1Hamilton Lane l Global Leader in the Private Markets Fiscal Year 2022 Fourth Quarter and Full Year Results Earnings Presentation - May 26, 2022
2Hamilton Lane l Global Leader in the Private Markets Today's Speakers Erik Hirsch Vice Chairman Mario Giannini Chief Executive Officer Atul Varma Chief Financial Officer John Oh Investor Relations Manager
3Hamilton Lane l Global Leader in the Private Markets Period Highlights Business Performance Financial Results Dividend • Assets under management and fee-earning assets under management were approximately $106 billion and $49 billion, respectively, as of March 31, 2022, increases of 21% and 17%, respectively, compared to March 31, 2021 • Management and advisory fees increased 9% compared to fiscal 2021 USD in millions except per share amounts Q4 FY22 FY22 vs. FY21 Management and advisory fees $84.6 $314.2 9 % GAAP net income $13.8 $146.0 49 % GAAP EPS $0.39 $3.98 42 % Adjusted net income1 $47.6 $235.4 61 % Non-GAAP EPS1 $0.89 $4.39 61 % Fee Related Earnings1 $38.0 $144.3 11 % Adjusted EBITDA1 $49.9 $183.9 9 % • Declared a quarterly dividend of $0.40 per share of Class A common stock to record holders at the close of business on June 15, 2022 1Adjusted net income, non-GAAP earnings per share, Fee Related Earnings and Adjusted EBITDA are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see pages 20 and 21 of this presentation.
4Hamilton Lane l Global Leader in the Private Markets CAGR: 21% Total Assets Under Management/Advisement ($B) Total AUA Total AUM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 3/31/22 $0 $200 $400 $600 $800 $1,000 Y-o-Y Growth AUM: 21% AUA: 26% $901B AUM & AUA Growing Asset Footprint & Influence 1Data as of calendar year end 12/31 unless otherwise noted. Numbers may not tie due to rounding. 1 $6 $7 $11 $13 $16 $19 $22 $24 $30 $32 $35 $40 $50 $59 $66 $76 $98 $106 $36 $51 $77 $79 $95 $81 $129 $147 $147 $189 $205 $292 $374 $410 $422 $581 $753 $795
5Hamilton Lane l Global Leader in the Private Markets $21 $22 $25 $26 $31 $10 $11 $14 $16 $18 Customized Separate Accounts Specialized Funds Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 $0 $10 $20 $30 $40 $50 $60 Total Fee-Earning Assets Under Management ($B) Fee-Earning AUM growth continues and annual fee rates are stable CAGR: 12% Total Management Fee Revenues as a % of Average FEAUM Fee-Earning AUM Driving Revenues Y-o-Y Drivers of Growth Customized Separate Accounts: • New client wins • Client re-ups Specialized Funds: • Fundraising 5th direct equity fund, 6th secondary fund, 7th credit-oriented fund and evergreen funds .55% .56% .60% .56% *Numbers may not tie due to rounding $31 $34 $39 $42 $49
6Hamilton Lane l Global Leader in the Private Markets AUM & AUA Drivers Customized Separate Accounts Specialized Funds Advisory Services Diverse mix of existing and prospective clients seeking to further or establish relationships with Hamilton Lane Select funds in market: • Direct equity fund • Secondary fund • Credit-oriented fund • Evergreen fund • Infrastructure fund • Impact fund Typically larger clients with wide- ranging mandates which include technology-driven reporting, monitoring and analytics services and consulting services; opportunity set continues to be robust • $5.3B year-over-year increase in FEAUM • +80% of our gross contributions during the last 12 months came from existing clients • $1.9B year-over-year increase in FEAUM • Closings during Q4 FY22: ◦ Direct equity fund: $306M • $164B year-over-year increase in AUA AUM AUA
7Hamilton Lane l Global Leader in the Private Markets Financial Highlights
