What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-05-23 compared with 2023-05-25 · 134 added, 85 removed, 572 unchanged (28% of the section changed)

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Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in “Risk Factors”, the “Summary of Risk Factors” and the “Cautionary Note Regarding Forward-Looking Information.” Unless otherwise indicated, references in this Annual Report on Form 10-K to fiscal 2024, fiscal 2023 and fiscal 2022 are to our fiscal years ended March 31, 2024, 2023 and 2022, respectively.

This section of this Form 10-K generally discusses fiscal 2024 and fiscal 2023 items and year-over-year comparisons between fiscal 2024 and fiscal 2023.

A detailed discussion of fiscal 2022 items and year-over-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in Part II, Item 7.

of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC on May 25, 2023.

Business Overview

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• Advisory Services :

We offer investment advisory services to assist clients in developing and implementing their private markets investment programs.

We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs.

Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence.

Our advisory clients include some of the largest and most sophisticated private markets investors in the world.

Our advisory clients include some of

the largest and most sophisticated private markets investors in the world.

We had approximately $796.2 billion of AUA as of March 31, 2024.

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Our results of operations are affected by a variety of factors, including conditions in the global financial markets and the economic and political environments, particularly in the United States, Western Europe and Asia.

As interest rates rise in response to continued inflationary pressures and public equity volatility continues, leading to a wider range of equity returns, we see increasing investor demand for alternative investments to achieve higher and less correlated relative yields and returns on invested capital.

As interest rates remain elevated in response to continued inflationary pressures and public equity volatility continues, leading to a wider range of equity returns, we see increasing investor demand for alternative investments to achieve higher and less correlated relative yields and returns on invested capital.

As a result, some investors have increased their allocation to private markets relative to other asset classes.

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Management fees for certain funds are discounted based on the amount of the limited partners’ commitments, whether the limited partners commit early in the offering period or if the limited partners are investors in our other funds.

Revenues from advisory and reporting services are generally annual fixed fees, which vary depending on the services we provide.

Revenues from advisory and reporting, monitoring, data and analytics services are generally annual fixed fees, which vary depending on the services we provide, and are recognized over the service term.

In limited cases, advisory service clients are charged basis point fees annually based on the amounts they have committed to invest pursuant to their agreements with us.

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In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our Consolidated Balance Sheets and recognized as income in accordance with our revenue recognition policy.

Performance fees, which are a component of incentive fees, are based on the aggregate amount of realized gains earned by the applicable customized separate account, subject to the achievement of defined minimum returns to the clients.

Performance fees, which are a component of incentive fees, are based on the aggregate amount of realized gains earned by the applicable specialized fund or customized separate account, subject to the achievement of defined minimum returns to the clients.

Performance fees range from 5.0% to 12.5% of net profits, subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%.

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Interest income is income earned on cash and cash equivalents.

Non-operating income (expense) consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

Other income (expense) of consolidated Variable Interest Entities (“VIEs”) consists primarily of the share of earnings of investments of consolidated general partner entities, which are not wholly-owned by us, in our specialized funds and certain customized separate accounts in which they have a general partner commitment, interest income on investments held in trust and changes in fair value of liabilities of our previously-sponsored special purpose acquisition company (“SPAC”).

Non-operating gain (loss) consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

commitment, interest income on our previously consolidated funds and interest income on investments held in trust, and changes in fair value of liabilities of our previously-sponsored special purpose acquisition company (“SPAC”).

Income Tax Expense

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Non-controlling interests

NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us.

Non-controlling interests reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us.

NCI are presented as separate components in our consolidated statements of income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

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Annual Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for fiscal 2023 compared to fiscal 2022.

This information is derived from our accompanying consolidated financial statements prepared in accordance with GAAP.

Refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K for management’s discussion and analysis of financial condition and results of operations for fiscal 2022 compared to fiscal 2021.

