Hamilton Lane Incorporated

My name is James and I will be your conference operator today. At this time, I'd like to welcome everyone to the Hamilton Lane Incorporated second quarter fiscal year 2020 earnings conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. I'd like to hand the call over to John Oh, Investor Relations Manager. You may begin your conference.

Thank you, James. Good morning and welcome to the Hamilton Lane Q2 fiscal 2020 earnings call. Today, I will be joined by Mario Giannini, CEO, Erik Hirsch, Vice Chairman, Jeff Meeker, Chief Client Officer, and Randy Stillman, CFO. Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For discussion of these risks, please review the risk factors included in the Hamilton Lane Fiscal 2019 10-K and subsequent reports we file with the SEC. We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials, which we will be referencing throughout the call and will also be shown on the webcast. These materials are available on the public investor relations section of the Hamilton Lane website. Our detailed financial results we've made available when our 10Q is filed. Please note that nothing on this call represents an offer to sell or solicitation to purchase interest in any of Hamilton Lane's products. Beginning on slide three. Year-to-date, our management and advisory fee revenue grew approximately 15% relative to the prior year period. Over the same period, we grew our fee-related earnings by 14%. This translated into year-to-date non-GAAP EPS of $0.94 based on approximately $50 million of adjusted net income and GAAP EPS of $0.98 based on approximately $27 million of GAAP net income. We have again declared a dividend of $0.275 per share this quarter, which keeps us on track for the 29% increase over last fiscal year and equates to $1.10 per share for fiscal year 2020. With that, I'll now turn the call over to Erik.

Thank you, John, and good morning, everyone. Turning to slide four, this should be familiar. It highlights our total asset footprint, which we define as the sum of our AUM, assets under management, and AUA, assets under advisement. Total asset footprint for the quarter stood at approximately $481 billion, and represents a 6% increase to our footprint year over year. Growth in AUM came across client type, size of client, geographic region and came from both our specialized funds and our separate accounts. We continue to focus on growing and winning across both lines of business. Moving to AUA, we also saw growth come across our client type and geographic region. As mentioned in the last earnings call, AUA can fluctuate quarter to quarter due to a variety of reasons, but the revenue associated with AUA does not necessarily move in lockstep with the change. And while this quarter saw an increase in AUA dollars relative to the previous quarter, we will continue to emphasize that no direct correlation exists between the scale of AUA dollars and revenue generation. Although we expect to add to our AUA over the long term, it remains an area where we are focused on finding the right match between our services and the needs of the particular client, not simply growing for growth's sake. On slide five, we highlight our fee-earning AUM. Fee-earning AUM is the combination of our customized separate accounts and our specialized funds with basis point-driven management fees. As we have stated in the past, fee-earning AUM is the most significant driver of our business as it makes up over 80% of our management and advisory fees. Year over year, total fee-earning AUM grew $4.4 billion, or nearly 14%, with solid growth and positive fund flows across both our specialized funds and our customized separate accounts. We have added net fee-earning AUM of $2 billion to our customized separate accounts, and over the same time period, we have added nearly $2.4 billion of net fee-earning AUM across our specialized funds. As we have mentioned on prior calls, This growth continues to be driven by four key components. Number one, re-ups from our existing clients. Two, winning and adding new clients. Three, growing our existing fund platforms. And four, raising new specialized funds. Also, as we have shown on the slide, our fee rates continue to remain steady. For those who have followed us since our IPO, this steadiness has been a consistent theme. Moving to slide six. The earning AUM from our customized separate accounts was $22.9 billion, growing approximately 10% over the last 12 months. This came from a combination of re-ups from existing accounts, as well as the addition of brand new relationships. We experienced growth across all of the geographies we served, as well as by the type and size of client. Additionally, in the past, we've discussed our efforts in working to broaden our partnerships with distribution platforms where we provide white label solutions. This area continues to experience attractive growth and we are encouraged by the opportunities that we see in front of us. With that, let me now turn the call over to Jeff to cover an update on our specialized funds.