What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-05-26 compared with 2021-05-27 · 223 added, 298 removed, 905 unchanged (37% of the section changed)

Financial Statements and Supplementary Data

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 42 )

Consolidated Balance Sheets

11 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 26, 2022 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in the year ending March 31, 2020 due to the adoption of ASU No.

2016-02, Leases (Topic 842), and the related amendments.

Basis for Opinion

16 unchanged sentences

As explained in Note 2 to the consolidated financial statements, the Company considers incentive fees from specialized funds and customized separate accounts to be variable consideration which is constrained and recognized when it is probable that a significant reversal in the cumulative amount of incentive fee revenue will not occur.

As incentive fees are generally payable after all contributed capital and the preferred return thereon has been distributed to investors, the Company estimates the amount and probability of additional future capital contributions that it will call from investors in specialized funds and customized separate accounts related to unfunded commitments or follow on investment opportunities in investees.

In evaluating incentive fees that are subject to contingencies as prescribed by the applicable fund or separate account documents, the Company estimates the amount and probability of additional future capital contributions that will be made from investors in specialized funds and customized separate accounts related to unfunded commitments or follow-on investment opportunities in investees.

These estimates could impact the probability of a significant reversal in the cumulative amount of incentive fee revenue occurring.

7 unchanged sentences

Recognition of Net Deferred Tax Asset from Equity Offering and Unit Exchange

Description of the Matter As further discussed in Note 11 to the consolidated financial statements, in connection with the Company’s equity offerings and unit exchanges during the current year (the “Transactions”), the Company recorded a net deferred tax asset of $121.1 million.

Description of the Matter As further discussed in Note 12 to the consolidated financial statements, in connection with the Company’s equity offering and unit exchanges during the current year (the “Transactions”), the Company recorded a net deferred tax asset of $17.0 million.

As further discussed in Note 2 to the consolidated financial statements, the resulting basis differences arising from the Transactions represent a temporary difference for which the Company records a deferred tax asset if it is more likely than not the deferred tax asset will be realized.

2 unchanged sentences

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s net deferred tax asset recognition process, including controls over management’s review of the determination of the tax basis step-ups and related future tax deductions and the identified historical basis differences described above.

To test the recognition of the net deferred tax asset resulting from the Transactions, we involved a specialist and performed procedures that included, among others, evaluating the technical merit of the Company’s determination of the tax basis step-ups and the related future tax deductions based on relevant tax law and regulations.

To test the recognition of the net deferred tax asset resulting from the Transactions, we involved tax subject matter professionals and performed procedures that included, among others, evaluating the technical merit of the Company’s determination of the tax basis step-ups and the related future tax deductions based on relevant tax law and regulations.

We also used available tax-related information to evaluate the historical basis differences the Company used in its determination.

56 unchanged sentences

Liabilities of consolidated variable interest entities:

Deferred incentive fee revenue — 3,704

Other liabilities 12,675 17,310

8 unchanged sentences

Additional paid-in-capital 161,676 150,564

Accumulated other comprehensive loss — ( 78 )

Retained earnings 185,149 87,512

27 unchanged sentences

Consolidated variable interest entities related:

Equity in loss of investees ( 2,123 ) ( 481 ) ( 255 )

Equity in income (loss) of investees 483 ( 2,123 ) ( 481 )

Unrealized gains 4,485 2,141 —

4 unchanged sentences

Net income 247,253 168,785 126,776

(Loss) income attributable to non-controlling interests in general partnerships ( 250 ) 85 564

Income (loss) attributable to non-controlling interests in general partnerships 376 ( 250 ) 85

Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.

1 unchanged sentence

Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.

4,343 1,293 —

Net income attributable to Hamilton Lane Incorporated $ 145,986 $ 98,022 $ 60,825

13 unchanged sentences

Comprehensive income $ 247,253 $ 168,915 $ 126,617

Comprehensive (loss) income attributable to non-controlling interests in general partnerships ( 250 ) 85 564

Comprehensive income (loss) attributable to non-controlling interests in general partnerships 376 ( 250 ) 85

Comprehensive income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.

1 unchanged sentence

Comprehensive income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc.

4,343 1,293 —

Total comprehensive income attributable to Hamilton Lane Incorporated $ 145,986 $ 98,100 $ 60,740

9 unchanged sentences

Balance at March 31, 2019 $ 27 $ 24 $ 92,482 $ 17,686 $ 7 $ 5,716 $ 53,780 $ 169,722

— — — 33,573 — 564 64,860 98,997

Cumulative-effect adjustment from adoption of accounting guidance

— — 411 20 — — 566 997

Net income — — — 60,825 — 85 65,866 126,776

Other comprehensive income — — — ( 85 ) — ( 74 ) ( 159 )

— — — — 7 — 8 15

Equity-based compensation — — 3,830 — — — 3,405 7,235

— — 2,912 — — — 3,544 6,456

Issuance of shares for contingent compensation payout — — 214 — — — 211 425

1 — 200 — — — 224 425

Purchase and retirement of Class A stock for tax withholding — — ( 3,227 ) — — — ( 2,654 ) ( 5,881 )

— — ( 2,425 ) — — — ( 2,962 ) ( 5,387 )

Deferred tax adjustment — — 6,526 — — — — 6,526

— — 10,346 — — — — 10,346

Dividends declared — — — ( 31,421 ) — — — ( 31,421 )

— — — ( 20,456 ) — — — ( 20,456 )

Capital contributions from (distributions to) non-controlling interests, net — — — — — ( 948 ) — ( 948 )

— — — — — ( 2,114 ) — ( 2,114 )

Member distributions — — — — — — ( 36,116 ) ( 36,116 )

— — — — — — ( 55,893 ) ( 55,893 )

Offerings adjustment 3 ( 2 ) 6,367 — — — ( 6,370 ) ( 2 )

4 ( 2 ) 9,589 — — — ( 9,593 ) ( 2 )

Employee Share Purchase Plan share issuance — — 659 — — — 585 1,244

— — 127 — — — 137 264

Vesting of restricted stock — — 333 — — — ( 333 ) —

— — 324 — — — ( 324 ) 0

Equity reallocation between controlling and non-controlling interests — — 543 — — — ( 543 ) —

— — ( 2,831 ) — — — 2,831 0

Balance at March 31, 2020 $ 30 $ 22 $ 107,727 $ 47,090 $ ( 78 ) $ 4,853 $ 77,757 $ 237,401

2 unchanged sentences

Equity-based compensation — — 4,415 — — — 2,695 7,110

Issuance of shares for contingent compensation payout — — 214 — — — 211 425

Purchase and retirement of Class A stock for tax withholding — — ( 3,935 ) — — — ( 2,084 ) ( 6,019 )

5 unchanged sentences

Employee Share Purchase Plan share issuance — — 900 — — — 547 1,447

Vesting of restricted stock — — 333 — — — ( 333 ) —

Adjustment of redeemable non-controlling interest to redemption value — — — ( 14,750 ) — — ( 7,199 ) ( 21,949 )

Equity reallocation between controlling and non-controlling interests — — 521 — — — ( 521 ) —

Balance at March 31, 2021 $ 36 $ 17 $ 150,564 $ 87,512 $ — $ 2,211 $ 73,861 $ 314,201

Hamilton Lane Incorporated

Consolidated Statements of Stockholders' Equity

(In Thousands)

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Accumulated Other

Comprehensive

Income (Loss) Non-Controlling

Interests in general partnerships Non-Controlling

Interests in Hamilton Lane Advisors, L.L.C.

