Hamilton Lane Incorporated (HLNE) Earnings

Management highlights

- Overall Footprint and Full Year Financials * Total asset footprint reached $1 trillion at fiscal year end 26, up 9% year-over-year * AUM stood at $142 billion, up 3% year-over-year, while AUA reached $905 billion, up 10% year-over-year * Full year 26 total management and advisory fees hit $584 million (up 14% YoY), total fee related revenue was $687 million (up 20% YoY), fee related earnings reached $345 million (up 25% YoY) * GAAP EPS was $5.92 on $249 million GAAP net income; non-GAAP EPS was $5.90 on $321 million adjusted net income * Board approved an 11% annual dividend increase to $2.40 per share, marking the ninth consecutive annual double-digit dividend increase since going public - Private Market Industry Perspective * Management expects private equity to transition into a healthier deal and exit environment, with 2025 global buyout deal volume up over 40% and exit value up nearly 50% (second best year on record) * Private credit fundamentals remain solid: disciplined leverage, sub-2% default rates (below historical averages), and continued attractive spreads over public loans * Venture and growth equity offer unique access to AI, data infrastructure, defense innovation, and next-generation software, with most value creation occurring while companies are still private * Secondaries maintain a compelling risk-reward profile, with favorable supply-demand dynamics and buyer-friendly pricing; management clarifies that secondary purchase discounts do not impact underlying fund valuations per standard GAAP rules * Infrastructure fundraising hit a record in 2025 with over 50% of funds oversubscribed, and over 40% of institutions remain underallocated to the asset class * Real estate has completed its valuation reset and now offers attractive entry points, with fundraising rebounding to over $240 billion in 2025 and improving liquidity ratios * Performance dispersion between top and bottom quartile managers is large and persistent across all private market sub-asset classes, reinforcing the value of active manager selection, which is Hamilton Lane's core competitive advantage - Evergreen Platform Performance * Total Evergreen AUM reached over $17.5 billion at quarter end, up 64% year-over-year, with $1 billion of aggregate net inflows in Q4 and no net outflows across any individual fund (no gates required amid industry-wide elevated redemption requests) * Monthly activity: +$471M net inflow January, +$591M February, -$17M net outflow March (only global credit and global multi-strategy saw small March outflows), with April 2026 tracking to over $265M aggregate net inflow * Institutional investors now account for over 25% of Evergreen inflows, up from prior periods, driven by tactical portfolio construction use cases that drawdown funds cannot support * Hamilton Lane launched the new daily subscription/priced Hamilton Lane Credit Income Fund (its 12th Evergreen fund) in April 2026, with $325 million in committed seed capital from institutional investors and the firm's balance sheet - Closed-End Fundraising Updates * The seventh secondary fund and second venture product are on track for initial closes in the coming months * The first GP-led secondary closed-end fund was officially launched, with Hamilton Lane as an early mover in this space since 2014; a first close is expected before the end of calendar 26 * The sixth equity opportunities fund has raised approximately $2.8 billion total (35% larger than the prior vintage fund), with fundraising extended through end of Q2 2026 for final closings - Strategic and Innovation Investments * Announced a strategic balance sheet investment in Cornerstone, a blockchain-based private market infrastructure platform that automates manual processes and improves investor experience * Announced a strategic investment in Republic, a leading on-chain investment platform, to expand retail access to private market strategies, support product development and tokenization, and advance Hamilton Lane's digital infrastructure strategy - Balance Sheet and Capital Management * Unrealized carry balance increased 23% year-over-year to ~$1.5 billion, even after recognizing $80 million in incentive fees over the prior 12 months * The Board approved an increase to the share repurchase program authorization to a total of $100 million, leaving ~$80 million available for future repurchases after ~$20 million spent in Q4

