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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ___________________________

Commission file number 001-38021

HAMILTON LANE INCORPORATED

(Exact name of Registrant as specified in its charter)
Delaware26-2482738
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
110 Washington Street,Suite 1300
Conshohocken, PA19428
(Address of principal executive offices)(Zip Code)
(610) 934-2222
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareHLNEThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of February 3, 2023, there were 37,868,486 shares of the registrant’s Class A common stock, par value $0.001, and 15,948,744 shares of the registrant’s Class B common stock, par value $0.001, outstanding.




Table of Contents
Page
Condensed Consolidated Statements of Income for the three and nine months ended December 31, 2022 and 2021
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2022 and 2021
This Quarterly Report on Form 10-Q (“Form 10-Q”) includes certain information regarding the historical performance of our specialized funds and customized separate accounts. An investment in shares of our Class A common stock is not an investment in our specialized funds or customized separate accounts. In considering the performance information relating to our specialized funds and customized separate accounts contained herein, current and prospective Class A common stockholders should bear in mind that the performance of our specialized funds and customized separate accounts is not indicative of the possible performance of shares of our Class A common stock and is also not necessarily indicative of the future results of our specialized funds or customized separate accounts, even if fund investments were in fact liquidated on the dates indicated, and there can be no assurance that our specialized funds or customized separate accounts will continue to achieve, or that future specialized funds and customized separate accounts will achieve, comparable results.
We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are owned by us or licensed by us. We also own or have the rights to copyrights that protect the content of our solutions. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, trade names and copyrights.



This Form 10-Q may include trademarks, service marks or trade names of other companies. Our use or display of other parties’ trademarks, service marks, trade names or products is not intended to, and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, service mark or trade name owners.
Unless otherwise indicated, information contained in this Form 10-Q concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources (including industry publications, surveys and forecasts), and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets that we believe to be reasonable. Although we believe the data from these third-party sources is reliable, we have not independently verified any third-party information.
Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” the “Company,” “Hamilton Lane” and similar terms refer to Hamilton Lane Incorporated and its consolidated subsidiaries. As used in this Form 10-Q, (i) the term “HLA” refers to Hamilton Lane Advisors, L.L.C. and (ii) the terms “Hamilton Lane Incorporated” and “HLI” refer solely to Hamilton Lane Incorporated, a Delaware corporation, and not to any of its subsidiaries.
Cautionary Note Regarding Forward-Looking Information
Some of the statements in this Form 10-Q may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 that 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 (our “2022 Form 10-K”), and in our subsequent reports filed from time to time with the Securities and Exchange Commission (the “SEC”). The forward-looking statements included in this Form 10-Q are made only as of the date we filed this report. 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.


2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Hamilton Lane Incorporated
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share amounts)
December 31,March 31,
20222022
Assets
Cash and cash equivalents$146,070 $72,138 
Restricted cash3,116 4,023 
Fees receivable52,074 51,869 
Prepaid expenses7,078 6,858 
Due from related parties7,784 1,872 
Furniture, fixtures and equipment, net28,348 28,842 
Lease right-of-use assets, net63,152 65,636 
Investments514,332 503,789 
Deferred income taxes230,154 245,046 
Other assets30,755 28,162 
Assets of consolidated variable interest entities:
Cash and cash equivalents3,909 36 
Investments held in trust 276,016 
Investments37,360 10,036 
Other assets229 623 
Total assets$1,124,361 $1,294,946 
Liabilities, redeemable non-controlling interests and equity
Accounts payable$2,045 $2,827 
Accrued compensation and benefits65,761 20,117 
Accrued members’ distributions19,161 27,119 
Accrued dividend14,810 12,947 
Debt199,126 171,326 
Payable to related parties pursuant to tax receivable agreement179,431 180,536 
Lease liabilities79,549 82,244 
Other liabilities (includes $13,954 and $13,818 at fair value)
34,503 47,669 
Liabilities of consolidated variable interest entities:
Other liabilities17 12,675 
Total liabilities594,403 557,460 
Commitments and contingencies (Note 16)
Redeemable non-controlling interests 276,000 
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued
  
