Houlihan Lokey, Inc. (HLI), the global investment bank, recently reported fiscal year 2025 results that saw its revenue soar by a remarkable +24.81% year-over-year, reaching a record $2.39 billion. This substantial top-line expansion significantly outpaced the +5.52% revenue growth achieved between FY2023 and FY2024, signaling a distinct acceleration in the company's performance trajectory.
This pronounced acceleration in revenue growth for the fiscal year ending March 31, 2025, underscores a potent resurgence in activity across key segments, particularly Corporate Finance and Financial Restructuring. The scale of this increase, adding nearly $480 million in revenue compared to the previous fiscal year, provides a foundational point for evaluating the underlying market dynamics that Houlihan Lokey is effectively capitalizing on.
Analyzing Houlihan Lokey's Record Fiscal Year 2025 Performance#
Houlihan Lokey's financial results for the fiscal year ended March 31, 2025, demonstrated robust performance across key metrics. According to data sourced from Monexa AI, the company achieved $2.39 billion in revenue, a significant increase from $1.91 billion in FY2024 and $1.81 billion in FY2023. This growth trajectory indicates a strong recovery and expansion phase following slightly softer performance in the preceding years compared to the peak in FY2022, which saw revenues of $2.27 billion. The +24.81% year-over-year revenue growth was a primary driver behind the overall positive results.
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The bottom line also saw substantial improvement. Net income for FY2025 reached approximately $399.71 million, representing a +42.6% increase from $280.3 million in FY2024. This outpaced the revenue growth, suggesting operating leverage and potentially a more favorable mix of business or improved cost management. Earnings per share (EPS) followed suit, climbing to $5.82 in FY2025 from $4.11 in FY2024. This EPS figure notably exceeded the analyst consensus estimate of $5.98 for the fiscal year, according to data compiled before the official release on May 15, 2025, as reported by Business Wire. The reported EPS of $5.82 is based on the latest financial data available from Monexa AI, while the earnings surprise data indicates actual results for specific quarters within the fiscal year, showing consistent beats against estimates. The reported EPS TTM figure is even higher at $6.04, reflecting the strong performance over the trailing twelve months.
Profitability margins also saw improvement in FY2025. The operating income margin increased to 20.99% from 18.95% in FY2024, while the net income margin rose to 16.73% from 14.64% in the prior year. Gross margins remained stable at 38.5% across FY2023, FY2024, and FY2025, indicating consistent efficiency in delivering services before operating expenses. The EBITDA margin for FY2025 stood at 23.96%, up from 20.44% in FY2024, further highlighting enhanced operational profitability. These margin expansions, particularly in operating and net income, demonstrate Houlihan Lokey's ability to translate top-line growth into stronger profitability.
Key Financial Performance Metrics: A Historical View#
Examining the company's performance over the past four fiscal years provides essential context for the FY2025 results. While FY2022 represented a peak in revenue and margins, FY2023 and FY2024 saw a moderation, reflecting a more challenging market environment for deal-making. The rebound in FY2025, with revenue exceeding the FY2022 peak and net income approaching it, suggests a powerful cyclical recovery and effective strategic execution. The +4.83% operating cash flow 3-year CAGR and +3.58% free cash flow 3-year CAGR reported by Monexa AI indicate consistent cash generation despite market fluctuations, which was dramatically boosted in FY2025 with operating cash flow growth of +158.36% and free cash flow growth of +209.07% year-over-year.
| Metric | FY2025 | FY2024 | FY2023 | FY2022 |
|---|---|---|---|---|
| Revenue | $2.39B | $1.91B | $1.81B | $2.27B |
| Net Income | $399.71MM | $280.3MM | $254.22MM | $437.75MM |
| Net Income Growth | +42.6% | +10.26% | -41.93% | +72.15% |
| EPS | $5.82 | $4.11 | $3.66 | $6.24 |
| Operating Margin | 20.99% | 18.95% | 18.89% | 27% |
| Net Margin | 16.73% | 14.64% | 14.05% | 19.28% |
| EBITDA Margin | 23.96% | 20.44% | 24.04% | 29.14% |
Source: Monexa AI Financial Data
This table clearly illustrates the significant rebound in profitability and operational efficiency in FY2025, with margins approaching or exceeding recent years, though still below the peak levels seen in FY2022, a period of exceptionally favorable market conditions for M&A.
Balance Sheet Strength and Capital Management#
Houlihan Lokey's balance sheet as of March 31, 2025, reflects a position of considerable strength and liquidity. According to Monexa AI data, cash and cash equivalents stood at $971.01 million, a substantial increase from $721.24 million in FY2024. Total current assets reached $1.56 billion, while total current liabilities were $1.13 billion, resulting in a current ratio of 26.07x on a TTM basis. This exceptionally high current ratio indicates strong short-term liquidity and the ability to cover immediate obligations comfortably. The total assets amounted to $3.82 billion.