8Hamilton Lane l Global Leader in the Private Markets US D in M ill io ns $173 $314 FY17 FY22 US D in M ill io ns $289 $314 FY21 FY22 Consolidated Revenue Strong revenue growth across management and advisory fees Management and Advisory Fees Incentive Fees Total Revenues YTD Long-Term Growth US D in M ill io ns $52 $54 FY21 FY22 US D in M ill io ns $7 $54 FY17 FY22 YTD Long-Term Growth Y-o-Y Growth: 9% CAGR: 13% US D in M ill io ns $342 $368 FY21 FY22 US D in M ill io ns $180 $368 FY17 FY22 YTD Long-Term Growth Y-o-Y Growth: 8% CAGR: 15% Y-o-Y Growth: 3% CAGR: 50% • Recurring management and advisory fees represented an average of 85% of total revenues over the past five fiscal years • $18.2M in retroactive fees from our latest secondary fund in the prior year • $1.4M in retroactive fees from our latest direct equity fund in the quarter • Total revenues increased by 8%, driven by growth across recurring management and advisory fee core offerings • Incentive fees derived from a highly diversified pool of assets and funds • Allocated carried interest of $1,191M as of 3/31/22 diversified across 3,000+ assets and over 90 funds • Timing of realizations unpredictable
9Hamilton Lane l Global Leader in the Private Markets Unrealized Carried Interest Period Ending Ve hi cl es USD in M illions Unrealized Carried Interest $441 $649 $1,191 65 78 92 Unrealized Carried Interest Vehicles in Unrealized Carry Position Mar-20 Mar-21 Mar-22 0 20 40 60 80 100 $0 $250 $500 $750 $1,000 $1,250 $1,500 Unrealized Carry by Age < 5 years 48% 5-8 years 29% 8-12 years 20% > 12 years 3%
10Hamilton Lane l Global Leader in the Private Markets US D in M ill io ns $130 $144 FY21 FY22 US D in M ill io ns $168 $184 FY21 FY22 Net Income Attributable to HLI US D in M ill io ns $98 $146 FY21 FY22 Adjusted EBITDA2 Consolidated Earnings Profitability stable and growing US D in M ill io ns $1 $146 FY17 FY22 YTD Long-Term Growth US D in M ill io ns $83 $184 FY17 FY22 Long-Term Growth Y-o-Y Growth: 49% US D in M ill io ns $72 $144 FY17 FY21 Long-Term Growth CAGR: 15% CAGR: 17% • Y-o-Y increase of 9% driven by growth in management and advisory fees • Y-o-Y growth of 11% • Long-term double digit growth in Fee Related Earnings • $146M in net income attributable to HLI for FY22 • $14M in net income attributable to HLI for the quarter 1Prior to our IPO in March 2017, HLI was a wholly-owned subsidiary of HLA with no operations or assets. 2Adjusted EBITDA and Fee Related Earnings are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non- GAAP measures provide useful information, see pages 20 and 21 of this presentation. YTD Y-o-Y Growth: 9% Fee Related Earnings2 YTD Y-o-Y Growth: 11% 1
11Hamilton Lane l Global Leader in the Private Markets Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage... US D in M ill io ns Investments $120 $137 $154 $208 $374 $514 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 $0 $150 $300 $450 $600 • For 3/31/22, the total investment balance consisted of: ◦ ~$336M in equity method investments in our funds ◦ ~$178M in technology related and other investments • Modest leverage • $171M of debt as of 3/31/22 US D in M ill io ns Leverage $75 $163 $171 Mar-20 Mar-21 Mar-22 $0 $50 $100 $150 $200
12Hamilton Lane l Global Leader in the Private Markets Appendix
13Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Statements of Income (Unaudited) Three Months Ended March 31, Year Ended March 31, (Dollars in thousands except share and per share amounts) 2021 2022 % Change 2021 2022 % Change Revenues Management and advisory fees $80,531 $84,575 5% $289,444 $314,228 9 % Incentive fees 18,622 13,916 (25) % 31,134 48,133 55 % Consolidated variable interest entities related: Incentive fees 3,724 2,409 (35) % 21,057 5,558 (74) % Total revenues 102,877 100,900 (2) % 341,635 367,919 8 % Expenses Compensation and benefits 42,405 35,137 (17) % 136,319 129,165 (5) % General, administrative and other 14,232 19,298 36 % 49,210 68,040 38 % Consolidated variable interest entities related: General, administrative and other 378 