Hamilton Lane(HLNE) - 2026 Q1 - Quarterly Results

Report Overview This section provides an overview of Hamilton Lane's Q1 FY2026 results, including its financial position, dividend declaration, and standard forward-looking statement disclosures Company Profile & Dividend Announcement Hamilton Lane, a leading private markets investment firm, reported its first quarter fiscal 2026 results, with $986.2 billion in assets under management and supervision as of June 30, 2025, and declared a quarterly dividend of $0.54 per share, marking a 10% increase in the target full-year dividend from the prior fiscal year - Declared a quarterly dividend of $0.54 per share of Class A common stock, with a target full-year dividend of $2.16, representing a 10% increase from the prior fiscal year[3] Assets Under Management and Supervision (AUMS) as of June 30, 2025 | Category | Amount (USD) | | :--- | :--- | | Discretionary Assets | $140.9 billion | | Non-discretionary Assets | $845.3 billion | | Total AUMS | $986.2 billion | - The company employs approximately 750 professionals in offices across North America, Europe, Asia Pacific, and the Middle East[6] Forward-Looking Statements This section contains standard cautionary language regarding forward-looking statements, outlining numerous known and unknown risks and uncertainties that could cause actual results to differ materially from expectations, directing investors to the company's SEC filings for a more detailed discussion of risk factors - The report includes forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially[7] - Key risks include historical performance not being indicative of future results, intense competition, potential conflicts of interest, reliance on senior management, and volatile market conditions[7] - Investors are advised to refer to the "Risk Factors" in the company's Annual Report on Form 10-K for more comprehensive information on potential risks[8] Financial & Operational Highlights This section details Hamilton Lane's first quarter fiscal 2026 financial performance, including key revenue and earnings metrics, alongside significant growth in its asset management base Q1 FY2026 Key Financial Results For Q1 FY2026, Hamilton Lane reported GAAP net income attributable to the company of $53.7 million, a 9% decrease year-over-year, with diluted GAAP EPS of $1.28, primarily driven by lower total revenues which fell 11% to $176.0 million due to a significant drop in incentive fees, though Fee Related Earnings (FRE) increased 31% year-over-year to $83.7 million Q1 FY2026 Financial Performance vs. Prior Periods | Metric (in millions, except EPS) | Q1 FY26 | vs. Q1 FY25 | vs. Q4 FY25 | | :--- | :--- | :--- | :--- | | Management and advisory fees | $133.7 | (4)% | 5% | | Net income attributable to HLNE | $53.7 | (9)% | 6% | | GAAP EPS | $1.28 | (13)% | 4% | | Fee Related Earnings (Non-GAAP) | $83.7 | 31% | (7)% | | Adjusted EBITDA (Non-GAAP) | $95.8 | 0% | (6)% | - Total revenues for Q1 FY26 were $176.0 million, an 11% decrease YoY, primarily due to a 26% decline in incentive fees[19] - GAAP net income was $77.1 million for the quarter, a 12% decrease compared to the prior-year quarter[18] Asset Management Performance The company demonstrated continued growth in its asset base, with total Assets Under Management and Advisement (AUM/AUA) reaching $986 billion as of June 30, 2025, driven by new client wins, re-ups, and successful fundraising for various specialized funds, resulting in AUM growing 9% to $141 billion and Fee-Earning AUM (FEAUM) increasing 10% to $74 billion - Total Assets Under Management/Advisement (AUM/AUA) reached $986 billion as of June 30, 2025[31] Year-over-Year Asset Growth (as of June 30, 2025) | Metric | Value (USD) | YoY Growth | | :--- | :--- | :--- | | Assets Under Management (AUM) | $141 billion | 9% | | Fee-Earning AUM (FEAUM) | $74 billion | 10% | | Assets Under Advisement (AUA) | $845 billion | 4% | - Growth in FEAUM was driven by both Customized Separate Accounts (+$4.6 billion YoY increase) and Specialized Funds (+$2.1 billion YoY increase), with over 80% of gross contributions in the last 12 months coming from existing clients[41][43] - The company is actively fundraising for several specialized funds, including its 9th credit-oriented fund, 6th direct equity fund, and various evergreen funds[38][44] Detailed Financial Analysis This section provides an in-depth analysis of Hamilton Lane's Q1 FY2026 financial performance, focusing on revenue streams, earnings metrics, unrealized carried interest, and the strength of its balance sheet Revenue Analysis Total revenues for Q1 FY26 decreased 11% year-over-year to $176 million, with management and advisory fees falling 4% to $134 million due to a significant reduction in retroactive fees, and incentive fees seeing a more significant decline of 26% to $42 million, reflecting the unpredictable timing of realizations Q1 Revenue Breakdown (Year-over-Year) | Revenue Stream (in millions) | Q1 FY25 | Q1 FY26 | YoY Change | | :--- | :--- | :--- | :--- | | Management & Advisory Fees | $140 | $134 | (4)% | | Incentive Fees | $57 | $42 | (26)% | | Total Revenues | $197 | $176 | (11)% | - The YoY decrease in Management and Advisory Fees was largely due to $20.7 million in retroactive fees in the prior year quarter, compared to only $0.3 million in the current quarter[58] - Recurring management and advisory fees have constituted approximately 80% of total revenues over the past five fiscal years, providing a stable base[58] Earnings Analysis Despite lower revenues, the company's core profitability remained strong, with Fee Related Earnings (FRE) growing 31% year-over-year to $84 million, Adjusted EBITDA remaining flat at $96 million, and Net income attributable to Hamilton Lane Incorporated (HLI) decreasing by 9% to $54 million due