10-Q 1 hli-20230930.htm 10-Q hli-20230930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-Q
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ______________
Commission File Number: 001-37537
Houlihan Lokey, Inc.
(Exact name of registrant as specified in its charter)
Delaware95-2770395
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification Number)
10250 Constellation Blvd.
5th Floor
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
(310) 788-5200
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001HLINew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    x  No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer¨
Non-accelerated filer
¨  
Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of November 2, 2023, the registrant had 51,614,392 shares of Class A common stock, $0.001 par value per share, and 17,370,751 shares of Class B common stock, $0.001 par value per share, outstanding.


HOULIHAN LOKEY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data and par value)September 30, 2023March 31, 2023
Assets
Cash and cash equivalents$493,929 $714,439 
Restricted cash373 373 
Investment securities31,214 37,309 
Accounts receivable, net of allowance for credit losses of $8,969 and $8,773, respectively
152,243 182,029 
Unbilled work in progress, net of allowance for credit losses of $6,461 and $5,622, respectively
133,787 115,045 
Income taxes receivable22,549 17,693 
Deferred income taxes106,343 104,941 
Property and equipment, net119,394 88,345 
Operating lease right-of-use assets363,719 333,877 
Goodwill1,086,438 1,087,784 
Other intangible assets, net196,652 203,370 
Other assets74,912 83,609 
Total assets$2,781,553 $2,968,814 
Liabilities and stockholders' equity
Liabilities:
Accrued salaries and bonuses$552,673 $765,877 
Accounts payable and accrued expenses95,125 113,421 
Deferred income37,370 40,695 
Deferred income taxes349 544 
Operating lease liabilities419,421 374,869 
Other liabilities30,539 60,111 
Total liabilities1,135,477 1,355,517 
Commitments and contingencies (Note 17)
Stockholders' equity:
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 51,565,992 and 50,638,924 shares, respectively
52 51 
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 17,427,625 and 18,048,345 shares, respectively
17 18 
Additional paid-in capital638,404 642,970 
Retained earnings1,087,326 1,033,072 
Accumulated other comprehensive loss(79,723)(62,814)
Total stockholders' equity1,646,076 1,613,297 
Total liabilities and stockholders' equity$2,781,553 $2,968,814 
See accompanying Notes to Consolidated Financial Statements
1

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended September 30,Six Months Ended September 30,
(In thousands, except share and per share data)2023202220232022
Revenues$466,989 $489,537 $882,818 $908,181 
Operating expenses:
Employee compensation and benefits296,542 309,859 560,025 575,594 
Travel, meals, and entertainment14,151 12,370 30,169 23,420 
Rent19,013 13,285 36,416 25,075 
Depreciation and amortization7,086 19,475 13,618 38,618 
Information technology and communications14,328 13,183 27,876 24,173 
Professional fees10,859 9,598 20,416 16,067 
Other operating expenses14,733 22,396 30,674 38,293 
Total operating expenses376,712 400,166 719,194 741,240 
Operating income90,277 89,371 163,624 166,941 
Other (income)/expense, net(3,296)5,104 (6,301)6,853 
Income before provision for income taxes93,573 84,267 169,925 160,088 
Provision for income taxes26,542 23,537 41,504 28,576 
Net income67,031 60,730 128,421 131,512 
Other comprehensive income, net of tax:
Foreign currency translation adjustments(19,883)(28,554)(16,909)(50,863)
Comprehensive income attributable to Houlihan Lokey, Inc.$47,148 $32,176 $111,512 $80,649 
Attributable to Houlihan Lokey, Inc. common stockholders:
Weighted average shares of common stock outstanding:
Basic64,551,353 63,422,701 64,180,642 63,350,545 
Fully diluted67,867,381 69,800,028 67,881,623 69,316,792 
Earnings per share (Note 13)
Basic$1.04 $0.96 $2.00 $2.08 
Fully diluted$0.99 $0.87 $1.89 $1.90 