198 (48) % 378 1,150 204 % Total expenses 57,015 54,633 (4) % 185,907 198,355 7 % Other income (expense) Equity in income of investees 21,452 18,632 (13) % 32,389 78,813 143 % Interest expense (596) (1,146) 92 % (2,044) (4,634) 127 % Interest income 901 12 (99) % 1,676 500 (70) % Non-operating (loss) income (935) (1,031) 10 % 5,894 64,469 994 % Consolidated variable interest entities related: Equity in income (loss) of investees 115 313 172 % (2,123) 483 (123) % Unrealized gains 2,141 3,418 60 % 2,141 4,485 109 % Interest expense (459) — N/A (459) (4) (99) % Total other income (expense) 22,619 20,198 (11) % 37,474 144,112 285 % Income before income taxes 68,481 66,465 (3) % 193,202 313,676 62 % Income tax expense 3,895 28,908 642 % 24,417 66,423 172 % Net income 64,586 37,557 (42) % 168,785 247,253 46 % Less: Income (loss) attributable to non-controlling interests in general partnerships 96 209 118 % (250) 376 (250) % Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 23,437 19,699 (16) % 69,720 96,548 38 % Less: Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. 1,293 3,824 196 % 1,293 4,343 236 % Net income attributable to Hamilton Lane Incorporated $39,760 $13,825 (65) % $98,022 $145,986 49 % Basic earnings per share of Class A common stock $1.01 $0.39 $2.82 $4.02 Diluted earnings per share of Class A Common stock $1.00 $0.39 $2.81 $3.98 Weighted-average shares of Class A common stock outstanding - basic 34,938,487 36,926,014 33,152,318 36,511,507 Weighted-average shares of Class A common stock outstanding - diluted 35,185,882 37,035,108 33,362,365 53,674,293
14Hamilton Lane l Global Leader in the Private Markets 1 Adjusted EBITDA and non-GAAP earnings per share are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, see page 20. 2 Incentive fee related compensation includes incentive fee compensation expense, bonus and other revenue sharing related to carried interest that is classified as base compensation. 3For the years ended March 31, 2021 and 2022, represents corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income. 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%. 4 Assumes the full exchange of Class B and Class C units in HLA for Class A common stock of HLI pursuant to the exchange agreement. Non-GAAP Financial Measures Three Months Ended March 31, Year Ended March 31, (Dollars in thousands except share and per share amounts) 2021 2022 % Change 2021 2022 % Change Adjusted EBITDA1 Management and advisory fees $80,531 $84,575 5 % $289,444 $314,228 9 % Total expenses 57,015 54,633 (4) % 185,907 198,355 7 % Less: Incentive fee related compensation2 (10,610) (7,710) (27) % (24,438) (25,395) 4 % SPAC related compensation (1,686) — N/A (1,686) — N/A SPAC related general, administrative and other expenses (378) (308) (19) % (378) (1,176) 211 % Non-operating income related compensation — (20) N/A — (1,810) N/A Management fee related expenses 44,341 46,595 5 % 159,405 169,974 7 % Fee Related Earnings $36,191 $37,980 5 % $130,039 $144,254 11 % Fee Related Earnings Margin 45 % 45 % 45 % 46 % Incentive fees 22,346 16,325 (27) % 52,191 53,691 3 % Incentive fees attributable to non-controlling interests (21) (94) 348 % (756) (228) (70) % Incentive fee related compensation2 (10,610) (7,710) (27) % (24,438) (25,395) 4 % Non-operating income related compensation — (20) N/A — (1,810) N/A SPAC related compensation (1,686) — N/A (1,686) — N/A Interest income 901 12 (99) % 1,676 500 (70) % Equity-based compensation 1,769 1,698 (4) % 7,079 7,404 5 % Depreciation and amortization 1,152 1,751 52 % 4,134 5,495 33 % Adjusted EBITDA 50,042 49,942 0 % 168,239 183,911 9 % Adjusted EBITDA margin 49 % 49 % 49 % 50 % Non-GAAP earnings per share1 Net income attributable to Hamilton Lane Incorporated $39,760 $13,825 (65) % $98,022 $145,986 49 % Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 23,437 19,699 (16%) 69,720 96,548 38 % Income tax expense 3,895 28,908 642% 24,417 66,423 172 % Adjusted pre-tax net income 67,092 62,432 (7%) 192,159 308,957 61 % Adjusted income taxes3 (16,093) (14,859) (8%) (45,734) (73,532) 61 % Adjusted net income $50,999 $47,573 (7%) $146,425 $235,425 61 % Adjusted shares outstanding4 53,675,223 53,710,942 53,602,400 53,674,293 Non-GAAP earnings per share $0.95 $0.89 (6) % $2.73 $4.39 61 %
