Hamilton Lane INC

Previous wording

We are a global private markets investment solutions provider and operate our business in a single segment. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity, venture capital and impact. These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types. These solutions are offered in a variety of formats covering some or all phases of private markets investment programs:

Current wording

We are a global private markets investment solutions provider and operate our business in a single segment. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, real assets, growth equity, venture capital and impact. These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types. These solutions are offered in a variety of formats covering some or all phases of private markets investment programs:

Previous wording

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised approximately $92.5 billion of our AUM as of March 31, 2024.

Current wording

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised $98.8 billion of our AUM as of March 31, 2025.

Previous wording

•Specialized Funds: We organize, invest and manage specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised approximately $31.9 billion of our AUM as of March 31, 2024.

Current wording

•Specialized Funds: We organize, invest and manage commingled specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised $39.5 billion of our AUM as of March 31, 2025.

Previous wording

•Advisory Services: We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had approximately $796.2 billion of AUA as of March 31, 2024.

Current wording

•Advisory Services: We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had $819.5 billion of AUA as of March 31, 2025.

Previous wording

•Increased competition to work with top private equity fund managers. There has been a trend amongst private markets investors to consolidate the number of general partners in which they invest. At the same time, an increasing flow of capital to the private markets has often times resulted in certain funds being oversubscribed. This has resulted in some investors, primarily smaller investors or less strategically important investors, not being able to gain access to certain funds. Our ability to invest and maintain our sphere of influence with these high-performing fund managers is critical to our investors’ success and our ability to maintain our competitive position and grow our revenue.

Current wording

•Increased competition to work with top private equity fund managers. There has been a trend among private markets investors to consolidate the number of general partners in which they invest. At the same time, an increasing flow of capital to the private markets has often times resulted in certain funds being oversubscribed. This has resulted in some investors, primarily smaller investors or less strategically important investors, not being able to gain access to certain funds. Our ability to invest and maintain our sphere of influence with these high-performing fund managers is critical to our investors’ success and our ability to maintain our competitive position and grow our revenue.

Previous wording

•Unpredictable global macroeconomic conditions. Global economic conditions, including political environments, financial market performance, interest rates, credit spreads or other conditions beyond our control, all of which affect the performance of the assets underlying private market investments, are unpredictable and could negatively affect the performance of our clients’ portfolios or the ability to raise funds in the future. In addition, the cash available from our Loan Agreements (defined below) and our cash balances are exposed to the credit risks of the financial institutions at which they are held. Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, could jeopardize our ability to access existing cash, cash equivalents and investments.

Current wording

•Unpredictable, volatile and uncertain macroeconomic conditions. Global economic conditions, including political environments, financial market performance, tariff policies, interest rates, credit spreads or other conditions beyond our control, all of which affect the performance of the assets underlying private market investments, are unpredictable and could negatively affect the performance of our clients’ portfolios or the ability to raise funds in the future. Since early 2025, the United States and countries around the world have experienced elevated levels of market volatility and uncertainty driven principally by geopolitical and global trade concerns, including, in particular, the announcements of the imposition of tariffs by the United States on certain of its trading partners in April 2025 and retaliation by certain such trade partners. This volatility and uncertainty adds to the risks and uncertainties in the business environment in which we operate and may have various negative impacts on our business and results of operations, including with respect to decreased valuations of investments by our specialized funds and customized separate accounts, deployments, realizations, and fundraising activities.

Previous wording

In March 2024, we and a selling stockholder completed a registered offering of an aggregate of 1,922,322 shares of Class A common stock at a price to the underwriter of $108 per share (the “March 2024 Offering”). The purpose of the March 2024 Offering was to provide liquidity to significant direct and indirect owners of HLA. The shares sold consisted of 55,000 shares held by the selling stockholder and 1,867,322 shares newly issued by us. We received $201.7 million in net proceeds from the sale of our shares and used all of the proceeds to settle exchanges by certain members of HLA of a total of 1,744,872 Class B units and 122,450 Class C units. In connection with the exchange of the Class B units, we also repurchased for par value and canceled a corresponding number of shares of Class B common stock. We did not receive any proceeds from the sale of shares by the selling stockholder.

