Q2 2024 Hamilton Lane Incorporated Earnings Call

Speaker 1: fiscal 2023 10K and subsequent reports we file with the S.

10-K, and subsequent reports we file with the SEC.

Speaker 2: And forward-looking statements are made only as of today and, except as required, we undertake no obligation to update or revise any of the documents.

Forward looking statements are made only as of today and except as required we undertake no obligation to update or revise any of them.

We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the shareholders section of the Hamilton Lane website.

Speaker 3: You will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the shareholder section of the Hamilton Lane website.

Speaker 4: Our detailed financial results will be made available when our 10Q is filed. Please note that nothing on this call represents an offer to sell or solicitation of an offer to purchase interest in any of Hamilton Lane's products.

Our detailed financial results will be made available when our 10-Q as filed please note that nothing on this call represents an offer to sell or a solicitation of an offer to purchase interest in any of Hamilton Lane's products.

Beginning with the financial highlights year to date, our management and advisory fee revenue grew by 20%, while our fee related earnings also grew by 20% versus the prior year period.

Speaker 5: Beginning with the financial highlights, year to date our management and advisory fee revenue grew by 20% while our fee related earnings also grew by 20% versus the prior year period.

Speaker 6: translated into GAAP EPS of $1.92 based on $73 million of GAAP net income and non-GAAP EPS of $1.83 based on $99 million of adjusted net income.

Translated into GAAP EPS of $1 92, based on $73 million of GAAP net income and non-GAAP EPS of $1 83 based on $99 million of adjusted net income.

Speaker 7: We have also declared a dividend of 44.5 cents per share this quarter, which keeps us on track for the 11% increase over last fiscal year, equating to the targeted $1.78 per share for fiscal year 2020.

We have also declared a dividend of <unk> $44 <unk> per share this quarter, which keeps us on track for the 11% increase over last fiscal year equating to the targeted $1 78 per share for fiscal year 2024.

Speaker 8: With that, I'll now turn the call over to Mario. Thank you, John , and good morning, everyone. I'll start with addressing the CEO transition announcement we made several weeks ago.

With that I'll now turn the call over to Mario.

Thank you John and good morning, everyone I will start with addressing the CEO transition announcement, we made several weeks ago at the beginning of calendar 2024, I'll be stepping down as CEO of Hamilton Lane. After having served the last 22 years in that capacity.

Speaker 9: At the beginning of calendar 2024, I will be stepping down as CEO of Hamilton Lane after having served the last 22 years in that capacity.

Speaker 10: I will move into an executive co-chair role alongside Hartley Rogers, our current chairman.

I will move into an executive co chair role alongside Hartley Rogers, our current chairman at that time, Eric Kirsch, and <unk> will become the new co Ceos of Hamilton Lane I.

Speaker 11: At that time, Eric Hirsch and Juan Delgado-Morir will become the new co-CEOs of Hamilton.

Speaker 12: I want to emphasize that I will not be moving on or back from Hamilton Lane and in fact quite the opposite. I'm a significant shareholder and I plan to remain very active and do my part in continuing to grow and scale our business. Once that's a fun man...

I want to emphasize that I will not be moving on or back from Hamilton Lane and in fact quite the opposite I mean.

A significant shareholder and I plan to remain very active and do my part and continuing to grow and scale our business.

I want to ask the fund manager how you know if someone has a good CEO. His answer was that you don't know until a couple of years. After that person is no longer CEO because of the mark of a good CEO is at his or her transition to another CEO is smooth and the successor continues to run the business successfully.

Speaker 13: But the answer was that you don't know until a couple of years after that person is no longer CEO . Because the mark of a good CEO is that his or her transition to another CEO is smooth and the successor continues to run the business.

Speaker 14: That's the measure, and I am certain that I will be regarded as a good CEO , because this transition has and will continue to be seamless, and Juan and Eric will be great CEOs at hand.

That's the measure and I am certain that I will be regarded as a good CEO. Because this transition has and will continue to be seamless and one and Eric will be great Ceos at Hamilton Lane.

Speaker 15: I've worked with both of them over many years here and there has been no decision or strategic discussion over the last 15 plus years of which they haven't been an integral part.

We worked with both of them over many years here and there has been no decision or strategic discussion over the last 15, plus years of which they haven't been an integral part.