Balance at March 31, 2020 $ 30 $ 22 $ 107,727 $ 47,090 $ ( 78 ) $ 4,853 $ 77,757 $ 237,401

— — — 98,022 — ( 250 ) 69,720 167,492

Net income — — — 145,986 — 376 96,548 242,910

Other comprehensive income — — — — — — — —

Equity-based compensation — — 5,040 — — — 2,364 7,404

— — 4,415 — — — 2,695 7,110

Purchase and retirement of Class A stock for tax withholding — — ( 2,204 ) — — — ( 1,281 ) ( 3,485 )

— — ( 3,935 ) — — — ( 2,084 ) ( 6,019 )

Deferred tax adjustment — — 2,747 — — — — 2,747

— — 19,252 — — — — 19,252

Dividends declared — — — ( 51,376 ) — — — ( 51,376 )

— — — ( 42,850 ) — — — ( 42,850 )

Capital contributions from (distributions to) non-controlling interests, net — — — — 836 — 836

— — — — ( 2,392 ) — ( 2,392 )

Member distributions — — — — — — ( 57,953 ) ( 57,953 )

— — — — — — ( 45,416 ) ( 45,416 )

Offerings adjustment 1 ( 1 ) 4,097 — — — ( 4,098 ) ( 1 )

Employee Share Purchase Plan share issuance — — 1,265 — — — 595 1,860

— — 900 — — — 547 1,447

Accretion of redeemable non-controlling interest — — — ( 14,750 ) — — ( 7,199 ) ( 21,949 )

Adjustment of redeemable non-controlling interest to redemption value — — — 3,027 — — 1,316 4,343

Equity reallocation between controlling and non-controlling interests — — 167 — — — ( 167 ) —

— — 521 — — — ( 521 ) —

Balance at March 31, 2022 $ 37 $ 16 $ 161,676 $ 185,149 $ — $ 3,423 $ 111,185 $ 461,486

14 unchanged sentences

Gain on sale of investments valued under the measurement alternative ( 11,936 ) — ( 4,973 )

Fair value adjustment to investment valued under the measurement alternative ( 6,229 ) ( 1,507 ) —

Proceeds received from investments 784 12,761 14,077

Fair value adjustment to investments valued under the measurement alternative ( 47,487 ) ( 6,229 ) ( 1,507 )

Proceeds received from partnerships 46,817 784 12,761

Non-cash lease expense 9,890 7,376 4,643

11 unchanged sentences

Unrealized gain on warrants measured at fair value ( 4,485 ) ( 2,141 ) —

Equity in income of investees 2,123 481 255

Equity in (income) loss of investees ( 483 ) 2,123 481

Change in deferred incentive fee revenue — ( 3,704 ) —

6 unchanged sentences

Proceeds from sales of investments valued under the measurement alternative 12,623 — 6,419

Cash paid for purchase of intangible assets ( 1,000 ) ( 4,172 ) —

Acquisition of business ( 10,096 ) — —

Purchase of intangible assets — ( 1,000 ) ( 4,172 )

Loan to investee — — ( 157 )

20 unchanged sentences

Members’ distributions paid ( 47,711 ) ( 34,368 ) ( 47,368 )

Other ( 75 ) — —

Consolidated variable interest entities related:

4 unchanged sentences

— ( 6,027 ) —

Net cash used in financing activities $ 270,660 $ ( 64,709 ) $ ( 90,210 )

Net cash (used in) provided by financing activities $ ( 113,216 ) $ 270,660 $ ( 64,709 )

Effect of exchange rate changes on cash and cash equivalents $ — $ 130 $ ( 144 )

Increase in cash, cash equivalents, and restricted cash 37,167 1,620 2,207

(Decrease) increase in cash, cash equivalents, and restricted cash ( 14,180 ) 37,167 1,620

Cash, cash equivalents and restricted cash at beginning of year 90,377 53,210 51,590

19 unchanged sentences

HLA sponsors the formation, and serves as the general partner or managing member, of various limited liability partnerships consisting of specialized funds and certain single client separate account entities (“Partnerships”) that acquire interests in third-party managed investment funds that make private equity and equity-related investments.

The Partnerships may also make direct co-investments, including investments in debt, equity, and other equity-based instruments.

The Partnerships may also make direct investments, including investments in debt, equity, and other equity-based instruments.

The Company, which includes certain subsidiaries that serve as the general partner or managing member of the Partnerships, may invest its own capital in the Partnerships and generally makes all investment and operating decisions for the Partnerships.

5 unchanged sentences

All intercompany transactions and balances have been eliminated in consolidation.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic, which has resulted in significant disruption and uncertainty in the global economic markets.

Given the amount of uncertainty currently regarding the scope and duration of the COVID-19 pandemic, it is currently not possible to predict the precise impact it will have on the Company’s financial statements.

In addition, certain impacts may not be reported in the current quarter

The COVID-19 pandemic continues to impact global economic markets.

Given the amount of uncertainty regarding the scope and duration of the COVID-19 pandemic, it is not possible to predict the precise impact it will have on the Company’s financial statements.

In addition, certain impacts may not be reported in the current quarter due to the Company’s investments in partnerships and unrealized carried interest amounts, which are reported on a three month lag, as discussed below in “Accounting for Differing Fiscal Periods” .

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

due to the Company’s investments in partnerships and unrealized carried interest amounts, which are reported on a three month lag, as discussed below in “Accounting for Differing Fiscal Periods” .

Use of Estimates

15 unchanged sentences

For entities that are not determined to be VIEs, the Company analyzes whether it has control through a majority voting interest to determine if consolidation is required.

At each reporting date, the Company determines whether any reconsideration events have occurred that require it to revisit the primary beneficiary analysis and will consolidate or deconsolidate accordingly.

See Note 6 for additional disclosure on VIEs.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

See Note 5 for additional disclosure on VIEs.

Accounting for Differing Fiscal Periods

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Restricted cash at March 31, 2022 and 2021 was primarily cash held by the Company’s foreign subsidiaries to meet applicable government regulatory capital requirements.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Investments Held in Trust by Consolidated Variable Interest Entities

4 unchanged sentences

Gains and losses resulting from the change in fair value of these securities are included in unrealized gains of consolidated variable interest entities on the Consolidated Statements of Income.

The estimated fair values of investments held in the trust account are determined using quoted prices in an active market and therefore are classified in Level 1 of the fair value hierarchy, as described in “Fair Value of Financial Instruments” below.

The estimated fair values of investments held in the trust account are determined using

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

quoted prices in an active market and therefore are classified in Level 1 of the fair value hierarchy, as described in “Fair Value of Financial Instruments” below.

Fees Receivable

13 unchanged sentences

Expenditures for ordinary repairs and maintenance are expensed as incurred.

On April 1, 2019, the Company adopted ASU 2016-02, “Leases” (ASC 842) on a prospective basis and as a result, prior period amounts were not adjusted to reflect the impacts of the new standard.

In addition, as permitted under the transition guidance within the new standard, prior scoping, classification, and accounting for initial direct costs were carried forward for leases existing as of the adoption date.

The new standard establishes a right of use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the Consolidated Balance Sheets for all leases with terms longer than 12 months.

Leases are classified as either finance or operating, with classification affecting the pattern of expense

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

recognition in the Consolidated Statements of Income.

The adoption did not have an impact on the Consolidated Statements of Income as all of the Company’s leases are operating leases, and will continue to be recognized as expense on a straight-line basis.

The adoption, however, resulted in a gross-up in total assets and total liabilities on the Consolidated Balance Sheets.

The Company determines whether an arrangement contains a lease at inception.

2 unchanged sentences

The Company accounts for lease components and non-lease components as a single lease component.

