Hamilton Lane INC Q1 FY2026 earnings call

• Total asset footprint at quarter-end was $986 billion, 5% YoY increase; AUM $141 billion, up 9% YoY; AUA $845 billion, up 4% YoY. • Total management and advisory fees down 4% YoY, but fee-related earnings up 31%. • GAAP EPS $1.28, non-GAAP EPS $1.31. Dividend of $0.54 per share declared. • Fee-earning AUM: Total fee-earning AUM $74 billion, up 10% YoY; customized separate accounts fee-earning AUM $40 billion, up 5% YoY; specialized funds fee-earning AUM $34 billion, up 16% YoY. • Evergreen platform: Approaching over $12.5 billion in total Evergreen AUM, 65% growth over last 12 months; $1.2 billion net inflows in Q1. • Specific funds: Sixth equity opportunities fund closed with $181 million LP commitments; second infrastructure fund raised nearly $775 million; annual strategic opportunities fund raised over $363 million; third impact fund raised over $175 million. • Financials: Specialized funds revenue down $7 million or 8% due to retro fee impact; customized separate accounts revenue up $1 million or 3%; incentive fees totaled $42 million; unrealized carry balance up 6%; total expenses down $8 million; FRE for the quarter $84 million, up 31%.

At quarter-end, Hamilton Lane's total asset footprint stood at $986 billion, a 5% year-over-year increase. AUM was $141 billion, growing $11 billion or 9% compared to the prior year period. AUA came in at $845 billion, growing $35 billion or 4% relative to the prior year period. Total management and advisory fees were down 4% year-over-year, but fee-related earnings for the quarter grew by 31% versus the prior year period. Fee-earning AUM: Total fee-earning AUM stood at $74 billion, growing $6.7 billion or 10% relative to the prior year period. Customized separate account fee-earning AUM was $40 billion, growing $2.1 billion or 5% over the last 12 months. Specialized funds fee-earning AUM ended fiscal Q1 at $34 billion, having grown $4.6 billion over the last 12 months, a 16% increase.

• Dividend target of $2.16 per share for fiscal year 2026, with a $0.54 per share dividend declared this quarter. • Expect fundraising for the next secondary fund in the near future. • Continued growth expected in Evergreen and customized separate accounts businesses.

• Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from projected, as per SEC filings.

Q: I wanted to first dig into the DBS Private Banking relationship. It seems possibly like this is a different spin on distribution for your wealth products. Maybe first, describe what you're doing here? And is there something different? And if there is something different, what is the opportunity to kind of do more of this over time? And are you delivering just asset management solutions? Or is there some component of technology, data or administration that goes along with the relationship?

A: Sure. Ken, it's Erik. Happy to take that. I think this is simply us doing more of what we've been doing, which is identifying a variety of strategic relationships, utilizing technology, different types of distribution where we can offer our products, services, technology and data in a variety of fashions. I think when you look at the success that we're having in both institutional traditional drawdown world as well as Evergreen, more retail-oriented world, I think it's a combination of factors that's driving that. And I've noted its expansion of relationships. It's expanding within those relationships. It's adding new partnerships that we think are different. One of the things that we're seeing, particularly when we're now talking about accessing the retail investor is that we need to meet the customer where they are and these customers are not homogeneous. They are looking to transact in different ways. Some want to exist in a digital world, and so we're going to have to transact with them in more of a tokenized fashion. Some are going to continue to transact very traditionally through wealth advisers. Others are going to access through different technology platforms. And for Hamilton Lane, we're simply focused on making sure that we are having our goods and services available in all of those various channels.

Q: This is Steph on for Mike. Maybe just diving into the customized separate account growth. Nice to see that organic growth accelerating. I recall last quarter, you had called out elongated sales cycle. Just curious how would you rank order some of the drivers of the reacceleration this quarter between new sales, re-ups or investment activity? And then how to think about that pipeline here as we look out?

