HLNE - Earnings call transcript Q4 2024 | Hamilton Lane Incorporated

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Operator

Good morning, ladies and gentlemen, and welcome to the Hamilton Lane Fourth Fiscal Quarter and Full Fiscal Year 2024 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, May 23, 2024.I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

John Oh

Thank you, Evo. Good morning, and welcome to the Hamilton Lane Q4 and fiscal year end 2024 earnings call. joined Chief Hirsch, Financial be and Executive will Armbrister, Jeff Officer. I by Co-Chief Erik Officer; Today, Earlier this we morning, to forward-looking slide and presentation, statements. we end remind issued a are year will on press you available that our be we website.Before results, discuss we quarter which the want release making and

events may Forward-looking file those Lane financial and risk Hamilton cause operations, including found as measures Shareholders view obligation the our made made them.We future please of for future Lane of are XX-K the with factors in of any performance, non-GAAP our performance review position, actual revise business. a assessing be as today, risks, not our will forward-looking XXXX. we or plans, we that the statements in fiscal expectations do results the projections forward-looking SEC of and also required, be subject referring of to those and current XXXX fiscal discuss presentation differ materially are results These performance earnings we upcoming statements update these website. or Form section and included the non-GAAP of measures projected.For as relating the available GAAP can XX-K from the our and our statements These to statements on business. cautionary reports to and uncertainties objectives, discussion materials guarantee subsequent to risks to and that of undertake important except only to Reconciliation in no Hamilton

to on sell, our to offer any on results, purchase simultaneously take a I'd to join private Day live is for Shareholder an HLNE our our to will headquarters, solicitation of filed. unable and get leadership in-person Lane's those insight be in that like the will results our this The Our in provide or detailed into financial when and available event interest webcast Conshohocken, Hamilton will we our both drivers PA offer showcase XX-K Please June detailed represents the nothing place business, us for highlight products.Before X, call of in-person. upcoming an to at note, made markets. growth

information visit of Hamilton Lane please the some on the to more move highlights. For now event, section the shareholder website.Let's financial

our share million XXXX, while on of a $X.XX based full increase For and net income, our also of dividend the into $X.XX non-GAAP based our XX%, and seventh grew to prior fiscal revenue XX% the by year million of fiscal increase EPS versus adjusted our our or $X.XX fee income.Lastly, XXXX. on fee-related public going EPS since dividend, net $XXX GAAP XX% GAAP grew earnings management This by in $X.XX, double-digit year. quarter. per of $XXX advisory per This to translated marked share Board to consecutive annual per has percentage approved annual year

Our of consistently ability growth now call every speaks increase strength the distributions that, and the turn year, over to the I'll our shareholders our to to business.With to Erik.

Erik Hirsch

morning. good and John, you, Thank

footprint. end, results. growth specialized to $XXX total The year-over-year. strong AUM specialized which fee footprint accounts earning customized at primarily up the growth to and quarter. our X% billion our the X% AUM, we billion represents $XX results came accounts. growth It funds. year-over-year, to was technology straight at be of and solution market both mandates.Turning to the now or separate strong start our at with largest increase our XX%. grew get AUA from continue fees, a It value Let's and to separate addition was continues driver of customized the of asset generate in another billion management stood I'll and or funds $XX quarter billion $XXX stood and both

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

our detail funds, at public XX funds.Our and customized from also was came to it on separately, our across we fee our here accounts. XX AUM towards The earning fee earning fee separate Evergreen separate the to customized remains X% strong. the fee from net in accounts, earning specialized AUM specialized went basis the Today, mix months. stood XXXX, blended our fee Stems at of past over XX continues was $X.X notably rate points.Moving products $X.X AUM points. continuing over increase. the billion the platform, of billion, stands rate rate When Taken growth where from basis shift now billion same in came blended higher additional $XX.X our growing our period,

