1Hamilton Lane l Global Leader in the Private Markets Fiscal Year 2023 Third Quarter Results Earnings Presentation - February 7, 2023
2Hamilton Lane l Global Leader in the Private Markets Today's Speakers Erik Hirsch Vice Chairman Atul Varma Chief Financial Officer John Oh Investor Relations Manager Mario Giannini Chief Executive Officer
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 $108 billion and $55 billion, respectively, as of December 31, 2022, increases of 10% and 19%, respectively, compared to December 31, 2021 • Management and advisory fees increased 20% compared to the nine months ended December 31, 2021 USD in millions except per share amounts Q3 FY23 QTD Q3 FY23 YTD vs. Q3 FY22 YTD Management and advisory fees $97.4 $276.2 20 % GAAP net income $9.7 $78.0 (41) % GAAP EPS $0.31 $2.19 (39) % Adjusted net income1 $23.3 $127.9 (32) % Non-GAAP EPS1 $0.43 $2.38 (32) % Fee Related Earnings1 $41.5 $118.1 11 % Adjusted EBITDA1 $63.7 $204.5 53 % • Declared a quarterly dividend of $0.40 per share of Class A common stock to record holders at the close of business on March 15, 2023 1Adjusted net income, non-GAAP earnings per share, Fee Related Earnings and Adjusted EBITDA are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see pages 20 and 21 of this presentation.
4Hamilton Lane l Global Leader in the Private Markets Total Assets Under Management/Advisement ($B) Total AUA Total AUM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $0 $200 $400 $600 $800 $1,000 CAGR: 19% Y-o-Y Growth AUM: 10 % AUA: (4) % $832B AUM & AUA Growing Asset Footprint & Influence $36 $51 $77 $79 $95 $81 $129 $147 $147 $189 $205 $292 $374 $410 $422 $6 $7 $11 $13 $16 $19 $22 $24 $30 $32 $35 $40 $50 $59 1Data as of calendar year end 12/31 unless otherwise noted. Numbers may not tie due to rounding. 1 $ 724 $ 108 $66 $581 $76 $98 $753
5Hamilton Lane l Global Leader in the Private Markets Total Fee-Earning Assets Under Management ($B) $21 $22 $25 $26 $31 $28 $33 $10 $11 $14 $16 $18 $18 $22 Customized Separate Accounts Specialized Funds Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Dec-21 Dec-22 $0 $10 $20 $30 $40 $50 $60 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 *Numbers may not tie due to rounding Y-o-Y Drivers of Growth Customized Separate Accounts: • New client wins • Client re-ups Specialized Funds: • Closed 1st infrastructure fund, 7th credit-oriented fund, and 5th direct equity fund • Fundraising 6th secondary fund, 2nd impact fund, and evergreen funds .59%.56%.55% .60% .56% .56% $39 $46 $49 $31 $34 $42 $55
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 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 • $4.7B year-over-year increase in FEAUM • +80% of our gross contributions during the last 12 months came from existing clients • $4.1B year-over-year increase in FEAUM • Closings during Q3 FY23: ◦ Direct equity fund: $281M ◦ Secondary fund: $572M • $29B year-over-year decrease in AUA AUM AUA Select funds in market: • Secondary fund • Credit-oriented fund • Evergreen fund • Impact fund
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 $267 $416 Q3 FY22 Q3 FY23 US D in M ill io ns $37 $140 Q3 FY22 Q3 FY23 US D in M ill io ns $230 $276 Q3 FY22 Q3 FY23 Consolidated Revenue Strong revenue growth across management and advisory fees Management and Advisory Fees Incentive Fees Total Revenues YTD YTD Y-o-Y Growth: 20% YTD Y-o-Y Growth: 56% Y-o-Y Growth: 274% • Recurring management and advisory fees represented an average of 85% of total revenues over the past five fiscal years • Y-o-Y increase of 20% • $3.8 million in retroactive fees from our latest secondary and direct equity funds in the quarter • Incentive fees derived from a highly diversified pool of assets and funds • Unrealized carried interest of $952 million as of 12/31/22 diversified across 3,000+ assets and over 90 funds • Timing of realizations unpredictable • Total revenues increased by 56%, driven by incentive fees US D in M ill io ns $173 $314 FY17 FY22 Long-Term Growth US D in M ill io ns $7 $54 FY17 FY22 Long-Term Growth CAGR: 13% US D in M ill io ns $180 $368 FY17 FY22 Long-Term Growth CAGR: 15% CAGR: 50%
