• Management and Advisory Fee Revenue Growth: 21% year-to-date increase.
• Fee-Related Earnings Growth: 21% year-to-date increase.
• GAAP EPS: $2.85 based on $114 million of GAAP net income.
• Non-GAAP EPS: $2.58 based on $140 million of adjusted net income.
• Dividend: $0.49 per share, targeting $1.96 per share for fiscal year 2025.
• Total Asset Footprint: $947 billion, 11% year-over-year increase.
• Assets Under Management (AUM): $131 billion, 10% year-over-year increase.
• Fee-Earning AUM: $70 billion, 14% year-over-year increase.
• Specialized Funds Revenue Increase: $40 million or 33% year-over-year.
• Incentive Fees: $87 million year-to-date, up 133% year-over-year.
• Unrealized Carry Balance: Approximately $1.3 billion, up 9% year-over-year.
• Total Expenses Increase: $48.6 million year-to-date.
• Fee-Related Earnings Margin: 43% for the quarter and year-to-date.

• Warning! GuruFocus has detected 5 Warning Signs with HLNE.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hamilton Lane Inc (NASDAQ:HLNE) reported a 21% growth in management and advisory fee revenue year-to-date through the second quarter of fiscal 2025.
• The company achieved a significant milestone by being added to the S&P MidCap 400 Index.
• Total assets under management (AUM) increased by 10% year-over-year, reaching $131 billion.
• The specialized funds platform saw strong growth, with fee-earning AUM increasing by 14% compared to the prior year.
• Hamilton Lane Inc (NASDAQ:HLNE) successfully launched new products, including a venture-focused fund with nearly $500 million in commitments and an infrastructure Evergreen product.

Negative Points

• The company faces potential challenges with retro fees impacting year-over-year specialized funds revenue growth comparisons.
• Total expenses increased by $48.6 million year-to-date, driven by higher compensation and general administrative costs.
• The fee rate, excluding retro fees, showed a decline quarter-over-quarter, indicating potential volatility in fee structures.
• Hamilton Lane Inc (NASDAQ:HLNE) is navigating a competitive landscape with increasing competition in the private markets sector.
• The company acknowledges regulatory hurdles in expanding private market access to 401(k) retirement accounts, which could limit growth opportunities in that segment.

Q & A Highlights

Q: Can you talk about the opportunities ahead for Hamilton Lane in new distribution channels, particularly with brokers offering alternative products for the first time? A: Erik Hirsch, Chief Investment Officer, explained that the majority of mass affluent individuals currently lack exposure to private markets. He sees a long-term shift where individual investors' portfolios will mirror those of institutional investors. This shift could move a significant portion of global wealth into private markets, transforming the industry and Hamilton Lane's business over time.

Q: Are new platforms asking more from Hamilton Lane compared to existing wirehouses or RIAs? A: Erik Hirsch stated that the expectations are consistent across platforms. Clients seek education, transparency, and accessible products with good performance. Hamilton Lane's strong client service and educational capabilities, supported by their data and technology, set them apart.

Q: What is the outlook for Hamilton Lane's specialized funds over the next 12 to 18 months? A: Erik Hirsch highlighted that they are focusing on a variety of products, including direct equity and impact funds, which are growing. The venture product has also shown strong initial success. The firm is working on multiple closings and aims to execute these successfully.

Q: How might changes in administration impact private markets' access to retirement accounts? A: Erik Hirsch noted that while much of the Evergreen capital is retirement capital, changes in 401(k) regulations would be needed to include private markets. If regulations change, Hamilton Lane is well-positioned to participate due to their strong brand and product offerings.

Q: Can you expand on the partnership with Northern Trust and how clients will utilize Cobalt? A: Erik Hirsch explained that Northern Trust's clients will use Cobalt, Hamilton Lane's data and analytics software, to manage their private market holdings. This partnership enhances Hamilton Lane's brand and revenue, and they aim to expand similar partnerships with other financial institutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.