1Hamilton Lane l Global Leader in the Private Markets Fiscal Year 2024 Second Quarter Results Earnings Presentation - November 7, 2023
2Hamilton Lane l Global Leader in the Private Markets Today's Speakers Erik Hirsch Vice Chairman Jeff Armbrister Chief Financial Officer John Oh Principal - Shareholder Relations 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 $119 billion and $61 billion, respectively, as of September 30, 2023, increases of 11% and 17%, respectively, compared to September 30, 2022 • Management and advisory fees increased 20% compared to the six months ended September 30, 2022 USD in millions except per share amounts Q2 FY24 QTD Q2 FY24 YTD vs. Q2 FY23 YTD Management and advisory fees $109.2 $214.6 20 % GAAP net income $42.0 $73.0 7 % GAAP EPS $1.11 $1.92 2 % Adjusted net income1 $47.8 $98.6 (6) % Non-GAAP EPS1 $0.89 $1.83 (6) % Fee Related Earnings1 $46.9 $92.0 20 % Adjusted EBITDA1 $62.3 $123.2 (13) % • Declared a quarterly dividend of $0.445 per share of Class A common stock to record holders at the close of business on December 15, 2023 1Adjusted net income, non-GAAP earnings per share, Fee Related Earnings and Adjusted EBITDA are non-GAAP financial measures. For the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see pages 20 and 21 of this presentation.
4Hamilton Lane l Global Leader in the Private Markets Total Assets Under Management/Advisement ($B) Total AUA Total AUM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 9/30/23 $0 $200 $400 $600 $800 $1,000 Y-o-Y Growth AUM: 11 % AUA: 3 % $854B AUM & AUA Growing Asset Footprint & Influence 1 CAGR: 18% 1Data as of calendar year end 12/31 unless otherwise noted. Numbers may not tie due to rounding. $6 $7 $11 $13 $16 $19 $22 $24 $30 $32 $35 $40 $50 $59 $66 $76 $98 $108 $36 $51 $77 $79 $95 $81 $129 $147 $147 $189 $205 $292 $374 $410 $422 $581 $753 $724 $735 $119
5Hamilton Lane l Global Leader in the Private Markets Total Fee-Earning Assets Under Management ($B) $22 $25 $26 $31 $35 $32 $36 $11 $14 $16 $18 $23 $20 $25 Customized Separate Accounts Specialized Funds Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-22 Sep-23 $0 $10 $20 $30 $40 $50 $60 $70 Fee-Earning AUM growth continues and annual fee rates are stable CAGR: 14% 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 2nd impact fund and 5th direct equity fund • Fundraising 6th secondary fund, 8th credit-oriented fund, 2nd infrastructure fund, and evergreen funds .62%.56% .60% .56% .58% $42 $53 $57 $34 $39 $49 $61 .59%
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 • $3.9B year-over-year increase in FEAUM • +80% of our gross contributions during the last 12 months came from existing clients • $4.8B year-over-year increase in FEAUM • Closings during Q2 FY24: ◦ Secondary fund: $622M • $18B year-over-year increase in AUA AUM AUA Select funds in market: • Secondary fund • Credit-oriented fund • Infrastructure fund • Evergreen funds
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 $289 $252 Q2 FY23 Q2 FY24 US D in M ill io ns $110 $37 Q2 FY23 Q2 FY24 US D in M ill io ns $179 $215 Q2 FY23 Q2 FY24 Consolidated Revenue Strong growth across management and advisory fees Management and Advisory Fees Incentive Fees Total Revenues YTD YTD Y-o-Y Change: 20% YTD Y-o-Y Change: (13)% Y-o-Y Change: (66)% • 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% • $6.1 million in retroactive fees from our latest secondary fund in the quarter • Incentive fees derived from a highly diversified pool of assets and funds • Unrealized carried interest of $1,151 million as of 9/30/23 diversified across 3,000+ assets and over 90 funds • Timing of realizations unpredictable • Total revenues decreased by 13%, driven by incentive fees, while management and advisory fees increased 20% US D in M ill io ns $195 $372 FY18 FY23 Long-Term Growth US D in M ill io ns $49 $157 FY18 FY23 Long-Term Growth CAGR: 14% US D in M ill io ns $244 $529 FY18 FY23 Long-Term Growth CAGR: 17% CAGR: 26%
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 $990 $985 $1,151 86 90 98 Unrealized Carried Interest Vehicles in Unrealized Carry Position Sep-21 Sep-22 Sep-23 0 20 40 60 80 100 $0 $250 $500 $750 $1,000 $1,250 $1,500 Unrealized Carry by Age < 5 years 42% 5-8 years 35% 8-12 years 20% > 12 years 3%
