Demetrius Sidberry - Head, Investor Relations Mario Giannini - Chief Executive Officer Erik Hirsch - Vice Chairman Randy Stilman - Chief Financial Officer Jeff Meeker - Chief Client Officer.

Ken Worthington - JPMorgan Michael Cyprys - Morgan Stanley Alex Blostein - Goldman Sachs Chris Harris - Wells Fargo Robert Lee - KBW.

Hello and welcome to the Hamilton Lane Q1 Earnings Call. On the call today from the Hamilton Lane team are Mario Giannini, CEO; Erik Hirsch, Vice Chairman; Randy Stilman, CFO; and Demetrius Sidberry, Head of Investor Relations.

Before the Hamilton Lane team discusses the quarter’s results, I want to remind you that they will be making forward-looking statements based on their current expectations for the business. These statements are subject to risks and uncertainties that may cause actual results to differ materially.

For a discussion of these risks, please review the risk factors included in Hamilton Lane’s fiscal 2018 10-K. Management will also be referring to non-GAAP measures that they view as important in assessing the performance of the business.

Reconciliation of these non-GAAP measures to GAAP can be found in the earnings presentation materials, which are available on the IR section of the Hamilton Lane’s website. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane’s funds or stock.

The company’s detailed financial results will be made available when the 10-Q is filed. Finally, for the call this morning, the Hamilton Lane team will be referencing pages in the earnings release presentation available on the Hamilton Lane IR website and shown on the webcast version of this call.

With that, I will turn the call over to Demetrius Sidberry, Head of Investor Relations..

Thank you, Sarah and thanks everyone for joining us. Slide 3 of the presentation provides a summary of our financial performance for Q1 of fiscal 2019. Compared with the first quarter of last year, our total revenue was up 20% driven by strong growth across the platform coupled with an uptick in incentive fee.

Management and advisory fee revenue came in relatively flat despite the fact that we comp against a large amount of retroactive fees in the prior year period. Now moving down to P&L to our earnings per share, for the quarter our non-GAAP EPS was $0.38 and this is based on over $20 million of adjusted net income.

Our GAAP EPS for Q1 was $0.39 and this is based on nearly $9 million of GAAP net income. Finally as in the prior quarter, we announced dividend of slightly more than $0.21 per share, which keeps us on track for our full fiscal year target of $0.85. With that, I will now turn the call over to Mario to cover additional highlights for the quarter..

Thanks, Demetrius and thanks everyone for joining the call. On previous calls we have either provided a deeper look into our company, the industry or the macro-environment in which we operate. While we continue to comment on important trends in the industry and update you on noteworthy developments within our firm.

Our industry is simply now want to change its quarter-to-quarter. Therefore in some quarters like this one, we will go straight into the results. For those of you who have joined our calls before, the graph on slide 4 should be similar.

We continue to believe that this graph is a simple and yet very important illustration of our influence in the private markets as it highlights our scale. For this quarter, our asset footprint of $471 billion was up 31% versus the same period from the previous fiscal year.

Growth in our asset base is coming from a diverse set of clients from different geographies. Broadly speaking, we are seeing the growth come from three types of new clients.

One, those are grand new to the asset class, two, those who have chosen the switch service providers, and three, those who previously took an in-house approach to investing in private market and are now seeking a partner. We are also continuing to see positive fund flows across different geographies and different types of investors.

Our growing client base is reflective of continued expansion of Hamilton Lane offerings, as well as, variety of customized mandates we fulfill on behalf of our clients.

As you can see on Slide 5, our total fee earning AUM was up $2.9 billion or nearly a 11% versus the prior year with solid growth across both our specialized products and our customized separate accounts. The chart on Slide 5 also shows that our fee rates have remained steady over a long period of time.

On Slide 6, we highlight areas of focused around our AUM built, starting with our customized separate account offering. Over the last 12 months we have added net fee earning AUM of over $2 billion to our customized separate accounts.

There continues to be a steady flow in new commitments from our existing clients, as these clients seek to maintain or increase their allocations to the private markets. Based on this, our existing clients account for approximately 70% of the new fee earning AUM within our separate accounts.

