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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, 2023
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

HL_Logo.jpg
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 2, 2024, there were 38,596,292 shares of the registrant’s Class A common stock, par value $0.001, and 15,409,507 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, 2023 and 2022
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2023 and 2022
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. Please note that nothing in this Form 10-Q represents an offer to sell, or a solicitation of an offer to purchase, interests in any of Hamilton Lane’s products.
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 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 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, 2023 (our “2023 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,
20232023
Assets
Cash and cash equivalents$164,450 $99,686 
Restricted cash4,985 4,804 
Fees receivable67,751 47,140 
Prepaid expenses9,418 9,817 
Due from related parties9,969 7,186 
Furniture, fixtures and equipment, net33,389 28,425 
Lease right-of-use assets, net63,432 62,327 
Investments587,771 530,921 
Deferred income taxes225,922 233,912 
Other assets25,830 46,784 
Assets of consolidated variable interest entities:
Cash and cash equivalents 12,062 
Investments15,855 57,044 
Other assets52 435 
Total assets$1,208,824 $1,140,543 
Liabilities and equity
Accounts payable$3,313 $4,559 
Accrued compensation and benefits58,048 24,190 
Accrued members’ distributions21,216 15,723 
Accrued dividend16,793 15,049 
Debt196,752 213,533 
Payable to related parties pursuant to tax receivable agreement173,818 174,702 
Lease liabilities80,373 78,817 
Other liabilities (includes $13,123 and $14,228 at fair value)
34,403 32,856 
Liabilities of consolidated variable interest entities:
Other liabilities2 6,922 
Total liabilities584,718 566,351 
Commitments and contingencies (Note 15)
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued
  
Class A common stock, $0.001 par value, 300,000,000 authorized; 38,604,787 and 38,611,919 issued and outstanding as of December 31, 2023 and March 31, 2023, respectively
39 39
Class B common stock, $0.001 par value, 50,000,000 authorized; 15,409,507 issued and outstanding as of each of December 31, 2023 and March 31, 2023
15 15 
Additional paid-in-capital181,929 171,567 
Retained earnings285,964 243,823 
Total Hamilton Lane Incorporated stockholders’ equity467,947 415,444 
Non-controlling interests in general partnerships4,772 3,877 
Non-controlling interests in Hamilton Lane Advisors, L.L.C.151,387 135,702 
Non-controlling interests in consolidated funds 19,169 
Total equity624,106 574,192 
Total liabilities and equity$1,208,824 $1,140,543 
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,
2023202220232022
Revenues
Management and advisory fees$113,641 $97,355 $328,232 $276,182 
Incentive fees11,623 24,075 48,945 132,835 
Consolidated variable interest entities related:
Incentive fees 5,644  6,948
Total revenues125,264 127,074 377,177 415,965 
Expenses
Compensation and benefits49,706 45,676 139,738 158,235 
General, administrative and other24,152 22,717 74,908 66,066 
Consolidated variable interest entities related:
General, administrative and other12309600 941 
Total expenses73,870 68,702 215,246 225,242 
Other income (expense)
Equity in (loss) income of investees(46)650 20,071 (7,493)
Interest expense(2,748)(2,419)(8,381)(6,027)
Interest income1,500 442 3,536 839 
Non-operating loss(8)(27,960)(989)(11,878)
Consolidated variable interest entities related:
Equity in income of investees240 389 660 1,030 
Unrealized gain 2,087 3,034 4,333 
Interest expense  (6) 
Interest income2,111 4,581 2,989 
Total other income (expense)(1,062)(24,700)22,506 (16,207)
Income before income taxes50,332 33,672 184,437 174,516 
Income tax expense15,800 11,788 34,055 38,766 
Net income34,532 21,884 150,382 135,750 
Less: Income attributable to non-controlling interests in general partnerships82 422 171 773 
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.14,944 9,146 52,733 51,326 
Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. 2,647  5,617 
Less: Income attributable to non-controlling interests in consolidated funds  4,980  
Net income attributable to Hamilton Lane Incorporated$19,506 $9,669 $92,498 $78,034 
Basic earnings per share of Class A common stock$0.52 $0.32 $2.45 $2.21 
Diluted earnings per share of Class A common stock$0.51 $0.31 $2.43 $2.19 
Dividends declared per share of Class A common stock$0.45 $0.40 $1.34 $1.20 
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.
Non-Controlling Interests in Consolidated FundsTotal Equity
Balance at March 31, 2023
$39 $15 $171,567 $243,823 $3,877 $135,702 $19,169 $574,192 
Net income
— — — 92,498 171 52,733 4,980 150,382 
Equity-based compensation
— — 6,468 — — 2,759 — 9,227 
Repurchase of Class A shares for employee tax withholding
— — (189)— — (80)— (269)
Dividends declared
— — — (50,357)— — — (50,357)
Capital contributions from non-controlling interests, net— — — — 724 — 142,924 143,648 
Member distributions
— — — — — (37,310)— (37,310)
Employee Share Purchase Plan share issuance
— — 1,167 — — 499 — 1,666 
 Deconsolidation of consolidated fund— — — — — — (167,073)(167,073)
Equity reallocation between controlling and non-controlling interests — — 2,916 — — (2,916)—  
Balance at December 31, 2023
$39 $15 $181,929 $285,964 $4,772 $151,387 $ $624,106 

