HOULIHAN LOKEY, INC.

Previous wording

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 the Retainer Fees and/or Progress Fees.

Current wording

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. A FR 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 Retainer Fees and/or Progress Fees.

Previous wording

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.

Current wording

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.

Previous wording

Our operating expenses are classified as compensation expense and non-compensation expenses; revenue and headcount are the primary drivers of our operating expenses. Reimbursements of certain out-of-pocket deal expenses are recorded on a gross basis and are therefore included in both Revenues and Operating expenses on the Consolidated Statements of Comprehensive Income.

Current wording

Our operating expenses are classified as compensation expenses and non-compensation expenses; revenue and headcount are the primary drivers of our operating expenses. Reimbursements of certain out-of-pocket deal expenses are recorded on a gross basis and are therefore included in both Revenues and Operating expenses in the Consolidated Statements of Income.

Previous wording

Compensation expenses consist 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. Base salary and benefits are paid ratably throughout the year. Equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which typically occurs in the first quarter of each fiscal year; accordingly, expenses are amortized over the stated vesting period. In most circumstances, the unvested portion of these awards is subject to forfeiture should the employee depart from the Company, and in certain cases if certain financial metrics are not met. Certain annual equity-based bonus awards granted prior to December 31, 2024 include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performance and are generally paid in the first quarter of each fiscal year with respect to prior year performance. Generally, a portion of the cash bonus is deferred and paid in the third quarter of the fiscal year in which the bonus is awarded.

Current wording

Employee compensation and benefits consist 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. Base salary and benefits are paid ratably throughout the year. Equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which typically occurs in the first quarter of each fiscal year; accordingly, expenses are amortized over the stated vesting period. In most circumstances, the unvested portion of these awards is subject to forfeiture should the employee depart from the Company, and in certain cases if certain financial metrics are not met. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performance, and are generally paid in the first quarter of each fiscal year with respect to prior year performance. Generally, a portion of the cash bonus is deferred and paid in the third quarter of the fiscal year in which the bonus is awarded.

Previous wording

Non-Compensation Expense. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, other operating expenses, and gains and/or losses associated with changes in the fair value of earnout liabilities. We refer to all of these expenses as non-compensation expenses. A portion of our non-compensation expenses fluctuates in response to changes in headcount.

Current wording

Non-Compensation Expenses. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, other operating expenses, and gains and/or losses associated with changes in the fair value of earnout liabilities. We refer to all of these expenses as non-compensation expenses. A portion of our non-compensation expenses fluctuates in response to changes in headcount.

Previous wording

Other (income) expense, net primarily includes interest income and gains earned on non-marketable and investment securities, cash and cash equivalents, loans receivable from affiliates, employee loans, and commercial paper.

Current wording

Other (income) expense, net primarily includes interest income and gains earned on investment securities, cash and cash equivalents, employee loans, and commercial paper.

Previous wording

The following is a discussion of our results of operations for the three and nine months ended December 31, 2025 and 2024.

Current wording

The following is a discussion of our results of operations for the three months ended June 30, 2026 and 2025.

Previous wording

Revenues were $717.1 million for the three months ended December 31, 2025, compared with $634.4 million for the three months ended December 31, 2024, representing an increase of 13%. The increase in revenues was primarily driven by higher revenues from our CF and FR business segments, as described in further detail below.

Current wording

Revenues were $511 million for the three months ended June 30, 2026, compared with $605 million for the three months ended June 30, 2025, representing a decrease of (16)%. The decrease in revenues was primarily driven by lower revenues from our CF segment, as described in further detail below.

Previous wording

The provision for income taxes for the nine months ended December 31, 2025 was $101.9 million, which reflected an effective tax rate of 23.8%. The provision for income taxes for the nine months ended December 31, 2024 was $103.3 million, which reflected an effective tax rate of 27.1%. The decrease in the Company’s effective tax rate was primarily a result of increased stock-based compensation deductions and decreased state taxes.

Current wording

The provision for income taxes for the three months ended June 30, 2026 was $8 million, which reflected an effective tax rate of 10%. The provision for income taxes for the three months ended June 30, 2025 was $0 million, which reflected an effective tax rate of 1%. The increase in the Company’s effective tax rate was primarily a result of decreased stock-based compensation deductions.

Previous wording

(3)As of the end of the respective reporting period.

