Hamilton Lane Incorporated

Good morning, ladies and gentlemen, and welcome to the Hamilton Lane 4th Fiscal Quarter and Full Fiscal Year 2024 Earnings Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, May 23, 2024. I would now like to turn the conference over to John O. head of shareholder relations. Please go ahead.

Thank you, Ivo. Good morning and welcome to the Hamilton Lane Q4 and fiscal year-end 2024 earnings call. Today, I will be joined by Eric Hirsch, co-chief executive officer, and Jeff Armbruster, chief financial officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. Before we discuss the quarter and year-end results, we want to remind you that we will be making forward-looking statements. forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. These forward-looking statements do not guarantee future events or performance and are subject to risks and uncertainties that may cause our actual results to differ materially from those projected. For discussion of these risks, please review the cautionary statements and risk factors included in the Hamilton Lane Fiscal 2023 10-K and subsequent reports we file with the SEC, including our upcoming Form 10-K for fiscal 2024. These forward-looking statements are made only as of today and, except as required, we undertake no obligation to update or revise any of them. 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 made available on the shareholder section of the Hamilton Lane website. Our detailed financial results will be made available when our 10-K is filed. Please note that nothing on this call represents an offer to sell or a solicitation of an offer to purchase interest in any of Hamilton Lane's products. Before we get to the results, I'd like to highlight our upcoming HLME Shareholder Day that will take place on June 5th, both in person at our ContraHawk and PA headquarters and simultaneously webcast live for those unable to join us in person. The event will provide detailed insight into growth drivers for our business and showcase our leadership in the private markets. For more information on the event, please visit the shareholder section of the Hamilton Lane website. Let's move now to some financial highlights. For fiscal year 2024, our management and advisory fee revenue grew by 22%, while our fee-related earnings also grew by 22% versus the prior year. This translated into full-year gap EPS of $3.69 and based on $141 million of GAAP net income and non-GAAP EPS of $3.92 based on $212 million of adjusted net income. Lastly, our Board has approved a 10% increase to our annual fiscal dividend to $1.96 per share or $0.49 per share per quarter. This marks the seventh consecutive annual double-digit percentage increase to our dividend since going public in 2017. Our ability to consistently increase distributions to our shareholders every year speaks to the growth and the strength of our business. With that, I'll now turn the call over to Eric.