Speaker 16: Their thoughts and judgments have been a key part of Hamilton Lane's success. And we would be nowhere near what we are today without them helping to spearhead the growth of the business over the last decade. Your point.

Their thoughts and judgments have been a key part of Hamilton Lane success, and we would be nowhere near what we are today without them, helping to spearhead the growth of the business over the last decade and longer.

Speaker 17: Both Eric and Juan have highly complementary investment and strategic management skill sets and bring fresh perspectives on the future of our

Both Eric and <unk> have highly complementary investment in strategic management skill sets and bring fresh perspectives on the future of our business.

Speaker 18: Juan will primarily focus on leading Hamilton Lane's global sales effort and client service organization, while Eric will take the lead on the strategic direction and operations of the firm. Eric and Juan will jointly lead our global investment...

Ron will primarily focus on leading Hamilton Lane's global sales effort and client service organization, while Eric will take the lead on the strategic direction and operations of the firm Eric and one we will jointly lead our global investment team. We look forward to working with them as Hamilton Lane bills on its market leadership position I will now turn it over to Eric.

Speaker 19: I look forward to working with them as Hamilton Lane builds on its market leadership position. I will now turn it over to Eric.

Speaker 20: Thank you, Mario and good morning everyone before I get into detail around the quarters results. I want to take this opportunity to thank the board. Hartley and Mario for entrusting me and Juan with this new responsibility.

Thank you Mario and good morning, everyone.

Before I get into detail around the quarters results I want to take this opportunity to thank the board.

Partly and Mario for Entrusting me and one with this new responsibility.

Speaker 21: We are excited to continue to build on the firm's strong position and momentum.

We are excited to continue to build on the firm's strong position and momentum.

Speaker 22: Juan will join the next earnings call to introduce himself to you all, but our plan going forward is that future calls will be led by me, Jeff Armbrister, and John , and to keep our interaction with you and the market consistent.

One will join the next earnings call to introduce himself to you all but our plan going forward is that future calls will be led by me, Jeff Armbruster, and John and to keep our interaction with you and the market consistent.

With that let's move onto the results for the quarter.

Speaker 23: I'll start with our total asset footprint, which we define as the sum of our AUM and AUA. This stood at $854 billion and represents a 4% increase to our footprint year over year and highlights our continued and steady growth as a firm.

I'll start with our total asset footprint, which we define as the sum of our AUM and <unk>. This.

This stood at $854 billion and represents a 4% increase to our footprint year over year and highlights our continued and steady growth as a firm.

Speaker 24: AUM stood at $119 billion at quarter end and grew $12 billion or 11%. The growth came from both our specialized funds and customized separate accounts.

AUM stood at $119 billion at quarter end and grew $12 billion or 11%.

The growth came from both our specialized funds and customized separate accounts.

Speaker 25: AUA was up $18 billion, or 3% year over year, primarily the result of the addition of reporting and advisory mandates. As a reminder, AUA can fluctuate for a variety of reasons, but the revenue associated with AUA does not necessarily move in lockstep with those changes.

<unk> was up 18 billion or 3% year over year, primarily the result of the addition of reporting and advisory mandates as a reminder.

Can fluctuate for a variety of reasons, but the revenue associated with <unk> does not necessarily move in lockstep with those changes.

Let's turn now to fee, earning AUM, which continues to be the largest driver of management fees and.

Speaker 26: Let's turn now to fee earning AUM, which continues to be the largest driver of management fees.

Speaker 27: And despite a challenging fundraising environment over recent quarters, we have experienced strong growth in both our customized separate accounts and specialized funds. Our total fee earning AUM stood at $61.4 billion and grew $8.7 billion, or 17%, relative to the prior year period.

And despite a challenging fundraising environment over recent quarters, we have experienced strong growth in both our customized separate accounts and specialized funds.

Our total fee, earning AUM stood at $61 4 billion and grew $8 7 billion or 17% relative to the prior year period.

Speaker 28: Taken separately, $3.9 billion of net fee earning AUM came from our customized separate accounts and over the same time period $4.8 billion came from our specialized funds.

Separately <unk> three $9 billion of net fee, earning AUM came from our customized separate accounts and over the same time period $4 $8 billion came from our specialized funds.

Speaker 29: Our blended fee rate across the platform also continues to increase.