Lease ROU assets and lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term.

Lease right of use (“ROU”) assets and lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term.

Lease ROU assets include initial direct costs incurred by the Company and are presented net of deferred rent and lease incentives.

4 unchanged sentences

Lease expense for lease payments on operating leases is recognized on a straight-line basis over the lease term.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Intangibles and Goodwill

8 unchanged sentences

The estimated amortization expense for each of the next five fiscal years is $ 2,499 , $ 2,458 , $ 2,458 , $ 2,222 , and $ 1,911 , respectively.

Goodwill of $ 3,943 as March 31, 2021 and 2020 is included in other assets in the Consolidated Balance Sheets and was recorded in conjunction with previous acquisitions.

Goodwill of $ 9,566 and $ 3,943 as of March 31, 2022 and 2021, respectively, is included in other assets in the Consolidated Balance Sheets and was recorded in conjunction with previous acquisitions.

Goodwill is reviewed for impairment at least annually utilizing a qualitative or quantitative approach, and more frequently if circumstances indicate impairment may have occurred.

1 unchanged sentence

The reporting unit is the reporting level for testing the impairment of goodwill.

If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value or when the quantitative approach is used, a two-step quantitative assessment is performed to (a) calculate the fair value of the reporting unit and compare it to its carrying value, and (b) if the carrying value exceeds its fair value, to measure an

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

impairment loss.

The Company performed the annual impairment assessment as of December 31, 2021 noting that no goodwill impairment existed.

8 unchanged sentences

Values are determined using quoted market prices for identical financial instruments in an active market.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Values are determined using quoted prices for similar financial instruments and valuation models whose inputs are observable.

6 unchanged sentences

Redeemable Non-Controlling Interest

Redeemable non-controlling interests represent the Class A shares issued by HLAH that are redeemable for cash by the public shareholders in the event of HLAH’s failure to complete a business combination or tender offer.

Redeemable non-controlling interests represent the Class A shares issued by HLAH that are redeemable for cash by the public stockholders in the event of HLAH’s failure to complete a business combination or tender offer.

The redeemable non-controlling interests are initially recorded at their original issue price, net of issuance costs and the initial fair value of separately traded warrants.

The carrying amount was accreted to its full redemption value at March 31, 2021.

The carrying amount was accreted to its full redemption value at March 31, 2022 and 2021.

Derivative Warrant Liabilities Held by Consolidated Variable Interest Entities

The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives pursuant to ASC 480 and ASC 815-15.

The classification of derivative instruments, including whether

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

such instrument should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

The classification of derivative instruments, including whether such instrument should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Both the public warrants and private placement warrants issued in connection with the initial public offering of HLAH are recognized as derivative liabilities in accordance with ASC 815-40.

2 unchanged sentences

The fair value of the public warrants have been measured based on the listed market price of such warrants, a Level 1 measurement, at March 31, 2021.

The fair value of the private placement warrants have been estimated based on the observed price for the public warrants, a Level 2 measurement, at March 31, 2021.

On April 1, 2018, the Company adopted the new Accounting Standards Codification 606, “ Revenue from Contracts with Customers ,” (“ASC 606”) using the modified retrospective method and applied the guidance only to contracts that were not completed as of that date.

The Company recorded a cumulative-effect adjustment that increased beginning additional paid-in-capital, retained earnings and non-controlling interest in Hamilton Lane Advisors, L.L.C.

by $ 411 , $ 20 and $ 566 , respectively.

The adjustment was related to commission payments that are considered a cost of obtaining a contract under ASC 606 and are capitalized and amortized over the expected life of the contractual relationship.

These amounts were previously expensed when incurred.

The fair value of the private placement warrants have been estimated based on the observed price for the public warrants, a Level 2 measurement, at March 31, 2022 and 2021.

Management and advisory fees

3 unchanged sentences

Customized separate accounts are generally contractual arrangements involving an investment management agreement between the Company and a single client.

In some cases, a customized separate account will be structured as a partnership with a subsidiary of the Company serving as general partner or managing member.

In some cases, a customized separate account will be

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

structured as a partnership with a subsidiary of the Company serving as general partner or managing member.

The Company determined that the partnership is generally considered to be the customer with respect to specialized funds, while the individual investor or single limited partner is the customer with respect to customized separate accounts and advisory clients.

5 unchanged sentences

For reimbursable travel, organization and syndication costs, the Company concluded it controls the services provided by its employees and other parties and therefore is a principal.

Accordingly, the Company records the reimbursement for these costs incurred on a gross basis as revenue

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

in management and advisory fees and as expense in general, administrative and other expenses in the Consolidated Statements of Operations.

Accordingly, the Company records the reimbursement for these costs incurred on a gross basis as revenue in management and advisory fees and as expense in general, administrative and other expenses in the Consolidated Statements of Operations.

The Company considers its performance obligations in its customer contracts to be one of the following based upon the services promised:

17 unchanged sentences

Accordingly, incentive fees are considered variable consideration in asset management services and are therefore constrained and not recognized until it is probable that a significant reversal will not occur.

Incentive fees from specialized funds and customized separate accounts are generally payable after all contributed capital and the preferred return on that capital has been distributed to investors.

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.

The Company estimates the amount and probability of additional future capital contributions to specialized funds and customized separate accounts, which could impact the probability of a significant reversal occurring.

15 unchanged sentences

Amounts payable pursuant to these arrangements are recorded as compensation expense when they have become probable and reasonably estimable.

The Company’s determination of the point at which it becomes probable and reasonably estimable that incentive fee compensation expense should be recorded is based on its assessment of numerous factors, particularly those related to the profitability, realizations, distribution status, investment profile and commitments or contingencies of the individual funds that may give rise to incentive fees.

Incentive fee compensation may be expensed before the related incentive fee revenue is recognized.

18 unchanged sentences

The Company analyzes its tax filing positions in all of the U.S.

federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well for all open tax years in these jurisdictions.

federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions.

The Company evaluates tax positions taken or expected to be taken in the course of preparing an entity’s tax returns to determine whether it is “more-likely-than-not” that each tax position will be sustained by the applicable tax authority.

25 unchanged sentences

Dividends and distributions are reflected in the consolidated financial statements when declared.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “ Accounting for Financial Instruments - Credit Losses ”.

ASU 2016-13 replaces the incurred loss methodology in current GAAP with a methodology that reflects expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The Company adopted ASU 2016-13 using the modified retrospective transition method on April 1, 2020.

The adoption did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, “ Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement ” (ASU 2018-13).

ASU 2018-13 changes the fair value measurement disclosure requirements.

The amendments remove or modify certain disclosures, while others were added.

Early adoption of any removed or modified disclosure requirements is permitted upon issuance of ASU 2018-13 and adoption of the additional disclosure requirements may be delayed until the effective date.

The Company elected to early adopt the removed or modified disclosure requirements of the standard on October 1, 2018.

The Company adopted the remaining requirements on April 1, 2020.

The adoption did not have a material impact on the Company’s consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform with current period presentation.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

Reclassifications

Certain prior period amounts have been reclassified to conform with current period presentation.

The following presents revenues disaggregated by product offering, which aligns with the identified performance obligations and the basis for calculating each amount:

15 unchanged sentences

Total incentive fees $ 53,691 $ 52,191 $ 29,128

The Company recognized incentive fee revenues of $ 3,704 and $ 2,541 during the years ended March 31, 2021, and 2019, respectively, that were previously received and deferred.

The Company recognized incentive fee revenues of $ 3,704 during the year ended March 31, 2021 that were previously received and deferred.

