Q1 2025 Hamilton Lane Inc Earnings Call
Operator: 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 shareholder section of the Hamilton Lane website.
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.
Our detailed financial results will be made available when our 10-Q was 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.
Operator: Our detailed financial results will be made available when our Tentu is filed.
Operator: 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.
First.
Operator: First, as a reminder for those who may have missed it, we held our second HL Annie Shareholder Day on June 5th, where several Hamilton Lane leaders walk through business channels and growth drivers. We chartered our progress since our IPO in March 2017, and discussed what we continue to see as a large and going market in front of us. We were proud to show our strong results in our continued leadership in private markets through the depth and breadth of our offering.
As a reminder, for those who may have missed it we held our second HL any shareholder day on June 5th where several Hamilton Lane leaders walked through business channels and growth drivers.
We chartered our progress since our IPO in March 2017, and discussed we continue to see is a large and growing market in front of us.
We were proud to show our strong results and our continued leadership in private markets due to the depth and breadth of our offering.
Speaker Change: For those who have not had a chance to watch the presentation a replay recording along with the accompanying slides can be found on the shareholders section of our website.
Operator: For those who have not had a chance to watch the presentation, a replay recording, along with the accompanying slides, can be found on the shareholder section of our website. Thank you to all those who join us in person at our headquarters for the live presentation.
Speaker Change: Thank you to all those who join us in person at our headquarters for the live presentation.
Speaker Change: Let's move now to some financial highlights for this first quarter of fiscal 2025, our management and advisory fee revenue grew by 33%, while our fee related earnings also grew by 33% versus the prior year period.
Operator: Let's move now to some financial highlights. For this first quarter of fiscal 2025, our management and advisory fee revenue grew by 33 percent, while our fee related earnings also grew by 33 percent versus the prior year period. This translated into gap EPS of $1.47, based on $59 million of gap net income, and non-gap EPS of $1.51 based on $81 million of adjusted net income. We have also declared a dividend of 49 cents per share of this quarter. This keeps us on track for the targeted full fiscal 2025 dividend of $1.96 per share, which represents a 10% increase from the prior fiscal year.
Speaker Change: This translated into GAAP EPS of $1 47.
Speaker Change: Based on $59 million of GAAP net income and non-GAAP EPS of $1.51 based on $81 million of adjusted net income.
Eric: We have also declared a dividend of 49 per share. This quarter. This keeps us on track for the targeted full fiscal 2025 dividend of $1 96 per share, which represents a 10% increase from the prior fiscal year with that I'll now turn the call over to Eric.
Eric Hirsch: With that, I'll turn the call over to Eric. Thank you, John, and good morning, everyone. We continue to experience strong momentum and have recorded another outstanding quarter. None of this happens by accident, particularly not in this market, and one and I are proud of the team here, and their unwavering focus on delivering excellence to our customers. That focus is what results in our ability to expand our brand and continue to grow.
Eric: Thank you John and good morning, everyone. We continue to experience strong momentum and have recorded another outstanding quarter. None of this happens by accident, particularly not in this market and one and I are proud of the team here and their unwavering focus on delivering excellence to our customers.
Speaker Change: That focus is what results in our ability to expand our brand and continue to grow.
Operator: Let's move now to our total asset footprint. This stood at $940 billion and represents a 15% increase to our footprint year over year. AUM stood at $130 billion to quarter end, and grew $13 billion or 11%. The growth came from both our specialized funds and our customized separate accounts. AUA was up $110 billion, or 16% year over year. Primarily, the result of market value growth and the addition of technology solutions and back office mandates. Turning out a fearing AUM, we continue to generate very strong growth across our specialized fund platform and more modest growth across our separate accounts.
Speaker Change: Let's move now to our total asset footprint. This stood at $940 billion and represents a 15% increase to our footprint year over year.
Speaker Change: AUM stood at $130 billion at quarter end and grew $13 billion or 11%.
Speaker Change: The growth came from both our specialized funds.
Speaker Change: And our customized separate accounts.
Speaker Change: <unk> was up 110 billion or 16% year over year.
Speaker Change: Primarily the result of market value growth and the addition of technology solutions and back office mandates.
Speaker Change: Turning now to fee, earning AUM, we continue to generate very strong growth across our specialized fund platform and more modest growth across our separate accounts. It is worth emphasizing that increasingly we are seeing separate account mandates include meaningful allocation to our specialized funds and that AUM, we'd get captured under specialized funds.
Operator: It is worth emphasizing that increasingly we are seeing separate account mandates include meaningful allocation to our specialized funds, and that AUM would get captured under specialized funds, not separate accounts. This is a good thing. Our total fearing AUM stood at $67.7 billion and grew $8 billion, or 13%, relative to the prior year period. Taking separately, $2.4 billion of net fearing AUM came from our customized separate accounts, and over the same time period, $5.7 billion came from our specialized fund. As we detailed in our shareholder day, our blended fee rate across the platform has been steadily increasing year over year.
