Hamilton Lane(US:HLNE)2025-08-05 20:15PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the three months ended June 30, 2025, compared to the same period in 2024, including balance sheets, statements of income, stockholders' equity, cash flows, and comprehensive notes detailing accounting policies and financial positions Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.80 billion from $1.69 billion at March 31, 2025, primarily driven by growth in cash and investments, with total liabilities rising to $807.0 million and total equity growing to $995.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $1,802,038 | $1,690,355 | | Cash and cash equivalents | $263,347 | $229,161 | | Investments | $674,453 | $664,354 | | Total Liabilities | $806,992 | $766,460 | | Debt | $288,582 | $290,303 | | Total Equity | $995,046 | $923,895 | Condensed Consolidated Statements of Income For the three months ended June 30, 2025, total revenues decreased to $176.0 million from $196.7 million in the prior-year period, primarily due to lower incentive fees, resulting in net income attributable to Hamilton Lane Incorporated of $53.7 million, or $1.28 per diluted share Condensed Consolidated Statements of Income (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $175,958 | $196,731 | | Management and advisory fees | $133,696 | $139,962 | | Incentive fees | $42,262 | $56,769 | | Total Expenses | $98,983 | $107,120 | | Net Income | $77,070 | $87,087 | | Net income attributable to HLI | $53,745 | $58,964 | | Diluted EPS | $1.28 | $1.47 | Condensed Consolidated Statements of Cash Flows For the three months ended June 30, 2025, net cash provided by operating activities significantly increased to $128.9 million, while net cash used in investing activities was $93.8 million, mainly due to higher contributions to funds, and net cash from financing activities was $3.3 million Cash Flow Summary (in thousands) | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $128,932 | $79,743 | | Net cash (used in) provided by investing activities | $(93,807) | $2,132 | | Net cash provided by (used in) financing activities | $3,261 | $(30,418) | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of accounting policies and financial statement items, including revenue disaggregation, investments, debt structure, equity-based compensation, and commitments, with unrecognized carried interest subject to contingencies amounting to approximately $1.31 billion as of June 30, 2025 Revenue Disaggregation (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Management & Advisory Fees | $133,696 | $139,962 | | Specialized funds | $82,745 | $89,792 | | Customized separate accounts | $34,575 | $33,453 | | Incentive Fees | $42,262 | $56,769 | | Specialized funds | $38,209 | $52,054 | | Customized separate accounts | $4,053 | $4,715 | - As of June 30, 2025, the company had allocated carried interest still subject to contingencies (unrecognized) of $1,309,480,000, net of amounts attributable to NCI90 - The company's aggregate unfunded commitment to its Funds was $264.7 million as of June 30, 202595 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the quarter ended June 30, 2025, highlighting a $20.8 million year-over-year revenue decrease primarily from lower incentive and management fees, an $8.3 million decrease in total expenses, $2.4 billion growth in fee-earning AUM, and a strong liquidity position Consolidated Results of Operations For the quarter ended June 30, 2025, total revenues decreased to $176.0 million from $196.7 million YoY, driven by a $14.5 million decrease in incentive fees and a $6.3 million decrease in management fees, while total expenses fell by $8.3 million to $98.5 million, mainly from an $11.0 million decrease in incentive fee compensation - Total revenues decreased by $20.8 million YoY, driven by decreases in both management and advisory fees (-$6.3 million) and incentive fees (-$14.5 million)138139 - The decrease in management fees was primarily due to a $20.4 million reduction in retroactive fees from specialized funds compared to the prior-year period140 - The decrease in incentive fees was mainly due to a $24.5 million drop in tax-related carried interest distributions and a significant realization event in the prior-year quarter141 - Total expenses decreased by $8.3 million YoY, largely due to an $11.0 million reduction in incentive fee compensation, which was partially offset by a $9.6 million increase in equity-based compensation142143144 Fee-Earning AUM Fee-earning Assets Under Management (AUM) increased by $2.4 billion during the three months ended June 30, 2025, reaching a total of $74.4 billion, driven by $3.4 billion in contributions from customized separate accounts and specialized funds, partially offset by $1.6 billion in distributions Fee-Earning AUM Roll-Forward (in millions) | Period | Balance, beginning of period | Contributions | Distributions | FX, market value, other | Balance, end of period | | :--- | :--- | :--- | :--- | :--- | :--- | | Q1 FY26 | $72,047 | $3,370 | $(1,575) | $557 | $74,399 | | Q1 FY25 | $65,749 | $4,256 | $(2,292) | $(3) | $67,710 | Non-GAAP Financial Measures The company reported non-GAAP financial measures, with Fee Related Earnings (FRE) increasing to $83.7 million from $64.0 million YoY, Adjusted EBITDA remaining stable at $95.8 million, and Non-GAAP EPS decreasing to $1.31 from $1.51, reflecting a modified FRE definition for comparability Non-GAAP Financial Highlights (in thousands, except per-share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Fee Related Earnings (FRE) | $83,710 | $63,974 | | Adjusted EBITDA | $95,839 | $96,224 | | Adjusted Net Income | $71,604 | $81,423 | | Non-GAAP EPS | $1.31 | $1.51 | - The definition of FRE was modified beginning in Q4 FY25 to exclude equity-based compensation and include fee related performance revenues (FRPR), with prior periods recast to reflect this change167 Liquidity and Capital Resources The company maintained a strong liquidity position with $263.3 million in cash and cash equivalents as of June 30, 2025, total debt outstanding of $291.3 million, and $133.8 million available under loan agreements, ensuring sufficient capital for short-term and long-term needs - As of June 30, 2025, cash and cash equivalents were $263.3 million186 - Total debt outstanding was $291.3 million, with $133.8 million in availability under existing loan agreements196 - On August 5, 2025, the company announced a quarterly dividend of $0.54 per share of Class A common stock99 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk stems from the fair value of fund investments impacting 'equity in income of investees', while management fees are largely insulated from market volatility, and a 100 basis point increase in interest rates would raise annual interest expense by approximately $0.9 million - The company's main market risk is the impact of investment valuations on its 'equity in income of investees', while management fees are not significantly affected by market value changes221223 - A 100 basis point increase in interest rates is estimated to increase annual interest expense by approximately $0.9 million based on the floating rate debt outstanding as of June 30, 2025227 Item 4. Controls and Procedures As of June 30, 2025, management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2025231 - No material changes were made to internal control over financial reporting during the quarter ended June 30, 2025232 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings that management believes would have a material adverse effect on its consolidated financial statements - In the opinion of management, there are no pending or threatened legal proceedings that would materially affect the company's financial statements234 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025 - No material changes from the risk factors disclosed in the 2025 Form 10-K were reported235 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company repurchased 18 shares of Class A common stock at an average price of $149.51 per share to satisfy employee tax withholding obligations, with its $50 million stock repurchase program remaining fully available - 18 shares of Class A common stock were repurchased to cover employee tax withholding on vested restricted stock236 - The company has a $50 million stock repurchase program, which was re-approved in December 2024 and has full purchase authority remaining237 Item 5. Other Information The company reported that none of its directors or officers adopted, terminated, or modified any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements during the quarter238 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley Act certifications from the Principal Executive Officers and Principal Financial Officer, as well as Inline XBRL documents - The report lists required exhibits, including CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act239