Fiscal Year 2025 Second Quarter Results November 6, 2024
2Hamilton Lane | Global Leader in the Private Markets Today's Speakers Erik Hirsch Co-CEO Jeff Armbrister Chief Financial Officer John Oh Head of Shareholder Relations
3Hamilton Lane | Global Leader in the Private Markets Business Performance Financial Results Dividend • Assets under management and fee-earning assets under management were $131 billion and $70 billion, respectively, as of September 30, 2024, increases of 10% and 14%, respectively, compared to September 30, 2023 • Management and advisory fees increased 21% compared to the six months ended September 30, 2023 USD in millions except per share amounts Q2 FY25 QTD Q2 FY25 YTD vs Q2 FY24 YTD Management and advisory fees $119.8 $259.7 21 % GAAP net income $55.0 $113.9 56 % GAAP EPS $1.37 $2.85 48 % Adjusted net income1 $58.2 $139.6 42 % Non-GAAP EPS1 $1.07 $2.58 41 % Fee Related Earnings1 $51.6 $111.6 21 % Adjusted EBITDA1 $75.6 $171.7 39 % • Declared a quarterly dividend of $0.49 per share of Class A common stock to record holders at the close of business on December 16, 2024 1Adjusted net income, non-GAAP earnings per share, Fee Related Earnings and Adjusted EBITDA are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see pages 20 and 21 of this presentation. Period Highlights
4Hamilton Lane | Global Leader in the Private Markets Total Assets Under Management/Advisement ($B) Total AUA Total AUM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 9/30/24 $0 $200 $400 $600 $800 $1,000 Y-o-Y Growth AUM: 10 % AUA: 11 % $947B AUM & AUA 1 CAGR: 18% $6 $7 $11 $13 $16 $19 $22 $24 $30 $32 $35 $40 $50 $59 $66 $76 $98 $108 $36 $51 $77 $79 $95 $81 $129 $147 $147 $189 $205 $292 $374 $410 $422 $581 $753 $724 $783 $120 Growing Asset Footprint & Influence 1Data as of calendar year end 12/31 unless otherwise noted. Numbers may not tie due to rounding. $131 $816
5Hamilton Lane | Global Leader in the Private Markets Y-o-Y Drivers of Growth Total Fee-Earning Assets Under Management ($B) $25 $26 $31 $35 $38 $36 $39 $14 $16 $18 $23 $28 $25 $30 Customized Separate Accounts Specialized Funds Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Sep-23 Sep-24 $0 $10 $20 $30 $40 $50 $60 $70 $80 Fee-Earning AUM growth continues and annual fee rates are stable CAGR: 14% Total Management Fee Revenues as a % of Average FEAUM 1) Includes $8.8 million in retroactive fees 2) Includes $20.7 million in retroactive fees Numbers may not tie due to rounding Customized Separate Accounts: • New client wins • Client re-ups Specialized Funds: • Closed 6th secondary fund • Fundraising 9th credit-oriented fund, 6th direct equity fund, 2nd infrastructure fund, and evergreen funds .60% $49 $61 $66 $39 $42 $57 $70 Fee-Earning AUM Driving Revenues .56% .59% .63% .62%1 .67%2
6Hamilton Lane | Global Leader in the Private Markets Customized Separate Accounts Specialized Funds Advisory Services Diverse mix of existing and prospective clients seeking to further or establish relationships with Hamilton Lane • $3.1 billion year-over-year increase in FEAUM • +80% of our gross contributions during the last 12 months came from existing clients AUM AUM & AUA Drivers AUA Select funds in market: • Direct equity fund • Credit-oriented fund • Infrastructure fund • Evergreen funds • $5.2 billion year-over-year increase in FEAUM Typically larger clients with wide-ranging mandates which include technology-driven reporting, monitoring and analytics services and consulting services; opportunity set continues to be robust • $81.3 billion year-over-year increase in AUA