Speaker Change: Not separate accounts.
Speaker Change: This is a good thing our total fee, earning AUM stood at $67 7 billion and grew $8 billion or 13% relative to the prior year period.
Speaker Change: Taken separately $2 $4 billion of net fee, earning AUM came from our customized separate accounts and over the same time period five $7 billion came from our specialized funds.
Speaker Change: As we detailed in our shareholder day, our blended fee rate across the platform has been steadily increasing year over year.
Operator: 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 remains impressive. When we went public in 2017, our blended fee rate was 57 basis points. Today, it stands at 61 basis points, excluding the impact from retro fees.
Speaker Change: 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 remains impressive when we went public in 2017, our blended fee rate was 57 basis points today. It stands at 61 basis points excluding.
Speaker Change: The impact from retro fees.
Operator: Moving now to additional detail on our customized separate accounts, we continue here to see growth coming from clients across type, mandate size, and geographic location. As we highlighted on our last call, our separate account business continues to grow through finding new clients, some of which have already invested in private markets, and for others, this is their first foray. The bulk of our flows continue to be driven by our existing clients who re-up with us as they look to maintain and grow their exposure to the asset class. This trend has remained steady since our IPO and remains the case through this fiscal quarter, where the balance of customized separate account net-fearing AUM stood at $38.2 billion and grew by $2.4 billion or 7% over the last 12 months.
Speaker Change: Moving now to additional detail on our customized separate accounts, we continue here to see growth coming from clients across type mandate size and geographic location as we highlighted on our last call. Our separate account business continues to grow through finding new clients some of which have already invested in private markets and for others. This is.
Speaker Change: Their first foray the bulk of our flows continued to be driven by our existing clients, who re up with us as they look to maintain and grow their exposure to the asset class. This trend has remained steady since our IPO and remains the case through this first this fiscal quarter or the balance of customized separate account net fee, earning AUM stood.
Speaker Change: At $38 2 billion and grew by $2 4 billion or 7% over the last 12 months.
Speaker Change: Okay.
Operator: Let's move now to our specialized funds, where momentum continues to be strong. The yearning AUM here stood at $29.5 billion at quarter end. Over the past 12 months, we achieved positive net inflows of $5.7 billion, 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 ever-gain platform.
Speaker Change: Let's move now to our specialized funds where momentum continues to be strong.
Speaker Change: Fee, earning AUM here stood at $29 5 billion at quarter end over the past 12 months, we achieved positive net inflows of $5 7 billion.
Speaker Change: Representing an increase of 24% relative to the prior year period.
Speaker Change: This growth stemmed from additional closes for funds currently in market.
Speaker Change: Robust investment activity and continued expansion of our evergreen platform.
Operator: Now moving to the drivers of specialized fund flows. Let's start with our latest secondary fund. On June 18, we announced the final close for our 6th secondary fund, with $5.6 billion in total commitments. This fund marks our largest-ever institutional fund raise and represents an over 40% increase in size relative to the prior fund, which held its final close in 2021. The fund's diverse group of investors include corporate and public pension funds, capped heartly plans, sovereign wealth funds, endowments, foundations, private wealth platforms, and other financial institutions. On our last call, we mentioned that we held a close in April that totaled $618 million of LP commitments and generated $11 million of retro fees.
Speaker Change: Now moving to the drivers of specialized fund flows.
Speaker Change: Let's start with our latest secondary fund.
Speaker Change: On June 18th we announced the final close for our six secondary fund with $5 6 billion and total commitments.
Speaker Change: This fund marks our largest ever institutional fundraise and represents an over 40% increase in size relative to the prior fund which held its final close in 2021.
Speaker Change: The funds diverse group of investors include corporate and public pension funds Taft Hartley plans sovereign wealth funds endowments foundations private wealth platforms and other financial institutions.
On our last call, we mentioned that we hope to close in April that totaled $618 million of LP commitments and generated $11 million of retro fees.
Operator: The final close for this fund ended up totaling nearly $569 million and generated another $9 million of retro fees. This brings the total raised in the quarter to nearly $1.2 billion and retro fees of nearly $21 million. The final close exceeded our expectations, and was the direct result of the dogged determination of our team, and the face placed in us by clients who were enthused how the portfolio was positioned, and the pipeline of attractive deals in front of us. I am extremely proud of the work and dedication my colleagues put forth during this fund raise, where we dealt with a crowded field, a choppy economic backdrop, and an unstable global geopolitical landscape.
Speaker Change: The final close of this fund ended up totaling nearly $569 million and generated another $9 million of retrofits.
Speaker Change: This brings the total raised in the quarter to nearly $1 $2 billion in retro fees of nearly $21 million.
Speaker Change: The final close exceeded our expectations and was the direct result of the dogged determination of our team and the faith placed in us by clients, who are enthused at how the portfolio is positioned and the pipeline of attractive deals in front of us I.
