Hamilton Lane INC Q2 FY2026 earnings call

Key Points

• Total asset footprint crossed $1 trillion, first time ever. AUM grew 11% YOY to $145B, AUA grew 5% YOY to $860B.
• Fee-related revenue up 23% YOY to $321.6M, fee-related earnings up 34% YOY to $160.7M.

Guardian Life Partnership

• Partnered with Guardian Life Insurance Co. to manage ~$5B private equity portfolio, with Guardian committing ~$500M/year for 10 years. Guardian will receive HLNE equity warrants and revenue share arrangements. Investment professionals from Guardian will join Hamilton Lane. Revenue from partnership will come from management fees on Evergreen funds and separate account management fees.

Business Highlights

• Fee-earning AUM: Total fee-earning AUM $76.4B, grew $6.7B or 10% YOY. Specialized fund platform drives growth, Evergreen products strong. Blended fee rate at 65 basis points, up 8 basis points since 2017.
• Specialized Funds: Closed-end fundraises progress, Evergreen platform AUM at $14.3B, largest quarter ever net inflows of $1.6B. Technology partnerships: Bloomberg partnership for private market indices, Securitize business combination, Novata acquisition for sustainability data solutions.

At quarter end, Hamilton Lane's total asset footprint stood at just over $1 trillion, a 6% year-over-year increase. AUM was $145 billion, growing $14 billion or 11% compared to the prior year period. AUA was $860 billion, growing $44 billion or 5% relative to the prior year period. Total management and advisory fees for the year-to-date period were up 6% year-over-year. Fee-related revenue for the period was $321.6 million, representing 23% growth year-over-year. Fee-related earnings were $160.7 million year-to-date, a 34% growth. Specialized funds fee-earning AUM ended fiscal Q2 at $35.6 billion, having grown $5.3 billion over the last 12 months (17% increase). Customized separate account fee-earning AUM stood at $40.8 billion, growing $1.4 billion or 4% over the last 12 months.

No specific upward/downward revision mentioned. Focus on continued growth in AUM, scaling of partnerships like Guardian, and leveraging technology and product offerings for sustained growth.

Forward-looking statements subject to risks and uncertainties as outlined in Hamilton Lane's fiscal 2025 10-K and subsequent SEC filings, including factors that may cause actual results to differ from projections.

Q: On the Guardian announcement, help with actual fees hitting P&L and fee structure for $5B and $500M/year allocation.

A: Vast majority of revenue from $5B coming in over next 10 years, existing $5B is monitoring, $250M going into Evergreen, SMA portion mix of primary funds and specialized funds at prevailing fee rates.

Q: Elaborate on Bloomberg partnership and data monetization. Scope for investable index products?

A: Bloomberg arrangement is revenue share model, brand enhancement focus, not seeing investable indices as focus as synthetic replication of private market portfolios via publicly listed securities has failed historically.

Q: SMA business pipeline development and sales force allocation. Warrants and rev share structure.

A: Sales team not organized by SMAs, pipeline is robust with billions in potential. Warrants are front-end loaded, rev share separate from warrants.

Q: Core fee rate on specialized funds ex retro, other factors and future outlook.

A: Fee rate up due to mix shift to higher fee rate specialized funds, particularly Evergreen, expected to continue as flows in specialized funds persist.

Q: Sales incentives/fee holidays on Evergreen funds and competition.

A: Fee holidays for new products to entice adopters, seen as normalized for first 6-12 months of new offerings, not expecting extension/enhancement for established funds due to market normalization.

Q: Impact on expenses from Guardian team acquisition and economics scaling.

A: Team acquisition is de minimis on expenses, overall economics of Guardian partnership expected to scale over time with $500M/year investment leading to higher fee rate initially and scaling over deployment of $5B.