See accompanying Notes to Consolidated Financial Statements
2

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
(In thousands, except share data)
Shares
$
Shares
$
$
$
$
$
Balances – July 1, 202351,296,601 $51 18,035,565 $18 $616,315 $1,058,509 $(59,840)$1,615,053 
Shares issued— — 55,907 — 5,635 — — 5,635 
Stock compensation vesting (Note 14)— — — — 41,662 — — 41,662 
Dividends— — — — — (38,214)— (38,214)
Conversion of Class B to Class A shares508,491 1 (508,491)(1)— — — — 
Other shares repurchased/forfeited(239,100)— (155,356)— (25,208)— — (25,208)
Net income— — — — — 67,031 — 67,031 
Change in unrealized translation— — — — — — (19,883)(19,883)
Total comprehensive income— — — — — 67,031 (19,883)47,148 
Balances – September 30, 202351,565,992 $52 17,427,625 $17 $638,404 $1,087,326 $(79,723)$1,646,076 
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
(In thousands, except share data)
Shares
$
Shares
$
$
$
$
$
Balances – July 1, 202249,649,765 $50 19,136,952 $19 $527,666 $955,484 $(65,656)$1,417,563 
Shares issued— — 32,310 — — — — — 
Stock compensation vesting (Note 14)— — — — 40,195 — — 40,195 
Dividends— — — — — (35,010)— (35,010)
Conversion of Class B to Class A shares231,367 — (231,367)— — — — — 
Other shares repurchased/forfeited(100,257)— (63,773)— (8,256)— — (8,256)
Net income— — — — — 60,730 — 60,730 
Change in unrealized translation— — — — — — (28,554)(28,554)
Total comprehensive income— — — — — 60,730 (28,554)32,176 
Balances – September 30, 202249,780,875 $50 18,874,122 $19 $559,605 $981,204 $(94,210)$1,446,668 
See accompanying Notes to Consolidated Financial Statements
3

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
(In thousands, except share data)
Shares
$
Shares
$
$
$
$
$
Balances – April 1, 202350,638,924 $51 18,048,345 $18 $642,970 $1,033,072 $(62,814)$1,613,297 
Shares issued— — 1,612,192 1 10,811 — — 10,812 
Stock compensation vesting (Note 14)— — — — 79,010 — — 79,010 
Dividends— — — — — (74,167)— (74,167)
Conversion of Class B to Class A shares1,159,559 1 (1,159,559)(1)— — — — 
Shares issued to non-employee directors (Note 14)6,609 — — — 587 — — 587 
Other shares repurchased/forfeited(239,100)— (1,073,353)(1)(94,974)— — (94,975)
Net income— — — — — 128,421 — 128,421 
Change in unrealized translation— — — — — — (16,909)(16,909)
Total comprehensive income— — — — — 128,421 (16,909)111,512 
Balances – September 30, 202351,565,992 $52 17,427,625 $17 $638,404 $1,087,326 $(79,723)$1,646,076 
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
(In thousands, except share data)
Shares
$
Shares
$
$
$
$
$
Balances – April 1, 202249,853,564 $50 17,649,555 $18 $564,761 $922,223 $(43,347)$1,443,705 
Shares issued— — 2,304,890 2 6,019 — — 6,021 
Stock compensation vesting (Note 14)— — — — 79,362 — — 79,362 
Dividends— — — — — (72,531)— (72,531)
Conversion of Class B to Class A shares497,859 — (497,859)— — — — — 
Shares issued to non-employee directors (Note 14)6,739 — — — 570 — — 570 
Other shares repurchased/forfeited(577,287)— (582,464)(1)(91,107)— — (91,108)
Net income— — — — — 131,512 — 131,512 
Change in unrealized translation— — — — — — (50,863)(50,863)
Total comprehensive income— — — — — 131,512 (50,863)80,649 
Balances – September 30, 202249,780,875 $50 18,874,122 $19 $559,605 $981,204 $(94,210)$1,446,668 
See accompanying Notes to Consolidated Financial Statements
4

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended September 30,
(In thousands) 20232022
Cash flows from operating activities:
Net income$128,421 $131,512 
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income taxes(2,633)(14,088)
Provision for bad debts, net4,058 6,103 
Unrealized losses on investment securities142 2,140 
Non-cash lease expense16,691 14,554 
Depreciation and amortization13,618 38,618 
Contingent consideration valuation(816)2,869 
Compensation expense – equity and liability classified share awards (Note 14)82,149 82,006 
Changes in operating assets and liabilities:
Accounts receivable26,569 5,388 
Unbilled work in progress(19,582)(53,837)
Other assets8,697 (13,025)
Accrued salaries and bonuses(211,229)(264,724)
Accounts payable and accrued expenses and other(36,234)(79,174)
Deferred income(3,325)6,729 
Income taxes payable(4,274)(57,988)
Net cash provided by/(used) in operating activities2,252 (192,917)
Cash flows from investing activities:
Purchases of investment securities(35)(11,263)
Sales or maturities of investment securities5,988 82,524 
Purchase of property and equipment, net(38,927)(17,796)
Net cash provided by/(used in) investing activities(32,974)53,465 
Cash flows from financing activities:
Dividends paid(77,390)(73,812)
Share repurchases(24,952)(48,905)
Payments to settle employee tax obligations on share-based awards(70,025)(42,191)
Earnouts paid(7,053)(2,078)
Loans payable to former shareholders redeemed— (33)
Repayments of loans to non-affiliates— (2,488)
Other financing activities587 570 
Net cash used in financing activities(178,833)(168,937)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash(10,955)(21,502)
Net decrease in cash, cash equivalents, and restricted cash(220,510)(329,891)
Cash, cash equivalents, and restricted cash – beginning of period714,812 834,070 
Cash, cash equivalents, and restricted cash – end of period$494,302 $504,179 
Supplemental disclosures of non-cash activities:
Shares issued via vesting of liability classified awards$5,114 $5,955 
Cash paid during the period:
Interest$200 $1,861 
Taxes, net of refunds48,410 102,418 
Regulatory fines and penalties15,000 — 
See accompanying Notes to Consolidated Financial Statements
5
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands, except share data or as otherwise stated)