Speaker Change: I am extremely proud of the work and dedication of my colleagues put forth. During this fundraise, where we dealt with a crowded field of choppy economic backdrop, and an unstable global geopolitical landscape.
Operator: At Conclusion, we took in over 228 investors across 31 countries, and we appreciate their support and trust, and we will strive to exceed their expectations. Investment activity remains fulsome and attractive, and as of June 30th, the fund was 40% committed, and we have a strong pipeline in front of us.
Michael Brown: In conclusion, we took in over 228 investors across 31 countries, and we appreciate their support and trust, and we will strive to exceed their expectations.
Speaker Change: Conclusion, we took in over 228 investors across 31 countries and we appreciate their support and trust and we will strive to exceed their expectations.
Speaker Change: Investment activity remains fulsome and attractive and as of June 30th The fund was 40% committed and we have a strong pipeline in front of us.
Operator: Turning now to some first-close announcements for two of our flagship products. First up is our Equity Opportunities Fund, which is our closed-end fund that co-invests alongside our fund managers in equity transactions. As a approximately $2.1 billion. We are proud to announce that we held the first close for our sixth Equity Opportunities Fund on June 30th with over $523 million of LP commitments. Similar to our prior fund, this fund will have two economic arrangements for investors where management fees are based on either committed capital with a lower-carried interest rate or net-invested capital with a higher-carried interest rate.
Speaker Change: Turning now to some first close announcements for two of our flagship products first up is our equity opportunities fund, which is our closed end funds that co invest alongside our fund managers and equity transactions as a quick reminder, our fifth equity opportunities fund closed in December of 2022 at approximately $2.
Speaker Change: $1 billion.
Speaker Change: We are proud to announce that we held the first close for our six equity opportunities fund on June 30th with over $523 million of LP commitments.
Speaker Change: Similar to our prior fund this fund will have two economic arrangements for investors, where management fees are based on either committed capital with a lower carried interest rate or net invested capital with a higher carried interest rate for context. The prior funds mix resulted in 49% of the dollar.
Operator: For context, the prior fund's mix resulted in 49% of the dollars raised based on committed capital and 51% based on net-invested capital. While we don't know the breakout of this next fundraise until the end, the capital raised in this first close resulted in 48% on capital committed and 52% on net-invested. As we hold additional closes for this fund, we'll provide the split and associated retrofeas with the committed capital often. Now stepping back, we are pleased with the start of this fundraise so far. We have built a strong platform of investing directly alongside the world's leading fund managers, and we look forward to providing you with future updates as we progress through this fundraise.
Speaker Change: Raise based on committed capital and 51% based on net invested capital while we don't know the breakout of this next fundraise until the end the capital raised in this first close resulted in 48% on capital committed and 52% on net invested as we hold additional closes for this fund will.
Speaker Change: Provided the split and associated retro fees with the committed capital option now stepping back we are pleased with the start of this raise so far we have built a strong platform of investing directly alongside the world's leading fund managers and we look forward to providing you with future updates as we progress through this fund raise.
Operator: Let's now turn 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 net-invested capital. For the benefit of those less familiar with the series, it is less about targeting a set amount of dollars to raise, as you would traditionally see across funds with a multi-year deployment period, and more about ensuring that we size the product in line with the current opportunity set. This inevitably will lead to some size variability from series to series.
Speaker Change: Let's now turn to our strategic opportunities fund, which is our annual direct credit fund targeting the institutional LP.
Speaker Change: As a refresher the series of funds as effectively always end market as we raise and deploy the capital with short investment periods and charge management fees on net invested capital for the benefit of those less familiar with the series. It is less about targeting a set amount of dollars to raise as you would traditionally see across funds with a multi year deployment period and.
Speaker Change: More about ensuring that we size the product in line with the current opportunity set this inevitably will lead to some size variability from series. The series. We are currently in market with our ninth series and on June 28th we held the first close for this latest series with nearly $150 million of commitments.
Operator: We are currently in market with our ninth series, and on June 28th, we held the first close for this latest series with nearly $150 million of commitments. Our Strategic Opportunities Fund remains a key component of our overall private credit platform that includes our discretionary separate accounts and our evergreen platform. If you total our prior eight funds, we have raised nearly $5 billion for this program going back to 2015.
Speaker Change: Our strategic opportunities fund remains a key component of our overall private credit platform that includes our discretionary separate accounts and our evergreen platform. If you total our prior eight funds we have raised nearly $5 billion of this program going back to 2015.
Operator: Now, onto our evergreen funds. During our shareholder day, we highlighted the opportunity we believe is in front of us related to continued growth of both our existing evergreen product offerings and new funds yet to launch. As of June 30th, total AUM across our three existing offerings stood at nearly $7.5 billion. Monthly net inflows remained strong as we averaged over $330 million for the second calendar quarter of 2024, which was up from $255 million for the first quarter. For our US offering, in a little over a year of having two wirehouse relationships, we have received nearly $1.2 billion of net inflows from that channel and impressive accomplishment, and we thank them for this successful partnership.