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

Our note long-term I'll months separate customized of in us, time. and clients belief There partnership with that secured the over were we of our close sale several breadth who account given us to this After interactions program to recent private size can building you long cycle would them Canadian-based competitors their separate vying the due me to to and achieve could success.Let track and accounts, here help with the manage, capital mandate, record, and be a of We their that, service look an endowments the selected be example grow create, markets. a of new win. importantly, the are invest that were for of we offering, our business. length first investments give

earning the new separate a is relationship we clients years, with this over that is that exceed of AUM brand our meaningfully. institution customers.Today, to through class, length find is while continue account the So also XX asset to that several average on growth existing basis, meaningful with an fee our

the with new a in had its to clients our customized well them [ momentum the private multiple today, in XXXX, the to to we've we ours. for XXth account.Fast continued now and markets, tranche, credit managing This now various be our as our to had organization way, business.Let's of us they've continues funds, here portfolio and move the for private are of commitments partnership privilege base, back funds on that forward stood combined expanding example, For served separate secondary end. that's whose recognized is existing approach XXXXs The to with its has to nationally of private and we've ] a separate, tranche, now relationships who equity with where on along AUM single added $XX.X early earning at strong. build also started the on Taftâ€“Hartley specialized quarter out at finding billion XXth

increase relative to XX This our current we've XX% the stemmed the platform.Moving inflows past secondary in our net the representing funds year from continued investment period. of let's our of Evergreen currently prior of positive drivers months, robust fund. achieved Over activity, an flow, start expansion closes growth and market, to specialized for $X.X additional with billion, of funds

million size million, year held to the recognized April $XXX During $XXX the that in that be XXXX.This first June $XX held to of totaled million This our in ending and generated total February brings will fiscal end, quarter fees an retro fees just that the fund March of quarter, the of additional we additional million of $X quarter. $XX.X commitments. investor quarter XX, quarter, over totaled closes close for we Subsequent which over generated billion. retro over in

to XX% size to now grows. to both of result point, history, increase this secondaries expect last fund holistic of is and received we our fund our administrative to note asset our and is this fund, accommodate billion, a annual LP. strategic fund growth over current a close of our our the our and fund, few continue the institutional credit small success a of next GPs fund be raise remaining to investors, targeting in expand seeking and weeks. I'll LPs order as leading we've The largest represents a the continues market specialized secondary class extension $X is within raises, liquidity.Let's is turn fund prior a as solution to at fund.The the completing the direct which for work total platform with the position the to the over platform institutional As raise, opportunities direct component fund the provider, overall key prior in market

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

at During strategy left regional million the credit platform of deal sources, quarter, we continued flow LP credit held the traditional from lending our commitments.Overall, the series banks. over the those void final the $XXX close remains Private our and retrenchment continues for scale fill to eighth and and to benefit by robust. of continues

space. to-date with quick monthly are of billion into and averaging wanted commitments funds across been more May accounts, calendar update access XXXX, XXXX, for complex and an XXXX to move not million to our the includes closing will calendar this funds, strategies.We Evergreen, which billion to credit nearly we we're that dedicated we've commingled fund capital XX% credit our on AUM primary, with now on to more inflow venture the onto net and in calendar Evergreen market time and separate we of than on first a our our the $XXX first ended in and business venture we For separate in actively which of is Evergreen remainder secondary, Recall co-investment versus the fund specialized throughout providing investors through XXXX.Now the fund, We our since investing XXXX, increase closed-end of market platform, prior $X.X the we year.Before transactions LP account announced venture and raised than platform. million have I invested remain entire provide funds. first in with $XXX $X.X of

billion. March AUM stood nearly of our X at $X.X XX, offerings across XXXX, As total

some averaged over adding platform. Our to being monthly to saw accomplished relationships goal highlight growth relationships would was up calendar platform with quarter XXXX, flows like the expanding earlier the monthly tick result in remains term, current make during wirehouse $XXX where from average latter by our this distribution simple the relationships million additional ones.We adding with while the steady of new inflow. our we and in longer great channel. backlog also continue one-off also further first Evergreen nature.I progress, over added of This that of within our more consistent with Maintain net

to approach $XXX taken close as there. of of As of calendar one-year million on-boarded flows we end approved getting we and the the the anniversary, have of of quarter first in XXXX,