Financial Highlights
8Hamilton Lane | Global Leader in the Private Markets U S D in M ill io ns $252 $347 Q2 FY24 Q2 FY25 U S D in M ill io ns $37 $87 Q2 FY24 Q2 FY25 U S D in M ill io ns $215 $260 Q2 FY24 Q2 FY25 Management and Advisory Fees Incentive Fees Total Revenues YTD YTD Y-o-Y Change: 21% YTD Y-o-Y Change: 38% Y-o-Y Change: 133% • Recurring management and advisory fees represented an average of over 80% of total revenues over the past five fiscal years • Y-o-Y increase of 21% • Incentive fees derived from a highly diversified pool of assets and funds • Unrealized carried interest of $1.3 billion as of 9/30/24 diversified across 3,000+ assets and over 100 funds • Timing of realizations unpredictable • Total revenues increased by 38%, driven by both incentive fees and management and advisory fees U S D in M ill io ns $218 $452 FY19 FY24 Long-Term Growth U S D in M ill io ns $34 $102 FY19 FY24 Long-Term Growth CAGR: 16% U S D in M ill io ns $252 $554 FY19 FY24 Long-Term Growth CAGR: 17% CAGR: 24% Consolidated Revenue Strong growth across management and advisory fees
9Hamilton Lane | Global Leader in the Private Markets Period Ending V eh ic le s U S D in M illions Unrealized Carried Interest $985 $1,151 $1,253 90 98 109 Unrealized Carried Interest Vehicles in Unrealized Carry Position Sep-22 Sep-23 Sep-24 0 20 40 60 80 100 120 $0 $250 $500 $750 $1,000 $1,250 $1,500 Unrealized Carry by Age < 5 years 25% 5-8 years 49% 8-12 years 21% > 12 years 5% Unrealized Carried Interest
10Hamilton Lane | Global Leader in the Private Markets U S D in M ill io ns $34 $141 FY19 FY24 Net Income Attributable to HLI Adjusted EBITDA1 Fee Related Earnings1 U S D in M ill io ns $123 $172 Q2 FY24 Q2 FY25 U S D in M ill io ns $73 $114 Q2 FY24 Q2 FY25 U S D in M ill io ns $118 $273 FY19 FY24 U S D in M ill io ns $92 $112 Q2 FY24 Q2 FY25 U S D in M ill io ns $90 $193 FY19 FY24 Y-o-Y Change: 56% 1Adjusted EBITDA and Fee Related Earnings are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see pages 20 and 21 of this presentation. Y-o-Y Change: 39% Y-o-Y Change: 21% CAGR: 17% CAGR: 18% Consolidated Earnings Stable long-term growth YTD YTD YTD Long-Term Growth Long-Term Growth Long-Term Growth • $55M in net income attributable to HLI for the quarter • Y-o-Y increase of 39% driven by increase in revenue • Y-o-Y growth of 21% • Long-term double digit growth in Fee Related Earnings CAGR: 32%
11Hamilton Lane | Global Leader in the Private Markets U S D in M ill io ns Investments $208 $374 $514 $588 $632 $669 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Sep-24 $0 $100 $200 $300 $400 $500 $600 $700 • For September 30, 2024, the total investment balance consisted primarily of: ◦ ~$420M in investments in our funds ◦ ~$249M in technology related and other investments • Modest leverage • $195M of debt as of September 30, 2024 U S D in M ill io ns Leverage $197 $196 $195 Sep-23 Mar-24 Sep-24 $0 $50 $100 $150 $200 $250 Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage...
