HOULIHAN LOKEY, INC.

Note 1 —Background

Houlihan Lokey, Inc. is a Delaware corporation. Unless the context otherwise requires, as used in this Quarterly Report on Form 10-Q, the terms “Houlihan Lokey”, “HL, Inc.”, “the Company”, “we”, “our”, and “us”, refer to Houlihan Lokey, Inc., and, in each case, unless otherwise stated, all of its subsidiaries.

The Company offers financial services and financial advice to a broad clientele through more than thirty offices in the United States of America, South America, Europe, the Middle East, and the Asia-Pacific region. The Company earns professional fees by providing focused services across the following three business segments:

•Corporate Finance ("CF") provides general financial advisory services and advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions, including financial sponsors, on a wide variety of matters, including buy-side and sell-side M&A transactions, debt and equity financings in both the private and public markets, and other corporate finance transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement (“Completion Fees”). A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the fees paid at the time an engagement letter is signed (“Retainer Fees”) and, in some cases, fees paid during the course of the engagement (“Progress Fees”).

•Financial Restructuring ("FR") provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented through bankruptcy proceedings and out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; liability management transactions; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The majority of our FR revenues consists of Completion Fees. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to Retainer Fees and/or Progress Fees.

•Financial and Valuation Advisory ("FVA") primarily provides financial advisory and valuation services with respect to companies, debt and equity interests (including complex illiquid investments), and other types of assets and liabilities; fairness opinions in connection with mergers and acquisitions and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions; as well as diligence, tax, transaction accounting, and other financial advisory services to companies, boards of directors, special committees, retained counsel, financial and strategic investors, trustees, and other parties. Also, our FVA business segment provides dispute resolution services to clients, for which fees are usually based on the hourly rates of our financial professionals. The majority of our FVA revenues consists of Retainer Fees, Progress Fees and/or Completion Fees, which are recognized on the achievement of our performance obligations.

Note 2 —Basis of Presentation and Consolidation

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for interim consolidated financial statement presentation. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for the full fiscal year. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the "2025 Annual Report").

In connection with certain acquisitions, contingent consideration is issued as part of the purchase price. Historically, the associated quarterly fair-value remeasurements of this consideration were recorded in Other (income) expense, net. Beginning with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, these remeasurements are presented on the face of the Consolidated Statements of Comprehensive Income under the line item Revaluation of acquisition contingent consideration. Prior period amounts have been recast to conform with this presentation. These reclassifications did not affect net income, stockholders’ equity, or cash flows as previously reported.

Additionally, certain other prior year amounts have been reclassified to conform to the current period's presentation. These reclassifications had no impact on net income, shareholders' equity or net cash flows as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, valuation of acquired intangibles and goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

Translation of Foreign Currency Transactions

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of December 31, 2025, we hadno open foreign currency forward contracts outstanding. As of December 31, 2024, we hadone foreign currency forward contract outstanding between the U.S. Dollar and the Pound Sterling with an aggregate notional value of $7,000. The change in fair value of this contract represented a net gain included inother operating expenses of $3 during the three months ended December 31, 2024.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement:

•Level I Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

•Level II Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•Level III Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, unbilled work in progress, accounts payable and accrued expenses, and deferred income approximates fair value due to the short maturity of these instruments.

The carrying value of loans to employees included in other assets approximates fair value due to the variable interest rate borne by those instruments.

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less.

The following table provides a reconciliation of cash and cash equivalents and restricted cash included within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.

(1)Restricted cash included cash deposits in support of two letters of credit for our Frankfurt office, cash held in escrow accounts, and collateral to support rent guarantees. Restricted cash is included within Other assets in the Consolidated Balance Sheets.

Recent Accounting Pronouncements

In September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modernizes the accounting for costs associated with internal-use software by replacing the project-stage approach with a principles-based model for capitalization. The guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company has early adopted this ASU as of September 30, 2025, and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disaggregated disclosure of certain income statement expenses within the footnotes of the financial statements. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU enhances transparency in income tax reporting by expanding disclosure requirements for the rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its income tax disclosures.

Note 3 —Revenue Recognition

Contract Balances

The change in the Company’s contract assets and liabilities during the period primarily reflects the timing difference between the Company’s performance and the customer’s payment. The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

(1)Included within Accounts receivable, net of allowance for credit losses in the Consolidated Balance Sheets.

(2)Represents deferred income which is included within Other liabilities in the Consolidated Balance Sheets.

During the nine months ended December 31, 2025, $34,481 of revenues were recognized that were included in the deferred income balance at the beginning of the period.

Note 4 —Related Party Transactions

Other assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $35,117 and $44,290 as of December 31, 2025 and March 31, 2025, respectively.

Note 5 —Fair Value Measurements

The following table presents information about the Company's financial assets and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

The Company had no transfers between fair value levels during the nine months ended December 31, 2025.