The balance of the fee earning AUM growth comes from us winning new clients, which produce the long-term organic growth potentially this part of our business. Over the last quarter, we saw a slight decrease in our separate account fee earning AUM, due to primarily the larger account reaching the end of its term.

We expect this decline to be offset by the start of a new tranche of capital for this client that will ramp up as commitments are made over the coming quarters. Having said this and we stated on our prior calls, due to the exact timing of new separate account signings and client speeding largely beyond our control.

We believe the best way to think about our separate account AUM built is in an annual or multiyear period versus quarter-over-quarter matrix. We’ve also experienced nice momentum for our specialized funds, which have added net fee earning AUM of nearly $900 million over the last 12 months.

The growth in our specialized funds fee earning AUM has been driven by the continued ways of our fourth co-investment fund, which has closed on over $900 million of commitments to-date, including over $200 million raised during the first quarter.

Additionally our fund-of-funds product which has reached over $120 million in commitments and the raise in the investment of our credit oriented funds continue to make good progress. We will continue to attract capital for both our co-investment and fund-of-funds products.

We will continue to have additional closes through 2018 and into 2019, because since both of these products are already actively deploying capital subsequent closing will result in retroactive fees. Lastly shown here is our advisory offering with AUA up $101 billion compared with the prior year.

We continue to expand both the number of advisory clients, as well as entities coming to us for management around back office and analytical needs, which are also represented in this revenue. And, as we noted before, there is not always a direct relation between AUA and advisory revenue growth.

Our AUA is an indicator of our presence and influence in the private markets. And as a figure we are both proud of and believe it’s a differentiating factor. To wrap-up my portion, we continue to be in a very robust environment with the market in general and the private markets more specifically.

Our existing business in pipeline of new opportunities reflects this and we are finding ways to not only address those opportunities that are here now and nature, but also those who will be part of the evolution what is already a very dynamic market. I will now turn this over to Randy to cover our financial performance for the quarter..

Thank you, Mario. Slide 8 of our presentation shows the financial highlights for the quarter. As shown on the slide, we continue to see very solid growth in our business with total revenue up 20% from the prior year period.

As Demetrius mentioned, management and advisory fee revenue was essentially flat over the prior year, with the prior year quarter reflecting the impact of the contributions from significant retroactive fees of $5.8 million that we did not recur this year.

As many of you are likely aware, investors that come into later closes of the fundraised for many of our products, the retroactive fees dating back to the funds first closed. Therefore you typically see a spike in management fees related to that fund for the quarter which subsequent closes occur.

Revenue from our customized separate accounts offering increased $1.6 million compared to the prior year period, due to the additional of several new accounts and additional allocations from existing accounts.

For our advisory and reporting offerings, we experienced over 20% growth compared to the prior year period, driven by new client adds in our advisory back office reporting and technology analytics offerings. The final component of our revenue is incentive fees, incentive fees were up more than $11 million from the prior year period.

The increase was driven by the recognition of carried interest from a customized separate account that included the GP catch-up. And, from one of our co-investment funds that recognized - carried interest in the prior two quarters.

As we discussed in the last call, we had $2.5 million in a deferred incentive fee liability still outstanding from this fund at the end of fiscal 2018. We were able to recognize approximately $5 million from this co-investment fund during the quarter, which included the $2.5 million of deferred incentive fees on which we had no associated expenses.

It is important to know that while incentive fees did increase at a healthy cliff this quarter. Our overall expectation for carry this fiscal year remains in line, but at the high end of our historical trends of 5% to 10% of overall revenue.

This quarter also shows that we have the ability to generate carry dollars beyond just fee or products as more and more of our separate accounts have transactional component consisting of secondary and our co-investments on which we generally received carried interest. This is helping to drive the diversity of our carry dollars.

As of quarter end, we had over $290 million in unrealized carried interest spread across over 50 investment vehicles and thousands of underlying investments. Turning to Slide 9, which profiles our earnings. Our fee related earnings declined modestly from the prior year period as a result of the retroactive fees we discussed earlier.

