Q1 2027 Hamilton Lane Inc Earnings Call

August 4, 2026

Operator: Good morning, ladies and gentlemen, and welcome to the Hamilton Lane Q1 fiscal year 2027 Earnings Call. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Tuesday, 04 August 2026. I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

Speaker #1: Good morning, ladies and gentlemen, and welcome to the Hamilton Lane first quarter fiscal year 2027 earnings call. At this time on Lines On, Alison only mode.

Speaker #1: presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Tuesday, August 4, 2026.

Speaker #1: I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

Speaker #2: Thank you, Joanna. Good morning and welcome to the Hamilton Lane Q1 fiscal year 2027's earnings call. Today I will be joined by Erik Hirsch, Co-Chief Executive Officer and Jeff Armbrister, Chief Financial Officer.

John Oh: Thank you, Joanna. Good morning and welcome to the Hamilton Lane Q1 fiscal year 2027 Earnings Call. Today, I will be joined by Erik Hirsch, Co-Chief Executive Officer, and Jeff Armbrister, Chief Financial Officer. Earlier this morning, we issued a press release and a slide presentation, which are available on our website. Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. These forward-looking statements do not guarantee future events or performance and are subject to risks and uncertainties that may cause our actual results to differ materially from those projected.

Speaker #2: Earlier this morning we issued a press release and a slide presentation which are available on our website. Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements.

Speaker #2: Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. These forward-looking statements do not guarantee future events or performance, and are subject to risks and uncertainty that may cause our actual results to differ materially from those projected.

Speaker #2: For discussion of these risks, please review the cautionary statements and risk factors included in the Hamilton Lane fiscal 2026 10-K and subsequent reports we file with the SEC.

John Oh: For a discussion of these risks, please review the cautionary statements and risk factors included in the Hamilton Lane fiscal 2026 10-K and subsequent reports we file with the SEC. Except as required, we undertake no obligation to update or revise any of these forward-looking statements, which are made only as of today. 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. Our detailed financial results will be made available when our 10-Q is 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.

Speaker #2: These 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 shareholder section of the Hamilton Lane website.

Speaker #2: Our detailed financial results will be made available when our 10-Q is filed. Please note that nothing on this call represents an offer to sell, or a solicitation of an offer to purchase, interests in any of Hamilton Lane's products.

Speaker #2: Let's begin with the highlights, and I'll start with our total asset footprint. At quarter end, our total asset footprint stood at over $1 trillion and represents an 8% increase to our footprint year over year.

John Oh: Let's begin with the highlights. I'll start with our total asset footprint. At quarter end, our total asset footprint stood at over $1 trillion and represents an 8% increase to our footprint year over year. AUM stood at $146 billion and grew $5 billion or 4% compared to the prior year period. AUA came in at $914 billion and grew $69 billion or 8% relative to the prior year period. This stemmed primarily from market value growth and the addition of a variety of technology solutions and back office mandates. For this Q1 of fiscal year 2027, total management and advisory fees were $161 million and were up 21% year over year. Total fee-related revenue was $236 million and represents 44% growth year over year. Fee-related earnings were $124 million and represents 49% growth year over year.

Speaker #2: AUM stood at $146 billion and grew $5 billion or 4% compared to the prior year period. AUA came in at $914 billion and grew $69 billion or 8% relative to the prior year period.

Speaker #2: This stemmed primarily from market value growth and the addition of a variety of technology solutions and back office mandates. For this first quarter of fiscal year 2027, total management and advisory fees were $161 million and were up 21% year over year.

Speaker #2: Total fee-related revenue was $236 million and represents 44% growth year over year. Fee-related earnings were $124 million and represents 49% growth year over year.

Speaker #2: We generated GAAP EPS, we generated quarterly GAAP EPS of $1.93 based on 80 million dollars of GAAP net income, and non-GAAP EPS of $1.94 based on 105 million dollars of adjusted net income.

John Oh: We generated quarterly GAAP EPS of $1.93 based on $80 million of GAAP net income and non-GAAP EPS of $1.94 based on $105 million of adjusted net income. We have also declared a dividend of $0.60 per share this quarter, which keeps us on track for the 11% increase over last fiscal year, equating to the targeted $2.40 per share for fiscal year 2027. I'll now turn the call over to Erik.

Speaker #2: We have also declared a dividend of $0.60 per share this quarter, which keeps us on track for the 11% increase over last fiscal year, equating to the targeted $2.40 per share for fiscal year 2027.

Speaker #2: With that, I'll now turn the call over to Erik.

Speaker #3: Thank you, John. Good morning, everyone. In May, we celebrated Hamilton Lane's 35th anniversary. A simple AI query will tell you that few companies founded, ever reached this milestone.

Erik Hirsch: Thank you, John. Good morning, everyone. In May, we celebrated Hamilton Lane's 35th anniversary. A simple AI query will tell you that few companies founded ever reach this milestone. To me, while the longevity is noteworthy, the more important point is what that milestone represents. It represents evolution, a desire to never stand still. As the world and markets have changed around us, Hamilton Lane has built and adapted and innovated, all with a focus on best serving our clients. While I am proud of the growth and how many new investors continue to entrust us with capital, I am exceptionally proud that clients who have been with us from the beginning of this journey continue to entrust us with capital today. At the end of the day, what makes Hamilton Lane are our people.

Speaker #3: To me, while the longevity is noteworthy, the more important point is what that milestone represents. It represents evolution. A desire to never stand still.

Speaker #3: As the world and markets have changed around us, Hamilton Lane has built, adapted, and innovated—all with a focus on best serving our clients.

Speaker #3: And while I'm proud of the growth and how many new investors continue to entrust us with capital, I am exceptionally proud that clients who have been with us from the beginning of this journey continue to entrust us with capital today.

Speaker #3: But at the end of the day, what makes Hamilton Lane is our people. We are looking forward to continuing to evolve, continue to grow, and continue to successfully serve our clients.

Erik Hirsch: We are looking forward to continuing to evolve, continuing to grow, and continuing to successfully serve our clients. Let me turn now to fee-earning AUM. At quarter end, total fee-earning AUM stood at $83.7 billion and grew $9.3 billion or 12% year over year. Net quarter over quarter growth was $2 billion or 3%. Our blended fee rate continues to benefit as our fee-earning AUM mix shifts towards the Specialized Funds part of our business. Our blended fee rate now stands at 69 basis points. Total fee-earning AUM growth continues to be driven largely by our Specialized Fund platform. Overall, Specialized Fund fee-earning AUM ended this quarter at $42.6 billion, having grown $8.5 billion over the last 12 months. This represents an increase of 25%. Quarter over quarter growth was $2 billion or 5%. We produced $2.4 billion of gross contributions in the quarter.

Speaker #3: Let me turn now to fee-earning AUM. At quarter end, total fee-earning AUM stood at $83.7 billion and grew 9.3 billion dollars or 12% year over year.

Speaker #3: Net quarter-over-quarter growth was $2.0 billion, or 3%. Our blended fee rate continues to benefit as our fee-earning AUM mix shifts toward the specialized funds part of our business.

Speaker #3: Our blended fee rate now stands at 69 basis points. Total fee-earning AUM growth continues to be driven largely by our specialized fund platform. Overall, specialized fund fee-earning AUM ended this quarter at $42.6 billion, having grown $8.5 billion over the last 12 months.

Speaker #3: This represents an increase of 25%. Quarter over quarter growth was 2 billion dollars or 5%. We produced 2.4 billion of gross contributions in the quarter, that stemmed primarily from new subscriptions to our evergreen products, along with healthy contributions from our drawdown products, namely our sixth equity opportunities fund, our second venture fund, and our second infrastructure fund.