Current wording

In February 2025, we and a selling stockholder completed a registered offering of an aggregate of 1,572,536 shares of Class A common stock at a price to the underwriter of $159.00 per share (the “February 2025 Offering”). The purpose of the February 2025 Offering was to provide liquidity to significant direct and indirect owners of HLA. The shares sold consisted of 10,255 shares held by the selling stockholder and 1,562,281 shares newly issued by us. We received $248.4 million in net proceeds from the sale of our shares and used all of the proceeds to settle exchanges by certain members of HLA of a total of 1,486,223 Class B units and 76,058 Class C units. In connection with the exchange of the Class B units, we also repurchased for par value and canceled a corresponding number of shares of Class B common stock. We did not receive any proceeds from the sale of shares by the selling stockholder.

Previous wording

Revenues from customized separate accounts are generally based on a contractual rate applied to committed capital or net invested capital under management. These fees often decrease over the life of the contract due to built-in declines in contractual rates and/or as a result of lower net invested capital balances as capital is returned to clients. In certain cases, we also provide advisory and/or reporting services, and, therefore, we also receive fees for services such as monitoring and reporting on a client’s existing private markets investments. In addition, we may provide for investments in our specialized funds as part of our customized separate accounts. In these cases, we generally reduce the asset-based and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.

Current wording

Revenues from customized separate accounts are generally based on a contractual rate applied to committed capital or net invested capital under management. These fees often decrease over the life of the contract due to built-in declines in contractual rates and/or as a result of lower net invested capital balances as capital is returned to clients. In certain cases, we also provide advisory and/or reporting services, and, therefore, we also receive fees for services such as monitoring and reporting on a client’s existing private markets investments. In addition, we may provide for investments in our specialized funds as part of our customized separate accounts. In these cases, we generally reduce the asset-based and/or incentive fees on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.

Previous wording

Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value in, our specialized funds. The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or net asset value. In the case of certain funds, we charge management fees on capital commitments, with the management fee increasing during the early years of the fund’s term and declining in the later years. Management fees for certain funds are discounted based on the amount of the limited partners’ commitments, whether the limited partners commit early in the offering period or if the limited partners are investors in our other funds.

Current wording

Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value (“NAV”) in, our specialized funds. The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or NAV. In the case of certain funds, we charge management fees on capital commitments, with the management fee increasing during the early years of the fund’s term and declining in the later years. Management fees for certain funds are discounted based on the amount of the limited partners’ commitments, whether the limited partners commit early in the offering period or if the limited partners are investors in our other funds.

Previous wording

For each of our secondary funds, direct investment funds, strategic opportunity funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%. To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5% of net profits, subject to the fund’s compounded annual preferred return.

Current wording

12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%. To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5.0% of net profits, subject to the fund’s compounded annual preferred return. We recognize carried interest when it is probable that a significant reversal will not occur.

Previous wording

Performance fees, which are a component of incentive fees, are based on the aggregate amount of realized gains earned by the applicable specialized fund or customized separate account, subject to the achievement of defined minimum returns to the clients. Performance fees range from 5.0% to 12.5% of net profits, subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when the risk of clawback or reversal is not probable.

Current wording

Performance fees are based on the aggregate amount of unrealized or realized gains earned by the applicable specialized fund or customized separate account, subject to the achievement of defined minimum returns to the clients or high-water marks. Performance fees range from 5.0% to 12.5% of net profits, with some subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when it is probable that a significant reversal will not occur.

Previous wording

We recognize carried interest when it is probable that a significant reversal will not occur. The primary contingency regarding incentive fees is the “clawback,” or the obligation to return distributions in excess of the amount prescribed by the applicable fund or separate account documents. Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt. In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our Consolidated Balance Sheets and recognized as income in accordance with our revenue recognition policy.

Current wording

The primary contingency regarding incentive fees is the “clawback,” or the obligation to return distributions in excess of the amount prescribed by the applicable fund or separate account documents. Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt. In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our Consolidated Balance Sheets and recognized as income in accordance with our revenue recognition policy.