Current wording

(3)As of the end of the respective reporting periods.

Previous wording

(4)Fee Events applicable to FVA only; a Fee Event includes any engagement that involves revenue activity during the measurement period with a revenue minimum of $1,000. References to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our annual report on Form 10-K.

Current wording

(4)Fee Events applicable to FVA only; a Fee Event includes any engagement that involves revenue activity during the measurement period with a revenue minimum of one thousand dollars. References to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our 2026 Annual Report.

Previous wording

Revenues for CF were $473.7 million for the three months ended December 31, 2025, compared with $421.6 million for the three months ended December 31, 2024, representing an increase of 12%. Revenues increased due to an increase in the average transaction fee on closed transactions, which was driven by transaction mix and does not represent a short-term trend in the average fee on closed transactions. Revenues also increased due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions.

Current wording

Revenues for CF were $303 million for the three months ended June 30, 2026, compared with $398 million for the three months ended June 30, 2025, representing a decrease of (24)%. Revenues decreased due to a decrease in the average transaction fee on closed transactions, which was driven by transaction mix and we believe does not represent a short-term trend in the average fee on closed transactions.

Previous wording

Segment profit for CF was $150.7 million for the three months ended December 31, 2025, compared with $131.6 million for the three months ended December 31, 2024, an increase of 15%. Profitability increased primarily as a result of an increase in revenues when compared to the same quarter last year.

Current wording

Segment profit for CF was $89 million for the three months ended June 30, 2026, compared with $127 million for the three months ended June 30, 2025, a decrease of (30)%. Profitability decreased primarily as a result of a decrease in revenues when compared to the same quarter last year.

Previous wording

Revenues for FR were $156.3 million for the three months ended December 31, 2025, compared with $130.9 million for the three months ended December 31, 2024, representing an increase of 19%. Revenues increased due to an increase in the average transaction fee on closed transactions, which was driven by transaction mix and does not represent a trend in the average fee on closed transactions.

Current wording

Revenues for FR were $119 million for the three months ended June 30, 2026, compared with $128 million for the three months ended June 30, 2025, representing a decrease of (8)%. Revenues decreased primarily due to a decrease in the number of closed transactions. This was partially offset by an increase in the average transaction fee on closed transactions. The reduction in transaction volume was driven by timing of transaction closings, while the higher average transaction fee on closed transactions resulted from transaction mix and we believe does not represent a trend.

Previous wording

Segment profit for FVA was $22.4 million for the three months ended December 31, 2025, compared with $23.3 million for the three months ended December 31, 2024, a decrease of (4)%. Profitability decreased primarily as a result of higher compensation expenses as a percentage of revenues, partially offset by an increase in revenues when compared to the same quarter last year.

Current wording

Segment profit for FR was $42 million for the three months ended June 30, 2026, compared with $43 million for the three months ended June 30, 2025, a decrease of (4)%. Profitability decreased primarily as a result of a decrease in revenues when compared to the same quarter last year.

Previous wording

Revenues for FVA were $87.1 million for the three months ended December 31, 2025, compared with $81.9 million for the three months ended December 31, 2024, representing an increase of 6%. Revenues increased due to an increase in the number of Fee Events, driven by improvements in the M&A markets.

Current wording

Revenues for FVA were $89 million for the three months ended June 30, 2026, compared with $79 million for the three months ended June 30, 2025, representing an increase of 13%. Revenues increased due to an increase in the number of Fee Events, driven by strong market demand across our service lines.

Previous wording

Segment profit for FVA was $65.2 million for the nine months ended December 31, 2025, compared with $60.4 million for the nine months ended December 31, 2024, an increase of 8%. Profitability increased primarily as a result of increased revenues, partially offset by an increase in non-compensation expenses as a percentage of revenues when compared to the same period last year.

Current wording

Segment profit for FVA was $23 million for the three months ended June 30, 2026, compared with $18 million for the three months ended June 30, 2025, an increase of 34%. Profitability increased primarily as a result of an increase in revenues when compared to the same quarter last year.

Previous wording

Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. As of December 31, 2025 and March 31, 2025, we had $825.7 million and $686.2 million of cash in foreign subsidiaries, respectively. Our excess cash may be invested from time to time in short-term investments, including treasury securities, commercial paper, certificates of deposit, and investment grade corporate and government debt securities. Please refer to Note 6 for further detail.