Year Ended March 31,

Years Ended March 31,

(in thousands) 2024 2023 2022

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Interest income 5,427 1,789 500

Non-operating (loss) income (5,243) 64,469 5,894

Non-operating (loss) gain (2,515) (5,243) 64,469

Consolidated variable interest entities related:

Equity in income (loss) of investees 1,455 483 (2,123)

Equity in income of investees 1,598 1,455 483

Unrealized gain 3,034 4,773 4,485

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Interest income 4,581 3,325 —

Total other income (expense) 2,570 144,112 37,474

Total other income 35,843 2,570 144,112

Income before income taxes 281,661 242,610 313,676

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Net income 227,207 187,185 247,253

Income (loss) attributable to non-controlling interests in general partnerships 986 376 (250)

Income attributable to non-controlling interests in general partnerships 534 986 376

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

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Net income attributable to Hamilton Lane Incorporated $ 140,858 $ 109,120 $ 145,986

Year Ended March 31,

The following table shows total revenues of the Company (excluding consolidated VIEs):

Year Ended March 31, Total Change

(in thousands) 2024 2023

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24,229 24,785 (556)

Reporting and other

Reporting, monitoring, data and analytics

24,711 24,792 (81)

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Incentive fees

156,879 53,691 52,191

Specialized funds 89,988 118,212 (28,224)

Customized separate accounts 11,918 31,719 (19,801)

Total incentive fees 101,906 149,931 (48,025)

Total revenues $ 553,842 $ 521,805 $ 32,037

Year ended March 31, 2024 compared to year ended March 31, 2023

Total revenues increased $160.8 million, or 44%, to $528.8 million, for fiscal 2023 compared to fiscal 2022, due to increases in both management and advisory fees and incentive fees.

Management and advisory fees increased $57.6 million, or 18%, to $371.9 million for fiscal 2023 compared to fiscal 2022.

Specialized funds revenue increased by $46.2 million compared to the prior year, due primarily to a $19.4 million increase in revenue from our evergreen funds, a $14.8 million increase in revenue from our latest secondary fund, and an $8.4 million increase in revenue from our latest direct equity fund, which added $1.1 billion, $1.9 billion and $0.6 billion, respectively, in fee-earning AUM year-over-year.

Revenue from our latest direct equity fund included $2.4 million in retroactive fees for fiscal 2023.

Total revenues increased $32.0 million for fiscal 2024 compared to fiscal 2023, due to an increase in management and advisory fees partially offset by a decrease in incentive fees.

Management and advisory fees increased $80.1 million for fiscal 2024 compared to fiscal 2023.

Specialized funds revenue increased by $64.7 million compared to the prior year, due primarily to a $41.3 million increase in revenue from our latest secondary fund and a $25.3 million increase in revenue from our evergreen funds, which added $2.4 billion and $2.7 billion, respectively, in fee-earning AUM year-over-year.

Revenue from our latest secondary fund included $19.6 million in retroactive fees during fiscal 2024 compared to $2.4 million in retroactive fees from our latest direct equity fund during fiscal 2023.

Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period.

Customized separate accounts revenue increased $14.5 million in fiscal 2023 due to a $3.7 billion increase in fee-earning AUM from the addition of several new accounts and additional allocations from existing accounts during the fiscal year.

Distribution management revenue decreased $7.9 million in fiscal 2023 due to decreased distribution activity.

Incentive fees increased $103.2 million to $156.9 million for fiscal 2023 compared to fiscal 2022 due primarily to increases in incentive fees from our specialized funds.

Customized separate accounts revenue increased $11.1 million in fiscal 2024 due to a $2.9 billion increase in fee-earning AUM from the addition of several new accounts, additional allocations from existing accounts and continued investment activity during the fiscal year.

Distribution management revenue increased $2.5 million in fiscal 2024 due to increased stock distribution activity from investments held by clients that are managed by us.

Fund reimbursement revenue increased by $2.4 million attributed primarily to the timing of newly created funds.

Incentive fees decreased $48.0 million for fiscal 2024 compared to fiscal 2023 due primarily to decreases in incentive fees from several funds having been in the general partner catch-up period in the prior fiscal year.

The catch-up period allocates distributions to the general partner to the agreed upon carried interest once the investors' total invested capital is returned and the preferred return is achieved.

The following table shows total expenses of the Company (excluding consolidated VIEs):

Year Ended March 31, Total Change

(in thousands) 2024 2023

Compensation and benefits

Base compensation and benefits $ 166,394 $ 149,318 $ 17,076

Incentive fee compensation 25,477 39,144 (13,667)

Equity-based compensation 12,133 9,950 2,183

Total compensation and benefits 204,004 198,412 5,592

General, administrative and other 103,403 89,395 14,008

Total expenses $ 307,407 $ 287,807 $ 19,600

Year ended March 31, 2024 compared to year ended March 31, 2023

Total expenses increased $90.4 million, or 46%, for fiscal 2023 compared to fiscal 2022, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Compensation and benefits expenses increased $69.2 million, or 54%, to $198.4 million for fiscal 2023 compared to fiscal 2022, due to increases in base compensation and benefits and incentive fee compensation.