Speaker Change: Now onto our evergreen funds during our shareholder day, we highlighted the opportunity. We believe is in front of us related to continued growth of both our existing evergreen product offerings and new funds yet to launch.
Speaker Change: As of June 30th total AUM across our three existing offerings stood at nearly seven $5 billion.
Speaker Change: Monthly net inflows remained strong as we averaged over $330 million for the second calendar quarter of 2024, which was up from $255 million for the first quarter.
Speaker Change: For our U S offering and a little over a year of having two wire house relationships. We have received nearly $1 $2 billion of net inflows from that channel an impressive accomplishment and we thank them for this successful partnership.
Operator: We remain optimistic around the prospects for continued expansion of this piece of our business, and our success to date gives us confidence that we are continuing to establish ourselves as a trusted partner and solution provider.
Speaker Change: We remain optimistic around the prospects for continued expansion of this piece of our business and our success to date gives us confidence that we are continuing to establish ourselves as a trusted partner and solution provider.
Eric Hirsch: Peter, moving on to the technology side. On June 26, we announce the latest addition to our HL Innovations portfolio, Daphne Technologies. Daphne was founded in 2022 through a collaboration between Apollo Global Management and Motive Partners to transform the management and transmission of data between asset managers and their investors and channel partners. Daphne will allow asset managers to digitize fund data and publish it with a click of a button. It is designed to serve multiple channels such as institutional investors, investment consultants, independent broker-dealers, and RIAs. This data can be transmitted and consumed via a web-based interface or API.
Speaker Change: Moving on to the technology side.
Speaker Change: On June 26, we announced the latest addition to our HL innovations portfolio Daphne technologies Daphne.
Speaker Change: Daphne was founded in 2022 through a collaboration between Apollo Global management and motive partners to transform the management and transmission of data between asset managers and their investors and channel partners.
Speaker Change: Daphne will allow asset managers to digitize fund data and publish it with a click of a button.
Speaker Change: It is designed to serve multiple channels such as institutional investors investment consultants.
Speaker Change: Independent broker dealers and <unk>. This data can be transmitted and consumed via a web based interface or API.
Eric Hirsch: As part of our partnership, Daphne has integrated with Cobalt, our proprietary private market's data, analytics, forecasting, and diligence platform. Daphne enables straight-through data processing by which alternative asset managers can directly transmit fund information into Cobalt, thus simplifying what has traditionally been a manual and cumbersome process for both asset managers and their investors and channel partners.
Speaker Change: As part of our partnership Daphne has integrated with cobalt, our proprietary private markets data analytics forecasting and diligence platform Daphne enables straight through data processing by which alternative asset managers can directly transmit fund information into cobalt, thus simplifying what has traditionally been a manual.
Speaker Change: And cumbersome process for both asset managers and their investors and channel partners.
Eric Hirsch: Daphne represents our continued efforts to make the private markets more transparent and easier to access, and we are excited for what is to come with this new partnership and investment. We are proud to be the first outside investor and strategic partner invited in, and we look forward to working closely with Apollo and Motive to drive Daphne's success.
<unk> represents our continued efforts to make the private markets more transparent and easier to access and we are excited for what is to come with this new partnership and investment we are proud to be the first outside investor and strategic partner invited in and we look forward to working closely with Apollo and motive to drive daphne's success.
Griffith Norville: I'd like to now hand the call over to my partner, Griff Norville, to provide you with more detail around the Hamilton Lane Technology Solutions offerings. Thank you, Eric, and good morning. I'm Griff Norville, Managing Director and Head of Technology Solutions. I've been with Hamilton Lane for more than 14 years and have led the build-out of several of our data and technology initiatives over that time.
Speaker Change: I'd like to now hand, the call over to my partner Griffith Norville to provide you with more detail around the Hamilton Lane technology solutions offerings.
Griffith Norville: Thank you Eric and good morning.
Griffin Norville: Griffin <unk>, managing director and head of Technology solutions.
Griffin Norville: I've been with Hamilton Lane for more than 14 years and have led to build out of several of our data and technology initiatives over that time.
Griffith Norville: I want to take this opportunity to expand on our technology solutions business, the combination of our in-house bill, Cobalt technology offering, and our reporting services offering, including why we believe it differentiates us. For decades, Hamilton Lane has amassed a proprietary database of private market, fund, and portfolio company data. Power data advantage, along with our expertise in how to use the data, is a key differentiator in attracting new clients. Cobalt is built for front-office investment professionals and provides private market-specific analytics, benchmarking, portfolio construction, and diligence functions. Client portfolios can consist of hundreds of positions, and the documentation received from these investments remains unstructured and opaque.
Griffin Norville: I want to take this opportunity to expand on our technology solutions business.
Griffin Norville: A combination of our in house built cobalt technology, offering and our reporting services offering, including why we believe it differentiates us.