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 $497 $1,064 $952 70 88 91 Unrealized Carried Interest Vehicles in Unrealized Carry Position Dec-20 Dec-21 Dec-22 0 20 40 60 80 100 $0 $250 $500 $750 $1,000 $1,250 $1,500 Unrealized Carry by Age < 5 years 51% 5-8 years 26% 8-12 years 19% > 12 years 4%
10Hamilton Lane l Global Leader in the Private Markets US D in M ill io ns $134 $205 Q3 FY22 Q3 FY23 US D in M ill io ns $106 $118 Q3 FY22 Q3 FY23 Net Income Attributable to HLI US D in M ill io ns $132 $78 Q3 FY22 Q3 FY23 Adjusted EBITDA2 Consolidated Earnings Profitability stable and growing YTD Y-o-Y Growth: (41)% • Y-o-Y increase of 53% driven by growth in both management and advisory fees and incentive fees • Y-o-Y growth of 11% • Long-term double digit growth in Fee Related Earnings • $10M in net income attributable to HLI for the quarter 1Prior to our IPO, 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: 53% Fee Related Earnings2 YTD Y-o-Y Growth: 11% US D in M ill io ns $1 $146 FY17 FY22 Long-Term Growth US D in M ill io ns $83 $184 FY17 FY22 Long-Term Growth US D in M ill io ns $72 $144 FY17 FY22 Long-Term Growth CAGR: 15% CAGR: 17% 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 $137 $154 $208 $374 $514 $552 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Dec-22 $0 $100 $200 $300 $400 $500 $600 • For 12/31/22, the total investment balance consisted of: ◦ ~$366M in equity method investments in our funds ◦ ~$186M in technology related and other investments • Modest leverage • $199M of debt as of 12/31/22 US D in M ill io ns Leverage $147 $171 $199 Dec-21 Mar-22 Dec-22 $0 $50 $100 $150 $200 $250
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 December 31, Nine Months Ended December 31, (Dollars in thousands except share and per share amounts) 2021 2022 % Change 2021 2022 % Change Management and advisory fees $79,836 $97,355 22 % $229,653 $276,182 20 % Incentive fees 10,490 24,075 130 % 34,217 132,835 288 % Consolidated variable interest entities related: Incentive fees 1,378 5,644 310 % 3,149 6,948 121 % Total revenues 91,704 127,074 39 % 267,019 415,965 56 % Compensation and benefits 34,004 45,676 34 % 94,028 158,235 68 % General, administrative and other 16,332 22,717 39 % 48,742 66,066 36 % Consolidated variable interest entities related: General, administrative and other 322 309 (4) % 952 941 (1) % Total expenses 50,658 68,702 36 % 143,722 225,242 57 % Equity in income (loss) of investees 12,924 650 (95) % 60,181 (7,493) (112) % Interest expense (1,157) (2,419) 109 % (3,488) (6,027) 73 % Interest income 26 442 1,601 % 488 839 72 % Non-operating income (expense) 37,043 (27,960) (175) % 65,500 (11,878) (118) % Consolidated variable interest entities related: Equity in (loss) income of investees (298) 389 N/A 170 1,030 506 % Unrealized income 2,135 2,087 (2) % 1,067 4,333 306 % Interest expense (4) — N/A (4) — N/A Interest income — 2,111 N/A — 2,989 N/A Total other income (expense) 50,669 (24,700) (149) % 123,914 (16,207) (113) % Income before income taxes 91,715 33,672 (63) % 247,211 174,516 (29) % Income tax expense 11,519 11,788 2 % 37,515 38,766 3 % Net income 80,196 21,884 (73) % 209,696 135,750 (35) % Less: (Loss) income attributable to non-controlling interests in general partnerships (119) 422 N/A 167 773 363 % Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 26,181 9,146 (65) % 76,849 51,326 (33) % Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. 2,285 2,647 16 % 519 5,617 982 % Net income attributable to Hamilton Lane Incorporated $51,849 $9,669 (81) % $132,161 $78,034 (41) % Basic earnings per share of Class A common stock $1.44 $0.32 (78) % $3.64 $2.21 (39) % Diluted earnings per share of Class A Common stock $1.40 $0.31 (78) % $3.59 $2.19 (39) % Weighted-average shares of Class A common stock outstanding - basic 36,902,741 37,025,416 36,375,797 37,004,657 Weighted-average shares of Class A common stock outstanding - diluted 53,744,144 53,769,379 53,707,401 53,733,521