Erik Hirsch: That stemmed primarily from new subscriptions to our evergreen products, along with healthy contributions from our drawdown products, namely our sixth equity opportunities fund, our second venture fund, and our second infrastructure fund. This was offset with redemptions coming primarily from two of our largest non-US evergreen products, along with exit activity and drawdown funds. Our evergreen platform continues to demonstrate resilience. For the quarter that ended in June, we generated nearly $640 million of net inflows across all strategies and ended the period with over $19 billion of AUM. Importantly, we did not enact gates on any of our funds, and we saw positive net inflow across 10 out of 12 funds with our non-US credit offering essentially being flat for the quarter and our non-US multi-strategy equity fund showing elevated redemptions and finishing in net outflow for the quarter.

Speaker #3: This was offset with redemptions coming primarily from two of our largest non-U.S. evergreen products, along with exit activity and drawdown funds. Our evergreen platform continues to demonstrate resilience.

Speaker #3: For the quarter that ended in June, we generated nearly $640 million of net inflows across all strategies and ended the period with over 19 billion dollars of AUM.

Speaker #3: Importantly, we did not enact gates on any of our funds, and we saw positive net inflow across 10 out of 12 funds, with our non-U.S. credit offering essentially being flat for the quarter and our non-U.S. multi-strategy equity fund showing elevated redemptions and finishing in net outflow for the quarter.

Speaker #3: The redemptions in this fund came largely from two categories of investors. The first being long-standing investors who have seen their exposure grow due to strong performance.

Erik Hirsch: The redemptions in this fund came largely from two categories of investors. The first being longstanding investors who have seen their exposure grow due to strong performance. Had you invested $1 in the institutional USD share class of our non-US multi-strat equity platform at inception, as of 30 June of this year, that $1 would be worth $2.32. Not surprisingly, we see clients harvesting some gains and rebalancing with some of those funds flowing back into other Hamilton Lane products. The second category is a bit more unique. Clients housing capital in the Evergreen Fund while awaiting deployment in a separately managed account. They are redeeming to then fund the SMA. In prior times, we saw clients often just leave future private dollars in passive public equity accounts.

Speaker #3: Have you invested a dollar in the institutional USD share class of our non-US multi-strat equity platform at inception? As of June 30th of this year, that dollar would be worth $2.32.

Speaker #3: Not surprisingly, we see clients harvesting some gains and rebalancing, with some of those funds flowing back into other Hamilton Lane products. The second category is a bit more unique.

Speaker #3: Clients' housing capital in the evergreen fund, while awaiting deployment in a separately managed account. They are redeeming to then fund the SMA. In prior times, we saw clients often just leave future private dollars in passive public equity accounts.

Speaker #3: But with the advent of evergreens, we are seeing more institutional clients avail themselves of this alternative to temporarily house capital for future use and drawdown funds.

Erik Hirsch: With the advent of Evergreens, we are seeing more institutional clients avail themselves of this alternative to temporarily house capital for future use in drawdown funds. While this inevitably results in redemptions, it still means the capital is retained by Hamilton Lane. As evergreen market dynamics continue to evolve and mature, we expect over time that redemptions will be driven by different motivators and will need to be examined in context. All that said, we have seen a slowdown on flows on certain products and a general hesitancy with investors given the constant negative headlines. We strongly believe this is temporary and have already begun to see the swing back. For us, we continue to operate with a long-term mindset. Our Evergreen platform has been purposely built to reach investors around the world and to offer a wide variety of strategies.

Speaker #3: While this inevitably results in redemptions, it still means the capital is retained by Hamilton Lane. As evergreen market dynamics continue to evolve and mature, we expect over time that redemptions will be driven by different motivators and will need to be examined in context.

Speaker #3: All that said, we have seen a slowdown on flows on certain products, and the general hesitancy with investors given the constant negative headlines. We strongly believe this is temporary, and have already begun to see the swing back.

Speaker #3: For us, we continue to operate with a long-term mindset. Our evergreen platform has been purposely built to reach investors around the world and to offer a wide variety of strategies.

Speaker #3: Today, we are one of only a small number of evergreen managers with both a scaled US platform and a scaled non-US platform. Outside the US, we offer seven vehicles with our multi-strategy equity, credit, and infrastructure funds each having more than $1 billion of AUM, and our secondaries and venture offerings are fast approaching the $1 billion AUM mark.

Erik Hirsch: Today, we are one of only a small number of Evergreen managers with both a scaled US platform and a scaled non-US platform. Outside the US, we offer seven vehicles with our multi-strategy equity, credit, and infrastructure funds, each having more than 1 billion of AUM, and our secondaries and venture offerings are fast approaching the 1 billion AUM mark. Performance across the vehicles remains strong. That same breadth is evident in the US as well. We now offer five vehicles across multi-strategy equity, infrastructure, venture, secondaries, and most recently, credit, which we discussed on our last call. Today, the multi-strategy equity fund represents the majority of our US Evergreen AUM, driven by strong performance since inception and continued traction in the wirehouse channels. The fund has just been added to another wirehouse, bringing distribution for that strategy to now three wirehouses.

Speaker #3: Performance across the vehicles remains strong. That same breadth is evident in the U.S. as well. We now offer five vehicles across multi-strategy equity, infrastructure, venture, secondaries, and most recently credit, which we discussed on our last call.

Speaker #3: Today, the multi-strategy equity fund represents the majority of our US evergreen AUM, driven by strong performance since inception, and continued traction in the wirehouse channels.

Speaker #3: The fund has just been added to another wirehouse, bringing distribution for that strategy to now three wirehouses. We have achieved all of this while at the same time leveling up and expanding our US distribution team.

Erik Hirsch: We have achieved all of this while at the same time leveling up and expanding our US distribution team. This may beg a logical question. If things are going well, why would we do this? It's simple, and it's where I started earlier. A constant desire to evolve and to be better. Sales professionals are realizing that not all platforms are built the same. With an increasing amount of data available on brands, product lineups, deal flow, and performance, professionals are choosing who they believe will be the winning franchises for the next many years. Over the last 12 months, we have added six highly experienced Evergreen sales professionals to our senior ranks. They have joined from outstanding firms, JPMorgan, Fidelity, Morgan Stanley, BlackRock, PIMCO, and Monroe Capital.

Speaker #3: This may beg a logical question. If things are going well, why would we do this? It's simple, and it's where I started earlier. A constant desire to evolve and to be better.

Speaker #3: Sales professionals are realizing that not all platforms are built the same, and with an increasing amount of data available on brands, product lineups, deal flow, and performance, professionals are choosing who they believe will be the winning franchises for the next many years.

Speaker #3: Over the last 12 months, we have added six highly experienced evergreen sales professionals to our senior ranks. They have joined from outstanding firms: J.P. Morgan, Fidelity, Morgan Stanley, BlackRock, PIMCO, and Monroe Capital.

Speaker #3: So while we are pleased with the success we have had so far, we are far more excited with what lies ahead as this team comes together.

Erik Hirsch: While we are pleased with the success we've had so far, we are far more excited with what lies ahead as this team comes together. Let me turn to performance. We are now entering the phase of the Evergreen journey where track records are getting longer and are getting more scrutiny. Investors are realizing that investment approach and risk-taking are not the same across platforms. For Hamilton Lane, we are not trying to build an index, nor are we building concentrated portfolios. We are building portfolios with purposeful diversification across managers, strategies, geographies, and underlying assets, and are doing so with the benefit of deep sourcing, disciplined pacing, active cash management, and rigorous portfolio construction. That matters because in private markets, manager selection and asset selection still drive outcomes in a very meaningful way, and the dispersion between top and bottom performers remains wide.

Speaker #3: Let me turn to performance. We are now entering the phase of the evergreen journey where track records are getting longer and are getting more scrutiny.

Speaker #3: Investors are realizing that investment approach and risk-taking are not the same across platforms. For Hamilton Lane, we are not trying to build an index.

Speaker #3: Nor are we building concentrated portfolios. We are building portfolios with purposeful diversification, across managers, strategies, geographies, and underlying assets, and are doing so with the benefit of deep sourcing, discipline-pacing, active cast management, and rigorous portfolio construction.

Speaker #3: That matters because in private markets, managers' selection and asset selection still drive outcomes in a very meaningful way, and the dispersion between top and bottom performers remains wide.

