HLNE - Earnings call 2 2024 | Hamilton Lane Incorporated

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Operator

Good morning, ladies and gentlemen, and welcome to the Hamilton Lane Second Quarter Fiscal 2024 Earnings Call. [Operator Instructions] This call is being recorded on Tuesday, November 7, 2023.

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

John Oh

Nina. you, Thank welcome earnings and Hamilton QX Lane Good to XXXX call. fiscal morning, the will Mario morning, Today, Hirsch, joined website. presentation, be I by on available and press and our Armbrister, which a are Vice Giannini, Jeff CFO. Earlier issued this we release slide Chairman; Erik CEO;

Before statements. remind that we results, will we to the want quarter's be discuss we you making forward-looking

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

risk and except in XXXX we are factors Lane's obligation fiscal For forward-looking reports SEC. of subsequent Hamilton today included and, as any of review discussion a these and risks, the XX-K of file only them. as statements please to These revise required, with we made update the or no statements the undertake cautionary

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

into EPS $XX grew by of adjusted XX%, while year of an Year-to-date, on of by $X.XX results the financial call million solicitation GAAP represents fee-related with $X.XX made detailed income. is $XX to our of XX% to available nothing period, income million on fee non-GAAP or net Hamilton be of management also prior on note revenue in will any a that and EPS this products. Beginning Our filed. an based financial earnings advisory when purchase highlights. grew net and our Please based Lane's versus XX-Q the GAAP sell interest of translated offer offer our

share $X.XX the this on quarter, XX% of fiscal last to XXXX. $X.XXX for for also share the over a declared per increase targeted track us per which equating have We dividend year keeps year, fiscal

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

Mario Giannini

and beginning ago. years co-chair of Delgado-Moreira the Rogers, Juan role executive capacity. morning, XXXX, the we calendar our time, last move of Chairman. addressing that an with be I XX announcement new the the At CEO weeks in At will having made down will Thank Hamilton everyone. alongside Lane become into I'll good Hartley that of several CEO Hirsch current Hamilton as served you, John, start co-CEOs after Erik Lane. transition stepping I and will

of direction sets both client Juan fresh CEOs to and as builds will be and nowhere transition at part and on I and organization, transition to how bring will longer. Both a want I'm sales and good global to fact, over what our Lane will great significant her of discussion longer strategic many Hamilton management to the the a Erik them very of lead on emphasize while if a you is and perspectives Lane's that His on certain will last the CEO, be because CEO active leading in opposite. no run manager, and growth the years or successor a Erik focus today has Hamilton a grow effort to is you the our an the am investment future which good business. Lane's business a be is part. and the Juan skill no back Lane. I've of regarded I and of Hamilton they will that that someone primarily we That's a years service take measure on successfully. strategic will my continuing look answer continues and the the will position. I or I business in and plan decision quite Erik now decade market leadership are been firm. this helping Juan investment continue his of person to We Juan the we another Their fund over as would CEO? that as over them Erik to there be global Hamilton not spearhead and team. thoughts with to Because Erik. remain of key with in know and and be here, haven't and do was and shareholder to have near until integral couple over good without is highly I after forward mark and, that operations it the complementary part business. Once scale the know will seamless, jointly success turn CEO. CEO I moving that been from smooth have the don't Lane XX-plus years or has Hamilton our strategic last lead on been them judgments working of its worked

Erik Hirsch

you, morning, Mario, good and Thank everyone.

quarter's to detail Mario Board, into take entrusting and me new for around opportunity responsibility. to want and get the results, Hartley, with Juan I I the this Before this thank

himself reporting Juan The accounts. introduce to advisory X% funds call is be quarter-end move future of Armbrister specialized plan and AUM our our join $XX at earnings on We separate was you billion are and growth asset X% to John, footprint, will at strong to that addition and with a continued the Jeff quarter. our result results you and But excited our to AUA. and momentum. position highlights the $XXX the start of grew customized increase billion the This market as as and the we footprint represents let's of the led growth that, for stood the continue AUM firm. steady came year-over-year, which up firm's to the will and me, year-over-year to keep both define our calls billion XX%. from forward or and total at all. build stood going I'll and and by billion on sum with consistent. With $XX to AUA a our and interaction mandates. $XXX our or primarily next

a changes. of with associated can reasons, AUA for necessarily lockstep revenue not those variety but move the in AUA with As reminder, a fluctuate does

turn specialized recent Let's growth our to accounts continues both the experienced fee-earning AUM, a which strong management now we to of fundraising despite be over And have separate in fees. customized and funds. driver environment largest challenging quarters,

$XX.X fee-earning $X.X or Our stood total AUM the relative to and billion billion period. XX% prior year grew at

$X.X same of from funds. came net came AUM separately, customized and time separate our specialized billion from billion period, Taken our accounts, fee-earning over $X.X the

rate platform Our stems funds, the our in of blended rate shift increase. continues towards where across This the AUM mix fee products Evergreen to growth notably higher continuing strong. fee also from fee-earning is most specialized our the

