Houlihan Lokey, Inc.

The company reported Q1 FY2027 revenue of $511 million and adjusted EPS of $1.35. Corporate Finance revenue was $303 million, down 24% year over year; Financial Restructuring revenue was $119 million; and Financial and Valuation Advisory revenue was $89 million, up 13% year over year. Corporate Finance closed 127 transactions, basically flat year over year; Financial Restructuring closed 23 transactions, down 34%; and FVA had 1,042 fee events, up 9%. Adjusted compensation expense ratio was 61.5%, adjusted non-compensation expense was $100 million versus $94 million a year ago, and the adjusted effective tax rate was 13% versus negative 1% last year. For fiscal 2027, management expects to maintain the 61.5% adjusted comp ratio, sees non-comp expense growth similar to last year, and expects a full-year adjusted tax rate of 26% to 28%.

Scott Adelson said the quarter was hurt by macro-driven delays in corporate finance, especially from Middle East conflict and software-sector disruption tied to AI-related reassessment, but he framed the issue as a temporary disruption rather than a structural reset. He emphasized that backlog, pipeline and new mandate activity remain at record or strong levels, and noted that many delayed deals are still moving through the process, just with extended timelines. He also highlighted strength in restructuring, growth in FVA, the planned Intrepid acquisition, and continued investment in data tools, senior talent and AI.

Lindsey Alley broke out the segment performance and said Corporate Finance fell to $303 million, down 24% year over year, because larger-fee deals were delayed even though 127 transactions closed and overall volume was basically flat. She said Financial Restructuring delivered $119 million in revenue, FVA reached $89 million with 1,042 fee events, and the firm’s adjusted comp ratio held at 61.5% in both fiscal 2027 and 2026 Q1. She also said non-comp expense rose 6% to $100 million, the quarterly tax rate was 13% due to lower stock-based tax benefits, and Q1 share activity included about 1.3 million shares issued and about 1.1 million repurchased.

Analysts focused on whether the weak corporate finance environment and longer deal timelines are temporary or require a business response; management said it is constantly improving process execution, but much of the timing is driven by client behavior and broader market uncertainty. They were also asked if the 61.5% comp ratio can hold, and Scott said it is effectively a long-standing constant and should remain intact. On M&A, management said the mid-cap market is still in the early innings and described current conditions as a “rain delay,” while on software they said investors are starting to distinguish good software companies from bad ones. When asked about the Morningstar partnership and DataBank, management said those are strategic first steps with de minimis near-term revenue and no modeling change.