Houlihan Lokey (HLI) Financials

Houlihan Lokey’s latest quarter showed solid profitability and very strong cash generation, but results also highlight a business that is becoming more dependent on expense control, restructuring charges, and balance-sheet management.

For the quarter ended March 31, 2026, revenue fell to $635.6 million from $717.1 million in the prior quarter and from $666.4 million in the year-ago comparable period. Net income also eased to $98.3 million, down from $116.5 million in the prior quarter. Even so, the company remained highly profitable, with diluted EPS of $1.47.

Cash flow remains a standout. In Q4 2026, Houlihan Lokey generated $293.0 million of operating cash flow, well above net income, which suggests strong earnings quality and substantial non-cash adjustments. That said, the company continued to return a lot of capital to shareholders through dividends and buybacks, while also making selective investments and acquisitions.

Looking at the last several years, Houlihan Lokey has generally posted consistent revenue growth, healthy margins, and strong cash conversion. However, operating expenses have also climbed, and restructuring charges have appeared regularly, which can signal a somewhat uneven cost structure in a cyclical advisory environment.

• Strong operating cash flow: Q4 2026 operating cash flow was $293.0 million, comfortably above net income.
• Consistent profitability: The company remained solidly profitable across the periods provided, with quarterly net income generally ranging around $60 million to $121 million.
• Revenue trend is up over time: Revenue rose from roughly $415.8 million in Q1 2024 to $635.6 million in Q4 2026, showing meaningful long-term growth.
• Healthy balance sheet equity: Total common equity was $2.29 billion in Q3 2026, indicating a substantial equity base.
• Large cash position: Cash and equivalents were $1.06 billion in Q3 2026, giving the company plenty of liquidity.
• Cash generation supports capital returns: Houlihan Lokey consistently paid dividends and repurchased shares, which is a sign of financial flexibility.
• EPS has been relatively steady: Diluted EPS moved within a fairly tight range over the periods shown, suggesting stable underlying earnings power.
• Asset mix is heavily goodwill- and intangible-driven: A large share of assets sits in goodwill, intangibles, and other noncurrent operating assets, which is common after acquisitions but worth monitoring.
• Revenue declined sequentially in the latest quarter: Q4 2026 revenue fell from Q3 2026, suggesting some near-term softness.
• Restructuring charges remain recurring: The company recorded restructuring charges in multiple quarters, which can point to ongoing business realignment or cost pressure.
• Operating expenses have risen meaningfully: SG&A, other operating expenses, and restructuring costs have increased at times, pressuring operating leverage.
• Cash declined from Q3 2026 to Q4 2026: Cash and equivalents fell from $1.06 billion to $942.0 million as the company returned capital and invested cash.

Bottom line: Houlihan Lokey still looks like a financially strong, cash-generative advisory firm with a durable profitability profile. The main watch items are the softer recent revenue trend, recurring restructuring costs, and the fact that margins depend heavily on keeping operating expenses under control.