AUM separate Moving past accounts. over accounts billion, $XX.X stood our months. now to XX the customized customized our at growing additional Fee-earning from separate detail on XX%

We the continue geographic location across and of to see the type, growth clients. coming size

more last separate of the existing than the accounts customized XX came XX% Over into inflows gross months, our client from base.

new plenty of what to also speaks very relationship installed you a to model, the opportunities. of it tells this While continues of coming a offer flows, large relationships, the despite from remainder base power the recurring market the clearly

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

Evergreen we billion, XX and an prior-year This of months, for platform. past Over relative to of increase funds representing our growth from positive XX% period. achieved net expansion robust additional of $X.X currently in continued activity, inflows stemmed market, the closes the investment

in some to around on fund currently of fund detail with Moving begin flows, specialized the market. I'll our secondary drivers

During the two total quarter, to closes additional held and million that $X here billion. over commitments, brings the of totaled approximately we $XXX LP that raised

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

retro fourth of Capital fees. $X.X XXXX we raising to quarter Originally, raised generated until had this fund. calendar quarter in this finish million

and the continue strong, Overall, momentum to the the of granted have our fund March we demand final end well, stages. into investors opportunity the an and However, to XXXX. to be remain heading perform and continues encouraged with extension us existing

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

as effectively deploy capital. short charge capital market of the with invested on is refresher, fees raise As and management in funds the and a series periods investment always we

currently closes that with additional we've in our total totaled have raise market series our last are eighth held of $XXX We update, series. LP for current million. million to And brings over since the nearly $XXX this This commitments.

of the sometime hold series close end the XXXX. before We expect calendar of the to final

and our opportunity sleeves platform remains capital I'd this direct to over annual Funds. our years being on the like complemented including Together, [ other has past footing institutional scale. with now grow series with continued experience highlight to to credit-focused credit accounts with few solid growth separate that various of strong the ] continue platform Evergreen to and

to happy move Evergreen first I our on the I'm we've that our Fund. Infrastructure close second Before Opportunities for held to Funds, announce

raised $XXX secondaries transaction-focused and and strategy and assets this direct in centers first around namely in that Our real recall nearly alongside the of investor million fund commitments and infrastructure equity fund, investments, the space.

$XXX first of alongside fund, commitments of secured this more and than in close the we million our fund. For second

having capital are I's progress XX% this pleased We raised with second momentum, over close. and the Fund with of

our Funds, to Evergreen where growth robust. now turn remains Let's

via seek channel globe We funds. semi-liquid our from continue to across to markets the witness strong out to noninstitutional demand access private coming as the the continues

of AUM the the nearly across September, total billion. As complex Evergreen at end of $X.X stood

monthly months X the are entirety $XXX XXXX, million platform. of of net first inflows we the calendar averaging across nearly the For of

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

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

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

highlight and investment standardized the anti-money solution, an I by strategic from know-your-customer, partnership our onboarding investor with balance an Jeff, to all and globally opportunity accepted parties in Before we tax for market securely onboarding investment and platform our supporting which On private like process efforts technology managers call onboarding turn connecting this take IDR I'd across process streamlines investor newest X, investment announced workflow their services. a to laundering to providing and onboarding August fundraising the is and IDR. sheet. the involved central, over

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

time IDR KYC and and our resource continued help to managers today This of cost, operational fund our services fund We led as have portfolio and maintain and streamline users AML implemented fund to leading to savings. Other oversight offerings well onboarding processes. administrators. include in efficiencies consistent as has

excited on updates. are We with and embark look providing to with IDR future forward this you to journey

now the And turn over I'll the with call financials. to Jeff cover to that,

Jeffrey Armbrister

you, everyone. Thank and Erik, good morning,

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

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

increase the growth fees primarily Let's driven the to revenue in was raised period. platform This by business months $XX year a $X fund. XX% achieved period. increased up secondary we by with million year advisory and prior fee-earning and move billion billion over AUM XX Evergreen now $X.X compared in our in funds financial our inception since to prior latest last the the our to results. in year-to-date, on versus Specialized or Fiscal management XX% strong

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

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

as expect We secondary additional Fund fees to subsequent for generate VI. hold we retro closes

current associated retro VI our secondary Erik has that of mentioned annual to calendar earlier, in we Fund receiving XXXX of out final quarterly QX on fees. to expect the movements an FRE our for interim extend This timing close will now But for out to we cause basis, the potential received maintain levels. the margins. an extension

$XXX,XXX offset by the technology decreased prior to advisory prior reporting on $X the sale to other period, and from the of year offerings primarily continued compared or investment of customized our new several Revenue and from Revenue the accounts. by in Capital separate accounts, XXX addition re-ups period solutions. XX% revenue assets to Moving to increases coming clients, to due our existing due increased from activity. the compared year partially million

