UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to ___________________________

Commission file number 001-38021

HAMILTON LANE INCORPORATED

(Exact name of Registrant as specified in its charter)

Delaware

26-2482738

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

110 Washington Street,

Suite 1300

Conshohocken,

19428

(Address of principal executive offices)

(Zip Code)

(610) 934-2222

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

HLNE

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of February ~~3, 2023,~~2, 2024, there were ~~37,868,486~~38,596,292 shares of the registrant’s Class A common stock, par value $0.001, and ~~15,948,744~~15,409,507 shares of the registrant’s Class B common stock, par value $0.001, outstanding.

Table of Contents


			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Consolidated Balance Sheets as of December 31, ~~2022~~2023 and March 31, ~~202~~22023			3
Condensed Consolidated Statements of Income for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022			4
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022			5
Condensed Consolidated Statements of Cash Flows for the nine m onths ended December 31, ~~2022~~2023 and ~~2021~~2022			7
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures about Market Risk			4546
Item 4. Controls and Procedures			47
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			48
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 5. Other Information			48
Item 6. Exhibits			49
Signatures			50

This Quarterly Report on Form 10-Q (“Form 10-Q”) includes certain information regarding the historical performance of our specialized funds and customized separate accounts. An investment in shares of our Class A common stock is not an investment in our specialized funds or customized separate accounts. In considering the performance information relating to our specialized funds and customized separate accounts contained herein, current and prospective Class A common stockholders should bear in mind that the performance of our specialized funds and customized separate accounts is not indicative of the possible performance of shares of our Class A common stock and is also not necessarily indicative of the future results of our specialized funds or customized separate accounts, even if fund investments were in fact liquidated on the dates indicated, and there can be no assurance that our specialized funds or customized separate accounts will continue to achieve, or that future specialized funds and customized separate accounts will achieve, comparable results. Please note that nothing in this Form 10-Q represents an offer to sell, or a solicitation of an offer to purchase, interests in any of Hamilton Lane’s products.

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are owned by us or licensed by us. We also own or have the rights to copyrights that protect the content of our solutions. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, trade names and copyrights.

This Form 10-Q may include trademarks, service marks or trade names of other companies. Our use or display of other parties’ trademarks, service marks, trade names or products is not intended to, and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, service mark or trade name owners.

Unless otherwise indicated, information contained in this Form 10-Q concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources (including industry publications, surveys and forecasts), and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets that we believe to be reasonable. Although we believe the data from these third-party sources is reliable, we have not independently verified any third-party information.

Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” the “Company,” “Hamilton Lane” and similar terms refer to Hamilton Lane Incorporated and its consolidated subsidiaries. As used in this Form 10-Q, (i) the term “HLA” refers to Hamilton Lane Advisors, L.L.C. and (ii) the terms “Hamilton Lane Incorporated” and “HLI” refer solely to Hamilton Lane Incorporated, a Delaware corporation, and not to any of its subsidiaries.

Cautionary Note Regarding Forward-Looking Information

Some of the statements in this Form 10-Q may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 ~~pursuing~~introducing new ~~lines~~types of ~~business~~investment structures, products or services or entering into strategic partnerships; our ability to ~~anticipate,~~manage redemption or repurchase rights in certain of our funds; our ability to manage, identify and ~~manage~~anticipate risks we face; our ability to manage the effects of events outside of our control; and our ability to receive distributions from HLA 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 ~~that~~ 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, ~~2022~~2023 (our ~~“2022~~“2023 Form 10-K”), and in our subsequent reports filed from time to time with the Securities and Exchange Commission (the “SEC”). The forward-looking statements included in this Form 10-Q are made only as of the date we filed this report. 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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Hamilton Lane Incorporated

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share amounts)


		December 31,		March 31,
		2022		2022
	December 31,							December 31,			March 31,
	2023									2023
Assets	Assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	146,070	$	72,138
Restricted cash	Restricted cash	3,116		4,023
Fees receivable	Fees receivable	52,074		51,869
Prepaid expenses	Prepaid expenses	7,078		6,858
Due from related parties	Due from related parties	7,784		1,872
Furniture, fixtures and equipment, net	Furniture, fixtures and equipment, net	28,348		28,842
Lease right-of-use assets, net	Lease right-of-use assets, net	63,152		65,636
Investments	Investments	514,332		503,789
Deferred income taxes	Deferred income taxes	230,154		245,046
Other assets	Other assets	30,755		28,162
Assets of consolidated variable interest entities:	Assets of consolidated variable interest entities:
Cash and cash equivalents	Cash and cash equivalents	3,909		36
Investments held in trust		—		276,016
Cash and cash equivalents
Cash and cash equivalents
Investments	Investments	37,360		10,036
Other assets	Other assets	229		623
Total assets	Total assets	$	1,124,361	$	1,294,946
Liabilities, redeemable non-controlling interests and equity
Liabilities and equity
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	2,045	$	2,827
Accrued compensation and benefits	Accrued compensation and benefits	65,761		20,117
Accrued members’ distributions	Accrued members’ distributions	19,161		27,119
Accrued dividend	Accrued dividend	14,810		12,947
Debt	Debt	199,126		171,326
Payable to related parties pursuant to tax receivable agreement	Payable to related parties pursuant to tax receivable agreement	179,431		180,536
Lease liabilities	Lease liabilities	79,549		82,244
Other liabilities (includes $13,954 and $13,818 at fair value)		34,503		47,669
Other liabilities (includes $13,123 and $14,228 at fair value)
Liabilities of consolidated variable interest entities:	Liabilities of consolidated variable interest entities:
Other liabilities
Other liabilities
Other liabilities	Other liabilities	17		12,675
Total liabilities	Total liabilities	594,403		557,460

Commitments and contingencies (Note 16)
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 15)

Redeemable non-controlling interests		—		276,000

Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	—		—
Class A common stock, $0.001 par value, 300,000,000 authorized; 37,868,691 and 37,280,697 issued and outstanding as of December 31, 2022 and March 31, 2022, respectively		38		37
Class B common stock, $0.001 par value, 50,000,000 authorized; 15,953,682 and 16,033,359 issued and outstanding as of December 31, 2022 and March 31, 2022, respectively		16		16

Preferred stock, $0.001 par value, 10,000,000 authorized, none issued

Preferred stock, $0.001 par value, 10,000,000 authorized, none issued
Class A common stock, $0.001 par value, 300,000,000 authorized; 38,604,787 and 38,611,919 issued and outstanding as of December 31, 2023 and March 31, 2023, respectively						Class A common stock, $0.001 par value, 300,000,000 authorized; 38,604,787 and 38,611,919 issued and outstanding as of December 31, 2023 and March 31, 2023, respectively	39		39
Class B common stock, $0.001 par value, 50,000,000 authorized; 15,409,507 issued and outstanding as of each of December 31, 2023 and March 31, 2023
Additional paid-in-capital	Additional paid-in-capital	166,821		161,676
Retained earnings	Retained earnings	227,786		185,149
Total Hamilton Lane Incorporated stockholders’ equity	Total Hamilton Lane Incorporated stockholders’ equity	394,661		346,878
Non-controlling interests in general partnerships	Non-controlling interests in general partnerships	3,653		3,423
Non-controlling interests in Hamilton Lane Advisors, L.L.C.	Non-controlling interests in Hamilton Lane Advisors, L.L.C.	131,644		111,185
Non-controlling interests in consolidated funds
Total equity	Total equity	529,958		461,486
Total liabilities, redeemable non-controlling interests and equity		$	1,124,361	$	1,294,946
Total liabilities and equity

See accompanying notes to the condensed consolidated financial statements.

Hamilton Lane Incorporated

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)


		Three Months Ended December 31,				Nine Months Ended December 31,
		2022		2021		2022		2021
	Three Months Ended December 31,
		2023
		2023
		2023
Revenues
Revenues
Revenues	Revenues
Management and advisory fees	Management and advisory fees	$	97,355	$	79,836	$	276,182	$	229,653
Management and advisory fees
Management and advisory fees
Incentive fees
Incentive fees
Incentive fees	Incentive fees	24,075		10,490		132,835		34,217
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Consolidated variable interest entities related:
Consolidated variable interest entities related:
Incentive fees
Incentive fees
Incentive fees	Incentive fees	5,644		1,378		6,948		3,149
Total revenues	Total revenues	127,074		91,704		415,965		267,019
Total revenues
Total revenues
Expenses
Expenses
Expenses	Expenses
Compensation and benefits	Compensation and benefits	45,676		34,004		158,235		94,028
Compensation and benefits
Compensation and benefits
General, administrative and other
General, administrative and other
General, administrative and other	General, administrative and other	22,717		16,332		66,066		48,742
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Consolidated variable interest entities related:
Consolidated variable interest entities related:
General, administrative and other
General, administrative and other
General, administrative and other	General, administrative and other	309		322		941		952
Total expenses	Total expenses	68,702		50,658		225,242		143,722
Total expenses
Total expenses
Other income (expense)	Other income (expense)
Equity in income (loss) of investees		650		12,924		(7,493)		60,181
Other income (expense)
Other income (expense)
Equity in (loss) income of investees
Equity in (loss) income of investees
Equity in (loss) income of investees
Interest expense
Interest expense
Interest expense	Interest expense	(2,419)		(1,157)		(6,027)		(3,488)
Interest income	Interest income	442		26		839		488
Non-operating (expense) income		(27,960)		37,043		(11,878)		65,500
Interest income
Interest income
Non-operating loss
Non-operating loss
Non-operating loss
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Equity in income (loss) of investees		389		(298)		1,030		170
Unrealized income		2,087		2,135		4,333		1,067
Consolidated variable interest entities related:
Consolidated variable interest entities related:
Equity in income of investees
Equity in income of investees
Equity in income of investees
Unrealized gain
Unrealized gain
Unrealized gain
Interest expense
Interest expense
Interest expense	Interest expense	—		(4)		—		(4)
Interest income	Interest income	2,111		—		2,989		—
Interest income
Interest income
Total other income (expense)
Total other income (expense)
Total other income (expense)	Total other income (expense)	(24,700)		50,669		(16,207)		123,914
Income before income taxes	Income before income taxes	33,672		91,715		174,516		247,211
Income before income taxes
Income before income taxes
Income tax expense
Income tax expense
Income tax expense	Income tax expense	11,788		11,519		38,766		37,515
Net income	Net income	21,884		80,196		135,750		209,696
Less: Income (loss) attributable to non-controlling interests in general partnerships		422		(119)		773		167
Net income
Net income
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	9,146		26,181		51,326		76,849
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.	Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.	2,647		2,285		5,617		519
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.
Less: Income attributable to non-controlling interests in consolidated funds
Less: Income attributable to non-controlling interests in consolidated funds
Less: Income attributable to non-controlling interests in consolidated funds
Net income attributable to Hamilton Lane Incorporated
Net income attributable to Hamilton Lane Incorporated
Net income attributable to Hamilton Lane Incorporated	Net income attributable to Hamilton Lane Incorporated	$	9,669	$	51,849	$	78,034	$	132,161

Basic earnings per share of Class A common stock	Basic earnings per share of Class A common stock	$	0.32	$	1.44	$	2.21	$	3.64

Basic earnings per share of Class A common stock

Basic earnings per share of Class A common stock
Diluted earnings per share of Class A common stock
Diluted earnings per share of Class A common stock
Diluted earnings per share of Class A common stock	Diluted earnings per share of Class A common stock	$	0.31	$	1.40	$	2.19	$	3.59
Dividends declared per share of Class A common stock	Dividends declared per share of Class A common stock	$	0.40	$	0.35	$	1.20	$	1.05
Dividends declared per share of Class A common stock
Dividends declared per share of Class A common stock

See accompanying notes to the condensed consolidated financial statements.

Hamilton Lane Incorporated

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)


	Class A Common Stock																											Class A Common Stock	Class B Common Stock	Additional Paid in Capital	Retained Earnings	Non-Controlling Interests in General Partnerships	Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.	Non-Controlling Interests in Consolidated Funds	Total Equity
				Class A Common Stock			Class B Common Stock			Additional Paid in Capital			Retained Earnings				Non-Controlling Interests in General Partnerships				Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.				Total Equity

Balance at March 31, 2022		$	37					$	16				$	161,676			$	185,149			$	3,423			$	111,185	$	461,486
Balance at March 31, 2023
Balance at March 31, 2023
Balance at March 31, 2023
Net income	Net income	—			—			—			78,034				773				51,326				130,133

Equity-based compensation
Equity-based compensation
Equity-based compensation	Equity-based compensation	—			—			4,702			—				—				2,114				6,816

Repurchase of Class A shares for employee tax withholding	Repurchase of Class A shares for employee tax withholding	—			—			(112)			—				—				(50)				(162)

Repurchase of Class A shares for employee tax withholding

Repurchase of Class A shares for employee tax withholding

Dividends declared	Dividends declared	—			—			—			(44,413)				—				—				(44,413)
Capital contributions to non-controlling interests, net		—			—			—			—				(543)				—				(543)
Dividends declared
Dividends declared
Capital contributions from non-controlling interests, net
Member distributions	Member distributions	—			—			—			—				—				(37,871)				(37,871)

Employee Share Purchase Plan share issuance	Employee Share Purchase Plan share issuance	1			—			993			—				—				447				1,441
Adjustment of redeemable non-controlling interest to redemption value		—			—			—			9,016				—				4,055				13,071
Employee Share Purchase Plan share issuance
Employee Share Purchase Plan share issuance

Deconsolidation of consolidated fund

Deconsolidation of consolidated fund

Deconsolidation of consolidated fund
Equity reallocation between controlling and non-controlling interests	Equity reallocation between controlling and non-controlling interests	—			—			(438)			—				—				438				—
Balance at December 31, 2022		$	38		$	16		$	166,821		$	227,786			$	3,653			$	131,644			$	529,958
Balance at December 31, 2023

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Non-Controlling
Interests in General Partnerships Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C. Total Equity
Balance at March 31, 2021 $ 36 $ 17 $ 150,564 $ 87,512 $ 2,211 $ 73,861 $ 314,201
Net income — — — 132,161 167 76,849 209,177
Equity-based compensation — — 3,870 — — 1,836 5,706
Repurchase of Class A shares for employee tax withholding — — (220) — — (385) (605)
Deferred tax adjustment — — 2,722 — — — 2,722
Dividends declared — — — (38,429) — — (38,429)
Capital contributions from non-controlling interests, net — — — — 563 — 563
Member distributions — — — — — (32,361) (32,361)
Secondary offerings 1 (1) 4,097 — — (4,098) (1)
Employee Share Purchase Plan share issuance — — 936 — — 446 1,382
Adjustment of redeemable non-controlling interest to redemption value — — — 393 — 127 520
Equity reallocation between controlling and non-controlling interests — — 98 — — (98) —
Balance at December 31, 2021 $ 37 $ 16 $ 162,067 $ 181,637 $ 2,941 $ 116,177 $ 462,875


	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Non-Controlling Interests in Consolidated Funds		Total Equity

Balance at March 31, 2022	$	37	$	16	$	161,676	$	185,149	$	3,423	$	111,185	$	—	$	461,486

Net income	—		—		—		78,034		773		51,326		—		130,133

Equity-based compensation	—		—		4,702		—		—		2,114		—		6,816
Repurchase of Class A shares for employee tax withholding	—		—		(112)		—		—		(50)		—		(162)


Dividends declared	—		—		—		(44,413)		—		—		—		(44,413)
Capital distributions to non-controlling interests, net	—		—		—		—		(543)		—		—		(543)
Member distributions	—		—		—		—		—		(37,871)		—		(37,871)

Employee Share Purchase Plan share issuance	1		—		993		—		—		447		—		1,441
Adjustment of redeemable non-controlling interest to redemption value	—		—		—		9,016		—		4,055		—		13,071
Equity reallocation between controlling and non-controlling interests	—		—		(438)		—		—		438		—		—
Balance at December 31, 2022	$	38	$	16	$	166,821	$	227,786	$	3,653	$	131,644	$	—	$	529,958

See accompanying notes to the condensed consolidated financial statements.