Cost to obtain contracts

1 unchanged sentence

These incremental costs are capitalized and amortized over the expected contract length proportionately to the management fee revenue expected to be recognized in each year as a percentage of the total expected revenue for the contract.

The contract asset related to the cost to obtain contracts was $ 964 and $ 994 as of March 31, 2021 and March 31, 2020, respectively, and is included in other assets in the Consolidated Balance Sheets.

The contract asset related to the cost to obtain contracts was $ 1,031 and $ 964 as of March 31, 2022 and 2021, respectively, and is included in other assets in the Consolidated Balance Sheets.

Amortization expense related to this contract asset was $ 532 , $ 526 and $ 504 for the years ended March 31, 2022, 2021 and 2020, respectively, and is included in general, administrative and other in the Consolidated Statements of Income.

4 unchanged sentences

Equity method investments in Partnerships $ 326,296 $ 240,337

Equity method investments in Partnerships held by consolidated VIEs (See Note 5) 4,787 9,988

Other equity method investments 1,573 1,297

1 unchanged sentence

Investments valued under the measurement alternative 156,100 109,821

Investment held in trust 276,003 —

Total Investments $ 503,789 $ 368,836

3 unchanged sentences

The Company has a 1 % interest in substantially all of the Partnerships.

The Company’s other equity method investments represent its ownership in a technology company that provides benchmarking and analytics of private equity data and its ownership in a joint venture that automates the collection of fund and underlying portfolio company data from general partners.

The Company’s other equity method investment represents its ownership in a joint venture that automates the collection of fund and underlying portfolio company data from general partners.

The Company recognized equity method income related to its investments in Partnerships and other equity method investments of $ 78,813 , $ 32,389 , and $ 20,731 for the years ended March 31, 2022, 2021, and 2020, respectively.

2 unchanged sentences

Secondary funds 50,070 31,054

Direct/co-investment funds 63,061 50,288

Direct investment funds 80,601 63,061

Customized separate accounts 107,536 72,158

Total equity method investments in Partnerships $ 326,296 $ 240,337

The Company’s equity method investments in Partnerships held by consolidated VIEs consist of direct/co-investment funds and customized separate accounts.

The Company evaluates each of its equity method investments to determine if any were significant pursuant to the requirements of Regulation S-X.

21 unchanged sentences

Other investments

The Company’s other investments represent investments in private equity funds and direct credit and equity co-investments.

The Company’s other investments represent a publicly traded security and investments in private equity funds and direct credit and direct equity investments that are held as collateral for the Company’s secured financing.

The private equity fund investments can only be redeemed through distributions received from the liquidation of underlying investments of the fund, and the timing of distributions is currently indeterminable.

The direct credit co-investments are debt securities classified as trading securities.

The direct equity co-investments and private equity funds are measured at fair value with unrealized holding gains and losses included in earnings.

During the year ended March 31, 2021, one of the Company’s direct equity co-investments held through a special purpose vehicle was transferred out of Level 3 and into Level 2 as the lockup restrictions from its initial public offering expired.

The special purpose vehicle now predominately attributes its fair value to a publicly traded share price and is therefore classified as Level 2 in the hierarchy.

As of March 31, 2021, the fair value of the Company’s investment in the special purpose vehicle was $ 4,083 .

The Company’s remaining other investments are recorded at estimated fair value utilizing significant unobservable inputs and are therefore classified in Level 3 of the fair value hierarchy.

The direct credit investments are debt securities classified as trading securities.

The direct equity investments and private equity funds are measured at fair value with unrealized holding gains and losses included in earnings.

In May 2019, the Company transferred the investments held as collateral for $ 15,750 in cash to a Partnership that is a VIE of which the Company is the general partner but does not consolidate as the Company is not the primary beneficiary.

Due to continuing involvement with these assets at the Partnership, the Company accounted for this transfer as a secured financing as it has not met the criteria in ASC 860, “Transfers and Servicing”, to qualify as a sale and, therefore, has recorded a financial liability for the secured financing which is included in other liabilities in the Consolidated Balance Sheets.

The cash received was recorded as a secured financing in financing activities in the Consolidated Statements of Cash Flows.

The Company accounts for this financial liability at fair value under the fair value option.

The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes.

The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral which are estimated using Level 3 inputs.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

The Company recognized a gain (loss) of $ 1,130 , $ 7,281 , and $( 748 ) on other investments during the years ended March 31, 2022, 2021, and 2020, respectively, and recognized a (loss) gain of $( 1,130 ), $( 7,281 ), and $ 43 on the secured financing liability during the years ended March 31, 2022, 2021 and 2020, respectively.

Gains and losses related to other investments and the secured financing liability are recorded in non-operating income in the Consolidated Statements of Income.

Investments valued under the measurement alternative

The Company’s investments valued under the measurement alternative include equity securities in other proprietary investments for which the Company does not have significant influence and fair value is not readily determinable.

ASC 321 requires equity securities to be recorded at cost and adjusted to fair value at each reporting period.

However, the guidance allows for a measurement alternative, which is to record the investments at cost, less impairment, if any, and subsequently adjust for observable price changes of identical or similar investments of the same issuer.

Fiscal 2022 Transactions

In June 2021, an investment held by the Company launched an initial public offering (“IPO”) and began trading on a public exchange.

As part of the IPO, the Company agreed to a lockup restriction on selling or transferring the security for a period of 180 days.

As the investment has a readily determinable fair value at the end of each reporting period, it no longer qualified to be recorded under the measurement alternative and transferred to a Level 3 due to the lockup restriction.

The investment is recorded at fair value with changes in value recorded to net income.

As the lockup restriction expired during the quarter ended December 31, 2021, the Company transferred the investment from Level 3 to Level 1 at December 31, 2021.

In July 2021 and December 2021, there were observable price changes in two investments held by the Company.

As a result of the transactions, the Company marked the investments to fair value based upon the transaction prices, which resulted in total unrealized gains of $ 44,484 that are recorded in non-operating income in the Consolidated Statement of Income.

In October 2021, the Company made investments in two private companies.

The Company invested $ 13,500 in a company maintaining a platform of solutions designed to aid individual investors and various wealth management platforms with their wealth management needs and $ 4,500 in a company that provides environmental, social and governance (“ESG”) reporting metrics and analysis to private market firms and private companies.

Due to the lack of readily determinable fair values for these investments, over which the Company does not have significant influence, the Company values the investments under the measurement alternative.

In October 2021, an entity in which the Company held an investment with a total carrying amount of $ 687 was sold to a third party.

The Company received cash proceeds of $ 12,623 and recorded a gain of $ 11,936 in connection with the transaction that is recorded in non-operating income in the Consolidated Statement of Income.

Fiscal 2021 Transactions

In March 2021, the Company invested approximately $ 90,000 in Russell Investments Group, Ltd., a leading outsourced CIO (OCIO) provider and global investment solutions firm.

Due to the lack of readily determinable fair values for the investment and the Company’s lack of significant influence, the Company values the investment under the measurement alternative.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

In December 2020, there was an observable price change for an investment held by the Company and valued under the measurement alternative.

As a result of the transaction, the Company marked that investment to fair value based upon the transaction price, which resulted in an unrealized gain of $ 6,229 that was recorded in non-operating income in the Consolidated Statements of Income for the year ended March 31, 2021.

Fiscal 2020 Transactions

On January 31, 2020, an observable price transaction occurred for one of the Company’s investments valued under the measurement alternative.

The Company recorded a fair value adjustment of $ 1,507 , which is recorded in non-operating income in the Consolidated Statements of Income for the year ended March 31, 2020.

