Hamilton Lane’s Earnings Call Highlights Growth and Strategic Moves

Hamilton Lane Inc ((HLNE)) has held its Q2 earnings call. Read on for the main highlights of the call.

Hamilton Lane Inc’s recent earnings call was marked by a generally positive sentiment, underscored by significant achievements such as surpassing a $1 trillion total asset footprint and robust growth in Assets Under Management (AUM). The company also highlighted strategic partnerships and the expansion of its Evergreen platform. However, challenges like a decline in retro fees and modest growth in customized separate accounts were noted. Overall, the positive developments and strategic initiatives position Hamilton Lane well for future growth.

Record Asset Footprint

Hamilton Lane announced a milestone achievement as its total asset footprint surpassed $1 trillion for the first time, marking a 6% increase year-over-year. This significant growth reflects the company’s successful strategies and robust market presence.

AUM Growth

The company reported an impressive $14 billion increase in Assets Under Management (AUM), an 11% rise compared to the previous year. This growth was primarily driven by specialized funds and customized separate accounts, showcasing Hamilton Lane’s effective asset management strategies.

Strong Fee-Related Revenue

Hamilton Lane’s fee-related revenue reached $321.6 million, representing a 23% growth year-over-year. Fee-related earnings also saw a substantial increase of 34%, highlighting the company’s strong revenue-generating capabilities.

Dividend Increase

The company declared a dividend of $0.54 per share, indicating a 10% increase over the last fiscal year. Hamilton Lane is on track to achieve a target of $2.16 per share for fiscal year 2026, reflecting its commitment to returning value to shareholders.

Strategic Partnership with Guardian Life

In a strategic move, Hamilton Lane partnered with Guardian Life Insurance Company of America to manage its private equity portfolio. This partnership involves commitments of $500 million per year for the next 10 years, strengthening Hamilton Lane’s position in the private equity market.

Growth in Evergreen Platform

The Evergreen platform witnessed significant growth, with AUM reaching $14.3 billion, nearly doubling in size over the past 18 months. The platform expanded from 3 to 11 funds, demonstrating Hamilton Lane’s ability to scale its offerings effectively.

Bloomberg Partnership

Hamilton Lane’s private market indices and benchmarks are now accessible via Bloomberg Terminal, enhancing the company’s brand visibility and providing greater market access to its data.

Securitize and Novata Developments

Securitize announced a public offering, while Novata acquired Atlas Metrics, expanding its sustainability data solutions. These developments highlight Hamilton Lane’s commitment to innovation and sustainability.

Retro Fees Decline

The company experienced a decline in retro fees, which dropped from $20.7 million in the prior year to $800,000 in the current period. This decrease poses a challenge but also an opportunity for Hamilton Lane to explore alternative revenue streams.

Modest Growth in Customized Separate Accounts

Revenue from customized separate accounts showed modest growth, increasing by only $2 million or 3% compared to the prior year. This indicates a need for strategic adjustments to enhance growth in this area.

Continued G&A Expense Increase

General and administrative expenses rose by $7 million, primarily due to revenue-related expenses. This increase underscores the need for efficient cost management as the company continues to grow.

Forward-Looking Guidance

Looking ahead, Hamilton Lane provided optimistic guidance with a total asset footprint exceeding $1 trillion, marking a 6% year-over-year increase. AUM reached $145 billion, up by $14 billion or 11%, while AUA amounted to $860 billion, reflecting a 5% growth. The company aims for a 10% annual increase in dividends, supported by its strategic partnership with Guardian Life Insurance, which involves managing Guardian’s $5 billion private equity portfolio with an additional $500 million annual commitment over the next decade.

In summary, Hamilton Lane’s earnings call conveyed a positive outlook, driven by record asset growth, strong fee-related revenue, and strategic partnerships. Despite challenges such as declining retro fees and modest growth in certain areas, the company’s forward-looking guidance and strategic initiatives suggest a promising future. Investors and market watchers will likely keep a keen eye on Hamilton Lane’s continued performance and strategic developments.