Current wording

Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. As of June 30, 2026 and March 31, 2026, we had $546 million and $860 million of cash and cash equivalents in foreign subsidiaries, respectively. Our excess cash may be invested in short-term investments, including treasury securities, commercial paper, certificates of deposit, and investment grade corporate debt securities. Please refer to Note 6 for further detail.

Previous wording

As of December 31, 2025 and March 31, 2025, our unrestricted cash and cash equivalents and investment securities were as follows:

Current wording

As of June 30, 2026 and March 31, 2026, our cash and cash equivalents and investment securities were as follows:

Previous wording

Our liquidity is highly dependent upon cash receipts from clients that are generally dependent upon the successful completion of transactions, as well as the timing of receivables collections, which typically occur within 60 days of billing. As of December 31, 2025, accounts receivable, net of allowance for credit losses was $210.9 million. As of December 31, 2025, unbilled work in progress, net of allowance for credit losses was $232.7 million.

Current wording

Our liquidity is highly dependent upon cash receipts from clients that are generally dependent upon the successful completion of transactions as well as the timing of receivables collections, which typically occur within 60 days of billing. As of June 30, 2026, Accounts receivable, net of allowance for credit losses was $224 million. As of June 30, 2026, Unbilled work in progress, net of allowance for credit losses was $255 million.

Previous wording

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 million (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 million) 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, we were, and expect to continue to be, in compliance with the financial covenants. As of December 31, 2025 and March 31, 2025, no principal was outstanding under the HLI Line of Credit.

Current wording

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 dated as of August 19, 2025 (as amended, the "HLI Line of Credit"). The HLI Line of Credit allows for borrowings of up to $150 million (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 million), 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 June 30, 2026, we were, and expect to continue to be, in compliance with such covenants. As of June 30, 2026 and March 31, 2026, no principal was outstanding under the HLI Line of Credit.

Previous wording

The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligations relating to notes payable and contingent consideration issued in connection with businesses previously acquired (see Note 10 included in Part I, Item 1 of this Form 10-Q).

Current wording

The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligations, including notes payable and contingent consideration issued in connection with businesses previously acquired.

Previous wording

Operating activities resulted in a net inflow of $411.1 million, primarily attributable to net income, partially offset by changes in our operating assets and liabilities, which includes the cash bonus payments in May 2025. Investing activities resulted in a net inflow of $51.8 million, primarily attributable to sales or maturities of investment securities, partially offset by purchases of investment securities and purchases of property and equipment. Financing activities resulted in a net outflow of $400.2 million, primarily attributable to payments made to settle employee tax obligations on share-based awards, dividends paid, and share repurchases.

Current wording

Operating activities resulted in a net outflow of $(336) million, primarily attributable to cash bonus payments in May 2026. Investing activities resulted in a net inflow of $112 million, primarily attributable to sales or maturities of investment securities. Financing activities resulted in a net outflow of $(217) million, primarily attributable to payments made to settle employee tax obligations on share-based awards, dividends paid, and share repurchases.

Previous wording

Operating activities resulted in a net inflow of $490.2 million, primarily attributable to net income, partially offset by cash bonus payments paid in May 2024. Investing activities resulted in a net outflow of $158.7 million, primarily attributable to the purchase of investment securities and several acquisitions closing during the nine months ended December 31, 2024. Financing activities resulted in a net outflow of $238.0 million, primarily attributable to dividends paid and payments made to settle employee tax obligations on share-based awards.

Current wording

Operating activities resulted in a net outflow of $(132) million, primarily attributable to cash bonus payments in May 2025. Investing activities resulted in a net inflow of $110 million, primarily attributable to sales or maturities of investment securities. Financing activities resulted in a net outflow of $(197) million, primarily attributable to payments made to settle employee tax obligations on share-based awards and dividends paid.

Previous wording

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. We entered into a new routine lease commitment during the quarter to support ongoing operations (see Note 16 included in Part I, Item 1 of this Form 10-Q).

Current wording

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 2026 Annual Report.

Previous wording

During the nine months ended December 31, 2025, there were no significant changes to our critical accounting policies and estimates. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended March 31, 2025, for a more complete discussion of our critical accounting policies and estimates.

Current wording

During the three months ended June 30, 2026, there were no significant changes to our critical accounting policies and estimates. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our 2026 Annual Report, for a more complete discussion of our critical accounting policies and estimates.