In regards to our expenses, total expenses increased compared with the prior year period driven by incentive fee compensation and acquisition earn-out expense. The earn-out expense is related to our real assets acquisition last August and is based on the performance of that business for a one year period following the acquisition.

Therefore we have recognized most of the expense to-date. That business continues to perform well and as a result the earn-out amount increased again this quarter. Total comp and benefits were up $6.7 million compared to the prior year period, due to a $4.2 million increase in incentive fee related compensation and $2.8 million from the earn-out.

G&A was up $2.6 million or 31% driven by $1.4 million uptick in consulting and professional fees, which included close to $900,000 in fees related to Private Market Connect, our joint venture firms in the prior year period, as well as, some increases in accounting and legal fees.

Wrapping up with our balance sheet on Slide 10, our investments alongside clients and products, which is the largest part of our balance sheet grew and we are up approximately 3% for the quarter. This balance will continue to grow as capital raise grows and we invest alongside.

We did see a modest decline in our investment evaluation this quarter compared to strong growth in the prior year period. As shown in the equity and income of the best of these lines of our income statement. As a reminder, our evaluations are on a three month lag.

So, public market performance in the first calendar quarter of the year likely had an impact on private market valuations with S&P and MSCI both of them more than 1%. In regards to our liabilities, our senior debt is our largest liability and we continue to be modestly levered at less than 1x LTM adjusted EBITDA.

On the prior call we discussed the announcement of an acquisition of one of the technology investments on our balance sheet Ipreo. We are excited to announce that subsequent to quarter end, we received approximately $18 million as part of the acquisition closing on August 2.

We expect to achieve about 2.6x our initial investment once all proceeds are received and expect to recognize a gain next quarter of approximately $7.6 million. With that, we are happy to take questions..

[Operator Instructions] Our first question comes from the line of Ken Worthington of JPMorgan. Please go ahead, your line is open..

Hi, good morning and thanks for taking my questions. And, I apologize if I missed this. In terms of distribution you’ve had about $3.5 billion of distributions in the separate account business over the last two quarters.

Can you talk a little bit about some of the timing aspects of maybe what happened this quarter and in even last quarter? And maybe help us understand what the outlook looks like for the level of distributions, if you could for the remainder of the year?.

Hey Ken, it’s Erik. I think what you’re seeing on kind of that decline on the fee earning AUM and around the distributions. I would say these last two quarters been abnormally a little bit larger, a lot of that outside of our control as you are seeing these tranches just age overtime and then ultimately come to an end.

What I would sort of point people to is couple of factors, one, you see really [de-minimis] impact to revenue because they’re in runoff mode, the fees are already coming down pretty substantially. What you don’t always have perfect alignment around is when those runoff versus when the new tranche starts.

So, as Mario mentioned in his comments, you had in this quarter just larger clients just in terms of AUM not necessarily revenue given again the age of the assets that had rolled-off and that new contract just hasn’t been inch yet, we haven’t gotten active which will happen we think very shortly.

So, in terms of guidance on a go forward basis, you are seeing kind of them aging on quarter-to-quarter. I think in some periods you are going to see this mismatch where one quarter just has slightly higher distributions then you have new stuff coming online. But I think we would go back to focus on the annual.

On the annual side, I think there is when you’re sort of seeing the net increase still continuing to come through reflecting the strong growth characteristics of the business..

Okay, great. Thank you.

And, then on expenses and base compensation, actually base compensation fell sequentially, maybe talk about the outlook for hiring and the growth in headcount that you expect in the coming year and maybe how that flows through - or should flow through the compensation line?.

Hi Ken, it’s Mario. I think the growth plans in terms of hiring are probably similar to what you’ve seen in the last year or two. I think that we look at - we obviously look at headcount very carefully, look at compensation carefully.

But I would expect that you will see growth in headcount across all areas of the organization, investment side, the infrastructure side, as we continue to grow.

And, I think we’ve talked about it in the past calls, we expect the margins to be around where they are and we look at the cost side of it very carefully, you add where you think you can grow and you add where you think that you need people to run the business as its running.

So, I don’t see any huge changes in how we are going to be looking at adding people or resources..

Okay, fair enough. Thank you very much..

Your next question comes from the line of Michael Cyprys of Morgan Stanley. Please go ahead, your line is open..