Speaker #3: And when you combine that discipline with the advantages of a multi-manager platform, differentiated deal flow, access to high-quality middle-market opportunities, flexibility across market environments, and the ability to lean into specialized expertise, you give yourself a far stronger foundation for consistency over time.

Erik Hirsch: When you combine that discipline with the advantages of a multi-manager platform, differentiated deal flow, access to high-quality middle-market opportunities, flexibility across market environments, and the ability to lean into specialized expertise, you give yourself a far stronger foundation for consistency over time. That is what we believe is showing up in our results, which continue to be strong. As of June 2026, when looking at institutional USD share class and excluding the most recently launched US private credit fund given its nascency, each of our funds has generated positive double-digit performance both year to date and since inception. With the exception being our non-US private credit platform, which targets a high single-digit return and has delivered just that. In addition, for every single one of those funds, we have also produced positive performance in every single calendar year since inception.

Speaker #3: That is what we believe is showing up in our results, which continue to be strong. As of June 2026, when looking at institutional USD share class and excluding the most recently launched US private credit fund given its nascency, each of our funds has generated positive double-digit performance both year-to-date and since inception.

Speaker #3: With the exception being our non-US private credit platform, which targets a high single-digit return, and has delivered just that. In addition, for every single one of those funds, we have also produced positive performance in every single calendar year since inception.

Speaker #3: I will also note that our three largest and most seasoned individual products—those being our US and non-US multi-strategy equity product, and non-US credit product—have generated over $3.6 billion of total cash realizations from their underlying portfolios.

Erik Hirsch: I will also note that our three largest and most seasoned individual products, those being our US and non-US multi-strategy equity product and non-US credit product, have generated over $3.6 billion of total cash realizations from their underlying portfolios. When we step back and look at the platform in its entirety, what we see is a business that remains healthy, diversified, and well-positioned for long-term growth. We have strong performance, growing global reach, expanding distribution, and a client base that continues to engage with the platform in different ways across products and structures. There will be periods where flows move around, and there will certainly be noise around the category, but none of that changes our conviction. We believe the Evergreen platform we have built is differentiated, durable, and still very early in its growth trajectory. Let me turn now to our closed-end franchise.

Speaker #3: So, when we step back and look at the platform in its entirety, what we see is a business that remains healthy, diversified, and well-positioned for long-term growth.

Speaker #3: We have strong performance, growing global reach, expanding distribution, and a client base that continues to engage with the platform in different ways across products and structures.

Speaker #3: There will be periods where flows move around, and there will certainly be noise around the category, but none of that changes our conviction. We believe the evergreen platform we have built is differentiated, durable, and still very early in its growth trajectory.

Speaker #3: Let me turn now to our closed-end franchise. We continue to execute well across our fundraising activities, and are seeing strong momentum build across several strategies approaching their initial closes.

Erik Hirsch: We continue to execute well across our fundraising activities and are seeing strong momentum build across several strategies approaching their initial closes. Through the balance of fiscal 2027 and into early fiscal 2028, we expect to be in market with five key strategies. Core secondaries, our inaugural GP-led secondary strategy, venture, credit, and infrastructure. Let me begin with our most recently closed fund. I'm pleased to announce that our direct equity platform finished its raise, collecting $3.8 billion in and alongside the fund. That broke down to $3.3 billion in the fund and $500 million in separate accounts investing alongside. The fund portion alone represents an over 57% growth versus the prior fund. We believe our team, our differentiated deal flow, and our near 30-year track record in this space resonated with investors across the globe.

Speaker #3: Through the balance of fiscal 2027 and into early fiscal 2028, we expect to be in market with five key strategies. Core secondaries, our inaugural GP-led secondary strategy, venture, credit, and infrastructure.

Speaker #3: But let me begin with our most recently closed fund. I'm pleased to announce that our direct equity platform finished its raise collecting $3.8 billion in and alongside the fund.

Speaker #3: That broke down to $3.3 billion in the fund and $500 million in separate accounts investing alongside. The fund portion alone represents an over 57% growth versus the prior fund.

Speaker #3: We believe our team, our differentiated deal flow, and our near 30-year track record in this space resonated with investors across the globe. We attracted public and private pension funds, sovereign wealth funds, capped Hartley plans, endowments and foundations, and individuals.

Erik Hirsch: We attracted public and private pension funds, sovereign wealth funds, Taft-Hartley plans, endowments and foundations, and individuals. We are deeply grateful for their trust in us. That fund is off to a strong start with nearly 30% of the capital committed across a variety of small and mid-market businesses, and while early performance is strong. This fundraise is yet another prime example of how we are continuing to scale both our closed-end franchise and our business overall. We are proud of what we've been able to accomplish with this fundraise. We look forward to continuing to build on this momentum. Turning to our seventh secondary fund. Fundraising is off to a good start as we held the first close just last week on nearly $1.3 billion of investor commitments. This will be followed by another close in this calendar year on which we already have good visibility.

Speaker #3: And we are deeply grateful for their trust in us. That fund is off to a strong start, with nearly 30% of the capital committed across a variety of small and mid-market businesses, and while early performance is strong.

Speaker #3: This fundraise is yet another prime example of how we are continuing to scale both our closed-end franchise and our business overall. We are proud of what we've been able to accomplish with this fundraise, and we look forward to continuing to build on this momentum.

Speaker #3: Turning to our seventh secondary fund, fundraising is off to a good start as we held the first close just last week on nearly $1.3 billion of investor commitments.

Speaker #3: This will be followed by another close in this calendar year, on which we already have good visibility. Like before, we have 18 months from the time of the initial close to complete the fundraise.

Erik Hirsch: Like before, we have 18 months from the time of the initial close to complete the fundraise. We remain encouraged by the level of support we have already received. We are looking forward to continuing to grow and expand this franchise. Turning now to Venture. I'm pleased to share that during the quarter, we successfully held the first close for our second venture fund, securing more than $370 million of investor commitments. For context, our first venture fund raised a total of $615 million, which means this initial close already represents more than 60% of the size of the first fund. We believe that is a strong early proof point for the strategy and a clear reflection of the confidence our investors have in the team, the platform, and the opportunity set we see in this market. Wrapping up here with Customized Separate Accounts.

Speaker #3: We remain encouraged by the level of support we have already received, and we are looking forward to continuing to grow and expand this franchise.

Speaker #3: Turning now to venture. I'm pleased to share that during the quarter we successfully held the first close for our second venture fund, securing more than $370 million of investor commitments.

Speaker #3: For context, our first venture fund raised a total of $615 million, which means this initial close already represents more than 60% of the size of the first fund.

Speaker #3: We believe that is a strong early proof point for the strategy, and a clearly reflection of the confidence our investors have in the team, the platform, and the opportunity set we see in this market.

Speaker #3: Wrapping up here with customized separate accounts, at quarter-end, customized separate account fee-earning AUM stood at $41.1 billion and grew $818 million, or 2%, over the last 12 months, and was up slightly quarter over quarter.

Erik Hirsch: At quarter end, Customized Separate Account fee-earning AUM stood at $41.1 billion and grew $818 million or 2% over the last 12 months, and was up slightly quarter-over-quarter. We continue to see gross contributions coming from a mix of new client wins, plus re-up activity from existing clients, plus contributions for investment activity. Then being offset by fee-basis step-downs, which is largely a timing related impact, as well as capital distribution stemming from exit activity. During the quarter, we continued to execute well across our separate account business, converting both our back book and active pipeline into closed mandates from existing clients and new relationships alike. From our existing client base, we closed on more than $2.3 billion of total mandate value, driven primarily by re-ups, while also expanding one relationship into a new service line.

Speaker #3: We continue to see gross contributions coming from a mix of new client wins, re-up activity from existing clients, and contributions from investment activity. These are being offset by fee-basis step-downs, which are largely a timing-related impact, as well as capital distributions stemming from exit activity.