10Hamilton Lane l Global Leader in the Private Markets US D in M ill io ns $142 $123 Q2 FY23 Q2 FY24 US D in M ill io ns $77 $92 Q2 FY23 Q2 FY24 Net Income Attributable to HLI US D in M ill io ns $68 $73 Q2 FY23 Q2 FY24 Adjusted EBITDA1 Consolidated Earnings Stable long-term growth YTD Y-o-Y Change: 7% • Y-o-Y decrease of 13% driven by lower incentive fees • Y-o-Y growth of 20% • Long-term double digit growth in Fee Related Earnings • $42M in net income attributable to HLI for the quarter 1Adjusted 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 Change: (13)% Fee Related Earnings1 YTD Y-o-Y Change: 20% US D in M ill io ns $17 $109 FY18 FY23 Long-Term Growth US D in M ill io ns $133 $260 FY18 FY23 Long-Term Growth US D in M ill io ns $81 $159 FY18 FY23 Long-Term Growth CAGR: 14% CAGR: 14%
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 $154 $208 $374 $514 $588 $677 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 $0 $100 $200 $300 $400 $500 $600 $700 • For 9/30/23, the total investment balance consisted primarily of: ◦ ~$396M in investments in our funds ◦ ~$209M in technology related and other investments • Modest leverage • $197M of debt as of 9/30/23 US D in M ill io ns Leverage $194 $214 $197 Sep-22 Mar-23 Sep-23 $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 September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2022 2023 % Change 2022 2023 % Change Management and advisory fees $92,880 $109,184 18 % $178,826 $214,592 20 % Incentive fees 59,237 17,692 (70) % 108,760 37,322 (66) % Consolidated variable interest entities related: Incentive fees 1,265 — (100) % 1,305 — (100) % Total revenues 153,382 126,876 (17) % 288,891 251,914 (13) % Compensation and benefits 60,364 45,930 (24) % 112,558 90,032 (20) % General, administrative and other 22,836 24,994 9 % 43,350 50,755 17 % Consolidated variable interest entities related: General, administrative and other 356 355 0 % 632 588 (7) % Total expenses 83,556 71,279 (15) % 156,540 141,375 (10) % Equity in (loss) income of investees (7,518) 8,251 N/A (8,143) 20,117 N/A Interest expense (2,114) (2,743) 30 % (3,609) (5,632) 56 % Interest income 1,107 1,099 (1) % 1,276 2,036 60 % Non-operating income (loss) 11,738 (1,215) (110) % 16,081 (982) (106) % Consolidated variable interest entities related: Equity in (loss) income of investees (91) 288 N/A 641 419 (35) % Unrealized gain 280 2,241 700 % 2,246 3,034 35 % Interest expense — — N/A — (6) N/A Interest income — 2,841 N/A — 4,581 N/A Total other income (expense) 3,402 10,762 216 % 8,492 23,567 178 % Income before income taxes 73,228 66,359 (9) % 140,843 134,106 (5) % Income tax expense 15,489 1,856 (88) % 26,977 18,256 (32) % Net income 57,739 64,503 12 % 113,866 115,850 2 % Less: Income attributable to non-controlling interests in general partnerships 43 87 102 % 351 88 (75) % Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 22,012 18,654 (15) % 42,180 37,790 (10) % Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. 803 — (100) % 2,970 — (100) % Less: Income attributable to non-controlling interests in consolidated funds — 3,768 N/A — 4,980 N/A Net income attributable to Hamilton Lane Incorporated $34,881 $41,994 20 % $68,365 $72,992 7 % Basic earnings per share of Class A common stock $0.98 $1.11 13 % $1.89 $1.94 3 % Diluted earnings per share of Class A Common stock $0.97 $1.11 14 % $1.88 $1.92 2 % Weighted-average shares of Class A common stock outstanding - basic 37,009,309 37,718,210 37,000,150 37,713,038 Weighted-average shares of Class A common stock outstanding - diluted 53,745,933 53,941,082 53,724,800 53,896,757
