Houlihan Lokey drew 11 news stories in the 24 hours to 29 October, against a usual 0.6 a day. The reports focus on its latest quarterly earnings and whether the results change the investment case. The most telling point from the filings is that profit and cash are moving at different speeds: net income fell 5.4% over the year while free cash flow fell 48.7%.
Source: SEC EDGAR XBRL company facts. Latest period shown: FY27 Q2.
View chart data
| Period | Revenue growth, TTM YoY | Operating margin (TTM) | FCF margin (TTM) |
|---|---|---|---|
| FY25 Q3 | 22.0% | 21.2% | 30.2% |
| FY25 Q4 | 24.8% | 21.0% | 33.9% |
| FY26 Q1 | 23.3% | 20.1% | 29.8% |
| FY26 Q2 | 21.0% | 20.2% | 30.5% |
| FY26 Q3 | 18.1% | 20.5% | 27.9% |
| FY26 Q4 | 9.6% | 20.1% | 26.0% |
| FY27 Q1 | 1.7% | 20.4% | 19.2% |
| FY27 Q2 | -0.4% | 20.3% | 15.7% |
The decline in sales is deepening
Net income and free cash flow are diverging. Over the trailing twelve months, net income fell 5.4% to $403.4 million, while free cash flow fell 48.7% over the same period. The trailing operating margin was 20.3%, up 0.1 percentage points from a year earlier, and the trailing net margin was 15.8%.
The revenue decline is deepening. Revenue over the twelve months to Q2 2027 was $2.6 billion, down 0.4% year over year, and that growth rate was 2.1 percentage points worse than the rate a quarter earlier. Reports that Houlihan Lokey topped its revenue estimates connect with this figure: a beat against expectations still sits on a negative growth rate that is worsening.
Investment is absorbing more of the cash. Capital spending fell 24.1% while operating cash flow fell 47.7%, so less was left over after reinvestment. Reports framing the earnings beat as potentially changing the case for the stock connect with this point: the cash left for shareholders is shrinking faster than the spending.
The counterpoint is buybacks. The diluted share count fell 1.6% over the year, so profit per share grows faster than profit itself. Even with net income declining, each share's claim on earnings is larger because the denominator is smaller.
Where Houlihan Lokey's figures sit in its own record
Today's operating margin of 20.3% is higher than 42% of the company's own past quarterly readings, which have ranged from 18.7% to 28.9%. The twelve-month revenue growth rate of −0.4% is higher than only 12% of past readings, which have ranged from −22.0% to 73.5%.
What Houlihan Lokey's share price implies against our model
In our model, growth 5 percentage points lower would lower the value by 22.7%, and growth 5 percentage points higher would raise it by 29.9%. A free-cash-flow margin 1 percentage point lower would lower the value by 5.7%.
What the filings cannot tell you at Houlihan Lokey
Our figures run to Q2 2027, from the company's own filings; they cannot confirm, explain or rule out anything in the reports. The revenue decline and the free cash flow drop bear most directly on the coverage, which centers on whether the earnings results change the investment case.