Speaker #3: During the quarter, we continued to execute well across our separate account business, converting both our back book and active pipeline into closed mandates from existing clients and new relationships alike.

Speaker #3: From our existing client base, we closed on more than $2.3 billion of total mandate value, driven primarily by re-ups, while also expanding one relationship into a new service line.

Speaker #3: We also closed on more than $1.3 billion of total mandate value from clients that are new to Hamilton Lane. These wins came from both domestic and international institutions, further reinforcing the global relevance for our platform and the continued demand we are seeing across the market for private market solutions, delivered at scale.

Erik Hirsch: We also closed on more than $1.3 billion of total mandate value from clients that are new to Hamilton Lane. These wins came from both domestic and international institutions, further reinforcing the global relevance for our platform and the continued demand we are seeing across the market for private market solutions delivered at scale. Lastly, our team continues to make very good progress replenishing the pipeline of re-up opportunities, which today totals multiple. As we have said before, these mandates do not always convert immediately into fee-earning AUM, particularly where the underlying portfolio construction is more heavily oriented towards primary investing, or where there are commitments being made to our transaction products, either drawdown or Evergreen. There is often a natural pacing element to deployment for the primary element. That timing should be expected.

Speaker #3: Lastly, our team continues to make very good progress replenishing the pipeline of re-up opportunities, which today totals multiple as we have said before, these mandates do not always convert immediately into fee earning AUM, particularly where the underlying portfolio construction is more heavily oriented towards primary investing, or where they are commitments being made to our transaction products, either drawdown or evergreen.

Speaker #3: There is often a natural pacing element to deployment for the primary element, and that timing should be expected. But what matters most to us is that the capital has been awarded, the client relationships have been established, and the foundation for future fee-earning growth is in place.

Erik Hirsch: What matters most to us is that the capital has been awarded, the client relationships have been established, and the foundation for future fee earning growth is in place. Turning now to our balance sheet updates, let me highlight some recent exciting events regarding several investments in our strategic investment portfolio, and then Jeff will provide more details in his section. I will start with Russell Investments. On 9 July, Russell announced that a consortium led by B Capital and CalPERS agreed to acquire the firm. As a reminder, in March 2021, we entered into a strategic partnership with Russell because we saw a compelling opportunity to combine Russell's global outsource solutions franchise and client reach with Hamilton Lane's private market platform, research portfolio construction capabilities, and technology.

Speaker #3: Turning now to our balance sheet updates and let me highlight some recent exciting events regarding several investments in our strategic investment portfolio, and then Jeff will provide more details in his section.

Speaker #3: I'll start with Russell Investments. On July 9th, Russell announced that a consortium, led by B Capital and CalFirs, agreed to acquire the firm. As a reminder, in March of 2021, we entered into a strategic partnership with Russell, because we saw the compelling opportunity to combine Russell's global outsource solutions franchise and client reach, with Hamilton Lane's private market platform, research, portfolio construction capabilities, and technology.

Speaker #3: Over the past five years, that partnership has created differentiated access points and tailored solutions for Russell's global clients, and it stands as a strong example of how we can use our platform to help sophisticated partners expand private market access in a way that is strategic, scalable, and aligned with client investment—delivering both strategic and financial benefits.

Erik Hirsch: Over the past 5 years, that partnership has created differentiated access points and tailored solutions for Russell's global clients, it stands as a strong example of how we can use our platform to help sophisticated partners expand private market access in a way that is strategic, scalable, and aligned with client demand. During our period of ownership, the investment delivered both strategic and financial benefits. While this transaction marks the end of our economic ownership in Russell, it does not mark the end of the relationship. We remain excited to continue advancing the partnership and our shared goal for delivering best-in-class private market solutions. Next, back in fall 2025, Securitize announced that it had entered into a definitive business combination agreement with Cantor Equity Partners II, a special purpose acquisition company, and they would transition to a publicly traded company.

Speaker #3: And while this transaction marks the end of our economic ownership in Russell, it does not mark the end of the relationship. We remain excited to continue advancing the partnership and our shared goal of delivering best-in-class private market solutions.

Speaker #3: Next, back in fall of 2025, Securitize announced that it had entered into a definitive business combination agreement with Cantor Equity Partners II. A special purpose acquisition company, and they would transition to a publicly traded company.

Speaker #3: That transaction has now been completed, and Securitize is now a publicly listed company on the New York Stock Exchange. We originally invested $5 million from our balance sheet and now hold approximately $1.1 million shares of Securitize which, as of yesterday's closing price, traded at $6.94 per share.

Erik Hirsch: That transaction has now been completed, Securitize is now a publicly listed company on the New York Stock Exchange. We originally invested $5 million from our balance sheet and now hold approximately 1.1 million shares of Securitize, which, as of yesterday's closing price, traded at $6.94 per share. Our relationship with Securitize began in 2022 when we partnered with them to tokenize several Hamilton Lane offerings and expand access to private markets through digital-first token-based technology. In May 2024, Hamilton Lane built on our commercial relationship and participated in Securitize's strategic funding round led by BlackRock. We made that investment because we believe Securitize was building important infrastructure for the next evolution of capital markets. Trusted, regulated technology that can bring traditional financial assets on chain and make private markets more accessible to a broader set of investors.

Speaker #3: Our relationship with Securitize began in 2022 when we partnered with them to tokenize several Hamilton Lane offerings and expand access to private markets through digital-first token-based technology.

Speaker #3: In May 2024, Hamilton Lane built on our commercial relationship and participated in Securitize's strategic funding round led by BlackRock. We made that investment because we believe Securitize was building important infrastructure for the next evolution of capital markets.

Speaker #3: Trusted, regulated technology that can bring traditional financial assets on-chain and make private markets more accessible to a broader set of investors. Securitize's move towards becoming a public company is an important validation of that thesis.

Erik Hirsch: Securitize's move towards becoming a public company is an important validation of that thesis. It reflects the increasing institutional adoption of tokenization and highlights the role that regulated infrastructure can play in modernizing how financial assets are issued, managed, traded, and serviced. Next up is Canoe. Canoe is an AI-driven platform that automates the collection, extraction, and validation of alternative investment data, taking the large volume of fund documents, capital account statements, and cash flow that underpin the private markets and turning them into clean, actionable information. Our relationship began in 2019 with pilots on Hamilton Lane's own documents, which was then followed by our initial investment in Canoe Series A in 2020, then continuing to support the business through subsequent rounds.

Speaker #3: It reflects the increasing institutional adoption of tokenization, and highlights the role that regulated infrastructure can play in modernizing how financial assets are issued, managed, traded, and serviced.

Speaker #3: Next up is Canoe. Canoe is an AI-driven platform that automates the collection, extraction, and validation of alternative investment data, taking the large volume of fund documents, capital account statements, and cash flow that underpin the private markets, and turning them into clean, actionable information.

Speaker #3: Our relationship began in 2019 with pilots on Hamilton Lane's own documents, which was then followed by our initial investment in Canoe's Series A in 2020.

Speaker #3: And then continuing to support the business through subsequent rounds. We invested because Canoe was addressing a need we experienced ourselves and saw across the broader market.

Erik Hirsch: We invested because Canoe was addressing a need we experienced ourself and saw across the broader market, that being reducing operational friction and enhancing data quality across the asset class. Bloomberg's agreement to acquire Canoe is a strong validation of that thesis. For Hamilton Lane, it is another example of us using our balance sheet in a targeted way to support technology partners that we believe are helping shape the future of the private markets. With that, I'll now pass the call to Jeff, who will cover both our financials and the impact stemming from these transactions.

Speaker #3: That being reducing operational friction and enhancing data quality across the asset class. Bloomberg's agreement to acquire Canoe is a strong validation of that thesis.

Speaker #3: For Hamilton Lane, it is another example of us using our balance sheet in a targeted way to support technology partners that we believe are helping shape the future of the private markets.

Speaker #3: And with that, I'll now pass the call to Jeff, who will cover both our financials and the impact stemming from these transactions.