Griffin Norville: For decades, Hamilton Lane has amassed a proprietary database of private market fund and portfolio company data.
Mario Giannini: Our data advantage, along with our expertise in how to use data, is a key differentiator in attracting new clients.
Our data advantage along with our expertise in how to use the data is a key differentiator in attracting new clients.
Griffin Norville: Cobalt is built for front office investment professionals and provides markets private market specific analytics benchmarking portfolio construction and diligence functions.
Griffin Norville: Client portfolios can consist of hundreds of positions and the documentation received from these investments remains unstructured and opaque.
Griffith Norville: Our clients desire a service to gather, extract, and validate data, and we offer a differentiated solution to our scale, expertise, and technology. As a result of growing our reporting business, Hamilton Lane's database is sourced from both our assets under advisement, or AUA, and our AUM. Notably, this data is derived from the primary source of information, extracted directly from fund financials, as opposed to public documents or unverified surveys. The client base for technology solutions is diverse, bi-geography, and institution type.
Griffin Norville: Our clients' desire a service to gather extract and validate data and we offer a differentiated solution through our scale expertise and technology.
Speaker Change: As a result of growing our reporting business Hamilton Lane's database is sourced from both our assets under advisement.
Speaker Change: And our AUM.
Speaker Change: Notably this data is derived from the primary source of information extracted directly from fund financials as opposed to public documents or unverified surveys.
Speaker Change: The client base for technology solutions is diverse by geography and institution type.
Jeffrey Armbrister: Today, we have over 200 clients subscribing to these services and over $28 million in annual contract value. Our average net revenue and renewal rate on contracts over the last four years is above 100%. The nature of our contracts and our consistent sales efforts have made this business highly predictable, and it has effectively scaled at a 30% revenue cater for over four years with a strong and growing pipeline. We also package access to our technology with our global investment solutions, a key differentiator in winning competitive processes, securing larger commitments, and retaining existing clients. Over half of our technology solutions clients have active fee earning AUM, with the remaining set of clients representing potential for new fundraising opportunities. Technology solutions clients are tied to over 30% of our fee earning AUM, and we expect this percentage to continue to grow. Overall, the private markets continue to move in the direction of greater transparency and deeper analytics. Blinds look to Hamilton Lane as their partner in achieving these goals, and in turn, access to our technology solutions deepens our relationships with them. With that, I'd like to thank you for the opportunity to share what we believe is an exciting business for us, and I'll now hand the call over to Jeff to cover the financials. Thank you, Griff, and good morning everyone.
Speaker Change: Today, we have over 200 clients subscribing to these services and over $28 million in annual contract value.
Speaker Change: Our average net revenue renewal rate on contracts over the last four years is above 100%.
Speaker Change: The nature of our contracts and our consistent sales efforts have made this business highly predictable and it has effectively scaled at a 30% revenue CAGR for over four years with a strong and growing pipeline.
We also package access to our technology with our global investment solutions.
Speaker Change: A key differentiator in winning competitive processes, securing larger commitments and retaining existing clients.
Speaker Change: Over half of our technology solutions clients have active fee, earning AUM with the remaining set of clients representing potential for a new fundraising opportunities.
Technology solutions clients are tied to over 30% of our fee, earning AUM and we expect this percentage to continue to grow.
Speaker Change: Overall, the private markets continue to move in the direction of greater transparency and deeper analytics.
Speaker Change: Clients look to Hamilton Lane as their partner in achieving these goals and in turn access to our technology solutions deepens, our relationships with them.
Speaker Change: With that I'd like to thank you for the opportunity to share. What we believe is an exciting business for us and I will now hand, the call over to Jeff to cover the financials.
Jeff: Thank you, Chris and good morning, everyone.
Jeffrey Armbrister: For the first quarter of fiscal 2025, we achieved strong growth in our business with management and advisory fees up 33% versus a prior year period. Our specialized funds revenue increased by $32.1 million or 56% compared to the prior year period, one primarily by $3.3 billion increased to fee earning AUM in our upper green platform and over $3.1 billion raised in our latest secondary fund over the last 12 months. Retro fees for the quarter included $20.7 million from our secondary fund that held its final closes versus $3.9 million from our secondary fund that held closes in the prior year period. As a reminder, investors that come into later closes during a fundraiser pay retroactive fees dating back to the fund's first close. For the remainder of the fiscal year, our current direct equity funded market will be the primary driver of retro fees now that our secondary fund has finished fundraising. Moving on to customize separate accounts, revenue increased 1.7 million dollars or 5% compared to the prior year period due to the addition of new accounts, reels from existing clients and continued investment activity. Revenue from advisory reporting, monitoring data and analytics offerings increased by 1.1 million dollars compared to the prior year period due primarily to increases in revenue coming from our technology solutions. Lastly, the final component of revenue is incentives.
Jeff: For the first quarter of fiscal 2025, we achieved strong growth in our business with management and advisory fees up 33% versus the prior year period.
