Sign in
HL

Hamilton Lane INC (HLNE)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue of $175.96M declined 11% YoY due to a tough retro-fee compare and lower incentive fees, but beat S&P Global consensus estimates; Non-GAAP EPS of $1.31 also beat, aided by fee-related performance revenues from evergreen funds . Revenue estimate: $162.38M*; EPS estimate: $0.99*.
  • Fee Related Earnings rose 31% YoY to $83.71M with a 51% FRE margin, reflecting strong fee-related performance revenues and disciplined G&A growth; GAAP diluted EPS was $1.28 (down 13% YoY, up 4% QoQ) .
  • AUM/AUA expanded to $140.88B/+9% YoY and $845.29B/+4% YoY; FEAUM reached $74.40B (+10% YoY), underscoring secular momentum in specialized funds and evergreen platforms .
  • Dividend maintained at $0.54 per share this quarter; fiscal-year dividend target raised to $2.16 (+10% YoY), with management reiterating stable margin outlook and highlighting strong evergreen net inflows and institutional adoption as near-term catalysts .

What Went Well and What Went Wrong

  • What Went Well
    • Fee Related Earnings and margin expansion: FRE up 31% YoY to $83.71M; FRE margin 51% vs 45% in prior-year quarter, supported by evergreen fee crystallization and muted G&A growth .
    • Secular growth in evergreen platform and FEAUM: FEAUM up 10% YoY to $74.40B; evergreen AUM approaching $12.5B with ~$1.2B net inflows in the quarter; blended fee rate ~64 bps .
    • Institutional adoption and distribution expansion: ~15% of evergreen flows from institutions; broadened partnerships and channels (including DBS private banking and technology-enabled/tokenized approaches) .
  • What Went Wrong
    • Top-line pressure from incentive-fee timing: Incentive fees fell to $42.26M (−26% YoY; −40% QoQ), with carry realizations lumpy and macro exits still subdued .
    • Tough retro-fee compare: Retroactive fees were ~$0.3M vs $20.7M in Q1 FY25, driving the YoY decline in management/advisory fees (−4% YoY) .
    • YoY compression in GAAP profitability: GAAP net income fell 12% YoY to $77.07M, and diluted GAAP EPS dropped to $1.28 (−13% YoY), despite sequential improvement and strong non-GAAP performance .

Financial Results

MetricQ3 FY25Q4 FY25Q1 FY26
Total Revenues ($USD Millions)$168.26 $197.97 $175.96
Diluted GAAP EPS ($)$1.32 $1.23 $1.28
Non-GAAP EPS ($)$1.25 $1.21 $1.31
Management & Advisory Fees ($USD Millions)$126.28 $127.84 $133.70
Incentive Fees ($USD Millions)$41.18 $70.14 $42.26
Adjusted EBITDA ($USD Millions)$92.68 $101.69 $95.84
Fee Related Earnings ($USD Millions)$54.23 $90.35 $83.71
FRE Margin (%)43% 49% 51%

Segment breakdown – Management & Advisory Fees

Category ($USD Thousands)Q3 FY25Q4 FY25Q1 FY26
Specialized funds$75,764$79,348 $82,745
Customized separate accounts$33,926$32,264 $34,575
Advisory$5,681$5,486 $5,486
Reporting/monitoring/data & analytics$7,102$8,020 $8,394
Distribution management$1,002$702 $975
Fund reimbursement revenue$2,807$2,018 $1,521
Total management & advisory fees$126,282 $127,838 $133,696

Incentive fees breakdown

Category ($USD Thousands)Q3 FY25Q4 FY25Q1 FY26
Direct equity funds$803 $3,250 $3,054
Secondary funds$21,179 $2,029 $520
Direct credit funds$2,217 $1,688 $921
Evergreen funds$1,376 $61,162 $32,592
Other specialized funds$10,065 $1,050 $1,122
Customized separate accounts$6,339 $956 $4,053
Total incentive fees$41,979 $70,135 $42,262

KPIs

KPIQ3 FY25Q4 FY25Q1 FY26
AUM ($USD Billions)$134.74$138.30 $140.88
AUA ($USD Billions)$821.24$819.47 $845.29
Total AUM + AUA ($USD Billions)$955.98$957.77 $986.17
Fee-Earning AUM (FEAUM) ($USD Billions)$70.99$72.05 $74.40
Debt ($USD Millions)$292.02 $290.30 $288.58
Unrealized carried interest ($USD Millions)$1,292.72 $1,260.28 $1,309.48

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareFY 2026$1.96 (FY 2025 target) $2.16 target (+10% YoY); $0.54 declared for Q1 FY26 Raised
FRE margin outlookOngoing“Stable” margin profile High-40s% expected under new methodology; Q1 FY26 at 51% Maintained/clarified
G&A run-rateFY 2026N/A~$33M per quarter run-rate; ~+$2M one-time benefit; increases tied to wirehouse commissions New disclosure
Evergreen US Private Assets feesOngoing1.5% mgmt fee; 12.5% incentive; preferred return; deal-by-deal carry 1.4% mgmt fee; 10% incentive; remove preferred return; high-watermark quarterly crystallization Lowered/structural change