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 23.6% and 23.9% for the three and six month periods ended September 30, 2023 and 2022, respectively, applied to adjusted pre-tax net income. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%. 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%. Non-GAAP Financial Measures Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2022 2023 % Change 2022 2023 % Change Adjusted EBITDA1 Management and advisory fees $92,880 $109,184 18 % $178,826 $214,592 20 % Revenue related to consolidated funds — 247 N/A — 394 N/A Total expenses 83,556 71,279 (15) % 156,540 141,375 (10) % Less: Incentive fee related compensation2 (28,712) (8,404) (71) % (52,253) (17,728) (66) % Consolidated VIE related general, administrative and other expenses (292) (333) 14 % (568) (566) 0 % Non-operating income related compensation (1,467) — N/A (1,467) (59) (96) % Management fee related expenses 53,085 62,542 18 % 102,252 123,022 20 % Fee Related Earnings $39,795 $46,889 18 % $76,574 $91,964 20 % Fee Related Earnings Margin 43 % 43 % 43 % 43 % Incentive fees 60,502 17,692 (71) % 110,065 37,322 (66) % Incentive fees attributable to non-controlling interests (55) — N/A (58) — N/A Incentive fee related compensation2 (28,712) (8,404) (71) % (52,253) (17,728) (66) % Non-operating income related compensation (1,467) — N/A (1,467) (59) (96) % Interest income 1,107 1,099 (1) % 1,276 2,036 60 % Equity-based compensation 2,085 3,118 50 % 3,982 5,963 50 % Depreciation and amortization 1,813 1,863 3 % 3,577 3,736 4 % Adjusted EBITDA $75,068 $62,257 (17) % $141,696 $123,234 (13) % Adjusted EBITDA Margin 49 % 49 % 49 % 49 % Non-GAAP earnings per share1 Net income attributable to Hamilton Lane Incorporated $34,881 $41,994 20 % $68,365 $72,992 7 % Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 22,012 18,654 (15) % 42,180 37,790 (10) % Income tax expense 15,489 1,856 (88) % 26,977 18,256 (32) % Adjusted pre-tax net income 72,382 62,504 (14) % 137,522 129,038 (6) % Adjusted income taxes3 (17,299) (14,752) (15) % (32,868) (30,453) (7) % Adjusted net income $55,083 $47,752 (13) % $104,654 $98,585 (6) % Adjusted shares outstanding 53,745,933 53,941,082 53,724,800 53,896,757 Non-GAAP earnings per share $1.02 $0.89 (13) % $1.95 $1.83 (6) %
15Hamilton Lane l Global Leader in the Private Markets Management and Advisory Fees Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2022 2023 % Change 2022 2023 % Change Management and advisory fees Specialized funds $47,150 $62,386 32 % $90,799 $120,102 32 % Customized separate accounts 29,383 32,040 9 % 57,758 63,759 10 % Advisory 6,211 6,014 (3) % 12,460 12,307 (1) % Reporting and other 6,133 6,261 2 % 12,450 11,819 (5) % Distribution management 771 1,254 63 % 1,267 2,467 95 % Fund reimbursement revenue 3,232 1,229 (62) % 4,092 4,138 1 % Total management and advisory fees $92,880 $109,184 18 % $178,826 $214,592 20 % Reporting and other: 8% Customized separate accounts: 30% Specialized funds: 56% Advisory: 6% Six Months Ended September 30, 2023
16Hamilton Lane l Global Leader in the Private Markets Incentive Fees Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2022 2023 % Change 2022 2023 % Change Incentive fees Direct equity funds $27,609 $1,113 (96) % $52,460 $3,444 (93) % Secondary funds 14,988 3,969 (74) % 26,947 12,046 (55) % Direct credit funds 5,507 (42) (101) % 7,633 4,725 (38) % Evergreen funds 42 1,790 4,162 % 997 3,005 201 % Other specialized funds 5,048 7,446 48 % 7,405 9,442 28 % Customized separate accounts 7,308 3,416 (53) % 14,623 4,660 (68) % Incentive fees $60,502 $17,692 (71) % $110,065 $37,322 (66) % As of September 30, 2022 June 30, 2023 September 30, 2023 YoY % Change QoQ % Change Allocated carried interest Secondary Fund II $369 $320 $199 (46) % (38) % Secondary Fund III 32,591 29,212 28,369 (13) % (3) % Secondary Fund IV 126,602 122,416 121,113 (4) % (1) % Secondary Fund V 144,199 145,126 153,399 6 % 6 % Secondary Fund VI — 13,439 14,855 N/A 11 % Co-investment Fund II 18,871 16,363 16,679 (12) % 2 % Co-investment Fund III 59,703 50,810 49,930 (16) % (2) % Co-investment Fund IV 104,421 127,496 131,502 26 % 3 % Equity Opportunities Fund V 6,358 20,624 28,270 345 % 37 % Evergreen funds 56,671 115,135 128,946 128 % 12 % Other specialized funds 111,772 116,776 117,390 5 % 1 % Customized separate accounts 322,973 342,874 360,099 11 % 5 % Total allocated carried interest $984,530 $1,100,591 $1,150,751 17 % 5 %