Our blended fee rate across the platform also continues to increase.

Speaker 30: This stems from the continuing shift in the mix of our fee earning AUM towards higher fee rate specialized funds, most notably our Evergreen products where growth is strong. Moving now to additional detail on our-

This stems from the continuing shift in the mix of our fee, earning AUM towards higher fee rate specialized funds, most notably our evergreen products where growth is strong.

Moving now to additional detail on our customized separate accounts.

Speaker 31: The earning AUM from our customized separate accounts stood at $36.2 billion, growing 12% over the past 12 months.

Earning AUM from our customized separate accounts stood at $36 $2 billion growing 12% over the past 12 months we.

Speaker 32: We continue to see the growth coming across type, size, and geographic location of the client.

We continue to see the growth coming across type size and geographic location of the clients over the last 12 months more than 80% of the gross inflows in the customized separate accounts came from our existing client base. While this clearly speaks to the power of a recurring relationship model. It also tells you with the remainder of the flows.

Over the last 12 months, more than 80% of the gross inflows in the customized separate accounts came from our existing client base. While this clearly speaks to the power of a recurring relationship model, it also tells you with the remainder of the flows, despite a very large install base coming from new relationships, the market continues to offer up plenty of opportunity.

Despite a very large install base coming from new relationships. The market continues to offer a plenty of opportunities.

Moving to our specialized funds. Momentum here continues to be strong. Fee earning AUM from our specialized funds stood at $25.2 billion at quarter end.

Moving to our specialized funds momentum here continues to be strong fee, earning AUM from our specialized funds stood at $25 2 billion at quarter end.

Over the past 12 months, we achieved positive net inflows of $4.8 billion, representing an increase of 24% relative to the prior year period.

Over the past 12 months, we achieved positive net inflows of $4 8 billion representing.

Representing an increase of 24% relative to the prior year period.

This growth stemmed from additional closes for funds currently in market, robust investment activity, and continued expansion of our Evergreen platform.

This growth stemmed from additional closes for funds currently in market robust investment activity and continued expansion of our evergreen platform.

Moving on to some detail around the drivers of specialized fund flows, I'll begin with our secondary fund currently in market. During the quarter, we held two additional closes that totaled approximately $622 million of LP commitments, and that brings the total raised here to over $3 billion.

Moving on to some detail around the drivers of specialized fund flows I'll begin with our secondary fund currently in market during the quarter. We held two additional closes that totaled approximately $622 million of LP commitments and that brings the total raised here to over $3 billion.

As a quick reminder, we raised $3.9 billion for our prior secondary fund, and we are on target to surpass the prior fund size with this current fund.

As a quick reminder, we raised $3 9 billion for our prior secondary fund and we are on target to surpass the prior fund size with this current fund.

Capital raised this quarter generated $6.1 million in retrofit.

Capital raised this quarter generated $6 $1 million in retro fees.

Originally, we had until calendar fourth quarter of 2023 to finish raising this fund. However, demand and opportunity remain strong, and our existing investors have granted us an extension to the end of March 2024. Overall, the fund continues to perform well, and we continue to be encouraged with the momentum heading into the final stage.

Originally we had until calendar fourth quarter of 2023. The finished raising this fund however demand and opportunity remain strong and our existing investors have granted us an extension to the end of March 2024 overall, the fund continues to perform well and we continue to be encouraged with the momentum heading in.

The final stages.

Moving on to our Strategic Opportunities Fund, which is our annual direct credit fund targeting the institutional LP.

Moving on to our strategic opportunities fund, which is our annual direct credit fund targeting the institutional LP.

As a refresher, the series of funds is effectively always in market as we raise and deploy the capital with short investment periods and charge management fees on invested capital. We are currently in market with our eighth series and since our last update we've held additional closes that have totaled over $230 million of LP commitment.

As a refresher the series of funds as effectively always end market and as we raise and deploy the capital with short investment periods and charge management fees on invested capital. We are currently in market with our eighth series and since our last update we've held additional closes that have totaled over $230 million of LP commitments.

This brings the total raise for this current series to nearly 570 million dollars. We expect to hold the final close for the series sometime before the end of calendar 2023.

This brings the total raise for this current series to nearly $570 million, we expect to hold the final close of the series sometime before the end of calendar 2023.

