Hamilton Lane(US:HLNE)2025-11-04 21:16Assets Under Management and Advisory - As of September 30, 2025, the company had $101.0 billion in assets under management (AUM) from customized separate accounts and $44.4 billion from specialized funds[117] - The company reported $859.8 billion in assets under advisement (AUA) as of September 30, 2025, indicating a strong advisory service segment[117] - Fee-earning AUM increased by $2.0 billion during the three months ended September 30, 2025, primarily due to contributions from customized separate accounts and specialized funds[191] - Customized separate accounts fee-earning AUM rose by $0.5 billion, with contributions of $1.1 billion and distributions of $0.8 billion for the same period[192] - Specialized funds fee-earning AUM increased by $1.5 billion, with contributions of $1.8 billion and distributions of $0.6 billion for the three months ended September 30, 2025[193] - For the six months ended September 30, 2025, fee-earning AUM increased by $4.4 billion, driven by contributions from both customized separate accounts and specialized funds[194] - Customized separate accounts fee-earning AUM grew by $1.5 billion, with contributions totaling $2.9 billion and distributions of $1.8 billion for the six months ended September 30, 2025[195] - Specialized funds fee-earning AUM increased by $2.9 billion, with contributions of $3.4 billion and distributions of $1.2 billion for the same period[196] Financial Performance - Total revenues for the three months ended September 30, 2025, increased by $36.7 million to $190.9 million compared to $149.9 million for the same period in 2024, driven by increases in management and advisory fees and incentive fees[153] - Management and advisory fees rose by $22.3 million to $142.1 million for the three months ended September 30, 2025, compared to $119.8 million in 2024, with specialized funds revenue contributing $19.5 million of this increase[154] - Incentive fees increased by $14.3 million to $44.6 million for the three months ended September 30, 2025, primarily due to the recognition of $13.1 million in performance fees from evergreen funds[155] - For the six months ended September 30, 2025, total revenues increased by $15.9 million to $366.8 million compared to $346.7 million in 2024, primarily due to higher management and advisory fees[156] - Management and advisory fees for the six months ended September 30, 2025, increased by $16.1 million to $275.8 million, with specialized funds revenue contributing significantly to this growth[157] - Total expenses for the three months ended September 30, 2025, increased by $27.7 million to $111.2 million compared to $82.8 million in 2024, mainly due to higher compensation and benefits[161] - Compensation and benefits expenses rose by $21.9 million to $77.0 million for the three months ended September 30, 2025, driven by increased salary expenses and annual bonus plan accruals[162] - Net income attributable to Hamilton Lane Incorporated for the three months ended September 30, 2025, was $70.9 million, compared to $55.0 million in 2024, reflecting a year-over-year increase of 28.5%[150] - Non-GAAP EPS for the three months ended September 30, 2025, was $1.54, up from $1.07 in the same period of 2024[206] - Adjusted EBITDA for the three months ended September 30, 2025, was $100.815 million, compared to $75.638 million for the same period in 2024[204] - Fee Related Earnings (FRE) for the three months ended September 30, 2025, were $77.037 million, compared to $56.292 million for the same period in 2024[204] Investment Activities - The company completed a registered offering of 528,705 shares of Class A common stock, generating $55.5 million in net proceeds[120] - On October 23, 2025, the company sold its interests in a wholly-owned entity for $92.3 million in cash[122] - The company recognized $0.8 million in retroactive fees from its latest direct equity fund for the six months ended September 30, 2025, compared to $20.7 million from a secondary fund in the same period of 2024[157] - Total other income for the three months ended September 30, 2025, was $37.9 million, significantly higher than $9.9 million in 2024, indicating improved investment performance[152] - Other income (expense) increased by $12.4 million for the three months ended September 30, 2025, primarily due to an increase in equity in income of investees[168] - Equity in income of investees increased by $13.7 million for the three months ended September 30, 2025, attributed to larger increases in investment valuations[169] - Other income (expense) of Consolidated Funds and Partnerships increased by $15.6 million for the three months ended September 30, 2025, due to increased investment activity[176] - Net cash provided by operating activities for the six months ended September 30, 2025, was $247.83 million, compared to $197.15 million for the same period in 2024, reflecting a year-over-year increase of approximately 25.7%[239] - Net cash used in investing activities for the six months ended September 30, 2025, was $227.92 million, significantly higher than $25.04 million in 2024, indicating increased investment activity[239] Debt and Liquidity - The company amended its credit facility on October 1, 2025, which included a decrease in the aggregate principal amount available to be borrowed and changes to interest rates[121] - The company had an outstanding balance of $89 million under the Term Loan Agreement as of September 30, 2025, with a maturity date of July 1, 2029[225] - The aggregate principal amount of loans that may be outstanding under all Loan Agreements is capped at $325 million, with $325 million available as of September 30, 2025[229] - The company issued $100 million in Senior Notes with a 5.28% interest rate, maturing on October 15, 2029, with interest payments starting on April 15, 2025[223] - As of September 30, 2025, the principal amount of debt outstanding was $288.1 million, down from $293.1 million as of March 31, 2025[229] - The company expects to continue paying quarterly cash dividends, subject to funds being legally available[237] - The company is required to maintain approximately $7.8 million in liquid net assets to meet regulatory net capital and capital adequacy requirements as of September 30, 2025[236] - The annual interest rate on the Term Loan Agreement was 6.00% as of September 30, 2025[259] - A 100 basis point increase in interest rates is estimated to result in an increased interest expense of approximately $0.9 million over the next 12 months[260] Strategic Partnerships and Investments - A long-term strategic partnership was established with The Guardian Life Insurance Company, managing nearly $5 billion in private equity and committing to invest approximately $500 million annually for the next 10 years[124] - The company plans to make strategic investments in technology-driven private markets data and wealth management solutions[233] Tax and Regulatory Matters - The effective tax rate was 11.9% for the three months ended September 30, 2025, compared to 1.5% for the same period in 2024, reflecting changes in income allocation and tax adjustments[179] - The One Big Beautiful Bill Act signed into law on July 4, 2025, did not have a material impact on the company's consolidated financial statements[145] Market Conditions and Competition - The company has noted increased competition for investment opportunities, which may impact future returns due to rising costs[211] - The performance of the funds is increasingly dependent on newer funds, as historical returns are primarily derived from earlier funds[211] - The company utilizes revolving credit facilities to enhance liquidity, which can magnify performance outcomes[217] - The company’s investment strategy includes a focus on private markets, with specialized funds investing across various sectors[210] Currency and Credit Risk - The company has limited currency exposure related to investments in foreign currency assets, typically at 1% of total capital commitments[258] - The company does not expect changes in exchange rates to materially impact its financial statements[258] - Credit risk is managed by limiting counterparties to reputable financial institutions[261] - The company does not possess significant assets in foreign countries or engage in material transactions in currencies other than the U.S. dollar[258] - The company’s general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States[256] Performance Metrics - The gross internal rate of return (IRR) for the Secondary Fund VI established in 2022 was 40.6%, while the net IRR was 44.1%[212] - The Infrastructure Opps Fund II, set to launch in 2024, has a projected gross IRR of 32.3% and a net IRR of 30.8%[212] - The company’s specialized funds have shown varying performance, with the PEF IX fund achieving a net IRR of 14.7%[212] - The average gross multiple across the specialized funds is approximately 1.5, indicating a strong return on capital invested[212] - The company’s strategic opportunities funds have a gross IRR of 14.4% for the year 2022, reflecting solid performance in the market[212]