On July 1, 2019, an acquisition of an entity in which the Company held an investment with a carrying value of $ 1,446 was completed.

The Company received cash proceeds of $ 6,419 and recorded a gain of approximately $ 4,973 in connection with the transaction, which was recorded in non-operating income in the Consolidated Statements of Income for the year ended March 31, 2020.

The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level:

As of March 31, 2022

Level 1 Level 2 Level 3 Total Amortized Cost

Financial assets:

Other investments

$ 6,002 $ — $ 13,818 $ 19,820 $ 10,853

Investments held in trust

276,016 — — 276,016 276,000

Total financial assets $ 282,018 $ — $ 13,818 $ 295,836 $ 286,853

Financial liabilities:

Warrant liability (1)

$ 2,484 $ 399 $ — $ 2,883

Secured financing (2)

— — 13,818 13,818

Total financial liabilities $ 2,484 $ 399 $ 13,818 $ 16,701

As of March 31, 2021

Level 1 Level 2 Level 3 Total Amortized Cost

Financial assets:

Other investments

$ — $ 4,083 $ 13,298 $ 17,381 $ 9,902

Investments held in trust

276,003 — — 276,003 276,000

Total financial assets $ 276,003 $ 4,083 $ 13,298 $ 293,384 $ 285,902

Financial liabilities:

Warrant liability (1)

$ 6,348 $ 1,020 $ — $ 7,368

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Secured financing (2)

— 4,083 13,298 17,381

Total financial liabilities $ 6,348 $ 5,103 $ 13,298 $ 24,749

(1) Warrant liability is recorded within other liabilities of consolidated variable interests in the Consolidated Balance Sheet.

(2) Secured financing is recorded within other liabilities in the Consolidated Balance Sheet.

The following is a reconciliation of other investments for which significant unobservable inputs (Level 3) were used in determining value:

Private equity funds Direct credit co-investments Direct equity co-investments Total other investments

Private equity funds Direct credit investments Direct equity investments Publicly traded equity security Total other investments

Balance as of March 31, 2020 $ 5,786 $ 1,756 $ 5,852 $ — $ 13,394

2 unchanged sentences

Net gain 1,788 254 5,427 — 7,469

Transfer out — — ( 4,271 ) — ( 4,271 )

Balance as of March 31, 2021 $ 6,254 $ 985 $ 6,059 $ — $ 13,298

2 unchanged sentences

Net gain (loss) 1,206 ( 9 ) ( 67 ) ( 165 ) 965

Transfer out of Level 3 — — ( 4,271 ) ( 4,271 )

Transfer in — — — 6,455 6,455

Transfer out — — — ( 6,290 ) ( 6,290 )

Balance as of March 31, 2022 $ 7,024 $ 774 $ 6,020 $ — $ 13,818

4 unchanged sentences

Private equity funds $ 7,024 Adjusted net asset value Selected market return ( 0.6 )% - ( 1.3 )% ( 1.1 )%

Direct credit co-investments $ 985 Discounted cash flow Market yield 9.3 % - 9.3 % 9.3 %

Direct equity co-investments $ 6,059 Market approach EBITDA multiple 7.75 x

Direct credit investments $ 774 Discounted cash flow Market yield 11.7 % - 11.7 % 11.7 %

Direct equity investments $ 6,020 Market approach EBITDA multiple 8.00 x

Market approach Equity multiple 1.57 x

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

March 31, 2021

2 unchanged sentences

Private equity funds $ 6,254 Adjusted net asset value Selected market return 2 % - 12.4 % 4.2 %

Direct credit co-investments $ 1,756 Discounted cash flow Market yield 11.5 % - 12.6 % 12.5 %

Direct equity co-investments $ 5,852 Market approach EBITDA multiple 7.25 x

Direct credit investments $ 985 Discounted cash flow Market yield 9.3 % - 9.3 % 9.3 %

Direct equity investments $ 6,059 Market approach EBITDA multiple 7.75 x

Market approach Equity multiple 1.52 x

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

For the significant unobservable inputs listed in the table above, (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively;

1 unchanged sentence

and (3) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.

In May 2019, the Company transferred these investments for an agreed amount of cash of $ 15,750 to a Partnership that is a VIE of which the Company is the general partner but does not consolidate as the Company is not the primary beneficiary.

The cash received was recorded as secured financing in financing activities in the Consolidated Statements of Cash Flows.

As of March 31, 2021, all other investments were pledged as collateral on the Company’s secured financing.

The Company accounts for this financial liability at fair value under the fair value option.

The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes.

The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral.

As of March 31, 2021, the secured financing had a fair value of $ 17,381 and an amortized cost of $ 9,902 .

The fair value of the secured financing is estimated using Level 3 inputs with the significant input being the fair value of the other investments utilized as collateral as shown above.

The Company recognized a gain (loss) of $ 7,281 , $( 748 ), and $ 705 on other investments during the years ended March 31, 2021, 2020, and 2019 respectively and recognized a (loss) gain of $( 7,281 ) and $ 43 on the secured financing liability during the years ended March 31, 2021 and 2020, respectively.

Gains and losses related to other investments and the secured financing liability are recorded in non-operating income in the Consolidated Statements of Income.

Investments valued under the measurement alternative

ASU 2016-01 requires equity securities to be recorded at cost and adjusted to fair value at each reporting period.

Fiscal 2021 Transactions

In March 2021, the Company invested approximately $ 90,000 in Russell Investments Group, Ltd., a leading outsourced CIO (OCIO) provider and global investment solutions firm.

Due to the lack of readily determinable fair values for the investment and the Company’s lack of significant influence, the Company will value the investment under the measurement alternative.

Additionally, in March 2021, the Company received a distribution of $ 3,072 from Russell Investments Group, Ltd., which was recorded as a return of capital and decreased the carrying value of the investment.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

In December 2020, there was an observable price change for an investment held by the Company and valued under the measurement alternative.

Fiscal 2020 Transactions

During the year ended March 31, 2020, the Company made equity investments in two private companies.

The Company invested approximately $ 2,000 in a technology company that has developed software to automate manual data entry tasks associated with alternative investment reporting.

The Company invested approximately $ 10,000 in a technology company which has developed a platform for investing in alternative assets.

Due to the lack of readily determinable fair values for these investments, for which the Company does not have significant influence, the Company will value the investments under the measurement alternative.

On January 31, 2020, an observable price transaction occurred for one of the Company’s investments valued under the measurement alternative.

The Company recorded a fair value adjustment of $ 1,507 , which is recorded in non-operating income in the Consolidated Statements of Income for the year ended March 31, 2020.

On July 1, 2019, an acquisition of an entity in which the Company held an investment with a carrying value of $ 1,446 was completed.

Fiscal 2019 Transactions

The Company performs qualitative impairment assessments on its investments recorded under the measurement alternative.

As of March 31, 2019, the Company determined that a quantitative assessment was required to be performed for one of its technology investments.

The assessment indicated that the fair value was less than the carrying value at March 31, 2019.

Prior to the impairment recorded, the carrying value of the investment was $ 2,990 .

The impairment amount was $ 701 and is included in non-operating income for the year ended March 31, 2019.

The fair value was determined using both a discounted cash flow approach and a market approach based on guideline public companies, and is a Level 3 fair value measurement as financial projections were utilized.

On August 2, 2018, an acquisition of an entity in which the Company held an investment with a carrying amount of $ 10,798 was completed.

The Company received cash proceeds of $ 17,724 and recorded a gain of $ 6,926 in connection with the transaction, which was recorded in non-operating income for the year ended March 31, 2019.