The company's debt profile remains conservative. Total debt was $438.19 million as of March 31, 2025, consisting entirely of long-term debt. This represents an increase from $415.41 million in FY2024 and $374.87 million in FY2023, but the net debt position remains negative at -$532.82 million (TTM net debt to EBITDA is -0.95x), indicating that cash holdings significantly exceed total debt. The debt-to-equity ratio is low at 0.2x TTM, underscoring a conservative capital structure with equity comprising the vast majority of funding. Total stockholders' equity grew to $2.17 billion in FY2025 from $1.84 billion in FY2024, bolstered by retained earnings which increased to $1.39 billion.
Capital allocation priorities are evident through the company's cash flow activities. In FY2025, net cash provided by operating activities was a robust $848.61 million, leading to free cash flow of $808.91 million after capital expenditures of -$39.7 million. The company returned capital to shareholders through dividends paid totaling -$165.22 million and common stock repurchased totaling -$52.51 million. These actions, particularly the significant free cash flow generation and subsequent capital returns, demonstrate management's confidence in the business and commitment to shareholder value. The quarterly dividend was recently increased to $0.60 per share, payable on June 15, 2025, with a record date of June 2, 2025, following a $0.57 dividend in March 2025, according to Monexa AI dividend history data. This represents a modest increase in the quarterly payout.
Strategic Expansion and Market Positioning#
Houlihan Lokey has been strategically expanding its global footprint, with a particular focus on high-growth regions. Recent announcements, highlighted by Business Wire, include strengthening leadership and presence in Asia, specifically Greater China and Hong Kong. The recruitment of key individuals like Angela Hu and Bill Scheuerer, as noted in press release highlights from May 5, 2025, aims to bolster the firm's capabilities in M&A and restructuring advisory within these markets. This strategic move is critical for tapping into the increasing cross-border deal activity and the evolving economic landscape across Asia.
This geographical expansion aligns with the company's core business segments: Corporate Finance, Financial Restructuring, and Valuation Advisory. The Corporate Finance segment, which includes M&A advisory, is a significant revenue driver, heavily influenced by global economic conditions and capital markets activity. The Financial Restructuring segment tends to perform counter-cyclically, seeing increased activity during periods of economic stress or regulatory change, while Valuation Advisory provides steady demand driven by complex transactions, regulatory requirements, and financial reporting standards. The recent regulatory environment, including the EU's Digital Operational Resilience Act (DORA) and Corporate Sustainability Reporting Directive (CSRD), is creating new avenues for advisory services, particularly in risk management, compliance, and ESG reporting. Houlihan Lokey's diversified service offering positions it to capitalize on these evolving market needs.
Historically, Houlihan Lokey has demonstrated an ability to navigate various market cycles. The strong performance in FY2022, a period of high M&A volumes, followed by the resilience shown in FY2023 and FY2024 despite a slowdown in deal activity, underscores the value of its restructuring and valuation businesses. The rebound in FY2025 suggests that market conditions for M&A are improving, while demand for its other services remains robust. The strategic expansion in Asia can be seen as a proactive measure to diversify revenue sources geographically and capture growth in markets with different cyclical patterns or regulatory drivers compared to its established North American and European strongholds.
Navigating the Regulatory Landscape#
The financial advisory industry is increasingly shaped by regulatory developments. Initiatives like the EU's DORA, effective January 2025, impose stringent requirements on financial entities and their third-party ICT providers regarding digital operational resilience. The CSRD mandates comprehensive sustainability reporting, impacting a wide range of companies. In the U.S., potential recalibration of capital requirements under Basel III and ongoing stress testing for banks influence the financial sector's capacity and willingness to engage in certain transactions. Globally, enhanced anti-money laundering and crime regulations increase the complexity of due diligence in M&A and other transactions.
These regulations, while potentially increasing compliance costs for advisory firms, also create significant opportunities. Companies require expert guidance to navigate complex reporting standards, assess operational risks, and ensure compliance. Houlihan Lokey's Valuation Advisory and Financial Restructuring segments, in particular, are well-positioned to provide services related to fair value assessments, risk model validation, and compliance frameworks. The ability to offer specialized advice on ESG integration, digital resilience, and regulatory compliance adds valuable revenue streams and strengthens client relationships in an increasingly complex operating environment.