Guidance

- Management expects overall exit activity to continue improving in the second half of calendar 26, driven by the aging of private market asset bases, new market equilibrium between buyers and sellers, a growing corporate M&A market, and an improving IPO environment - Hamilton Lane targets getting net Evergreen inflows back to and above the January-February 2026 average run rate (approximately $525 million per month) as the market hangover from early 2026 industry headlines fades - The firm expects continued strong growth in technology solutions revenue, driven by growing demand for bundled back office and analytics services as well as fast growing standalone demand for the Cobalt analytics platform - Management expects to grow its secondary franchise from its current mid-tier market position to become a top-tier player in the space

Segment performance

1. Specialized Funds: Total fee-earning AUM ended fiscal 26 at $41 billion, representing 50% of total fee-earning AUM, with 24% year-over-year growth and 7% quarter-over-quarter growth. Revenue increased by $59 million (19% year-over-year), driven by $7 billion of AUM growth in the Evergreen platform and over $1 billion raised for the sixth equity opportunities fund in fiscal 26. 2. Customized Separate Accounts: Total fee-earning AUM ended fiscal 26 at $41 billion, representing 50% of total fee-earning AUM, with 4% year-over-year growth and essentially flat quarter-over-quarter change. Revenue increased by $7 million (5% year-over-year), driven by new client wins, re-ups from existing clients, and continued investment activity. 3. Technology Solutions (Reporting, Monitoring, Data and Analytics): Revenue increased by approximately $7 million (22% year-over-year), driven by strong adoption of bundled and standalone technology offerings.

Risks & headwinds

- Industry-wide elevated redemption requests for evergreen private credit funds could create short-term flow volatility, as seen in the small March 2026 net outflow for two of Hamilton Lane's evergreen products - There is ongoing industry scrutiny of incentive fee accounting for evergreen funds that crystallize performance fees on unrealized gains, though management notes this follows standard GAAP and is the industry norm - Secondary market transaction pricing can create public misunderstanding of underlying private asset valuations, despite widespread adherence to standard accounting rules - The firm faces competition for secondary deal flow and product placement in wealth channels, though management notes strong selectivity and growing demand for its offerings mitigate this risk - Liquidity risk in evergreen funds is mitigated by ongoing distributions, maintained cash reserves, and dedicated lines of credit, though a prolonged period of redemptions in excess of inflows would require active liquidity management

Analyst Q&A

• Q: What is the pipeline for expanding evergreen fund access to wirehouse channels, and how is the firm ramping up wealth channel hiring? /

  A: A number of Hamilton Lane's products have reached the $1 billion+ critical mass required for wirehouse placement, and the firm is in active dialogue with distribution partners to expand access in 2026. The firm has recently hired multiple seasoned wealth distribution executives from large established asset management firms, who are currently in the onboarding process, so full revenue benefits from these hires are not yet expected.

• Q: Is there fee scrutiny as institutional allocations to higher-fee evergreen funds grow, and could fee structures shift toward institutional levels over time? /

  A: Evergreen fund fees are actually lower than most alternative benchmarks for institutional clients: they are cheaper than traditional 2-and-20 closed-end GP funds, and cheaper than Hamilton Lane's own separate accounts, which charge a wrapper fee on top of underlying GP fees. This dynamic makes the shift toward evergreen allocations rational for clients, and it is a healthy evolution for the firm.

• Q: Why does Hamilton Lane turn down 99% of secondary deal flow, and what is the firm's perspective on unrealized incentive fee accounting? /

  A: The firm only pursues high-quality assets managed by high-quality GPs at appropriate prices, and the large volume of available deal flow allows it to pass on opportunities that do not meet this bar; competition is not a driver of this high rejection rate. Current accounting follows GAAP and 30+ years of industry standard practice; any future industry-wide change would be adopted by all players evenly, and Hamilton Lane adjusts its structure to meet client demand when requested.

• Q: Do April 2026 Evergreen net inflows of $265 million represent the new baseline run rate going forward, and how much will exit activity pick up? /

  A: Management expects April inflows to be a low point driven by lingering industry headline hysteria, and targets a return to the January-February average run rate of ~$525 million per month. Exit activity will improve in the second half of 2026 driven by maturation of the existing asset base, new market equilibrium between buyers and sellers, and improving M&A and IPO activity.