Hamilton Lane Incorporated

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Non-Controlling
Interests in General Partnerships Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C. Total Equity
Balance at September 30, 2022 $ 38 $ 16 $ 164,763 $ 225,957 $ 3,820 $ 130,384 $ 524,978
Net income — — — 9,669 422 9,146 19,237
Equity-based compensation — — 1,956 — — 879 2,835
Repurchase of Class A shares for employee tax withholding — — (48) — — (22) (70)
Dividends declared — — — (14,810) — — (14,810)
Capital contributions to non-controlling interests, net — — — — (589) — (589)
Member distributions — — — — — (12,164) (12,164)
Employee Share Purchase Plan share issuance — — 303 — — 136 439
Adjustment of redeemable non-controlling interest to redemption value — — — 6,970 — 3,132 10,102
Equity reallocation between controlling and non-controlling interests — — (153) — — 153 —
Balance at December 31, 2022 $ 38 $ 16 $ 166,821 $ 227,786 $ 3,653 $ 131,644 $ 529,958

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Non-Controlling
Interests in General Partnerships Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C. Total Equity
Balance at September 30, 2021 $ 37 $ 16 $ 161,000 $ 141,130 $ 2,904 $ 99,165 $ 404,252
Net income — — — 51,849 (119) 26,181 77,911
Equity-based compensation — — 1,179 — — 532 1,711
Repurchase of Class A shares for employee tax withholding — — — — — —
Deferred tax adjustment — — 2 — — — 2
Dividends declared — — — (12,916) — — (12,916)
Capital contribution to non-controlling interests, net — — — — 156 — 156
Member distributions — — — — — (11,024) (11,024)
Secondary offerings — — — — — —
Employee Share Purchase Plan share issuance — — 340 — — 158 498
Adjustment of redeemable non-controlling interest to redemption value — — — 1,574 — 711 2,285
Equity reallocation between controlling and non-controlling interests — — (454) — — 454 —
Balance at December 31, 2021 $ 37 $ 16 $ 162,067 $ 181,637 $ 2,941 $ 116,177 $ 462,875


	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Non-Controlling Interests in Consolidated Funds		Total Equity

Balance at September 30, 2023	$	39	$	15	$	179,215	$	283,251	$	4,408	$	147,567	$	167,073	$	781,568
Net income	—		—		—		19,506		82		14,944		—		34,532

Equity-based compensation	—		—		2,287		—		—		977		—		3,264
Repurchase of Class A shares for employee tax withholding	—		—		(113)		—		—		(48)		—		(161)
Dividends declared	—		—		—		(16,793)		—		—		—		(16,793)
Capital contributions to non-controlling interests, net	—		—		—		—		282		—		—		282
Member distributions	—		—		—		—		—		(12,098)		—		(12,098)
Employee Share Purchase Plan share issuance	—		—		410		—		—		175		—		585



Deconsolidation of consolidated fund	—		—		—		—		—		—		(167,073)		(167,073)
Equity reallocation between controlling and non-controlling interests	—		—		130		—		—		(130)		—		—
Balance at December 31, 2023	$	39	$	15	$	181,929	$	285,964	$	4,772	$	151,387	$	—	$	624,106


	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Non-Controlling Interests in Consolidated Funds		Total Equity

Balance at September 30, 2022	$	38	$	16	$	164,763	$	225,957	$	3,820	$	130,384	$	—	$	524,978
Net income	—		—		—		9,669		422		9,146		—		19,237
Equity-based compensation	—		—		1,956		—		—		879		—		2,835
Repurchase of Class A shares for employee tax withholding	—		—		(48)		—		—		(22)		—		(70)

Dividends declared	—		—		—		(14,810)		—		—		—		(14,810)
Capital distribution to non-controlling interests, net	—		—		—		—		(589)		—		—		(589)
Member distributions	—		—		—		—		—		(12,164)		—		(12,164)

Employee Share Purchase Plan share issuance	—		—		303		—		—		136		—		439
Equity reallocation between controlling and non-controlling interests	—		—		(153)		—		—		153		—		—
Adjustment of redeemable non-controlling interest to redemption value	—		—		—		6,970		—		3,132		—		10,102

Balance at December 31, 2022	$	38	$	16	$	166,821	$	227,786	$	3,653	$	131,644	$	—	$	529,958

See accompanying notes to the condensed consolidated financial statements.

Hamilton Lane Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


		Nine Months Ended December 31,
		2022		2021
	Nine Months Ended December 31,						Nine Months Ended December 31,
	2023					2023		2022
Operating activities:	Operating activities:
Net income	Net income	$	135,750	$	209,696
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	5,600		3,744
Change in deferred income taxes	Change in deferred income taxes	14,892		19,941
Change in payable to related parties pursuant to tax receivable agreement	Change in payable to related parties pursuant to tax receivable agreement	(1,105)		(6,202)
Equity-based compensation	Equity-based compensation	6,816		5,706
Equity in loss (income) of investees		7,493		(60,181)
Gain on sale of investment		(9,783)		(11,936)
Equity in (income) loss of investees
Net realized loss (gain) on sale of investments
Fair value adjustment of other investments	Fair value adjustment of other investments	(18,578)		(47,774)
Proceeds received from partnerships	Proceeds received from partnerships	11,877		38,945
Non-cash lease expense	Non-cash lease expense	5,370		7,210
Gain on sale of intangible asset	Gain on sale of intangible asset	2,771		—
Impairment of other investment	Impairment of other investment	43,289		—
Other	Other	(2,864)		43
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
Fees receivable
Fees receivable
Fees receivable	Fees receivable	(205)		(17,883)
Prepaid expenses	Prepaid expenses	(220)		263
Due from related parties	Due from related parties	(5,911)		479
Other assets	Other assets	(5,309)		256
Accounts payable	Accounts payable	(782)		17
Accrued compensation and benefits	Accrued compensation and benefits	45,644		18,867
Lease liability	Lease liability	(5,581)		(1,410)
Other liabilities	Other liabilities	(11,548)		(6,457)
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Change in warrant liability measured at fair value	Change in warrant liability measured at fair value	(2,883)		(1,067)
Change in warrant liability measured at fair value
Change in warrant liability measured at fair value

Cash relinquished with deconsolidation of fund
Cash relinquished with deconsolidation of fund
Cash relinquished with deconsolidation of fund
Net unrealized gain on investment
Equity in income of investees	Equity in income of investees	(1,030)		(170)
Other assets and liabilities	Other assets and liabilities	(332)		425
Net cash provided by operating activities	Net cash provided by operating activities	213,371		152,512
Investing activities:	Investing activities:
Purchase of furniture, fixtures and equipment	Purchase of furniture, fixtures and equipment	(3,261)		(7,788)
Purchase of furniture, fixtures and equipment
Purchase of furniture, fixtures and equipment
Cash paid for acquisition of business	Cash paid for acquisition of business	(1,500)		(10,096)
Loans to investees	Loans to investees	(2,535)		—
Purchase of other investments		(34,125)		(18,798)
Purchase of investments
Proceeds from sale of investments	Proceeds from sale of investments	10,000		12,623
Distributions from investments	Distributions from investments	1,406		12,739
Proceeds from sale of intangible assets
Distributions received from Partnerships	Distributions received from Partnerships	15,990		12,088
Contributions to Partnerships	Contributions to Partnerships	(63,364)		(56,432)
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Sale of investments held in trust		278,954		—
Net cash provided by (used in) investing activities		201,565		(55,664)
(Purchase) Sale of investments
(Purchase) Sale of investments
(Purchase) Sale of investments

Net cash (used in) provided by investing activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by investing activities

Hamilton Lane Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended December 31,
2022 2021
Financing activities:
Proceeds from offerings — 73,833
Purchase of membership interests — (73,833)
Borrowings of debt 31,682 —
Repayments of debt (3,873) (1,382)
Draw-down on revolver 25,000 —
Repayment of revolver (25,000) (15,000)
Repurchase of Class B common stock — (1)
Repurchase of Class A shares for employee tax withholding (162) (605)
Proceeds received from issuance of shares under Employee Share Purchase Plan 1,441 1,382
Payments to related parties, pursuant to tax receivable agreement — (15,584)
Dividends paid (42,550) (36,714)
Members’ distributions paid (45,828) (37,469)
Other — (75)
Consolidated variable interest entities related:
Contributions from non-controlling interest in general partnerships 687 1,053
Distributions to non-controlling interest in general partnerships (1,230) (490)
Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc. (278,205) —
Net cash used in financing activities (338,038) (104,885)
Increase (decrease) in cash, cash equivalents, and restricted cash 76,898 (8,037)
Cash, cash equivalents, and restricted cash at beginning of the period 76,197 90,377
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period $ 153,095 $ 82,340
Reconciliation of Cash and Cash Equivalents, Restricted Cash and Cash and Cash Equivalents Held at Consolidated Variable Interest Entities to the Condensed Consolidated Balance Sheets:
As of December 31,
2022 2021
Cash and cash equivalents $ 146,070 $ 78,838
Restricted cash 3,116 3,315
Cash and cash equivalents held at consolidated variable interest entities 3,909 187
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities $ 153,095 $ 82,340


	Nine Months Ended December 31,
	2023		2022
Financing activities:


Borrowings of debt	—		31,682
Repayments of debt	(1,875)		(3,873)
Draw-down on revolver	10,000		25,000
Repayment of revolver	(25,000)		(25,000)


Repurchase of Class A shares for employee tax withholding	(269)		(162)
Proceeds received from issuance of shares under Employee Share Purchase Plan	1,666		1,441

Dividends paid	(48,613)		(42,550)
Members’ distributions paid	(31,817)		(45,828)

Consolidated variable interest entities related:
Contributions from non-controlling interests in general partnerships	769		687
Distributions to non-controlling interests in general partnerships	(45)		(1,230)
Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc.	—		(278,205)

Contributions from non-controlling interests in consolidated funds	142,924		—


Net cash provided by (used in) financing activities	47,740		(338,038)

Increase in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities	52,883		76,898
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the period	116,552		76,197
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period	$	169,435	$	153,095


Reconciliation of Cash and Cash Equivalents, Restricted Cash and Cash and Cash Equivalents Held at Consolidated Variable Interest Entities to the Condensed Consolidated Balance Sheets:
	As of December 31,
	2023		2022
Cash and cash equivalents	$	164,450	$	146,070
Restricted cash	4,985		3,116
Cash and cash equivalents held at consolidated variable interest entities	—		3,909
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities	$	169,435	$	153,095

See accompanying notes to the condensed consolidated financial statements.

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

1. Organization

Hamilton Lane Incorporated (“HLI”) was incorporated in the State of Delaware on December 31, 2007 and, following its 2017 initial public offering, is a holding company whose principal asset is a controlling equity interest in Hamilton Lane Advisors, L.L.C. (“HLA”). As the sole managing member of HLA, HLI operates and controls all of the business and affairs of HLA, and through HLA, conducts its business. As a result, HLI consolidates HLA’s financial results and reports a non-controlling interest related to the portion of HLA units not owned by HLI. The assets and liabilities of HLA represent substantially all of HLI’s consolidated assets and liabilities with the exception of certain cash, certain deferred tax assets and liabilities, ~~payable~~payables to related parties pursuant to a tax receivable agreement, and dividends payable. Unless otherwise specified, “the Company” refers to the consolidated entity of HLI, HLA and subsidiaries throughout the remainder of these notes. As of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, HLI held approximately ~~69.0% and 68.9%, respectively,~~70.1% of the economic interest in HLA. As future exchanges of HLA units occur pursuant to the exchange agreement in place with HLA’s members, the economic interest in HLA held by HLI will increase.

HLA is a registered investment advisor with the United States Securities and Exchange Commission (“SEC”), providing asset management and advisory services, primarily to institutional investors, to design, build and manage private markets portfolios. HLA generates revenues primarily from management fees, by managing assets on behalf of customized separate accounts, specialized fund products and distribution management accounts, and advisory fees and by providing asset supervisory and reporting services. HLA sponsors the formation, and serves as the general partner or managing member, of various limited liability partnerships consisting of specialized funds and certain single client separate account entities (“Partnerships”) that acquire interests in third-party managed investment funds that make private equity and equity-related investments. The Partnerships may also make direct investments, including investments in debt, equity, and other equity-based instruments. The Company, which includes certain subsidiaries that serve as the general partner or managing member of the Partnerships, may invest its own capital in the Partnerships and generally makes all investment and operating decisions for the Partnerships. HLA operates several wholly-owned entities through which it conducts its foreign operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Management believes it has made all necessary adjustments (which consisted of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. Results of operations for the three and nine months ended December 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending March 31, ~~2023.~~2024. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in HLI’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022.~~2023.

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Accounting for Differing Fiscal Periods

The Partnerships primarily have a fiscal year end as of December 31, and the Company accounts for its investments in the Partnerships using a three-month lag due to the timing of financial information received from the investments held by the Partnerships. The Partnerships primarily invest in private equity funds, which generally require at least 90 days following the calendar year end to present audited financial statements. The Company records its share of capital contributions to and distributions from the Partnerships in investments in the Condensed Consolidated Balance Sheets during the three-month lag period.

Fair Value of Financial Instruments

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). The levels of the hierarchy are described below:

•Level 1: Values are determined using quoted market prices for identical financial instruments in an active market.

•Level 2: Values are determined using quoted prices for similar financial instruments and valuation models whose inputs are observable.

•Level 3: V~~alues~~Values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The carrying amount of cash and cash equivalents, fees receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments.

Recent Accounting Pronouncements

In ~~June 2022,~~October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standard~~Standards Update ~~("ASU"~~(“ASU”) ~~2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject~~2023-06 - Disclosure Improvements: Codification Amendments in Response to ~~Contractual Sale Restrictions.~~the SEC’s Disclosure Update and Simplification Initiative. The amendments in this ~~update clarify~~ASU incorporate 14 of the ~~guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new~~27 disclosure requirements ~~related to such equity securities.~~published in SEC Release No. 33-10532 - Disclosure Update and Simplification into various topics within the Accounting Standards Codification (“ASC”). The amendments represent clarifications to, or technical corrections of, current requirements. For SEC registrants, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. Early adoption is prohibited. The amendments will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the new requirements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU enhances segment disclosures primarily around significant segment expenses for both interim and annual periods. The amendments in this ASU are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of the new requirements.

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. The Company is ~~currently~~ evaluating the impact of adopting this ~~guidance on its condensed consolidated financial statements.~~

~~Reclassifications~~

~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~ASU.

3. Revenue

The following table presents revenues disaggregated by product offering, which aligns with the identified performance obligations and the basis for calculating each amount:


	Three Months Ended December 31,				Nine Months Ended December 31,
Management and advisory fees	2023		2022		2023		2022
Specialized funds	$	64,871	$	53,299	$	184,972	$	144,099
Customized separate accounts	32,943		29,571		96,702		87,329
Advisory	6,085		6,613		18,392		19,073
Reporting and other	6,479		6,720		18,298		19,170
Distribution management	1,512		596		3,979		1,863
Fund reimbursement revenue	1,751		556		5,889		4,648
Total management and advisory fees	$	113,641	$	97,355	$	328,232	$	276,182


	Three Months Ended December 31,				Nine Months Ended December 31,
Incentive fees	2023		2022		2023		2022
Specialized funds	$	10,542	$	8,679	$	43,204	$	102,815
Customized separate accounts	1,081		15,396		5,741		30,020
Consolidated variable interest entities related:
Specialized funds	—		5,644		—		6,948
Total incentive fees	$	11,623	$	29,719	$	48,945	$	139,783

4. Investments

Investments consist of the following:


	December 31,		March 31,
	2023		2023
Equity method investments in Partnerships	$	391,884	$	340,603
Other equity method investments	1,795		—
Fair value investments	18,570		21,586
Investments valued under the measurement alternative	175,522		168,732
Total Investments	$	587,771	$	530,921

1011

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Three Months Ended
December 31, Nine Months Ended December 31,
Management and advisory fees 2022 2021 2022 2021
Specialized funds $ 53,299 $ 38,233 $ 144,099 $ 107,935
Customized separate accounts 29,571 25,982 87,329 75,416
Advisory 6,613 6,119 19,073 18,781
Reporting and other 6,720 5,992 19,170 16,983
Distribution management 596 3,170 1,863 9,313
Fund reimbursement revenue 556 340 4,648 1,225
Total management and advisory fees $ 97,355 $ 79,836 $ 276,182 $ 229,653

Three Months Ended
December 31, Nine Months Ended December 31,
Incentive fees 2022 2021 2022 2021
Specialized funds $ 8,679 $ 6,765 $ 102,815 $ 23,903
Customized separate accounts 15,396 3,725 30,020 10,314
Consolidated variable interest related:
Specialized funds 5,644 1,378 6,948 3,149
Total incentive fees $ 29,719 $ 11,868 $ 139,783 $ 37,366
Investments of consolidated variable interest entities (“VIEs”) consist of the following:

~~4. Investments~~

~~Investments consist of the following:~~
December 31, March 31,
2022 2022
Equity method investments in Partnerships $ 328,311 $ 326,296
Other equity method investments — 1,573
Other investments 20,189 19,820
Investments valued under the measurement alternative 165,832 156,100
Total Investments $ 514,332 $ 503,789


	December 31,		March 31,
	2023		2023
Equity method investments in Partnerships	$	15,855	$	12,292
Fair value investments	—		44,752
Total Investments of Consolidated VIEs	$	15,855	$	57,044

Equity method investments

The Company’s equity method investments in Partnerships represent its ownership in certain specialized funds and customized separate accounts. The strategies and geographic location of investments within the Partnerships vary by fund. The Company has a 1% interest in substantially all of the ~~Partnerships.~~Partnerships, representing a general partner interest. The Company’s other equity method investments represent its ownership in a technology company to develop an AI-powered investment assistant for private markets.

During the quarter ended September 30, 2022, the Company sold its ownership interests in its joint venture that automates the collection of fund and underlying portfolio company data from general partners, Private Markets Connect, for $10,000 and recognized a gain of $9,783 which is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. Immediately preceding the sale, the Company received a distribution from the joint venture of $1,406.


			11

~~Hamilton Lane Incorporated~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except share and per share amounts)~~

~~Other~~Fair value investments

The Company’s ~~other~~fair value investments represent a publicly traded security and investments in private equity funds, ~~and~~ direct credit and equity investments that are held as collateral on the Company’s secured financing. The private equity fund investments can only be redeemed through distributions received from the liquidation of underlying investments of the fund, and the timing of distributions is currently indeterminable. The amortized cost of the assets held as collateral was $6,430 and $7,429 as of December 31, 2023 and March 31, 2023, respectively. The direct credit investments ~~are~~were debt securities classified as trading securities. ~~Other~~Fair value investments are measured at fair value with unrealized ~~holding~~ gains and losses recorded in non-operating ~~(expense) income~~ lossin the Condensed Consolidated Statements of Income.