Note 1 — Background
Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries:
•Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly-owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and is a member of Financial Industry Regulatory Authority, Inc.

•Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly-owned direct subsidiary of HL, Inc.

•Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K.").

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, advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side M&A transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of 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") that may have been received.

•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; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. 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.

•Financial and Valuation Advisory ("FVA") primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.
6
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying 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 consolidated financial statement presentation. The results of operations for the six months ended September 30, 2023 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2024. 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, 2023 (the "2023 Annual Report").
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.
The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.
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.
Revenues
Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contracts. Revenues reflect fees generated from our CF, FR, and FVA business segments.
The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling the contracts for such services. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success-related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).
7
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the engagement as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event, which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions or reports have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the Consolidated Statements of Comprehensive Income.
Operating Expenses
The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses.
Translation of Foreign Currency Transactions
The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.
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, 2023 we had three foreign currency forward contracts outstanding between the U.S. dollar and the pound sterling with an aggregate notional value of $35.2 million and two foreign currency forward contracts outstanding between the euro and the pound sterling with a notional value of €9.4 million. As of September 30, 2022, we had two foreign currency forward contracts outstanding between the pound sterling and the euro with notional values of €7.5 million and €0.5 million. The change in fair value of these contracts represented a loss included in Other operating expenses of $(1,217) and $(232) during the three months ended September 30, 2023 and September 30, 2022, respectively.
8
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
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 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
•Level 2 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 3 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.
For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available, and may incorporate management's own assumptions or involve a significant degree of judgment.
The following methods and assumptions were used by the Company in estimating fair value disclosures:
•Corporate debt securities: All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.
•U.S. treasury securities: Fair values for U.S. treasury securities are based on quoted prices from recent trading activity of identical or similar securities. All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the instrument.
The fair values of the financial instruments represent the amounts that would be received to sell assets or that would be paid to transfer liabilities in an orderly transaction between market participants as of a specified date. Fair value measurements maximize the use of observable inputs; however, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, as well as available observable and unobservable inputs.
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 the loans to employees included in Other assets, Loans payable to former shareholders, and an unsecured loan which is included in Loan payable to non-affiliate 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. As of September 30, 2023 and March 31, 2023, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.
9
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     
September 30, 2023March 31, 2023
Cash and cash equivalents$493,929 $714,439 
Restricted cash (1)
373 373 
Total cash, cash equivalents, and restricted cash$494,302 $714,812 
(1)Restricted cash as of September 30, 2023 and March 31, 2023 consisted of a cash secured letter of credit issued for our Frankfurt office.

Investment Securities
Investment securities consist primarily of corporate debt and U.S. treasury securities with original maturities over 90 days. The Company classifies its corporate debt and U.S. treasury securities as trading and measures them at fair value in the Consolidated Balance Sheets. Unrealized holding gains and losses for trading securities are included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income.     

Allowance for Credit Losses
The allowance for credit losses on accounts receivable and unbilled work in progress reflects management’s best estimate of expected losses using the Company's internal current expected credit losses model. This model analyzes expected losses based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that could potentially affect the collectability of the reported amounts. This is recorded through provision for bad debts, which is included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income. Amounts deemed to be uncollectible are written off against the allowance for credit losses.