Hi, good morning. Thanks for taking the question.

Just following up on the IPreo exit, the $70 million in proceeds, can you just elaborate a little bit more how you’re thinking about reinvesting using those proceeds in terms of capital management versus reinvestment back in the business? And, then just broadly on the technology side, if you could just talk about how you’re thinking about next way sort of technology strategic investments that you might be making or thinking about where to be added, what’s your approach in your criteria there?.

Mike its Erik. Thanks for the question. Let me the latter part first and then I’ll come back to the beginning. I think the Ipreo exit for us and then we are very proud of. I think it’s reflective of the fact that the technology strategy is working.

We said on prior calls about using balance sheet money in a smart way where we can both enhance the competitive positioning of the business through technology, as well as making money on the balance sheet dollar. I think both of those coming into very - a lot of clarity around what just happened.

One, on the advisory business over the last couple of quarters, you’ve seen good growth there, part of that is driven by new advisory clients coming on. But also a part of that is driven by us continuing to win back office and analytic mandates. Again that is largely due to technology.

So, now you are seeing a very successful exit on the Ipreo position. So, we would say the strategy is working. What does that mean going forward? We continue to be actively in dialogue with technology, potential technology partners.

Our criteria is pretty simple, we need something that is going to enhance what we already have to be our current offering that’s going to make us more efficient and that’s going to deliver a better client experience for the end-user. We have, as you know, have found four of those to date.

I think we would all be surprised if that doesn’t continue to grow overtime. I don’t think that’s going to necessarily be a quarter-to-quarter growth.

But again we look at that strategically and tactically, which takes us back to the first part of your question, which is where are those dollars going? I think for us we view our balance sheet as a strength, it’s very clean, where are we spending dollars, we’ve been spending those dollars on continuing to grow our GP commitments alongside of the AUM growth that is not stopping as the AUM growth is not stopping.

And, I think we will also again opportunistically look to redeploy some of those dollars back into other technology initiatives as we continue to find them..

Great, and then just separately if you could just update us on the reach our high network platform initiatives.

I think in some cases you are maybe white labeling for some managers or thinking about that for some distribution part, maybe if you can elaborate on how you’re thinking about the high network retail distribution front and the opportunity set there?.

Sure Michael its Mario. I think we are looking at it in two ways, I don’t think that has changed from what we have probably articulated before. I think one the white label remains interesting. There are a lot of groups there that have that distribution channel and wanted as a white label product. So, I think we are a natural partner with them.

We’ve done it before. We have experience. We don’t really threaten them in the context of saying we are going to go after their clients or anything like that. So, I think we are a very good partner for that and we continue to have some of those relationships and explore new ones.

I think the other part of it is the retail around liquid products, around products, evergreen products, all sorts of technology and types of offerings you can have and we continue to explore those.

I think for us it’s an interesting avenue as you probably know as well as anyone, there all sorts of different regulatory and legal requirements around them that you’ve got to make sure you’re doing well. But we think that it’s an area that will have significant growth for us going forward.

So, I think we are very interested in that and continue to work on it..

Great. Thank you..

Your next question comes from the line of Alex Blostein of Goldman Sachs. Please go ahead, your line is open..

Hey everyone. So, I was hoping to touch on fee dynamics both kind of broader for the industry and specifically related to you guys. So, I guess, when you look at the separate account fees, it looks like they declined a little bit sequentially. I know that’s more of an output and there are a lot of things that are kind of going in and out of it.

Maybe kind of comment on kind of what’s going on any of the surface and if there any increase pricing pressures you’re starting to see in the business and how we should think about the fee rates on the separate account side going forward?.

Yes. Thanks Alex, its Erik. I would say a couple of observations. I think the notion of the fee pressure exists across all the asset classes and we are not immune from that. I think the fact that we are showing numbers that are showing real strength and stability over the long period of time is reflective of a couple pieces.

One, we are simply doing more for clients and as a result of that we’ve been able to hold the fees. The second part is, the fee pressure is more a little bit around kind of customized side as supposed to commingle product side. In the commingle product side, you have seen just remarkably resilient fee levels.