Previous wording

Equity in income (loss) of investees primarily represents our share of earnings from our investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Equity income primarily comprises our share of the net realized and unrealized gains (losses) and investment income partially offset by the expenses from these investments.

Current wording

Equity in income of investees primarily represents our share of earnings from our investments in our specialized funds and certain customized separate accounts in which we have a commitment. Equity income primarily comprises our share of the net realized and unrealized gains (losses) and investment income partially offset by the expenses from these investments.

Previous wording

We have general partner commitments in our specialized funds and certain customized separate accounts that invest solely in primary funds, secondary funds and direct investments, as well as those that invest across investment types. Equity in income (loss) of investees will increase or decrease as the change in underlying fund investment valuations increases or decreases. Since our direct investment funds invest in underlying portfolio companies, their quarterly and annual valuation changes are more affected by individual company movements than our primary and secondary funds that have exposures across multiple portfolio companies in underlying private markets funds. Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our general partner investments do not include any significant concentrations in a specific sector or area outside the United States.

Current wording

We have commitments in our specialized funds and certain customized separate accounts that invest solely in primary funds, secondary funds and direct investments, as well as those that invest across investment types. Equity in income (loss) of investees will increase or decrease as the change in underlying fund investment valuations increases or decreases. Since our direct investment funds invest in underlying portfolio companies, their quarterly and annual valuation changes are more affected by individual company movements than our primary and secondary funds that have exposures across multiple portfolio companies in underlying private markets funds. Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our investments do not include any significant concentrations in a specific sector or area outside the United States.

Previous wording

We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. Prior to our IPO, we operated as a partnership for U.S. federal income tax purposes and therefore were not subject to U.S. federal and state income taxes. HLA is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by HLA flows through to its limited partners, including us, and is generally not subject to U.S. federal or state income tax at the partnership level. Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to non-U.S. income taxes. Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such NCI.

Current wording

We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. HLA is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by HLA flows through to its limited partners, including us, and is generally not subject to U.S. federal or state income tax at the partnership level. Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to non-U.S. income taxes. Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such NCI.

Previous wording

Non-controlling interests reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. NCI are presented as separate components in our consolidated statements of income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Current wording

NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. NCI are presented as separate components in our Consolidated Statements of Income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Previous wording

Total revenues increased $32.0 million for fiscal 2024 compared to fiscal 2023, due to an increase in management and advisory fees partially offset by a decrease in incentive fees.

Current wording

Total revenues increased $158.3 million for fiscal 2025 compared to fiscal 2024, due to increases in management and advisory fees and incentive fees.

Previous wording

Management and advisory fees increased $80.1 million for fiscal 2024 compared to fiscal 2023. Specialized funds revenue increased by $64.7 million compared to the prior year, due primarily to a $41.3 million increase in revenue from our latest secondary fund and a $25.3 million increase in revenue from our evergreen funds, which added $2.4 billion and $2.7 billion, respectively, in fee-earning AUM year-over-year. Revenue from our latest secondary fund included $19.6 million in retroactive fees during fiscal 2024 compared to $2.4 million in retroactive fees from our latest direct equity fund during fiscal 2023. Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period. Customized separate accounts revenue increased $11.1 million in fiscal 2024 due to a $2.9 billion increase in fee-earning AUM from the addition of several new accounts, additional allocations from existing accounts and continued investment activity during the fiscal year. Distribution management revenue increased $2.5 million in fiscal 2024 due to increased stock distribution activity from investments held by clients that are managed by us. Fund reimbursement revenue increased by $2.4 million attributed primarily to the timing of newly created funds.