Speaker #2: Thank you, Erik, and good morning, everyone. For this first quarter of fiscal 2027, we continue to generate solid growth in our business. Management and advisory fees were up 21% from the prior-year period, while total fee-related revenue was up 44%, driven by strong growth in our fee-related performance revenues.

Jeff Armbrister: Thank you, Erik, and good morning, everyone. For this Q1 of fiscal 2027, we continued to generate solid growth in our business. Management and advisory fees were up 21% from the prior year period, while total fee-related revenue was up 44%, driven by strong growth in our fee-related performance revenues. Specialized Funds management fees increased by $26 million, or 32%, compared to the prior year period. This was driven primarily by a $6.7 billion increase of fee-earning AUM in our Evergreen platform and over a $930 million increase from our latest direct equity fund over the last 12 months. Moving on to Customized Separate Accounts, revenue increased slightly compared with the prior year period, driven by steady re-ups from existing clients, continued investment activity, and the addition of new accounts partially offset by older accounts reaching the end of their fund term and fee basis step-downs.

Speaker #2: Specialized fund management fees increased by $26 million, or 32%, compared to the prior year period. This was driven primarily by a $6.7 billion increase to fee-earning AUM in our evergreen platform and an over $930 million increase from our latest direct equity fund over the last 12 months.

Speaker #2: Moving on to customized separate accounts, revenue increased slightly compared with the prior year period, driven by steady re-ops from existing clients, continued investment activity, and the addition of new accounts partially offset by older accounts reaching the end of their fund term and fee basis step-downs.

Speaker #2: Revenue from our operating, monitoring, data, and analytics offerings increased by 1.5 million or 18% compared to the prior year period, as we continue to produce strong growth in our technology solutions offering.

Jeff Armbrister: Revenue from our operating, monitoring, data, and analytics offerings increased by $1.5 million, or 18%, compared to the prior year period, as we continue to produce strong growth in our technology solutions offering. Lastly, the final component of our revenue is incentive fees, which totaled $114 million for the period. This amount includes fee-related performance revenues stemming primarily from the quarterly crystallization of performance fees from our U.S. Private Assets Evergreen Fund, with additional contributions coming from our more recently launched Evergreen Funds. Let's turn now to our unrealized carry balance. The balance is up 11% from the prior year period, even while having recognized $113 million of incentive fees, excluding fee-related performance revenues during the last 12 months. The unrealized carry balance now stands at approximately $1.5 billion. Moving on to expenses. Fiscal year to date, total expenses increased $50 million, or 50%, compared with the prior year period.

Speaker #2: Lastly, the final component of our revenue is incentive fees, which totaled $114 million for the period. This amount includes fee-related performance revenues stemming primarily from the quarterly crystallization of performance fees from our US private assets evergreen fund, with additional contributions coming from our more recently launched evergreen funds.

Speaker #2: Let's turn now to our unrealized carry balance. The balance is up 11% from the prior year period, even while having recognized $113 million of incentive fees excluding fee-related performance revenues during the last 12 months.

Speaker #2: The unrealized carry balance now stands at approximately $1.5 billion. Moving on to expenses, fiscal year-to-date total expenses increased $50 million, or 50%, compared with the prior year period.

Speaker #2: Total compensation and benefits increased $38 million, or 55%, due primarily to increases in operating performance and headcount. G&A increased by $12 million, primarily driven by revenue-related expenses and one-time benefits in the prior-year period.

Jeff Armbrister: Total compensation and benefits increased $38 million, or 55%, due primarily to increases in operating performance and headcount. G&A increased by $12 million, primarily driven by revenue-related expenses and one-time benefits in the prior year period. Revenue-related expenses include the third-party commissions related to our U.S. Evergreen Funds, along with other Evergreen Fund platform fees, closed-end fund placement agent fees, and fund reimbursement expenses, which are expected to lead to corresponding revenue over time. The increase in these expenses is a good thing and can be an indicator of growth to come. We continue to successfully offset this with cost savings and expense discipline in other parts of business where we have discretion. Moving to FRE.

Speaker #2: Revenue-related expenses include the third-party commissions related to our U.S. evergreen funds, along with other evergreen fund platform fees, closed-end fund placement agent fees, and fund reimbursement expenses, which are expected to lead to corresponding revenue over time.

Speaker #2: The increase in these expenses is a good thing and can be an indicator of growth to come. We continue to successfully offset this with cost savings and expense discipline in other parts of business where we have discretion.

Speaker #2: Moving to FRE, FRE for the quarter was $124 million and was up 49% relative to the prior year period, with FRE margin year-to-date came in at 53% compared to 51% for the prior year period.

Jeff Armbrister: FRE for the quarter was $124 million and was up 49% relative to the prior year period, with FRE margin year to date came in at 53%, compared to 51% for the prior year period. Both FRE and FRE margin benefited from strong fee-related performance revenues in the period. Let me now move to our share repurchase activity during the quarter. We repurchased approximately 559,000 shares at a weighted average price of $89.51 per share, resulting in roughly $50 million spent under the program during the quarter. Throughout the life of the program, we have spent $70 million on share repurchases. Before I wrap up with the balance sheet commentary, I want to take a moment to outline our expectations on how the recent events that Erik mentioned regarding our investments in Russell, Securitize, and Canoe will come through our income statement.

Speaker #2: Both FRE and FRE margins benefited from strong fee-related performance revenues in the period. Let me now move to our share repurchase activity during the quarter.

Speaker #2: We repurchased approximately 559,000 shares at a weighted average price of $89.51 per share, resulting in roughly $50 million spent under the program during the quarter.

Speaker #2: Throughout the life of the program, we have spent $70 million on share repurchases. Before I wrap up with balance sheet commentary, I want to take a moment to outline our expectations for how the recent events that Erik mentioned regarding our investments in Russell, Securitize, and Canoe will come through our income statement.

Speaker #2: With respect to Russell, we expect to realize just under $50 million based on our share of the proposed transaction value. The company has indicated that the transaction is expected to close in the first quarter of calendar year 2027, subject to regulatory approvals and other customary closing conditions.

Jeff Armbrister: With respect to Russell, we expect to realize just under $50 million based on our share of the proposed transaction value. The company has indicated that the transaction is expected to close in Q1 of calendar year 2027, subject to regulatory approvals and other customary closing conditions. Assuming the transaction closes as expected, we would anticipate recording a gain of approximately $18 million at that time. With respect to Securitize, as Erik mentioned, following the close of the business combination, we now hold approximately 1.5 million shares of Securitize, which trades under the ticker SECZ. Because the transaction closed after the end of the reporting period, we will begin marking this position to the publicly traded share price next quarter and at the end of each quarter going forward. Our shares remain subject to a 180-day lock-up period, after which we will continue to evaluate the position.

Speaker #2: Assuming the transaction closes as expected, we would anticipate recording a gain of approximately $18 million at that time. With respect to Securitize, as Eric mentioned, following the close of the business combination, we now hold approximately $1.5 million shares of Securitize.

Speaker #2: With trades under the ticker SECZ. Because the transaction closed after the end of the reporting period, we will begin making this position to we will begin marking this position to the publicly traded share price next quarter, and at the end of each quarter going forward.

Speaker #2: Our shares remain subject to $180-day lock-up period, after which we will continue to evaluate the position. With respect to Canoe, based on our ownership stake in the proposed transaction, we expect to receive proceeds of approximately $30 million This represents an estimated gain of over $15 million versus our current carrying value, which is based on the valuation from Canoe's most recent funding round.

Jeff Armbrister: With respect to Canoe, based on our ownership stake in the proposed transaction, we expect to receive proceeds of approximately $30 million. This represents an estimated gain of over $15 million versus our current carrying value, which is based on the valuation from Canoe's most recent funding round. We expect to recognize this gain upon the transaction's closing. Let's wrap up now 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 we'll continue to invest our balance sheet capital alongside our clients. In regard to our liabilities, we continue to be modestly levered.

