Hamilton Lane Incorporated (HLNE) Earnings

Management highlights

### Firm Milestone & Strategic Mindset - Hamilton Lane celebrated its 35th anniversary in May 2026, framing the milestone as a reflection of continuous evolution and client-focused innovation, with long-tenured clients retaining their capital with the firm. ### Evergreen Platform Updates - Total fee-earning AUM across the firm grew 12% YoY to $83.7 billion, with 25% of that growth driven by the specialized fund (primarily Evergreen) segment, and the blended fee rate now stands at 69 basis points, benefiting from the mix shift to higher-fee specialized funds. - The Evergreen platform generated $640 million of net inflows in the quarter, ending with over $19 billion of AUM. No gates were enacted on any funds, with 10 out of 12 funds posting positive net inflows. Net outflows were limited to non-U.S. multi-strategy equity funds, driven by two main factors: 1) longstanding investors harvesting gains after strong cumulative performance (a $1 inception investment in the institutional USD share class is now worth $2.32), with many proceeds reallocated to other Hamilton Lane products; 2) investors redeeming to fund separately managed accounts (SMAs), with capital remaining within the firm. - Hamilton Lane is one of the only scaled Evergreen managers with both U.S. and non-U.S. platforms, with three non-U.S. funds already exceeding $1 billion AUM and additional offerings approaching that threshold. The U.S. Evergreen multi-strategy equity fund recently added a third wire house distribution partner, and the firm added six senior experienced evergreen sales professionals from top-tier firms over the past 12 months to expand distribution. - All Evergreen funds (excluding the newly launched U.S. credit fund) have posted positive double-digit year-to-date and inception-to-date returns, with positive annual performance every calendar year since inception, and the three largest seasoned funds have generated over $3.6 billion in total cash realizations. ### Closed-End Franchise & Fundraising - The firm's most recent direct equity fund closed with $3.8 billion in total commitments ($3.3 billion for the fund, $500 million in co-investment separate accounts), representing 57% growth over the prior fund, with 30% of capital already deployed. - The seventh secondary fund held an initial close last week with $1.3 billion in investor commitments, with an additional close expected later this calendar year and an 18-month fundraising window. - The second venture fund held an initial close with more than $370 million in commitments, exceeding 60% of the total size of the first venture fund. - Over the balance of FY2027 and into early FY2028, the firm expects to be fundraising for five core strategies: core secondaries, inaugural GP-led secondary strategy, venture, credit, and infrastructure. ### Customized Separate Accounts - The segment added $2.3 billion in mandate value from existing client re-ups (including one expansion into a new service line) and $1.3 billion in mandate value from new clients across domestic and international institutions. The total pipeline of awarded but not yet deployed mandates totals multiple billions of dollars, with conversion to fee-earning AUM paced by deployment timelines for primary and transactional commitments. ### Strategic Balance Sheet Investments - A consortium led by B Capital and CalPERS agreed to acquire Russell Investments, where Hamilton Lane had held a strategic stake since 2021. Hamilton Lane expects to realize ~$50 million in proceeds with an ~$18 million gain when the transaction closes in Q1 calendar 2027, and will continue its strategic partnership with Russell post-closing. - Securitize, a tokenization infrastructure firm Hamilton Lane invested in, completed its SPAC business combination and is now publicly traded on the NYSE under ticker SECZ. Hamilton Lane holds ~1.5 million shares subject to a 180-day lockup, and will mark the position to market starting next quarter. - Bloomberg agreed to acquire Canoe, an alternative investment data automation platform that Hamilton Lane invested in. Hamilton Lane expects ~$30 million in proceeds with an estimated gain of over $15 million upon closing. ### Financial Operational Updates - The unrealized carried interest balance increased 11% YoY to ~$1.5 billion, even after recognizing $113 million in incentive fees over the prior 12 months. - Total expenses increased 50% YoY ($50 million), driven by a 55% ($38 million) increase in compensation from higher performance and headcount growth, plus a $12 million increase in G&A from revenue-related expenses (third-party commissions, platform fees, placement fees) that are expected to drive future revenue growth. The firm offset this growth with cost savings in other discretionary areas. - The FRE margin was 53% for the quarter, up from 51% YoY, supported by strong fee-related performance revenues. The firm repurchased 559,000 shares for $50 million in the quarter, bringing cumulative repurchases to $70 million under the current program, and declared a $0.60 per share dividend, on track to hit the targeted $2.40 full-year dividend (an 11% increase over FY2026).

Guidance

- Management maintained its full-year FY2027 dividend target of $2.40 per share, representing an 11% increase over FY2026. - Management expects a busy fundraising period across five core specialized fund strategies (core secondaries, inaugural GP-led secondaries, venture, credit, infrastructure) through the balance of FY2027 and into early FY2028, with infrastructure fundraising expected to start a few quarters out. - Management expects the recent net outflow in non-U.S. multi-strategy Evergreen funds to be temporary, with improving market sentiment and expanded distribution expected to drive a return to consistent net inflows. Management also expects noise around the Evergreen category to subside as the asset class matures and investor education improves. - Management expects conversion of the multi-billion dollar pipeline of awarded separate account mandates to fee-earning AUM to follow natural pacing: primary-focused mandates will convert over multiple years, while transactionally oriented mandates will convert over 1-2 years. - Management expects sustained FRE margin to come from a combination of continued fee-related performance revenue, mix shift to higher-fee specialized products, top-line growth, and ongoing expense discipline.