the for represents its first more share and on-chain Apex's in and Hamilton and kind This with being Lane Innovations what flows scale We complement sheet as and most tokenization. broadly move within digitally breakthrough share May private addition potentially class about Sygnum on DLT nicely, to Bank sheet our announcements what investment a serve significant X, announced and remain Group.This of to of via a in the announced believe balance enthused together success. global class, industry.Next ahead.Let's native XX, now strategic the very balance can some to management In blockchain technology making the first In partnership markets wirehouse non-wirehouse investable asset and portfolio we efficient recent that a lies share newest to we've about marks already that this ledger on the accessible, wealth accomplished continue newly around or catalyst our broader Apex built investments. register. the technology our for entry and the distributed launch We offering Securitize. banking Evergreen adoption, partnerships, on tokenized February private created fund Polygon we enthused join

by participated You've our now speak further products, that and access with we also from the investments heard partnership that spanning an Evergreen, investor tokenized have partnering solidified the us The Lane company's Tradeweb. around providing Secondaries ParaFi which to round such their Securitize. in becoming to recently fundraise Direct by led market We're in money with recent as fund strategies and pleased announce in partnership was launched Securitize.Hamilton tokenized and strategic BlackRock, first Securitize most this Equity. in past included

in Tuesday services Innovations sustainability Hamilton financing inclusive tokenization in and the Hamilton its our and to announced which Global.The the portfolio, We form sophisticated is expert this Lane of the a forward our we and digital ventures, investors, enables future.Lastly build strategic platform, collect, them Jeff to and investors asset Novata, Lane capitalism, journey within for continued report investment private the week more to financing affiliates most new allow in technology backed of participated in recent alongside a their to motive to the by financing. and providing space, analyze turn another balance on look S&P Recall the with and markets financials. our Novata leader existing the on closing I'll of on a sheet of forward a cover and metrics. launch Global Securitize updates private mission.And pioneer now that XXXX, their call as this modest platform over achieve has Apollo also Management. included in to continued look the continuing that markets to to which sustainable we support with Since

Jeffrey Armbrister

and Thank good everyone. you Erik morning

in achieved fees For growth XX% and strong our the fiscal XXXX, prior advisory we of versus with business, year. management

revenue Our $X.X by months our XX% the billion AUM our million in specialized This year year. million billion our earning the the in included since driven our primarily equity prior by increased funded $XX.X last fee fund evergreen million, versus raised from funds the in prior compared in secondary $X.X platform $XX.X $X.X or secondary fiscal over XX year. inception from increase and for latest a fees direct to fund.Retro to market, was

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

of Evergreen Revenue $XX.X generate or We new of and the to year the fiscal carry to activity. $X year expenses and million carry continued The fees the and million revenue catch assets, vehicles having year stands technology slightly driven for incentive at of year. the revenue, The separate AUM increased $X.X over to billion.Moving last balance. increases is we've unrealized fee prior Recall that that primarily market.Moving driven to XX $XXX.X up our while retro are compared fees, balance relative total for wirehouses offset re-ups related reporting prior to benefits $XX.X $XXX.X from XX% million, being on by discussed due amount fee, as $X.X related secondary prior final relative million compensation increased up compensation. totaled by primarily X%, several clients commissions expenses, offered related incentive existing incentive to accounts, fiscal revenue other last fees. of fee the prior Total headcount by XXXX several the year the to to result expenses, million customized earnings million, fees of balance and addition a growth, expect XXXX, G&A solutions.Lastly, accounts, eligible partially earning by unrealized XX% or which than compared we to prior were and by our the as discussed that to year FRE compared decreased management $XX.X closes, in.Let's due from less additional increased due in now turn third-party component our is by Capital the offset million related are fiscal from revenue up our XXXX, sale incentive down period coming fees growth increased fund Incentive for prior our and of of year. calls.Lastly, the a and to carry prior we earlier. the during our months. period product for XXX to the final our on the to fiscal were offerings generated advisory, investment the fee on U.S. from the XX% hold recognized partially large

here quarters quarter's for at up of and on in fund commentary related sheet. impact, FRE stemming we and margin balance timing fiscal the XX.X% on with secondary wrap some our margin the offsetting fourth margin our prior our discussed As the with higher in fiscal from year market.I'll came call, FRE coming extension third

clients and customized to accounts separate be specialized investments Our alongside continues our largest in funds. our our asset

of an and important growth, for to component continue long-term, that, Over levered.With continued now our capital balance regard these view we be our invest will it clients. In investments we the should call up continue open our we sheet questions. alongside will to liabilities, as modestly the our