And, if you are in that game as we are and you are a good provider which we are, there is a kind of market rate for that and that market rate has been very, very stable.

I think what you’re seeing this quarter on the fee side is again more reflective of just some of the dollars moving and aging overtime and distributing out as opposed to any alteration in the fee pressure dynamic, which we are not seeing quarter-to-quarter..

Got it. And, then just a couple of quick follow ups for Randy. On the catch-up fees, as you guys continue to fundraise and some of those investments are in the process.

Any way to emphasize, kind of what kind of catch-up fee you are going to have in the management in the next couple of quarters? And, then secondly maybe you could just head on the G&A expenses, obviously been sort of elevated, you highlighted a couple of reasons why missing and looking out over the next 12 months or so, how we should think about the level of G&A? Thanks..

Alex its Erik, I’ll take the first, and then Randy will handle the G&A. On the retro fees, so as you heard to say, we’ve got a fairly lengthy time period to rise on these commingle products, it’s generally 18 months after the first close. So, we’ve got some real time to go. There are a couple of pieces that are sitting in there.

So, our co-investment product, the most recent one which we’ve talked about in terms of adding AUM is active and so that’s where again as we have subsequent closing which Mario referenced we will go back to those. That is going to be driven by two factors.

One, the further out we go in time obviously the larger the catch-up and two, the larger the AUM also the bigger catch-up. We are still today not at the level of what the prior fund had been. And, so there is still we think interesting room for us to grow those products. And, as we said we’ve got time to do that on fundraises across the board.

What you’re also seeing is we had talked about the credit product last time that is done, is raised, given that is a fee on invested, none of those dollars are flowing through on these financials because it hasn’t started during this time period. And, so we still have that looking forward and ahead of us.

So, we think there is some meaningful growth still coming on things that are already in process if not already raised that you’ll start seeing in subsequent quarter. With that, let me go to Randy for G&A question..

Thanks. With the G&A, we increased about a million fix over the prior year’s quarter and more than half of that increase was due to the Private Market Connect, expense actually moving from our compensation line over to the G&A. And, this is the quarter that it occurred last year, actually at the end of the first fiscal quarter.

So, that explains about half of the expense. We are also seeing, we still have some additional costs that we’re incurring on professional fees, whether it’s legal or accounting and auditing and tax. As we build out, as we increase the public company reporting and the like.

And, we also had a situation this last quarter on the legal side where the European risk initiative was just put into place. That was something that we incurred some additional professional fees that were not expected at the time..

Got it, and just on the run rate going forward, any other drops off?.

I think that really what we are looking at is single digit growth to low double digit growth in terms of expenses, which will match what we’ve communicated as far as the revenues..

Got it. Great. Thank you..

Your next question comes from the line of Chris Harris of Wells Fargo. Please go ahead, your line is open..

Great, thanks.

[Technical difficulty] have number of permanent capital vehicles…?.

Hey Chris, we missed the first part of that question, sorry can you repeat it. We can hear you better now..

[Technical difficulty] I know you guys are different, but just wondering if that’s something [technical difficulty]?.

Chris, sorry, it’s really breaking up. We’re only getting pieces.

I think your question is, that some groups have raised permanent capital vehicles and why we are not like some of them, are we thinking of raising permanent capital vehicles? Is that close?.

Yes, that’s the question..

The short answer is, yes. Part of what I was talking about earlier in terms of looking at some of the retail strategies revolves around some of those types of vehicles. Clearly as you said, some of them are raised by groups that are different from us and so some of the structuring challenges are different for them then it would be for someone like us.

But I think as the markets continue to expand whether here or in the - or outside the United States, some of these vehicles do become interesting. And so, yes, we are looking at those very actively..

Your next question comes from the line of Robert Lee of KBW. Please go ahead, your line is open..

Great, thank you very much. Thanks for taking my questions. And, first one is, well, I apologize if it’s got on little late, if you touched it earlier. But maybe just refresh us on some of the specialized fund - fundraisings, I know they’re still doing the co-investment, I think the fund-of-funds.

Are there other products that you’re also in the process of raising for right now?.