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.
Non-Controlling Interests in Consolidated FundsTotal 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 distributions 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 

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.
Non-Controlling Interests in Consolidated FundsTotal Equity
Balance at September 30, 2023
$39 $15 $179,215 $283,251 $4,408 $147,567 $167,073 $781,568 
Net income
— — — 19,506 82 14,944 — 34,532 
Equity-based compensation
— — 2,287 — — 977 — 3,264 
Repurchase of Class A shares for employee tax withholding— — (113)— — (48)— (161)
Dividends declared
— — — (16,793)— — — (16,793)
Capital contributions to non-controlling interests, net— — — — 282 — — 282 
Member distributions
— — — — — (12,098)— (12,098)
Employee Share Purchase Plan share issuance— — 410 — — 175 — 585 
    Deconsolidation of consolidated fund— — — — — — (167,073)(167,073)
Equity reallocation between controlling and non-controlling interests — — 130 — — (130)—  
Balance at December 31, 2023
$39 $15 $181,929 $285,964 $4,772 $151,387 $ $624,106 
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.
Non-Controlling Interests in Consolidated FundsTotal 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 distribution to non-controlling interests, net— — — — (589)— — (589)
Member distributions
— — — — — (12,164)— (12,164)
Employee Share Purchase Plan share issuance
— — 303 — — 136 — 439 
Equity reallocation between controlling and non-controlling interests — — (153)— — 153 —  
Adjustment of redeemable non-controlling interest to redemption value— —  6,970 — 3,132 — 10,102 
Balance at December 31, 2022
$38 $16 $166,821 $227,786 $3,653 $131,644 $ $529,958 

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,
20232022
Operating activities:
Net income$150,382 $135,750 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,774 5,600 
Change in deferred income taxes7,990 14,892 
Change in payable to related parties pursuant to tax receivable agreement(884)(1,105)
Equity-based compensation9,227 6,816 
Equity in (income) loss of investees(20,071)7,493 
Net realized loss (gain) on sale of investments288 (9,783)
Fair value adjustment of other investments45 (18,578)
Proceeds received from partnerships22,160 11,877 
Non-cash lease expense6,796 5,370 
Gain on sale of intangible asset 2,771 
Impairment of other investment 43,289 
Other511 (2,864)
Changes in operating assets and liabilities:
Fees receivable(20,611)(205)
Prepaid expenses399 (220)
Due from related parties(2,346)(5,911)
Other assets17,114 (5,309)
Accounts payable(1,246)(782)
Accrued compensation and benefits33,858 45,644 
Lease liability(6,345)(5,581)
Other liabilities319 (11,548)
Consolidated variable interest entities related:
Change in warrant liability measured at fair value (2,883)
Cash relinquished with deconsolidation of fund(101,712) 
Net unrealized gain on investment(1,406) 
Equity in income of investees(660)(1,030)
Other assets and liabilities(442)(332)
Net cash provided by operating activities99,140 213,371 
Investing activities:
Purchase of furniture, fixtures and equipment(9,463)(3,261)
Cash paid for acquisition of business (1,500)
Loans to investees (2,535)
Purchase of investments(6,352)(34,125)
Proceeds from sale of investments1,343 10,000 
Distributions from investments 1,406 
Proceeds from sale of intangible assets2,562  
Distributions received from Partnerships10,730 15,990 
Contributions to Partnerships(34,985)(63,364)
Consolidated variable interest entities related:
 (Purchase) Sale of investments(57,832)278,954 
Net cash (used in) provided by investing activities(93,997)201,565 