Appendix
13Hamilton Lane | Global Leader in the Private Markets Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2023 2024 % Change 2023 2024 % Change Management and advisory fees $109,184 $119,783 10 % $214,592 $259,745 21 % Incentive fees 17,692 30,216 71 % 37,322 86,985 133 % Total revenues 126,876 149,999 18 % 251,914 346,730 38 % Compensation and benefits 45,930 55,070 20 % 90,032 133,504 48 % General, administrative and other 24,994 27,737 11 % 50,755 56,274 11 % Consolidated variable interest entities related: General, administrative and other 355 — (100) % 588 149 (75) % Total expenses 71,279 82,807 16 % 141,375 189,927 34 % Equity in income of investees 8,251 6,372 (23) % 20,117 13,762 (32) % Interest expense (2,743) (2,704) (1) % (5,632) (5,651) 0 % Interest income 1,099 1,406 28 % 2,036 2,171 7 % Non-operating (loss) gain (1,215) 1,437 N/A (982) 11,251 N/A Consolidated variable interest entities related: Equity in income of investees 288 957 232 % 419 1,884 350 % Unrealized gain 2,241 2,342 5 % 3,034 3,539 17 % Interest expense — — N/A (6) — N/A Interest income 2,841 92 (97) % 4,581 108 (98) % Total other income (expense) 10,762 9,902 (8) % 23,567 27,064 15 % Income before income taxes 66,359 77,094 16 % 134,106 183,867 37 % Income tax expense 1,856 1,172 (37) % 18,256 20,859 14 % Net income 64,503 75,922 18 % 115,850 163,008 41 % Less: Income attributable to non-controlling interests in general partnerships 87 388 346 % 88 733 733 % Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 18,654 19,850 6 % 37,790 47,495 26 % Less: Income attributable to non-controlling interests in consolidated funds 3,768 702 (81) % 4,980 834 (83) % Net income attributable to Hamilton Lane Incorporated $ 41,994 $ 54,982 31 % $ 72,992 $ 113,946 56 % Basic earnings per share of Class A common stock $1.11 $1.38 24 % $1.94 $2.87 48 % Diluted earnings per share of Class A Common stock $1.11 $1.37 23 % $1.92 $2.85 48 % Weighted-average shares of Class A common stock outstanding - basic 37,718,210 39,704,607 37,713,038 39,700,166 Weighted-average shares of Class A common stock outstanding - diluted 53,941,082 54,180,960 53,896,757 54,127,320 Condensed Consolidated Statements of Income (Unaudited)
14Hamilton Lane | Global Leader in the Private Markets 1 Adjusted EBITDA and Non-GAAP earnings per share are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, see page 20. 2 Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation. 3 Represents corporate income taxes at our estimated statutory tax rate of 23.4% and 23.6% for the three and six month periods ended September 30, 2024 and 2023, respectively, applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%. Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2023 2024 % Change 2023 2024 % Change Adjusted EBITDA1 Management and advisory fees $109,184 $119,783 10 % $214,592 $259,745 21 % Revenue related to consolidated funds 247 — (100) % 394 — (100) % Total expenses 71,279 82,807 16 % 141,375 189,927 34 % Less: Incentive fee related compensation2 (8,404) (14,353) 71 % (17,728) (41,318) 133 % Consolidated VIE related general, administrative and other expenses (333) — N/A (566) (149) (74) % Non-operating income related compensation — (278) N/A (59) (278) 371 % Management fee related expenses 62,542 68,176 9 % 123,022 148,182 20 % Fee Related Earnings $46,889 $51,607 10 % $91,964 $111,563 21 % Fee Related Earnings Margin 43 % 43 % 43 % 43 % Incentive fees 17,692 30,216 71 % 37,322 86,985 133 % Incentive fees attributable to non-controlling interests — — N/A — — N/A Incentive fee related compensation2 (8,404) (14,353) 71 % (17,728) (41,318) 133 % Non-operating income related compensation — (278) N/A (59) (278) 371 % Interest income 1,099 1,406 28 % 2,036 2,171 7 % Equity-based compensation 3,118 4,673 50 % 5,963 7,896 32 % Depreciation and amortization 1,863 2,367 27 % 3,736 4,680 25 % Adjusted EBITDA $62,257 $75,638 21 % $123,234 $171,699 39 % Adjusted EBITDA Margin 49 % 50 % 49 % 50 % Non-GAAP earnings per share1 Net income attributable to Hamilton Lane Incorporated $41,994 $54,982 31 % $72,992 $113,946 56 % Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 18,654 19,850 6 % 37,790 47,495 26 % Income tax expense 1,856 1,172 (37) % 18,256 20,859 14 % Adjusted pre-tax net income 62,504 76,004 22 % 129,038 182,300 41 % Adjusted income taxes3 (14,752) (17,785) 21 % (30,453) (42,658) 40 % Adjusted net income $47,752 $58,219 22 % $98,585 $139,642 42 % Adjusted shares outstanding 53,941,082 54,180,960 53,896,757 54,127,320 Non-GAAP earnings per share $0.89 $1.07 20 % $1.83 $2.58 41 % Non-GAAP Financial Measures
