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01/10 16:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company reported strong financial performance with 23% growth in fee-related revenue and a 34% increase in fee-related earnings. The Evergreen AUM nearly doubled, and the dividend was increased by 10%. The Q&A section did not reveal significant concerns, and the Guardian and Bloomberg partnerships are expected to contribute positively. Given the market cap of approximately $4.9 billion, these factors suggest a positive stock price movement of 2% to 8% over the next two weeks.
Total Asset Footprint At quarter end, the total asset footprint stood at just over $1 trillion, representing a 6% increase year-over-year. This growth was attributed to the first-time crossing of the $1 trillion mark, despite quarter-to-quarter swings due to AUA.
Assets Under Management (AUM) AUM stood at $145 billion, growing $14 billion or 11% compared to the prior year period. The growth was driven by specialized funds and customized separate accounts.
Assets Under Advisement (AUA) AUA came in at $860 billion, growing $44 billion or 5% year-over-year. This growth was primarily due to market value growth and the addition of technology solutions and back-office mandates.
Total Management and Advisory Fees Total management and advisory fees for the year-to-date period were up 6% year-over-year. This includes the impact of $20.7 million of retro fees in the prior year period versus $800,000 in the current year period.
Total Fee-Related Revenue Total fee-related revenue for the period was $321.6 million, representing 23% growth year-over-year. This growth was largely driven by fee-related performance revenue.
Fee-Related Earnings (FRE) Fee-related earnings were $160.7 million year-to-date, representing 34% growth year-over-year. The FRE margin for the quarter was 50%, up from 46% in the prior year period, benefiting from strong fee-related performance revenues.
GAAP EPS GAAP EPS was $2.98, based on $124.6 million of GAAP net income.
Non-GAAP EPS Non-GAAP EPS was $2.86, based on $155.7 million of adjusted net income.
Dividend A dividend of $0.54 per share was declared this quarter, maintaining a 10% increase over the last fiscal year, equating to a targeted $2.16 per share for fiscal year 2026.
Fee-Earning AUM Total fee-earning AUM stood at $76.4 billion, growing $6.7 billion or 10% year-over-year. Growth was largely driven by specialized fund platforms, particularly semi-liquid Evergreen products.
Customized Separate Account Fee-Earning AUM Customized separate account fee-earning AUM was $40.8 billion, growing $1.4 billion or 4% year-over-year. Growth stemmed from new client wins, re-ups from existing clients, and contributions for investment activity.
Specialized Funds Fee-Earning AUM Specialized funds fee-earning AUM ended fiscal Q2 at $35.6 billion, growing $5.3 billion or 17% year-over-year. Growth was driven by Evergreen platform inflows, net asset value growth, and closed-end fund activity.
Evergreen AUM Evergreen AUM reached $14.3 billion, nearly doubling over 18 months. Growth was driven by expanded product offerings, robust fundraising, and strong performance.
Unrealized Carry Balance The unrealized carry balance was up 14% year-over-year, now standing at approximately $1.4 billion, even after recognizing $102 million of incentive fees in the last 12 months.
Evergreen Products: Expanded product offerings, including the launch of additional Evergreen products. Total Evergreen AUM reached $14.3 billion, nearly doubling in 18 months. New products like Global Secondaries, Global Venture, and Asia funds contributed to $1.6 billion in net inflows this quarter.
Specialized Funds: Fee-earning AUM grew by 17% to $35.6 billion, driven by Evergreen platform and closed-end fundraises. New funds like the second infrastructure fund and flagship secondaries fund are scaling effectively.
Technology Solutions: Partnership with Bloomberg to provide private market indices and benchmarks via Bloomberg Terminal. Securitize partnership deepened with expected 2x return on investment. Novata acquisition of Atlas Metrics expands sustainability data solutions.
Strategic Partnership with Guardian Life: Hamilton Lane will manage Guardian's $5 billion private equity portfolio and an additional $500 million annual commitment for 10 years. This partnership includes equity warrants and financial incentives for Hamilton Lane.
Insurance Solutions Platform: Scaled to over $119 billion, with a dedicated team formed in 2024 to serve insurers. Guardian partnership is a key milestone in this strategy.
Fee-earning AUM: Total fee-earning AUM grew by 10% year-over-year to $76.4 billion, driven by specialized funds and Evergreen products. Blended fee rate increased to 65 basis points.
Revenue Growth: Total fee-related revenue grew by 23% year-over-year to $321.6 million. Fee-related earnings increased by 34% to $160.7 million.
Expense Management: G&A expenses increased due to revenue-related costs, but cost savings in other areas maintained financial discipline.