Property and Equipment
Property and equipment are stated at cost. Repair and maintenance charges are expensed as incurred and costs of renewals or improvements are capitalized at cost. Depreciation on furniture and office equipment is recognized on a straight-line basis over the estimated useful lives of the respective assets.
Income Taxes
The Company files consolidated federal income tax returns, as well as consolidated and separate returns in state and local jurisdictions, and the Company reports income tax expense on this basis.
We account for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The measurement of the deferred items is based on enacted tax laws and applicable tax rates. A valuation allowance related to a deferred tax asset is recorded if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
The Company utilized a comprehensive model to recognize, measure, present, and disclose in its financial statements any uncertain tax positions that have been taken or are expected to be taken on a tax return. The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense and penalties related to income taxes are included in the provision for income taxes in the accompanying Consolidated Statements of Comprehensive Income.
The Global Intangible Low-Taxed Income tax (“GILTI inclusion”) can be recognized in the financial statements through an accounting policy election by either recording a period cost (permanent item) or providing deferred income taxes stemming from certain basis differences that are expected to result in GILTI inclusion. The Company has elected to account for the tax impacts of the GILTI inclusion as a period cost.
10
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Leases
We assess whether an arrangement is or contains a lease at the inception of the agreement. Right-of-use ("ROU") assets represent our right to use underlying assets for the lease term, and lease liabilities represent our obligation to make lease payments arising from leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease terms utilizing the discount rate implicit in the leases. If the discount rate implicit in the leases is not readily determinable, the present value of future lease payments is calculated utilizing the Company’s incremental borrowing rate, which approximates the interest that the Company would have to pay on a secured loan. The Company elected to utilize a portfolio approach and applies the rates to a portfolio of leases with similar terms and economic environments. The terms of our leases used to determine the ROU asset and lease liability account for options to extend when it is reasonably certain that we will exercise those options, if applicable. ROU assets and lease liabilities are subject to adjustment in the event of modification to lease terms, changes in probability that an option to extend or terminate a lease would be exercised and other factors. In addition, ROU assets are periodically reviewed for impairment.
Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.
The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.
Goodwill and Intangible Assets
Goodwill represents an acquired company’s acquisition cost over the fair value of acquired net tangible and intangible assets. Goodwill is the net asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets identified and accounted for include tradenames and marks, backlog, developed technologies, and customer relationships. Those intangible assets with finite lives, including backlog and customer relationships, are amortized over their estimated useful lives.
Goodwill is reviewed annually during the fourth quarter for impairment and more frequently if potential impairment indicators exist. Goodwill is reviewed for impairment in accordance with ASC Topic 350, Intangibles – Goodwill and Other, as amended by Accounting Standards Update ("ASU") No. 2017-04, Simplifying the Test for Goodwill Impairment, which permits management to perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its corresponding carrying value. If management determines the reporting unit's fair value is more likely than not less than its carrying value, a quantitative analysis will be performed to compare the fair value of the reporting unit with its corresponding carrying value. If the conclusion of the quantitative analysis is that the fair value is in fact less than the carrying value, management will recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying value exceeds its fair value. Impairment testing of goodwill requires a significant amount of judgment in assessing both qualitative factors and if necessary, quantitative factors used to estimate the fair value of the reporting unit. As of September 30, 2023, management concluded that it was not more likely than not that the Company’s reporting units’ fair value was less than their carrying amount and no further quantitative impairment testing had been considered necessary.

Indefinite-lived intangible assets are reviewed annually for impairment in accordance with ASU 2012-02, Testing Indefinite-lived Intangible Assets for Impairment, which provides management the option to perform a qualitative assessment. If it is more likely than not that the asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment expense. As of September 30, 2023, management concluded that it was not more likely than not that the fair values were less than the carrying values.

Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group (inclusive of other long-lived assets) be tested for possible impairment, management first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of September 30, 2023, no events or changes in circumstances were identified that indicated that the carrying amount of the finite-lived intangible assets were not recoverable.
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Business Combinations
Accounting for business combinations requires management to make significant estimates and assumptions. We allocate the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date, with the consideration in excess recorded as goodwill. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, expected asset lives, geographic risk premiums, discount rates, and more. The amounts and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.
Note 3 — Revenue Recognition
Disaggregation of Revenues
The Company has disclosed disaggregated revenues based on its business segment and geographical area, which provides a reasonable representation of how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See Note 18 for additional information.

Contract Balances
The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred income (contract liability) until the performance obligations are satisfied.

Costs incurred in fulfilling advisory contracts with point-in-time revenue recognition are recorded as a contract asset when the costs (i) relate directly to a contract, (ii) generate or enhance resources of the Company that will be used in satisfying performance obligations, and (iii) are expected to be recovered. The Company amortizes the contract asset costs related to fulfilling a contract based on recognition of fee revenues for the corresponding contract.

Costs incurred in fulfilling an advisory contract with over-time revenue recognition are expensed as incurred.

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:
April 1, 2023Increase/(Decrease)September 30, 2023
Receivables (1)
$175,023 $(29,670)$145,353 
Unbilled work in progress, net of allowance for credit losses115,045 18,742 133,787 
Contract Assets (1)
7,006 (116)6,890 
Contract Liabilities (2)
40,695 (3,325)37,370 
(1)Included within Accounts receivable, net of allowance for credit losses in the September 30, 2023 Consolidated Balance Sheets.
(2)Included within Deferred income in the September 30, 2023 Consolidated Balance Sheets.

During the three and six months ended September 30, 2023, $7.5 million and $20.7 million of Revenues, respectively, were recognized that were included in the Deferred income balance at the beginning of the period.