The Company accounts for its secured financing at fair value under the fair value option. The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes. The significant input to the fair value of the secured financing is the fair value of the ~~other~~fair value investments delivered as collateral which are estimated using Level 3 inputs with the significant inputs as shown in Note 5 below.

The Company recognized a gain of $637 and a loss of $230 on ~~other~~fair value investments held as collateral during the three and nine months ended December 31, 2023, respectively, and a gain of $821 and $915 during the three and nine months ended December 31, 2022, respectively, ~~and~~that are recorded in non-operating (loss) income. The Company recognized a gain of ~~$2,288~~$637 and ~~$3,239~~a loss of $230 on the secured financing liability during the three and nine months ended December 31, ~~2021,~~2023, respectively, ~~that are recorded in non-operating (expense) income. The Company recognized~~and a loss ~~on the secured financing liability~~ of $821 and $915 during the three and nine months ended December 31, 2022, respectively, ~~and a loss of $2,288 and $3,239 during the three and nine months ended December 31, 2021, respectively,~~ that are recorded in non-operating ~~(expense)~~(loss) income in the Condensed Consolidated Statements of Income.

~~Investments valued under the measurement alternative~~

During the quarter ended June 30, 2022, the Company made investments in two private companies. The Company invested $3,000 in a technology driven platform that provides a digitized token for investors that improves the efficiency of capital raises. Additionally, the Company invested $12,000 in an online financial services platform. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company values the investments under the measurement alternative.

During the quarter ended June 30, 2022, the Company made an additional investment of $5,236 in a company that maintains a platform of solutions designed to aid individual investors and various wealth management platforms with their wealth management needs. As a result of the transaction, the Company marked its original investment to fair value based upon the transaction price, which resulted in total unrealized gain of $6,687 during the three months ended June 30, 2022, that is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. Due to the lack of readily determinable fair value for this investment, over which the Company does not have significant influence, the Company will continue to value the investment under the measurement alternative.

During the quarter ended September 30, 2022, the Company made investments in two private companies. The Company invested $3,000 in a digital platform that offers financial planning and portfolio management tools to retail and accredited investors. The Company invested $4,000 in a cloud-based treasury and liquidity solution for investment management firms. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company will value the investments under the measurement alternative.


			12

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

~~During~~Investments valued under the quarter ended December 31, 2022, the Company made additional investments in three private companies in which it previously invested. The Company invested an additional $1,228 in a cloud-based treasury and liquidity solution for investment management firms. The Company invested an additional $5,061 in a company that provides environmental, social and governance (“ESG”) reporting metrics and analysis to private market firms and private companies. As a resultmeasurement alternative


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Carrying amount beginning of the period	$	175,522	$	190,023	$	168,732	$	156,100
Adjustments related to equity investments:
Purchases	—		7,440		6,312		34,676
Sales / return of capital	—		—		(177)		—
Net unrealized gain (loss)1	—		(31,631)		1,177		(24,944)
Net realized loss	—		—		(522)		—

Carrying amount, end of period	$	175,522	$	165,832	$	175,522	$	165,832

(1) Net unrealized gain (loss) consists of ~~the transaction, the Company marked its original investment to~~ fair value ~~based upon~~adjustments for observable price changes of identical or similar investments.

The following table summarizes the ~~transaction price, which resulted in a total~~cumulative gross unrealized gain of $11,521 during the three months ended December 31, 2022 that is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. The Company invested an additional $600 in a technology company that has developed software to automate manual data entry tasks associated with alternative investment reporting. As part of that funding round, a convertible note issued by the investeegains and cumulative gross unrealized losses related to the Company converted into additional shares of the investee with a value of $550. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company will continue to value theseCompany’s investments under the measurement ~~alternative.~~alternative:

The Company performs qualitative impairment assessments at each quarter end on its investments recorded under the measurement alternative. As a result of this assessment as of December 31, 2022, the Company determined that a quantitative assessment was required to be performed for one of its investments given a significant decrease in earnings performance and overall economic and market conditions. The assessment indicated that the fair value was less than the carrying value at December 31, 2022. Prior to the impairment recorded, the carrying value of the investment was $74,189. The impairment amount was $43,289 and is included in non-operating (expense) income in the Condensed Consolidated Statements of Income. The fair value was estimated using Level 3 inputs with the significant input as shown in Note 5 below.


	December 31,		March 31,
	2023		2023
Cumulative gross unrealized gains	$	70,235	$	69,058
Cumulative gross unrealized losses	$	(43,289)	$	(43,289)

5. Fair Value Measurements

The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level:

As of December 31, 2022
Level 1 Level 2 Level 3 Total Amortized Cost
Financial assets:
Other investments $ 6,235 $ — $ 13,954 $ 20,189 $ 10,703
Total financial assets $ 6,235 $ — $ 13,954 $ 20,189 $ 10,703
Financial liabilities:
Secured financing(1)
— — 13,954 13,954
Total financial liabilities $ — $ — $ 13,954 $ 13,954


	As of December 31, 2023
	Level 1		Level 2		Level 3		NAV(2)		Total
Financial assets:
Fair value investments	$	5,447	$	—	$	13,123	$	—	$	18,570


Total financial assets	$	5,447	$	—	$	13,123	$	—	$	18,570

Financial liabilities:
Secured financing(1)	$	—	$	—	$	13,123	$	—	$	13,123
Total financial liabilities	$	—	$	—	$	13,123	$	—	$	13,123


			13

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)


	As of March 31, 2023														As of March 31, 2023
	Level 1											Level 1	Level 2	Level 3		NAV(2)	Total
Financial assets:
Fair value investments
Fair value investments
Fair value investments
Consolidated VIEs
Fair value investments
Fair value investments
Fair value investments
		As of March 31, 2022
		Level 1		Level 2		Level 3		Total		Amortized Cost
Financial assets:
Other investments		$	6,002	$	—	$	13,818	$	19,820	$	10,853
Investments held in trust		276,016		—		—		276,016		276,000
Total financial assets
Total financial assets
Total financial assets	Total financial assets	$	282,018	$	—	$	13,818	$	295,836	$	286,853

Financial liabilities:	Financial liabilities:
Warrant liability(2)		$	2,484	$	399	$	—	$	2,883
Financial liabilities:
Financial liabilities:

Secured financing(1)

Secured financing(1)

Secured financing(1)	Secured financing(1)	—		—		13,818		13,818
Total financial liabilities	Total financial liabilities	$	2,484	$	399	$	13,818	$	16,701

(1) Secured financing is recorded within other liabilities in the Condensed Consolidated Balance Sheets.

(2)~~Warrant liability is~~ Investments are recorded ~~within other liabilities~~at estimated fair value based upon the net asset value of ~~consolidated variable interests~~the fund utilizing the practical expedient under ASC 820, “Fair Value Measurement.” The fair value amounts presented in this column are intended to permit reconciliation of the ~~Condensed Consolidated Balance Sheets.~~fair value hierarchy to the amounts presented in Note 4.

The following is a reconciliation of other investments for which significant unobservable inputs (Level 3) were used in determining fair value:

Private equity funds Direct credit investments Direct equity investments Total other investments
Balance as of September 30, 2022 $ 6,252 $ 768 $ 6,060 $ 13,080
Contributions 91 — — 91
Distributions (38) — — (38)
Net gain 417 18 386 821
Balance as of December 31, 2022 $ 6,722 $ 786 $ 6,446 $ 13,954
Balance as of March 31, 2022 $ 7,024 $ 774 $ 6,020 $ 13,818
Contributions 114 — — 114
Distributions (893) — — (893)
Net gain 477 12 426 915
Balance as of December 31, 2022 $ 6,722 $ 786 $ 6,446 $ 13,954


	Private equity funds		Direct credit investments		Direct equity investments		Total other investments
Balance as of September 30, 2023	$	5,739	$	—	$	6,634	$	12,373
Contributions	152		—		—		152
Distributions	(39)		—		—		(39)
Net (loss) gain	(11)		—		648		637

Balance as of December 31, 2023	$	5,841	$	—	$	7,282	$	13,123

Balance as of March 31, 2023	$	6,664	$	790	$	6,774	$	14,228
Contributions	152		—		—		152
Distributions	(229)		(798)		—		(1,027)
Net (loss) gain	(746)		8		508		(230)


Balance as of December 31, 2023	$	5,841	$	—	$	7,282	$	13,123

Private equity funds Direct credit investments Direct equity investments Publicly traded equity security Total other investments
Balance as of September 30, 2021 $ 7,159 $ 783 $ 6,068 $ 6,122 $ 20,132
Contributions 204 — — — 204
Distributions (25) — — — (25)
Net gain (loss) 1,464 (1) 825 168 2,456
Transfer out — — — (6,290) (6,290)
Balance as of December 31, 2021 $ 8,802 $ 782 $ 6,893 $ — $ 16,477


	Private equity funds		Direct credit investments		Direct equity investments		Total other investments
Balance as of September 30, 2022	$	6,252	$	768	$	6,060	$	13,080
Contributions	91		—		—		91
Distributions	(38)		—		—		(38)
Net gain	417		18		386		821

Balance as of December 31, 2022	$	6,722	$	786	$	6,446	$	13,954


			14

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Private equity funds Direct credit investments Direct equity investments Publicly traded equity security Total other investments
Balance as of March 31, 2021 $ 6,254 $ 985 $ 6,059 $ — $ 13,298
Contributions 293 — 28 — 321
Distributions (179) (202) — — (381)
Net gain (loss) 2,434 (1) 806 (165) 3,074
Transfer in — — — 6,455 6,455
Transfer out — — — (6,290) (6,290)
Balance as of December 31, 2021 $ 8,802 $ 782 $ 6,893 $ — $ 16,477


	Private equity funds		Direct credit investments		Direct equity investments		Total other investments
Balance as of March 31, 2022	$	7,024	$	774	$	6,020	$	13,818
Contributions	114		—		—		114
Distributions	(893)		—		—		(893)
Net gain	477		12		426		915
Balance as of December 31, 2022	$	6,722	$	786	$	6,446	$	13,954

The following is a reconciliation of investments held by our consolidated VIEs for which significant

unobservable inputs (Level 3) were used in determining value:


	Direct credit investments
Balance as of September 30, 2023	$	69,381
Contributions	—
Distributions	—
Net income	—
Transfer in	—
Transfer out due to deconsolidation	(69,381)
Balance as of December 31, 2023	$	—


	Direct credit investments
Balance as of March 31, 2023	$	21,163
Contributions	24,787
Distributions	(180)
Net income	494
Transfer in	23,117
Transfer out due to deconsolidation	(69,381)
Balance as of December 31, 2023	$	—


			15

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in recurring Level 3 fair value measurements of financial assets were as follows, as of December 31, ~~2022:~~2023:

Significant
Fair Valuation Unobservable Weighted
Value Methodology Inputs Range Average
Other investments:
Private equity funds $ 6,722 Adjusted net asset value Selected market return 2.3% - 6.3% 3.2%
Direct credit investments $ 786 Discounted cash flow Market yield 12.9% - 12.9% 12.9%
Direct equity investments $ 6,446 Market approach EBITDA multiple 8.25 - 14.25x 11.61x
Market approach Equity multiple 1.8x 1.8x

The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in non-recurring Level 3 fair value measurements of financial assets were as follows, as of December 31, 2022:

~~Significant~~

~~Fair~~

~~Valuation~~

~~Unobservable~~

~~Weighted~~

~~Value~~

~~Methodology~~

~~Inputs~~

~~Range~~

~~Average~~

~~Investment valued under the measurement alternative~~

~~30,900~~

~~Market approach~~

~~Revenue Multiple~~

~~3.5x~~

Significant

Fair

Valuation

Unobservable

Weighted

Value

Methodology

Inputs

Range

Average

Other investments:

Private equity funds

5,841

Adjusted net asset value

Selected market return

6.7%

7.2%

7.1%

Direct equity investments

7,282

Market approach

EBITDA multiple

7.50x

15.50x

12.05x

For the significant unobservable inputs listed in the tables above: (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively; ~~(2) a significant increase or decrease in the market yield would result in a significantly lower or higher fair value measurement, respectively;~~ and ~~(3)~~(2) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.


			15

~~Hamilton Lane Incorporated~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except share and per share amounts)~~

6. ~~Acquisitions~~

On April 1, 2021, the Company acquired substantially all the assets of 361 Capital, LLC for a total aggregate cash amount of $13,096, of which $10,096 was paid on the closing date of the acquisition. The remaining $3,000 will be paid in two equal installments on the first and second anniversaries of the closing. On April 1, 2022, the Company paid the first of the two equal installments. The purchase price based upon the fair value of consideration transferred at the date of acquisition is $12,946. The Company recorded $7,145 of definite lived intangible assets related primarily to the acquired investment management contracts, which will be amortized over seven years, and $5,623 of goodwill, which are both recorded in other assets in the Condensed Consolidated Balance Sheets. The remaining assets acquired and liabilities assumed are not material to the condensed consolidated financial statements. Revenue and net income attributable to the acquisition of 361 Capital, LLC were not material for the three and nine months ended December 31, 2022 and 2021, and therefore, pro forma information related to this acquisition is not presented.

In December 2022, the Company finalized the transfer of the advisory arrangement to a third party for an agreed upon percentage of the respective funds’ management fees over two calendar years. The Company recognized a gain of $2,771 on the sale of the advisory agreements that is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income.

7. Variable Interest Entities

The Company ~~consolidates certain~~holds variable interests in entities that are considered variable interest entities (“VIEs”) because limited partners lack the ability to remove the general partner or dissolve the entity without cause by simple majority vote (i.e., limited partners do not have substantive “kick out” or “liquidation” rights). The Company’s variable interest in such entities is in the form of direct equity interests in, and/or fee arrangements with, the Partnerships in which it also serves as the general partner or managing member. In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable Partnership and makes all investment and operating decisions. The Company consolidates VIEs in which it is determined that the Company is the primary beneficiary.

Consolidated Variable Interest Entities

The Company consolidates general partner entities of certain Partnerships ~~and a Partnership in which it is currently the primary beneficiary, which~~that are not wholly-owned by the Company. The total assets of these consolidated VIEs are $41,498 and $10,036 as of December 31, 2022 and March 31, 2022, respectively. The consolidated VIEs had no liabilities as of December 31, 2022 and March 31, 2022. The assets of the consolidated general partner VIEs represent equity method-investments in direct investment funds and customized separate ~~accounts and the assets of the consolidated Partnership VIE represent cash and direct credit investments.~~accounts. The assets may only be used to settle obligations of the respective consolidated VIEs, if any. In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities, except for certain entities in which there could be a clawback of previously distributed carried interest.

The Company previously ~~sponsored~~consolidated a Partnership in which it was the primary beneficiary. On October 1, 2023, the Company no longer qualified as the primary beneficiary and ~~consolidated Hamilton Lane Alliance Holdings I, Inc. (“HLAH”) through HL Alliance Holdings Sponsor LLC, an indirect wholly-owned subsidiary~~deconsolidated all the assets and liabilities of the ~~Company. On January 15, 2021, HLAH completed an IPO raising total gross proceeds of $276,000, which were placed~~non-controlling interest in ~~a trust and could only be utilized for funding a business combination~~the Partnership from the condensed consolidated financial statements. No gain or the redemption of Class A shares of HLAH. In a private placement concurrent with the IPO, HLAH sold warrants to HL Alliance Holdings Sponsor LLC for gross proceeds of $7,520, which were used by HLAH to pay the offering costs and also to provide working capital. On December 15, 2022, HLAHloss was ~~liquidated,~~recognized as it was determined that HLAH would be unable to consummate an initial business combination within the time period required by its governing documents. In connection with the liquidation, HLAH redeemed allpart of the ~~outstanding shares of Class A common stock, cancelled all~~deconsolidation for the three and nine months ended December 31, 2023. Subsequent to the deconsolidation of the ~~outstanding public and private warrants and settled all other outstanding liabilities.~~Partnership, the Company records its interest in the Partnership using the equity method, within investments in the Condensed Consolidated Balance Sheets.


			16

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Nonconsolidated Variable Interest Entities

~~The Company holds variable interests in certain~~Certain Partnerships that are VIEs ~~which~~ are not consolidated ~~as it is determined that~~because the Company has determined it is not the primary beneficiary based upon the Company’s equity interest percentage in each of the VIEs. Certain Partnerships are considered VIEs because limited partners lack the ability to remove the general partner or dissolve the entity without cause, by simple majority vote (i.e. do not have substantive “kick out” or “liquidation” rights). The Company’s involvement with such entities is in the form of direct equity interests in, and fee arrangements with, the Partnerships in which it also serves as the general partner or managing member. In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable ~~Partnership and makes all investment and operating decisions.~~VIEs. As of December 31, ~~2022,~~2023, the total remaining unfunded commitments from the Company’s general partner entities to the nonconsolidated VIEs was ~~$140,691.~~$157,092. Investor commitments are the primary source of financing for the nonconsolidated VIEs.

The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these nonconsolidated ~~entities.~~VIEs. The Company believes that its maximum exposure to loss is limited because it establishes separate limited partnerships or limited liability companies to serve as the general partner or managing member of the Partnerships.