Jeff: Our specialized funds revenue increased by $32 1 million or 56% compared to the prior year period.
Jeff: This was driven primarily by a $3 $3 billion increase in fee, earning AUM and our evergreen platform and over $3 1 billion raised in our latest secondary fund over the last 12 months.
Jeff: Retrofits for the quarter included $27 million from our secondary fund that held its final closes versus $3 $9 million from our secondary fund that held closes in the prior year period.
Jeff: As a reminder, investors that come into later closes during a fundraise pay retroactive fees dating back to the fund's first close.
Jeff: For the remainder of the fiscal year, our current direct equity funded market will be the primary driver of retro fees now that our secondary fund has finished fundraising.
Jeff: Moving on to customized separate accounts.
Speaker Change: Revenue increased $1 7 million or 5% compared to the prior year period due to the addition of new accounts re ups from existing clients and continued investment activity.
Speaker Change: <unk> from advisory reporting monitoring data and analytics offerings increased by $1 1 million compared.
Speaker Change: Compared to the prior year period, due primarily to increases in revenue coming from our technology solutions.
Speaker Change: Lastly, the final component of revenue is incentive fees.
Jeffrey Armbrister: Centuries for the quarter total $56.8 million, and are up 189% relative to the prior year period. Let's now turn to our unrealized carry balance. The balance is up 12% from the prior year period, while having recognized $139 million as incentives during the last 12 months. The unrealized carry balance now stands at approximately $1.2 million.
Speaker Change: <unk> for the quarter totaled $56 $8 million and are up 189% relative to the prior year period.
Speaker Change: Let's now turn to our unrealized carry balance.
Speaker Change: The balances up 12% from the prior year period, while having recognized $139 million of incentive fees during the last 12 months.
Speaker Change: The unrealized carry balance now stands at approximately $1 2 billion.
Jeffrey Armbrister: Moving to expenses, total expenses for the quarter increased $37 million compared with a prior year period. Total compensation and benefits increased by $34.3 million, driven primarily by higher compensation associated with increased amount of incentive and management fees relative to prior year period. The related expenses, including the third party commissions related to our U.S. Evergreen product being offered on wirehouses that we've discussed on prior calls. The related earnings or FRA were up 33% relative to the prior year period as a result of the management fee and fee earning AUM growth discussed earlier. FRA margin for the quarter came in at 43%.
Speaker Change: Moving to expenses total expenses for the quarter increased $37 million compared with the prior year period.
Speaker Change: Compensation and benefits increased by $34 $3 million, driven primarily by higher compensation associated with the increased amount of incentive and management fees relative to the prior year period.
Speaker Change: G&A increased $2 $7 million, driven primarily by revenue related expenses, including the third party commissions related to our U S. Evergreen product being offered on warehouses that we've discussed on prior calls.
Speaker Change: Fee related earnings or FRE, we're up 33% relative to the prior year period as a result of the management fee and fee, earning AUM growth discussed earlier FRE.
Speaker Change: <unk> margin for the quarter came in at 43%.
Jeffrey Armbrister: I'll wrap up here with some commentary on our balance sheet. Our largest asset continues to be our investments alongside our clients in our customized separate accounts and specialized funds. Over the long term, we view these investments as an important component of our continued growth and will continue to invest our balance sheet capital alongside our clients. In regard to our liabilities, we continue to be modestly leopard.
Speaker Change: I'll wrap up here with some commentary on our balance sheet.
Jacqueline Rantanen: Our largest asset continues to be our investments alongside our clients in our customized separate accounts and specialized funds.
Speaker Change: Our largest 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 will continue to invest our balance sheet capital alongside our clients in.
Speaker Change: In regard to our liabilities, we continue to be modestly levered with that we will now open up the call for questions.
Operator: With that, we will now open up the call for questions. Thank you, ladies and gentlemen. If you'd like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star two. One moment, please, for your first question.
Speaker Change: Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: <unk> a question please press star two.
Please Sir your first question.
Kenneth Worthington: Your first question comes from Kenneth Worthington from JP Morgan. Please go ahead.
Speaker Change: Your first question comes from Ken Worthington from Jpmorgan. Please go ahead.
Alex Perence: Hi, this is Alex Perence, the United African. Thanks so much for taking our question, and congrats on the strong quarter. Just wanted to double-click on the on a data point, I think, especially what we've seen with some of the other asset managers out there, notably with the recent acquisition that BlackRock completed. Can you talk a bit more about current efforts and perhaps where you can see the monetization of the data changing? What sort of data products currently just Hamilton Lane offer and how do you think about the sales around this data, VCV, some of the different sales efforts and teams that you may have?
Alex Bernstein: Hi, This is Alex Bernstein on for Dan. Thanks, So much for taking my question and congrats on the strong quarter just wanted to double double click on a data point I think especially what we've seen with some of the other asset managers out there, notably with the recent acquisition that Blackrock completed can you talk a bit more about current efforts and perhaps where you can see.
Speaker Change: The monetization of the data changing.