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25 and Q4 FY25)Current Period (Q1 FY26)Trend
Evergreen platform growthQ3: Evergreen AUM ~$10.7B; strong net inflows; new products (infrastructure US/non-US, secondaries, LTIF, venture & growth) . Q4: FRPR introduced; initial $58M crystallized; most evergreen AUM carries incentive fees .Evergreen AUM ~$12.5B; quarterly net inflows ~$1.2B; blended fee rate ~64 bps; 15% institutional flows .Accelerating adoption and monetization
Institutional adoption of evergreen~150 institutions; ~15% of capital; tactical use cases for CIOs .15% share reiterated; mix of smaller institutions and larger tactical users .Steady-to-rising institutional mix
Macro/tariffs/exitsQ4: Elevated volatility; tariffs/regulatory uncertainty; muted exits; continuation/NAV loans; elongated holds .Expect exit activity to improve in 2H if macro remains supportive; average hold ~5 years .Cautious improvement
Technology/AI and middle-officeStrategic investment in 73 Strings (AI-driven data/valuation platform) .Tech-enabled distribution (tokenized/digital channels); reporting/data/analytics revenue +20% YoY .Continued tech enablement
Regional growth (Asia)N/A in Q3; momentum building across regions .Launch of Asia Private Assets evergreen fund (HLAPA) targeting Asia’s private markets .Geographic expansion

Management Commentary

  • “Our growth story continues... clients, assets, revenues, deal flow, and people. Total fee earning AUM stood at $74B (+10% YoY) ... evergreen products continue to experience strong momentum... blended fee rate stands at 64 bps.” — Erik Hirsch, prepared remarks .
  • “Management and advisory fees were down 4% YoY... $21M of retro fees in prior year vs $290K this quarter... incentive fees totaled $42M, including $29M of fee-related performance revenues crystallized quarterly from U.S. Private Assets.” — CFO Jeff Armbrister .
  • “FRE for the quarter came in at $84M and was up 31% YoY... FRE margin 51%... we remain modestly levered and continue to invest our balance sheet alongside clients.” — CFO Jeff Armbrister .
  • “We are building and orienting the firm to be running a marathon, not a sprint... expanding strategic partnerships, technology, distribution, and brand.” — Erik Hirsch .

Q&A Highlights

  • Distribution partnerships and channels: Management emphasized differentiated, customized distribution (e.g., DBS) and meeting retail customers across tokenized, advisor, and platform channels; more similar partnerships expected .
  • SMA pipeline and sales cycles: Organic growth reaccelerating, driven by new wins, re-ups, and investment activity; elongated sales cycles with contracting phase delays, but large backlog of won business .
  • Incentive fees trajectory: With improving macro, exit opportunities should increase in back half; recent quarters lighter vs historical averages after earlier carry realizations .
  • G&A outlook: ~$33M per quarter run-rate, with increases tied to wirehouse commissions offset by savings; ~+$2M one-time benefit in Q1 .
  • Secondary fund status: Fund VI more than halfway invested; Fund VII marketing not yet active, but deal flow and performance strong across vehicles including evergreen and SMAs .

Estimates Context

Results versus S&P Global consensus:

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue Estimate ($USD Millions)*170.69170.69162.38
Revenue Actual ($USD Millions)168.26 197.97 175.96
Primary EPS Estimate ($)*1.171.170.99
Primary EPS Actual ($)1.25 1.21 1.31
EBITDA Estimate ($USD Millions)*90.9090.90N/A
EBITDA Actual ($USD Millions)92.68 101.69 95.84

Values marked with an asterisk retrieved from S&P Global.

Consensus revision/implications:

  • Strong beats on revenue and EPS in Q1 FY26, aided by FRPR and evergreen net inflows; prior quarter Q4 also beat revenue/EPS; expect upward bias to estimates on FRE and fee-related revenues if evergreen performance sustains and macro exits improve .
  • Target price consensus mean at ~$163.5 remained stable into Q1 FY26*.

Key Takeaways for Investors

  • Evergreen monetization is a key driver: quarterly crystallization (FRPR) and net inflows (~$1.2B) are scaling non-linear earnings within fee-related revenues; watch for sustained performance and breadth across new evergreen strategies .
  • Fee profile and margins are improving: FRE margin at 51% with management indicating high-40s% going forward, supported by revenue-mix shift and G&A discipline .
  • Incentive fees remain lumpy but pipeline constructive: unrealized carry grew to ~$1.31B; macro tailwinds (exits, DPI) could lift back-half realizations .
  • Secular AUM/FEAUM growth: AUM +9% YoY; FEAUM +10% YoY driven by specialized funds, evergreen platform, and SMAs; blended fee rate ~64 bps favors revenue growth .
  • Distribution and institutional broadening: Institutional participation (~15%) in evergreen and partnerships (e.g., DBS) expand channels, likely supporting consistent net inflows and fee durability .
  • Dividend growth and capital allocation: $0.54 quarterly dividend and $2.16 FY target (+10% YoY); modest leverage and continued balance sheet co-investment support long-term growth .
  • Near-term trading lens: Emphasize the beat on revenue/EPS and margin expansion; monitor monthly net inflow cadence, macro exit backdrop, and any additional FRPR sources; upside bias if evergreen momentum persists and exits improve .