On August 11, 2018, an acquisition of an entity in which the Company held an investment with a carrying amount of $ 600 was completed.

The Company received cash proceeds of $ 4,807 and recorded a gain of $ 4,207 in connection with the transaction, which was recorded in non-operating income for the year ended March 31, 2019.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Variable Interest Entities

2 unchanged sentences

The Company consolidates general partner entities of certain Partnerships, which are not wholly owned by the Company.

The total assets of the consolidated general partner entities are $ 4,787 and $ 9,988 as of March 31, 2021 and 2020.

The general partner entities had no liabilities other than deferred incentive fee revenue of $ 3,704 as of March 31, 2020.

The assets of the general partner entities may only be used to settle obligations of the general partners, if any.

The total assets of the consolidated general partner entities are $ 10,036 and $ 4,787 as of March 31, 2022 and 2021, respectively.

The general partner entities had no liabilities as of March 31, 2022 and 2021.

The assets of the consolidated general partner entities represent equity-method investments in direct equity funds and customized separate accounts and may only be used to settle obligations of the general partners, if any.

In addition, there is no recourse to the Company for the general partners’ liabilities, except for certain entities in which there could be a claw back of previously distributed carried interest.

2 unchanged sentences

In a private placement concurrent with the initial public offering, HLAH sold warrants to HL Alliance Holdings Sponsor LLC for gross proceeds of $ 7,520 which were used by HLAH to pay the offering costs and also provide working capital.

The total assets of HLAH are $ 277,528 and liabilities are $ 17,310 as of March 31, 2021.

The total assets of HLAH are $ 276,675 and $ 277,528 and liabilities are $ 12,675 and $ 17,310 as of March 31, 2022 and 2021, respectively.

The assets of HLAH held outside of the trust can only be used to settle obligations of HLAH and there is no recourse to the Company for HLAH’s liabilities.

2 unchanged sentences

The Company holds variable interests in certain Partnerships that are VIEs, which are not consolidated, as it is determined that the Company is not the primary beneficiary.

Such Partnerships are considered VIEs because limited partners lack the ability to remove the general partner or dissolve the entity without cause, by simple majority vote (i.e.

Such Partnerships are considered VIEs because limited partners lack the ability to remove the general partner or dissolve the entity without cause, by

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

simple majority vote (i.e.

have substantive “kick out” or “liquidation” rights).

1 unchanged sentence

In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable Partnership and makes all investment and operating decisions.

As of March 31, 2021, the total commitments and remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIEs are $ 23,522,838 and $ 9,986,996 , respectively.

These commitments are the primary source of financing for the unconsolidated VIEs.

As of March 31, 2022, the total remaining unfunded commitments from the Company’s general partner entities to the unconsolidated VIEs was $ 104,804 .

Investor commitments are the primary source of financing for the unconsolidated VIEs.

The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these unconsolidated entities.

The Company believes that its maximum exposure to loss is limited because it establishes separate limited liability or limited partnership entities to serve as the general partner or managing member of the Partnerships.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The carrying amount of assets and liabilities recognized in the Consolidated Balance Sheets related to the Company’s interests in these non-consolidated VIEs and the Company’s maximum exposure to loss relating to non-consolidated VIEs were as follows:

3 unchanged sentences

Total VIE assets 201,910 143,062

Deferred incentive fee revenue — 3,704

Non-controlling interests ( 1,873 ) ( 2,211 )

21 unchanged sentences

The Company has a Term Loan Agreement, a Revolving Loan Agreement (together the “Loan Agreements”) and a Multi-Draw Term Loan Agreement with First Republic Bank.

The Term Loan Agreement has a maturity date of July 1, 2027, provides for additional uncommitted term advances not to exceed $ 25,000 in the aggregate until March 24, 2023, and the interest rate is a floating per annum rate equal to the prime rate minus 1.5 % subject to a floor of 2.25 %.

The Term Loan Agreement has a maturity date of July 1, 2027, provides for additional uncommitted term advances not to exceed $ 25,000 in the aggregate, as well as additional committed term advances not to exceed $ 25,000 in the aggregate, until March 24, 2023, and the interest rate is a floating per annum rate equal to the prime rate minus 1.5 % subject to a floor of 2.25 %.

The Revolving Loan Agreement has a $ 25,000 borrowing capacity, a maturity date of March 24, 2023, and the interest rate is a floating per annum rate equal to the prime rate minus 1.5 % subject to a floor of 2.25 %.

The Multi-Draw Term Loan Agreement (the “Multi-Draw Facility”) provides for a term loan in the aggregate principal amount of $ 75,000 that may be drawn any time during a period of one year following the closing date.

Borrowings accrue interest at a fixed per annum rate of 3.5 % and matures on July 1, 2030.

The Company fully drew the Multi-Draw Facility in March 2021.

The Multi-Draw Term Loan Agreement (the “Multi-Draw Facility”) provides for a term loan in the aggregate principal amount of $ 100,000 that the Company has fully drawn down.

Borrowings accrue interest at a fixed per annum rate of 3.5 % and mature on July 1, 2030.

The Loan Agreements and Multi-Draw Facility 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, make distributions, engage in transactions with affiliates and take certain actions with respect to management fees.

2 unchanged sentences

The aggregate minimum principal payments on the Company’s outstanding debt are due as follows:

Fiscal year ending March 31,

2022 $ 16,875

For the fiscal year ending March 31,

Thereafter 98,470

Total $ 171,754

The fair value of the outstanding balance of the Company’s debt instruments at March 31, 2022 and 2021 approximated par value based on current market rates for similar debt instruments and are classified as Level 2 within the fair value hierarchy.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

The fair value of the outstanding balance of the Company’s debt instruments at March 31, 2021 and 2020 approximated par value based on current market rates for similar debt instruments and are classified as Level 2 within the fair value hierarchy.

The Company has two classes of common stock outstanding, Class A common stock and Class B common stock.

16 unchanged sentences

Shares issued in connection with ESPP 25,640 —

Shares converted from units 41,435 —

Shares repurchased for employee tax withholdings ( 100,683 ) —

3 unchanged sentences

Shares issued (repurchased) in connection with offering 6,415,760 ( 5,309,881 )

Shares issued in connection with contingent compensation payment 7,692 —

Shares issued in connection with ESPP 23,130 —

16 unchanged sentences

In addition to these tax distributions, HLA made distributions in excess of required tax distributions to members in an aggregate amount of $ 36,979 , $ 34,167 , and $ 34,014 for the years ended March 31, 2022, 2021, and 2020, respectively.

September 2021 Offering

In September 2021, the Company and certain selling stockholders completed a registered offering of an aggregate of 950,751 shares of Class A common stock at a price to the underwriter of $ 84.15 per share (the

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

“September 2021 Offering”).

The shares sold consisted of 73,351 shares held by the selling stockholders and 877,400 shares newly issued by the Company.

The Company received $ 73,833 in net proceeds from the sale of its shares and used all of the proceeds to settle exchanges by certain members of HLA of a total of 695,505 Class B units and 181,895 Class C units.

In connection with the exchange of the Class B units, the Company also repurchased for par value and canceled a corresponding number of shares of Class B common stock.

The Company did not receive any proceeds from the sale of shares by the selling stockholders.

March 2021 Offering

16 unchanged sentences

The Company did not receive any proceeds from the sale of shares by the selling stockholders.

September 2019 Offering

In September 2019, the Company and certain selling stockholders completed a registered offering of an aggregate of 2,680,089 shares of Class A common stock at a price of $ 60.01 per share (the “September 2019 Offering”) .