Speaker #2: We expect to recognize this gain upon the transaction's closing. Let's wrap up now with some commentary on our balance sheet. Our largest asset continues to be our investments alongside our clients, and our customized separate accounts and specialized funds.

Speaker #2: 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.

Speaker #2: In regard to our liabilities, we continue to be modestly levered. Lastly, I'd like to reiterate that we will continue to evaluate opportunities to strategically utilize the strength of our balance sheet in support of future growth initiatives.

Jeff Armbrister: Lastly, I'd like to reiterate that we will continue to evaluate opportunities to strategically utilize the strength of our balance sheet in support of future growth initiatives. These activities have generally taken the form of C capital to help stand up new product launches, and have also come with having to consolidate these products onto our balance sheet during the ramp and scaling up phases. While this can introduce noise into our financials, this is generally a short-term phenomenon with the goal of deconsolidation once our initial contribution is diluted down as the products grow. With that, we'd like to thank everyone for listening in, and we'll now open up the call for questions.

Speaker #2: These activities are generally taken in the form of seed capital to help stand up new product launches and have also come with having to consolidate these products onto our balance sheet during the ramp and scaling up phases.

Speaker #2: While this can introduce noise into our financials, this is generally a short-term phenomenon with the goal of deconsolidation once our initial contribution is diluted down as the products grow.

Speaker #2: And with that, we'd like to thank everyone for listening in, and we'll now open up the call for questions.

Speaker #1: 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 the one on your touchstone phone.

Operator: 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 the one on your touch-tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. We do ask that you limit yourself to one question and one follow-up. You may re-queue if you have additional questions. Michael Cyprys with Morgan Stanley, please go ahead.

Speaker #1: You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two.

Speaker #1: If you are using a speakerphone, please lift the handset before pressing any keys. We do ask that you limit yourself to one question and one follow-up.

Speaker #1: You may re-queue if you have additional questions. Michael Cypress with Morgan Stanley, please go ahead.

Michael Cyprys: Hey, good morning. Thanks for taking the question. Just wanted to circle back on the private wealth commentary regarding the redemptions in the international vehicle, the Global Private Assets Fund. Just curious what your expectation is around the path for that fund to return to net inflows on a more consistent basis. Maybe you could also talk about how you are expanding distribution reach of that vehicle to capture new customers and new platforms.

Speaker #3: Hey, good morning. Thanks for taking the question. Just wanted to circle back on the private wealth. Commentary, regarding the redemptions in the international vehicle that we'll private asset fund.

Speaker #3: Just curious what your expectation is around the path for that fund to return to net inflows on a more consistent basis and maybe you could also talk about how you are expanding distribution reach of that vehicle to capture new customers and new platforms.

Speaker #2: Sure, Mike. It's Eric. I think we're doing all of the above. So the team continues to expand the number of relationships, continues to expand and I think increasingly we're starting to see rotation out of some competitive products and we believe we'll start to see that rotation back into our products on a relative performance basis.

Erik Hirsch: Sure, Mike, it's Erik. I think we're doing all of the above. The team continues to expand, the number of relationships continues to expand, and I think increasingly we're starting to see rotation out of some competitive products. We believe we'll start to see that rotation back into our products on a relative performance basis. I think that's sort of the tailwind, and the headwind right now is what I mentioned on the call, the sort of the rebalancing due to kind of being at that sort of five-plus year mark with good performance, and just all of the noise around the sector that is just causing people to either pause or to sort of act a little spooked.

Speaker #2: So I think that's sort of the tailwind and the headwind right now is what I mentioned on the call, the sort of the rebalancing due to kind of being at that sort of five-plus-year mark with good performance and just all of the noise around the sector that is just causing people to either pause or to sort of act a little spooked.

Speaker #3: Gotcha. And then just more broadly, on the Evergreen fund lineup continues to expand and bring in assets. But also just given some of the experiments you've had with tokenization that you alluded to in some of your commentary, just curious what learnings you've had around tokenization so far?

Michael Cyprys: Gotcha. Just more broadly on the Evergreen Funds lineup continues to expand and bring in assets. Also just given some of the experiments you've had with tokenization that you alluded to in some of your commentary, just curious what learnings you've had around tokenization so far. Where are you seeing greatest utility? Ultimately, just curious, could tokenization prove as important to private markets as maybe ETFs were to public markets? Just curious how you're thinking about that and how you're thinking about some of the next generation of Evergreen and semi-liquid product structures.

Speaker #3: Where are you seeing the greatest utility? And ultimately, just curious—could tokenization prove as important to private markets as maybe ETFs were to public markets?

Speaker #3: Just curious how you're thinking about that, and how you're thinking about some of the next generation of evergreen and semi-liquid product structures.

Speaker #2: Sure. I think the tokenization is still remains kind of a when is this going to start to become the norm as opposed to the exception in terms of utilization.

Jeff Armbrister: Sure. I think the tokenization still remains kind of a when is this going to start to become the norm as opposed to the exception in terms of utilization. I think our early belief in this is it's one of the few things that we've seen where all parties benefit. It is truly a better, faster, cheaper. The adoption, I think, has been muted due to continued confusion in the market that somehow people are equating tokens to cryptocurrency. They share nothing in common other than a blockchain backbone. I think there's confusion around that linkage, which just does not exist. Education continues to be important. Having companies like Securitize become publicly traded, I think that's enormously helpful because, again, that helps the education. It sort of shows stability, it shows future growth.

Speaker #2: I think our early belief in this is it's one of the few things that we've seen where all parties benefit. It is truly a better faster cheaper.

Speaker #2: The adoption, I think, has been muted due to continued confusion in the market that somehow people are equating tokens to cryptocurrency. They share nothing in common other than a blockchain backbone.

Speaker #2: But I think there is confusion around that linkage, which just does not exist. So education continues to be important. Having companies like Securitize become publicly traded I think that's enormously helpful because, again, that helps the education.

Speaker #2: It sort of shows stability. It shows future growth. And what we're seeing is some very, very large asset management firms tokenizing I would say very mundane product think about that like tokenizing cash funds.

Jeff Armbrister: What we're seeing is some very, very large asset management firms tokenizing, I would say, very mundane product. Think about that like tokenizing cash funds. That's been good because I think it's sort of showing people that this does not need to be exotic assets, that this is just a better way to operate. I think the other reality is that we're going through, we're about to undertake a huge generational wealth transition, particularly in this country. As that sort of younger generation who is much more comfortable operating in a fully digital environment starts to become the holders of wealth, I think that's going to be another big push. For us, I think it sort of widens out the addressable market. It allows us to capture customers who are looking to operate in a digitally native environment.

Speaker #2: And that's been good, because I think it's sort of showing people that this does not need to be exotic assets, that this is just a better way to operate.

Speaker #2: I think the other reality is that we're going through we're about to undertake a huge generational wealth transition, particularly in this country. And is that sort of younger generation who is much more comfortable operating in a fully digital environment starts to become the holders of wealth, I think that's going to be another big push.

Speaker #2: So, for us, I think it sort of widens out the addressable market. It allows us to capture customers who are looking to operate in a digitally native environment.

Speaker #2: And as tokenization utilization increases, we believe that that will drive down some operating costs for us.

Jeff Armbrister: As tokenization utilization increases, we believe that that will drive down some operating costs for us.

Speaker #3: Great. Thanks so much.

Michael Cyprys: Great. Thanks so much.

Speaker #1: Thank you. Alex Blousteen with Goldman Sachs, please go ahead.

Operator: Thank you. Alex Blostein with Goldman Sachs, please go ahead.

Speaker #4: Hey, good morning. This is Anthony on for Alex. You spoke to clients redeeming out of your Global Private Assets Fund and switching into other Hamilton Lane products.

[Analyst] (Goldman Sachs): Hey, good morning. This is Anthony on for Alex. You spoke to clients redeeming out of your Global Private Assets Fund and switching into other Hamilton Lane products. Could you quantify how much an inflows is driven to other products? What other funds are seeing kind of the biggest demand from this switching aspect?