Class A common stock, $0.001 par value, 300,000,000 authorized; 37,868,691 and 37,280,697 issued and outstanding as of December 31, 2022 and March 31, 2022, respectively
38 37
Class B common stock, $0.001 par value, 50,000,000 authorized; 15,953,682 and 16,033,359 issued and outstanding as of December 31, 2022 and March 31, 2022, respectively
16 16 
Additional paid-in-capital166,821 161,676 
Retained earnings227,786 185,149 
Total Hamilton Lane Incorporated stockholders’ equity394,661 346,878 
Non-controlling interests in general partnerships3,653 3,423 
Non-controlling interests in Hamilton Lane Advisors, L.L.C.131,644 111,185 
Total equity529,958 461,486 
Total liabilities, redeemable non-controlling interests and equity$1,124,361 $1,294,946 
See accompanying notes to the condensed consolidated financial statements.
3

Hamilton Lane Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
December 31,
Nine Months Ended December 31,
2022202120222021
Revenues
Management and advisory fees$97,355 $79,836 $276,182 $229,653 
Incentive fees24,075 10,490 132,835 34,217 
Consolidated variable interest entities related:
Incentive fees5,644 1,378 6,9483,149
Total revenues127,074 91,704 415,965 267,019 
Expenses
Compensation and benefits45,676 34,004 158,235 94,028 
General, administrative and other22,717 16,332 66,066 48,742 
Consolidated variable interest entities related:
General, administrative and other309322 941 952 
Total expenses68,702 50,658 225,242 143,722 
Other income (expense)
Equity in income (loss) of investees650 12,924 (7,493)60,181 
Interest expense(2,419)(1,157)(6,027)(3,488)
Interest income442 26 839 488 
Non-operating (expense) income(27,960)37,043 (11,878)65,500 
Consolidated variable interest entities related:
Equity in income (loss) of investees389 (298)1,030 170 
Unrealized income2,087 2,135 4,333 1,067 
Interest expense (4) (4)
Interest income2,111 2,989  
Total other income (expense)(24,700)50,669 (16,207)123,914 
Income before income taxes33,672 91,715 174,516 247,211 
Income tax expense11,788 11,519 38,766 37,515 
Net income21,884 80,196 135,750 209,696 
Less: Income (loss) attributable to non-controlling interests in general partnerships422 (119)773 167 
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.9,146 26,181 51,326 76,849 
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.2,647 2,285 5,617 519 
Net income attributable to Hamilton Lane Incorporated$9,669 $51,849 $78,034 $132,161 
Basic earnings per share of Class A common stock$0.32 $1.44 $2.21 $3.64 
Diluted earnings per share of Class A common stock$0.31 $1.40 $2.19 $3.59 
Dividends declared per share of Class A common stock$0.40 $0.35 $1.20 $1.05 
See accompanying notes to the condensed consolidated financial statements.




4

Hamilton Lane Incorporated
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)