Thank you, John, and good morning. Let's get straight to the results. It was another strong quarter. I'll start with our total asset footprint. This stood at $921 billion and represents a 7% increase to our footprint year over year. AUM stood at $124 billion at quarter end. and grew $13 billion, or 11%. The growth came from both our specialized funds and customized separate accounts. AUA was up $51 billion, or 7% year over year, primarily the result of market value growth and the addition of technology solution mandates. Turning now to fee-earning AUM, which continues to be the largest driver of management fees, we continue to generate strong growth in both our customized separate accounts and specialized funds. Our total fee-earning AUM stood at $65.7 billion and grew $8.4 billion, or 15%, relative to the prior year period. Taken separately, $2.9 billion of net fee-earning AUM came from our customized separate accounts, and over the same period, $5.5 billion came from our specialized funds. Our blended fee rate across the platform also continues to increase. This stems from the continuing shift in the mix of our fee-earning AUM towards higher fee rate specialized funds, most notably our evergreen products, where growth remains strong. When we went public in 2017, our blended fee rate was 57 basis points. Today, it stands at 63 basis points. Moving now to additional detail on our customized separate accounts. Fee-earning AUM here stood at $37.6 billion, growing 8% over the past 12 months. We continue to see the growth coming across type, mandate, size, and geographic location of the clients. Our customized separate accounts are built in close partnership with our clients who look to us to create, manage, and invest their capital to achieve long-term success. Let me give you an example of a recent win. After months of interactions with us, and I'll note here that the sales cycle can be long given length and size of the mandate, we secured a new separate account that, importantly, would be this Canadian-based endowment's First, investments in the private markets. There were several of our competitors vying for the business, and we were selected due to track record, breadth of service offering, and a belief that we could help them grow their program over time. So while this is an institution that is brand new to the asset class, we also continue to find meaningful growth through our existing customers. Today, on a fee-earning AUM basis, the average length of relationship with our separate account clients is over 10 years. with several that exceed that meaningfully. For example, we've had the privilege of managing the portfolio for a nationally recognized Taft-Harley organization whose relationship started back in the early 2000s with a single private equity separate account. Fast forward to today, that partnership is now on its 14th tranche, and along the way, we added private credit for them in 2010, and that's now on its 10th tranche, and they've had multiple commitments to various secondary funds of ours. This approach of finding clients who are new to the private markets combined with expanding with our existing base has served us well as we've continued to build out our separate customized business. Let's move on now to our specialized funds where momentum also continues to be strong. The earning AUM here stood at $28.2 billion at quarter end. Over the past 12 months, we've achieved positive net inflows of $5.5 billion representing an increase of 24% relative to the prior year period. This growth stemmed from additional closes for our funds currently in market, robust investment activity, and continued expansion of our evergreen platform. Moving to the drivers of specialized funds flow, let's start with our current secondary fund. During the quarter, we held additional closes in February and March that totaled just over $800 million of investor commitments. This generated retro fees of $12.3 million for the quarter. Subsequent to quarter end, we held an additional close in April that totaled $618 million, which generated over $11 million of retro fees that will be recognized in the quarter ending June 30th, our first quarter of fiscal year 2025. This brings the total fund size to over $5 billion. As with prior fundraisers, we've received a small extension in order to accommodate the last remaining investors who are completing administrative work and expect to close the fund over the next few weeks. I'll note at this point, the total current fund size of over $5 billion is the largest institutional fundraise in our history and represents a 30% increase to the prior fund. The secondary platform is a key component of our specialized fund growth, and our platform continues to expand as the overall secondaries market grows. The success of this fundraise is a direct result of our market-leading position within the asset class as we continue to be a holistic solution provider to both GPs and LPs seeking liquidity. Let's now turn to our Strategic Opportunities Fund, which is our annual direct credit fund targeting the institutional LP. As a refresher, The series of funds is effectively always in market as we raise and deploy the capital with short investment periods and charge management fees on invested capital. During the quarter, we held the final close for our eighth series of the strategy at over $690 million of LP commitments. Overall, our credit platform continues to scale and deal flow remains robust. Private credit continues to benefit and fill the void left from the continued retrenchment by traditional lending sources, and those regional banks. For calendar 2023 across our entire credit complex, which includes our separate accounts, closed-end funds, and Evergreen platform, we invested more than $1.3 billion into credit transactions, not funds, which is an increase of more than 45% versus the prior year. Before we move on to Evergreen, I wanted to provide a quick update on our first dedicated specialized fund in the venture space. Recall that we have been actively investing in venture since 1996 through our separate account business and are now providing investors with commingled fund access to the venture capital market with primary, secondary, and co-investment strategies. We announced the first closing in May of 2023, and to date we've raised nearly $250 million LP commitments for this first-time fund, and we will remain in market throughout the remainder of calendar 2024. Now onto our Evergreen funds. We ended calendar 2023 with $5.7 billion of AUM and we're averaging $160 million of monthly net inflow onto the platform. As of March 31st, 2024, total AUM across our three offerings stood at nearly $6.5 billion. Our goal remains simple with our Evergreen platform. Maintain steady, consistent growth in monthly flows over the longer term accomplished by expanding with current distribution relationships while also adding new ones. We saw our average further tick up during this first quarter of calendar 2024, where the platform averaged over $255 million of monthly net inflow. This was the result of adding additional relationships and some backlog from relationships added earlier, with the latter being more one-off in nature. I would also like to highlight that we continue to make great progress within our Wirehouse channel. As of the end of the first calendar quarter of 24, we have taken in close to $900 million of flows as we approach the one-year anniversary of getting approved and onboarded there. In addition to that, non-Wirehouse flows continue to scale nicely and complement the Wirehouse success. We remain enthused about what we've already accomplished and very enthused about what lies ahead. Let's move on now to some announcements around our most recent technology partnerships and balance sheet investments. On February 29th, we announced the launch of a newly created distributed ledger technology or DLT share class built on the Polygon blockchain for our global private asset evergreen fund together with Signum Bank and Apex Group. This first of its kind digitally native and tokenized share class marks the first entry in Apex's on-chain share register. This offering represents a significant breakthrough in making the private markets more broadly accessible, efficient, and investable via tokenization. We believe this partnership can potentially serve as a catalyst for broader adoption within the banking and wealth management industry. Next, on May 1st, we announced our newest strategic balance sheet investment to join the Hamilton Lane Innovations portfolio, that being Securitize. You've heard us speak in the past around partnering with Securitize and providing tokenized access to our products, spanning strategies such as evergreen, secondaries, and direct equity. And we're now pleased to announce that we have further solidified this partnership by becoming an investor in Securitize. Hamilton Lane participated in the company's most recent strategic fundraise that was led by BlackRock, which recently launched their first tokenized money market fund in partnership with Securitize. The round also included investments from Parify and TradeWeb. We continue to view Securitize as a pioneer and a leader in the tokenization and digital asset space, and we look forward to providing updates on our journey with them in the future. Lastly, on Tuesday of this week, Novata, another strategic investment within our Hamilton Lane Innovations balance sheet portfolio, announced the closing of their most recent financing. Recall that Novata's technology platform and expert services allow for the private markets to collect, analyze and report on sustainability metrics. Hamilton Lane participated in this financing alongside existing investors S&P Global. The financing also included new investors, Motive Ventures, which is backed by affiliates of Apollo Global Management. Since its launch in 2021, Nevada has continued to build a sophisticated platform which enables the private markets to achieve a more sustainable and inclusive form of capitalism, and we look forward to continuing our support in their mission. And with that, I'll now turn the call over to Jeff to cover the financials.