Base compensation and benefits increased $40.9 million, or 38%, for fiscal 2023 compared to fiscal 2022, due primarily to an increase in our bonus plan accrual related to the increase in incentive fee revenue.

compensation increased $25.8 million for fiscal 2023 compared to fiscal 2022 due to the increase in incentive fee revenue.

Total expenses increased $19.6 million for fiscal 2024 compared to fiscal 2023, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Compensation and benefits expenses increased $5.6 million for fiscal 2024 compared to fiscal 2023, due primarily to an increase in base compensation and benefits, partially offset by a decrease in incentive fee compensation.

Base compensation and benefits increased $17.1 million for fiscal 2024 compared to fiscal 2023, due primarily to an increase in salary expense from additional headcount.

Incentive compensation decreased $13.7 million for fiscal 2024 compared to fiscal 2023 due to a decrease in incentive fee revenue.

Equity based compensation increased $2.2 million in fiscal 2024 compared to fiscal 2023, driven primarily by a full year of expense related to performance awards included in fiscal 2024 compared to fiscal 2023 due to the performance awards being issued in September 2022.

General, administrative and other expenses increased $14.0 million for fiscal 2024 compared to fiscal 2023.

This change consisted primarily of a $4.0 million increase in travel expense, a $4.0 million increase in third-party commissions, a $3.2 million increase in consulting and professional fees, a $2.5 million increase in fund reimbursement expenses, and a $2.2 million increase in conferences and marketing.

This change consisted primarily of a $6.7 million increase in third-party commissions primarily attributed to the increase in gross subscriptions to our evergreen funds, a $2.6 million increase in fund reimbursement expense attributed to the timing of newly created funds, a $2.1 million increase in technology related expense and a $1.7 million increase in travel, conferences and marketing expenses.

Other Income (Expense)

The following shows the equity in income (loss) of investees included in other income (expense):

Year Ended March 31,

The following table shows the total other income (expense) of the Company (excluding consolidated VIEs):

Year Ended March 31, Total Change

(in thousands) 2024 2023

Other income (expense)

Equity in income of investees

Primary funds $ 515 $ 67 $ 448

$ 60 $ 9,016 $ 2,443

Direct investment funds 12,061 (2,941) 15,002

Secondary funds 4,376 693 3,683

693 15,725 6,226

Customized separate accounts 9,232 (383) 9,615

(94) 25,223 9,508

Other funds 8,435 9,813 3,536

Evergreen funds 9,173 7,603 1,570

Other equity method investments (464) 49 (513)

Total equity in income of investees 34,893 5,088 29,805

$ 6,543 $ 79,296 $ 30,266

Interest expense (11,169) (8,617) (2,552)

Interest income 5,427 1,789 3,638

Non-operating loss (2,515) (5,243) 2,728

Total other income (expense) $ 26,636 $ (6,983) $ 33,619

Year ended March 31, 2024 compared to year ended March 31, 2023

Other income (expense) decreased $141.5 million to $2.6 million for fiscal 2023 compared to fiscal 2022, due primarily to decreases in equity in income of investees and other non-operating income.

Equity in income of investees decreased $72.8 million to $6.5 million for fiscal 2023 compared to fiscal 2022.

This was due primarily to the prior year gains from increases in public market valuations during the calendar year ended December 31, 2021.

Non-operating income decreased $69.4 million to a non-operating loss of $5.2 million for fiscal 2023 compared to fiscal 2022, due primarily to $59.6 million in gains on balance sheet investments in fiscal 2022 compared to $10.3 million in losses on balance sheet investments in fiscal 2023.

Interest expense increased $4.0 million for fiscal 2023 compared to fiscal 2022, due to the prime rate increasing 450 basis points and a $42.6 million increase in principal outstanding in fiscal 2023.

Other income of consolidated VIEs increased $4.6 million for fiscal 2023 compared to fiscal 2022, due primarily to interest income of investments held in trust of our sponsored SPAC.

Other income (expense) increased $33.6 million for fiscal 2024 compared to fiscal 2023, due primarily to increases in equity in income of investees.

Equity in income of investees increased $29.8 million for fiscal 2024 compared to fiscal 2023.

This increase was due primarily to a $15.0 million increase across our direct investment funds, a $9.6 million increase in our customized separate accounts, and a $3.7 million increase in gains in our secondary funds.

