Investment banking firm Houlihan Lokey (NYSE: HLI) announced better-than-expected revenue in calendar Q3 2026 (fiscal Q2 2027), with revenue up 4.9% year on year to $692 million. Its non-GAAP profit of $1.85 per share was 12.1% above analysts’ consensus estimates.

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“Improving market conditions resulted in a stronger second quarter,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey. “While we remain cautious due to the volatility of external factors, we expect to see solid performance across our businesses for the remainder of the year.”

Revenue growth

A company’s long-term revenue performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Houlihan Lokey’s revenue grew at a tepid 5.6% annualized rate over the last five years, falling short of the financials sector standard.

Long-term growth matters most, but within financials, a half-decade historical view may miss recent interest rate changes, market returns and industry trends. Houlihan Lokey’s annualized revenue growth of 9.8% over the last two years is above its five-year trend, suggesting some bright spots. Note: Quarters not shown were determined to be outliers because they were impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Houlihan Lokey reported modest year-on-year revenue growth of 4.9% but beat Wall Street’s consensus estimates by 8.9%.

Key takeaways from Houlihan Lokey’s Q3 results

Houlihan Lokey delivered some important positives in Q3, with revenue well ahead of analysts’ consensus estimates and EBITDA also topping Wall Street’s estimates. Investors were likely hoping for more: Shares tumbled 7.8% to $126.50 immediately after the report.

When evaluating Houlihan Lokey, the latest quarter matters, but not as much as longer-term business quality and valuation. Read the full research report here (it’s free).