I'd like to highlight that our Direct Credit platform has continued to experience strong growth over the past few years, with this annual institutional series now being complemented with other sleeves of credit-focused capital, including various separate accounts and our Evergreen funds.

I'd like to highlight that our direct lending platform has continued to experience strong growth over the past few years with this annual institutional series now being complemented with other sleeves of credit focused capital, including various separate accounts and our evergreen funds.

Together, the platform remains on solid footing with opportunity to continue to grow and scale.

Whether the platform remains on solid footing with opportunity to continue to grow and scale.

Before I move on to our Evergreen funds, I'm happy to announce that we've held the first close for our second Infrastructure Opportunities Fund. Our first fund raised nearly $575 million of investor commitments in and alongside the fund. And recall that this strategy centers around transaction-focused investments, namely direct equity and secondaries in the real assets and infrastructure space.

Before I move on to our evergreen funds I'm happy to announce that we've held the first close for our second infrastructure opportunities Fund. Our first fund raised nearly $575 million of investment investor commitments in alongside the fund and recall that this strategy centers around transaction focused investments, namely.

Direct equity in secondaries, and the real assets and infrastructure space.

For this first close of our second fund, we secured more than $300 million of commitments in and alongside the fund. We are pleased with the progress and momentum, having raised over 50% of Fund1's capital with this second close.

Or this first close of our second fund, we secured more than $300 million of commitments in and alongside the fund. We are pleased with the progress and momentum having raised over 50% of fund <unk> capital with the second close.

Let's turn now to our evergreen funds where growth remains robust continue.

It's turned now to our Evergreen Funds, where growth remains robust.

As of the end of September , total AUM across the Evergame complex stood at nearly $4.9 billion. For the first nine months of calendar 2023, we are averaging net monthly inflows of nearly $160 million across the entirety of the platform. For the first nine months of calendar 2023, we are averaging net monthly inflows of nearly $160 million across the entirety of the platform.

Continue to witness strong demand coming from across the globe is the non institutional channel continues to seek out access to the private markets via our semi liquid funds as of the end of September total AUM across the evergreen complex stood at nearly $4 9 billion for the first nine months.

Calendar 2023, we are averaging net monthly inflows of nearly $160 million across the entirety of the platform.

For our U.S. private markets offering, we continue to generate solid traction with the wire houses that we've been onboarded to earlier this year.

For our U S private markets offering we continue to generate solid traction with the wire houses that we have been on boarded two earlier this year.

As of the end of September , we've generated nearly $440 million of flows and have achieved that level of success in just a few short months of being live on those platforms.

As of the end of September we generated nearly $440 million of flows and have achieved that level of success in just a few short months of being live on those platforms. Our success demonstrates our strength in providing access to the private markets for the non institutional investor. We believe that we are still very much in the early stages of.

Our success demonstrates our strength in providing access to the private markets for the non-institutional investor. We believe that we are still very much in the early stages of this exciting business and look forward to expanding our presence in this space.

This exciting business and look forward to expanding our presence in this space.

Before I turn the call over to Jeff, I'd like to take this opportunity to highlight our newest strategic technology investment from our balance.

Before I turn the call over to Jeff I'd like to take this opportunity to highlight our newest strategic technology investment from our balance sheet.

On August 8th, we announced an investment and partnership with IDR. IDR is an investor onboarding platform which securely streamlines the onboarding process for private market managers and their fundraising efforts by providing a central, globally accepted, and standardized investor onboarding solution, connecting all parties involved in the investment process and supporting onboarding workflow across know your customer, tax, and anti-money laundering services.

On August eight we announced an investment and partnership with Dr. <unk> as an investor Onboarding platform, which securely streamline the onboarding process for private market managers and their fundraising efforts by providing a central globally accepted and standardized investor Onboarding solution.

Connecting all parties involved in the investment process and supporting Onboarding workflow across know your customer tax and anti money laundering services or.

Our investment in partnership with IDR is yet another example of our commitment to increasing efficiency and improving the private markets user experience for all parties, investors, fund managers and even our own team.

Our investment in partnership with <unk> is yet. Another example of our commitment to increasing efficiency and improving the private market's user experience for all parties investors fund managers and even our own teams. We have implemented <unk> Onboarding services in our portfolio fund offerings to help maintain consistent oversight and.