15Hamilton Lane | Global Leader in the Private Markets Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2023 2024 % Change 2023 2024 % Change Management and advisory fees Specialized funds $62,386 $70,312 13 % $120,102 $160,103 33 % Customized separate accounts 32,040 34,757 8 % 63,759 68,210 7 % Advisory 6,014 5,728 (5) % 12,307 11,639 (5) % Reporting, monitoring, data and analytics 6,261 7,128 14 % 11,819 14,122 19 % Distribution management 1,254 416 (67) % 2,467 915 (63) % Fund reimbursement revenue 1,229 1,442 17 % 4,138 4,756 15 % Total management and advisory fees $109,184 $119,783 10 % $214,592 $259,745 21 % Reporting and other: 8% Customized separate accounts: 26% Specialized funds: 62% Advisory: 4% Six Months Ended September 30, 2024 Management and Advisory Fees
16Hamilton Lane | Global Leader in the Private Markets Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2023 2024 % Change 2023 2024 % Change Incentive fees Direct equity funds $1,113 $6,949 524 % $3,444 $10,897 216 % Secondary funds 3,969 13,511 240 % 12,046 23,392 94 % Direct credit funds (42) 9 N/A 4,725 11,058 134 % Evergreen funds 1,790 1,521 (15) % 3,005 7,065 135 % Other specialized funds 7,446 4,031 (46) % 9,442 25,664 172 % Customized separate accounts 3,416 4,195 23 % 4,660 8,909 91 % Incentive fees $17,692 $30,216 71 % $37,322 $86,985 133 % As of September 30, 2023 June 30, 2024 September 30, 2024 YoY % Change QoQ % Change Allocated carried interest Secondary Fund II $199 $24 $23 (88) % (4) % Secondary Fund III 28,369 284 225 (99) % (21) % Secondary Fund IV 121,113 104,665 97,304 (20) % (7) % Secondary Fund V 153,399 152,530 144,838 (6) % (5) % Secondary Fund VI 14,855 40,404 42,580 187 % 5 % Co-investment Fund II 16,679 22,541 25,815 55 % 15 % Co-investment Fund III 49,930 38,312 37,078 (26) % (3) % Co-investment Fund IV 131,502 150,979 142,805 9 % (5) % Equity Opportunities Fund V 28,270 45,595 45,152 60 % (1) % Evergreen Funds 128,946 168,910 182,053 41 % 8 % Other specialized Funds 117,390 117,156 123,650 5 % 6 % Customized separate accounts 360,099 396,205 411,313 14 % 4 % Total allocated carried interest $1,150,751 $1,237,605 $1,252,836 9 % 1 % Incentive Fees
17Hamilton Lane | Global Leader in the Private Markets (Dollars in millions) September 30, 2023 June 30, 2024 September 30, 2024 YoY % Change QoQ % Change Assets under management / advisement Assets under management $119,182 $129,724 $131,373 10 % 1 % Assets under advisement 734,804 810,414 816,057 11 % 1 % Total assets under management /advisement $853,986 $940,138 $947,430 11 % 1 % Fee-earning assets under management Customized separate accounts Balance, beginning of period $35,850 $37,574 $38,223 7 % 2 % Contributions 1,258 1,647 1,673 33 % 2 % Distributions (921) (969) (548) (40) % (43) % Foreign exchange, market value and other 47 (29) 30 (36) % N/A Balance, end of period $36,234 $38,223 $39,378 9 % 3 % Specialized funds Balance, beginning of period $23,815 $28,175 $29,487 24 % 5 % Contributions 1,614 2,609 1,380 (14) % (47) % Distributions (297) (1,323) (788) 165 % (40) % Foreign exchange, market value and other 55 26 283 415 % 988 % Balance, end of period $25,187 $29,487 $30,362 21 % 3 % Total Balance, beginning of period $59,665 $65,749 $67,710 13 % 3 % Contributions 2,872 4,256 3,053 6 % (28) % Distributions (1,218) (2,292) (1,336) 10 % (42) % Foreign exchange, market value and other 102 (3) 313 207 % N/A Balance, end of period $61,421 $67,710 $69,740 14 % 3 % Assets Under Management