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 and bonus related to carried interest that is classified as base compensation. 3 Represents corporate income taxes at our estimated statutory tax rate of 23.9% and 23.8% for the three and nine month periods ended December 31, 2022 and 2021, respectively, applied to adjusted pre-tax net income. The 23.9% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.9%. 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%. Non-GAAP Financial Measures Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands except share and per share amounts) 2021 2022 % Change 2021 2022 % Change Adjusted EBITDA1 Management and advisory fees $79,836 $97,355 22 % $229,653 $276,182 20 % Total expenses 50,658 68,702 36 % 143,722 225,242 57 % Less: Incentive fee related compensation2 (5,609) (14,001) 150 % (17,685) (66,254) 275 % SPAC related general, administrative and other expenses (309) (278) (10) % (868) (846) (3) % Non-operating income related compensation (1,790) 1,413 (179) % (1,790) (54) (97) % Management fee related expenses 42,950 55,836 30 % 123,379 158,088 28 % Fee Related Earnings $36,886 $41,519 13 % $106,274 $118,094 11 % Fee Related Earnings Margin 46 % 43 % 46 % 43 % Incentive fees 11,868 29,719 150 % 37,366 139,783 274 % Incentive fees attributable to non-controlling interests (59) (243) 312 % (134) (302) 125 % Incentive fee related compensation2 (5,609) (14,001) 150 % (17,685) (66,254) 275 % Non-operating income related compensation (1,790) 1,413 N/A (1,790) (54) (97) % Interest income 26 442 1,601 % 488 839 72 % Equity-based compensation 1,711 2,834 66 % 5,706 6,816 19 % Depreciation and amortization 1,292 2,022 57 % 3,744 5,600 50 % Adjusted EBITDA $44,325 $63,705 44 % $133,969 $204,522 53 % Adjusted EBITDA Margin 48 % 50 % 50 % 49 % Non-GAAP earnings per share1 Net income attributable to Hamilton Lane Incorporated $51,849 $9,669 (81) % $132,161 $78,034 (41) % Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 26,181 9,146 (65) % 76,849 51,326 (33) % Income tax expense 11,519 11,788 2 % 37,515 38,766 3 % Adjusted pre-tax net income 89,549 30,603 (66) % 246,525 168,126 (32) % Adjusted income taxes3 (21,312) (7,314) (66) % (58,673) (40,182) (32) % Adjusted net income $68,237 $23,289 (66) % $187,852 $127,944 (32) % Adjusted shares outstanding 53,744,144 53,769,379 53,707,401 53,733,521 Non-GAAP earnings per share $1.27 $0.43 (66) % $3.50 $2.38 (32) %
15Hamilton Lane l Global Leader in the Private Markets Management and Advisory Fees Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands) 2021 2022 % Change 2021 2022 % Change Management and advisory fees Specialized funds $38,233 $53,299 39 % $107,935 $144,099 34 % Customized separate accounts 25,982 29,571 14 % 75,416 87,329 16 % Advisory 6,119 6,613 8 % 18,781 19,073 2 % Reporting and other 5,992 6,720 12 % 16,983 19,170 13 % Distribution management 3,170 596 (81) % 9,313 1,863 (80) % Fund reimbursement revenue 340 556 63 % 1,225 4,648 279 % Total management and advisory fees $79,836 $97,355 22 % $229,653 $276,182 20 % Reporting and other: 9% Customized separate accounts: 32% Specialized funds: 52% Advisory: 7% Nine Months Ended December 31, 2022
16Hamilton Lane l Global Leader in the Private Markets Incentive Fees Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands) 2021 2022 % Change 2021 2022 % Change Incentive fees Direct equity funds $1,377 $5,644 310 % $3,149 $58,104 1,745 % Secondary funds 209 447 113 % 5,574 27,393 391 % Direct credit funds 359 6 (98) % 5,477 7,638 39 % Evergreen funds 1,456 3,072 111 % 1,611 4,069 152 % Other specialized funds 4,742 5,154 9 % 11,241 12,559 12 % Customized separate accounts 3,725 15,396 313 % 10,314 30,020 191 % Incentive fees $11,868 $29,719 150 % $37,366 $139,783 274 % As of December 31, 2021 September 30, 2022 December 31, 2022 YoY Change % QoQ Change % Allocated carried interest Secondary Fund II $638 $369 $385 (40) % 4 % Secondary Fund III 32,839 32,591 31,285 (5) % (4) % Secondary Fund IV 150,561 126,602 126,943 (16) % 0 % Secondary Fund V 115,378 144,199 142,538 24 % (1) % Secondary Fund VI — — 1,730 N/A N/A Co-investment Fund II 18,352 18,871 15,436 (16) % (18) % Co-investment Fund III 108,072 59,703 54,964 (49) % (8) % Co-investment Fund IV 131,001 104,421 103,252 (21) % (1) % Equity Opportunities Fund V — 6,358 4,678 N/A (26) % Evergreen funds 31,445 56,671 66,030 110 % 17 % Other specialized funds 140,937 111,772 109,042 (23) % (2) % Customized separate accounts 335,207 322,973 295,905 (12) % (8) % Total allocated carried interest $1,064,430 $984,530 $952,188 (11) % (3) %