15Hamilton Lane l Global Leader in the Private Markets Management and Advisory Fees Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2021 2022 % Change 2021 2022 % Change Management and advisory fees Specialized funds $45,920 $42,144 (8) % $148,023 $150,079 1 % Customized separate accounts 23,363 27,813 19 % 93,963 103,229 10 % Advisory 6,511 6,191 (5) % 26,439 24,972 (6) % Reporting and other 3,041 6,344 109 % 11,134 23,327 110 % Distribution management 1,410 1,153 (18) % 6,701 10,466 56 % Fund reimbursement revenue 286 930 225 % 3,184 2,155 (32) % Total management and advisory fees $80,531 $84,575 5 % $289,444 $314,228 9 % Reporting and other: 11% Customized separate accounts: 33% Specialized funds: 48% Advisory: 8% Year Ended March 31, 2022
16Hamilton Lane l Global Leader in the Private Markets Incentive Fees Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2021 2022 % Change 2021 2022 % Change Incentive fees Secondary Fund II $264 $0 (100) % $1,183 $239 (80) % Co-investment Fund II 20 2,410 11,950 % 17,354 5,558 (68) % Other specialized funds 9,088 6,428 (29) % 15,761 30,093 91 % Customized separate accounts 12,974 7,487 (42) % 17,893 17,801 (1) % Incentive fees $22,346 $16,325 (27) % $52,191 $53,691 3 % As of March 31, 2021 December 31, 2021 March 31, 2022 YoY % Change QoQ % Change Unrecognized carried interest Secondary Fund II $1,020 $638 $470 (54) % (26) % Secondary Fund III 35,088 32,839 33,514 (4) % 2 % Secondary Fund IV 94,056 150,561 156,123 66 % 4 % Secondary Fund V 36,723 115,378 151,362 312 % 31 % Co-investment Fund II 21,767 18,352 16,754 (23) % (9) % Co-investment Fund III 88,229 108,072 114,057 29 % 6 % Co-investment Fund IV 37,671 131,001 149,615 297 % 14 % Equity Opportunities Fund V — — 4,658 N/A N/A Other specialized funds 125,312 172,382 198,714 59 % 15 % Customized separate accounts 208,906 335,207 365,798 75 % 9 % Total unrecognized carried interest $648,772 $1,064,430 $1,191,065 84 % 12 %
17Hamilton Lane l Global Leader in the Private Markets Assets Under Management (Dollars in millions) March 31, 2021 December 31, 2021 March 31, 2022 YoY % Change QoQ % Change Assets under management / advisement Assets under management $87,816 $98,131 $106,382 21 % 8 % Assets under advisement 630,740 752,917 794,732 26 % 6 % Total assets under management /advisement $718,556 $851,048 $901,114 25 % 6 % Fee-earning assets under management Customized separate accounts Balance, beginning of period $25,026 $27,390 $28,364 13 % 4 % Contributions 2,330 1,540 3,995 71 % 159 % Distributions (1,936) (719) (1,441) (26) % 100 % Foreign exchange, market value and other 244 153 20 (92) % (87) % Balance, end of period $25,664 $28,364 $30,938 21 % 9 % Specialized funds Balance, beginning of period $15,167 $17,243 $17,705 17 % 3 % Contributions 1,361 770 1,452 7 % 89 % Distributions (211) (384) (989) 369 % 158 % Foreign exchange, market value and other 24 76 25 4 % (67) % Balance, end of period $16,341 $17,705 $18,193 11 % 3 % Total Balance, beginning of period $40,193 $44,633 $46,069 15 % 3 % Contributions 3,691 2,310 5,447 48 % 136 % Distributions (2,147) (1,103) (2,430) 13 % 120 % Foreign exchange, market value and other 268 229 45 (83) % (80) % Balance, end of period $42,005 $46,069 $49,131 17 % 7 %
18Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) March 31, 2021 March 31, 2022 Assets Cash and cash equivalents $87,025 $72,138 Restricted cash 3,041 4,023 Fees receivable 29,202 51,869 Prepaid expenses 6,143 6,858 Due from related parties 2,495 1,872 Furniture, fixtures and equipment, net 23,308 28,842 Lease right-of-use assets, net 64,384 65,636 Investments 368,836 503,789 Deferred income taxes 251,949 245,046 Other assets 17,821 28,162 Assets of consolidated variable interest entities: Cash and cash equivalents 311 36 Investments held in trust 276,003 276,016 Investments 4,787 10,036 Other assets 1,214 623 Total assets $1,136,519 $1,294,946 Liabilities, redeemable non-controlling interests and equity Accounts payable $2,173 $2,827 Accrued compensation and benefits 29,415 20,117 Accrued members' distributions 16,877 27,119 Accrued dividend 11,201 12,947 Debt 163,175 171,326 Payable to related parties pursuant to tax receivable agreement 194,764 180,536 Lease liabilities 75,281 82,244 Other liabilities (includes $17,381 and $13,818 at fair value) 36,122 47,669 Liabilities of consolidated variable interest entities: Other liabilities 17,310 12,675 Total liabilities $546,318 $557,460 Redeemable non-controlling interests 276,000 276,000 Total equity 314,201 461,486 Total liabilities, redeemable non-controlling interests and equity $1,136,519 $1,294,946
19Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Statements of Cash Flows (Unaudited) Year Ended March 31, (Dollars in thousands) 2020 2021 2022 Operating activities Net income $126,776 $168,785 $247,253 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,291 4,134 5,495 Change in deferred income taxes 7,929 7,027 23,944 Change in payable to related parties pursuant to tax receivable agreement (346) 897 (5,332) Equity-based compensation 7,183 7,079 7,404 Equity in income of investees (20,731) (32,389) (78,813) Gain on sale of investments valued under the measurement alternative (4,973) — (11,936) Fair value adjustment to investment valued at the measurement alternative (1,507) (6,229) (47,487) Proceeds received from partnerships 12,761 784 46,817 Non-cash lease expense 4,643 7,376 9,890 Other 789 1,571 (815) Changes in operating assets and liabilities (19,923) 33,512 (22,370) Consolidated variable interest entities related 481 (4,389) (4,527) Net cash provided by operating activities $116,373 $188,158 $169,523 Investing activities Purchase of furniture, fixtures and equipment $(1,978) $(18,637) $(8,526) Purchase of investments valued under the measurement alternative (3,967) (90,500) (18,997) Distributions received from investments valued under the measurement alternative — 3,072 12,739 Proceeds from sales of investments valued under the measurement alternative 6,419 — 12,623 Acquisition of business — — (10,096) Purchase of intangible assets (4,172) (1,000) — Loan to investee (157) — — Distributions received from partnerships 7,687 31,195 15,010 Contributions to investments (53,732) (69,911) (73,240) Consolidated variable interest entities related: Purchase of investments held in trust — (276,000) — Net cash used in investing activities $(49,900) $(421,781) $(70,487) Financing activities Proceeds from offering $147,122 $473,339 $73,833 Purchase of membership interests (147,122) (473,339) (73,833) Repayments of long term debt (71,250) (1,406) (1,840) Borrowings of debt, net of deferred financing costs 74,765 75,000 25,000 Drawdown of revolver 15,000 15,000 — Repayment of revolver (15,000) — (15,000) Secured financing 15,750 — — Repurchase of Class B common stock (2) (5) (1) Repurchase of Class A common stock for employee tax withholding (5,881) (6,019) (3,485) Proceeds received from issuance of shares under employee stock plans 1,244 1,447 1,860 Payments to related parties pursuant to the tax receivable agreement (1,952) (6,894) (23,170) Dividends paid (29,067) (39,676) (49,630) Members' distributions paid (47,368) (34,368) (47,711) Consolidated variable interest entities related (948) 267,581 836 Other — — (75) Net cash (used in) provided by financing activities $(64,709) $270,660 $(113,216) Effect of exchange rate changes on cash and cash equivalents (144) 130 — Increase in cash, cash equivalents, and restricted cash 1,620 37,167 (14,180) Cash, cash equivalents, and restricted cash at beginning of year 51,590 53,210 90,377 Cash, cash equivalents, and restricted cash at end of year $53,210 $90,377 $76,197