Note 6 —Investment Securities

The amortized cost and gross unrealized gains (losses) of marketable investment securities accounted under the fair value method were as follows:

Scheduled maturities of the debt securities held by the Company included within the investment securities portfolio were as follows:

Note 7 —Allowance for Credit Losses

The following table presents information about the Company's allowance for credit losses:

Note 8 —Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

Additions to property and equipment during the nine months ended December 31, 2025 were primarily related to leasehold improvement costs incurred.

Depreciation expense of $6,988 and $5,495 was recognized for the three months ended December 31, 2025 and 2024, respectively, and $21,216 and $16,187 for the nine months ended December 31, 2025 and 2024, respectively.

Note 9 —Goodwill and Other Intangible Assets

The following table provides a reconciliation of Goodwill and Other intangible assets, net reported on the Consolidated Balance Sheets.

The following table provides a reconciliation of goodwill attributable to the Company’s business segments:

(1)Changes pertain primarily to foreign currency translation adjustments.

Amortization expense of approximately $1,310 and $4,066 was recognized for the three months ended December 31, 2025 and 2024, respectively, and $13,374 and $9,674 was recognized for the nine months ended December 31, 2025 and 2024, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five fiscal years and thereafter are as follows:

Note 10 —Other Liabilities

On August 23, 2019, the Company entered into a syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto, which was amended by the First Amendment to Credit Agreement dated as of August 2, 2022, and further amended by the Second Amendment to Credit Agreement on August 19, 2025 (as amended, the "HLI Line of Credit"). The HLI Line of Credit allows for borrowings of up to $150,000 (and, subject to certain conditions, provides the Company with an uncommitted expansion option, which, if exercised in full, would provide for a total credit facility of $200,000) and matures on August 19, 2030 (or if such date is not a business day, the immediately preceding business day). Borrowings under the HLI Line of Credit bear interest at a floating rate, which can be either, at the Company's option, (i) a term Secured Overnight Financing Rate ("SOFR") plus a 0.95% margin per annum or (ii) a base rate, which is the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) a term SOFR rate plus a 1.00% margin. Commitment fees apply to unused amounts. The HLI Line of Credit contains certain financial covenants and other restrictions, including a financial loan covenant to maintain a consolidated leverage ratio of less than 2.00 to 1.00. As of December 31, 2025 and March 31, 2025, no principal was outstanding under the HLI Line of Credit.

In December 2024, the Company acquired Waller Helms Advisors LLC (“WHA”). Contingent consideration was issued in connection with the acquisition of WHA, which had a fair value of $47,900 and $30,000 as of December 31, 2025 and March 31, 2025, respectively.

Note 11 —Accumulated Other Comprehensive (Loss)

Accumulated other comprehensive (loss) is comprised entirely of foreign currency translation adjustments.

Note 12 —Income Taxes

The Company’s provision for income taxes was $53,100 and $49,816 for the three months ended December 31, 2025 and 2024, respectively. These represent effective tax rates of 31.3% and 34.3% for the three months ended December 31, 2025 and 2024, respectively. The decrease in the Company’s effective tax rate was primarily a result of decreased state taxes and decreased non-deductible expenses.

The Company’s provision for income taxes was $101,889 and $103,289 for the nine months ended December 31, 2025 and 2024, respectively. These represent effective tax rates of 23.8% and 27.1% for the nine months ended December 31, 2025 and 2024, respectively. The decrease in the Company’s effective tax rate was primarily a result of increased stock-based compensation deductions and decreased state taxes.

On July 4, 2025 the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S. The legislation has multiple effective dates, and the Company is currently evaluating the potential impact of OBBBA.

Note 13 —Earnings Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below. The determination of weighted average shares of common stock outstanding includes both the Company's Class A common stock and Class B common stock.

Note 14 —Employee Benefit Plans

Share-Based Incentive Plans

Awards of restricted shares and restricted stock units ("RSU"s) have been and will be made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the "2016 Incentive Plan"), which became effective in August 2015 and was amended in October 2024. Under the 2016 Incentive Plan, it is anticipated that the Company will continue to grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent necessary to operate the Company's business. Equity-based incentive awards issued under the 2016 Incentive Plan generally vest over afour-year period.

Excess tax benefits recognized during the three months ended December 31, 2025 and 2024 were immaterial. Excess tax benefits of $30,562 and $21,921 were recognized during the nine months ended December 31, 2025 and 2024, respectively, as a component of the provision for income taxes. The excess tax benefits recognized during the nine months ended December 31, 2025 and 2024 were primarily related to shares vested in May 2025 and May 2024, respectively.

We recognize compensation expense for all stock-based awards, including restricted stock and RSU awards, based on the estimate of fair value of the award at the grant date. The fair value of each restricted stock and RSU award is measured based on the closing stock price of our common stock on the date of grant. We account for forfeitures as they occur. The compensation expense is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four years.