The carrying value of assets and liabilities recognized in the Condensed Consolidated Balance ~~Sheet~~Sheets related to the Company’s interests in these nonconsolidated VIEs and the Company’s maximum exposure to loss relating to non-consolidated VIEs were as follows:

December 31, March 31,
2022 2022
Investments $ 190,735 $ 191,378
Fees receivable 16,418 9,754
Due from related parties 1,901 778
Total VIE Assets 209,054 201,910
Less: Non-controlling interests (1,534) (1,873)
Maximum exposure to loss $ 207,520 $ 200,037


	December 31,		March 31,
	2023		2023
Investments	$	199,101	$	199,858
Fees receivable	27,614		15,829
Due from related parties	3,043		1,960
Total VIE Assets	229,758		217,647
Less: Non-controlling interests	(1,647)		(1,665)
Maximum exposure to loss	$	228,111	$	215,982

8.7. Debt

The Company’s debt consisted of the following:

As of December 31, 2022 As of March 31, 2022
Principal Outstanding Carrying Value Interest Rate Principal Outstanding Carrying Value Interest Rate
Term Loan $ 100,000 $ 99,578 6.25 % $ 71,754 $ 71,574 2.25 %
2020 Multi-Draw Facility 100,000 99,548 3.50 % 100,000 99,752 3.50 %
Total Debt $ 200,000 $ 199,126 $ 171,754 $ 171,326


	As of December 31, 2023						As of March 31, 2023
	Principal Outstanding		Carrying Value		Interest Rate		Principal Outstanding		Carrying Value		Interest Rate
Term Loan	$	97,500	$	97,140	7.25	%	$	99,375	$	98,969	6.75	%
2020 Multi-Draw Facility	100,000		99,612		3.50	%	100,000		99,564		3.50	%
Revolver	—		—				15,000		15,000		6.50	%
Total Debt	$	197,500	$	196,752			$	214,375	$	213,533

In October 2022, the Company modified its existing credit facility with its lender. The modifications took the form of a new 2022 Multi-Draw Term Loan and Security Agreement, as well as amendments to the existing Revolving Loan and Security Agreement, Term Loan and Security Agreement and 2020 Multi-Draw Term Loan and Security Agreement (collectively, the “Loan Agreements”).


			17

~~Hamilton Lane Incorporated~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except share and per share amounts)~~

The modifications extended maturity dates of the Loan Agreements, increased the principal outstanding under the term loan to $100,000 and added borrowing capacity across the Loan Agreements, subject to an overall cap of $325,000 of loan principal outstanding. The facility is secured by substantially all of HLA’s personal property assets, subject to certain excluded assets. The Loan Agreements contain financial and operational covenants, events of default and remedies that the Company believes to be customary.

The carrying value of the Company’s outstanding debt as of December 31, ~~2022~~2023 and March 31, ~~2022~~2023 approximated fair value except for the 2020 multi-draw facility, which had an estimated fair value of ~~$86,782~~$88,588 and $88,136 as of December 31, ~~2022.~~2023 and March 31, 2023, respectively. The estimated fair value of debt is based on then-current market rates for similar debt instruments and is classified as Level 2 within the fair value hierarchy.


			17

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

8. Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, ~~2022:~~2023:

Class A Common Stock Class B Common Stock
March 31, 2022 37,280,697 16,033,359
Forfeitures (5,899) (79,677)
Shares repurchased for employee tax withholdings (2,311) —
Awards granted 569,442 —
Shares issued pursuant to Employee Share Purchase Plan 26,762 —
December 31, 2022 37,868,691 15,953,682


	Class A Common Stock	Class B Common Stock
March 31, 2023	38,611,919	15,409,507

Forfeitures	(40,490)	—
Shares repurchased for employee tax withholdings	(3,610)	—
Awards granted	15,890	—
Shares issued pursuant to Employee Share Purchase Plan	21,078	—
December 31, 2023	38,604,787	15,409,507

~~10.~~9. Equity Based Compensation

Restricted Stock Awards

A summary of restricted stock activity for the nine months ended December 31, ~~2022~~2023 is presented below:

Total
Unvested Weighted-
Average
Grant-Date
Fair Value of
Award
March 31, 2022 281,307 $ 67.50
Granted 41,160 $ 66.97
Vested (11,485) $ 77.38
Forfeited (5,899) $ 70.15��
December 31, 2022 305,083 $ 67.00


	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2023	377,668	$	65.70
Granted	15,890	$	88.19
Vested	(19,119)	$	69.79
Forfeited	(14,402)	$	66.77
December 31, 2023	360,037	$	66.44

As of December 31, ~~2022,~~2023, total unrecognized compensation expense related to restricted stock was ~~$14,950.~~$17,531.


			18

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Performance Awards

The Company granted performance stock awards to certain employees that are subject to both a market-based vesting and a service-based vesting condition (“Performance Awards”). The Performance Awards will vest based upon (i) the market price of HLI Class A common stock achieving certain price thresholds from $150 per share to $230 per share and (ii) continued employment through the date the price target is met (with a minimum of five years of service required after the grant date for vesting). If the price target is met prior to the fifth anniversary of the grant date, the vesting date will be the fifth anniversary of the grant date. Holders of the Performance Awards do not participate in dividends until such awards have met both their market-based and service-based vesting requirements.

Due to the existence of the service requirement, the vesting period for these awards will vary with each respective tranche as the employees must be employed with the Company at the point in which the market requirement is met with a minimum of five years of service required after the grant date for vesting. As such, compensation expense will be recognized ratably for each vesting tranche from the grant date to the end for the employee’s service period. The fair value of the awards granted are based on a Monte-Carlo simulation valuation model.

A summary of ~~Performance Award~~performance award activity for the nine months ended December 31, ~~2022~~2023 is presented below:

Total
Unvested Weighted-
Average
Grant-Date
Fair Value of
Award
March 31, 2022 — $ —
Granted 528,282 $ 29.79
Vested — $ —
Forfeited — $ —
December 31, 2022 528,282 $ 29.79

Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of the Performance Awards granted September 16, 2022:

Grant Date Fair Value $ 29.79
Closing share price as of grant date $ 69.67
Risk Free Rate 3.6%
Volatility 37.0%
Dividend Yield 2.3%


	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2023	528,282	$	29.79
Granted	—	$	—
Vested	—	$	—
Forfeited	(26,088)	$	29.79
December 31, 2023	502,194	$	29.79

As of December 31, ~~2022,~~2023, total estimated unrecognized expense related to the unvested ~~Performance Awards~~performance awards was ~~$14,815,~~$11,092 and none of the ~~Performance Awards~~performance awards have met their market ~~price based~~price-based vesting condition.


			19

~~Hamilton Lane Incorporated~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except share and per share amounts)~~

~~11.~~10. Compensation and Benefits

The Company has recorded the following amounts related to compensation and benefits:

Three Months Ended December 31, Nine Months Ended December 31,
2022 2021 2022 2021
Base compensation and benefits $ 35,473 $ 29,340 $ 116,549 $ 79,014
Incentive fee compensation 7,368 2,953 34,870 9,308
Equity-based compensation 2,835 1,711 6,816 5,706
Total compensation and benefits $ 45,676 $ 34,004 $ 158,235 $ 94,028


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Base compensation and benefits	$	43,536	$	35,473	$	118,275	$	116,549
Incentive fee compensation	2,906		7,368		12,236		34,870
Equity-based compensation	3,264		2,835		9,227		6,816
Total compensation and benefits	$	49,706	$	45,676	$	139,738	$	158,235

~~12.~~11. Income Tax

The Company’s effective tax rate used for interim periods is based on an estimated annual effective tax rate including the tax effect of items required to be recorded discretely in the interim period in which those items occur. The effective tax rate is dependent on many factors, including the estimated amount of income subject to income tax; therefore, the effective tax rate can vary from period to period. The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized.

The Company’s effective tax rate was 31.4% and 18.5% for the three and nine months ended December 31, 2023, respectively, and 35.0% and 22.2% for the three and nine months ended December 31, 2022, ~~respectively, and 12.6% and 15.2% for the three and nine months ended December 31, 2021,~~ respectively. The effective tax rates were different from the statutory tax rates due to the portion of income allocated to non-controlling interests, valuation allowance recorded against deferred tax assets and discrete tax adjustments ~~recorded in~~to true-up prior fiscal year estimated investment taxable income to actual investment taxable income reported to the ~~periods.~~Company after the prior fiscal year end.


			19

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

As of December 31, ~~2022,~~2023, the Company had no unrecognized tax positions and believes there will be no changes to uncertain tax positions within the next 12 months.

~~13.~~12. Earnings per Share

Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to HLI, and, therefore, are not participating securities. As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included. Shares of the Company’s Class B common stock are, however, considered potentially dilutive to the Class A common stock because the Class B units to which the Class B common stock corresponds are exchangeable for shares of Class A common stock on a one-for-one basis, at which time the share of Class B common stock is surrendered in exchange for a payment of its par value.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:


	Three Months Ended December 31, 2023					Three Months Ended December 31, 2022
	Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount		Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount
Net income attributable to HLI	$	19,506				$	9,669
Impact of changes in carrying amount of redeemable NCI	—					2,095
Basic EPS of Class A common stock	$	19,506	37,736,012	$	0.52	$	11,764	37,025,416	$	0.32
Adjustment to net income:
Assumed vesting of employee awards	25					5
Assumed conversion of Class B and Class C Units	8,232					5,058
Effect of dilutive securities:
Assumed vesting of employee awards			162,446					68,129
Assumed conversion of Class B and Class C Units			16,089,097					16,675,834
Diluted EPS of Class A common stock	$	27,763	53,987,555	$	0.51	$	16,827	53,769,379	$	0.31


			20

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

~~The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:~~


		Three Months Ended December 31, 2022					Three Months Ended December 31, 2021
		Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount		Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount
	Nine Months Ended December 31, 2023													Nine Months Ended December 31, 2023			Nine Months Ended December 31, 2022
	Net income attributable to Class A Stockholders											Net income attributable to Class A Stockholders	Weighted-Average Shares		Per share amount	Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount
Net income attributable to HLI	Net income attributable to HLI	$	9,669				$	51,849
Impact of changes in carrying amount of redeemable NCI	Impact of changes in carrying amount of redeemable NCI	2,095					1,308
Impact of changes in carrying amount of redeemable NCI
Impact of changes in carrying amount of redeemable NCI
Basic EPS of Class A common stock
Basic EPS of Class A common stock
Basic EPS of Class A common stock	Basic EPS of Class A common stock	$	11,764	37,025,416	$	0.32	$	53,157	36,902,741	$	1.44
Adjustment to net income:	Adjustment to net income:
Assumed vesting of employee awards	Assumed vesting of employee awards	5					66
Assumed vesting of employee awards
Assumed vesting of employee awards
Assumed conversion of Class B and Class C Units
Assumed conversion of Class B and Class C Units
Assumed conversion of Class B and Class C Units	Assumed conversion of Class B and Class C Units	5,058					21,946
Effect of dilutive securities:	Effect of dilutive securities:
Effect of dilutive securities:
Effect of dilutive securities:
Assumed vesting of employee awards
Assumed vesting of employee awards
Assumed vesting of employee awards	Assumed vesting of employee awards			68,129					165,569
Assumed conversion of Class B and Class C Units	Assumed conversion of Class B and Class C Units			16,675,834					16,675,834
Diluted EPS of Class A common stock		$	16,827	53,769,379	$	0.31	$	75,169	53,744,144	$	1.40

		Nine Months Ended December 31, 2022					Nine Months Ended December 31, 2021
		Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount		Net income attributable to Class A Stockholders		Weighted-Average Shares	Per share amount
Net income attributable to HLI		$	78,034				$	132,161
Impact of changes in carrying amount of redeemable NCI		3,809					358
Basic EPS of Class A common stock		$	81,843	37,004,657	$	2.21	$	132,519	36,375,797	$	3.64
Adjustment to net income:
Assumed vesting of employee awards		34					156
Assumed conversion of Class B and Class C Units	Assumed conversion of Class B and Class C Units	35,968					60,083
Effect of dilutive securities:
Assumed vesting of employee awards				53,030					138,902
Assumed conversion of Class B and Class C Units	Assumed conversion of Class B and Class C Units			16,675,834					17,192,702
Diluted EPS of Class A common stock	Diluted EPS of Class A common stock	$	117,845	53,733,521	$	2.19	$	192,758	53,707,401	$	3.59
Diluted EPS of Class A common stock
Diluted EPS of Class A common stock


			21

~~Hamilton Lane Incorporated~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except share and per share amounts)~~

The adjustments to net income for dilutive securities are based upon the additional income that would be allocated to HLI for the change in its ownership percentage due to the dilutive securities and adjusted for the incremental income tax expense related to the additional allocated income. Net income (loss) recorded by HLI on a standalone basis will determine if the Class B and Class C units are dilutive or antidilutive in each respective period.

The calculation of diluted earnings per share excludes ~~528,282 Performance Awards~~502,336 and 509,641 weighted-average shares underlying performance awards for the three and nine months ended December 31, ~~2022~~2023, respectively, as the market condition was not achieved as of December 31, ~~2022.~~2023.

~~14.~~13. Related Party Transactions

The Company considers its employees, directors, and equity method investments to be related parties.

Revenue and Receivables

The Company has investment management agreements with various specialized funds and customized separate accounts that it manages. The Company earned management and advisory fees from Partnerships of $87,482 and $251,502 for the three and nine months ended December 31, 2023, respectively, and $70,929 and $198,973 for the three and nine months ended December 31, 2022, ~~respectively,~~respectively. The Company earned incentive fees from Partnerships of $11,432 and ~~$53,701 and $150,955~~$46,659 for the three and nine months ended December 31, ~~2021, respectively. The Company earned incentive fees from Partnerships of~~2023, respectively, and $28,652 and $137,545 for the three and nine months ended December 31, 2022, ~~respectively, and $10,335 and $34,669 for the three and nine months ended December 31, 2021,~~ respectively.

Fees receivable from the Partnerships were ~~$35,263~~$51,760 and ~~$27,728~~$31,684 as of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, respectively, and are included in fees receivable in the Condensed Consolidated Balance Sheets.

~~15. Supplemental Cash Flow~~
Nine Months Ended December 31,
2022 2021
Establishment of lease liability in exchange for right of use asset $ 5,401 $ 7,950
Non-cash investing activities:
Establishment of receivable for intangible assets sold $ 6,776 $ —
Non-cash financing activities:
Dividends declared but not paid $ 14,810 $ 12,916
Member distributions declared but not paid $ 19,161 $ 11,769
Establishment of net deferred tax assets related to offerings $ — $ 19,783


			21			22

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

~~16.~~

14. Supplemental Cash Flow


	Nine Months Ended December 31,
	2023		2022
Establishment of lease liability in exchange for right of use asset	$	5,455	$	5,401
Deconsolidation of net liabilities held by deconsolidated fund	$	6,095	$	—
Non-cash investing activities:
Deconsolidation of investments held by deconsolidated fund	$	103,990	$	—
Transfer of equity method investment in Partnerships from deconsolidated fund	$	32,018	$	—
Establishment of receivable for intangible assets sold	$	—	$	6,776
Non-cash purchase of other equity method investment	$	2,000	$	—
Non-cash financing activities:
Dividends declared but not paid	$	16,793	$	14,810
Member distributions declared but not paid	$	21,216	$	19,161

15. Commitments and ~~Contigencies~~Contingencies

Litigation

In the ordinary course of business, the Company may be subject to various legal, regulatory, and/or administrative proceedings from time to time. Although there can be no assurance of the outcome of such proceedings, in the opinion of management, the Company does not believe it is probable that any pending or, to its knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect its condensed consolidated financial statements.

Incentive Fees

The Partnerships have allocated carried interest still subject to contingencies ~~and~~that did not meet the Company’s criteria for revenue recognition in the amounts of ~~$952,188~~$1,125,678 and ~~$1,191,066,~~$1,022,250, net of amounts attributable to non-controlling interests, at December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, respectively.

If the Company ultimately receives the unrecognized carried interest, a total of ~~$238,047~~$281,419 and ~~$297,766~~$255,562 as of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, respectively, would potentially be payable to certain employees and third parties pursuant to compensation arrangements related to carried interest profit-sharing plans. Such amounts have not been recorded in the Condensed Consolidated Balance Sheets or Condensed Consolidated Statements of Income as the payment is not yet probable.

Commitments

The Company serves as the investment manager of the Partnerships. The general partner or managing member of each Partnership is generally a separate subsidiary of the Company and has agreed to invest funds on the same basis as the limited partners in most instances. The Company’s aggregate unfunded commitment to the Partnerships was ~~$212,895~~$232,227 and ~~$186,164~~$211,556 as of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, respectively.


			22

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

The Company has an unrealized net gain on its investments valued under the measurement alternative and a fair value investment of ~~$29,004~~$30,429 as of December 31, ~~2022,~~2023, of which up to 15% may be paid as a discretionary bonus as those gains are realized.

The Company offers an Employee Investment Program (“EIP”) through which certain employees are able to invest directly into certain Company managed funds as individual limited partners (“LPs”). The employees also have an option to enter into a loan agreement with the Company or a third-party lender to fund committed capital. The loan is collateralized by the underlying LP interest in the fund and return of capital distributions are utilized to pay the outstanding loan balance. The Company entered into a separate agreement with the third-party lender to backstop the employee’s performance under the loan with a commitment to purchase the LP interest from the lender at the greater of fair value or the outstanding balance of the loan in the event of a default by the employee. As of December 31, 2023, the total amount of outstanding loans at the third-party lender under the EIP was $736, and the Company believes the risk of default by an employee to be remote.