Interest expense increased $2.6 million for fiscal 2024 compared to fiscal 2023, due primarily to increased interest rates on our variable-rate Term Loan Agreement.

Interest income increased $3.6 million for fiscal 2024 compared to fiscal 2023, attributed primarily to increased rates on interest bearing accounts.

Non-operating loss decreased $2.7 million for fiscal 2024 compared to fiscal 2023, due primarily to a decrease in negative fair value adjustments related to our non-fund investments partially offset by an increase in tax receivable agreement expense.

Losses on non-fund investments decreased in fiscal 2024 by $5.8 million compared to fiscal 2023 driven by the recognition of a $43.3 million impairment on an investment offset by $36 million in positive fair value adjustments on several other investments during fiscal 2023.

Tax receivable agreement expense increased $3.5 million during fiscal 2024 compared to fiscal 2023, driven primarily by changes in projected income tax rates in fiscal 2024.

Consolidated Variable Interest Entities

The following table shows the results of operations of consolidated VIEs:

Year Ended March 31, Total Change

(in thousands) 2024 2023

Incentive fees $ — $ 6,948 $ (6,948)

General, administrative and other $ 617 $ 906 $ (289)

Other income (expense)

Equity in income of investees $ 1,598 $ 1,455 $ 143

Unrealized gain 3,034 4,773 (1,739)

Interest expense (6) — (6)

Interest income 4,581 3,325 1,256

Total other income (expense) $ 9,207 $ 9,553 $ (346)

Year ended March 31, 2024 compared to year ended March 31, 2023

Incentive fees decreased $6.9 million for fiscal 2024 compared to fiscal 2023, due to decreases in incentive fees from our specialized funds.

Total other income of consolidated VIEs decreased $0.3 million for fiscal 2024 compared to fiscal 2023, due primarily to the decrease in unrealized gain partially offset by an increase in interest income.

Unrealized gain decreased by $1.7 million due primarily to the change in fair value of a consolidated Partnership prior to its deconsolidation in fiscal 2024 compared to fiscal 2023.

Interest income increased $1.3 million due primarily to interest income of investments earned by a consolidated Partnership prior to its deconsolidation in fiscal 2024 compared to fiscal 2023.

Income Tax Expense

Income tax expense reflects U.S.

federal and applicable state income taxes with respect to our allocable share of any taxable income of HLA subsequent to the Reorganization.

Our effective income tax rate in fiscal 2024 and 2023 was 19.3% and 22.8%, respectively.

The fiscal 2023 effective income tax rate was different from the statutory tax rate due to the portion of income allocated to NCI and change in the valuation allowance.

The effective income tax rate for fiscal 2023 was greater than fiscal 2022 due to higher other permanent tax adjustments and less income allocated to the NCI in fiscal 2023.

The fiscal 2024 effective income tax rate was different from the statutory tax rate due to the portion of income allocated to non-controlling interests and valuation allowance recorded against deferred tax assets.

The effective income tax rate for fiscal 2024 was less than fiscal 2023 primarily due to changes in valuation allowance recorded against deferred tax assets in fiscal 2024.

Non-Controlling Interests

The following table shows income attributable to non-controlling interests:

Year Ended March 31, Total Change

Income attributable to non-controlling interests in general partnerships $ 534 $ 986 $ (452)

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

80,835 71,027 9,808

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

— 5,617 (5,617)

Income attributable to non-controlling interests in consolidated funds 4,980 435 4,545

Net income attributable to non-controlling interest $ 86,349 $ 78,065 $ 8,284

Year ended March 31, 2024 compared to year ended March 31, 2023

Net income attributable to non-controlling interests increased by $8.3 million in fiscal 2024 compared to fiscal 2023.

The increase was driven primarily by the allocation of net income to non-controlling interest holders based upon their economic ownership percentages, partially offset by our increased economic ownership percentage in Hamilton Lane Advisors, L.L.C during fiscal 2024 and the liquidation of Hamilton Alliance Holdings I, Inc.

during fiscal 2023.

Fee-Earning AUM

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Year ended March 31, 2024 compared to year ended March 31, 2023

Fee-earning AUM increased $8.2 billion, or 17%, to $57.3 billion for fiscal 2023, due to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $3.7 billion, or 12%, to $34.7 billion for fiscal 2023.