Current wording

Management and advisory fees increased $61.9 million for fiscal 2025 compared to fiscal 2024. Specialized funds revenue increased by $54.2 million compared to the prior year, due primarily to increases of $52.1 million in revenue from our evergreen funds and $10.6 million in revenue from our latest secondary fund, which added $4.1 billion and $1.2 billion, respectively, in fee-earning AUM year-over-year. Revenue from our latest secondary fund included $20.7 million in retroactive fees during fiscal 2025 compared to $19.6 million during fiscal 2024. Retroactive fees are management fees earned from investors that commit to a specialized fund after the first closing of the fund and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period. Revenue from our specialized funds was partially offset by a decrease of $10.3 million from contractual step downs and funds reaching the end of their term. Customized separate accounts revenue increased $5.6 million compared to the prior year due primarily to a $1.8 billion increase in fee-earning AUM from the addition of new accounts, additional allocations from existing accounts and continued investment activity during the fiscal year. Reporting, monitoring, data and analytics revenue increased $4.5 million compared to the prior year due primarily to increased Cobalt LP subscriptions during fiscal 2025. Fund reimbursement revenue increased by $1.5 million compared to the prior year attributed primarily to the timing of newly created funds. Distribution management revenue decreased $2.4 million in fiscal 2025 compared to the prior year due to decreased stock distribution activity from investments held by clients that are managed by us.

Previous wording

Total expenses increased $19.6 million for fiscal 2024 compared to fiscal 2023, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Current wording

Total expenses increased $88.0 million for fiscal 2025 compared to fiscal 2024, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Previous wording

Compensation and benefits expenses increased $5.6 million for fiscal 2024 compared to fiscal 2023, due primarily to an increase in base compensation and benefits, partially offset by a decrease in incentive fee compensation. Base compensation and benefits increased $17.1 million for fiscal 2024 compared to fiscal 2023, due primarily to an increase in salary expense from additional headcount. Incentive compensation decreased $13.7 million for fiscal 2024 compared to fiscal 2023 due to a decrease in incentive fee revenue. Equity based compensation increased $2.2 million in fiscal 2024 compared to fiscal 2023, driven primarily by a full year of expense related to performance awards included in fiscal 2024 compared to fiscal 2023 due to the performance awards being issued in September 2022.

Current wording

Compensation and benefits expenses increased $70.5 million for fiscal 2025 compared to fiscal 2024. Base compensation and benefits increased $41.8 million for fiscal 2025 compared to fiscal 2024, due primarily to an increase in salary expense from additional headcount and an increase in our bonus plan accrual. Equity-based compensation increased $19.3 million in fiscal 2025 compared to fiscal 2024, driven primarily by the performance awards granted during fiscal 2025. Incentive fee compensation increased $9.4 million for fiscal 2025 compared to fiscal 2024 due to an increase in incentive fee revenue in fiscal 2025.

Previous wording

General, administrative and other expenses increased $14.0 million for fiscal 2024 compared to fiscal 2023. This change consisted primarily of a $6.7 million increase in third-party commissions primarily attributed to the increase in gross subscriptions to our evergreen funds, a $2.6 million increase in fund reimbursement expense attributed to the timing of newly created funds, a $2.1 million increase in technology related expense and a $1.7 million increase in travel, conferences and marketing expenses.

Current wording

General, administrative and other expenses increased $17.5 million for fiscal 2025 compared to fiscal 2024. This change consisted primarily of an increase of $4.2 million in fund reimbursement expense attributed to the timing of newly created funds, an increase of $4.1 million in consulting and professional fees, an increase of $2.7 million in third-party commissions primarily attributed to the increase in gross subscriptions to our evergreen funds, an increase of$1.9 million in conference and marketing expenses and an increase of$1.3 million in expenses relating to our leased office space.

Previous wording

Other income (expense) increased $33.6 million for fiscal 2024 compared to fiscal 2023, due primarily to increases in equity in income of investees.

Current wording

Other income (expense) increased $5.4 million for fiscal 2025 compared to fiscal 2024, due primarily to an increase in non-operating gain (loss), partially offset by a decrease in equity in income of investees.

Previous wording

Our effective income tax rate in fiscal 2024 and 2023 was 19.3% and 22.8%, respectively. The fiscal 2024 effective income tax rate was different from the statutory tax rate due to the portion of income allocated to non-controlling interests and valuation allowance recorded against deferred tax assets. The effective income tax rate for fiscal 2024 was less than fiscal 2023 primarily due to changes in valuation allowance recorded against deferred tax assets in fiscal 2024.