Leases

The Company’s leases consist primarily of operating leases for office space and office equipment in various locations around the world. Some leases have the option to extend for an additional term or terminate early. Short-term lease costs are not material.

The following table shows lease costs and other supplemental information related to the Company’s operating leases:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023			2022
Operating lease costs	$	2,468	$	2,095	$	6,938		$	6,199
Variable lease costs	$	381	$	395	$	1,039		$	1,067
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,325	$	1,997	$	6,657		$	5,858

Weighted average remaining lease term (in years)					12.8			14.8
Weighted average discount rate					3.5		%	3.3		%


			23

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

~~The following table shows lease costs and other supplemental information related to the Company’s operating leases:~~

Three Months Ended December 31, Nine Months Ended December 31,
2022 2021 2022 2021
Operating lease costs $ 2,095 $ 2,011 $ 6,199 $ 7,610
Variable lease costs $ 395 $ 416 $ 1,067 $ 980
Cash paid for amounts included in the measurement of operating lease liabilities $ 1,997 $ 1,657 $ 5,858 $ 4,794
Weighted average remaining lease term (in years) 14.0 14.7
Weighted average discount rate 3.3 % 3.2 %

As of December 31, ~~2022,~~2023, the maturities of operating lease liabilities were as follows:


Remainder of ~~FY2023~~FY2024	$	~~2,092~~2,245
~~FY2024~~	~~7,645~~
FY2025	~~7,233~~8,790
FY2026	~~6,623~~8,231
FY2027	~~6,623~~7,847
FY2028	7,305
Thereafter	~~70,210~~65,456
Total lease payments	~~100,426~~99,874
Less: imputed interest	~~(20,877)~~(19,501)
Total operating lease liabilities	$	~~79,549~~80,373

~~17.~~16. Subsequent Events

On February ~~7, 2023,~~6, 2024, the Company ~~declared~~announced a quarterly dividend of ~~$0.40~~$0.445 per share of Class A common stock to record holders at the close of business on March 15, ~~2023.~~2024. The payment date will be April ~~6, 2023.~~4, 2024.


			24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Form 10-Q, and our audited financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2022~~2023 Form 10-K for a more complete understanding of our financial position and results of operations.

The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Investors should review the “Cautionary Note Regarding Forward-Looking Information” above and the “Risk Factors” detailed in Part I, Item 1A of our ~~2022~~2023 Form 10-K for a discussion of those risks and uncertainties that have the potential to cause actual results to be materially different. Our results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period. Unless otherwise indicated, references in this Form 10-Q to fiscal ~~2022~~2023 and fiscal ~~2021~~2022 are to our fiscal years ended March 31, ~~2022,~~2023, and ~~2021,~~2022, respectively.

Business Overview

We are a global private markets investment solutions provider and operate our business in a single segment. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity, venture capital and impact. These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types. These solutions are offered in a variety of formats covering some or all phases of private markets investment programs:

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised ~~approximately $81~~$89.1 billion of our assets under management (“AUM”) as of December 31, ~~2022.~~2023.

•Specialized Funds: We organize, invest and manage specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest ~~primarily~~ in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised ~~approximately $27~~$30.8 billion of our AUM as of December 31, ~~2022.~~2023.

•Advisory Services: We offer investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, ~~legal negotiations,~~ the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had ~~approximately $724~~$782.9 billion of assets under advisement (“AUA”) as of December 31, ~~2022.~~2023.

•Distribution Management: We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds.

•Reporting, Monitoring, Data and Analytics: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis. We also provide comprehensive research and analytical services as part of our investment solutions, leveraging our large, global, proprietary and high-quality database for transparency and powerful analytics. Our data, as well as our benchmarking and forecasting models, are accessible through our proprietary technology solution, Cobalt LP, on a stand-alone, subscription basis.

Our client and investor base is broadly diversified by type, size and geography. Our client base primarily comprises institutional investors that range from those seeking to make an initial investment in alternative assets to some of the world’s largest and most sophisticated private markets investors. As we offer a highly customized, flexible service, we are equipped to provide investment services to institutional clients of all sizes and with different needs, internal resources and investment objectives. Our clients include prominent institutional investors in the United States, Canada, Europe, the Middle East, Asia, Australia and Latin America. We provide private markets solutions and services to some of the largest global pension, sovereign wealth and U.S. state pension funds. In addition, we believe we are a leading provider of private markets solutions for U.S. labor union pension plans, and we serve numerous smaller public and corporate pension plans, sovereign wealth funds, financial institutions and insurance companies, endowments and foundations, as well as family offices and ~~selected~~ high-net-worth individuals.

Key Financial and Operating Measures

Our key financial measures are discussed below.

Revenues

We generate revenues primarily from management and advisory fees, and to a lesser extent, incentive fees.

Management and advisory fees comprise specialized fund and customized separate account management fees, advisory and reporting fees and distribution management fees.

Revenues from customized separate accounts are generally based on a contractual rate applied to committed capital or net invested capital under management. These fees often decrease over the life of the contract due to built-in declines in contractual rates and/or as a result of lower net invested capital balances as capital is returned to clients. In certain cases, we also provide advisory and/or reporting services, and, therefore, we also receive fees for services such as monitoring and reporting on a client’s existing private markets investments. In addition, we may provide for investments in our specialized funds as part of our customized separate accounts. In these cases, we generally reduce the ~~management~~asset-based and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.

Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value in, our specialized funds. The management fee during the ~~commitment~~investment period is often charged on capital commitments and after the ~~commitment~~investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested ~~capital.~~capital or net asset value. In the case of certain funds, we charge

management fees on capital commitments, with the management fee increasing during the early

years of the fund’s term and declining in the later years. Management fees for certain funds are discounted based on the amount of the limited partners’ commitments, whether the limited partners commit early in the offering period or if the limited partners are investors in our other funds.

Revenues from advisory and reporting services are generally annual fixed fees, which vary depending on the services we provide. In limited cases, advisory service clients are charged basis point fees annually based on the amounts they have committed to invest pursuant to their agreements with us. In other cases where our services are limited to monitoring and reporting on investment portfolios, clients are charged a fee based on the number of investments in their portfolio.

Distribution management fees are generally earned by applying a percentage to AUM or proceeds received. Certain active management clients may elect a fee structure under which they are charged an asset-based fee plus a fee based on net realized and unrealized gains and income net of realized and unrealized losses.

Incentive fees comprise carried interest earned from our specialized funds and certain customized separate accounts structured as single-client funds in which we have a general partner commitment, and performance fees earned on certain other specialized funds and customized separate accounts.

For each of our secondary funds, direct investment funds, strategic opportunity funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%. To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5.0% of net profits, subject to the fund’s compounded annual preferred return.

We recognize carried interest when it is probable that a significant reversal will not occur. The primary contingency regarding incentive fees is the “clawback,” or the obligation to return distributions in excess of the amount prescribed by the applicable fund or separate account documents. Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt. In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our Condensed Consolidated Balance ~~Sheet~~Sheets and recognized as income in accordance with our revenue recognition policy.

Performance fees, which are a component of incentive fees, are based on the aggregate amount of realized gains earned by the applicable specialized fund or customized separate account, subject to the achievement of defined minimum returns to the clients. Performance fees range from 5.0% to 12.5% of net profits, subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when the risk of clawback or reversal is not probable.

Expenses

Compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock and performance awards and (c) incentive fee compensation, which consists of carried interest and performance fee allocations. We expect to continue to experience a general rise in compensation and benefits expense commensurate with expected growth in headcount and with the need to maintain competitive compensation levels as we expand geographically and create new products and services.

Our compensation arrangements with our employees contain a significant bonus component driven by the results of our operations. Therefore, as our revenues, profitability and the amount of incentive fees earned by our customized separate accounts and specialized funds increase, our compensation costs rise.

Certain current and former employees participate in a carried interest program whereby approximately 25% of incentive fees from certain of our specialized funds and customized separate accounts are awarded to plan participants. We record compensation expense payable to plan participants as the incentive fees become estimable and collection is probable.

General, administrative and other includes travel, accounting, legal and other professional fees, commissions, placement fees, office expenses, depreciation and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.

Other Income (Expense)

Equity in income (loss) of investees primarily represents our share of earnings from our investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Equity income primarily comprises our share of the net realized and unrealized gains (losses) and investment income partially offset by the expenses from these investments.

We have general partner commitments in our specialized funds and certain customized separate accounts that invest solely in primary funds, secondary funds and direct investments, as well as those that invest across investment types. Equity in income (loss) of investees will increase or decrease as the change in underlying fund investment valuations increases or decreases. Since our direct investment funds invest in underlying portfolio companies, their quarterly and annual valuation changes are more affected by individual company movements than our primary and secondary funds that have exposures across multiple portfolio companies in underlying private markets funds. Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our general partner investments do not include any significant concentrations in a specific sector or area outside the United States.

Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs, amortization of original issue discount and the write-off of deferred financing costs due to the repayment of previously outstanding debt.

Interest income is income earned on cash and cash equivalents.

Non-operating ~~income (expense)~~loss consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

Other income (expense) of consolidated ~~Variable Interest Entities~~variable interest entities (“VIEs”) consists primarily of the share of earnings of investments of consolidated general partner entities, which are not wholly-owned by us, in our specialized funds and certain customized separate accounts in which they have a general partner commitment, interest income on our previously consolidated funds and interest income on investments held in trust, and changes in fair value of liabilities of our ~~sponsored~~previously-sponsored special purpose acquisition company (“SPAC”).

Income Tax Expense

We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. ~~Prior to our IPO, we operated as a partnership for U.S. federal income tax purposes and therefore were not subject to U.S. federal and state income taxes.~~ HLA is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by HLA flows through to its limited partners, including us, and is generally not subject to U.S. federal or state income tax at the partnership level. Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to non-U.S. income taxes. Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such ~~non-controlling interests.~~NCI.

Non-controlling interests

~~Non-controlling interests~~NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. ~~Non-controlling interests~~NCI are presented as separate components in our consolidated statements of income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Fee-Earning AUM

Fee-earning AUM 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 (“NAV”) of our customized separate accounts and specialized funds depending on the fee terms. ~~Substantially all~~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.

Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for the three and nine months ended December 31, ~~2022~~2023 and ~~2021.~~2022. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.


		Three Months Ended December 31,				Nine Months Ended December 31,
		Three Months Ended December 31,
		Three Months Ended December 31,
		Three Months Ended December 31,
($ in thousands)
($ in thousands)
($ in thousands)	($ in thousands)	2022		2021		2022		2021
Revenues	Revenues
Revenues
Revenues
Management and advisory fees
Management and advisory fees
Management and advisory fees	Management and advisory fees	$	97,355	$	79,836	$	276,182	$	229,653
Incentive fees	Incentive fees	24,075		10,490		132,835		34,217
Incentive fees
Incentive fees
Consolidated variable interest entities related:
Consolidated variable interest entities related:
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Incentive fees	Incentive fees	5,644		1,378		6,948		3,149
Incentive fees
Incentive fees
Total revenues
Total revenues
Total revenues	Total revenues	127,074		91,704		415,965		267,019
Expenses	Expenses
Expenses
Expenses
Compensation and benefits
Compensation and benefits
Compensation and benefits	Compensation and benefits	45,676		34,004		158,235		94,028
General, administrative and other	General, administrative and other	22,717		16,332		66,066		48,742
General, administrative and other
General, administrative and other
Consolidated variable interest entities related:
Consolidated variable interest entities related:
Consolidated variable interest entities related:	Consolidated variable interest entities related:
General, administrative and other	General, administrative and other	309		322		941		952
General, administrative and other
General, administrative and other
Total expenses
Total expenses
Total expenses	Total expenses	68,702		50,658		225,242		143,722
Other income (expense)	Other income (expense)
Equity in income (loss) of investees		650		12,924		(7,493)		60,181
Other income (expense)
Other income (expense)
Equity in (loss) income of investees
Equity in (loss) income of investees
Equity in (loss) income of investees
Interest expense
Interest expense
Interest expense	Interest expense	(2,419)		(1,157)		(6,027)		(3,488)
Interest income	Interest income	442		26		839		488
Non-operating (expense) income		(27,960)		37,043		(11,879)		65,500
Interest income
Interest income
Non-operating loss
Non-operating loss
Non-operating loss
Consolidated variable interest entities related:	Consolidated variable interest entities related:
Equity in income (loss) of investees		389		(298)		1,030		170
Unrealized income		2,087		2,135		4,333		1,067
Consolidated variable interest entities related:
Consolidated variable interest entities related:
Equity in income of investees
Equity in income of investees
Equity in income of investees
Unrealized gain
Unrealized gain
Unrealized gain
Interest expense
Interest expense
Interest expense	Interest expense	—		(4)		—		(4)
Interest income	Interest income	2,111		—		2,989		—
Interest income
Interest income
Total other income (expense)
Total other income (expense)
Total other income (expense)	Total other income (expense)	(24,700)		50,669		(16,207)		123,914
Income before income taxes	Income before income taxes	33,672		91,715		174,516		247,211
Income before income taxes
Income before income taxes
Income tax expense
Income tax expense
Income tax expense	Income tax expense	11,788		11,519		38,766		37,515
Net income	Net income	21,884		80,196		135,750		209,696
Less: Income (loss) attributable to non-controlling interests in general partnerships		422		(119)		773		167
Net income
Net income
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in general partnerships
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	9,146		26,181		51,326		76,849
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.	Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.	2,647		2,285		5,617		519
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.
Less: Income attributable to non-controlling interests in consolidated funds
Less: Income attributable to non-controlling interests in consolidated funds
Less: Income attributable to non-controlling interests in consolidated funds
Net income attributable to Hamilton Lane Incorporated
Net income attributable to Hamilton Lane Incorporated
Net income attributable to Hamilton Lane Incorporated	Net income attributable to Hamilton Lane Incorporated	$	9,669	$	51,849	$	78,034	$	132,161

Revenues

The following table shows total revenues of the Company and its consolidated VIEs:


		Three Months Ended December 31,				Nine Months Ended December 31,
	Three Months Ended December 31,												Three Months Ended December 31,		Nine Months Ended December 31,
($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2023	2022		2023		2022
Management and advisory fees	Management and advisory fees
Specialized funds
Specialized funds
Specialized funds	Specialized funds	$	53,299	$	38,233	$	144,099	$	107,935
Customized separate accounts	Customized separate accounts	29,571		25,982		87,329		75,416
Advisory	Advisory	6,613		6,119		19,073		18,781
Reporting and other	Reporting and other	6,720		5,992		19,170		16,983
Distribution management	Distribution management	596		3,170		1,863		9,313
Fund reimbursement revenue	Fund reimbursement revenue	556		340		4,648		1,225
Total management and advisory fees	Total management and advisory fees	97,355		79,836		276,182		229,653
Incentive fees	Incentive fees	29,719		11,868		139,783		37,366
Total revenues	Total revenues	$	127,074	$	91,704	$	415,965	$	267,019

Three months ended December 31, ~~2022~~2023 compared to three months ended December 31, ~~2021~~2022

Total revenues ~~increased $35.4~~decreased $1.8 million, or ~~39%~~1%, to ~~$127.1~~$125.3 million, for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due primarily to ~~increases~~a decrease in ~~both~~incentive fees, partially offset by an increase in management and advisory ~~fees and incentive~~ fees.

Management and advisory fees increased ~~$17.5~~$16.3 million ~~or 22%,~~ to ~~$97.4~~$113.6 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021.~~2022. Specialized funds revenue increased ~~$15.1~~$11.6 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due primarily to ~~a $5.3~~an $8.1 million increase in revenue from our latest secondary fund and a ~~$3.9~~$7.0 million increase in revenue from our evergreen funds, ~~and a $3.5 million increase in revenue from our latest direct equity fund,~~ which added ~~$1.6 billion, $1.1~~$1.9 billion and ~~$0.9~~$2.2 billion, respectively, in fee-earning AUM between periods. Revenue from our latest secondary fund included $6.1 million in retroactive fees for the three months ended December 31, 2023 compared to $3.8 million in retroactive fees from our latest secondary and direct equity funds ~~included $2.0 million and $1.8 million, respectively, in retroactive fees~~ for the three months ended December 31, 2022. Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period. Customized separate accounts revenue increased ~~$3.6~~$3.4 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021~~2022 due to the addition of several new accounts, ~~and~~ additional allocations from existing ~~accounts. Distribution management~~accounts, and continued investment activity. Fund reimbursement revenue ~~decreased $2.6~~increased by $1.2 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021~~2022, due primarily to ~~decreased distribution activity.~~the recognition of fund reimbursements from our latest strategic opportunities fund in the current year period.

Incentive fees ~~increased $17.9~~decreased $18.1 million to ~~$29.7~~$11.6 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due primarily to ~~increases~~a decrease in incentive fees from ~~our specialized~~several funds having been in the general partner catch-up period in the prior year period. The catch-up period allocates distributions to the general partner to the agreed-upon carried interest once the investors’ total invested capital is returned and ~~customized separate accounts.~~the preferred return is achieved.