Speaker Change: What sort of data products currently Hamilton Lane offer.
Speaker Change: How do you think about the sales around this data vis vis some of the different sales efforts and teams that you may have.
Alex Perence: Is this really setting around cobalt or other Hamilton Lane centric products and sales related to those efforts?
Speaker Change: Is this really centered around cobalt or are there other Hamilton lane centric products.
Speaker Change: Sales related to those efforts and finally, what more can be done with regarding to this process and ensuring that there's no distraction from the growth of the core business, which of course continues to perform thank you.
Alex Perence: And finally, what more can be done with regarding this process and ensuring that there's no distracting from the growth of the core business, which of course continues to perform.
Erik Hirsch: Thanks, Alex. It's Erik. I'll take that.
Eric Hirsch: Thanks Alex, it's Eric, I'll take that. So, from a data standpoint, we are, I would say, directly and indirectly, as Griff alluded to, monetizing the data. So the direct is the cobalt business and that is really a SaaS business. So we're selling subscriptions to that. Griff went over the numbers there; growth continues to be strong, double digit. Cobalt has a dedicated sales team that is separate and apart from what we see on the institutional or the private wealth side. And so we see a very large addressable market there today. We're really only selling to LPs, and that market is significant and vast.
Speaker Change: Thanks, Alex it's Eric I'll take that so.
Speaker Change: So from a data standpoint, we are I would say directly and indirectly as Greg alluded to monetizing the data. So the direct is the cobalt business and that is really a SaaS business. So we're selling subscription so that <unk> won over the numbers. There growth continues to be strong double digit cobalt as a dedicated sales team that is.
Speaker Change: Separate and apart from what we see on the institutional or the private wealth side and so we see a very large addressable market. There today, we're really only selling to Lps.
Greg: And that market is significant and vast the indirect is what was what grip alluded to which is we're really tying it together as a way to win broader pieces of business. So the asset management tie in.
Eric Hirsch: The indirect is what Griff alluded to, which is we're really tying it together as a way to win broader pieces of business. So the asset management tie-in, again, so it takes secondary funds as an example, crowded space, a lot of formidable competitors out there with similar secondary offerings. and again, for us, one of those key differentiators is collecting us gives the client, you know, preferred access to cobalt, and we use that to win a lot of ties or a lot of jump balls. And so that is, that's what we're doing today.
Speaker Change: So it takes secondary fund as an example, crowded space a lot of formidable competitors out there with similar secondary offerings.
Speaker Change: And again for US one of those key Differentiators is.
Speaker Change: Selecting us gives the client preferred access to cobalt and we use that to win a lot of times, where a lot of jump balls and so that is that's what we're doing today.
Eric Hirsch: There are certainly other ways to monetize data. We evaluate those continually. We have a variety of strategic discussions, part of the technology businesses that we're also investing in. Some number of them benefit from some of our data. And so that also helps, again, with us as a preferred technology partner. So we think we have a tremendously powerful database. It's one that continues to grow, as the firm continues to grow in scale. It's all verified direct source data, which is very different than a number of the other databases out there. And so we think this is a valuable asset.
Speaker Change: Certainly other ways to monetize data.
Speaker Change: Evaluate those continually we have a variety of strategic discussions part of the technology businesses that we're also investing in some number of them benefit from some of our data and so that also helps again with us as a preferred technology partner. So we think we have a tremendously powerful database. It's one that continues to grow.
Speaker Change: <unk> as the firm continues to grow and scale. It's all verified direct sourced data, which is very different than a number of the other databases out there and so we think this is a valuable asset we're monetizing it today and we'll continue to look for ways to do that more in the future.
Eric Hirsch: We're monetizing it today, and we'll continue to look for ways to do it more in the future.
Alex Perence: Thanks so much.
Speaker Change: Thanks, so much.
Alex Blostin: Your next question comes from Alex Blostin from Goldman Sachs.
Speaker Change: Your next question comes from Alex Blaustein from Goldman Sachs. Please go ahead.
Alex Blostin: Please go ahead.
Anthony: Good morning. This is Anthony on for Alex. I appreciate the color on the Evergreen platform, and it's nice to see momentum continuing.
Speaker Change: Hi, Good morning. This is Anthony on for Alex.
Anthony: The color on the evergreen platform and it's nice to see momentum continuing.
Eric Hirsch: Where do you expect the next layer of growth to come from, and how do you plan on balancing getting on the new wirehouses versus rolling out new products? Thanks. Thanks, Anthony. Eric, I think it's just as you noted. I think it's a combination of factors. Ron, we're very happy with the growth that we've been achieving so far, and that's really been the result of both growth in the wirehouse relationships as well as growth in our direct sales efforts. Both of those will continue. We expect to add more distribution partners in the future, and we will certainly expect to take our current three offerings in that channel up to more.
Anthony: Expect the next leg of growth to come from and how do you plan on balancing getting on the new warehouses versus rolling out new products.