17Hamilton Lane l Global Leader in the Private Markets Assets Under Management (Dollars in millions) September 30, 2022 June 30, 2023 September 30, 2023 YoY % Change QoQ % Change Assets under management / advisement Assets under management $107,107 $117,064 $119,182 11 % 2 % Assets under advisement 716,515 700,651 734,804 3 % 5 % Total assets under management /advisement $823,622 $817,715 $853,986 4 % 4 % Fee-earning assets under management Customized separate accounts Balance, beginning of period $31,749 $34,684 $35,850 13 % 3 % Contributions 1,264 1,792 1,258 0 % (30) % Distributions (587) (636) (921) 57 % 45 % Foreign exchange, market value and other (93) 10 47 N/A 370 % Balance, end of period $32,333 $35,850 $36,234 12 % 1 % Specialized funds Balance, beginning of period $19,372 $22,662 $23,815 23 % 5 % Contributions 1,230 1,258 1,614 31 % 28 % Distributions (324) (172) (297) (8) % 73 % Foreign exchange, market value and other 76 67 55 (28) % (18) % Balance, end of period $20,354 $23,815 $25,187 24 % 6 % Total Balance, beginning of period $51,121 $57,346 $59,665 17 % 4 % Contributions 2,494 3,050 2,872 15 % (6) % Distributions (911) (808) (1,218) 34 % 51 % Foreign exchange, market value and other (17) 77 102 N/A 32 % Balance, end of period $52,687 $59,665 $61,421 17 % 3 %
18Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) March 31, 2023 September 30, 2023 Assets Cash and cash equivalents $99,686 $128,098 Restricted cash 4,804 4,965 Fees receivable 47,140 61,800 Prepaid expenses 9,817 6,534 Due from related parties 7,186 7,822 Furniture, fixtures and equipment, net 28,425 31,814 Lease right-of-use assets, net 62,327 64,543 Investments 530,921 558,268 Deferred income taxes 233,912 229,791 Other assets 46,784 40,460 Assets of consolidated variable interest entities: Cash and cash equivalents 12,062 101,712 Investments 57,044 118,530 Other assets 435 4,319 Total assets $1,140,543 $1,358,656 Liabilities and equity Accounts payable $4,559 $3,542 Accrued compensation and benefits 24,190 47,151 Accrued members' distributions 15,723 12,338 Accrued dividend 15,049 16,784 Debt 213,533 197,346 Payable to related parties pursuant to tax receivable agreement 174,702 173,818 Lease liabilities 78,817 80,935 Other liabilities (includes $14,228 and $12,373 at fair value) 32,856 34,798 Liabilities of consolidated variable interest entities: Other liabilities 6,922 10,376 Total liabilities 566,351 577,088 Total equity 574,192 781,568 Total liabilities and equity $1,140,543 $1,358,656
19Hamilton Lane l Global Leader in the Private Markets Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended September 30, (Dollars in thousands) 2022 2023 Operating activities Net income $113,866 $115,850 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,577 3,736 Change in deferred income taxes 7,839 4,121 Change in payable to related parties pursuant to tax receivable agreement (934) (884) Equity-based compensation 3,982 5,963 Equity in loss (income) of investees 8,143 (20,117) Net realized (gain) loss on sale of investments (9,783) 288 Fair value adjustment of other investments (5,352) 445 Proceeds received from partnerships 8,503 12,998 Non-cash lease expense 2,903 3,999 Other 40 231 Changes in operating assets and liabilities 26,364 11,196 Consolidated variable interest entities related (3,294) (2,257) Net cash provided by operating activities $155,854 $135,569 Investing activities Purchase of furniture, fixtures and equipment $(2,490) $(6,276) Cash paid for acquisition of business (1,500) — Loans to investees (535) — Purchase of investments (27,236) (6,352) Proceeds from sale of investments 10,000 1,343 Distributions from investments 1,406 — Proceeds from sale of intangible assets — 1,739 Distributions received from Partnerships 9,240 6,001 Contributions to Partnerships (49,553) (23,632) Purchase of investments — (57,832) Net cash used in investing activities $(60,668) $(85,009) Financing activities Borrowings of debt $25,000 $— Repayments of debt (2,164) (1,250) Draw-down on revolver 25,000 10,000 Repayment of revolver (25,000) (25,000) Repurchase of Class A shares for employee tax withholding (93) (108) Proceeds received from issuance of shares under Employee Share Purchase Plan 1,001 1,082 Dividends paid (27,747) (31,829) Members' distributions paid (42,072) (28,599) Consolidated variable interest entities related 46 143,367 Net cash (used in) provided by financing activities $(46,029) $67,663 Increase in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities 49,157 118,223 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the period 76,197 116,552 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period $125,354 $234,775