17Hamilton Lane l Global Leader in the Private Markets Assets Under Management (Dollars in millions) December 31, 2021 September 30, 2022 December 31, 2022 YoY Change % QoQ Change % Assets under management / advisement Assets under management $98,131 $107,107 $107,530 10 % 0 % Assets under advisement 752,917 716,515 724,364 (4) % 1 % Total assets under management /advisement $851,048 $823,622 $831,894 (2) % 1 % Fee-earning assets under management Customized separate accounts Balance, beginning of period $27,390 $31,749 $32,333 18 % 2 % Contributions 1,540 1,264 1,432 (7) % 13 % Distributions (719) (587) (576) (20) % (2) % Foreign exchange, market value and other 153 (93) (100) (165) % 8 % Balance, end of period $28,364 $32,333 $33,089 17 % 2 % Specialized funds Balance, beginning of period $17,243 $19,372 $20,354 18 % 5 % Contributions 770 1,230 1,472 91 % 20 % Distributions (384) (324) (213) (45) % (34) % Foreign exchange, market value and other 76 76 163 114 % 114 % Balance, end of period $17,705 $20,354 $21,776 23 % 7 % Total Balance, beginning of period $44,633 $51,121 $52,687 18 % 3 % Contributions 2,310 2,494 2,904 26 % 16 % Distributions (1,103) (911) (789) (28) % (13) % Foreign exchange, market value and other 229 (17) 63 (72) % N/A Balance, end of period $46,069 $52,687 $54,865 19 % 4 %
18Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands except share and per share amounts) March 31, 2022 December 31, 2022 Assets Cash and cash equivalents $72,138 $146,070 Restricted cash 4,023 3,116 Fees receivable 51,869 52,074 Prepaid expenses 6,858 7,078 Due from related parties 1,872 7,784 Furniture, fixtures and equipment, net 28,842 28,348 Lease right-of-use assets, net 65,636 63,152 Investments 503,789 514,332 Deferred income taxes 245,046 230,154 Other assets 28,162 30,755 Assets of consolidated variable interest entities: Cash and cash equivalents 36 3,909 Investments held in trust 276,016 — Investments 10,036 37,360 Other assets 623 229 Total assets $1,294,946 $1,124,361 Liabilities, redeemable non-controlling interests and equity Accounts payable $2,827 $2,045 Accrued compensation and benefits 20,117 65,761 Accrued members' distributions 27,119 19,161 Accrued dividend 12,947 14,810 Debt 171,326 199,126 Payable to related parties pursuant to tax receivable agreement 180,536 179,431 Lease liabilities 82,244 79,549 Other liabilities (includes $13,818 and $13,954 at fair value) 47,669 34,503 Liabilities of consolidated variable interest entities: Other liabilities 12,675 17 Total liabilities 557,460 594,403 Redeemable non-controlling interests 276,000 — Total equity 461,486 529,958 Total liabilities, redeemable non-controlling interests and equity $1,294,946 $1,124,361
19Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended December 31, (Dollars in thousands) 2021 2022 Operating activities Net income $209,696 $135,750 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,744 5,600 Change in deferred income taxes 19,941 14,892 Change in payable to related parties pursuant to tax receivable agreement (6,202) (1,105) Equity-based compensation 5,706 6,816 Equity in (income) loss of investees (60,181) 7,493 Gain on sale of investment (11,936) (9,783) Fair value adjustment of other investments (47,774) (18,578) Proceeds received from partnerships 38,945 11,877 Non-cash lease expense 7,210 5,370 Gain on sale of intangible asset — 2,771 Impairment of other investment — 43,289 Other 43 (2,864) Changes in operating assets and liabilities (5,868) 16,088 Consolidated variable interest entities related (812) (4,245) Net cash provided by operating activities $152,512 $213,371 Investing activities Purchase of furniture, fixtures and equipment (7,788) (3,261) Cash paid for acquisition of business (10,096) (1,500) Loans to investees — (2,535) Purchase of other investments (18,798) (34,125) Proceeds from sale of investments 12,623 10,000 Distributions from investments 12,739 1,406 Distributions received from partnerships 12,088 15,990 Contributions to partnerships (56,432) (63,364) Sale of investments held in trust — 278,954 Net cash (used in) provided by investing activities $(55,664) $201,565 Financing activities Proceeds from offerings 73,833 — Purchase of membership interests (73,833) — Borrowings of debt — 31,682 