Hamilton Lane INC Q3 FY2025 earnings call

• Culture: Recognized as a Best Place to Work in Money Management for the 13th consecutive year.
• Total asset footprint: Grew 6% YOY to $956 billion; AUM up 12% to $135 billion; AUA up 5% to $38 billion.
• Fee-earning AUM: Specialized funds drove 13% growth, customized separate accounts up 8%. Specialized funds had $31.2 billion fee-earning AUM with $5 billion net inflows YOY.
• Technology partnerships: Partnered with Republic to launch digital blockchain solutions for retail investors.
• Financials: Management and advisory fees up 18%; specialized funds revenue up 28%; customized separate accounts revenue up 6%; incentive fees up 163%; unrealized carry balance up 15% to $1.3 billion.

Year-to-date through the third quarter of fiscal 2025, management and advisory fee revenue grew by 18%, with fee-related earnings up 21%. GAAP EPS was $4.15 based on $167 million GAAP net income, and non-GAAP EPS was $3.82 based on $208 million adjusted net income. Total asset footprint stood at $956 billion (6% YOY growth). AUM was $135 billion (up $15 billion or 12% YOY). AUA was up $38 billion (5% YOY). Fee-earning AUM totaled approximately $71 billion (up $7.9 billion or 13% YOY). Customized separate accounts had fee-earning AUM of $39.8 billion (up 8% YOY). Specialized funds had fee-earning AUM of $31.2 billion, with net inflows of $5 billion over the past 12 months (19% YOY growth).

• Dividend: $0.49 per share declared, on track for 10% increase to $1.96 for fiscal 2025.
• Evergreen platform: Continued expansion of distribution efforts, expecting annualized growth.
• Equity-based comp: Run rate of about $30 million per year, with current quarter showing full impact.

• Market forces, calendar seasonality, and portfolio rebalancing causing growth variability.
• Intense competition in the Evergreen fund space.
• Short-term impact of equity-based compensation on expenses.

Q: Ken Worthington asked about SMA adoption of specialized funds and fee structure in Evergreen.

A: Erik Hirsch responded about benefits of secondaries, co-investing, and future fee compression in Evergreen.

Q: Alex Blostein asked about Evergreen fund gross sales, redemptions, and competitive dynamics.

A: Erik Hirsch talked about competition, focus on net inflows, and long-term strategy for Evergreen.

Q: Michael Cyprys asked about expense efficiency and FRE margin trend.

A: Erik Hirsch discussed margin protection, technology use, and stability of FRE margin.

Q: Mike Brown asked about equity-based comp and shares outstanding.

A: Jeff Armbrister and Erik Hirsch explained run rate of equity-based comp and alignment with shareholders.

Q: Aidan Hall asked about base comp and technology impact.

A: Erik Hirsch talked about margin protection and comp levers.

Q: Alex Blostein followed up on total operating income margin.

A: Erik Hirsch discussed stability and future margin expansion prospects.