Hamilton Lane Incorporated

Good morning, ladies and gentlemen, and welcome to the Hamilton Lane First Quarter Fiscal 2026 Earnings Conference Call. At this time, all lines are in 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 zero for the operator. This call is being recorded on Tuesday, August 5th, 2025. I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

Thank you, Constantine. Good morning and welcome to the Hamilton Lane Q1 Fiscal 2026 Earnings Call. Today, I will be joined by Eric Hirsch, Co-Chief Executive Officer, and Jeff Armiser, Chief Financial Officer. Earlier this morning, we issued a press release and a slide presentation, which are available on our website. Before we discuss the quarter's results, we wanna 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 2025-10K and subsequent reports we filed with the SEC. 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-GAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAP measures to GAP 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 10Q is filed. Please note that nothing on this call represents an offer to sell or solicitation of an offer to purchase interest in any of Hamilton Lane's products. Let's begin with the highlights, and I'll start with our total asset footprint. At quarter end, our total asset footprint stood at $986 billion and represents a 5% increase to our footprint year over year. AUM stood at $141 billion and grew $11 billion, or 9% compared to the prior year period. The growth came from both our specialized funds and customized separate accounts. AUA came in at $845 billion and grew $35 billion, or 4% relative to the prior year period. This stemmed primarily from market value growth and the addition of a variety of technology solutions and back office mandates. For this first quarter of fiscal year 2026, total management and advisory fees were down 4% year over year. However, this decrease was due primarily to the impact from retro fees, which were $21 million in fiscal Q1 of 2025 versus approximately $300,000 in this current reported quarter. Fee related earnings for the quarter grew by 31% versus the prior year period. We generated quarterly gap EPS of $1.28 based on $54 million of gap net income and non-gap EPS of $1.31 based on $72 million of adjusted net income. We have also declared a dividend of $0.54 per share this quarter, which keeps us on track for the 10% increase over last fiscal year, equating to the targeted $2.16 per share for fiscal year 2026. With that, I'll now turn the call over to Eric.

Thank you, John, and good morning, everyone. Our growth story continues with another solid quarter, and that growth is coming across the totality of the business, clients, assets, revenues, deal flow, and people. The Hamilton Lane team is executing well across all fronts, and our results this quarter are certainly reflective of that. Turning now to fee-earning AUM. Total fee-earning AUM stood at $74 billion and grew $6.7 billion, or 10%, relative to the prior year period. Net -over-quarter growth was $2.4 billion, or 3%. Fee-earning AUM growth continues to be largely driven by our specialized fund platform. Specifically, our semi-liquid Evergreen products continue to experience strong momentum. The combination of our fundraising, new product additions, and strong performance has driven the growth of total fund net asset value. Our blended fee rate also continues to benefit from the shift of fee-earning AUM towards higher fee-rate specialized funds, most notably our Evergreen products. Today, our blended fee rate stands at 64 basis points. At quarter-end, customized separate account fee-earning AUM stood at $40 billion and grew 2.1 billion, or 5%, over the last 12 months. Net -over-quarter growth was $937 million, or 2%, with the gross contribution stemming from a mix of new client wins. These wins came from both US and non-US prospects, and the mandates ranged across geographies and sub-asset classes. We also continue to see re-up activity from existing clients and contributions for investment activity. These gains were offset by fee-based decreases from exit activity and the migration from committed to invested capital in certain accounts. We maintain large amounts of committed and contractual dry powder to continue to deploy, along with a strong backlog of business that has been won and is now in the contracting phase. As we've mentioned in the past, the sale and contracting dynamic in our SMA business can lead to some unpredictability as to when these dollars come on, but we simply remain focused on winning new business. Moving now to specialized funds. The earning AUM ended fiscal Q1 at $34 billion, having grown $4.6 billion over the last 12 months. This represents an increase of 16%. -over-quarter net growth was $1.4 billion, or 4%, largely driven by our Evergreen platform. No material drawdown fund closes have occurred in the past nine weeks since our last quarterly update. We are slated to have a series of closings on our drawdown funds following summer's end. Quickly running through the various drawdown funds in market. On our last call, we highlighted that we held a close for our sixth equity opportunities funds that would be reflected in this reported quarter. As a reminder, that close totaled $181 million of LP commitments and brought the total amount raised to nearly $1.3 billion. Of the $181 million, $51 million came in on committed capital management fee basis, while 131 million came in on a net invested capital basis. The $51 million generated $290,000 in retro fees for the quarter. We expect to remain in market into calendar 2026. Our second infrastructure fund has raised nearly $775 million of commitments in and alongside the fund. As a quick refresher, the strategy for this product centers around direct equity and secondaries in the real assets and infrastructure space and generates management fees on a net invested basis. We will remain in market with this fund through the second half of calendar 2025. of our first equity opportunities fund. Our annual strategic opportunities fund, which is our closed end direct credit strategy, continues to take in additional capital and to date we've raised over $363 million for this current series. As a reminder, this product charges management fees on a net invested basis and is effectively perpetually fundraising as when we close a sleeve, we immediately open another. Lastly, we remain in market with our third impact fund. This fund focuses on investing directly into private companies that have a measurable environmental and social impact and it generates management fees on a committed capital basis. Recall that our first two funds in this strategy totaled nearly 100 and $373 million of commitments respectively. To date, we've raised over $175 million of investor commitments and we expect to remain in market into calendar 2026. Turning now to our Evergreen platform. It has been about six years since we've launched our first Evergreen product and we are very pleased with the progress to date. We continue to grow across every axis, assets, relationships,