As a practical expedient, the Company does not disclose information about remaining performance obligations pertaining to (i) contracts that have an original expected duration of one year or less, and/or (ii) contracts where the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that is or forms part of a single performance obligation. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at September 30, 2023.
12
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 4 — Related Party Transactions
The Company provides financial advisory services to certain related parties, and received fees for these services totaling approximately $2 and $1,537 for the three and six months ended September 30, 2023, respectively.
Other assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $25,910 and $28,869 as of September 30, 2023 and March 31, 2023, respectively.
Note 5 — Fair Value Measurements
The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:
September 30, 2023
Level ILevel IILevel IIITotal
Corporate debt securities$— $20,505 $— $20,505 
U.S. treasury securities— 10,186 — 10,186 
Certificates of deposit— 523 — 523 
Total assets measured at fair value$— $31,214 $— $31,214 

March 31, 2023
Level ILevel IILevel IIITotal
Corporate debt securities$— $23,617 $— $23,617 
U.S. treasury securities— 12,990 — 12,990 
Common stock184 — — 184 
Certificates of deposit— 518 — 518 
Total assets measured at fair value$184 $37,125 $— $37,309 

The Company had no transfers between fair value levels during the six months ended September 30, 2023.
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
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:
September 30, 2023
Amortized CostGross Unrealized GainsGross Unrealized (Losses)
Fair Value (1)
Corporate debt securities$21,863 $3 $(1,361)$20,505 
U.S. treasury securities10,723 — (537)10,186 
Certificates of deposit523 — — 523 
Total securities with unrealized gains/(losses)$33,109 $3 $(1,898)$31,214 

March 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized (Losses)
Fair Value (1)
Corporate debt securities$24,936 $6 $(1,325)$23,617 
U.S. treasury securities13,400 15 (425)12,990 
Common stock768 — (584)184 
Certificates of deposit518 — — 518 
Total securities with unrealized gains/(losses)$39,622 $21 $(2,334)$37,309 

Scheduled maturities of the debt securities held by the Company included within the investment securities portfolio were as follows:
September 30, 2023March 31, 2023
Amortized CostEstimated Fair ValueAmortized CostEstimated Fair Value
Due within one year$3,969 $3,927 $6,243 $6,254 
Due within years two through five29,140 27,287 33,379 31,055 
Total debt within the investment securities portfolio$33,109 $31,214 $39,622 $37,309 
Note 7 — Allowance for Credit Losses
The following table presents information about the Company's allowance for credit losses:
September 30, 2023
Beginning balance$14,395 
Provision for bad debt, net4,058 
Recovery/(write-off) of uncollectible accounts, net (3,023)
Ending balance$15,430 
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 8 — Property and Equipment
Property and equipment, net of accumulated depreciation consists of the following:
September 30, 2023March 31, 2023
Equipment$11,126 $10,178 
Furniture and fixtures18,298 19,508
Leasehold improvements133,265 107,156
Computers and software13,745 12,086
Other7,442 7,411
Total cost183,876 156,339 
Less: accumulated depreciation(64,482)(67,994)
Total net book value$119,394 $88,345 
Additions to property and equipment during the six months ended September 30, 2023 were primarily related to leasehold improvement costs incurred.
Depreciation expense of $3,727 and $3,849 was recognized for the three months ended September 30, 2023 and 2022, respectively, and $6,903 and $7,228 was recognized for the six months ended September 30, 2023 and 2022, respectively.
Note 9 — Goodwill and Other Intangible Assets
The following table provides a reconciliation of Goodwill and other intangibles, net reported on the Consolidated Balance Sheets.
Useful LivesSeptember 30, 2023March 31, 2023
GoodwillIndefinite$1,086,438 $1,087,784 
Tradename-Houlihan LokeyIndefinite192,210 192,210 
Other intangible assetsVaries93,781 93,917 
Total cost1,372,429 1,373,911 
Less: accumulated amortization(89,339)(82,757)
Goodwill and other intangibles, net$1,283,090 $1,291,154 

Goodwill attributable to the Company’s business segments is as follows:
April 1, 2023
Change (1)
September 30, 2023
Corporate Finance$833,254 $(1,346)$831,908 
Financial Restructuring162,815 — 162,815 
Financial and Valuation Advisory91,715 — 91,715 
Goodwill$1,087,784 $(1,346)$1,086,438 
(1)Changes pertain primarily to foreign currency translation adjustments.
15
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Amortization expense of approximately $3,360 and $15,625 was recognized for the three months ended September 30, 2023 and 2022, respectively, and $6,715 and $31,390 for the six months ended September 30, 2023 and 2022, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five years and thereafter are as follows:
Year Ended March 31,
Remainder of 2024$2,444 
20251,694 
2026— 
2027— 
2028 and thereafter— 
Note 10 — Loans Payable
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 (the "HLI Line of Credit"), which allows for borrowings of up to $100.0 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 $200.0 million). and matures on August 23, 2025 (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) Term Secured Overnight Financing Rate ("SOFR") plus a 0.10% SOFR adjustment plus a 1.00% margin or (ii) 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) Term SOFR plus a 0.10% SOFR adjustment. Commitment fees apply to unused amounts, and the HLI Line of Credit contains debt covenants which require that the Company maintain certain financial ratios. As of September 30, 2023 and March 31, 2023, no principal was outstanding under the 2019 Line of Credit.