Speaker #4: Could you quantify how much and inflows this is driven to other products and what other funds are seeing kind of the biggest demand from this switching aspect?

Speaker #2: Yeah, Anthony, it's Erik. So, one, when we're selling, we're doing this all as a package. So, this is not a surprise to us because when we are pitching that client, one of the reasons why we're being selected is that they want that sort of fully invested aspect for their portfolio.

Erik Hirsch: Yeah, Anthony, it's Erik. One, when we're selling, we're doing this all as a package. This is not a surprise to us because when we are

Erik Hirsch: Pitching that client, one of the reasons why we're being selected is that they want that sort of fully invested aspect for their portfolio. The way they achieve that is they make an asset allocation decision, and they decide that they're going to put X amount of dollars with us. Those dollars, in this case, are starting in the evergreen, and then they're migrating. The second biggest movement of capital out was because of large client moving into SMAs. That's, for us, known. While it is a redemption, it's just moving from one pocket of Hamilton Lane capital to another pocket, and again, a much better experience for the client. That, we think, is a positive. Again, in a prior world, prior to evergreens, that capital was largely kept in a passive public equity index, obviously, that we were not managing.

Speaker #2: And so the way they achieve that is they make an asset allocation decision, and they decide that they're going to put X amount of dollars with us.

Speaker #2: Those dollars in this case are starting in the Evergreen, and then they're migrating. The biggest—the second biggest movement of capital out was because of a large client moving into SMAs.

Speaker #2: And so that's for us known. So, while it is a redemption, it's just moving from one pocket of Hamilton Lane capital to another pocket.

Speaker #2: And again, a much better experience for the client. So, that we think is a positive. Again, in a prior world, prior to Evergreens, that capital was largely kept in a passive public equity index, obviously that we were not managing.

Speaker #2: And so we think the advent of this, and the evolution of this, continues to be a positive thing.

Erik Hirsch: We think the advent of this and the evolution of this continues to be a positive thing.

[Analyst] (Goldman Sachs): Got it. That's helpful. Maybe switching over to the US Evergreen channel. Flows in some of the newer products have been relatively slow. Yeah, what are you hearing on the ground from platforms and advisors, and what are your expectations on flows as you guys kind of expand the distribution and sales efforts?

Speaker #4: Got it. That's helpful. And then maybe switching over to the US Evergreen channel flows and some of the newer products have been relatively slow.

Speaker #4: I guess, what are you hearing on the ground from platforms and advisors, and what are your expectations on flows as you guys kind of expand the distribution and sales efforts?

Speaker #2: Sure, it's Eric. So, as I said, we've done a big overhaul of the sales team. A lot of them are not fully productive today because they're literally just joining the firm.

Erik Hirsch: Sure. It's Erik. As I said, we've done a big overhaul of the sales team. A lot of them sort of not fully productive today because they're literally just joining the firm. I also think that a lot of these products are in sort of their infancy, they're not sitting at that kind of magical billion-dollar mark, which we see as a big stepping stone to getting onto larger platforms and picking up larger flows. I think we expect that the early phases of this are always a bit of a grind as you're trying to getting to scale. I think with the expansion of the team and bringing in more senior seasoned talent, we think that all will help accelerate this.

Speaker #2: But I also think that a lot of these products are in sort of their infancy, and so they're not sitting at that kind of magical $1 billion mark, which we see as a big stepping stone to getting onto larger platforms and picking up larger flows.

Speaker #2: So I think we expect that the early phases of this are always a bit of a grind as you're trying to get to scale.

Speaker #2: I think with the expansion of the team and bringing in more senior seasoned talent, we think that all will help accelerate this. And then I think you got to get to that magical size and then you start to see a ramping occurring at a much quicker space.

Erik Hirsch: I think you got to get to that magical size, you start to see a ramping occurring in a much quicker space, that's what we expect.

Speaker #2: And that's what we expect.

Speaker #4: Got it. Thank you.

[Analyst] (Goldman Sachs): Got it. Thank you.

Speaker #1: Thank you. Alex Bond with KBW, please go ahead.

Operator: Thank you. Alex Bond with KBW. Please go ahead.

Speaker #5: Hey, good morning, everyone. Thanks for taking the questions. Maybe I just wanted to ask about the Evergreen Suite to start. Following the $640 million of net inflows in the quarter, I was wondering if you can share any July trends as it relates to the Evergreen Suite.

Alex Bond: Hey, good morning, everyone. Thanks for taking the questions. Maybe I just wanted to ask around the Evergreen suite to start. Maybe just following the $640 million of net inflows in the quarter. I'm wondering if you can share any July trends as it relates to the Evergreen suite. Secondly, more of a bigger picture question. I'm wondering how you would juxtapose the trajectory of the growth in terms of the US funds versus the international funds here. You mentioned that the international funds are a bit more mature and have had strong performance to date. Maybe any color there that you could share around the long-term growth potential for both the international suite in and of itself, and then maybe relative to the US suite would be helpful as well. Thank you.

Speaker #5: And then secondly, more of a bigger picture question. Wondering how you would juxtapose the trajectory of the growth in terms of the US funds versus the international funds here.

Speaker #5: You mentioned that the international funds are a bit more mature and have had strong performance to date. But maybe any color there that you could share around the long-term growth potential for both the international suite in and of itself and then maybe relative to the US suite would be helpful as well.

Speaker #5: Thank you.

Speaker #2: Sure. Alex, it's Erik. I would say I'll take the latter part first. I mean, I think what we're seeing is education levels are rising across geographies.

Erik Hirsch: Sure, Alex. It's Erik. I would say I'll take the latter part first. I think what we're seeing is education levels are rising across geographies, and that really is, I think, the most important piece here. You've seen over the last few months that the market is simply not mature when it comes to this space. Headlines, largely not driven by good data, caused investor behavior. To me, that is an example of a lack of maturity and confidence in an industry and in a sub-asset class that I think is not surprising given how young it is and how little experience investors have with the space. To me, this is a combination of the industry needs more education. The industry needs time for them to start to kind of normalize so that, again, scary headlines don't cause investors to actually take action.

Speaker #2: And that really is, I think, the most important piece here. You've seen, over the last few months, that the market is simply not mature when it comes to this space.

Speaker #2: So, headlines largely not driven by good data caused investor behavior. And to me, that is an example of a lack of maturity and confidence in an industry and in a sub-asset class that I think is not surprising, given how young it is.

Speaker #2: And how little experience investors have with the space. So, to me, this is a combination of the industry needing more education and the industry needing time.

Speaker #2: For them to start to kind of normalize so that, again, scary headlines don't cause investors to actually take action. We're not seeing a material differences on the ground between non-US and US.

Erik Hirsch: We're not seeing material differences on the ground between non-US and US. We're seeing those markets kind of continuing to develop hand in hand. Our presence there had well over a full year head start versus US activities. You see a little bit of sort of a playing catch up in the US. From a flow perspective, as I look into July and sort of into the future, we're seeing some of the noise subsiding. We're generally just seeing just more positive sentiment across the product offerings and across the geographies.

Speaker #2: We're seeing those markets kind of continuing to develop hand in hand. We just started outside the U.S. first, and so our presence there had well over a full year head start versus U.S. activities.

Speaker #2: And so you see a little bit of sort of playing catch-up in the US. But from a flow perspective, as I look into July and sort of into the future, we're seeing some of the noise subsiding.

Speaker #2: And so, we're generally just seeing this more positive sentiment across the product offerings and across the geographies.

Speaker #5: Got it. Okay. That's helpful. And then maybe one for Jeff just on the accrued carried interest balance. It looks like this sequential decline there was around 90 million, whereas the non-Evergreen incentive fee realizations in the quarter were closer to 30 million.

Alex Bond: Got it. Okay. That's helpful. Maybe one for Jeff, just on the accrued carried interest balance. It looks like the sequential decline there was around $90 million, whereas the non-Evergreen incentive fee realizations in the quarter were closer to $30 million. Just wondering if you could share maybe what drove that delta here in the quarter. Thanks.

