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Hamilton Lane INC (HLNE)·Q2 2026 Earnings Summary

Executive Summary

  • Strong Q2 FY26 with broad-based beats vs consensus: Non-GAAP EPS $1.54 vs $1.10 consensus, Revenue $190.9M vs $169.4M, and EBITDA $82.2M vs $72.0M; management highlighted mix shift to higher-fee Specialized/evergreen products and robust fee-related performance revenues contributing to margin strength . EPS*, revenue*, and EBITDA* beats versus S&P Global Consensus were 40%, 13%, and 14%, respectively; Values retrieved from S&P Global.
  • Year-over-year acceleration: Total revenues +27%, management & advisory fees +19%, incentive fees +61% (including FRPR), GAAP diluted EPS +23%; FRE up 37% and FRE margin to 49% (+200 bps YoY), reflecting operating leverage and evergreen momentum .
  • Secular growth catalysts: Record evergreen net inflows of $1.6B in the quarter (largest ever), expansion of the evergreen suite from 3 to 11 funds to $14.3B AUM, and key partnerships (Guardian Life $500M/year for 10 years with warrants; Bloomberg indices distribution) to deepen distribution and elevate brand equity .
  • Balance sheet sturdy: Unrealized carry grew to ~$1.43B (+14% YoY, +10% QoQ), debt modest at $285.6M, and investments increased to $708.3M, providing continued optionality to invest alongside clients and strategic tech initiatives .
  • Dividend maintained and stepping up: Quarterly dividend declared at $0.54; full-year target $2.16 (+10% YoY) re-affirmed—an ongoing shareholder return pillar .

What Went Well and What Went Wrong

What Went Well

  • Mix shift and fee-rate lift: Specialized Funds—especially evergreen—drove PR/FEAUM growth and a higher blended fee rate (65 bps); FRE up 37% YoY and margin to 49% . “Our blended fee rate also continues to benefit from the shift…most notably our Evergreen products” .
  • Record evergreen inflows: $1.6B net Q2 inflows (largest quarter ever), suite expanded to 11 funds, with over $1B evergreen AUM not yet paying management fees set to phase-in starting calendar Q4 2025 and into 2026 (timing tailwind) . “We expect that over half of that current $1 billion will move into Specialized Fund fee-earning AUM during the calendar fourth quarter of 2025” .
  • Strategic partnerships: Guardian Life’s long-term partnership—$500M per year for 10 years plus $5B oversight and seed capital to accelerate evergreen; warrants diluted <1% and revenue share tied to seed capital—near-term fee uplift and durable pipeline . Bloomberg partnership to distribute Hamilton Lane private market indices globally, a brand and distribution amplifier among RIAs .

What Went Wrong

  • Expense growth: Total expenses +34% YoY; compensation & benefits +40% and G&A +21% YoY given headcount/EB comp and revenue-related commissions for wealth channels, partially offset by discipline elsewhere .
  • Incentive fees volatility: Despite strong Q2, management reiterated inherent unpredictability of realizations (though FRPR provides recurring element); prior quarters showed lighter incentive fee levels, underscoring variability embedded in the model .
  • Advisory revenue softness: Advisory fees -5% YoY and fund reimbursement -27% YTD, reflecting mix and timing; the strategic focus remains on higher-fee specialized offerings and evergreen expansion .

Financial Results

MetricQ4 FY25 (Mar 31, 2025)Q1 FY26 (Jun 30, 2025)Q2 FY26 (Sep 30, 2025)
Total Revenues ($USD Millions)$197.973 $175.958 $190.880
Management & Advisory Fees ($USD Millions)$127.838 $133.696 $142.127
Incentive Fees ($USD Millions)$70.135 $42.262 $48.753
Net Income Attributable to HLI ($USD Millions)$50.499 $53.745 $70.889
GAAP Diluted EPS ($)$1.23 $1.28 $1.69
Adjusted Net Income ($USD Millions)$66.058 $71.604 $84.086
Non-GAAP EPS ($)$1.21 $1.31 $1.54
Fee Related Earnings (FRE) ($USD Millions)$90.348 $83.710 $77.037
Adjusted EBITDA ($USD Millions)$101.691 $95.839 $100.815

Segment breakdown – Q2 FY26 management & advisory fees:

SegmentQ2 FY25 ($USD Thousands)Q2 FY26 ($USD Thousands)YoY %
Specialized Funds$70,312 $89,857 28%
Customized Separate Accounts$34,757 $35,771 3%
Advisory$5,728 $5,431 (5%)
Reporting/Monitoring/Data/Analytics$7,128 $8,644 21%
Distribution Management$416 $452 9%
Fund Reimbursement Revenue$1,442 $1,972 37%
Total Mgmt & Advisory Fees$119,783 $142,127 19%

Key KPIs:

KPIQ4 FY25Q1 FY26Q2 FY26
AUM ($USD Millions)$138,295 $140,877 $145,357
AUA ($USD Millions)$819,473 $845,289 $859,842
Total AUM + AUA ($USD Millions)$957,768 $986,166 $1,005,199
Fee-Earning AUM ($USD Millions)$72,047 $74,399 $76,419
Unrealized Carried Interest ($USD Thousands)$1,260,277 $1,309,480 $1,434,248
Debt ($USD Thousands)$290,303 $288,582 $285,611
Cash & Equivalents ($USD Thousands)$229,161 $263,347 $240,773
Investments ($USD Thousands)$664,354 $674,453 $708,278

Results vs S&P Global consensus – Q2 FY26:

MetricConsensusActualBeat/Miss
Primary EPS$1.10*$1.54 +40%*
Revenue ($USD Millions)$169.44*$190.88 +12.7%*
EBITDA ($USD Millions)$72.02*$82.23 +14.2%*
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareFY26Target $2.16 (10% YoY increase) Target $2.16; Q2 dividend declared $0.54 (Record: Dec 19, Pay: Jan 7) Maintained
Evergreen fee activationCalendar Q4 2025 & 2026Not previously quantified>$1B evergreen AUM not yet earning fees; >50% to FEAUM in Q4 2025; remainder in 2026 New timing detail
Guardian warrants dilutionMulti-yearN/A<1% dilution based on current fully diluted shares; vesting aligned to partnership term; tiered exercise prices New disclosure

No formal quantitative revenue/margin tax rate guidance was provided on the call or in the release .