The shares sold consisted of (i) 228,456 shares held by the selling stockholders and (ii) 2,451,633 shares newly issued by the Company.

The Company received approximately $ 147,122 in proceeds from the sale of its shares, net of underwriting discounts and commissions, and used all of the proceeds to settle in cash exchanges by certain members of HLA of a total of 1,466,712 Class B units and 984,921 Class C units.

In connection with the exchange of the Class B units, the Company also repurchased for par value and canceled a corresponding number of shares of Class B common stock.

The Company did not receive any proceeds from the sale of shares by the selling stockholders.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

March 2019 Offering

In March 2019, the Company and a certain selling stockholder completed a registered offering of an aggregate of 1,449,303 shares of Class A common stock at a price of $ 45.65 per share (the “March 2019 Offering”).

The shares sold consisted of (i) 50,000 shares held by the selling stockholder and (ii) 1,399,303 shares newly issued by the Company.

The Company received approximately $ 63,878 in proceeds from the sale of its shares, net of underwriting discounts and commissions, and used all of the net proceeds to settle in cash exchanges by certain members of HLA of a total of 711,943 Class B units and 687,360 Class C units.

In connection with the exchange of the Class B units, the Company also repurchased for par value and canceled a corresponding number of shares of Class B common stock.

The Company did not receive any proceeds from the sale of shares by the selling stockholder.

Equity-Based Compensation

1 unchanged sentence

The Company has adopted its 2017 Equity Incentive Plan, as amended (the “Plan”), which permits the issuance of up to 5,000,000 shares of Class A common stock, which may be granted as incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, or PSUs.

Awards under the Plan generally vest over four years , with options expiring not more than ten years from the date of grant, three months after termination of employment or one year after the date of death or termination due to disability of the grantee.

Awards under the Plan generally vest over four years , with options expiring not more than ten years from the date of grant, three

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

months after termination of employment or one year after the date of death or termination due to disability of the grantee.

As of March 31, 2022, there were 3,164,707 shares of Class A common stock available to grant under the Plan.

1 unchanged sentence

Restricted Stock

The Company has granted restricted Class A common stock under the Plan to certain employees as part of the annual bonus program and in connection with its IPO.

Holders of restricted stock have all of the rights of a stockholder with respect to such shares, including the right to vote the shares but not the right to receive dividends or other distributions.

3 unchanged sentences

Compensation expense related to the awards is recognized ratably each month over the vesting period.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The change in unvested restricted stock for the year ended March 31, 2022 is as follows:

6 unchanged sentences

March 31, 2022 281,307 $ 67.50

The weighted-average fair value per share of restricted stock awarded during the years ended March 31, 2021, 2020 and 2019 was $ 82.97 , $ 54.71 , and $ 40.77 , respectively.

The weighted-average grant-date fair value per share of restricted stock awarded during the years ended March 31, 2022, 2021 and 2020 was $ 73.20 , $ 82.97 , and $ 54.71 , respectively.

The total fair value of restricted stock that vested during the years ended March 31, 2022, 2021 and 2020 was $ 10,923 , $ 19,961 , and $ 18,141 , respectively.

7 unchanged sentences

The benefit received by the employees, which is equal to a 15 % discount on the shares of the Company’s Class A common stock purchased, is recognized as equity-based compensation expense on the date of each purchase.

During the year ended March 31, 2021, 2020 and 2019, the Company recorded expense of $ 256 , $ 220 and $ 47 respectively, related to the ESPP.

During the years ended March 31, 2022, 2021 and 2020, the Company recorded expense of $ 330 , $ 256 and $ 220 respectively, related to the ESPP.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Compensation and Benefits

5 unchanged sentences

Equity-based compensation 7,404 7,079 7,183

Contingent compensation related to acquisition — — 5,100

Total compensation and benefits $ 129,165 $ 136,319 $ 100,138

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The Company provides defined contribution plans covering U.S., United Kingdom and Hong Kong employees subject to minimum age and service guidelines.

The Company provides defined contribution plans covering eligible employees subject to minimum age and service guidelines.

Eligible employees may contribute a percentage of their annual compensation subject to statutory guidelines.

22 unchanged sentences

$ 66,423 $ 24,417 $ 13,968

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

A reconciliation of the U.S.

6 unchanged sentences

Valuation allowance 4.6 % ( 1.0 ) % ( 0.9 ) %

Deferred tax asset state apportionment changes — % — % 10.3 %

Other ( 0.9 ) % ( 0.4 ) % ( 2.1 ) %

Effective tax rate 21.2 % 12.6 % 9.9 %

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The significant components of deferred tax assets and liabilities are as follows:

7 unchanged sentences

State taxes 717 586

Other ( 12 ) —

Total deferred tax assets

3 unchanged sentences

As of March 31, 2022 and 2021, it is more likely than not that the tax benefits from certain of these net operating loss carryforwards will not be realized, therefore, a valuation allowance of $ 416 and $ 176 has been established, respectively.

In connection with the offering activity in fiscal 2021 and related unit exchanges, the Company recorded a deferred tax asset in the amount of $ 121,065 , which is net of a valuation allowance of $ 9,591 related to the portion of tax benefits that it is more likely than not will not be realized.

Additionally, in connection with recording the deferred tax asset for the fiscal 2021 offerings and related unit exchanges, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $ 102,052 .

In connection with the offering in fiscal 2022 and related unit exchanges, the Company recorded a deferred tax asset in the amount of $ 16,996 , which is net of a valuation allowance of $ 2,786 related to the portion of tax benefits that it is more likely than not will not be realized.

Additionally, in connection with recording the deferred tax asset for the fiscal 2022 offering and related unit exchanges, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $ 14,277 .

The Company believes it is more likely than not that the deferred tax assets (except those identified above) will be realized based on the Company’s historic earnings, forecasted income, and the reversal of temporary differences.

3 unchanged sentences

If and when the Company does record unrecognized tax positions in the future, any interest and penalties related to unrecognized tax positions will be recorded in the income tax expense line in the Consolidated Statements of Income.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The Company files income tax returns as required by the tax laws of the jurisdictions in which it operates.

3 unchanged sentences

The Company has recorded a liability related to the TRA of $ 180,536 and $ 194,764 as of March 31, 2022 and 2021.

A payment of $ 6,894 and $ 1,952 was made during the year ended March 31, 2021 and 2020.

Payments of $ 23,170 and $ 6,894 were made during the years ended March 31, 2022 and 2021, respectively.

During the year ended March 31, 2022, the Company determined to make lump sum payments to certain TRA participants to terminate their right to receive future payments, as permitted by the TRA.

As a result of the early termination payments, the Company recognized a gain of $ 4,319 during the year ended March 31, 2022 that is recorded in non-operating income in the Consolidated Statement of Income.

In the event that the valuation allowance related to tax benefits associated with the tax receivable agreement is released in a future period, an additional estimated payable will be due to the TRA Recipients of $ 11,333 .