Nine ~~months ended~~Months Ended December 31, ~~2022~~2023 compared to nine months ended December 31, ~~2021~~2022

Total revenues ~~increased $148.9~~decreased $38.8 million, or ~~56%~~9%, to ~~$416.0~~$377.2 million, for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022, due primarily to ~~increases~~a decrease in ~~both~~incentive fees, partially offset by an increase in management and advisory ~~fees and incentive~~ fees.

Management and advisory fees increased ~~$46.5~~$52.0 million ~~or 20%,~~ to ~~$276.2~~$328.2 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021.~~2022. Specialized funds revenue increased ~~$36.2~~$40.9 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022, due primarily to a ~~$15.2 million increase in revenue from our evergreen funds, a $9.1~~$25.6 million increase in revenue from our latest secondary fund and ~~an $8.6~~a $16.6 million increase in revenue from our ~~latest direct equity fund,~~evergreen funds, which added ~~$1.1 billion, $1.6~~$1.9 billion and ~~$0.9~~$2.2 billion, respectively, in fee-earning AUM between periods. Revenue from our latest ~~direct equity~~secondary fund included $12.8 million in retroactive fees for the nine months ended December 31, 2023 compared to $2.4 million in retroactive fees from our latest direct equity fund for the nine months ended December 31, 2022. Customized separate accounts revenue increased ~~$11.9~~$9.4 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021~~2022 due to the addition of several new accounts, ~~and~~ additional allocations from existing ~~accounts. Distribution management revenue~~accounts, and continued investment activity.

Incentive fees decreased ~~$7.4~~$90.8 million to $48.9 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021 due to decreased distribution activity. Fund reimbursement revenue increased $3.4 million for the nine months ended December 31,~~ 2022, ~~compared to the nine months ended December 31, 2021,~~ due primarily to ~~the recognition of fund reimbursements from our latest secondary fund in the current year period.~~

~~Incentive fees increased $102.4 million to $139.8 million for the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, due primarily to increases~~a decrease in incentive fees from ~~our specialized funds.~~several funds having been in the general partner catch-up period in the prior year period.

Expenses

Three months ended December 31, ~~2022~~2023 compared to three months ended December 31, ~~2021~~2022

Total expenses increased ~~$18.0~~$5.2 million, or ~~36%~~8%, to ~~$68.7~~$73.9 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021~~2022, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Compensation and benefits expenses increased ~~$11.7~~$4.0 million ~~or 34%,~~ to ~~$45.7~~$49.7 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due to ~~increases~~an increase in base compensation and benefits, ~~and~~partially offset by a decrease in incentive fee compensation. Base compensation and benefits increased ~~$6.1~~$8.1 million ~~or 21%,~~ for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due to ~~an increase in our bonus plan accrual related to the increase in incentive fee revenue and~~ an increase in salary expense from additional headcount in the current year period compared to the prior year period. Incentive fee compensation ~~increased $4.4~~decreased $4.5 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due to the ~~increase~~decrease in incentive fee revenue.

General, administrative and other expenses including our variable interest entities increased ~~$6.4~~$1.1 million to $24.2 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021.~~2022. This change consisted primarily of a ~~$2.4~~$0.8 million increase in ~~third-party commissions, a $1.0 million increase in travel~~fund reimbursement expense attributed to the timing of newly created funds and a $0.8 million increase in ~~depreciation expense.~~technology related expense, partially offset by a $0.5 million decrease in consulting and professional fees.

Nine Months Ended December 31, 2023 compared to nine months ended December 31, 2022

Total expenses decreased $10.0 million, or 4%, to $215.2 million for the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, due primarily to a decrease in compensation and benefits expenses, partially offset by an increase in general, administrative and other expenses.

~~Nine months ended December 31, 2022 compared~~Compensation and benefits expenses decreased $18.5 million to ~~nine months ended December 31, 2021~~

~~Total expenses increased $81.5 million, or 57%, to $225.2~~$139.7 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021~~2022, due primarily to ~~increases~~a decrease in ~~both~~incentive fee compensation, partially offset by an increase in base compensation and benefits ~~expenses~~ and ~~general, administrative and other expenses.~~

~~Compensation and benefits expenses increased $64.2 million, or 68%, to $158.2~~equity-based compensation. Incentive fee compensation decreased $22.6 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022, due to ~~increases~~the decrease in ~~base compensation and benefits and~~ incentive fee ~~compensation.~~revenue. Base compensation and benefits increased ~~$37.5~~$1.7 million ~~or 48%,~~ for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022 due ~~primarily~~ to an increase in ~~our bonus plan accrual related to~~salary expense from additional headcount in the ~~increase in incentive fee revenue. Incentive fee~~current year period. Equity-based compensation increased ~~$25.6~~$2.4 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021, due to~~2022, driven primarily by performance awards issued in the ~~increase in incentive fee revenue.~~prior year period.

General, administrative and other expenses including our variable interest entities increased ~~$17.3~~$8.5 million to $75.5 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021.~~2022. This change consisted primarily of a ~~$3.7~~$4.4 million increase in third-party ~~commissions, $2.9 million~~commission primarily attributed to the increase in ~~travel expense,~~gross subscriptions to our evergreen funds, a ~~$2.6~~$1.8 million increase in fund reimbursement ~~expenses,~~expense attributed to the timing of newly created funds, a ~~$2.6~~$1.4 million increase in ~~consulting~~technology-related expenses, and ~~professional fees,~~ a ~~$1.9~~$0.7 million increase in ~~depreciation expense, and a $1.5 million increase in conferences and marketing.~~travel expense.

Other Income (Expense)

The following table shows the equity in income (loss) of investees of the Company and its consolidated VIEs included in other income (expense):


		Three Months Ended December 31,				Nine Months Ended December 31,
	Three Months Ended December 31,												Three Months Ended December 31,		Nine Months Ended December 31,
($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2023	2022		2023		2022
Equity in income (loss) of investees	Equity in income (loss) of investees
Primary funds
Primary funds
Primary funds	Primary funds	$	(537)	$	1,129	$	(210)	$	7,124
Direct investment funds	Direct investment funds	(305)		867		(5,496)		15,375
Secondary funds	Secondary funds	234		4,074		(546)		11,824
Customized separate accounts	Customized separate accounts	(1,350)		5,042		(3,502)		20,201
Other equity method investments	Other equity method investments	2,997		1,514		3,291		5,827
Total equity in income (loss) of investees	Total equity in income (loss) of investees	$	1,039	$	12,626	$	(6,463)	$	60,351

Three months ended December 31, ~~2022~~2023 compared to three months ended December 31, ~~2021~~2022

Other income ~~decreased $75.4~~(expense) increased $23.5 million, to ~~a $24.7~~$1.1 million ~~loss~~of expense for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due primarily to a decrease in ~~other~~ non-operating ~~income and equity~~loss.

Equity in income (loss) of ~~investees.~~investees decreased $0.8 million to $0.2 million of income for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This was due primarily to the decreases in public market valuations during the period.

~~Non-operating~~Interest income ~~decreased $65.1~~increased $1.1 million to $1.5 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021, due~~2022, primarily attributed to ~~the recognition of a $43.3 million loss~~increased rates on ~~an investment in the current year period and $31.7 million in gains on two investments in the prior year period.~~interest bearing accounts.

Equity in income of investees decreased $11.6 million to a $1.0 million gain for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. This was due primarily to the gains of public market valuations during the quarter ended September 30, 2021.

~~Other income of consolidated VIEs increased $2.8~~Non-operating loss decreased $28.0 million for the three months ended December 31, ~~2022~~2023 compared to the three months ended December 31, ~~2021,~~2022, due primarily to ~~interest income~~the recognition of a $43.3 million impairment of an investment, partially offset by $13.2 million in fair value adjustments on several other investments ~~held~~ in ~~trust of our sponsored SPAC.~~

~~Nine~~the three months ended December 31, 2022.

Other consolidated VIE related amounts decreased $4.3 million to $0.2 million of income for the three months ended December 31, 2023 compared to the three months ended December 31, 2022, due to $2.1 million of interest income and $2.1 million of unrealized gains related to our previously sponsored SPAC during the three months ended December 31, 2022.

Nine Months Ended December 31, 2023 compared to nine months ended December 31, ~~2021~~2022

Other income ~~decreased $140.1~~(expense) increased $38.7 million, to ~~a $16.2~~$22.5 million ~~loss~~of income for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022, due primarily to ~~a decrease~~an increase in ~~other non-operating income and~~ equity in income of ~~investees.~~investees, other income related to our consolidated VIEs and a decrease in non-operating loss.

~~Non-operating~~Equity in income ~~decreased $74.1~~(loss) of investees increased $27.2 million to $20.7 million of income for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021, due to the recognition of $15.0 million in losses on investments in the current year period compared to $59.7 million in gains on investments in the prior year period.~~

~~Equity in income of investees decreased $66.8 million to a $6.5 million loss for the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021.~~2022. This was due primarily to the ~~prior year~~ gains from increases in public market valuations during the ~~period ended September 30, 2021 compared~~period.

Interest expense increased $2.4 million to ~~losses for the period ended September 30, 2022.~~

~~Other income of consolidated VIEs increased $7.1~~$8.4 million for the nine months ended December 31, ~~2022~~2023 compared to the nine months ended December 31, ~~2021,~~2022, due primarily to increased interest rates on our variable-rate Term Loan.

Interest income increased $2.7 million to $3.5 million for the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily attributed to increased rates on interest bearing accounts.

Non-operating loss decreased $10.9 million to $1.0 million of loss for the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, due primarily to the recognition of a $43.3 million impairment on an investment offset by $31.0 million in fair value adjustments on several other investments ~~held~~ in ~~trust of our sponsored SPAC.~~the nine months ended December 31, 2022.

Income Tax Expense

Our effective tax rate was ~~35.0%~~31.4% and ~~12.6%~~35.0% for the three months ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~22.2%~~18.5% and ~~15.2%~~22.2% for the nine months ended December 31, 2023 and 2022, respectively. The effective tax rates for the three months ended December 31, 2023 and ~~2021, respectively. These rates~~2022 were different from the statutory tax rate due to the valuation allowance recorded against deferred tax assets. The effective tax rates for the nine months ended December 31, 2023 and 2022 were different from the statutory tax rate due to the portion of income allocated to non-controlling interests, valuation allowance recorded against deferred tax assets and discrete tax adjustments ~~recorded in~~to true-up prior fiscal year estimated investment taxable income to actual investment taxable income reported to the ~~periods.~~Company after the prior fiscal year end. The effective tax ~~rates~~rate for the three and nine months ended December 31, 2023 was lower than the effective tax rate for the three and nine months ended December 31, 2022 ~~were more than~~primarily due to changes in the ~~three and nine months ended December 31, 2021 due primarily to a~~ valuation allowance ~~for~~against deferred tax assets ~~not expected to be realized~~ and discrete tax ~~adjustments, which were higher in the three and nine months ended December 31, 2022 than the three and nine months ended December 31, 2021.~~adjustments.

Fee-Earning AUM

The following table provides the period to period rollforward of our fee-earning AUM.


		Three Months Ended December 31,						Nine Months Ended December 31,
		Three Months Ended December 31,
		Three Months Ended December 31,
		Three Months Ended December 31,																	Nine Months Ended December 31,
($ in millions)	($ in millions)	2022						2022						($ in millions)	2023				2023
		Customized Separate Accounts		Specialized Funds		Total		Customized Separate Accounts		Specialized Funds		Total
	Customized Separate Accounts															Customized Separate Accounts	Specialized Funds	Total		Customized Separate Accounts	Specialized Funds	Total
Balance, beginning of period	Balance, beginning of period	$	32,333	$	20,354	$	52,687	$	30,938	$	18,193	$	49,131
Contributions (1)	Contributions (1)	1,432		1,472		2,904		4,598		4,137		8,735
Distributions (2)	Distributions (2)	(576)		(213)		(789)		(2,305)		(716)		(3,021)
Foreign exchange, market value and other (3)	Foreign exchange, market value and other (3)	(100)		163		63		(142)		162		20
Balance, end of period	Balance, end of period	$	33,089	$	21,776	$	54,865	$	33,089	$	21,776	$	54,865

(1)Contributions represent (i) new commitments from customized separate accounts and specialized funds that earn fees on a committed capital fee base and (ii) capital contributions to underlying investments from customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base.

(2)Distributions represent (i) returns of capital in customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base, (ii) reductions in fee-earning AUM from separate accounts and specialized funds that moved from a committed capital to net invested capital fee base and (iii) reductions in fee-earning AUM from customized separate accounts and specialized funds that are no longer earning fees.

(3)Foreign exchange, market value and other consists primarily of (i) the impact of foreign exchange rate fluctuations for customized separate accounts and specialized funds that earn fees on non-U.S. dollar denominated commitments and (ii) market value appreciation (depreciation) from customized separate accounts and specialized funds that earn fees on a NAV fee base.

Three months ended December 31, ~~2022~~2023

Fee-earning AUM increased ~~$2.2~~$1.7 billion to ~~$54.9~~$63.1 billion during the three months ended December 31, ~~2022,~~2023, due primarily to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased ~~$0.8~~$0.7 billion, or 2%, to ~~$33.1~~$36.9 billion for the three months ended December 31, ~~2022.~~2023. Customized separate accounts contributions were ~~$1.4~~$1.7 billion for the three months ended December 31, ~~2022,~~2023, due primarily to new allocations from existing clients and the addition of new clients. Distributions were ~~$0.6~~$1.0 billion for the three months ended December 31, ~~2022~~2023, due primarily to ~~$0.3~~$0.6 billion from accounts moving from a committed to net invested capital fee base and $0.4 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee ~~base, $0.2 billion from accounts reaching the end of their fund term, and $0.1 billion from accounts moving from a committed to net invested capital fee~~ base.

Specialized funds fee-earning AUM increased ~~$1.4~~$1.0 billion, or 7%4%, to ~~$21.8~~$26.2 billion for the three months ended December 31, ~~2022.~~2023. Specialized fund contributions were ~~$1.5~~$1.3 billion for the three months ended December 31, ~~2022,~~2023, due primarily to ~~$0.6~~$0.5 billion from our latest secondary ~~fund.~~fund and $0.6 billion from our evergreen funds. Distributions were ~~$0.2~~$0.4 billion for the three months ended December 31, ~~2022,~~2023, due primarily to returns of capital in funds earning fees on a net invested capital or NAV fee base.

Nine ~~months ended~~Months Ended December 31, ~~2022~~2023

Fee-earning AUM increased ~~$5.7~~$5.8 billion to ~~$54.9~~$63.1 billion during the nine months ended December 31, ~~2022,~~2023, due primarily to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $2.2 billion, or 7%6%, to ~~$33.1~~$36.9 billion for the nine months ended December 31, ~~2022.~~2023. Customized separate accounts contributions were ~~$4.6~~$4.8 billion for the nine months ended December 31, ~~2022,~~2023, due primarily to new allocations from existing clients and the addition of new clients. Distributions were ~~$2.3~~$2.6 billion for the nine months ended December 31, ~~2022~~2023, due primarily to ~~$0.8~~$1.4 billion from accounts moving from a committed to net invested capital fee base, $0.8 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and ~~$0.7~~$0.4 billion from accounts reaching the end of their fund term.

Specialized funds fee-earning AUM increased ~~$3.6~~$3.5 billion, or ~~20%~~16%, to ~~$21.8~~$26.2 billion for the nine months ended December 31, ~~2022.~~2023. Specialized fund contributions were $4.1 billion for the nine months ended December 31, ~~2022,~~2023, due primarily to $1.8 billion from our evergreen funds and $1.6 billion from our latest secondary ~~fund and $0.8 billion from our evergreen funds.~~fund. Distributions were ~~$0.7~~$0.8 billion for the nine months ended December 31, ~~2022,~~2023 due to ~~$0.6~~$0.5 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.1 billion from accounts ~~reaching the end of their fund term.~~moving from a committed to net invested capital fee base.

Non-GAAP Financial Measures

Below is a description of our unaudited non-GAAP financial measures. These are not measures of financial performance under GAAP and should not be considered a substitute for the most directly comparable GAAP measures, which are reconciled below. These measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these measures in isolation or as a substitute for GAAP measures. Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

Fee Related Earnings

Fee Related Earnings (“FRE”) is used to highlight ~~our~~ 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) other non-operating income 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.

Adjusted EBITDA

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) other non-operating income and (f) certain other significant items that we believe are not indicative of our core performance.