to lower incentive fees Q1 Earnings Breakdown (Year-over-Year) | Metric (in millions) | Q1 FY25 | Q1 FY26 | YoY Change | | :--- | :--- | :--- | :--- | | Fee Related Earnings | $64 | $84 | 31% | | Adjusted EBITDA | $96 | $96 | 0% | | Net Income Attributable to HLI | $59 | $54 | (9)% | - The 31% YoY growth in Fee Related Earnings highlights the strength and long-term double-digit growth trajectory of the company's core earnings stream[71] Unrealized Carried Interest The balance of unrealized carried interest, a key indicator of future potential incentive fee revenue, grew to $1.31 billion as of June 30, 2025, representing a 6% increase from $1.24 billion in the prior year, with the portfolio diversified across 116 vehicles and the majority (52%) of value in funds aged between 5 and 8 years, indicating a mature pipeline for future realizations - Unrealized carried interest increased to $1.309 billion as of June 30, 2025, up from $1.238 billion as of June 30, 2024[62] - The unrealized carry is diversified across 116 different vehicles[62] Unrealized Carry by Fund Age | Age of Fund | Percentage of Total | | :--- | :--- | | < 5 years | 26% | | 5-8 years | 52% | | 8-12 years | 17% | | > 12 years | 5% | Balance Sheet & Key Items Hamilton Lane maintains a strong balance sheet with a total investment balance of $863 million as of June 30, 2025, primarily composed of investments in its own funds ($464 million) and technology-related investments ($399 million), while employing modest leverage with total debt standing at $289 million - The total investment balance was $863 million as of June 30, 2025[76] - The investment portfolio consists of approximately $464 million in Hamilton Lane funds and $399 million in technology-related and other investments[79] - The company maintains a modest leverage profile with $289 million of debt as of June 30, 2025[80] Appendix This appendix provides comprehensive supporting financial data, including detailed breakdowns of revenue and asset growth, consolidated financial statements, non-GAAP reconciliations, and definitions of key financial and operational terms Detailed Financial Tables The appendix provides detailed breakdowns of key financial and operational metrics, showing that for Q1 FY26, management and advisory fees were primarily driven by specialized funds (62%) and customized separate accounts (26%), incentive fees were significantly impacted by a sharp decline in secondary and direct credit funds, and Fee-Earning AUM saw a net increase of $2.35 billion during the quarter - For the three months ended June 30, 2025, Specialized Funds contributed $82.7 million (62%) and Customized Separate Accounts contributed $34.6 million (26%) to total management and advisory fees[85][86] - Incentive fees from Evergreen funds were the largest contributor in Q1 FY26 at $32.6 million, though this was down 47% sequentially. Fees from secondary funds dropped 95% YoY to $0.5 million[88] - Total Fee-Earning AUM increased from $72.0 billion at the beginning of the quarter to $74.4 billion at the end, driven by $3.4 billion in contributions offset by $1.6 billion in distributions[90] Consolidated Financial Statements This section presents the unaudited condensed consolidated balance sheets and statements of cash flows, showing total assets of $1.80 billion as of June 30, 2025, with cash and cash equivalents increasing to $263.3 million, and net cash provided by operating activities of $128.9 million for the quarter, while net cash used in investing activities was $93.8 million Key Balance Sheet Items (in thousands) | Account | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $229,161 | $263,347 | | Investments | $664,354 | $674,453 | | Total Assets | $1,690,355 | $1,802,038 | | Debt | $290,303 | $288,582 | | Total Liabilities | $766,460 | $806,992 | Key Cash Flow Items (Three Months Ended June 30) | Activity (in thousands) | 2024 | 2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $79,743 | $128,932 | | Net cash provided by (used in) investing activities | $2,132 | $(93,807) | | Net cash (used in) provided by financing activities | $(30,418) | $3,261 | Non-GAAP Reconciliations This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP counterparts, bridging GAAP Net Income to key metrics such as Fee Related Earnings (FRE), Adjusted EBITDA, and Adjusted Net Income, offering transparency into the adjustments made for items like incentive fees, equity-based compensation, and other non-core expenses - Provides a full reconciliation from GAAP Net Income to Fee Related Earnings and Adjusted EBITDA for current and historical periods[96] - Details the calculation of Adjusted Net Income and Non-GAAP Earnings Per Share, including adjustments for taxes and share counts[96] - Breaks down GAAP revenue and expense lines into their 'fee related' non-GAAP components, such as 'Fee related management and advisory fees' and 'Fee related compensation and benefits expenses'[100] Definitions and Disclosures The final section of the appendix defines the key terms and non-GAAP measures used throughout the presentation, such as Adjusted EBITDA, Fee Related Earnings (FRE), Assets Under Management (AUM), and Fee-Earning AUM (FEAUM), and includes the full forward-looking statements disclosure, reiterating the risks and uncertainties associated with the company's business - Provides specific definitions for non-GAAP measures like Fee Related Earnings (FRE), which is used to highlight recurring revenue streams[103] - Defines operational metrics including Assets Under Management (AUM), Assets Under Advisement (AUA), and Fee-Earning AUM (FEAUM), explaining how each is calculated and its relevance[105][106] - Contains the full legal disclosure regarding forward-looking statements, consistent with the information presented at the beginning of the report[110][111]