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Earnings per Share

4 unchanged sentences

Shares of the Company’s Class B common stock are, however, considered potentially dilutive to the Class A common stock because each share of Class B common stock, together with a corresponding Class B unit, is exchangeable for a share of Class A common stock on a one -for-one basis.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

3 unchanged sentences

Net income attributable to HLI $ 145,986 $ 98,022 $ 60,825

Deemed dividend for the accretion of redeemable non-controlling interest ( 4,637 ) — —

Impact of changes in carrying amount of redeemable NCI 951 ( 4,637 ) —

Net income attributable to Class A common stockholders - basic $ 146,937 $ 93,385 $ 60,825

5 unchanged sentences

Assumed vesting of employee awards 121 229 352

Assumed conversion of Class B and Class C Units 66,666 — —

Net income attributable to Class A common stockholders - diluted $ 213,724 $ 93,614 $ 61,177

2 unchanged sentences

Assumed vesting of employee awards 97,531 210,047 350,194

Assumed conversion of Class B and Class C Units 17,065,255 — —

Weighted-average shares of Class A common stock outstanding - diluted 53,674,293 33,362,365 28,438,772

1 unchanged sentence

The calculations of diluted earnings per share exclude 17,553,234 and 23,968,994 outstanding Class B and C units of HLA for the years ended March 31, 2021 and 2020, respectively, which are exchangeable into Class A common stock under the “if-converted” method, because the inclusion of such shares would be antidilutive.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Related-Party Transactions

5 unchanged sentences

Fees receivable from the Partnerships were $ 27,728 and $ 14,814 as of March 31, 2022 and 2021, respectively, and are included in fees receivable in the Consolidated Balance Sheets.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Expenses and Payables

4 unchanged sentences

The Company received 2,278,524 shares of the investee which were recorded at the carrying value of the Note of $ 902 at the date of conversion.

These shares are included with similar shares of that investee as investments held under the measurement alternative.

These shares were included with similar shares of that investee as investments held under the measurement alternative.

On January 31, 2020, the Company entered into an asset purchase agreement with one of its equity method investments for the code and an exclusive license to distribute the Cobalt LP software.

1 unchanged sentence

The assets purchased were recorded as intangible assets in other assets in the Consolidated Balance Sheets and will be amortized over 7 years.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Supplemental Cash Flow Information

3 unchanged sentences

Cash paid during the year for income taxes $ 33,682 $ 6,331 $ 7,804

Cumulative-effect adjustment from adoption of accounting guidance

$ — $ — $ 997

Shares issued for contingent compensation payment

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In the ordinary course of business, the Company may be subject to various legal, regulatory, and/or administrative proceedings from time to time.

Although there can be no assurance of the outcome of such proceedings, in the opinion of management, the Company does not believe it is probable that any pending or, to its knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect its consolidated financial statements.

Incentive Fees

The Partnerships have allocated carried interest, which has not yet been received or recognized, in the amounts of $ 648,772 and $ 441,150 at March 31, 2021 and 2020, respectively, of which $ 3,704 at March 31, 2020 was received and deferred by the Company.

If the Company ultimately receives the unrecognized carried interest, a total of $ 162,193 and $ 110,288 as of March 31, 2021 and 2020, respectively, would be potentially payable to certain employees and third parties pursuant to compensation arrangements related to the carried interest profit-sharing plans.

Such amounts have not been recorded in the Consolidated Balance Sheets or Consolidated Statements of Income as this liability is not yet probable.

Although there can be no assurance of the outcome of such

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

proceedings, in the opinion of management, the Company does not believe it is probable that any pending or, to its knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect its consolidated financial statements.

Incentive Fees

The Partnerships have allocated carried interest, which has not yet been received or recognized, in the amounts of $ 1,191,066 and $ 648,772 at March 31, 2022 and 2021, respectively.

If the Company ultimately receives the unrecognized carried interest, a total of $ 297,766 and $ 162,193 as of March 31, 2022 and 2021, respectively, would be potentially payable to certain employees and third parties pursuant to compensation arrangements related to the carried interest profit-sharing plans.

Such amounts have not been recorded in the Consolidated Balance Sheets or Consolidated Statements of Income as this liability is not yet probable.

The Company’s leases consist primarily of operating leases for office space and office equipment in various locations around the world, which have remaining lease terms of one year to 16 years.

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The Company entered into a 17 -year lease agreement for its new headquarters in a newly constructed building.

The Company was granted access to the space in October 2020 to begin building various leasehold improvements and expects to move into the property in June 2021.

The Company was granted access to the space in October 2020 and began building various leasehold improvements.

The Company moved into the property in June 2021.

The following table shows lease costs and other supplemental information related to the Company’s operating leases:

Year Ended March 31,

2022 2021 2020

Operating lease costs $ 9,675 $ 5,216 $ 4,838

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Weighted average discount rate 3.2 % 3.4 % 5.2 %

Total lease expense was $ 5,851 for the year ended March 31, 2019 and was recorded on the straight-line basis and included in general, administrative and other expenses in the Consolidated Statements of Income.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

As of March 31, 2022, the maturities of operating lease liabilities were as follows:

FY2022 $ 6,189

For the fiscal year ending March 31,

Thereafter 70,273

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The aggregate unfunded commitment of the general partners to the Partnerships was $ 186,164 and $ 201,442 as of March 31, 2022 and 2021, respectively.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Quarterly Financial Information (Unaudited)

For the quarter ended

June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021

Total revenues $ 69,744 $ 84,431 $ 84,583 $ 102,877

Total expenses 40,911 46,117 41,864 57,015

Net income 4,968 44,599 54,632 64,586

Net income attributable to HLI 3,246 21,813 33,203 39,760

Earnings per share of Class A common stock:

Class A - Basic

$ .11 $ .66 $ .96 $ 1.01

Class A - Diluted

$ .11 $ .66 $ .96 $ 1.00

For the quarter ended

June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2020

Total revenues $ 64,686 $ 64,292 $ 68,138 $ 76,932

Total expenses 37,693 37,367 39,246 43,313

Net income 27,453 32,273 28,437 38,613

Net income attributable to HLI 11,381 15,299 13,497 20,648

Earnings per share of Class A common stock:

Class A - Basic

$ .43 $ .56 $ .46 $ .71

Class A - Diluted

$ .42 $ .56 $ .46 $ .70

Subsequent Events

On April 1, 2021, the Company acquired substantially all the assets of 361 Capital, LLC for a total aggregate cash amount of $ 13,096 , of which $ 10,096 was paid on the closing date of the acquisition.

The the remaining $ 3,000 will be paid in two equal installments on the first and second anniversaries of the closing.

The preliminary purchase price based upon the fair value of consideration transferred at the date of acquisition is $ 12,850 .

The Company expects to record approximately $ 7,145 of intangible assets related primarily to the acquired investment management contracts, which will be amortized over seven years , and $ 5,623 of goodwill.

The remaining assets acquired and liabilities assumed are not expected to be material to the consolidated financial statements.

The purchase price and allocation are still preliminary and subject to change as the valuation is finalized.

On April 22, 2021, the Company amended its Term Loan Agreement to provide an additional $ 25,000 of committed borrowing capacity and amended its Multi-Draw Facility to increase the maximum commitment amount from $ 75,000 to $ 100,000 as well as extend the period to request an advance under the facility until March 31, 2022.

The remaining $ 3,000 will be paid in two equal installments on the first and second anniversaries of the closing.

The purchase price based upon the fair value of consideration transferred at the date of acquisition is $ 12,946 .

The Company recorded $ 7,145 of definite lived intangible assets related primarily to the acquired investment management contracts, which will be amortized over seven years , and $ 5,623 of goodwill, which are both recorded in other assets in the Consolidated Balance Sheets.

The remaining assets acquired and liabilities assumed are not material to the consolidated financial statements.

Subsequent Events

The Company participated in a new funding round for an existing investment that it values under the measurement alternative in which it contributed $ 5,236 of cash for additional equity interests.

Based upon the terms of the new equity interests being similar to its existing equity interests, the Company estimates that it will record an unrealized gain of $ 6,700 on its original investment.

On May 26, 2022, the Company declared a quarterly dividend of $ 0.40 per share of Class A common stock to record holders at the close of business on June 15, 2022.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data