A: Thanks for the question. It's Erik. So it's all of that. And I think what I said last quarter, and I will reiterate again, the sales cycle for SMAs is not short. So I think people should be confident in the fact that the flows that we're seeing coming in this quarter were certainly not started in the sales cycle in this quarter. So we're not identifying marketing to and closing and doing that in a couple of months' time period. Process takes longer than that. And so what I've been saying is, we have a huge pipeline of business that we are both working on. And in a number of cases, we've already won that we're just simply moving through the contracting phase. And so that just takes time with some of these customers and then we start to activate. So this quarter, what you saw was brand-new wins getting contracted and activated. You're seeing existing customers re-up getting contracted and activated and you're seeing an increase in investment activity, which was also causing that fee basis to go up.

Q: Well, I was hoping you guys could double-click into the Evergreen fund. And specifically, I was curious on the institutional demand you guys have seen within that product, both in terms of the existing base, if you think about the sort of fee-paying AUM in the Evergreen products, how much of that is comprised from maybe some of the smaller institutional accounts? And as you think about the growth forward, is that all sort of new incremental demand you're seeing to the firm? Or do you think some of that is coming out of whether separate accounts or other specialized vehicles?

A: Sure, Alex. It's Erik. I'll take that. I think what we said last call was that if you look at the totality of our flows, about 15% or so was coming from institutional investors into Evergreen and the 85% was coming from traditional retail wealth. I don't -- I'm sure that will move quarter-to-quarter. But I think if you look at the sort of the larger trend, we're not seeing any sort of significant change in how people are utilizing the products from 9 weeks ago to today. And I think if you drill in and look at the institutional customer who is utilizing the Evergreen product, I think you're seeing a multitude of types. One is a smaller customer that historically probably accessed the asset class via a fund-to-funds vehicle. They are too small for an SMA. And so their choices to date since most of us don't really offer fund-to-fund vehicles anymore, was to either go into something like a co-investment fund or a secondary fund that while it provides a nice amount of diversification is not nearly as diversified as some of our Evergreen products. And so those clients either were sitting on the sidelines and doing nothing and now are reemerging, or in some cases, they're deciding to toggle from one type of product offering to something else. The other type of customer that we're seeing on the institutional side is actually a larger institutional customer who is seeing that the Evergreen product is a portfolio management tool. If you're thinking as a CIO of a plan sponsor or sovereign wealth fund, endowment foundation, et cetera, and you wanted to put on a, for example, a credit overweight into your portfolio in the private markets. Doing that with the drawdown fund takes a lot of time because by the time you identify the managers they actually call down the capital, you build up the exposure, years could have passed. In fact, years likely would have passed. And so it became very hard to tactically operate into toggle your portfolio. With these Evergreen products being fully invested, it gives you a real portfolio tool that if you wanted to put on an overweight or take off of an overweight, you can do that now with real ease and simplicity. Again,我要回到我的观点，这是一场马拉松，不是冲刺。其中一部分是你处于教育客户并让他们看到这些产品如何使用、如何战术性使用的早期阶段。所以我认为我们会继续观察这种演变。但我不认为这是纯粹的自相蚕食。我认为这主要是市场扩张，我们认为这是非常好的事情。 Q: Well, I was hoping you guys could double-click into the expenses for the quarter. I think I heard you say on G&A, there was a little bit of a onetime helper, but I think last quarter was also particularly elevated. So maybe kind of help us frame what G&A outlook could look like for the firm as you look into the back half of fiscal or rather calendar 2025? And any framework to kind of think about G&A growth from there?

A: Yes. This is Jeff Armbrister. Thanks for the question. So we're thinking about it internally that this is about a $33 million per quarter expense. I mean that being said, remember, we've got a portion of that, that is tied to the revenue on the -- on PAF and from the commissions from the wirehouses that are associated with that. But we've been able to generate savings and through our initiatives and cost expense controls, which have been very helpful and offset those increased commissions as well. And as we think about the onetime impact, it's about a couple of million dollars. So all in all, I think we've been outperforming that $33 million kind of target that we've had, but we expect that there will continue to be some increases as we continue to generate revenue from the wirehouses and pay those associated commissions.