Houlihan Lokey records earnings per share, turnover increases

Houlihan Lokey (HLI 4.50%)a global investment bank known for its financial advisory services, announced its second quarter 2025 earnings results on October 30, 2024. For the period ending September 30, it reported results well above market expectations, demonstrating the effectiveness of its diversified range of services in corporate finance, financial restructuring and financial and valuation advice. Amended earnings per share (EPS) rose 12% year over year to $1.46, above the $1.31 analysts expected. Total net sales rose 7% to $575 million, ahead of expectations of $538 million. This quarter’s performance highlights Houlihan Lokey’s skill at navigating a complex market landscape.

Source: Analyst estimates for the quarter provided by FactSet.

About Houlihan Lokey and its core activities

Houlihan Lokey’s diverse advisory services specialties include corporate finance, financial restructuring, and financial and valuation consulting. The investment bank prides itself on its independence – maintaining objectivity by avoiding potential conflicts inherent in making loans or selling securities – and provides targeted, unbiased advisory services.

This diversified strategy not only meets the needs of a diverse range of customers, but also helps Houlihan Lokey maintain relatively stable revenues during fluctuating economic cycles. By hiring high-level experts and fostering interdisciplinary collaboration, Houlihan Lokey excels where deep collaboration and sector specialization matter most. Its global reach – it has offices in 36 major world cities – also enables strategic connections with its extensive customer network, enriching both the knowledge and capabilities of the sector.

Quarter Highlights and Segment Performance

In the second quarter of fiscal 2025, Houlihan Lokey achieved notable success across all its service lines. The corporate finance segment led the way with revenue up 29% year over year to $364 million. This was due to a favorable transaction mix and an increase in the number of closed deals, which rose from 117 to 131. Financial restructuring also contributed with a 15% increase in revenue to $132 million, largely due to improved transaction types, despite only a slight increase in the number of closed transactions. offers.

The financial and valuation advisory segment grew at a relatively modest rate of 12% to $79 million in revenues, due to better market conditions for M&A and more reimbursement events.

Expenses increased slightly, in parallel with sales growth. Employee benefits increased from $297 million to $361 million, leaving the compensation ratio stable at 61.5%. However, non-compensation costs, such as IT and general corporate costs, increased 4.3% to $84 million. These costs underscore the continued investments in infrastructure to support the growing market footprint.

The investment bank’s effective tax rate rose to 31.3% from 28.4% in the same period last year, driven by higher state taxes and bigger tax bills from its foreign operations. This had consequences for the net result. Yet Houlihan Lokey still grew its net profit to $94 million, compared to $67 million in the same period last year.

Guidance from management

Houlihan Lokey’s management expressed optimism for the fiscal year based on continued merger and acquisition activity and potential expansion in the capital markets. This is based on an expected upturn in corporate financing activities and a positive diverse business model, similar to the execution of the niche strategy to date.

The recent appointment of Scott Adelson as CEO presents both opportunities and challenges. Houlihan Lokey’s focus remains firmly positioned on expanding capabilities through strategic acquisitions and talent development, allowing the company to continue its upward trajectory in a highly competitive market. Investors should pay attention to any notable shifts in operating strategies or the integration of new business units that could impact future results.