In May 2018, the Company acquired BearTooth Advisors. Total consideration included an unsecured note of $2.8 million bearing interest at an annual rate of 2.88% and payable on May 21, 2048. This note was subsequently assigned by the seller to the former BearTooth principals (who became employees of the Company), and, under certain circumstances, is convertible into Company Class B common stock after the fifth anniversary of the closing of the transaction. The Company did not incur interest expense on this note during the three months ended September 30, 2023 and 2022, respectively, and incurred interest expense of $0 and $18 for the six months ended September 30, 2023 and 2022, respectively.
In December 2019, the Company acquired Freeman & Co. Total consideration included an unsecured note of $4.0 million bearing interest at an annual rate of 2.75% and payable on December 16, 2049. The note issued by the Company to the seller was distributed to the former principals of Freeman & Co. (who became employees of the Company). Under certain circumstances, the note may be exchanged by each principal for Company stock over a four-year period in equal annual installments starting in December 2020. The Company incurred interest expense on this note of $21 for the three months ended September 30, 2023 and 2022, and $41 for the six months ended September 30, 2023 and 2022.
In August 2020, the Company acquired MVP Capital, LLC (“MVP”). Total consideration included an unsecured non-interest bearing note of $4.5 million payable August 14, 2050. The note was issued by the Company to the former principals and sellers of MVP (who became employees of the Company). Under certain circumstances, the note may be exchanged by each seller for a combination of cash and Company stock over a three-year period in equal annual installments starting in August 2021. As of September 30, 2023, the note was fully converted and exchanged for a combination of cash and Company stock. Contingent consideration was also issued in connection with the acquisition of MVP, the remaining liability of which was settled during the three months ended September 30, 2023. The carrying value of the MVP contingent consideration was $12.9 million as of March 31, 2023, which is included in Other liabilities in our Consolidated Balance Sheet.
In July 2021, the Company acquired Baylor Klein, Ltd (“BK”). Contingent consideration was issued in connection with the acquisition of BK, which had a carrying value of $17.9 million and $18.1 million as of September 30, 2023 and March 31, 2023, respectively, which is included in Other liabilities in our Consolidated Balance Sheets.
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 11 — Accumulated Other Comprehensive (Loss)
Accumulated other comprehensive (loss) is comprised of Foreign currency translation adjustments of $(19,883) and $(28,554) for the three months ended September 30, 2023 and 2022, respectively, and $(16,909) and $(50,863) for the six months ended September 30, 2023 and 2022, respectively.