Current wording

Our effective income tax rate in fiscal 2025 and 2024 was 13.4% and 19.3%, respectively. The fiscal 2025 effective income tax rate was different from the statutory tax rate due primarily to the portion of income allocated to NCI and a reduction in valuation allowance recorded against deferred tax assets. The effective income tax rate for fiscal 2025 was less than fiscal 2024 due primarily to less valuation allowance recorded against deferred tax assets in fiscal 2025.

Previous wording

The following table shows income attributable to non-controlling interests:

Current wording

The following table shows income attributable to NCI:

Previous wording

The following table provides the period to period roll-forward of our fee-earning AUM:

Current wording

The following table provides the year to year roll-forward of our fee-earning AUM:

Previous wording

Fee-earning AUM increased $8.4 billion for fiscal 2024 compared to fiscal 2023 due to contributions from customized separate accounts and specialized funds.

Current wording

Fee-earning AUM increased $6.3 billion for fiscal 2025 compared to fiscal 2024 due to contributions from customized separate accounts and specialized funds.

Previous wording

Customized separate accounts fee-earning AUM increased $2.9 billion for fiscal 2024 compared to fiscal 2023. Customized separate accounts contributions were $7.7 billion for fiscal 2024 due to new allocations from existing clients and new clients. Distributions were $5.0 billion for fiscal 2024 due to $2.6 billion from accounts moving from a committed to net invested capital fee base, $1.4 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $1.0 billion from accounts reaching the end of their fund term.

Current wording

Customized separate accounts fee-earning AUM increased $1.8 billion for fiscal 2025 compared to fiscal 2024. Customized separate accounts contributions were $6.7 billion for fiscal 2025 due primarily to new allocations from existing clients and the addition of new clients. Distributions were $4.9 billion for fiscal 2025 due primarily to $1.9 billion from accounts moving from a committed to net invested capital fee base, $1.8 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $1.2 billion from accounts reaching the end of their fund term.

Previous wording

Specialized funds fee-earning AUM increased $5.5 billion for fiscal 2024 compared to fiscal 2023. Specialized fund contributions were $6.2 billion for fiscal 2024, due primarily to $2.4 billion from our latest secondary fund and $2.7 billion from our evergreen funds. Distributions were $1.1 billion for fiscal 2024, due to $1.0 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.1 billion from funds moving from a committed to net invested capital fee base.

Current wording

Specialized funds fee-earning AUM increased $4.5 billion for fiscal 2025 compared to fiscal 2024. Specialized fund contributions were $7.1 billion for fiscal 2025, due primarily to $4.2 billion from our evergreen funds and $1.2 billion from our latest secondary fund. Distributions were $3.3 billion for fiscal 2025, due primarily to $2.0 billion from returns of capital and redemptions in funds earning fees on a net invested capital or NAV fee base and $1.1 billion from accounts reaching the end of their fund term.

Previous wording

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) non-operating (loss) gain 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.

Current wording

Fee Related Earnings (“FRE”) is used to highlight earnings from revenues that are measured and received on a recurring basis. FRE represents net income excluding (a) incentive fees, net of fee related performance revenues, and related compensation, (b) equity-based compensation, (c) interest income and expense, (d) income tax expense, (e) equity in income of investees, (f) non-operating gain (loss) and (g) 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.

Previous wording

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to Fee Related Earnings and Adjusted EBITDA for fiscal 2024, 2023, and 2022:

Current wording

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to FRE and Adjusted EBITDA for fiscal 2025, 2024, and 2023:

Previous wording

(1) Incentive fee related compensation includes incentive fee compensation expense, bonus and other revenue sharing related to carried interest that is classified as base compensation.

Current wording

(1) Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation.

Previous wording

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 NCI. Adjusted shares outstanding for the years ended March 31, 2024, 2023 and 2022 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP earnings per share are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.

Current wording

Non-GAAP earnings per share (“EPS”) 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 EPS 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 NCI. Adjusted shares outstanding for the years ended March 31, 2024 and 2023 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP EPS are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.

Previous wording

(1) For the year ended March 31, 2024, represents corporate income taxes at our estimated statutory tax rate of 23.4% applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The years ended March 31, 2023 and 2022, represent corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income. The 23.8% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.8%.