Fee-earning AUM increased $8.4 billion for fiscal 2024 compared to fiscal 2023 due to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $2.9 billion for fiscal 2024 compared to fiscal 2023.

Customized separate accounts contributions were $7.7 billion for fiscal 2024 due to new allocations from existing clients and new clients.

Distributions were $5.0 billion for fiscal 2024 due to $2.6 billion from accounts moving from a committed to net invested capital fee base, $1.4 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $1.0 billion from accounts reaching the end of their fund term.

Specialized funds fee-earning AUM increased $4.5 billion, or 25%, to $22.7 billion for fiscal 2023.

Specialized funds fee-earning AUM increased $5.5 billion for fiscal 2024 compared to fiscal 2023.

Specialized fund contributions were $6.2 billion for fiscal 2024, due primarily to $2.4 billion from our latest secondary fund and $2.7 billion from our evergreen funds.

Distributions were $0.9 billion for fiscal 2023, due to $0.8 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.1 billion from funds reaching the end of their fund term.

Distributions were $1.1 billion for fiscal 2024, due to $1.0 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.1 billion from funds moving from a committed to net invested capital fee base.

Non-GAAP Financial Measures

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Fee Related Earnings (“FRE”) is used to highlight earnings from recurring management fees.

FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) other non-operating income and (f) certain other significant items that we believe are not indicative of our core performance.

FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) non-operating (loss) gain and (f) certain other significant items that we believe are not indicative of our core performance.

We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business.

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We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods.

Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) other non-operating income and (f) certain other significant items that we believe are not indicative of our core performance.

Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e ) non-operating (loss) gain and (f) certain other significant items that we believe are not indicative of our core performance.

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to Fee Related Earnings and Adjusted EBITDA for fiscal 2024, 2023, and 2022:

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Net income attributable to Hamilton Lane Incorporated $ 140,858 $ 109,120 $ 145,986

Income (loss) attributable to non-controlling interests in general partnerships 986 376 (250)

Income attributable to non-controlling interests in general partnerships 534 986 376

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

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48,406 74,374 25,395

SPAC related compensation — — 1,686

SPAC related general, administrative and other expenses 846 1,176 378

Consolidated VIE related general, administrative and other expenses 566 846 1,176

Revenue related to consolidated funds 394 61 —

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(36,491) (6,543) (79,296)

Non-operating income 470 (68,954) (8,035)

Non-operating (gain) loss (519) 470 (68,954)

Fee Related Earnings

8 unchanged sentences

(48,406) (74,374) (25,395)

SPAC related compensation — — (1,686)

Non-operating income related compensation (59) (367) (1,810)

28 unchanged sentences

53,902,467 53,698,681 53,674,293

Exchange of Class B and Class C units in HLA (2)

— — 20,240,035

Adjusted shares outstanding (2)

2 unchanged sentences

$ 3.92 $ 3.34 $ 4.39

(1) For the years ended March 31, 2023, 2022, and 2021, represents corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income.

(1) For the year ended March 31, 2024, represents corporate income taxes at our estimated statutory tax rate of 23.4% applied to adjusted pre-tax net income.

The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%.

The years ended March 31, 2023 and 2022, represent corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income.

The 23.8% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.8%.

(2) Assumes the full exchange of Class B and Class C units in HLA for Class A common stock of HLI pursuant to the exchange agreement.

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• the performance of particular funds also will be affected by risks of the industries and businesses in which they invest;

• we may create new funds that reflect a different asset mix and new investment strategies, as well as a varied geographic and industry exposure, compared to our historical funds, and any such new funds could have different returns from our previous funds.

The historical and potential future returns of the investment funds we manage are not directly linked to returns on our Class A common stock.

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Strat Opps VII 2022 953 803 1.1 1.1 14.7% 13.4% 341 bps 105 bps 344 bps 162 bps

Strat Opps VIII 2023 700 32 1.0 N/A N/M N/A N/M N/A N/M N/A

Performance Methodology

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As of March 31, 2024, we had an outstanding balance of $97 million under the Term Loan Agreement.

We are entitled to request additional uncommitted term advances not to exceed $25 million in the aggregate, subject to the Cap, through December 31, 2023.

The Revolving Loan Agreement provides that the aggregate outstanding balance will not exceed $50 million, subject to the Cap, and has a maturity date of March 24, 2025.

The interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%.

As of March 31, 2023, we had an outstanding balance of $15 million under the Revolving Loan Agreement.

As of March 31, 2024, we did not have an outstanding balance under the Revolving Loan Agreement.