Focus on Long-term Growth: Decisions are aimed at sustainable growth, including scaling new products and expanding partnerships.
Private Credit Market Insights: Data shows strong credit fundamentals with low default rates (~1%) and prudent leverage levels. Private credit continues to outperform public indices.
Market Conditions: Concerns about a broader credit crisis in the industry were addressed, but the company stated that they see no data to support this notion. However, the narrative of a potential credit crisis could create uncertainty in the market.
Regulatory Hurdles: No explicit mention of regulatory challenges, but the company operates in a highly regulated financial environment, which inherently carries compliance risks.
Economic Uncertainties: The company highlighted strong credit fundamentals and low default rates, but broader economic uncertainties could still pose risks to their operations and investments.
Strategic Execution Risks: The company is expanding its product offerings and entering new partnerships, such as with Guardian Life Insurance. While these initiatives are growth-oriented, they carry execution risks, including integration challenges and achieving expected financial outcomes.
Supply Chain Disruptions: Not applicable to the company's operations as it is a financial services firm.
Competitive Pressures: The company is facing competitive pressures in the private equity and asset management space, as evidenced by their focus on expanding product offerings and partnerships to maintain market position.
Guardian Life Partnership: Hamilton Lane will manage Guardian's private equity portfolio of nearly $5 billion and receive approximately $500 million per year for the next 10 years. This includes $250 million in seed capital for expanding the Evergreen platform. The partnership also involves equity warrants and financial incentives for Guardian.
Fee-Earning AUM Growth: Fee-earning AUM grew 10% year-over-year to $76.4 billion, with strong momentum in semi-liquid Evergreen products. The blended fee rate increased to 65 basis points, up 14% since 2017.
Evergreen Platform Expansion: Evergreen AUM reached $14.3 billion, with $1.6 billion in net inflows during the quarter. Over $1 billion of Evergreen AUM is not yet earning management fees but is expected to transition in the next 12-18 months.
Specialized Funds and Secondaries: The company is raising its next flagship secondaries fund, with a first close expected in the first half of 2026. The current vintage secondaries fund has a net IRR of 44.1%.
Infrastructure Fundraising: The second infrastructure fund has raised over $1.1 billion, nearly doubling the size of the first fund. Fundraising is expected to conclude in the coming months, with a new fund launch anticipated in late 2026 or early 2027.
Bloomberg Partnership: Hamilton Lane's private market indices and benchmarks are now available on Bloomberg Terminal, enhancing brand visibility and access to a broader audience.
Securitize Public Listing: Securitize, a partner in tokenizing financial assets, is expected to go public in the first half of 2026. Hamilton Lane anticipates a 2x return on its initial investment.
Novata Acquisition: Novata acquired Atlas Metrics to expand sustainability data solutions. Hamilton Lane invested additional capital to support this acquisition and future growth.
Dividend per share: $0.54 per share declared this quarter
Annual dividend target: $2.16 per share for fiscal year 2026, representing a 10% increase over last fiscal year
The company reported strong financial performance with 23% growth in fee-related revenue and a 34% increase in fee-related earnings. The Evergreen AUM nearly doubled, and the dividend was increased by 10%. The Q&A section did not reveal significant concerns, and the Guardian and Bloomberg partnerships are expected to contribute positively. Given the market cap of approximately $4.9 billion, these factors suggest a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: strong AUM growth, a dividend increase, and a stable FRE margin outlook are positive, but declining management fees and specialized funds revenue raise concerns. The Q&A section lacks clarity, adding uncertainty. Overall, the positive and negative factors balance out, leading to a neutral sentiment. Given the market cap of approximately $4.9 billion, the stock is likely to experience minimal movement, falling in the neutral range of -2% to 2%.
The earnings call highlights strong growth in fee-related earnings, AUM, and dividend increases, which are positive indicators. Despite some revenue declines due to retro fees, the company shows robust performance in specialized funds and evergreen platforms. The Q&A reveals confidence in strategic partnerships and potential growth in incentive fees with a favorable macro environment. The market cap suggests moderate sensitivity to these factors, leading to a positive stock price prediction.
The earnings report highlights strong financial performance, with significant growth in management and advisory fees, fee-related earnings, and AUM. The dividend increase and stable FRE margin are positive indicators. Although market volatility and competition pose risks, management's focus on capitalizing on opportunities and maintaining margins is reassuring. The Q&A section did not reveal major concerns, and the market cap suggests a moderate reaction. Overall, the positive financial results, dividend increase, and stable outlook support a positive stock price movement prediction of 2% to 8% over the next two weeks.
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