Yes Rob its Erik. Thanks for the question. I think what you’ll see in the - our earnings transcript is, yes, continued progress on both the co-investment fund and the fund-of-funds.

What I had mentioned earlier is that, again everyone should keep in mind that we’ve got a fairly long runway to raise these vehicles usually at least 18 months after first close. And, so we still have a fair amount of time in front of us.

And I would say if history is a barometer, you tend to see this a little bit bookended, little bit of more aggressive activity on the very front end and then more aggressive activity in terms of closing capital on the very end and then the middle tends to be little quieter.

And, so we continue to make good progress and feel good about those prospects.

In terms of other things that are showing up in that specialized product vehicle, this really goes back to the comment that Mario made which is that we are seeing an increase in terms of what I would think of is kind of smaller specialty products either white labelish or attacking a particular market segment or a particular geography for a define set of LPs.

These are not kind of large flagship products that I think are worthy of us kind of highlighting and calling out on the call. But as you start to see the growth of just the variety of them, they are adding meaningful increase in AUM across that as they all continue to scale overtime..

Okay, great. And, then just kind of maybe broader or higher level question, I mean, secondary is market place broadly feels like it’s growing at - that the rest of the industry is growing at high rate, I mean, you and many peers have raised a lot of assets to access that market in various ways.

Could you - how is that impacting do you think kind of pricing up, the pricing or opportunity within secondarily just generally, I mean, maybe this is a bad analogy I think too many years ago, the bank loan market used to trade by appointment and pretty liquid and then over the years more money put into it, it’s got more liquid, if it still pain in that trade, but more easily traded on some level I’m assuming impacted the opportunity.

So, how do you kind of think of that as more capital kind of comes into space?.

Rob its Mario. That is one of the more interesting markets in our view right now. I think what - you are right, it has grown. And, I think it’s also accurate to say that discounts have narrowed somewhat. But even there it depends on what you are talking about. If you are talking about discounts on big brand name funds, yes, they are very narrow.

If you are talking about discounts on other funds, it varies, some of the discounts would surprise people in terms of looking at that and saying is the liquid a market as people think? I think more broadly what you are seeing in the secondary market, it’s how large it is becoming both in terms of what you would call your normal vanilla, you are buying a partnership at a discount that was raised 7 or 8 years ago to big portfolios that are being sold to massive restructurings that are being done by very high quality general partners.

It is a very different market from what it was from 5 years ago. And, so as you think about the opportunity set, it has grown far larger than you would normally say, what is the market for just playing secondary interest in general partners trading? So, as we look at that market, there is a lot of capital that has been raised.

There’s also a lot of capital that has been spent in that market. So, there is a reloading period that needs to occur.

And, in our view that market continues to expand as an opportunity set and so as we look at it, the headline numbers look like well it’s something different going on, what’s different going on is that market is simply becoming a much broader deeper and expanded market than what I think anyone would have thought 5 or 6, 7 years ago..

Maybe this is a follow up, I mean, the GPs have to approve any transfer of ownership I presume.

So, do you find the most of the GPs try to - kind of expanding their list so to speak of approved investors like yourselves or they tend to keep their approved lists, so they’re willing to transfer interest to or to facilitate the interest kind of keeping that pretty narrow and tight?.

It varies. I think that not all of them have approval rights in that sense, but it varies. I think that you are seeing again to this notion of the secondary market becoming. 15 years ago you only had a secondary if there was a problem that is no longer the case.

And, so it is more accepted way of if you are facilitating transfers among your limited partners. But there are certainly general partners that have restricted lists, I think for us that’s a great thing because everybody wants a relationship with Hamilton Lane, because we represent such a large segment of the market.

So, I think the answer is that general partners have restricted lists. They are somewhat broad; few of them are very narrow. If you asked us, we would love it if they all narrow it to one or two groups, because we know we would be one of those one or two groups.

But I think the realistic answer is, there are restrictions, there are some groups that are favored more than others. But again this is a market that is becoming way more accepted than you’ve seen in the past..

Great. Thank you for taking my questions..

There are no further questions at this time. I will turn the call back over to the presenters for closing remarks..

Thanks everyone for joining. Have a great day..