Current wording

(1) For the year ended March 31, 2025, represents corporate income taxes at our estimated statutory tax rate of 23.7% applied to adjusted pre-tax net income. The 23.7% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.70%. The year ended March 31, 2024 represents corporate income taxes at our estimated statutory tax rate of 23.4% applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The year ended March 31, 2023 represents corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income. The 23.8% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.8%.

Previous wording

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of March 31, 2024 and March 31, 2023, our cash and cash equivalents were $114.6 million and $99.7 million, respectively.

Current wording

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of March 31, 2025 and March 31, 2024, our cash and cash equivalents were $229.2 million and $114.6 million, respectively.

Previous wording

Finally, we have used available cash and borrowings from our Loan Agreements to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions.

Current wording

Finally, we have used available cash and borrowings from our Loan Agreements to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions. We have used proceeds from the issuance of our Senior Notes to seed newspecialized funds and for general corporate purposes.

Previous wording

We maintain the Term Loan Agreement, the Revolving Loan Agreement, the 2020 Multi-Draw Term Loan Agreement and the 2022 Multi-Draw Term Loan Agreement with JPMorgan, as successor to First Republic. In early May 2023, JPMorgan announced its purchase of First Republic after that bank’s failure. The purchase included the Loan Agreements. The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

Current wording

We maintain our Term Loan Agreement, Revolving Loan Agreement, 2020 Multi-Draw Term Loan Agreement, and 2022 Multi-Draw Term Loan Agreement with JPMorgan Chase Bank, N.A. (“JPMorgan”). On October 7, 2024, HLA and JPMorgan amended each of the Loan Agreements in connection with HLA’s entry into the Note Purchase Agreement. The amendments included naming JPMorgan as the successor-in-interest to First Republic Bank, updating the maturity dates for the Loan Agreements and allowing for the incurrence of additional indebtedness. The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

Previous wording

The Term Loan Agreement has a maturity date of January 1, 2030 and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of March 31, 2024, we had an outstanding balance of $97 million under the Term Loan Agreement.

Current wording

The Term Loan Agreement has a maturity date of July 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of March 31, 2025, we had an outstanding balance of $93.1 million under the Term Loan Agreement.

Previous wording

The Loan Agreements contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of March 31, 2024 and 2023, the principal amount of debt outstanding equaled $196.9 million and $214.4 million, respectively. We had $128.1 million in availability under the Loan Agreements as of March 31, 2024.

Current wording

The Loan Agreements and the Note Purchase Agreement contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The Note Purchase Agreement requires HLA to maintain (i) a consolidated leverage ratio within a specified range and (ii) specified amounts of management fees, (as described in the Note Purchase Agreement). The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of March 31, 2025 and 2024, the principal amount of debt outstanding equaled $293.1 million and $196.9 million, respectively. We had $131.9 million in availability under the Loan Agreements as of March 31, 2025.

Previous wording

Our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings. For the years ended March 31, 2024, 2023 and 2022, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses. Additionally, the year ended March 31, 2024 was impacted by cash relinquished upon deconsolidation of a previously consolidated fund while the year ended March 31, 2023 was impacted by an impairment on one of our investments.

Current wording

Our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings. For the years ended March 31, 2025, 2024 and 2023, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses. Additionally, the years ended March 31, 2025 and 2024 were impacted by cash relinquished upon deconsolidation of a previously consolidated fund while the year ended March 31, 2023 was impacted by an impairment on one of our investments.

Previous wording

Our investing activities generally reflect cash used for acquisitions, fixed asset purchases and contributions to and distributions from our investments. For the years ended March 31, 2024, 2023 and 2022, our net cash used in investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchase of other investments and net contributions to our funds. Additionally, the year ended March 31, 2023 included the sale of investments held in trust by our consolidated SPAC due to its liquidation.

Current wording

Our investing activities generally reflect cash used for fixed asset purchases and contributions to and distributions from our investments. For the years ended March 31, 2025, 2024 and 2023, our net cash used in (provided by) investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchase of investments and convertible notes, and net contributions to our funds partially offset by the sale of investments.