We have implemented IDR onboarding services in our portfolio fund offerings to help maintain consistent oversight and to streamline our KYC and AML process.

To streamline our <unk> and AML processes. This.

This has led to continued operational efficiencies, as well as cost, time, and resource savings. Other users today include leading fund managers and fund administrators. We are excited to embark on this journey with IDR and look forward to providing you with future updates. And with that, I'll now turn the call over to Jeff to cover the financials. Thank you.

This has led to continued operational efficiencies as well as cost time and resource savings. Other users today include leading fund managers and fund administrators. We are excited to embark on this journey with <unk> and look forward to providing you with future updates and with that I'll now turn the call over to Jeff to cover the financials.

Thank you Eric and good morning, everyone. As this is my first <unk> earnings call as Hamilton Lane CFO I'd like to start by conveying how excited I am to be working alongside the board, Eric one and the rest of the senior leadership team here.

As this is my first HL&E earnings call as Hamilton Lane's CFO , I'd like to start by conveying how excited I am to be working alongside the Board, Eric, Juan, and the rest of the senior leadership.

spent the last five years leading and growing Hamilton Lane's direct equity platform, and I am looking forward to this exciting opportunity to continue to help drive growth at the firm. Let's fourteen minutes to Talking Soap veterinarians

Since the last five years, leading and growing Hamilton Lane's direct equity platform I'm looking forward to this exciting opportunity to continue to help drive growth at the firm.

Let's move on now to the financial results.

fiscal year to date we achieve strong growth in our business with management and advisory fees up 20% versus the prior year period.

Fiscal year to date, we achieved strong growth in our business with management and advisory fees up 20% versus the prior year period.

Specialized funds revenue increased by $29 million, or 32% compared to the prior year period.

Specialized funds revenue increased by $29 million or 32% compared to the prior year period.

driven primarily by a $1.8 billion increase to fee earning AUM in our Evergreen platform in the last 12 months and over $3 billion raised since inception in our latest secondary growth strategy.

Was driven primarily by a $1 8 billion increase to fee, earning AUM and our evergreen platform in the last 12 months and over $3 billion raised since inception in our latest secondary fund.

Retro fees for the fiscal year were $8.8 million from our secondary funded market versus $1.2 million from our direct equity fund in the prior year period.

Trophies for the fiscal year were $8 $8 million from our secondary funded market versus $1 2 million from our direct equity fund in the prior year period.

As a reminder, investors that come into later closes during a fundraiser, fundraise pay retroactive fees dating back to the funds first close.

As a reminder, investors that come into later closes during a fundraiser fundraise pay retroactive fees dating back to the Fund's first close.

Expect to generate additional retro fees as we hold subsequent closes for secondary.

Expect to generate additional retrofits as we hold subsequent closes for secondary fund six.

Eric mentioned earlier, we received an extension for the final closed for secondary fund six out to calendar Q1 of 2024 that will extend out the timing of receiving the associated retro.

Eric mentioned earlier, we received an extension for the final close for secondary funds out to calendar Q1 of 2024 that will extend out the timing of receiving the associated retro fees. This.

This now has potential to cause interim movements in our quarterly FRE margins, but on an annual basis, we expect to maintain our current levels.

This now has the potential to cause interim movements in our quarterly FRE margins, but on an annual basis, we expect to maintain our current levels.

Moving on to customized separate accounts revenue increased $6 million or 10% compared to the prior year period due to re ups from existing clients. The addition of several new accounts and continued investment activity.

Revenue increased $6 million or 10% compared to the prior year period due to re-ups from existing clients, the addition of several new accounts, and continued investment activities.

Revenue from our advisory reporting and other offerings decreased by $784,000 compared to the prior period due primarily to the sale of the 361 capital assets partially offset by increases in revenue coming from our technology solutions. Lastly, the final component...

Revenue from our advisory reporting and other offerings decreased by $784000 compared to the prior year period due primarily to the sale of the $3 61 capital assets, partially offset by increases in revenue coming from our technology solutions.

Lastly, the final component of our revenue is incentive fees year to date incentive fees totaled $37 million and are down 66% relative to the prior year period recall that the last fiscal year, we generated a large amount of incentive fees due to the catch up period that several of our carry eligible vehicles were in.