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to ~~Fee Related Earnings~~FRE and Adjusted EBITDA for the three and nine months ended December 31, ~~2022~~2023 and ~~2021:~~2022:
Three Months Ended December 31, Nine Months Ended December 31,
($ in thousands) 2022 2021 2022 2021
Net income attributable to Hamilton Lane Incorporated $ 9,669 $ 51,849 $ 78,034 $ 132,161
Income (loss) attributable to non-controlling interests in general partnerships 422 (119) 773 167
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 9,146 26,181 51,326 76,849
Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. 2,647 2,285 5,617 519
Incentive fees (29,719) (11,868) (139,783) (37,366)
Incentive fee related compensation (1)
14,001 5,609 66,254 17,685
SPAC related general, administrative and other expenses 278 309 846 868
Non-operating income related compensation (1,413) 1,790 54 1,790
Interest income (2,553) (26) (3,829) (488)
Interest expense 2,419 1,161 6,027 3,492
Income tax expense 11,788 11,519 38,766 37,515
Equity in (income) loss of investees (1,039) (12,626) 6,463 (60,351)
Non-operating expense (income) 25,873 (39,178) 7,546 (66,567)
Fee Related Earnings $ 41,519 $ 36,886 $ 118,094 $ 106,274
Depreciation and amortization 2,022 1,292 5,600 3,744
Equity-based compensation 2,834 1,711 6,816 5,706
Incentive fees 29,719 11,868 139,783 37,366
Incentive fees attributable to non-controlling interests (243) (59) (302) (134)
Incentive fee related compensation (1)
(14,001) (5,609) (66,254) (17,685)
Non-operating income related compensation 1,413 (1,790) (54) (1,790)
Interest income 442 26 839 488
Adjusted EBITDA $ 63,705 $ 44,325 $ 204,522 $ 133,969


	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2023		2022		2023		2022
Net income attributable to Hamilton Lane Incorporated	$	19,506	$	9,669	$	92,498	$	78,034
Income attributable to non-controlling interests in general partnerships	82		422		171		773
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	14,944		9,146		52,733		51,326
Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.	—		2,647		—		5,617
Income attributable to non-controlling interests in consolidated funds	—		—		4,980		—
Incentive fees	(11,623)		(29,719)		(48,945)		(139,783)
Incentive fee related compensation (1)	5,521		14,001		23,249		66,254
Consolidated VIE related general, administrative and other expenses	—		278		566		846
Revenue related to consolidated funds	—		—		394		—
Non-operating income related compensation	—		(1,413)		59		54
Interest income	(1,500)		(2,553)		(8,117)		(3,829)
Interest expense	2,748		2,419		8,387		6,027
Income tax expense	15,800		11,788		34,055		38,766
Equity in (income) loss of investees	(194)		(1,039)		(20,731)		6,463
Non-operating income (loss)	8		25,873		(2,045)		7,546
Fee Related Earnings	$	45,292	$	41,519	$	137,254	$	118,094
Depreciation and amortization	2,037		2,022		5,774		5,600
Equity-based compensation	3,264		2,834		9,227		6,816
Incentive fees	11,623		29,719		48,945		139,783
Incentive fees attributable to non-controlling interests	—		(243)		—		(302)
Incentive fee related compensation (1)	(5,521)		(14,001)		(23,249)		(66,254)
Non-operating income related compensation	—		1,413		(59)		(54)
Interest income	1,500		442		3,536		839
Adjusted EBITDA	$	58,195	$	63,705	$	181,428	$	204,522

(1) Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation.

Non-GAAP Earnings Per Share

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~~ nine months ended December 31, ~~2022~~2023 and ~~2021~~2022 are equal to ~~the~~ 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.

The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated for the three and nine months ended December 31, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended December 31, Nine Months Ended December 31,
(in thousands, except share and per-share amounts) 2022 2021 2022 2021
Net income attributable to Hamilton Lane Incorporated $ 9,669 $ 51,849 $ 78,034 $ 132,161
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 9,146 26,181 51,326 76,849
Income tax expense 11,788 11,519 38,766 37,515
Adjusted pre-tax net income 30,603 89,549 168,126 246,525
Adjusted income taxes (1)
(7,314) (21,312) (40,182) (58,673)
Adjusted net income $ 23,289 $ 68,237 $ 127,944 $ 187,852
Adjusted shares outstanding 53,769,379 53,744,144 53,733,521 53,707,401
Non-GAAP earnings per share $ 0.43 $ 1.27 $ 2.38 $ 3.50


	Three Months Ended December 31,			Nine Months Ended December 31,
(in thousands, except share and per-share amounts)		2023		2022		2023		2022
Net income attributable to Hamilton Lane Incorporated		$	19,506	$	9,669	$	92,498	$	78,034
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.		14,944		9,146		52,733		51,326
Income tax expense		15,800		11,788		34,055		38,766
Adjusted pre-tax net income		50,250		30,603		179,286		168,126
Adjusted income taxes (1)		(11,859)		(7,314)		(42,312)		(40,182)
Adjusted net income		$	38,391	$	23,289	$	136,974	$	127,944

Adjusted shares outstanding		53,987,555		53,769,379		53,932,804		53,733,521

Non-GAAP earnings per share		$	0.71	$	0.43	$	2.54	$	2.38

(1) Represents corporate income taxes at our estimated statutory tax rate of ~~23.9%~~23.6% and ~~23.8%~~23.9% for the three and nine ~~month periods~~months ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively, applied to adjusted pre-tax net income. 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%. The 23.9% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.9%~~. The 23.8% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.8%~~.

Investment Performance

The following tables present information relating to the historical performance of our specialized funds with fund families having at least two distinct vintages and most recent fund sizes of greater than $500 million per fund. The data are presented from the date indicated through September 30, ~~2022~~2023 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.

When considering the data presented below, note that the historical results of our specialized funds are not indicative of the future results you should expect from such investments, from any future investment funds we may raise or from an investment in our Class A common stock, in part because:

•market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future;

•the performance of our funds is generally calculated on the basis of the NAV of the funds’ investments, including unrealized gains, which may never be realized;

•our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed;

•our ~~newly established~~newly-established funds may generate lower returns during the period that they initially deploy their capital;

•in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; ~~and~~

•the performance of particular funds also will be affected by risks of the industries and businesses in which they ~~invest.~~invest; and

•we may create new funds that reflect a different asset mix and new investment strategies, as well as a varied geographic and industry exposure, compared to our historical funds, and any such new funds could have different returns than our previous funds.

The historical and potential future returns of the investment funds we manage are not directly linked to returns on our Class A common stock. Therefore, you should not conclude that continued positive performance of the investment funds we manage will necessarily result in positive returns on an investment in our Class A common stock. As used in this discussion, internal rate of return (“IRR”) is calculated on a pooled basis using daily cash flows. See “Performance Methodology” below for more information on how our returns are calculated.

Specialized Fund Performance

We organize, invest and manage specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. Below is performance information across our various specialized funds. Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized.


Fund	Fund	Vintage year	Fund size ($M)	Capital invested ($M)	Gross multiple	Net Multiple	Gross IRR (%)	Net IRR (%)	Gross Spread vs. S&P 500 PME	Net Spread vs. S&P 500 PME	Gross Spread vs. MSCI World PME	Net Spread vs. MSCI World PME	Fund	Vintage year		Fund size ($M)		Capital invested ($M)		Gross multiple		Net Multiple		Gross IRR (%)		Net IRR (%)		Gross Spread vs. S&P 500 PME		Net Spread vs. S&P 500 PME		Gross Spread vs. MSCI World PME		Net Spread vs. MSCI World PME
Primaries (Diversified)	Primaries (Diversified)
PEF I
PEF I
PEF I	PEF I	1998	122	117	1.3	1.2	5.4%	2.5%	378 bps	76 bps	322 bps	16 bps	1998		122		117		1.3		1.2		5.4%		2.5%		378 bps		76 bps		322 bps		16 bps
PEF IV	PEF IV	2000	250	238	1.7	1.5	16.2%	11.2%	1,302 bps	828 bps	1,170 bps	708 bps	PEF IV	2000		250		238		1.7		1.5		16.2%		11.2%		1,302 bps		828 bps		1,170 bps		708 bps
PEF V	PEF V	2003	135	133	1.7	1.6	14.2%	9.6%	841 bps	363 bps	950 bps	466 bps	PEF V	2003		135		133		1.7		1.6		14.2%		9.6%		841 bps		363 bps		950 bps		466 bps
PEF VI	PEF VI	2007	494	514	1.7	1.6	11.8%	8.9%	83 bps	(157) bps	422 bps	178 bps	PEF VI	2007		494		513		1.7		1.6		11.7%		8.9%		72 bps		(168 bps)		408 bps		163 bps
PEF VII	PEF VII	2010	262	288	1.6		12.8%	8.9%	(60) bps	(431) bps	349 bps	(28) bps	PEF VII	2010		262		289		1.6				12.4%		8.4%		(133 bps)		(504 bps)		262 bps		(113 bps)
PEF VIII	PEF VIII	2012	427	423	1.5		10.4%	7.9%	(113) bps	(351) bps	249 bps	6 bps	PEF VIII	2012		427				1.5				9.6%		7.2%		(277 bps)		(510 bps)		52 bps		(185 bps)
PEF IX	PEF IX	2015	517	504	1.9		20.8%	18.9%	896 bps	733 bps	1,254 bps	1,088 bps	PEF IX	2015		517		516		1.9				19.2%		17.0%		610 bps		413 bps		926 bps		723 bps
PEF X	PEF X	2018	278	223	1.4		20.9%	17.2%	1,539 bps	1,095 bps	1,932 bps	1,473 bps	PEF X	2018		278		244		1.5		1.4		17.9%		14.8%		784 bps		414 bps		1,057 bps		680 bps
Secondaries	Secondaries
Pre-Fund	Pre-Fund	-		362	1.5	N/A	17.1%	N/A	1,330 bps	N/A	1,172 bps	N/A
Pre-Fund
Pre-Fund														—				362		1.5		N/A		17.1%		N/A		1,330 bps		N/A		1,172 bps		N/A
Secondary Fund I	Secondary Fund I	2005	360	353	1.2		5.2%	3.8%	113 bps	(63) bps	341 bps	157 bps	Secondary Fund I	2005		360		353		1.2				5.2%		3.8%		113 bps		(63 bps)		341 bps		157 bps
Secondary Fund II	Secondary Fund II	2008	591	596	1.5	1.4	19.9%	13.5%	459 bps	(188) bps	876 bps	218 bps	Secondary Fund II	2008		591		603		1.5		1.4		19.9%		13.5%		452 bps		(194 bps)		870 bps		212 bps
Secondary Fund III	Secondary Fund III	2012	909	838	1.4		13.9%	11.6%	92 bps	(160) bps	487 bps	240 bps	Secondary Fund III	2012		909		839		1.4				13.4%		11.0%		12 bps		(255 bps)		397 bps		135 bps
Secondary Fund IV	Secondary Fund IV	2016	1,916	2,046	1.7	1.6	19.2%	19.8%	762 bps	738 bps	1,131 bps	1,108 bps	Secondary Fund IV	2016		1,917		2,065		1.7		1.6		17.3%		18.0%		416 bps		431 bps		736 bps		759 bps
Secondary Fund V	Secondary Fund V	2019	3,929	3,363	1.4	1.5	33.8%	34.9%	3,778 bps	3,982 bps	4,182 bps	4,381 bps	Secondary Fund V	2019		3,929		3,715		1.5		1.4		22.6%		21.4%		1,678 bps		1,598 bps		1,922 bps		1,845 bps
Secondary Fund VI													Secondary Fund VI	2022		3,081		635		1.5		1.6		>100%				10,636 bps		20,744 bps		10,928 bps		20,900 bps
Direct/Co-investments	Direct/Co-investments
Pre-Fund
Pre-Fund
Pre-Fund	Pre-Fund	-		244	1.9	N/A	21.3%	N/A	1,655 bps	N/A	1,600 bps	N/A	—				244		1.9		N/A		21.3%		N/A		1,655 bps		N/A		1,600 bps		N/A
Co-Investment Fund	Co-Investment Fund	2005	604	577	1.0	0.9	0.2%	(1.3)%	(570) bps	(745) bps	(319) bps	(500) bps	Co-Investment Fund	2005		604		577		1.0		0.9		0.2%		(1.3)%		(569 bps)		(746 bps)		(319 bps)		(501 bps)
Co-Investment Fund II	Co-Investment Fund II	2008	1,195	1,157	2.1	1.8	17.9%	14.2%	580 bps	196 bps	967 bps	578 bps	Co-Investment Fund II	2008		1,195		1,157		2.1		1.8		17.9%		14.2%		569 bps		185 bps		950 bps		561 bps
Co-Investment Fund III	Co-Investment Fund III	2014	1,243	1,276	1.9	1.7	17.1%	14.0%	393 bps	85 bps	747 bps	435 bps	Co-Investment Fund III	2014		1,243		1,292		1.8		1.6		15.0%		12.0%		111 bps		(189 bps)		446 bps		141 bps
Co-Investment Fund IV	Co-Investment Fund IV	2018	1,698	1,480	1.9	1.8	26.3%	24.6%	1,589 bps	1,435 bps	1,949 bps	1,796 bps	Co-Investment Fund IV	2018		1,698		1,489		2.2		2.0		25.3%		23.4%		1,270 bps		1,073 bps		1,556 bps		1,352 bps
Equity Opportunities Fund V	Equity Opportunities Fund V	2021	1,731	1,204	1.1		10.5%	8.6%	3,042 bps	3,288 bps	3,378 bps	3,597 bps	Equity Opportunities Fund V	2021		2,069		1,513		1.2		1.1		11.9%		9.7%		986 bps		886 bps		1,149 bps		1,049 bps

Fund	Fund	Vintage year	Fund size ($M)	Capital invested ($M)	Gross multiple	Net Multiple	Gross IRR (%)	Net IRR (%)	Gross Spread vs. CS HY II PME	Net Spread vs. CS HY II PME	Gross Spread vs. CS LL PME	Net Spread vs. CS LL PME
Fund
Fund														Vintage year		Fund size ($M)		Capital invested ($M)		Gross multiple		Net Multiple		Gross IRR (%)		Net IRR (%)		Gross Spread vs. CS HY II PME		Net Spread vs. CS HY II PME		Gross Spread vs. CS LL PME		Net Spread vs. CS LL PME
Strategic Opportunities (Tail-end secondaries and credit)	Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015
Strat Opps 2015
Strat Opps 2015	Strat Opps 2015	2015	71	68	1.3	1.2	14.1%	10.6%	561 bps	222 bps	862 bps	518 bps	2015		71		68		1.3		1.2		14.1%		10.6%		561 bps		215 bps		862 bps		513 bps
Strat Opps 2016	Strat Opps 2016	2016	214	216	1.2		9.8%	7.4%	403 bps	172 bps	526 bps	296 bps	Strat Opps 2016	2016		214		216		1.3		1.2		10.4%		8.0%		461 bps		223 bps		567 bps		331 bps
Strat Opps 2017	Strat Opps 2017	2017	435	448	1.3	1.2	11.5%	9.1%	816 bps	560 bps	801 bps	562 bps	Strat Opps 2017	2017		435		448		1.3				11.9%		9.5%		806 bps		550 bps		776 bps		536 bps
Strat Opps 2018		2018	889	862	1.2		9.7%	7.6%	726 bps	501 bps	728 bps	492 bps
Stat Opps 2019		2019	762	699	1.2	1.1	11.4%	8.9%	1,161 bps	811 bps	847 bps	482 bps
Stat Opps 2020		2021	898	838	1.0		1.5%	0.6%	1,242 bps	1,103 bps	321 bps	209 bps
Strat Opps 2021		2022	953	193	1.0		7.5%	6.4%	3,120 bps	2,935 bps	1,293 bps	1,819 bps
Strat Opps IV (Series 2018)													Strat Opps IV (Series 2018)	2018		889		865		1.3		1.2		9.6%		7.6%		625 bps		401 bps		611 bps		376 bps
Strat Opps V (Series 2019)													Strat Opps V (Series 2019)	2019		762		711		1.2				11.8%		9.4%		952 bps		631 bps		666 bps		335 bps
Strat Opps VI (Series 2020)													Strat Opps VI (Series 2020)	2021		898		841		1.1				6.2%		5.3%		723 bps		540 bps		132 bps		(7 bps)
Strat Opps VII													Strat Opps VII	2022		953		636		1.1				12.9%		11.9%		782 bps		686 bps		193 bps		20 bps

Performance Methodology

The indices presented for comparison are the S&P 500, MSCI World, Credit Suisse High Yield II (“CS HY II”) and Credit Suisse Leverage Loan (“CS LL”), calculated on a public market equivalent (“PME”) basis. We believe these indices are commonly used by private markets and credit investors to evaluate performance. The PME calculation methodology allows private markets investment performance to be evaluated against a public index and assumes that capital is being invested in, or withdrawn from, the index on the days the capital was called and distributed from the underlying fund managers. The S&P 500 Index is a total return capitalization-weighted index that measures the performance of 500 U.S. large cap stocks. The MSCI World Index is a free float-adjusted market capitalization-weighted index of over 1,600 world stocks that is designed to measure the equity market performance of developed markets. The CS HY II Index, formerly known as the DLJ High Yield Index, is designed to mirror the investable

universe of the U.S. dollar denominated high yield debt market. Prices for the CS HY II Index are

available on a weekly basis. The CS LL Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Loans must be rated 5B or lower and the index frequency is monthly.

Our IRR represents the pooled IRR for all discretionary investments for the period from inception to September 30, ~~2022.~~2023. Gross IRR is presented net of management fees, carried interest and expenses charged by the general partners of the underlying investments, but does not include our management fees, carried interest or expenses. Our gross IRR would decrease with the inclusion of our management fees, carried interest and expenses. Net IRR is net of all management fees, carried interest and expenses charged by the general partners of the underlying investments, as well as by us. Net IRR figures for our funds do not include cash flows attributable to the general partner. Note that secondary portfolio IRRs can be initially impacted by purchase discounts (or premiums) paid at the closing of a transaction, the impact of which will diminish over time.

“Capital Invested” refers to the total amount of all investments made by a fund, including commitment-reducing and non-commitment-reducing capital calls. “Multiple” represents total distributions from underlying investments to the fund plus the fund’s market value divided by total contributed capital. “Gross Multiple” is presented net of management fees, carried interest and expenses charged by the fund managers of the underlying investments.