Earnings Call Themes & Trends

TopicQ4 FY25 (two quarters ago)Q1 FY26 (prior quarter)Q2 FY26 (current)Trend
Evergreen platform growthHighlighted strong evergreen momentum; FRE definition refined to include FRPR ~$1.2B quarterly net inflows; evergreen AUM approaching $12.5B; suite expansion (Asia-focused, secondaries, multi-strategy) Record $1.6B net inflows; suite expanded to 11 funds; $14.3B evergreen AUM; fee holidays phasing into FEAUM Accelerating growth and monetization
Fee rate/blended economicsStable/strong specialized fund fee rates Blended fee rate ~64 bps Blended fee rate ~65 bps; mix shift toward higher-fee evergreen Upward
Insurance solutions platformN/ABuilding pipeline; SMA sales cycles elongated but robust pipeline Guardian partnership ($500M/yr; $250M seed to evergreen; warrants <1%) Strategic expansion
Technology/data initiativesN/ADistribution/channel expansion (DBS/private banking; tokenization channels) Bloomberg indices partnership; Securitize SPAC participation; Novata acquisition support Broader ecosystem build
Macro/creditN/AComments on improving exit environment aiding carry in back half Firmly rebutted “credit crisis” narrative; defaults ~1%, leverage ~5x, coverage ~2.8x; positive private credit performance history Constructive stance

Management Commentary

  • Strategic growth: “Guardian Life Insurance Company of America has partnered with Hamilton Lane…Guardian will…commit to invest approximately $500 million per year for the next 10 years…$250 million being used as seed…to…accelerate our growing global Evergreen platform” .
  • Fee-rate and mix: “Our blended fee rate also continues to benefit from the shift…towards higher fee-rate Specialized Funds, most notably our Evergreen products. Today, our blended fee rate stands at 65 basis points” .
  • Evergreen momentum and monetization: “We took in over $1.6 billion in net inflows…our largest quarter ever…over $1 billion of Evergreen AUM…not yet earning Management Fees…over half…will move into Specialized Fund fee-earning AUM during the calendar fourth quarter of 2025” .
  • Data/brand distribution: “We are proud to announce a partnership with Bloomberg, where users now have access to a suite of Hamilton Lane Private Market Indices and Benchmarks…this…will raise the bar for how private markets are now benchmarked” .
  • Macro/credit: “Credit fundamentals are strong and defaults are low…default rate sits at around 1%…private credit…posted positive annual returns…2007 through 2010” .

Q&A Highlights

  • Guardian economics and dilution: Warrants front-end loaded with additional potential later; dilution <1% based on current fully diluted share count; revenue streams from evergreen (Specialized Funds) and SMA management fees with performance fees potential .
  • Fee-rate trajectory: Specialized core fee rate continues to lift as mix shifts to evergreen; expectation for continued blended rate improvement .
  • Fee holidays: Applied to new product launches (6–12 months) to attract early adopters; not expected for established funds or longer durations; FRPR continues during holidays .
  • SMA pipeline and sales motion: Robust multi-billion pipeline; sales organized by geography problem-solving rather than product silos; superior economics favor Specialized/evergreen when meeting client needs .
  • Bloomberg indices monetization: Revenue share model; primary focus on brand enhancement among RIAs and embedding private market benchmarks into workflows, not investible indices .

Estimates Context

  • HLNE delivered substantial beats vs S&P Global consensus on EPS*, revenue*, and EBITDA* (see table above). The magnitude of beats alongside higher fee-related performance revenues and rising blended fee rate suggests upward pressure on forward estimates for management & advisory fees and FRE margin.
  • Consensus target price* stood at $163.5 during Q2; with strategic catalysts (Guardian, Bloomberg, record evergreen inflows) and monetization of fee holidays, sell-side may revisit target dispersion and FRE sensitivity. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Powerful mix shift: Evergreen products are driving fee-rate uplift, stronger FRE margins, and recurring FRPR—supporting higher-quality earnings and cash generation .
  • Monetization runway: >$1B evergreen AUM not yet fee-paying will begin converting in Q4 2025; tailwinds to management fees and margins into FY26–FY27 .
  • Strategic distribution scaling: Guardian partnership institutionalizes durable inflows ($500M/yr), while Bloomberg indices broaden brand and RIA engagement—both catalysts for multi-year AUM growth .
  • Carry and credit risks appear manageable: Growing unrealized carry to ~$1.43B and management’s data-backed stance against a credit crisis support visibility on incentive fees over time (with inherent timing variability) .
  • Expense optics: Elevated G&A and compensation reflect growth investments and revenue-related distribution costs; management emphasizing offsets and discipline—watch FRE margin resilience vs scaling costs .
  • Near-term trading: The magnitude of beats and evergreen monetization timing are positive; any incremental color in the 10-Q on Guardian warrants and revenue share could be a stock narrative driver .
  • Medium-term thesis: HLNE’s multi-pronged growth (evergreen, insurance solutions, data/tech distribution) and rising blended fee rates underpin sustained AUM, revenue, and FRE expansion with improving earnings quality .