Here today, incentive fees totaled 37 million dollars and are down 66% relative to the prior year.

that the last fiscal year we generated a large amount of incentive fees due to the catch-up period that several of our carry eligible vehicles

Let me now turn to some additional detail on our unrealized carry bounce.

Let me now turn to some additional detail on our unrealized carry balance balance is up 17% from the prior year period, while having recognized $84 $1 million of incentive fees during the last 12 months.

balance is up 17% from the prior year period while having SEP recognize $84.1 million of incentive fees during the last 12 months.

unrealized carry balance now stands at approximately $1.2 billion.

Unrealized carry balance now stands at approximately $1 2 billion.

Moving to expenses, year-to-date total expenses decreased $15 million compared with the prior year period. Total compensation and benefits decreased by $23 million driven primarily by lower compensation associated with a decreased amount of incentives.

Moving to expenses year to date total expenses decreased $15 million compared with the prior year period.

Total compensation and benefits decreased by $23 million, driven primarily by lower compensation associated with the decreased amount of incentive fees.

DNA increased $7 million driven primarily by revenue-related expenses, which are the third-party commissions related to our U.S. Evergreen products, being offered on our wirehouses that we discussed last call.

G&A increased $7 million driven primarily by revenue related expenses, which are the third party commissions related to our U S. Evergreen product being offered on our warehouses that we discussed last call.

I'd like to remind you that the flows that come in through the Wirehouse channel have an associated upfront fee from the dollars raised.

I'd like to remind you that the flows that come in through the wire House channel have an associated upfront fee from the dollars raised there that.

That payment is made and applied to the total amount when those dollars close into the fund. However, the corresponding management fees we earn from those same dollars come in over the course of a year for as long as the client is invested in the fund.

Payment is made and apply to the total amount when those dollars close into the fund however, the corresponding management fees. We earn from those same dollars come in over the course of a year for as long as the client is invested in the fund.

Create the timing mismatch between the costs of bringing those dollars on and the revenue associated with those flows.

Creates a timing mismatch between the cost of bringing those dollars on and the revenue associated with those flows.

Causes are G and A to increase with the eventual offsetting revenue to come in during the subsequent quarters and

Our G&A to increase with the eventual offsetting revenue to come in during the subsequent quarters and years.

Said more simply, we bear the full cost upfront and then receive our revenue over time.

Said more simply we bear the full cost upfront and then receive our revenue over time lastly.

Lastly, our fee-related earnings were up 20% relative to the prior year period as a result of the management fee and fee-earning AUM growth discussed earlier.

Lastly, our fee related earnings were up 20% relative to the prior year period as a result of the management fee and fee, earning AUM growth discussed earlier.

I'll wrap up here with some commentary on our balance sheet.

The largest asset continues to be our investments alongside our clients in our customized separate accounts and specialized funds.

<unk> asset continues to be our investments alongside our clients and our customized separate accounts and specialized funds.

Over the long term, we view these investments as an important component of our continued growth, and we will continue to invest our balance sheet capital alongside power.

Over the long term, we view these investments as an important component of our continued growth.

And we will continue to invest our balance sheet capital alongside our clients.

With regard to our liabilities, we continue to be modestly levered. With that, we will now...

<unk> two our liabilities, we continue to be modestly levered with that we will now open up the call for questions.

Thank you, ladies and gentlemen, we will not begin the question and answer session. Should you have a question, please pass the star fault by the one on your telephone keypad. You will hear a three-tone prompt acknowledging a request. Questions will be taken in the order received. And should you wish to cancel your request, please pass the star fault by the two. If you are using a speaker phone, please leave your handset before pressing any keys. One moment please for your first question.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by one on your telephone keypad.

Hey, Jay.

<unk> request.

<unk> will be taken in the order received and should you wish to cancel your request. Please press star followed later.

If youre using a speakerphone. Please keep your handset before pressing any Keith one moment. Please please your first question.

Once again, Dotty Star and want to ask a question. And your first question comes on the line of Kenneth Worthington from JP Morgan. Please go ahead.

Again that is star and wanted to ask a question and your first.

Question comes from the line of Kenneth.

Thank goodness from Jpmorgan. Please go ahead.

Hi, thank you so much. This is Alex on for Ken. Thanks for taking our questions. Maybe to double click on the Evergreen platform and congratulations on all the continued success there. Maybe just initially to get a better sense of the decision process that you're making across choosing to launch new products versus trying to onboard existing products onto some of the larger distribution platforms, which is the wire houses you discussed. Maybe we can start there please.