7

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

Nine Months Ended December 31,
20232022
Financing activities:
Borrowings of debt 31,682 
Repayments of debt(1,875)(3,873)
Draw-down on revolver10,000 25,000 
Repayment of revolver(25,000)(25,000)
Repurchase of Class A shares for employee tax withholding(269)(162)
Proceeds received from issuance of shares under Employee Share Purchase Plan1,666 1,441 
Dividends paid(48,613)(42,550)
Members’ distributions paid(31,817)(45,828)
Consolidated variable interest entities related:
Contributions from non-controlling interests in general partnerships769 687 
Distributions to non-controlling interests in general partnerships(45)(1,230)
Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc. (278,205)
Contributions from non-controlling interests in consolidated funds142,924  
Net cash provided by (used in) financing activities47,740 (338,038)
Increase in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities52,883 76,898 
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the period116,552 76,197 
Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the period$169,435 $153,095 

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,
20232022
Cash and cash equivalents$164,450 $146,070 
Restricted cash4,985 3,116
Cash and cash equivalents held at consolidated variable interest entities 3,909 
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities$169,435 $153,095 
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”) was incorporated in the State of Delaware on December 31, 2007 and, following its 2017 initial public offering, 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, payables 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, 2023 and March 31, 2023, HLI held approximately 70.1% 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 and 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, 2023 are not necessarily indicative of the results that may be expected for the year ending March 31, 2024. 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, 2023.


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 October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this ASU incorporate 14 of the 27 disclosure requirements published in SEC Release No. 33-10532 - Disclosure Update and Simplification into various topics within the Accounting Standards Codification (“ASC”). The amendments represent clarifications to, or technical corrections of, current requirements. For SEC registrants, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. Early adoption is prohibited. The amendments will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the new requirements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU enhances segment disclosures primarily around significant segment expenses for both interim and annual periods. The amendments in this ASU are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of the new requirements.


10

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. The Company is evaluating the impact of adopting this ASU.

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:

Three Months Ended
December 31,
Nine Months Ended December 31,
Management and advisory fees2023202220232022
Specialized funds$64,871 $53,299 $184,972 $144,099 
Customized separate accounts32,943 29,571 96,702 87,329 
Advisory6,085 6,613 18,392 19,073 
Reporting and other6,479 6,720 18,298 19,170 
Distribution management1,512 596 3,979 1,863 
Fund reimbursement revenue1,751 556 5,889 4,648 
Total management and advisory fees$113,641 $97,355 $328,232 $276,182 
Three Months Ended
December 31,
Nine Months Ended December 31,
Incentive fees2023202220232022
Specialized funds$10,542 $8,679 $43,204 $102,815 
Customized separate accounts1,081 15,396 5,741 30,020 
Consolidated variable interest entities related:
Specialized funds 5,644  6,948 
Total incentive fees$11,623 $29,719 $48,945 $139,783 

4. Investments

Investments consist of the following:

December 31,March 31,
20232023
Equity method investments in Partnerships$391,884 $340,603 
Other equity method investments1,795  
Fair value investments18,570 21,586
Investments valued under the measurement alternative175,522 168,732
Total Investments$587,771 $530,921 


11

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

Investments of consolidated variable interest entities (“VIEs”) consist of the following:

December 31,March 31,
20232023
Equity method investments in Partnerships$15,855 $12,292 
Fair value investments 44,752 
Total Investments of Consolidated VIEs$15,855 $57,044 

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, representing a general partner interest. The Company’s other equity method investments represent its ownership in a technology company to develop an AI-powered investment assistant for private markets.

Fair value investments

The Company’s fair value investments represent a publicly traded security and investments in private equity funds, 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 amortized cost of the assets held as collateral was $6,430 and $7,429 as of December 31, 2023 and March 31, 2023, respectively. The direct credit investments were debt securities classified as trading securities. Fair value investments are measured at fair value with unrealized gains and losses recorded in non-operating loss 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 fair value 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 of $637 and a loss of $230 on fair value investments held as collateral during the three and nine months ended December 31, 2023, respectively, and a gain of $821 and $915 during the three and nine months ended December 31, 2022, respectively, that are recorded in non-operating (loss) income. The Company recognized a gain of $637 and a loss of $230 on the secured financing liability during the three and nine months ended December 31, 2023, respectively, and a loss of $821 and $915 during the three and nine months ended December 31, 2022, respectively, that are recorded in non-operating (loss) income in the Condensed Consolidated Statements of Income.

