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 advice to a broad clientele through more than thirty offices worldwide. 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. 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 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.

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 condensed consolidated financial statements. 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, 2026 (the "2026 Annual Report").

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

Unless otherwise noted, amounts are presented in millions. Percentages presented and earnings per common share amounts are calculated from the underlying whole-dollar amounts.

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 when appropriate, 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.

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 September 30, 2026, we hadtwo open foreign currency forward contracts outstanding between the U.S. Dollar and the Pound Sterling with an aggregate notional value of $114. As of September 30, 2025, we hadno open foreign currency forward contracts outstanding. During both the three months ended September 30, 2026 and 2025, the change in fair value of foreign currency forward contracts was immaterial and was included in Other operating expenses.

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 I 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 deposits securing letters of credit for leases, 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 December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU clarifies existing interim reporting disclosure requirements by providing a comprehensive list of required interim disclosures and introducing a principle that requires entities to disclose events occurring since the end of the most recent annual reporting period that materially affect the entity. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In November 2024, the 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.

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 six months ended September 30, 2026, $18 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 $25 and $36 as of September 30, 2026 and March 31, 2026, 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 six months ended September 30, 2026.

Note 6 —Investment Securities

The amortized cost and gross unrealized gains (losses) of our 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:

Depreciation expense of $7 and $7 was recognized for the three months ended September 30, 2026 and 2025, respectively, and $13 and $14 for the six months ended September 30, 2026 and 2025, 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)Change pertains primarily to the acquisition of Intrepid Financial Partners.

Amortization expense of approximately $3 and $3 was recognized for the three months ended September 30, 2026 and 2025, respectively, and $5 and $12 was recognized for the six months ended September 30, 2026 and 2025, 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 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 (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), 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 September 30, 2026 and March 31, 2026, no principal was outstanding under the HLI Line of Credit.

Note 11 —Income Taxes

The Company’s provision for income taxes was $49 and $49 for the three months ended September 30, 2026 and 2025, respectively. These represent effective tax rates of 31% and 30% for the three months ended September 30, 2026 and 2025, respectively.

The Company’s provision for income taxes was $57 and $49 for the six months ended September 30, 2026 and 2025, respectively. These represent effective tax rates of 23% and 19% for the six months ended September 30, 2026 and 2025, respectively. The increase in the Company's effective tax rate was primarily a result of decreased stock-based compensation deductions.

Note 12 —Earnings Per Common Share

The calculations of basic and diluted earnings per common 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 13 —Employee Benefit Plans

Share-Based Incentive Plans

Awards of restricted shares and restricted stock units (“RSUs”) are made under the Second Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the “Second A&R Plan”), which the Company’s board of directors adopted on July 22, 2026, and which was approved by the Company’s stockholders on, and became effective as of, September 16, 2026. Pursuant to the Second A&R Plan, shares available for issuance are 12.0.

Prior to the adoption and approval of the Second A&R Plan, awards were made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the “2016 Incentive Plan”), as amended from time to time. Equity-based incentive awards issued under the Second A&R Plan and the 2016 Incentive Plan generally vest over afour-year period.

Excess tax benefits recognized during the three months ended September 30, 2026 and 2025 were immaterial. Excess tax benefits of $14 and $31 were recognized during the six months ended September 30, 2026 and 2025, respectively, as a component of the provision for income taxes.

Activity in equity-classified share awards under the 2016 Incentive Plan during the six months ended September 30, 2026 and 2025 is as follows:

Activity in RSU awards under the 2016 Incentive Plan during the six months ended September 30, 2026 and 2025 is as follows:

Compensation expenses for the Company associated with equity awards granted pursuant to the 2016 Incentive Plan totaled $43 and $47 for the three months ended September 30, 2026 and 2025, respectively, and $87 and $89 for the six months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026 and 2025, there was $421 and $401, 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 approximately 2.0 years and 2.4 years, as of September 30, 2026 and 2025, respectively.

Note 14 —Stockholders' Equity

Dividends

Previously declared dividends related to unvested shares of $11 and $15 were unpaid as of September 30, 2026 and 2025, respectively.

On October 21, 2026, the Company's board of directors declared a quarterly cash dividend of $0.70 per share of Class A and Class B common stock, payable on December 15, 2026, to stockholders of record as of the close of business on December 1, 2026.

Share Repurchases

In April 2022, the board of directors authorized a share repurchase program for up to $500 of the Company's Class A common stock and Class B common stock. As of September 30, 2026, shares with a value of $130 remained available for purchase under the program.

During the three months ended September 30, 2026, the Company repurchased approximately 0.4 shares of its outstanding Class A common stock at a weighted average price of $125.77 per share, excluding commissions, for an aggregate purchase price of $50. During the three months ended September 30, 2025, the Company repurchased approximately 0.1 shares of its outstanding Class A common stock at a weighted average price of $202.51 per share, excluding commissions, for an aggregate purchase price of $30.

During the six months ended September 30, 2026 and 2025, the Company repurchased approximately 0.8 and 0.8 shares, respectively, of Class B common stock, to satisfy $107 and $138, respectively, of required withholding taxes in connection with the vesting of restricted awards. During the six months ended September 30, 2026, the Company repurchased approximately 0.7 shares of its outstanding Class A common stock at a weighted average price of $134.17 per share, excluding commissions, for an aggregate purchase price of $100. During the six months ended September 30, 2025, the Company repurchased approximately 0.2 shares of its outstanding Class A common stock at a weighted average price of $191.88 per share, excluding commissions, for an aggregate purchase price of $38.

Note 15 —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.

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.

Note 16 —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, data strategy group, 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 do not include asset information, and the CODM does not use segment asset information to assess performance or allocate resources.

(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.