20Hamilton Lane l Global Leader in the Private Markets Non-GAAP Reconciliation Reconciliation from Net Income Year Ended March 31, Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2017 2022 2021 2022 2021 2022 Net income attributable to Hamilton Lane Incorporated $612 $145,986 $39,760 $13,825 $98,022 $145,986 Income (loss) attributable to non-controlling interests in general partnerships 1,192 376 96 209 (250) 376 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 72,634 96,548 23,437 19,699 69,720 96,548 Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — 4,343 1,293 3,824 1,293 4,343 Incentive fees (7,146) (53,691) (22,346) (16,325) (52,191) (53,691) Incentive fee related compensation1 3,283 25,395 10,610 7,710 24,438 25,395 SPAC related compensation — — 1,686 — 1,686 — SPAC related general, administrative and other expenses — 1,176 378 308 378 1,176 Non-operating income related compensation — 1,810 — 20 — 1,810 Interest income (320) (500) (901) (12) (1,676) (500) Interest expense 14,565 4,638 1,055 1,146 2,503 4,638 Income tax expense 316 66,423 3,895 28,908 24,417 66,423 Equity in income of investees (12,801) (79,296) (21,567) (18,945) (30,266) (79,296) Non-operating income (83) (68,954) (1,205) (2,387) (8,035) (68,954) Fee Related Earnings $72,252 $144,254 $36,191 $37,980 $130,039 $144,254 Depreciation and amortization 1,915 5,495 1,152 1,751 4,134 5,495 Equity-based compensation 4,681 7,404 1,769 1,698 7,079 7,404 Incentive fees 7,146 53,691 22,346 16,325 52,191 53,691 Incentive fees attributable to non-controlling interests — (228) (21) (94) (756) (228) Incentive fee related compensation1 (3,283) (25,395) (10,610) (7,710) (24,438) (25,395) SPAC related compensation — — (1,686) — (1,686) — Non-operating income related compensation — (1,810) — (20) — (1,810) Interest income 320 500 901 12 1,676 500 Adjusted EBITDA $83,031 $183,911 $50,042 $49,942 $168,239 $183,911 Non-GAAP earnings per share reconciliation Net income attributable to Hamilton Lane Incorporated $39,760 $13,825 $98,022 $145,986 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 23,437 19,699 69,720 96,548 Income tax expense 3,895 28,908 24,417 66,423 Adjusted pre-tax net income 67,092 62,432 192,159 308,957 Adjusted income taxes2 (16,093) (14,859) (45,734) (73,532) Adjusted net income $50,999 $47,573 $146,425 $235,425 Weighted-average shares of Class A common stock outstanding - diluted 35,185,882 37,035,108 33,362,365 53,674,293 Exchange of Class B and Class C units in HLA3 18,489,341 16,675,834 20,240,035 — Adjusted shares outstanding 53,675,223 53,710,942 53,602,400 53,674,293 Non-GAAP earnings per share $0.95 $0.89 $2.73 $4.39 1 Incentive fee related compensation includes incentive fee compensation expense, bonus and other revenue sharing related to carried interest that is classified as base compensation. 2 For the years ended March 31, 2021 and 2022, represents corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income. 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%. 3 Assumes the full exchange of Class B and Class C units in HLA for Class A common stock of HLI pursuant to the exchange agreement. For the year ended March 31, 2022, the full exchange of Class B and Class C units is already included within the GAAP Weighted-average shares of Class A common stock outstanding - diluted.