18Hamilton Lane | Global Leader in the Private Markets (Dollars in thousands) March 31, 2024 September 30, 2024 Assets Cash and cash equivalents $114,634 $193,771 Restricted cash 4,985 5,858 Fees receivable 108,291 95,509 Prepaid expenses 11,073 16,750 Due from related parties 8,150 16,467 Furniture, fixtures and equipment, net 33,013 32,264 Lease right-of-use assets, net 62,425 62,991 Investments 603,697 627,172 Deferred income taxes 261,887 257,187 Other assets 34,435 33,989 Assets of consolidated variable interest entities: Cash and cash equivalents — 33,198 Investments 28,575 41,888 Other assets 35 7,286 Total assets $1,271,200 $1,424,330 Liabilities and equity Accounts payable $4,505 $6,430 Accrued compensation and benefits 35,979 71,431 Accrued members' distributions 23,815 9,279 Accrued dividend 17,628 19,454 Debt 196,159 194,971 Payable to related parties pursuant to tax receivable agreement 201,422 200,346 Lease liabilities 79,033 79,884 Other liabilities (includes $13,071 and $13,080 at fair value) 36,700 39,904 Liabilities of consolidated variable interest entities: Other liabilities 1 709 Total liabilities 595,242 622,408 Total equity 675,958 801,922 Total liabilities and equity $1,271,200 $1,424,330 Condensed Consolidated Balance Sheets (Unaudited)
19Hamilton Lane | Global Leader in the Private Markets Six Months Ended September 30, (Dollars in thousands) 2023 2024 Operating activities Net income $115,850 $163,008 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,736 4,680 Change in deferred income taxes 4,121 4,700 Change in payable to related parties pursuant to tax receivable agreement (884) (1,076) Equity-based compensation 5,963 7,896 Equity income of investees (20,117) (13,762) Net realized loss (gain) on sale of investments 288 (618) Fair value adjustment of other investments 445 (9,780) Proceeds received from Partnerships 12,998 14,038 Non-cash lease expense 3,999 4,778 Other 231 397 Changes in operating assets and liabilities 11,196 34,167 Consolidated variable interest entities related (2,257) (11,283) Net cash provided by operating activities $135,569 $197,145 Investing activities Purchase of furniture, fixtures and equipment $(6,276) $(3,080) Purchase of investments (6,352) (5,000) Proceeds from sale of investments 1,343 1,193 Proceeds from sale of intangible assets 1,739 1,275 Distributions received from Partnerships 6,001 12,678 Contributions to Partnerships (23,632) (23,928) Consolidated variable interest entities related (57,832) (8,175) Net cash used in investing activities $(85,009) $(25,037) Financing activities Repayments of debt $(1,250) $(1,250) Draw-down on revolver 10,000 — Repayment of revolver (25,000) — Repurchase of Class A shares for employee tax withholding (108) (918) Proceeds received from issuance of shares under Employee Share Purchase Plan 1,082 1,269 Dividends paid (31,829) (37,079) Members' distributions paid (28,599) (31,021) Consolidated variable interest entities related 143,367 10,099 Net cash provided by (used in) financing activities $67,663 $(58,900) Increase in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities 118,223 113,208 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the period 116,552 119,619 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period $234,775 $232,827 Condensed Consolidated Statements of Cash Flows (Unaudited)
20Hamilton Lane | Global Leader in the Private Markets Reconciliation from Net Income Year Ended March 31, Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2019 2024 2023 2024 2023 2024 Net income attributable to Hamilton Lane Incorporated $33,573 $140,858 $41,994 $54,982 $72,992 $113,946 Income attributable to non-controlling interests in general partnerships 564 534 87 388 88 733 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 64,860 80,835 18,654 19,850 37,790 47,495 Income attributable to non-controlling interests in consolidated funds — 4,980 3,768 702 4,980 834 Incentive fees (34,406) (101,906) (17,692) (30,216) (37,322) (86,985) Incentive fee related compensation1 14,983 48,406 8,404 14,353 17,728 41,318 Consolidated VIE related general, administrative and other expenses — 566 333 — 566 149 Revenue related to consolidated funds — 394 247 — 394 — Non-operating income related compensation — 59 — 278 59 278 Interest income (255) (10,008) (3,940) (1,498) (6,617) (2,279) Interest expense 3,039 11,175 2,743 2,704 5,638 5,651 Income tax expense 30,560 54,454 1,856 1,172 18,256 20,859 Equity in income of investees (7,202) (36,491) (8,539) (7,329) (20,536) (15,646) Contingent compensation