Operator

Stanley. [Operator Instructions] the from from Morgan Your first question of Ma Stephanie comes line

Stephanie Ma

from on Stephanie is This Mike.

then going on of you momentum product is be question new incremental channel. might strong. the for launches? you you Our on the the funds can on of Appreciate click as that's coming rollouts what building. the double existing forward roadmap where first Maybe for into And ahead, scope in what's flows the maybe look gave is the color that some and retail

Erik Hirsch

I'll Stephanie, take it's Erik. that.

existing pieces the getting sort if existing So sales of I and relationships. building relationships, relationships is factors. deeper better. new are the think seeing relationship. expanding X, break sales I -- They're own think, we those deeper side, resources on our we to those what They're X continue you're new getting couple of a expand resources

partners. continue so, of we new So all is to add working.And that

this to continue of add new factor. We part education an channels. And is

introducing for is, most you're that still, new. something people You're fundamentally

process, fantastic focused so is is education that job on. a our on, And team that very doing something is and that

investor of in that In those come see really the be might used today, a not as relationships remains again, X I've make deepening will of to sprint. this that said investor experience and in returns We're And the future, excellent.Building more the We calls that looking, we for strategies to marathon, continue think sure of is outstanding. our those terms experience main prior out what to brand We analogy than roll have there's variety that to I priority. we of think a and sort want sure the offerings make received. properly, the want to just we'll that. that and be becomes us we a the well current we say.Expect

X products, want absolutely X future. flows, to new the in expect become than make managing And so, but more we we're managing sure to that

Stephanie Ma

your remind market again today, into funds broadly what 'XX. on look over come funds make are next zooming sense to those fiscal just just And back then market XX maybe and where what we into might months? more you the the Great. stand, as sooner us for the out follow-up, my in out fundraising Can

Erik Hirsch

Sure.

talked So today infrastructure, of I I this mentioned think about some new we've impact, in the prior sort product. calls venture

talked The market series other we equity is is that credit, noted. about, direct market perpetually also that in -- have the as of in thing sort our next in I

So on. Evergreen. we've pretty top that, that Operator, a working on question. next got things course of of full And the of we're slate

Operator

Your of from the from JPMorgan. line comes next Ken Worthington question

Kenneth Worthington

the What we margins year? me plan you place? in expect are should targeting about fiscal we you sort is And expenses. of as that to this expense that have Talk guys what the think given about investment growth coming

Erik Hirsch

this. stick with I'll Erik,

of say So in we've great sort the the I'll job, ourselves done pat margin. a think back, managing and I sort actually of

if you inflation. of, So about what sort think headwinds costs sort are right of now,

up. So our back. are more is costs Travel traveling are Those team Conferences a lot. are expensive.

We or a today ago.And activity. had offices, yesterday bigger year team a certainly people, have more more than more we so

So a headwind. that's

and a what's as think that's you're all been wirehouses Evergreen headwind paying I flows great these are kind of an that you know, and also terrific, first onboarding we're is, onto cost year. onboarding to the obviously the as in

So that's a headwind.

So coming retro the given quarter, at of last fact that despite some this a nature of kind I margins year in fee the higher talked quarter. about are XX%.Obviously that, little we think this had that

margin shift doing sort of of job I are great of sort higher business. mix business tailwinds the that, think into the that we're this a managing

board that. the is So across funds specialized helping the

at maintain that every higher. when think of our strong sort about a the to work day, of how little how thinking day say we about arrives growth.We arriving I talk management are to the sort tweak not shareholders, work every team I double-digit I margin sort of can to thinking that

benefit dealing what scale the has think et we et will with with in cetera, we're sort of time come efficiencies, I delivering been et I of think we're operating as cetera, think noteworthy. that cetera, current I and market, what get the over but

Kenneth Worthington

growth last to the Okay. say of next? we've that of investments expenses XX seen that the months it fair sort of continues or for Is growth the over piecing

Erik Hirsch

can that I all hope fundraising. strong you My distribution continuing that's cost, does, I certainly on commissions, hope to grow. we're continue indicating kind it to answer the I is that's fees indicate because because that again going think and of the --

so, hope I of all that And continues.