Specialized fund and pre-fund performance does not include ten funds-of-funds that have investor-specific investment guidelines.

Many of our specialized funds utilize revolving credit facilities, which provide capital that is available to fund investments or pay partnership expenses and management fees. Borrowings may be paid down from time to time with investor capital contributions or distributions from investments. The use of a credit facility affects the fund’s return and magnifies the performance on the upside or on the downside.

Liquidity and Capital Resources

Historical Liquidity and Capital Resources

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, our cash and cash equivalents were ~~$146.1~~$164.5 million and ~~$72.1~~$99.7 million, respectively.

Our material sources of cash from our operations include: (1) management and advisory fees, which are collected monthly or quarterly; (2) incentive fees, which are volatile and largely unpredictable as to amount and timing; and (3) fund distributions related to investments in our specialized funds and certain customized separate accounts that we manage. We use cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, debt service, capital expenditures and distributions to our owners and to fund commitments to certain of our specialized funds and customized separate accounts. If cash ~~flow~~flows from operations were insufficient to fund distributions to our owners, we expect that we would suspend paying such distributions.

We have also accessed the capital markets and used proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.

Finally, we have used available cash and borrowings from our Loan Agreements (defined below) to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions.

Loan Agreements

~~On October 20, 2022, we entered into~~We maintain a ~~new Multi-Draw Term Loan and Security Agreement (the “2022 Multi-Draw Term Loan Agreement”) and amended our existing~~ Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”) ~~and~~, a 2020 Multi-Draw Term Loan and Security Agreement (as amended, the “2020 Multi-Draw Term Loan Agreement”) and a 2022 Multi-Draw Term Loan and Security Agreement (the “2022 Multi-Draw Term Loan Agreement” and, together with the ~~2022 Multi-Draw~~ Term Loan Agreement, ~~Term~~Revolving Loan Agreement and ~~Revolving~~2020 Multi-Draw Term Loan Agreement, the “Loan Agreements”) with JPMorgan Chase & Co. (“JPMorgan”), ~~with~~as successor to First Republic Bank. In early May 2023, JPMorgan announced its purchase of First Republic Bank ~~(“First Republic”).~~after that bank’s failure. The purchase included the Loan Agreements. The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus ~~1.25%~~1.50% subject to a floor of 3.00%. As of December 31, ~~2022,~~2023, we ~~had no~~did not have an outstanding balance under the 2022 Multi-Draw Term Loan Agreement. We are entitled to request term loans not to exceed $75 million in the aggregate, subject to the Cap, through September 30, 2025.

The Term Loan Agreement has a maturity date of January 1, 2030 and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of December 31, ~~2022,~~2023, we had an outstanding balance of ~~$100~~$98 million under the Term Loan Agreement. We ~~are~~were entitled to request additional uncommitted term advances not to exceed $25 million in the aggregate, subject to the Cap, through December 31, 2023.

The Revolving Loan Agreement provides that the aggregate outstanding balance will not exceed $50 million, subject to the Cap, and has a maturity date of March 24, 2025. The interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. As of December 31, ~~2022,~~2023, we did not have an outstanding balance under the Revolving Loan Agreement.

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of July 1, 2030. ~~Advances could be drawn through March 31, 2022 and the~~The interest rate is a fixed per annum rate of 3.50%. As of December 31, ~~2022,~~2023, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.

The Loan Agreements contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, the principal amount of debt outstanding equaled ~~$200~~$198 million and ~~$171.8~~$214 million, respectively. We had $128 million in availability under the Loan Agreements as of December 31, 2023.

Future Sources and Uses of Liquidity

We generate significant cash flows from operating activities. We believe that we will be able to continue to meet our short-term and long-term liquidity and capital requirements through our cash flows from operating activities, existing cash and cash equivalents and our ability to obtain future external financing. However, the availability of capital from the Loan Agreements and our cash balances are exposed to the credit risks of the financial institutions at which they are held. If events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about any such events, occur, our ability to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities to pay operational and other costs, may be threatened or lost.

We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets and use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement. The timing or size of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs. There can be no assurance that any such transactions will be completed on favorable terms, or at all.

We will also continue to evaluate opportunities to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions.

In November 2018, we authorized a program to repurchase up to 6% of the outstanding shares of our Class A common stock, not to exceed $50 million (the “Stock Repurchase Program”). The Stock Repurchase Program does not include specific price targets or timetables and may be suspended or terminated by us at any time. We intend to finance the purchases using available working capital and/or external financing. The Stock Repurchase Program expires 12 months after the date of the first acquisition under the authorization. We have not repurchased any shares of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available. Our board of directors periodically reviews the Stock Repurchase Program and most recently re-approved it in December ~~2022.~~2023.

We expect that our primary short-term and long-term liquidity needs will comprise cash to: (1) provide capital to facilitate the growth of our business; (2) fund commitments to our investments; (3) pay operating expenses, including cash compensation to our employees; (4) make payments and/or exercise early termination buyout rights under the tax receivable agreement; (5) fund capital expenditures and make strategic investments; (6) pay interest and principal due on our outstanding debt; (7) pay income taxes; (8) make dividend payments to our stockholders and distributions to holders of HLA units in accordance with our distribution policy; (9) settle exchanges of HLA membership interests by direct

and indirect owners of HLA pursuant to our exchange agreement from time to time; and (10) fund purchases of our Class A common stock pursuant to the Stock Repurchase Program.

We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary. These net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of December 31, ~~2022~~2023 and March 31, ~~2022,~~2023, we were required to maintain ~~approximately $3.1~~$5.0 million and ~~$4.0~~$4.8 million, respectively, in liquid net assets within these subsidiaries to

meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.

Dividend Policy

The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors. We intend to continue to pay a cash dividend on a quarterly basis. Subject to funds being legally available, we will cause HLA to make pro rata distributions to its members, including us, in an amount at least sufficient to allow us to pay all applicable taxes, to make payments under the tax receivable agreement, and to pay our corporate and other overhead expenses.

Tax Receivable Agreement

We expect that periodic exchanges of membership units of HLA by members of HLA will result in increases in the tax basis in our share of the assets of HLA that otherwise would not have been available. These increases in tax basis are expected to increase our depreciation and amortization deductions and create other tax benefits and therefore may reduce the amount of tax that we would otherwise be required to pay in the future. The tax receivable agreement will require us to pay 85% of the amount of these and certain other tax benefits, if any, that we realize (or are deemed to realize in the case of an early termination payment, a change in control or a material breach by us of our obligations under the tax receivable agreement) to the pre-IPO members of HLA.

Cash Flows

Nine Months Ended December 31, ~~2022~~2023 and ~~2021~~2022


		Nine Months Ended December 31,
	Nine Months Ended December 31,								Nine Months Ended December 31,
($ in thousands)	($ in thousands)	2022		2021		($ in thousands)	2023	2022
Net cash provided by operating activities	Net cash provided by operating activities	$	213,371	$	152,512
Net cash provided by (used in) investing activities		$	201,565	$	(55,664)
Net cash used in financing activities		$	(338,038)	$	(104,885)
Net cash (used in) provided by investing activities
Net cash provided by (used in) financing activities

Operating Activities

~~Our~~Cash flows from our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense and depreciation and amortization, all of which are included in earnings. For the nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses. Additionally, the nine months ended December 31, 2023 included the deconsolidation of a previously consolidated fund.

Investing Activities

~~Our~~Cash flows from our investing activities generally reflect cash used for acquisitions, fixed asset purchases and contributions to and distributions from our ~~investments.~~funds. For the nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, our net cash ~~used in~~(used in) provided by investing activities was driven primarily by purchases of furniture, fixtures

and equipment, ~~and~~ net contributions to our ~~funds.~~funds and purchases of non-fund investments. Additionally, ~~during~~the nine months ended December 31, 2023 included purchases of investments by our previously consolidated fund, and the nine months ended December 31, 2022 ~~we received~~included the sale ~~proceeds~~of investments held in trust by our consolidated SPAC due to its liquidation and redemption of its Class A common stock from ~~and made purchases of non-fund investments.~~its holders.

Financing Activities

~~Our~~Cash flows from our financing activities generally reflect cash received from debt and equity financings, payments to owners in the form of dividends, distributions and repurchases of shares and scheduled repayments of our outstanding debt. For the nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, our net cash ~~used in~~provided by (used in) financing activities was driven primarily by dividends paid to ~~shareholders and~~stockholders, distributions to HLA ~~members.~~members, and repayment of borrowings under our Revolving Loan Agreement. Additionally, ~~during~~the nine months ended December 31, 2023 included contributions from non-controlling interest in our previously consolidated fund, and the nine months ended December 31, 2022 ~~we borrowed additional amounts~~included borrowings under our ~~existing term loan~~Term Loan Agreement and ~~borrowed and fully repaid amounts under~~the redemption by our ~~revolving credit facility in order to fund contributions to our funds and other non-fund investments.~~consolidated SPAC of its Class A common stock from its holders.

Off-Balance Sheet Arrangements

There have been no material changes in our off-balance sheet arrangements discussed in our ~~2022~~2023 Form 10-K.

Contractual Obligations, Commitments and Contingencies

There have been no material changes outside of the ordinary course of business in our contractual obligations, commitments and contingencies from those specified in our ~~2022~~2023 Form 10-K.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent liabilities. We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a more complete discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our condensed consolidated financial statements, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2022~~2023 Form 10-K.

Recent Accounting Pronouncements

Information regarding recent accounting developments and their impact on our results can be found in Note 2, “Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk. Potentially negative effects of these risks may be mitigated to a certain extent by those aspects of our investment approach, investment strategies, fundraising practices or other business activities that are designed to benefit, either in relative or absolute terms, from periods of economic weakness, tighter credit or financial market dislocations.

Our predominant exposure to market risk is related to our role as general partner or investment manager for our specialized funds and customized separate accounts and the sensitivities to movements in the fair value of their investments, which may adversely affect our equity in income of investees. Since our management fees are generally based on commitments or net invested capital, our management fee and advisory fee revenue is not significantly impacted by changes in investment values.

Fair value of the financial assets and liabilities of our specialized funds and customized separate accounts may fluctuate in response to changes in the value of securities, foreign currency exchange rates, commodity prices and interest rates. The impact of investment risk is as follows:

•Equity in income of investees changes along with the realized and unrealized gains of the underlying investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Our general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States.

•Management fees from our specialized funds and customized separate accounts are not significantly affected by changes in fair value as the management fees are not generally based on the value of the specialized funds or customized separate accounts, but rather on the amount of capital committed or invested in the specialized funds or customized separate accounts, as applicable.

•Incentive fees from our specialized funds and customized separate accounts are not materially affected by changes in the fair value of unrealized investments because they are based on realized gains and subject to achievement of performance criteria rather than on the fair value of the specialized fund’s or customized separate account’s assets prior to realization. Minor decreases in underlying fair value would not affect the amount of deferred incentive fee revenue subject to clawback.

Exchange Rate Risk

Several of our specialized funds and customized separate accounts hold investments denominated in non-U.S. dollar currencies that may be affected by movements in the rate of exchange between the U.S. dollar and foreign currency, which could impact investment performance. The currency exposure related to investments in foreign currency assets is limited to our general partner interest, which is typically one percent of total capital commitments. We do not possess significant assets in foreign countries in which we operate or engage in material transactions in currencies other than the U.S. dollar. Therefore, changes in exchange rates are not expected to materially impact our financial statements.

Interest Rate Risk

As of December 31, ~~2022,~~2023, we had ~~$200.0~~$197.5 million in borrowings outstanding under our Loan Agreements. The annual interest rate on the Term Loan Agreement, which is at the prime rate minus 1.25%, subject to a floor of 3.00%, was ~~6.25%~~7.25% as of December 31, ~~2022. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 6.00% as of December 31, 2022.~~2023.

Based on the floating rate component of our Loan Agreements payable as of December 31, ~~2022,~~2023, we estimate that a 100 basis point increase in interest rates would result in increased interest expense of approximately $1.0 million over the next 12 months.

Credit Risk

We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the respective counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, including our ~~Chief~~Co-Chief Executive ~~Officer~~Officers and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, ~~2022.~~2023. Our disclosure controls and procedures are intended to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the ~~Chief~~Co-Chief Executive ~~Officer~~Officers and Chief Financial Officer, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our ~~Chief~~Co-Chief Executive ~~Officer~~Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective at December 31, ~~2022.~~2023.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the quarter ended December 31, ~~2022~~2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we may be subject to various legal, regulatory and/or administrative proceedings from time to time. Although there can be no assurance of the outcome of such proceedings, in the opinion of management, we do not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our ~~2022~~2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our repurchase activity with respect to shares of our Class A common stock for the quarter ended December 31, ~~2022:~~2023:

Period
Total
Number of
Shares
Purchased(1)
Average Price
Paid per
Share Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
Maximum Approximate
Dollar Value of
Shares
that May Yet Be
Purchased Under the
Plans or Programs(2)
October 1-31, 2022 — $ — — $ 50,000,000
November 1-30, 2022 — $ — — $ 50,000,000
December 1-31, 2022 991 $ 72.27 — $ 50,000,000
Total 991 $ 72.27 — $ 50,000,000


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
October 1–31, 2023	—	$	—	—	$	50,000,000
November 1–30, 2023	505	$	90.30	—	$	50,000,000
December 1–31, 2023	—	$	—	—	$	50,000,000
Total	505	$	90.30	—	$	50,000,000

(1) Represents shares of Class A common stock tendered by employees as payment of taxes withheld on the vesting of restricted stock granted under HLI’s Amended and Restated 2017 Equity Incentive Plan.

(2) On November 6, 2018, we announced that our board of directors authorized ~~a program~~the Stock Repurchase Program to repurchase, in the aggregate, up to 6% of the outstanding shares of our Class A common stock as of the date of the authorization, not to exceed $50 ~~million (the “Stock Repurchase Program”).~~million. The authorization provides us the flexibility to repurchase shares in the open market or in privately negotiated transactions from time to time, based on market conditions and other factors. We have not repurchased any of our Class A common stock under the Stock Repurchase Program, so the full purchase authority remains available under this program, which expires 12 months after the date of the first acquisition under the authorization. Our board of directors most recently re-approved the Stock Repurchase Program in December ~~2022.~~2023.

Item 5. Other Information

Trading Arrangements

During the three months ended December 31, 2023, none of the Company’s directors or officers adopted, terminated or modified any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K).

Item 6. Exhibits

Incorporated By Reference

Filed Herewith

Incorporated By Reference

Filed Herewith

Exhibit No.

Description of Exhibit

Form

Exhibit

Filing Date

File No.

Filed Herewith

Exhibit No.

Description of Exhibit

Form

Exhibit

Filing Date

File No.

3.1

Amended and Restated Certificate of Incorporation of Hamilton Lane Incorporated

8-K

3.1

3/10/17

001-38021

3.2

Amended and Restated Bylaws of Hamilton Lane Incorporated

10-K

3.2

6/27/17

001-38021

10.1º

Multi-Draw Term Loan and Security Agreement, dated October 20, 2022, by and between First Republic Bank and Hamilton Lane Advisors, L.L.C.

8-K

10.1

10/26/22

001-38021

10.2º

Third Amendment to Revolving Loan and Security Agreement, dated October 20, 2022, by and between First Republic Bank and Hamilton Lane Advisors, L.L.C.

8-K

10.2

10/26/22

001-38021

10.3º

Fourth Amendment to Term Loan and Security Agreement, dated October 20, 2022, by and between First Republic Bank and Hamilton Lane Advisors, L.L.C.

8-K

10.3

10/26/22

001-38021

10.4

Third Amendment to Multi-Draw Term Loan and Security Agreement, dated October 20, 2022, by and between First Republic Bank and Hamilton Lane Advisors, L.L.C.

8-K

10.4

10/26/22

001-38021

3.2

31.1

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32‡

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements.

101

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2023 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) Notes to Condensed Consolidated Financial Statements; and (vi) certain information under Part II, Item 5, “Other Information.”

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

º ~~Confidential information in this exhibit has been omitted.~~

‡ Furnished herewith.


			49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this ~~7th~~6th day of February ~~2023.~~2024.


HAMILTON LANE INCORPORATED


By:			~~/s/ Atul Varma~~/s/ Jeffrey Armbrister
			Name: ~~Atul Varma~~Jeffrey Armbrister
			Title: Chief Financial Officer and Treasurer (Principal Financial Officer and Authorized Signatory)

~~By:~~			~~/s/ Michael Donohue~~
			~~Name: Michael Donohue~~
			~~Title: Managing Director and Controller~~


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total		Amortized Cost
Financial assets:
Other investments	$	6,235	$	—	$	13,954	$	20,189	$	10,703

Total financial assets	$	6,235	$	—	$	13,954	$	20,189	$	10,703

Financial liabilities:
Secured financing(1)	—		—		13,954		13,954
Total financial liabilities	$	—	$	—	$	13,954	$	13,954


	Class A Common Stock	Class B Common Stock
March 31, 2022	37,280,697	16,033,359

Forfeitures	(5,899)	(79,677)
Shares repurchased for employee tax withholdings	(2,311)	—
Awards granted	569,442	—
Shares issued pursuant to Employee Share Purchase Plan	26,762	—
December 31, 2022	37,868,691	15,953,682


Grant Date Fair Value	$	29.79
Closing share price as of grant date	$	69.67
Risk Free Rate	3.6%
Volatility	37.0%
Dividend Yield	2.3%