Repayments of debt (1,382) (3,873) Draw-down on revolver — 25,000 Repayment of revolver (15,000) (25,000) Repurchase of Class B common stock (1) — Repurchase of Class A shares for employee tax withholding (605) (162) Proceeds received from issuance of shares under Employee Share Purchase Plan 1,382 1,441 Payments to related parties, pursuant to tax receivable agreement (15,584) — Dividends paid (36,714) (42,550) Members' distributions paid (37,469) (45,828) Other (75) — Consolidated variable interest entities related 563 (278,748) Net cash used in financing activities $(104,885) $(338,038) (Decrease) increase in cash, cash equivalents, and restricted cash (8,037) 76,898 Cash, cash equivalents, and restricted cash at beginning of the period 90,377 76,197 Cash, cash equivalents, and restricted cash at end of the period $82,340 $153,095
20Hamilton Lane l Global Leader in the Private Markets Non-GAAP Reconciliation Reconciliation from Net Income Year Ended March 31, Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands except share and per share amounts) 2017 2022 2021 2022 2021 2022 Net income attributable to Hamilton Lane Incorporated $612 $145,986 $51,849 $9,669 $132,161 $78,034 Income (loss) attributable to non-controlling interests in general partnerships 1,192 376 (119) 422 167 773 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 72,634 96,548 26,181 9,146 76,849 51,326 Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — 4,343 2,285 2,647 519 5,617 Incentive fees (7,146) (53,691) (11,868) (29,719) (37,366) (139,783) Incentive fee related compensation1 3,283 25,395 5,609 14,001 17,685 66,254 SPAC related general, administrative and other expenses — 1,176 309 278 868 846 Non-operating income related compensation — 1,810 1,790 (1,413) 1,790 54 Interest income (320) (500) (26) (2,553) (488) (3,829) Interest expense 14,565 4,638 1,161 2,419 3,492 6,027 Income tax expense 316 66,423 11,519 11,788 37,515 38,766 Equity in (income) loss of investees (12,801) (79,296) (12,626) (1,039) (60,351) 6,463 Non-operating (income) expense (83) (68,954) (39,178) 25,873 (66,567) 7,546 Fee Related Earnings $72,252 $144,254 $36,886 $41,519 $106,274 $118,094 Depreciation and amortization 1,915 5,495 1,292 2,022 3,744 5,600 Equity-based compensation 4,681 7,404 1,711 2,834 5,706 6,816 Incentive fees 7,146 53,691 11,868 29,719 37,366 139,783 Incentive fees attributable to non-controlling interests — (228) (59) (243) (134) (302) Incentive fee related compensation1 (3,283) (25,395) (5,609) (14,001) (17,685) (66,254) Non-operating income related compensation — (1,810) (1,790) 1,413 (1,790) (54) Interest income 320 500 26 442 488 839 Adjusted EBITDA $83,031 $183,911 $44,325 $63,705 $133,969 $204,522 Non-GAAP earnings per share reconciliation Net income attributable to Hamilton Lane Incorporated $51,849 $9,669 $132,161 $78,034 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 26,181 9,146 76,849 51,326 Income tax expense 11,519 11,788 37,515 38,766 Adjusted pre-tax net income 89,549 30,603 246,525 168,126 Adjusted income taxes2 (21,312) (7,314) (58,673) (40,182) Adjusted net income $68,237 $23,289 $187,852 $127,944 Adjusted shares outstanding 53,744,144 53,769,379 53,707,401 53,733,521 Non-GAAP earnings per share $1.27 $0.43 $3.50 $2.38 1 Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation. 2 Represents corporate income taxes at our estimated statutory tax rate of 23.9% and 23.8% for the three and nine month periods ended December 31, 2022 and 2021, respectively, applied to adjusted pre-tax net income. The 23.9% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.9%. 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%.
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. Adjusted shares outstanding for the three and nine months ended December 31, 2021 and 2022 are equal to weighted-average shares of Class A common stock outstanding - diluted. 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 anticipate, identify and manage risks we face; our ability to manage the effects of events outside of our control; and our ability to receive distributions from HLA 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, 2022 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 February 7, 2023
