Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Management and advisory fee revenue grew by 33% year-over-year.
- GAAP EPS of $1.47 and non-GAAP EPS of $1.51, indicating strong profitability.
- Total asset footprint increased by 15% year-over-year to $940 billion.
- Fee-earning AUM grew by 13% to $67.7 billion, driven by both specialized funds and customized separate accounts.
- Declared a dividend of $0.49 per share, on track for a 10% increase in the full fiscal 2025 dividend.
Negative Points
- Total expenses increased by $37 million compared to the prior year period.
- G&A expenses rose by $2.7 million, driven by revenue-related expenses.
- Retro fees for the quarter included $20.7 million, indicating reliance on retroactive fees for revenue.
- The insurance solutions team expansion reflects a need for unique structures to access private markets, indicating complexity.
- The integration of new technology solutions like Daphne is still in progress, which may pose operational challenges.
Q & A Highlights
Highlights from Hamilton Lane Inc (HLNE, Financial) Q1 Fiscal 2025 Earnings Call
Q: Can you talk a bit more about current efforts and perhaps where you can see the monetization of the data changing? What sort of data products currently does Hamilton Lane offer?
A: Erik Hirsch, Co-Chief Executive Officer, explained that Hamilton Lane monetizes data directly through its Cobalt business, a SaaS offering, and indirectly by using data to win broader business. Cobalt has a dedicated sales team and targets LPs. The firm continues to explore additional ways to monetize its verified, direct-sourced data.
Q: Where do you expect the next leg of growth for the evergreen platform to come from?
A: Erik Hirsch, Co-Chief Executive Officer, noted that growth will come from expanding wire house relationships, direct sales efforts, and introducing new products. The firm plans to add more distribution partners and increase its current offerings.
Q: Can you remind us of your insurance footprint today and what the new Insurance Solutions team allows you to do differently?
A: Erik Hirsch, Co-Chief Executive Officer, stated that Hamilton Lane has been selling into the insurance channel for some time and has expanded resources for structuring and distribution. The goal is to enhance and grow their existing footprint in the insurance sector.
Q: How integrated is Cobalt with Daphne Technologies, and what are the opportunities for future integration?
A: Griff Norville, Head of Technology Solutions, confirmed that Cobalt is fully integrated with Daphne, receiving data from general partners. The focus is on scaling Daphne by introducing it to more GP partners to increase data flow.
Q: What are the primary drivers of the strong growth in management and advisory fees?
A: Jeffrey Armbrister, Chief Financial Officer, attributed the 33% growth in management and advisory fees to a $3.3 billion increase in fee-earning AUM in the evergreen platform and over $3.1 billion raised in the latest secondary fund.
Q: Can you provide more details on the specialized funds' performance and growth?
A: Erik Hirsch, Co-Chief Executive Officer, highlighted that fee-earning AUM in specialized funds grew by $5.7 billion or 24% year-over-year, driven by additional closes, robust investment activity, and expansion of the evergreen platform.
Q: What is the status of the latest secondary fund and its impact on retro fees?
A: Erik Hirsch, Co-Chief Executive Officer, announced the final close of the sixth secondary fund with $5.6 billion in total commitments, generating nearly $21 million in retro fees for the quarter.
Q: How is the Technology Solutions business performing, and what are its growth prospects?
A: Griff Norville, Head of Technology Solutions, reported that the Technology Solutions business has over 200 clients and $28 million in annual contract value, with a 30% revenue CAGR over four years. The business is highly predictable and continues to grow.
Q: What are the key financial highlights for the quarter?
A: Jeffrey Armbrister, Chief Financial Officer, noted that GAAP EPS was $1.47, non-GAAP EPS was $1.51, and a dividend of $0.49 per share was declared. The firm achieved strong growth in management and advisory fees, specialized funds revenue, and incentive fees.
Q: How does Hamilton Lane plan to leverage its partnership with Daphne Technologies?
A: Erik Hirsch, Co-Chief Executive Officer, explained that Daphne will allow asset managers to digitize fund data and publish it efficiently. The partnership aims to make private markets more transparent and easier to access, enhancing Hamilton Lane's technology offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