Eric: Thanks, Anthony Eric I think it's just as you just as you noted I think it's a combination of factors one we're very happy with the growth that we've been achieving so far and that's really been the result of both growth in the wire house relationships as well as growth in our direct sales efforts. Both of those will continue we expect to add.
Eric: More distribution partners in the future.
Eric: And we will certainly expect to take our current three offerings in that channel up to more so I think as we sort of talked about this over the next coming years again, we keep saying this is a marathon not a sprint.
Eric Hirsch: So I think as we sort of talk about this over the next coming years, again, we keep saying this is a marathon, not a sprint, but it's going to be a combination of all of the above. More channel partners, more direct distribution efforts, more products.
Eric: Well, it's going to be a combination of all of the above more channel partners more direct distribution efforts more products.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask us a question, please press star one.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star one.
Stephen E. Muff: Your next question comes from Stephen E. Muff from Morgan Stanley.
Stephanie <unk>: Your next question comes from Stephanie <unk> from Morgan Stanley. Please go ahead.
Stephanie Ma: Please go ahead. Hey, good morning. This is definitely on some mic. Maybe just one on your recent announcement of the Insurance Solutions team. Can you just remind us of your insurance footprint today, and what does this team allow you to do differently or accelerate? And what are your aspirations for this channel over time? Thanks, Stephanie.
Anthony Eric: Hey, Good morning. This is Anthony on for Mike Maybe just one on your recent announcement of the insurance solutions team can you just remind us of your insurance footprint today and what does this penalize you do differently or salary and what are your aspirations for this channel over time.
Erik Hirsch: Thanks, Stephanie. It's Erik.
Eric Hirsch: It's Eric. I think this is really more of an evolution, not a revolution. We've been selling into the insurance channel for quite some time. We have a number of prominent relationships in that space. I think the announcement that you saw last week was really directly reflecting our expansion of the resources we have. As you know, the insurance channel requires oftentimes unique structures to access the private markets. And so we're just bringing on additional capability for structuring and distribution. So our aspiration there is simple. We have a good footprint today that we believe we can make better and bigger over time.
Eric: Thanks, Stephanie it's Eric I think this is really more of a of an evolution not a revolution, we've been selling into the insurance channel for quite some time, we have a number of prominent relationships in that space I think the announcement that you saw last week was really directly reflecting our expansion of the resources we have.
Adam Beatty: I think this is really more of an evolution, not a revolution. We've been selling into the insurance channel for quite some time. We have a number of prominent relationships in that space. I think the announcement that you saw last week was really directly reflecting our expansion of the resources we have. As you know, the insurance channel often requires unique structures to access private markets. And so we're just bringing on additional capability for structuring and distribution. So our aspiration there is simple. We have a good footprint today that we believe we can make better and bigger over time.
Eric: As you know the insurance channel requires oftentimes unique structures to access the private markets and so we're just bringing on additional capability for structuring and distribution. So our aspiration. There is simple we have a good good footprint today that we believe we can make better and bigger over time.
Stephanie Ma: Great. Thank you.
Daphne: Great. Thank you and maybe just as a follow up on Daphne just hoping to get more color on how integrated is cobalt today is this a work in progress and what are the opportunities to do more over time with Anthony Thanks.
Stephanie Ma: Maybe this is a follow-up on Stephanie. This is hoping to get more color.
Stephanie Ma: How integrated is public today? Is this a work in progress? And what are the opportunities to do more over time with Stephanie?
Griffith Norville: So today, this is, by the way, thanks for the questions, Stephanie.
Daphne: So today this is by the way thanks for the question Stephanie This is Chris.
Griffith Norville: This is Griff. Today, Cobalt is fully integrated with Daphne. We are receiving data from general partners that are working with Daphne. Daphne is a young company and is working to scale, and what we are helping them do is introduce them to our GP partners in order to tell the story of Daphne's value add and increase the amount of data flowing directly into our systems via Daphne.
Daphne: Today <unk> is fully integrated with Daphne we are receiving data from general partners that are working with Daphne.
Daphne is a young company and is working to scale and what we are helping them do is introduce them to our GP partners in order to tell the story of daphne's value add and increase the amount of data flowing directly into our systems via Duffy.
Daphne: Okay.
Griffith Norville: Great, thank you.
Daphne: Great. Thank you.
Eric Hirsch: And there are no further questions; at this time, I will turn the call back over to Erik Hirsch for closing remarks. Again, very strong quarter.
Operator: And there are no further questions at this time. I will turn the call back over to Erik Hirsch for closing remarks.
Daphne: And there are no further questions at this time I will turn the call back over to Erik Hirsch for closing remarks.
Erik Hirsch: Again very strong quarter. We appreciate everyone's time, we appreciate the questions and we appreciate the partnership thank you very much.
Operator: We appreciate everyone's time. We appreciate the questions, and we appreciate the partnership. Thank you very much.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.
Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.
Speaker Change: [noise].