Accumulated other comprehensive (loss) as of September 30, 2023 was comprised of the following:
Balance, April 1, 2023$(62,814)
Foreign currency translation adjustment(16,909)
Balance, September 30, 2023$(79,723)
Note 12 — Income Taxes
The Company’s provision for income taxes was $26,542 and $23,537 for the three months ended September 30, 2023 and 2022, respectively, and $41,504 and $28,576 for the six months ended September 30, 2023 and 2022, respectively. These represent effective tax rates of 28.4% and 27.9% for the three months ended September 30, 2023 and 2022, respectively, and 24.4% and 17.9% for the six months ended September 30, 2023 and 2022, respectively.
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.
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Numerator:
Net income attributable Houlihan Lokey, Inc.$67,031 $60,730 $128,421 $131,512 
Denominator:
Weighted average shares of common stock outstanding — basic64,551,353 63,422,701 64,180,642 63,350,545 
Weighted average number of incremental shares pertaining to unvested restricted stock and issuable in respect of unvested restricted stock units, as calculated using the treasury stock method
3,316,028 6,377,327 3,700,981 5,966,247 
Weighted average shares of common stock outstanding — diluted67,867,381 69,800,028 67,881,623 69,316,792 
Basic earnings per share$1.04 $0.96 $2.00 $2.08 
Diluted earnings per share$0.99 $0.87 $1.89 $1.90 
Note 14 — Employee Benefit Plans
Defined Contribution Plans
The Company sponsors a 401(k) defined contribution savings plan for its domestic employees and defined contribution retirement plans for its international employees. The Company contributed approximately $3,083 and $1,867 to these plans during the three months ended September 30, 2023 and 2022, respectively, and $6,112 and $3,801 for the six months ended September 30, 2023 and 2022, respectively.
Share-Based Incentive Plans
Awards of restricted shares and restricted stock units 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 2017. 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 a four-year period. Restricted shares of Class A common stock were granted under the 2016 Incentive Plan to (i) six independent directors in the first quarter of fiscal 2023 at $84.55 and (ii) six independent directors in the first quarter of fiscal 2024 at $87.60.
17
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
No excess tax benefit was recognized during the three months ended September 30, 2023 and 2022. An excess tax benefit of $7,299 and $8,102 was recognized during the six months ended September 30, 2023 and 2022, respectively, as a component of the provision for income taxes and an operating activity on the Consolidated Statements of Cash Flows. The excess tax benefits recognized during the six months ended September 30, 2023 and 2022 were related to shares vested in May 2023 and May 2022, respectively.
The share awards are 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 Company's 2016 Incentive Plan during the six months ended September 30, 2023 and 2022 was as follows:
Unvested Share AwardsShares
Weighted Average
Grant Date
Fair Value
Balance, April 1, 20235,281,779 $79.57 
Granted1,244,902 87.60 
Vested(1,636,778)74.23 
Forfeited/Repurchased(306,521)84.30 
Balance, September 30, 20234,583,382 $83.34 
Balance, April 1, 20224,314,375 $71.42 
Granted2,221,461 84.49 
Vested(1,175,311)59.82 
Forfeited/Repurchased(76,002)80.44 
Balance, September 30, 20225,284,523 $79.37 
Activity in liability-classified share awards during the six months ended September 30, 2023 and 2022 was as follows:
Awards Settleable in SharesFair Value
Balance, April 1, 2023$11,971 
Offer to grant9,112 
Share price determined-converted to cash payments(3)
Share price determined-transferred to equity grants(6,172)
Forfeited— 
Balance, September 30, 2023$14,908 
Balance, April 1, 2022$14,349 
Offer to grant6,188 
Share price determined-converted to cash payments(2,676)
Share price determined-transferred to equity grants(4,269)
Forfeited— 
Balance, September 30, 2022$13,592 

18
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Activity of our RSUs during the six months ended September 30, 2023 and 2022 was as follows:
Restricted Stock UnitsRSUs
Weighted Average Grant Date Fair Value
RSUs as of April 1, 20231,050,646 $95.46 
Issued94,286 87.60 
Forfeitures(19,070)90.91 
Vested(266,883)94.38 
RSUs as of September 30, 2023858,979 $95.02 
RSUs as of April 1, 20221,038,503 $95.27 
Issued50,556 84.55 
Forfeitures(14,275)96.82 
Vested(24,138)63.75 
RSUs as of September 30, 20221,050,646 $95.45 

Compensation expenses for the Company associated with both equity-classified and liability-classified awards totaled $42,740 and $41,399 for the three months ended September 30, 2023 and 2022, respectively, and $82,149 and $82,006 for the six months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and 2022, there was $463,603 and $519,704, respectively, of total unrecognized compensation cost related to unvested share awards granted under the 2016 Incentive Plan. These costs are recognized over a weighted average period of 3.4 years and 2.8 years, as of September 30, 2023 and 2022, respectively.

On October 19, 2017, 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 by approximately 12.2 million shares. Under the Amendment, the aggregate number of shares of common stock that are available for issuance under awards granted pursuant to the 2016 Incentive Plan is equal to the sum of (i) 8.0 million and (ii) any shares of our Class B common stock that are subject to awards under our 2006 Incentive Plan that terminate, expire or lapse for any reason after October 19, 2017.

The number of shares available for issuance increases annually beginning on April 1, 2018 and ending on April 1, 2025, by an amount equal to the lowest of:

•6,540,659 shares of our Class A common stock and Class B common stock;
•Six percent of the shares of Class A common stock and Class B common stock outstanding on the final day of the immediately preceding fiscal year; and
•such smaller number of shares as determined by our board of directors.
Note 15 — Stockholders' Equity
There are two classes of authorized Company common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions.
19
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Class A Common Stock
During the three months ended September 30, 2023 and 2022, no shares were issued to non-employee directors and 508,491 and 231,367 shares were converted from Class B to Class A, respectively. During the six months ended September 30, 2023 and 2022, 6,609 and 6,739 shares were issued to non-employee directors, respectively, and 1,159,559 and 497,859 shares were converted from Class B to Class A, respectively.

As of September 30, 2023, there were 51,501,057 Class A shares held by the public and 64,935 Class A shares held by non-employee directors. As of September 30, 2022, there were 49,722,549 Class A shares held by the public and 58,326 Class A shares held by non-employee directors.

Class B Common Stock
As of September 30, 2023 and 2022, there were 17,427,625 and 18,874,122 of Class B shares held by the HL Voting Trust, respectively.