related to acquisition 5,100 — — — — — Non-operating gain (20,915) (519) (1,026) (3,779) (2,052) (14,790) Fee Related Earnings $89,901 $193,337 $46,889 $51,607 $91,964 $111,563 Depreciation and amortization 2,500 8,186 1,863 2,367 3,736 4,680 Equity-based compensation 6,382 12,133 3,118 4,673 5,963 7,896 Incentive fees 34,406 101,906 17,692 30,216 37,322 86,985 Incentive fees attributable to non-controlling interests (725) — — — — — Incentive fee related compensation1 (14,983) (48,406) (8,404) (14,353) (17,728) (41,318) Non-operating income related compensation — (59) — (278) (59) (278) Interest income 255 5,427 1,099 1,406 2,036 2,171 Adjusted EBITDA $117,736 $272,524 $62,257 $75,638 $123,234 $171,699 Non-GAAP earnings per share reconciliation Net income attributable to Hamilton Lane Incorporated $41,994 $54,982 $72,992 $113,946 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 18,654 19,850 37,790 47,495 Income tax expense 1,856 1,172 18,256 20,859 Adjusted pre-tax net income 62,504 76,004 129,038 182,300 Adjusted income taxes2 (14,752) (17,785) (30,453) (42,658) Adjusted net income $47,752 $58,219 $98,585 $139,642 Adjusted shares outstanding 53,941,082 54,180,960 53,896,757 54,127,320 Non-GAAP earnings per share $0.89 $1.07 $1.83 $2.58 1 Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation. 2 Represents corporate income taxes at our estimated statutory tax rate of 23.4% and 23.6% for the three and six months ended September 30, 2024 and 2023, respectively, applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%. Non-GAAP Reconciliation
21Hamilton Lane | Global Leader in the Private Markets Adjusted EBITDA is an internal measure of profitability. We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods. Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) non-operating gain (loss) and (f) certain other significant items that we believe are not indicative of our core performance. Fee Related Earnings ("FRE") is used to highlight earnings from recurring management fees. FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) non-operating gain (loss) and (f) certain other significant items that we believe are not indicative of our core performance. We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business. FRE is presented before income taxes. Non-GAAP earnings per share measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI. Non-GAAP earnings per share is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate and excludes any impact of changes in carrying amount of our redeemable non-controlling interest. Adjusted shares outstanding for the three and six months ended September 30, 2023 and 2024 and March 31, 2024 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP earnings per share are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods. Our assets under management ("AUM"), as presented in these materials, comprise the assets associated with our customized separate accounts and specialized funds. AUM does not include the assets associated with our distribution management services. We classify assets as AUM if we have full discretion over the investment decisions in an account. We calculate our AUM as the sum of: (1) the net asset value of our clients' and funds' underlying investments; (2) the unfunded commitments to our clients' and funds' underlying investments; and (3) the amounts authorized for us to invest on behalf of our clients and fund investors but not committed to an underlying investment. Management fee revenue is based on a variety of factors and is not linearly correlated with AUM. However, we believe AUM is a useful metric for assessing the relative size and scope of our asset management business. Our assets under advisement ("AUA") comprise assets from clients for which we do not have full discretion to make investments in their account. We generally earn revenue on a fixed fee basis on our AUA client accounts for services including asset allocation, strategic planning, development of investment policies and guidelines, screening and recommending investments, monitoring and reporting on investments and investment manager review and due diligence. Advisory fees vary by client based on the amount of annual commitments, services provided and other factors. Since we earn annual fixed fees from the majority of our AUA clients, the growth in AUA from existing accounts does not have a material impact on our revenues. However, we view AUA growth as a meaningful benefit in terms of the amount of data we are able to collect and the degree of influence we have with fund managers. Fee-earning assets under management (Fee-earning "AUM" or "FEAUM") is a metric we use to measure the assets from which we earn management fees. Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees that are generally derived from applying a certain percentage to the appropriate fee base. We classify customized separate account revenue as management fees if the client is charged an asset-based fee, which includes the majority of our discretionary AUM accounts but also includes certain non-discretionary AUA accounts. Our fee-earning AUM is equal to the amount of capital commitments, net invested capital and net asset value of our customized separate accounts and specialized funds depending on the fee terms. The vast majority of our customized separate accounts and specialized funds earn fees based on commitments or net invested capital, which are not affected by market appreciation or depreciation. Therefore, revenues and fee-earning AUM are not significantly affected by changes in market value. Our calculations of fee-earning AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. Our definition of fee-earning AUM is not based on any definition that is set forth in the agreements governing the customized separate accounts or specialized funds that we manage. Hamilton Lane Incorporated (or "HLI"), a Delaware corporation, was formed for the purpose of completing an initial public offering ("IPO") and related transactions in order to carry on the business of Hamilton Lane Advisors, L.L.C. ("HLA") as a publicly-traded entity. As of the closing of our IPO on March 6, 2017, HLI became the sole managing member of HLA. Terms
22Hamilton Lane | Global Leader in the Private Markets Some of the statements in this presentation may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as "will", "expect", "believe", "estimate", "continue", "anticipate", "intend", "plan", and similar expressions are intended to identify these forward-looking statements. Forward-looking statements discuss management's current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. All forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different, including risks relating to: our ability to manage growth, fund performance, competition in our industry, changes in our regulatory environment and tax status; market conditions generally; our ability to access suitable investment opportunities for our clients; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; defaults by clients and third-party investors on their obligations to fund commitments; our exposure and that of our clients and investors to the credit risks of financial institutions at which we and they hold accounts; our ability to comply with investment guidelines set by our clients; our ability to successfully integrate acquired businesses with ours; our ability to manage risks associated with introducing new types of investment structures, products or services or entering into strategic partnerships; our ability to manage redemption or repurchase rights in certain of our funds; our ability to manage, identify and anticipate risks we face; our ability to manage the effects of events outside of our control; and our ability to receive distributions from Hamilton Lane Advisors, L.L.C. to fund our payment of dividends, taxes and other expenses. The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks we face, you should refer to the "Risk Factors" detailed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and in our subsequent reports filed from time to time with the Securities and Exchange Commission. The forward-looking statements included in this presentation are made only as of the date presented. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law. Values appearing in this presentation that are whole numbers are rounded approximations. As of November 6, 2024 Disclosures