12


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

Investments valued under the measurement alternative

Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Carrying amount beginning of the period$175,522 $190,023 $168,732 $156,100 
Adjustments related to equity investments:
Purchases 7,440 6,312 34,676 
Sales / return of capital   (177) 
Net unrealized gain (loss)1
 (31,631)1,177 (24,944)
Net realized loss  (522) 
Carrying amount, end of period$175,522 $165,832 $175,522 $165,832 
(1) Net unrealized gain (loss) consists of fair value adjustments for observable price changes of identical or similar investments.

The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses related to the Company’s investments under the measurement alternative:

December 31,March 31,
20232023
Cumulative gross unrealized gains$70,235 $69,058 
Cumulative gross unrealized losses $(43,289)$(43,289)

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, 2023
Level 1Level 2Level 3
NAV(2)
Total
Financial assets:
Fair value investments
$5,447 $ $13,123 $ $18,570 
Total financial assets$5,447 $ $13,123 $ $18,570 
Financial liabilities:
Secured financing(1)
$ $ $13,123 $ $13,123 
Total financial liabilities$ $ $13,123 $ $13,123 
13


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

As of March 31, 2023
Level 1Level 2Level 3
NAV(2)
Total
Financial assets:
Fair value investments
$7,358 $ $14,228 $ $21,586 
Consolidated VIEs
Fair value investments  21,163 23,589 44,752 
Total financial assets$7,358 $ $35,391 $23,589 $66,338 
Financial liabilities:
Secured financing(1)
$ $ $14,228 $ $14,228 
Total financial liabilities$ $ $14,228 $ $14,228 

(1) Secured financing is recorded within other liabilities in the Condensed Consolidated Balance Sheets.
(2) Investments are recorded at estimated fair value based upon the net asset value of the fund utilizing the practical expedient under ASC 820, “Fair Value Measurement.” The fair value amounts presented in this column are intended to permit reconciliation of the fair value hierarchy to the amounts presented in Note 4.

The following is a reconciliation of other investments for which significant unobservable inputs (Level 3) were used in determining fair value:

Private equity fundsDirect credit investmentsDirect equity investmentsTotal other investments
Balance as of September 30, 2023
$5,739 $ $6,634 $12,373 
Contributions152   152 
Distributions(39)  (39)
Net (loss) gain(11) 648 637 
Balance as of December 31, 2023
$5,841 $ $7,282 $13,123 
Balance as of March 31, 2023
$6,664 $790 $6,774 $14,228 
Contributions152   152 
Distributions(229)(798) (1,027)
Net (loss) gain(746)8 508 (230)
Balance as of December 31, 2023
$5,841 $ $7,282 $13,123 


Private equity fundsDirect credit investmentsDirect equity investmentsTotal other investments
Balance as of September 30, 2022
$6,252 $768 $6,060 $13,080 
Contributions91   91 
Distributions(38)  (38)
Net gain417 18 386 821 
Balance as of December 31, 2022
$6,722 $786 $6,446 $13,954 
14


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

Private equity fundsDirect credit investmentsDirect equity investmentsTotal other investments
Balance as of March 31, 2022
$7,024 $774 $6,020 $13,818 
Contributions114   114 
Distributions(893)  (893)
Net gain477 12 426 915 
Balance as of December 31, 2022
$6,722 $786 $6,446 $13,954 

The following is a reconciliation of investments held by our consolidated VIEs for which significant
unobservable inputs (Level 3) were used in determining value:
Direct credit investments
Balance as of September 30, 2023
$69,381 
Contributions 
Distributions 
Net income 
Transfer in 
Transfer out due to deconsolidation(69,381)
Balance as of December 31, 2023
$ 

Direct credit investments
Balance as of March 31, 2023
$21,163 
Contributions24,787 
Distributions(180)
Net income494 
Transfer in23,117 
Transfer out due to deconsolidation(69,381)
Balance as of December 31, 2023
$ 

15


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

The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in recurring Level 3 fair value measurements of financial assets were as follows, as of December 31, 2023:

Significant
FairValuationUnobservableWeighted
ValueMethodologyInputsRangeAverage
Other investments:
Private equity funds
$5,841 Adjusted net asset valueSelected market return6.7%-7.2%7.1%
Direct equity investments
$7,282 Market approachEBITDA multiple
7.50x
-
15.50x
12.05x

For the significant unobservable inputs listed in the tables above: (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively; and (2) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.