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

our Let from XX% the me detail additional million now $X.X having recognized balance unrealized period, prior carry XX while fees the turn now approximately Unrealized carry months. year during balance. on billion. is to up some incentive Balance stands of at $XX.X last

we you an through wirehouse and like discussed the channel by amount to those to Moving expenses from and $X amount with fee lower call. I'd the fees. upfront million third-party fund. applied that driven associated $XX total primarily million dollars flows products are of there. expenses. benefits to compared that primarily made being last That U.S. payment G&A period. related incentive raised $XX that by prior-year compensation come expenses, revenue-related compensation our the driven commissions decreased our offered the close decreased in Year-to-date wirehouses by the remind total the with dollars into which the have Evergreen is associated to Total on million, decreased the increased when

the However, in of as the long our over upfront management invested and quarters dollars to with revenue eventual fees revenue timing a receive the the flows. during years. those client come the as between cost on simply, the in G&A come in earn we and with then creates is mismatch from dollars year increase those the bear the our associated cost It of Said and revenue full subsequent those course corresponding same offsetting we bringing It fund. more to causes the the for time. over

wrap The funds. management largest AUM our accounts as in to the earning XX% growth investments asset specialized here up on and continues our of be fee to commentary Lastly, a earlier. I'll with clients separate period the our alongside fee-related earnings sheet. up some prior-year result customized relative were our fee discussed our and balance

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

our that, we call to liabilities, be regard With up to now With will continue the levered. we questions. for open modestly

Operator

the your Thank we now you. and Kenneth comes question gentlemen, line from session. of Instructions] And Ladies first will Worthington begin question-and-answer the JPMorgan. from [Operator

Unknown Analyst

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

Mario Giannini

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

to the intend fully offerings. we so And expand product

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

would provide that at the But sure both which But we into and function that a expanded. And already additional we an look platform offerings. providing want platform have continue that really, that platforms we it making of have their it's the platforms have to expect in we and So that investment to number them. we expanding space there. own will be our of and will right think products we

Unknown Analyst

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

Mario Giannini

does market offering. Look, in that is the developments see I you want? as again. looking market we're numbers, at clearly, what Mario think it's our in What wants And the everyone market. Alex,

where way, of it you haven't get in So that things that have, as we for said, expect you you'll described products like order we of market But kinds terms if much or requires will that either in innovation that the change the the this you would think to we existing about see we've it's do incremental continue just increase to had demand. need saying, we said, tweak people more need. With around demand, I not I it. as seen necessary to demand

You've seen They're the flows. healthy.

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

Operator

And your next question Michael comes of from KBW. the Brown from line

Evan Holeman

the further expansion? contribution us leverage Mike can investment for been This just further limit to grow that there if business, Or the several has margin kind And Evan is last fairly there The quarters. this as Brown. support And Holeman you so, an its quantify is stable embedded the platform help on is operating can to that of Evergreen would dynamic? that? FRE continues

Erik Hirsch

Evan, Sure, Thanks Erik. question. for it's the

as Jeff his the revenue wirehouses, does with said we're later. with success section, of then the upfront the think particularly I but coming of kind in cost with come thrilled and kind that that we're having,

I I what think, seeing sort with of now, where that is think with fact upfront and managing we're is good across doing with noteworthy in certainly the sort in actually falling we're holding of a and of all margin think steady I shows margins think job you're this peers on the costs, growth is management market environment those that those So think segment, dynamics. seeing I right an noteworthy, I

as To on of be growth building just you the upfront expansion, now particularly focus this point, say and continues to I be you've of product. That investing on would now the force. margin out That said, management's product sort margins to sales growth. in revenue. a new -- given Mario's the forward, here paid you're benefiting start enhancer, continuing think from in a as would that you vacuum margin be rising Going could get and cost

So we is I sure we're significant focus can we not think that continuing can margins the growth increase to in business how continue up to it's our on make today these put smartly invest numbers. further, to

Evan Holeman

Great. or just wirehouses of that the would revenue That's maybe expenses, guys visibility on helpful. Evergreen kind and be may additional follow-up color we quick dislocation a in that through be And you any have to that think as great. just to product then added

Erik Hirsch

that many way the are order want our just the in to tremendous mean and platforms, U.S. not a mean, U.S. focus sense. we to those focus it actually to in in successful, on product as There's -- as doing there. sure I only you're have support the adding but build think our makes putting We and the I like. make that team outside customer the for Sure. need once And continues in is to you you to support be education, it's a locations

So a marathon view think the is race started. as getting this really I and we just

that So those we future of That's management's partners road, But a that as and drivers exciting. had areas. some which success this we're in the to I long already but tomorrow. all see again, thrilled is big we're look reinvestment business, an as as around the and going the growth resources in the is is of viewing one distribution I while continued addition what you all coming of not a of of this think this thrilled addition and of be think from perspective, on more we're forward, with expect our see should kind we're wirehouses, we've product more you to is

Operator

no Hirsch, Erik questions there time. proceed. Please Mr. further this are at Instructions] [Operator

Erik Hirsch

you. very, Again, number We of day was for a thank a busy know time. you for it the very

well. Thank again, So we wish you. everyone participation. appreciate And the

Operator

conclude for Thank all Thank you. conference that does Ladies you participating. our today. for gentlemen, and

disconnect. all may You

Hamilton Lane (HLNE) 7 Nov 232024 Q2 Earnings call transcript