The share awards are generally classified as equity awards at the time of grant unless the number of shares granted is unknown. Awards that are settleable in shares based upon a future determinable stock price are classified as liabilities until the price is established and the resulting number of shares is known, at which time they are re-classified from liabilities to equity awards. Activity in equity-classified share awards which relate to the 2016 Incentive Plan during the nine months ended December 31, 2025 and 2024 was as follows:

Activity in liability-classified share awards during the nine months ended December 31, 2025 and 2024 was as follows:

Activity in RSU awards during the nine months ended December 31, 2025 and 2024 was as follows:

Compensation expenses for the Company associated with both equity-classified and liability-classified awards totaled $60,923 and $45,586 for the three months ended December 31, 2025 and 2024, respectively, and $149,775 and $123,982 for the nine months ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, there was $349,399 and $421,133, respectively, of total unrecognized compensation cost related to unvested share awards granted under the 2016 Incentive Plan. These costs will be recognized over a weighted average period of 2.1 years and 1.2 years, as of December 31, 2025 and 2024, respectively.

On October 24, 2024, our board of directors approved an amendment (the “Amendment”) to the 2016 Incentive Plan reducing the number of shares of common stock available for issuance under the 2016 Incentive Plan. Under the Amendment, the aggregate number of shares of common stock available for issuance under awards granted pursuant to the 2016 Incentive Plan on or after October 24, 2024 was equal to 8.0 million. Pursuant to the Amendment, the number of shares available for issuance increased on April 1, 2025 by 4,231,218.

Note 15 —Stockholders' Equity

Dividends

Previously declared dividends related to unvested shares of $17,053 and $20,383 were unpaid as of December 31, 2025 and 2024, respectively.

On January 22, 2026, the Company's board of directors declared a quarterly cash dividend of $0.60 per share of Class A and Class B common stock, payable on March 15, 2026, to stockholders of record as of the close of business on March 2, 2026.

Share Repurchases

In April 2022, the board of directors authorized an increase to the existing July 2021 share repurchase program, which provides for share repurchases of a new aggregate amount of up to $500,000 of the Company's Class A common stock and Class B common stock. As of December 31, 2025, shares with a value of $280,116 remained available for purchase under the program.

During the three months ended December 31, 2025 and 2024, the Company repurchased 13,869 and 1,177 shares, respectively, of Class B common stock, to satisfy $2,160 and $247, respectively, of required withholding taxes in connection with the vesting of restricted awards. During the three months ended December 31, 2025, the Company repurchased 480,899 shares of its outstanding Class A common stock at a weighted average price of $182.75 per share, excluding commissions, for an aggregate purchase price of $87,883. There were no regular share repurchases made under the existing share repurchase program during the three months ended December 31, 2024.

During the nine months ended December 31, 2025 and 2024, the Company repurchased 777,578 and 676,572 shares, respectively, of Class B common stock, to satisfy $139,851 and $101,963, respectively, of required withholding taxes in connection with the vesting of restricted awards. During the nine months ended December 31, 2025, the Company repurchased 676,465 shares of its outstanding Class A common stock at a weighted average price of $185.39 per share, excluding commissions, for an aggregate purchase price of $125,408. There were no regular share repurchases made under the existing share repurchase program during the nine months ended December 31, 2024.

Note 16 —Commitments and Contingencies

The Company has been named in various legal actions arising in the normal course of business. In the opinion of the Company, in consultation with legal counsel, the final resolutions of these matters are not expected to have a material adverse effect on the Company’s financial condition, operations and cash flows.

In November 2025, the Company signed a lease agreement for additional office space with undiscounted future lease payments of approximately $60,000 and a lease term of 9 years.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are included in Item 7 of our 2025 Annual Report.

Note 17 —Segment and Geographical Information

The Company’s reportable segments, described in Note 1, were identified based on several primary factors, including: each segment operates under independent management, offers distinct services, and requires specialized expertise for service delivery. Revenues by segment represent fees earned on the various services offered within each segment. Our operating expenses are classified as employee compensation and benefits expense and non-compensation expense; revenue and headcount are the primary drivers of our operating expenses. Our employee compensation and benefits expense consists of base salary, payroll taxes, benefits, annual incentive compensation payable as cash bonus awards, deferred cash bonus awards, and the amortization of equity-based bonus awards. The balance of our operating expenses (non-compensation expense) includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, and other operating expenses. Segment profit consists of segment revenues, less (1) direct expenses including employee compensation and benefits, travel, meals and entertainment, professional fees, and bad debt and (2) expenses allocated by headcount such as communications, rent, depreciation and amortization, and office expense. The corporate expense category includes costs not allocated to individual segments, including certain acquisition related charges and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and legal and compliance. The following tables present information about revenues, profit and assets by segment and geography. The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer. The CODM oversees the performance of the Company'sthree reportable segments by analyzing their financial metrics, including revenues by segment and segment profit. The financial metrics the CODM regularly receives does not include asset information and does not use segment asset information to assess performance or allocate resources. Comparable prior year information has been recast to reflect the additional disclosure of employee compensation and benefits by segment and non-compensation expense by segment.

(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2)Corporate expenses include costs not allocated to individual segments, including certain acquisition related charges and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and legal and compliance.

Note 18 —Subsequent Events

On February 2, 2026, the Company closed the transaction to obtain a controlling interest in Audere Partners, a prominent French corporate finance firm previously operating under the Natixis Partners brand.