Kenneth Worthington

seen on clients? stands XX stood where pipeline SMAs today, where it greatest in just SMAs, versus months to interest talk Great. of Okay. And from where us about the your you've then the say sort ago. X or it And

Erik Hirsch

and good a side, Pipeline and fact of I Yes, good in I'll speaks different I XX class endless to from rate as we're be size number and stay you spectrum about.And high attractive, our literally to in both very just going in We class. about of over sort geographies. to sort for no the trying No has sort shoot I objectives and end of think the I they're of One today, tranches think install different growth of sort given to to single-digit all the It's asset be this. to the continued X diametrically with each continued to the the think has be now us exposure, for been you the I years asset spoke on And entering first gave those opportunity kind they're with on the base, different able that question. the know examples sort the class. organizations, other mean X of mean the are organizations that time. to X continues the to asset breadth us the Erik. someone relationships that's on what who set.I different achieve other. of script for. saying the appealing has for of SMA robust. think that that those enter of

they where think infrastructure are and all to SMA And whatever People that's can customers. those beauty the of venture of is people and looking for the really says interest about all someone the a those do looking business about.So is varied. credit of - kind wants what set else for of we that you is SMA are today, the other business, overlay. and customer needs We SMA to business meeting address has. sort are, all that's up I the the talk customer is that for

Operator

Your question line Beatty the UBS. from of of comes Adam next

Adam Beatty

what channel, that and that and suggested fees some pay the distribution into distribution of mentioned wealth You of upfront. for sort was you management some of

get and how might the that to changing the of be versus sort fees, share of commentary Just your wanted revenue on arrangements, those ongoing and thoughts near-term? in mix upfront

Erik Hirsch

Sure It's Adam. Erik.

for on, an internal sort them measurement us, I'll upfront are, for them of fees, put on of of fundraising put those one-time is where in I'd the people sort of buckets. of you that So paying macro. piece U.S.-only them if dollars U.S. other wirehouses, our raised sort we're kind kind of dealing in sort of about a to sort revenue. of that as think with that commission of structure know, year in based first that around that.The of X kind commissions the in a typically is we're internal and you fees X percentage, is

But fee.And And the and should that obvious we're dealing internal structure. equally noted strong, sales wirehouse about upfront strong, then upfront, be fund with so, of being the with we're that that to a for that, both to not channel an ongoing. increasing an as of be flows reason dealing continue those I are think on you and the continue on commission majority

Adam Beatty

very That's certainly have to problem and good for Great. a helpful sure.

fund. that the And some you've of decisions assets as advent managing the time. quite a specialized carefully make and specialized to launch to know I been when to fund you turning these VC as VC in Just type say, you how for

that, sentiment you're investor into these and around went what wondering VC seeing days? how just So

Erik Hirsch

Erik. it's Adam, Yes,

-- So thank you you. I think

of we've doing I I both you're going it been XXXX. mean, think right on to noted, I back parts. as sort

us that track very kind very, terrific as a record, relationships, So a venture business. good being partner reputation of long in by good

rational.And is venture a when we're getting things That like doing us feel an the sort just time time were versus couple ago at seeing a to to a better frenzy is that, bit not of a good what more did think enter us. I like absolute pitch. feels today business little years to something, that

that, So a our just time are to is better we and sort reacting of when prices market in down. client in, to I to base think beginning be what is getting see environment come this it's

Operator

questions [Operator Instructions] Erik We do at further not continue. time. please have Hirsch, this

Erik Hirsch

time, you as U.S. and Thank partnership, healthy those for weekend a of safe always, the appreciate the Well, Great. the here and wishing questions we all the you. Memorial and in Day

Operator

call. conference Thank participation. today's your for concludes This you

disconnect. now may You

Hamilton Lane (HLNE) 23 May 242024 Q4 Earnings call transcript