Class A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsNon-Controlling
Interests in General Partnerships
Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C.
Total Equity
Balance at March 31, 2022
$37 $16 $161,676 $185,149 $3,423 $111,185 $461,486 
Net income
— — — 78,034 773 51,326 130,133 
Equity-based compensation
— — 4,702 — — 2,114 6,816 
Repurchase of Class A shares for employee tax withholding
— — (112)— — (50)(162)
Dividends declared
— — — (44,413)— — (44,413)
Capital contributions to non-controlling interests, net— — — — (543)— (543)
Member distributions
— — — — — (37,871)(37,871)
Employee Share Purchase Plan share issuance
1 — 993 — — 447 1,441 
Adjustment of redeemable non-controlling interest to redemption value— — — 9,016 — 4,055 13,071 
Equity reallocation between controlling and non-controlling interests
— — (438)— — 438  
Balance at December 31, 2022
$38 $16 $166,821 $227,786 $3,653 $131,644 $529,958 
Class A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsNon-Controlling
Interests in General Partnerships
Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C.
Total Equity
Balance at March 31, 2021
$36 $17 $150,564 $87,512 $2,211 $73,861 $314,201 
Net income— — — 132,161 167 76,849 209,177 
Equity-based compensation
— — 3,870 — — 1,836 5,706 
Repurchase of Class A shares for employee tax withholding
— — (220)— — (385)(605)
Deferred tax adjustment
— — 2,722 — — — 2,722 
Dividends declared
— — — (38,429)— — (38,429)
Capital contributions from non-controlling interests, net— — — — 563 — 563 
Member distributions
— — — — — (32,361)(32,361)
Secondary offerings1 (1)4,097 — — (4,098)(1)
Employee Share Purchase Plan share issuance
— — 936 — — 446 1,382 
Adjustment of redeemable non-controlling interest to redemption value— — — 393 — 127 520 
Equity reallocation between controlling and non-controlling interests
— — 98 — — (98) 
Balance at December 31, 2021
$37 $16 $162,067 $181,637 $2,941 $116,177 $462,875 

See accompanying notes to the condensed consolidated financial statements.





5

Hamilton Lane Incorporated
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)

Class A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsNon-Controlling
Interests in General Partnerships
Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C.
Total Equity
Balance at September 30, 2022
$38 $16 $164,763 $225,957 $3,820 $130,384 $524,978 
Net income
— — — 9,669 422 9,146 19,237 
Equity-based compensation
— — 1,956 — — 879 2,835 
Repurchase of Class A shares for employee tax withholding— — (48)— — (22)(70)
Dividends declared
— — — (14,810)— — (14,810)
Capital contributions to non-controlling interests, net— — — — (589)— (589)
Member distributions
— — — — — (12,164)(12,164)
Employee Share Purchase Plan share issuance — 303 — — 136 439 
Adjustment of redeemable non-controlling interest to redemption value— — — 6,970 — 3,132 10,102 
Equity reallocation between controlling and non-controlling interests
— — (153)— — 153  
Balance at December 31, 2022
$38 $16 $166,821 $227,786 $3,653 $131,644 $529,958 
Class A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsNon-Controlling
Interests in General Partnerships
Non-Controlling
Interests in Hamilton Lane Advisors, L.L.C.
Total Equity
Balance at September 30, 2021
$37 $16 $161,000 $141,130 $2,904 $99,165 $404,252 
Net income
— — — 51,849 (119)26,181 77,911 
Equity-based compensation
— — 1,179 — — 532 1,711 
Repurchase of Class A shares for employee tax withholding
— — — — —  
Deferred tax adjustment
— — 2 — —  2 
Dividends declared
— — — (12,916)— — (12,916)
Capital contribution to non-controlling interests, net— — — — 156 — 156 
Member distributions
— — — — — (11,024)(11,024)
Secondary offerings  — —   
Employee Share Purchase Plan share issuance
— — 340 — — 158 498 
Adjustment of redeemable non-controlling interest to redemption value— —  1,574 — 711 2,285 
Equity reallocation between controlling and non-controlling interests — — (454)— — 454  
Balance at December 31, 2021
$37 $16 $162,067 $181,637 $2,941 $116,177 $462,875 

See accompanying notes to the condensed consolidated financial statements.