Segment performance

As of Q1 FY2027 end, Hamilton Lane's total asset footprint exceeded $1 trillion, an 8% increase year-over-year (YoY). AUM reached $146 billion, a 4% YoY increase, and AUA reached $914 billion, an 8% YoY increase. Total management and advisory fees were $161 million, up 21% YoY; total fee-related revenue was $236 million, up 44% YoY; fee-related earnings (FRE) were $124 million, up 49% YoY. GAAP EPS was $1.93 on $80 million GAAP net income, and non-GAAP EPS was $1.94 on $105 million adjusted net income. - Specialized funds: Specialized fund fee-earning AUM ended the quarter at $42.6 billion, up 25% YoY ($8.5 billion increase) and 5% quarter-over-quarter (QoQ). Management fees for this segment increased $26 million (32%) YoY, driven by a $6.7 billion fee-earning AUM increase in the Evergreen platform and a $930 million increase from the newly closed direct equity fund. This segment contributed 50.9% of total fee-earning AUM as of quarter end. - Customized separate accounts: Customized separate account fee-earning AUM stood at $41.1 billion, up 2% YoY ($818 million increase) and slightly up QoQ. Revenue increased slightly YoY, with growth from new client wins and existing client re-ups partially offset by fee basis step-downs and exit-related capital distributions. This segment contributed 49.1% of total fee-earning AUM as of quarter end. - Operating, monitoring, data, and analytics offerings: Revenue increased $1.5 million (18%) YoY, driven by strong growth in the firm's technology solutions segment. - Incentive fees: Incentive fees totaled $114 million for the quarter, primarily from quarterly crystallization of performance fees for the U.S. Private Assets Evergreen Fund.

Risks & headwinds

- Forward-looking statements are inherently uncertain, and actual results may differ materially from projected results due to unforeseen risks, as detailed in the firm's SEC filings including the FY2026 10-K. - Near-term investor sentiment has been negatively impacted by sustained negative market headlines, leading to temporary flow slowdowns and redemptions in some Evergreen products. - Market confusion conflating asset tokenization with cryptocurrency has slowed adoption of tokenization infrastructure, delaying broader utilization of the technology in private markets. - Newly launched Evergreen products are still in early growth phases and have not yet reached the scale required for broader platform access and accelerated inflows, leading to slow near-term flow results. - Conversion of awarded separate account mandates to fee-earning AUM can take multiple years depending on mandate type, leading to delayed revenue recognition from the current large pipeline. - New sales team hires are not yet fully productive, meaning expanded distribution capacity will not immediately drive accelerated flow growth.

Analyst Q&A

• Q: What is the expected path to consistent net inflows for the out-of-flow non-U.S. multi-strategy Evergreen fund, and how is distribution being expanded for this vehicle? /

  A: Management notes current outflows are driven by temporary performance rebalancing and sector-wide investor hesitation from negative headlines. The firm is continuing to expand distribution relationships, and is already starting to see rotation from competitive products back to its offering based on strong relative performance, which is expected to drive a return to net inflows. (117 characters)

• Q: What key learnings has Hamilton Lane had from tokenization experiments, where is the greatest utility, and how important could tokenization become for private markets? /

  A: Management confirms tokenization is fundamentally faster, cheaper, and better for all market participants, but adoption has been slowed by widespread market confusion incorrectly linking tokenization to cryptocurrency. The recent public listing of partner Securitize is helping improve education and signal stability, and large firms already tokenizing mundane products like cash funds are helping normalize the technology. Management expects generational wealth transfer to digital-native investors will widen the addressable market for tokenized private market products and reduce long-term operating costs. (385 characters)

• Q: How much of the redemption outflow from the non-U.S. Evergreen fund flows to other Hamilton Lane products, and which products see the most demand from this reallocation? /

  A: Most outflows from the non-U.S. fund are moving to other Hamilton Lane vehicles, most commonly customized SMAs, per pre-planned client asset allocation. Clients previously held this temporary capital in passive public equity funds that Hamilton Lane did not manage, so moving that capital through an Evergreen interim hold before SMA deployment keeps all capital within the firm, which is a net positive for Hamilton Lane. (274 characters)

• Q: What is driving the delta between the sequential unrealized carried interest decline and quarterly non-Evergreen incentive fee realizations, and what is the outlook for unrealized carry going forward? /

  A: The delta is driven by stronger-than-expected portfolio realization activity from strong underlying fund performance, which reduces the unrealized balance as carried interest is crystallized. Management noted continued strong realizations are expected but are hard to predict in the current market environment. (192 characters)