6. Variable Interest Entities

The Company holds variable interests in entities that are considered variable interest entities (“VIEs”) because limited partners lack the ability to remove the general partner or dissolve the entity without cause by simple majority vote (i.e., limited partners do not have substantive “kick out” or “liquidation” rights). The Company’s variable interest in such entities is in the form of direct equity interests in, and/or fee arrangements with, the Partnerships in which it also serves as the general partner or managing member. In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable Partnership and makes all investment and operating decisions. The Company consolidates VIEs in which it is determined that the Company is the primary beneficiary.

Consolidated Variable Interest Entities

The Company consolidates general partner entities of certain Partnerships that are not wholly-owned by the Company. The assets of the consolidated general partner VIEs represent equity method-investments in direct investment funds and customized separate accounts. The assets may only be used to settle obligations of the respective consolidated VIEs, if any. In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities, except for certain entities in which there could be a clawback of previously distributed carried interest.

The Company previously consolidated a Partnership in which it was the primary beneficiary. On October 1, 2023, the Company no longer qualified as the primary beneficiary and deconsolidated all the assets and liabilities of the non-controlling interest in the Partnership from the condensed consolidated financial statements. No gain or loss was recognized as part of the deconsolidation for the three and nine months ended December 31, 2023. Subsequent to the deconsolidation of the Partnership, the Company records its interest in the Partnership using the equity method, within investments in the Condensed Consolidated Balance Sheets.



16


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

Nonconsolidated Variable Interest Entities

Certain Partnerships that are VIEs are not consolidated because the Company has determined it is not the primary beneficiary based upon the Company’s equity interest percentage in each of the applicable VIEs. As of December 31, 2023, the total remaining unfunded commitments from the Company’s general partner entities to the nonconsolidated VIEs was $157,092. Investor commitments are the primary source of financing for the nonconsolidated VIEs.

The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these nonconsolidated VIEs. The Company believes that its maximum exposure to loss is limited because it establishes separate limited partnerships or limited liability companies to serve as the general partner or managing member of the Partnerships.

The carrying value of assets and liabilities recognized in the Condensed Consolidated Balance Sheets related to the Company’s interests in these nonconsolidated VIEs and the Company’s maximum exposure to loss relating to non-consolidated VIEs were as follows:

December 31,March 31,
20232023
Investments$199,101 $199,858 
Fees receivable27,614 15,829 
Due from related parties3,043 1,960 
Total VIE Assets229,758 217,647 
Less: Non-controlling interests(1,647)(1,665)
Maximum exposure to loss$228,111 $215,982 

7. Debt

The Company’s debt consisted of the following:

As of December 31, 2023
As of March 31, 2023
Principal OutstandingCarrying ValueInterest RatePrincipal OutstandingCarrying ValueInterest Rate
Term Loan$97,500 $97,140 7.25 %$99,375 $98,969 6.75 %
2020 Multi-Draw Facility100,000 99,612 3.50 %100,000 99,564 3.50 %
Revolver  15,000 15,000 6.50 %
Total Debt$197,500 $196,752 $214,375 $213,533 


The carrying value of the Company’s outstanding debt as of December 31, 2023 and March 31, 2023 approximated fair value except for the 2020 multi-draw facility, which had an estimated fair value of $88,588 and $88,136 as of December 31, 2023 and March 31, 2023, respectively. The estimated fair value of debt is based on then-current market rates for similar debt instruments and is classified as Level 2 within the fair value hierarchy.

17


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

8. Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2023:

Class A Common StockClass B Common Stock
March 31, 202338,611,919 15,409,507 
Forfeitures(40,490) 
Shares repurchased for employee tax withholdings(3,610) 
Awards granted15,890  
Shares issued pursuant to Employee Share Purchase Plan21,078  
December 31, 202338,604,787 15,409,507 

9. Equity Based Compensation

Restricted Stock Awards

A summary of restricted stock activity for the nine months ended December 31, 2023 is presented below:

Total
Unvested
Weighted-
Average
Grant-Date
Fair Value of
Award
March 31, 2023377,668 $65.70 
Granted 15,890 $88.19 
Vested(19,119)$69.79 
Forfeited(14,402)$66.77 
December 31, 2023360,037 $66.44 

As of December 31, 2023, total unrecognized compensation expense related to restricted stock was $17,531.

18


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