6

Hamilton Lane Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

Nine Months Ended December 31,
20222021
Operating activities:
Net income$135,750 $209,696 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,600 3,744 
Change in deferred income taxes14,892 19,941 
Change in payable to related parties pursuant to tax receivable agreement(1,105)(6,202)
Equity-based compensation6,816 5,706 
Equity in loss (income) of investees7,493 (60,181)
Gain on sale of investment(9,783)(11,936)
Fair value adjustment of other investments(18,578)(47,774)
Proceeds received from partnerships11,877 38,945 
Non-cash lease expense5,370 7,210 
Gain on sale of intangible asset2,771  
Impairment of other investment43,289  
Other(2,864)43 
Changes in operating assets and liabilities:
Fees receivable(205)(17,883)
Prepaid expenses(220)263 
Due from related parties(5,911)479 
Other assets(5,309)256 
Accounts payable(782)17 
Accrued compensation and benefits45,644 18,867 
Lease liability(5,581)(1,410)
Other liabilities(11,548)(6,457)
Consolidated variable interest entities related:
Change in warrant liability measured at fair value(2,883)(1,067)
Equity in income of investees(1,030)(170)
Other assets and liabilities(332)425 
Net cash provided by operating activities213,371 152,512 
Investing activities:
Purchase of furniture, fixtures and equipment(3,261)(7,788)
Cash paid for acquisition of business(1,500)(10,096)
Loans to investees(2,535) 
Purchase of other investments(34,125)(18,798)
Proceeds from sale of investments10,000 12,623 
Distributions from investments1,406 12,739 
Distributions received from Partnerships15,990 12,088 
Contributions to Partnerships(63,364)(56,432)
Consolidated variable interest entities related:
Sale of investments held in trust278,954  
Net cash provided by (used in) investing activities201,565 (55,664)

7

Hamilton Lane Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

Nine Months Ended December 31,
20222021
Financing activities:
Proceeds from offerings 73,833 
Purchase of membership interests (73,833)
Borrowings of debt31,682  
Repayments of debt(3,873)(1,382)
Draw-down on revolver25,000  
Repayment of revolver(25,000)(15,000)
Repurchase of Class B common stock (1)
Repurchase of Class A shares for employee tax withholding(162)(605)
Proceeds received from issuance of shares under Employee Share Purchase Plan1,441 1,382 
Payments to related parties, pursuant to tax receivable agreement (15,584)
Dividends paid(42,550)(36,714)
Members’ distributions paid(45,828)(37,469)
Other (75)
Consolidated variable interest entities related:
Contributions from non-controlling interest in general partnerships687 1,053 
Distributions to non-controlling interest in general partnerships(1,230)(490)
Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc.(278,205) 
Net cash used in financing activities(338,038)(104,885)
Increase (decrease) in cash, cash equivalents, and restricted cash76,898 (8,037)
Cash, cash equivalents, and restricted cash at beginning of the period76,197 90,377 
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period$153,095 $82,340 
Reconciliation of Cash and Cash Equivalents, Restricted Cash and Cash and Cash Equivalents Held at Consolidated Variable Interest Entities to the Condensed Consolidated Balance Sheets:
As of December 31,
20222021
Cash and cash equivalents$146,070 $78,838 
Restricted cash3,116 3,315
Cash and cash equivalents held at consolidated variable interest entities3,909 187 
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities$153,095 $82,340 
See accompanying notes to the condensed consolidated financial statements.

8

Hamilton Lane Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts)


1. Organization

Hamilton Lane Incorporated (“HLI”) is a holding company whose principal asset is a controlling equity interest in Hamilton Lane Advisors, L.L.C. (“HLA”). As the sole managing member of HLA, HLI operates and controls all of the business and affairs of HLA, and through HLA, conducts its business. As a result, HLI consolidates HLA’s financial results and reports a non-controlling interest related to the portion of HLA units not owned by HLI. The assets and liabilities of HLA represent substantially all of HLI’s consolidated assets and liabilities with the exception of certain cash, certain deferred tax assets and liabilities, payable to related parties pursuant to a tax receivable agreement, and dividends payable. Unless otherwise specified, “the Company” refers to the consolidated entity of HLI, HLA and subsidiaries throughout the remainder of these notes. As of December 31, 2022 and March 31, 2022, HLI held approximately 69.0% and 68.9%, respectively, of the economic interest in HLA. As future exchanges of HLA units occur pursuant to the exchange agreement in place with HLA’s members, the economic interest in HLA held by HLI will increase.