21Hamilton Lane l Global Leader in the Private Markets Terms 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. Fee Related Earnings ("FRE") is used to highlight 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. 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. 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. Our assets under management ("AUM"), as presented in these materials, comprise the assets associated with our customized separate accounts and specialized funds. AUM does not include the assets associated with our distribution management services. We classify assets as AUM if we have full discretion over the investment decisions in an account. We calculate our AUM as the sum of: (1) the net asset value of our clients' and funds' underlying investments; (2) the unfunded commitments to our clients' and funds' underlying investments; and (3) the amounts authorized for us to invest on behalf of our clients and fund investors but not committed to an underlying investment. Management fee revenue is based on a variety of factors and is not linearly correlated with AUM. However, we believe AUM is a useful metric for assessing the relative size and scope of our asset management business. Our assets under advisement ("AUA") comprise assets from clients for which we do not have full discretion to make investments in their account. We generally earn revenue on a fixed fee basis on our AUA client accounts for services including asset allocation, strategic planning, development of investment policies and guidelines, screening and recommending investments, legal negotiations, monitoring and reporting on investments and investment manager review and due diligence. Advisory fees vary by client based on the amount of annual commitments, services provided and other factors. Since we earn annual fixed fees from the majority of our AUA clients, the growth in AUA from existing accounts does not have a material impact on our revenues. However, we view AUA growth as a meaningful benefit in terms of the amount of data we are able to collect and the degree of influence we have with fund managers. Fee-earning assets under management (Fee-earning "AUM" or "FEAUM") 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 of our customized separate accounts and specialized funds depending on the fee terms. Substantially all 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. Hamilton Lane Incorporated (or "HLI"), a Delaware corporation, was formed for the purpose of completing an initial public offering ("IPO") and related transactions in order to carry on the business of Hamilton Lane Advisors, L.L.C. ("HLA") as a publicly-traded entity. As of the closing of our IPO on March 6, 2017, HLI became the sole managing member of HLA.
22Hamilton Lane l Global Leader in the Private Markets Disclosures Some of the statements in this presentation may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 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 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 new lines of business or entering into strategic partnerships; our ability to manage, identify and anticipate risks we face; our ability to manage the effects of events outside of our control; and our ability to receive distributions from Hamilton Lane Advisors, L.L.C. 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 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, 2021, as amended, and in our subsequent reports filed from time to time with the Securities and Exchange Commission. The forward-looking statements included in this presentation are made only as of the date presented. 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. Values appearing in this presentation that are whole numbers are rounded approximations. As of May 26, 2022