Dividends
Previously declared dividends related to unvested shares of $17,236 and $12,003 were unpaid as of September 30, 2023 and 2022, respectively.

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 $500.0 million of the Company's Class A common stock and Class B common stock. As of September 30, 2023, shares with a value of $457.7 million remained available for purchase under the program.

During the three months ended September 30, 2023 and 2022, the Company repurchased 4,235 and 9,731 shares, respectively, of Class B common stock, to satisfy $259 and $70, respectively, of required withholding taxes in connection with the vesting of restricted awards. During the three months ended September 30, 2023, the Company repurchased 239,100 shares of its outstanding Class A common stock at a weighted average price of $104.36 per share, excluding commissions, for an aggregate purchase price of $24,952. During the three months ended September 30, 2022, the Company repurchased 100,257 shares of its outstanding Class A common stock at a weighted average price of $81.74 per share, excluding commissions, for an aggregate purchase price of $8,195.

During the six months ended September 30, 2023 and 2022, the Company repurchased 766,832 and 506,462 shares, respectively, of Class B common stock, to satisfy $70,025 and 42,191 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the six months ended September 30, 2023, the Company repurchased 239,100 shares of its outstanding Class A common stock at a weighted average price of $104.36 per share, excluding commissions, for an aggregate purchase price of $24,952. During the six months ended September 30, 2022, the Company repurchased 577,287 shares of its outstanding Class A common stock at a weighted average price of $84.72 per share, excluding commissions, for an aggregate purchase price of $48,905.
20
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 16 — Leases
Lessee Arrangements
Operating Leases
We lease real estate and equipment used in operations from third parties. As of September 30, 2023, the remaining term of our operating leases ranged from 1 to 16 years with various automatic extensions.
The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of September 30, 2023.

Maturity of Operating Leases
Operating Leases
Remaining 2024$12,980 
202545,382 
202651,080 
202748,870 
202848,165 
Thereafter370,454 
Total576,931 
Less: present value discount(157,510)
Operating lease liabilities$419,421 

As of September 30, 2023, the Company has entered into operating leases for additional office space that have not yet commenced for approximately $6.5 million. These operating leases will commence during fiscal year 2024 with a lease term of 5 years to 13 years.
Lease costs
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Operating lease expense$13,385 $8,571 $25,808 $15,807 
Variable lease expense (1)
5,476 4,725 10,713 9,244 
Short-term lease expense62 52 108 87 
Less: Sublease income90 (63)(213)(63)
Total lease costs$19,013 $13,285 $36,416 $25,075 
(1)Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.
Weighted-average details
September 30,
20232022
Weighted-average remaining lease term (years)129
Weighted-average discount rate5.1 %3.3 %

21
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Supplemental cash flow information related to leases:
Six Months Ended September 30,
20232022
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities$17,562 $18,292 
Non-cash activity:
Operating lease right-of-use assets obtained in exchange of Operating lease liabilities$13,735 $19,219 
Change in Operating lease right-of-use assets due to remeasurement32,655 161 
Note 17 — 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.
The Company also provides routine indemnifications relating to certain real estate (office) lease agreements under which it may be required to indemnify property owners for claims and other liabilities arising from the Company’s use of the applicable premises. In addition, the Company guarantees the performance of its subsidiaries under certain office lease agreements. The terms of these obligations vary, and because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the maximum amount that it could be obligated to pay under such contracts. Based on historical experience and evaluation of specific indemnities, management believes that judgments, if any, against the Company related to such matters are not likely to have a material effect on the consolidated financial statements. Accordingly, the Company has not recorded any liability for these obligations as of September 30, 2023 or March 31, 2023.
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 2023 Annual Report.
22
HOULIHAN LOKEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In thousands, except share data or as otherwise stated)
Note 18 — Segment and Geographical Information
The Company’s reportable segments are described in Note 1 and each are individually managed and provide separate services that require specialized expertise for the provision of those services. Revenues by segment represent fees earned on the various services offered within each segment. Segment profit consists of segment revenues, less (1) direct expenses including compensation, 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 charges related to incentive compensation 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.    
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Revenues by segment
Corporate Finance$281,684 $315,016 $508,735 $578,967 
Financial Restructuring114,670 97,694 238,038 176,532 
Financial and Valuation Advisory70,635 76,827 136,045 152,682 
Revenues$466,989 $489,537 $882,818 $908,181 
Segment profit (1)
Corporate Finance$90,517 $93,794 $152,139 $185,359 
Financial Restructuring32,499 17,563 76,093 44,259 
Financial and Valuation Advisory19,593 26,169 34,492 45,203 
Total segment profit142,609 137,526 262,724 274,821 
Corporate expenses (2)
52,332 48,155