HLA is a registered investment advisor with the United States Securities and Exchange Commission (“SEC”), providing asset management and advisory services, primarily to institutional investors, to design, build and manage private markets portfolios. HLA generates revenues primarily from management fees, by managing assets on behalf of customized separate accounts, specialized fund products and distribution management accounts, and advisory fees, by providing asset supervisory and reporting services. HLA sponsors the formation, and serves as the general partner or managing member, of various limited liability partnerships consisting of specialized funds and certain single client separate account entities (“Partnerships”) that acquire interests in third-party managed investment funds that make private equity and equity-related investments. The Partnerships may also make direct investments, including investments in debt, equity, and other equity-based instruments. The Company, which includes certain subsidiaries that serve as the general partner or managing member of the Partnerships, may invest its own capital in the Partnerships and generally makes all investment and operating decisions for the Partnerships. HLA operates several wholly-owned entities through which it conducts its foreign operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Management believes it has made all necessary adjustments (which consisted of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. Results of operations for the three and nine months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending March 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in HLI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022.


9

Hamilton Lane Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts)

Accounting for Differing Fiscal Periods

The Partnerships primarily have a fiscal year end as of December 31, and the Company accounts for its investments in the Partnerships using a three-month lag due to the timing of financial information received from the investments held by the Partnerships. The Partnerships primarily invest in private equity funds, which generally require at least 90 days following the calendar year end to present audited financial statements. The Company records its share of capital contributions to and distributions from the Partnerships in investments in the Condensed Consolidated Balance Sheets during the three-month lag period.

Fair Value of Financial Instruments

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). The levels of the hierarchy are described below:

Level 1: Values are determined using quoted market prices for identical financial instruments in an active market.
Level 2: Values are determined using quoted prices for similar financial instruments and valuation models whose inputs are observable.
Level 3: Values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The carrying amount of cash and cash equivalents, fees receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments.

Recent Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board issued Accounting Standard Update ("ASU") 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

3. Revenue
The following table presents revenues disaggregated by product offering, which aligns with the identified performance obligations and the basis for calculating each amount:

10

Hamilton Lane Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts)

Three Months Ended
December 31,
Nine Months Ended December 31,
Management and advisory fees2022202120222021
Specialized funds$53,299 $38,233 $144,099 $107,935 
Customized separate accounts29,571 25,982 87,329 75,416 
Advisory6,613 6,119 19,073 18,781 
Reporting and other6,720 5,992 19,170 16,983 
Distribution management596 3,170 1,863 9,313 
Fund reimbursement revenue556 340 4,648 1,225 
Total management and advisory fees$97,355 $79,836 $276,182 $229,653 
Three Months Ended
December 31,
Nine Months Ended December 31,
Incentive fees2022202120222021
Specialized funds$8,679 $6,765 $102,815 $23,903 
Customized separate accounts15,396 3,725 30,020 10,314 
Consolidated variable interest related:
Specialized funds5,644 1,378 6,948 3,149 
Total incentive fees$29,719 $11,868 $139,783 $37,366 

4. Investments

Investments consist of the following:
December 31,March 31,
20222022
Equity method investments in Partnerships$328,311 $326,296 
Other equity method investments 1,573
Other investments20,189 19,820
Investments valued under the measurement alternative165,832 156,100
Total Investments$514,332 $503,789 

Equity method investments

The Company’s equity method investments in Partnerships represent its ownership in certain specialized funds and customized separate accounts. The strategies and geographic location of investments within the Partnerships vary by fund. The Company has a 1% interest in substantially all of the Partnerships.

During the quarter ended September 30, 2022, the Company sold its ownership interests in its joint venture that automates the collection of fund and underlying portfolio company data from general partners, Private Markets Connect, for $10,000 and recognized a gain of $9,783 which is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. Immediately preceding the sale, the Company received a distribution from the joint venture of $1,406.

