restructuring and are bullish on both U.S. and European markets over the next couple years, and they expect software restructuring to be a huge opportunity with revenue likely starting to show in calendar '27 and into '28.
"With respect to software, I don't want to size it, but it is going to be a huge opportunity for those who are in software restructuring." — J. Alley (CFO)