Valuation and Market Reaction#
Following the strong FY2025 earnings report, Houlihan Lokey's stock price reacted positively. As of the latest available data from Monexa AI, the stock was trading at $174.75, reflecting a +0.38% increase from the previous close of $174.08. The company's market capitalization stands at approximately $12.2 billion. This price movement contributed to a notable rally in the shares after the earnings announcement, as highlighted by sources like Zacks.
From a valuation perspective, Houlihan Lokey trades at a premium relative to some traditional financial services firms, reflecting its specialized advisory model and growth profile. The trailing twelve months (TTM) Price-to-Earnings (P/E) ratio is 28.95x, while the spot P/E based on FY2025 EPS is 30.03x. The Price-to-Sales (P/S) ratio TTM is 5.11x, and the Price-to-Book (P/B) ratio TTM is 5.32x. The Enterprise Value over EBITDA (EV/EBITDA) TTM is 20.86x.
Looking ahead, analyst estimates compiled by Monexa AI suggest continued growth. The estimated EPS for FY2026 is $7.07, rising to $8.05 for FY2027 and $9.09 for FY2028. Estimated revenue follows a similar upward trend, projected to reach $2.62 billion in FY2026, $2.93 billion in FY2027, and $3.19 billion in FY2028. These estimates imply forward P/E ratios that decrease over time, standing at 24.59x for FY2026, 22.02x for FY2027, and 19.55x for FY2028, based on the current price.
Valuation Multiples: Current and Forward#
| Metric | TTM | FY2025 (Reported) | FY2026 (Est.) | FY2027 (Est.) | FY2028 (Est.) |
|---|---|---|---|---|---|
| P/E Ratio | 28.95x | 30.03x | 24.59x | 22.02x | 19.55x |
| Price/Sales Ratio | 5.11x | 5.11x | 4.69x | 4.29x | 3.95x |
| EV/EBITDA | 20.86x | 20.86x | 17.52x | 15.70x | 14.44x |
Source: Monexa AI Financial Data and Analyst Estimates (Estimates based on current price)
The declining forward multiples suggest that, based on analyst expectations, the company's growth is anticipated to outpace its current valuation over the next few years. The TTM Return on Equity (ROE) is strong at 19.88%, and Return on Invested Capital (ROIC) is 10.39%, indicating efficient use of capital to generate profits. These profitability metrics support the premium valuation compared to firms with lower returns.
Management Execution and Future Prospects#
Management's execution in FY2025 appears strong, evidenced by the significant revenue and net income growth which exceeded analyst expectations. The ability to grow the top line by nearly +25% and the bottom line by over +42% in a market that, while improving, still presented headwinds in certain areas, speaks to effective strategy implementation. The consistent earnings beats over the past four quarters, as detailed in the earnings surprise data from Monexa AI, further underscore management's ability to deliver results above forecasts.
Capital allocation decisions, such as the increased dividend and share repurchases, signal confidence in future earnings sustainability and a commitment to returning value to shareholders. The strategic investments in international expansion, particularly in Asia, indicate a forward-looking approach aimed at diversifying revenue streams and capturing growth in emerging markets. These investments, while potentially impacting short-term margins or cash flow slightly through acquisition costs or hiring, are crucial for long-term competitive positioning.
The historical context shows that Houlihan Lokey has successfully navigated periods of market volatility by leveraging its diverse service lines. During M&A downturns, the Financial Restructuring segment has often provided a stabilizing force. The current environment, marked by both increasing deal activity and complex regulatory requirements, plays to the firm's strengths across all three core segments. Management's focus on expanding capabilities in areas like digital resilience and ESG aligns with evolving client needs and regulatory pressures, suggesting a strategic adaptation to market shifts.
Looking ahead, the company's financial health, characterized by a strong balance sheet and robust free cash flow generation, provides flexibility for continued strategic investments, potential acquisitions, and ongoing capital returns. The anticipated growth in revenue and EPS over the next few years, as reflected in analyst estimates, is contingent on continued favorable market conditions for M&A, successful integration of new hires and offices, and effective navigation of the regulatory landscape. The company's ability to maintain or expand its operating and net margins will be key to translating top-line growth into enhanced profitability and shareholder value.
Key Takeaways for Investors#
Houlihan Lokey's FY2025 results were exceptionally strong, marked by significant revenue and net income growth that exceeded analyst expectations. The company's strategic focus on expanding its global footprint, particularly in Asia, and its ability to capitalize on complex market dynamics, including regulatory changes, position it well for continued growth. The strong balance sheet and robust cash flow generation provide a solid foundation for future investments and capital returns. While the stock trades at a premium valuation based on current earnings, the forward multiples decrease significantly, suggesting that expected future growth is priced into the shares. Investors should continue to monitor macroeconomic conditions, the pace of M&A activity globally, and the impact of regulatory developments on demand for advisory services.