11


Hamilton Lane Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts)

Other investments

The Company’s other investments represent a publicly traded security and investments in private equity funds and direct credit and equity investments that are held as collateral on the Company’s secured financing. The private equity fund investments can only be redeemed through distributions received from the liquidation of underlying investments of the fund, and the timing of distributions is currently indeterminable. The direct credit investments are debt securities classified as trading securities. Other investments are measured at fair value with unrealized holding gains and losses recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income.

The Company accounts for its secured financing at fair value under the fair value option. The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes. The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral which are estimated using Level 3 inputs with the significant inputs as shown in Note 5 below.

The Company recognized a gain on other investments held as collateral of $821 and $915 during the three and nine months ended December 31, 2022, respectively, and a gain of $2,288 and $3,239 during the three and nine months ended December 31, 2021, respectively, that are recorded in non-operating (expense) income. The Company recognized a loss on the secured financing liability of $821 and $915 during the three and nine months ended December 31, 2022, respectively, and a loss of $2,288 and $3,239 during the three and nine months ended December 31, 2021, respectively, that are recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income.

Investments valued under the measurement alternative

During the quarter ended June 30, 2022, the Company made investments in two private companies. The Company invested $3,000 in a technology driven platform that provides a digitized token for investors that improves the efficiency of capital raises. Additionally, the Company invested $12,000 in an online financial services platform. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company values the investments under the measurement alternative.

During the quarter ended June 30, 2022, the Company made an additional investment of $5,236 in a company that maintains a platform of solutions designed to aid individual investors and various wealth management platforms with their wealth management needs. As a result of the transaction, the Company marked its original investment to fair value based upon the transaction price, which resulted in total unrealized gain of $6,687 during the three months ended June 30, 2022, that is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. Due to the lack of readily determinable fair value for this investment, over which the Company does not have significant influence, the Company will continue to value the investment under the measurement alternative.

During the quarter ended September 30, 2022, the Company made investments in two private companies. The Company invested $3,000 in a digital platform that offers financial planning and portfolio management tools to retail and accredited investors. The Company invested $4,000 in a cloud-based treasury and liquidity solution for investment management firms. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company will value the investments under the measurement alternative.

12


Hamilton Lane Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts)

During the quarter ended December 31, 2022, the Company made additional investments in three private companies in which it previously invested. The Company invested an additional $1,228 in a cloud-based treasury and liquidity solution for investment management firms. The Company invested an additional $5,061 in a company that provides environmental, social and governance (“ESG”) reporting metrics and analysis to private market firms and private companies. As a result of the transaction, the Company marked its original investment to fair value based upon the transaction price, which resulted in a total unrealized gain of $11,521 during the three months ended December 31, 2022 that is recorded in non-operating (expense) income in the Condensed Consolidated Statements of Income. The Company invested an additional $600 in a technology company that has developed software to automate manual data entry tasks associated with alternative investment reporting. As part of that funding round, a convertible note issued by the investee to the Company converted into additional shares of the investee with a value of $550. Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company will continue to value these investments under the measurement alternative.

The Company performs qualitative impairment assessments at each quarter end on its investments recorded under the measurement alternative. As a result of this assessment as of December 31, 2022, the Company determined that a quantitative assessment was required to be performed for one of its investments given a significant decrease in earnings performance and overall economic and market conditions. The assessment indicated that the fair value was less than the carrying value at December 31, 2022. Prior to the impairment recorded, the carrying value of the investment was $74,189. The impairment amount was $43,289 and is included in non-operating (expense) income in the Condensed Consolidated Statements of Income. The fair value was estimated using Level 3 inputs with the significant input as shown in Note 5 below.

5. Fair Value Measurements

The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level:
As of December 31, 2022
Level 1Level 2Level 3TotalAmortized Cost
Financial assets:
Other investments
$6,235 $ $13,954 $20,189 $10,703 
Total financial assets$6,235 $ $13,954 $20,189 $10,703