Hi, Thank you. So much this is Alex on for Ken. Thanks for taking our questions. Maybe you could double click on the evergreen platform and congratulations on all the continued success there maybe.

And maybe just initially to get a better sense of the decision process that youre, making across choosing to launch new products versus trying to onboard existing products onto some of the larger distribution platforms such as the wire houses can you discuss maybe we can start there. Please.

Sure Alex, it's Mario. The decision is fairly straightforward in the sense that obviously these products that we have on the platforms are having great success.

Sure Alex it's Mario.

The decision is fairly straightforward in the sense that obviously these products that we have on the platforms are having great success.

And so we fully intend to expand the product offerings.

And so we fully intend to expand the product offerings.

As you're aware, we have a credit offering outside the United States on those platforms, so we have already expanded.

As you are aware, we have a credit offering outside of the United States on those platforms. So we have already expanded and and we look at it and think that we will have an additional number of offerings, but really it's a function of making sure that we have the right investment platforms.

And we look at it and think that we will have an additional number of offerings, but really it's a function of making sure that we have the right investment platforms that both the platforms want and in which there's space to provide them. But we would expect that.

That both platforms want and in which their space to provide them, but we would expect that.

We will continue to be providing products into that platform and expanding our own platform.

We will continue to be providing products into that platform and expanding our own platform there.

Got it, thank you. And maybe as a follow up, some of your peers that also have Evergreen products have been looking at some more innovative structures, such as ticker subscriptions and things of that nature. Do you see merit there? And is that something that you're considering? Or how are you framing that question?

Got it thank you and maybe as a follow up some of your peers that also have evergreen products had been looking at some more innovative structures, such as particular subscriptions and things of that nature.

Do you see merit, there and is that something that you're considering or how are you framing that question.

Alexus Mario again. Look, I think everyone is looking at

Alex This is Mario again look I think everyone is looking at developments in that market.

developments in that market. What does the market want?

What does the market want.

And clearly as you see in our numbers, the market wants what we're offering. So as we think about, do we need to change that in order to increase demand? We just haven't seen that need.

And clearly as you see in our numbers the market wants what we're offering so as we think about do we need to change that in order to increase demand. We just haven't seen that need with that said I.

With that said, I would expect that you'll continue to see innovation around the kinds of things like you described.

I would expect that Youll continue to see innovation around the kinds of things like you described where either it's necessary or the market requires it but as I said in terms of the existing products. We have we've not had much demand for people, saying if you tweak. It this way you will get more.

where either it's necessary or the market requires it. But as I said, in terms of the existing products we have, we've not had much demand for people saying, if you tweak it this way, you will get more incremental demand.

Incremental demand.

You've seen the flows there they're healthy and so I would not expect anytime soon that we're going to be changing that but sure.

would not expect any time soon that we're going to be changing that. But sure, products looking forward, I think as the markets change, we will certainly change and hopefully be some of the...

Products looking forward I think as the markets change, we will certainly change and hopefully be some of them.

Understood. Thank you so much for taking my questions I appreciate it.

Thank you and your next question comes from the line of Michael Brown from KBW. Please go ahead.

Thank you and your next question comes from the line of Michael <unk> from Keybanc. Please go ahead.

This is Aiden Hall on from Mike Brown. Thanks for taking our questions. The FRE margin has been fairly stable, less several quarters, and as the Evergreen platform continues to grow as a contribution to the business, they're embedded operating leverage that can support further expansion, or is there further investment that would limit this dynamic? If so, can you just kind of help us quantify that?

Hi, This is Nathan Hall on for Mike Brown, Thanks for taking our questions.

You see FRE margin has been fairly stable over the last several quarters and as ever.

Evergreen platform continues to grow as a contribution to the business is there embedded operating leverage that can support further expansion or is there further investment that would limit this dynamic and if so can you just kind of help us.

Quantify that.

Sure, even if Eric, thanks for the question. I think as Jeff said in his section

Sure even if Erik thanks for the question I think as Jeff said in his section.

We're thrilled with the success we're having, particularly with the wire houses, but that does come with that kind of upfront cost and then kind of the revenue coming later. So, I think what you're seeing with margin right now, I think is actually noteworthy. In an environment where we're certainly seeing. Margins falling across.