Speaker #5: So, just wondering if you could share maybe what drove that delta here in the quarter. Thanks.

Speaker #2: Yeah, we're continuing to see strong activity in terms of realizations, and that's impacting the unrealized carried interest balance. So we're optimistic and hopeful that we'll continue, but it's hard to predict what's going to happen in the future, especially in this environment.

Jeff Armbrister: Yeah. We're continuing to see strong activity in terms of realizations, and that's impacting the unrealized carried interest balance. We're optimistic and hopeful that will continue, it's hard to predict what's going to happen in the future, especially in this environment. That's what we're largely seeing is just strong performance and the realizations carrying through.

Speaker #2: But that's what we're largely seeing—just strong performance and the realizations carrying through.

Speaker #5: Okay. Thank you.

Alex Bond: Okay. Thank you.

Speaker #1: Thank you. Ken Worthington with JP Morgan, please go ahead.

Operator: Thank you. Ken Worthington with JPMorgan. Please go ahead.

Speaker #6: Hi, this is Madeline Delight in on for Ken. Thanks for taking our question. So, Evergreen questions are all pretty much asked and answered, but just digging into your earlier comments on the products coming back to market.

Madeline Daleiden: Hi, this is Madeline Daleiden on for Ken. Thanks for taking our question. Evergreen questions all pretty much asked and answered, but just digging into your earlier comments on the products coming back to market. Any other details or timelines you can provide on what we should expect to be back in market over the next two to three quarters? Thank you.

Speaker #6: Are there any other details or timelines you can provide on what we should expect to be back in market over the next two to three quarters?

Speaker #6: Thank you.

Speaker #2: So Madeline, it's Erik. Thanks for the question. I think it's sort of what we touched on. So direct equity is now out of market.

Erik Hirsch: Madeline and Sarah, thanks for the question. I think it's what we sort of touched on. Direct equity is now out of market. That flagship secondary, the GP-led secondary, we're a few more quarters away from infrastructure, but venture is in market, we've got a full suite of offerings. It's going to be a busy year for us on the Specialized Funds front. Madeline, did you have a follow-up?

Speaker #2: That flagship secondary, the GP-led secondary—we're a few more quarters away from infrastructure, but venture is in market. So we've got a full suite of offerings.

Speaker #2: So it's going to be a busy year for us on the specialized fund front.

Speaker #3: Madeline, did you have a follow-up?

Speaker #6: Thank you. No, thank you.

Madeline Daleiden: Thank you. No. Thank you.

Speaker #1: Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star one. Brendan Hawkin with BMO, please go ahead.

Operator: Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star one. Brennan Hawken with BMO, please go ahead.

[Analyst] (BMO): Hey, it's Mark on for Brendan. Just wanted to ask on FRE margin, it was strong in the quarter, 53% benefiting from FRPR. As we think through the remainder of the fiscal year, how should we kind of think about a stable margin? Would incremental margin expansion come from continued top-line growth and mix shift, or from expense discipline?

Speaker #5: Hey, it's Mark on for Brendan. Just wanted to ask on FRD margin. It was strong in the quarter—53%, benefiting from FRPR. As we think through the remainder of the fiscal year, how should we kind of think about a sustainable margin?

Speaker #5: And would incremental margin expansion come from continued top-line growth and mix shift, or from expense discipline?

Speaker #2: Yeah, it's Erik. Thanks for the question, Mark. I think it's going to be a combination of those things. As we've said before, when we're generating meaningful amounts of FRPR as we did this quarter, that is a natural margin enhancer.

Erik Hirsch: Yeah. It's Erik. Thanks for the question, Mark. I think it's going to be a combination of those things. As we've said before, when we're generating meaningful amounts of FRPR as we did this quarter, that is a natural margin enhancer. To the extent that we continue to see that, along with the shifting that we've been seeing across the asset mix, all of that is margin lifting. The team here continues to, I think, execute very well on expense discipline. Comp ratios remain consistent, and expenses that we can control, I think we've continued to do a good job controlling.

Speaker #2: And so, to the extent that we continue to see that, along with the sort of shifting that we've been seeing across the asset mix, all of that is margin lifting.

Speaker #2: And the team here continues to, I think, execute very well on expense discipline. Comp ratios remain consistent, and expenses that we can control, I think, we've continued to do a good job controlling.

Speaker #5: Okay. And then within customized separate accounts, you highlighted a strong pipeline of awarded mandates in the billions of dollars. Can you provide more color on the timing of converting that pipeline into fee-paying AUM?

[Analyst] (BMO): Okay. Within Customized Separate Accounts, you highlighted a strong pipeline of awarded mandates in the billions of dollars. Can you provide more color on the timing of converting that pipeline into fee-paying AUM? Additionally, when existing clients re-up with you, are you generally seeing larger mandate sizes?

Speaker #5: And additionally, when existing clients re-up with you, are you generally seeing larger mandate sizes?

Speaker #2: So, it's Erik. On the latter, I mean, that really varies by the client—how mature their portfolio is. So, for the client who is newer in their private market journey and who’s sort of grossly under-allocated still, yes, you tend to see re-ups at larger levels because they're still trying to hit and achieve target.

Erik Hirsch: It's Erik. On the latter, that really varies by the client, how mature their portfolio is. For the client who is newer in their private market journey and who's sort of grossly under-allocated still, yes, you tend to see re-ups at larger levels because they're still trying to hit and achieve target. For clients that are much more mature and are kind of at allocation and are looking to just sort of steady state maintain, those mandates tend to be more similarly sized. It does vary by client. On the first part of your question around the timing of conversion, again, it varies depending on what is the mandate.

Speaker #2: For clients that are much more mature and are kind of at allocation and are looking to just sort of steady-state maintain, those mandates tend to be more similarly sized.

Speaker #2: So it does vary by client. On the first part of your question around the timing of conversion, again, it varies depending on what is the mandate.

Speaker #2: If the mandate is a separate account that is full of just primary funds, those often take years to continue to move in, as you're continuing to find managers, have that capital drawn down, and begin to charge fees on that.

Erik Hirsch: If the mandate is a separate account that is full of just primary funds, those often take years to continue to move in as you're continuing to find managers, have that capital drawn down, and begin to charge fees on that. A primary-only mandate is a much slower process to fee conversion. If the SMA is much more transactionally oriented, that is obviously much, much quicker as that capital tends to get deployed over a one or two-year timetable. For the SMA portion that's moving into Specialized Funds, well, that depends on whether the fund's on committed capital or invested capital and how quickly that sort of moves over and how quickly that capital turns into fee-earning AUM.

Speaker #2: So a primary-only mandate is a much slower process to fee conversion. If the SMA is much more transactionally oriented, then that is obviously much, much quicker, as those capital tends to get deployed over a one- or two-year timetable.

Speaker #2: And for the SMA portion that's moving into specialized funds, well, that depends on whether the funds are on committed capital or invested capital and how quickly that sort of moves over, and how quickly that capital turns into fee-earning AUM.

[Analyst] (BMO): Yeah. Thank you.

Speaker #5: Yeah. Thank you.

Speaker #1: Thank you. We have no further questions. I will turn the call back over to Erik Hirsch, Co-Chief Executive Officer, for closing comments.

Operator: Thank you. We have no further questions. I will turn the call back over to Erik Hirsch, Co-Chief Executive Officer, for closing comments.

Erik Hirsch: I'm going to say thank you for taking the time to join us today. Hopefully, your takeaway is that we remain very excited about the opportunity that lies ahead, and we are firmly committed to continuing to deliver for our clients and our shareholders. Thank you very much.

Speaker #2: I'm going to say thank you for taking the time to join us today. Hopefully, your takeaway is that we remain very excited about the opportunity that lies ahead.

Speaker #2: And we are firmly committed to continuing to deliver for our clients and our shareholders. Thank you very much.

Operator: Ladies and gentlemen, this concludes your conference call for today.

Madeline Daleiden: Goodbye.

Operator: We thank you for participating and ask that you please disconnect your line.

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