20Hamilton Lane l Global Leader in the Private Markets Non-GAAP Reconciliation Reconciliation from Net Income Year Ended March 31, Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2018 2023 2022 2023 2022 2023 Net income attributable to Hamilton Lane Incorporated $17,341 $109,120 $34,881 $41,994 $68,365 $72,992 Income attributable to non-controlling interests in general partnerships 2,448 986 43 87 351 88 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 86,508 71,027 22,012 18,654 42,180 37,790 Income attributable to non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — 5,617 803 — 2,970 — Income attributable to non-controlling interests in consolidated funds — 435 — 3,768 — 4,980 Incentive fees (49,003) (156,879) (60,502) (17,692) (110,065) (37,322) Incentive fee related compensation1 3,874 74,374 28,712 8,404 52,253 17,728 Consolidated VIE related general, administrative and other expenses — 846 292 333 568 566 Revenue related to consolidated funds — 61 — 247 — 394 Non-operating income related compensation — 367 1,467 — 1,467 59 Interest income (528) (5,114) (1,107) (3,940) (1,276) (6,617) Interest expense 5,989 8,617 2,114 2,743 3,609 5,638 Income tax expense 33,333 55,425 15,489 1,856 26,977 18,256 Equity in (income) loss of investees (17,102) (6,543) 7,609 (8,539) 7,502 (20,536) Contingent compensation related to acquisition 3,399 — — — — — Non-operating (income) expense (5,036) 470 (12,018) (1,026) (18,327) (2,052) Fee Related Earnings $81,223 $158,809 $39,795 $46,889 $76,574 $91,964 Depreciation and amortization 1,891 7,442 1,813 1,863 3,577 3,736 Equity-based compensation 5,544 9,950 2,085 3,118 3,982 5,963 Incentive fees 49,003 156,879 60,502 17,692 110,065 37,322 Incentive fees attributable to non-controlling interests (1,729) (302) (55) — (58) — Incentive fee related compensation1 (3,874) (74,374) (28,712) (8,404) (52,253) (17,728) Non-operating income related compensation — (367) (1,467) — (1,467) (59) Interest income 528 1,789 1,107 1,099 1,276 2,036 Adjusted EBITDA $132,586 $259,826 $75,068 $62,257 $141,696 $123,234 Non-GAAP earnings per share reconciliation Net income attributable to Hamilton Lane Incorporated $34,881 $41,994 $68,365 $72,992 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 22,012 18,654 42,180 37,790 Income tax expense 15,489 1,856 26,977 18,256 Adjusted pre-tax net income 72,382 62,504 137,522 129,038 Adjusted income taxes2 (17,299) (14,752) (32,868) (30,453) Adjusted net income $55,083 $47,752 $104,654 $98,585 Adjusted shares outstanding 53,745,933 53,941,082 53,724,800 53,896,757 Non-GAAP earnings per share $1.02 $0.89 $1.95 $1.83 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 23.6% and 23.9% for the three and six month periods ended September 30, 2023 and 2022, respectively, applied to adjusted pre-tax net income. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%. 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%.
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 six months ended September 30, 2022 and 2023 and March 31, 2023 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, 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. The vast majority 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 exposure and that of our clients and investors to the credit risks of financial institutions at which we and they hold accounts; 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 introducing new types of investment structures, products or services or entering into strategic partnerships; our ability to manage redemption or repurchase rights in certain of our funds; 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, 2023 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 November 7, 2023