We're thrilled with the success, we're having particularly with the wire houses, but that does come with that kind of upfront cost and then kind of the revenue coming later, so I think what youre seeing with margin right. Now I think is actually noteworthy and are in an environment, where we're certainly seeing margins falling across peers in the market.

peers in the market segment, I think the fact that we're holding steady with this growth and with those upfront costs, I think is no or the insurte shows that I think management is doing a good job on sort of managing all of those dynamics.

I think the fact that we're holding steady with this growth and with those upfront costs.

Think is noteworthy and sort of shows that I think management is doing a good job on sort of managing all of those dynamics.

Going forward, you would say in a vacuum that margins could be rising as you start to get as you've now paid the upfront costs and now you're just benefiting from revenue. That would be a margin enhancer, particularly given the margin on this product. That said, I think management's focus here continues to be on growth and investing in growth.

Going forward, you would say in a vacuum.

That margins could be rising as you start to again as you've now pay the upfront costs and now youre benefiting from revenue that would be a margin enhancer, particularly given the margin on this product that said I think management's focus here continues to be on growth and investing in growth to mario's point, new product expansion continuing sort of.

to Mario's point, new product expansion, continuing sort of building out of the sales force. So I think our focus today is not on can we increase margins further, it's how can we continue to invest smartly in the business to make sure that we're continuing to put up these significant growth numbers.

Building out of the sales force. So I think our focus today is not on can we increase margins. Further is how can we continue to invest smartly in the business to make sure that we're continuing to put up these significant growth numbers.

Great. That's helpful. And then maybe just a quick follow up on.

Any color or visibility you guys have to additional wire houses that the Evergreen product may be added to, just as we think through kind of that dislocation in revenue and expenses, that'd be great.

Any color or visibility you guys have two additional wire houses that yes, the evergreen product maybe added to just as we think through kind of that dislocation in revenue and expenses that'd be great.

Sure, I mean our focus, I mean the team continues to build in the US and outside the US and our focus is just putting the product in as many locations as we think makes sense.

Sure I mean, our focus I mean, the team continues to build in the U S and.

Outside the U S and our and our focus is just putting the product in as many locations.

As we think makes sense.

I want to make sure you're doing that in a way that not only are you adding onto those platforms but in order to be successful you have to actually support it once it's there. There's a tremendous need for education, customer support and the like. So I think we view this as really a marathon and the race is just getting started.

To make sure you're doing that in a way that not only are you adding onto those platforms, but in order to be successful you have to actually support it once it's there there is a tremendous need for education customer support and the like so I think we view this as really a marathon in the race is just getting started so while we're thrilled with the success that we've had and we're thrilled that.

So while we're thrilled with the success that we've had and we're thrilled that we're already on some wire houses, as you look forward, I think what you should expect to see is addition of more distribution partners and an addition of more product and a continued kind of reinvestment in our resources around all of those areas. But again, I think for management...

We're already on some wire houses as you look forward I think what you should expect to see is addition of more distribution partners and an addition of more product and then continued kind of reinvestment in our resources around all of those areas, but again I think from management's perspective.

Reviewing this as this is a long road. Which is exciting that's one of the big growth drivers we see is the future of the business, but this is all not going to be coming in tomorrow.

Viewing this as this is a long road, which is exciting that's one of the big growth drivers, we see as the future of the business, but this is all not going to be coming in tomorrow.

Great. Thanks for taking my questions.

Thank you. Once again, should you have any questions, please press star 10, the number 1 on your telephone keypad.

Thank you once again should you have any question. Please press Star then the number one on your telephone keypad.

Mr erry KS D no further question at the time PLE speceded.

Mr. Erik Hirsch there are no further question at this time. Please proceed.

Again, thank you for the time. We know it was a very, very busy day for a number of you, so we appreciate the participation. And again, wish everyone well. Thank you.

Again, thank you for the time, we know it was a very very busy day for a number of you. So we appreciate the participation and again wish everyone well. Thank you.

Thank you, ladies and gentlemen that does conclude our conference for today. Thank you all for participating you may all disconnect.

Thank you ladies and gentlemen that this concludes the conference for today. Thank you all for participating. You may all disconnect.

Yeah.