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of July 1, 2030.

The interest rate is a fixed per annum rate of 3.50%.

of March 31, 2023, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.

As of March 31, 2024, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.

The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 3.00%.

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Net cash provided by operating activities $ 120.9 $ 226.6 $ 169.5

$ 226.6 $ 169.5 $ 188.2

Net cash provided by (used in) investing activities $ 177.9 $ (70.5) $ (421.8)

Net cash (used in) provided by financing activities $ (364.1) $ (113.2) $ 270.7

Net cash (used in) provided by investing activities $ (122.2) $ 177.9 $ (70.5)

Net cash provided by (used in) financing activities $ 4.4 $ (364.1) $ (113.2)

Operating Activities

Our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings.

For the years ended March 31, 2023, 2022 and 2021, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.

For the years ended March 31, 2024, 2023 and 2022, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.

Additionally, the year ended March 31, 2024 was impacted by cash relinquished upon deconsolidation of a previously consolidated fund while the year ended March 31, 2023 was impacted by an impairment on one of our investments.

Investing Activities

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For the years ended March 31, 2024, 2023 and 2022, our net cash used in investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchase of other investments and net contributions to our funds.

Additionally, during the years ended March 31, 2023 and 2022, we received proceeds from the sale of investments.

Additionally, the year ended March 31, 2023 included the sale of investments held in trust by our consolidated SPAC due to its liquidation.

Financing Activities

Our financing activities generally reflect cash received from debt and equity financings, payments to owners in the form of dividends, distributions and repurchases of shares and scheduled drawdowns and repayments of our outstanding debt.

For the years ended March 31, 2023, 2022 and 2021, our net cash used in financing activities was driven primarily by dividends paid to stockholders, payments under the tax receivable agreement, distributions to HLA members and drawdowns and repayments under our revolving credit facility.

For the years ended March 31, 2024, 2023 and 2022, our net cash used in financing activities was driven primarily by dividends paid to stockholders, payments under the tax receivable agreement, distributions to HLA members and drawdowns and repayments under our Revolving Credit Agreement.

Additionally, the year ended March 31, 2023 included the redemption by our consolidated SPAC of its Class A common stock from its holders.

Future Sources and Uses of Liquidity

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If events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about any such events, occur, our ability to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities to pay operational and other costs, may be threatened or lost.

We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets and use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.

We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets for working capital or to use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.

The timing or size of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs.

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The Stock Repurchase Program expires 12 months after the date of the first acquisition under the authorization.

We have not repurchased any of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available.

We have not repurchased any shares of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available.

Our board of directors periodically reviews the Stock Repurchase Program and most recently re-approved it in December 2023.

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We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary.

These net capital requirements are met by retaining

These net capital requirements are met by retaining cash.

As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions.

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(2) Represents interest to be paid over the maturity of the related debt obligations, which has been calculated assuming no pre-payments will be made and debt will be held until its final maturity date.

The future interest payments are calculated using the variable interest rate of 6.75% on our Term Loan Agreement, the fixed interest rate of 3.50% on our 2020 Multi-Draw Term Loan Agreement and the variable interest rate of 6.50% on our Revolving Loan Agreement in effect as of March 31, 2023.

The future interest payments are calculated using the variable interest rate of 7.25% on our Term Loan Agreement and the fixed interest rate of 3.50% on our 2020 Multi-Draw Term Loan Agreement.

(3) Represents commitments by us to fund a portion of each investment made by our specialized funds and certain customized separate account entities.

These amounts are generally due on demand and are therefore presented in the less than one year category.

We have entered into a tax receivable agreement with our pre-IPO owners pursuant to which we will pay them 85% of the amount of tax benefits, if any, that we realize (or are deemed to realize in the case of an early termination payment by us, a change in control or a material breach by us of our obligations under the tax receivable agreement) as a result of increases in tax basis (and certain other tax benefits) resulting from

purchases or exchanges of membership units of HLA.

termination payment by us, a change in control or a material breach by us of our obligations under the tax receivable agreement) as a result of increases in tax basis (and certain other tax benefits) resulting from purchases or exchanges of membership units of HLA.

Because the timing of amounts to be paid under the tax receivable agreement cannot be determined, this contractual commitment has not been presented in the table above.

The tax savings achieved may be substantial and we may not have sufficient cash available to pay this liability, in which case, we might be required to incur additional debt to satisfy this liability.

We offer an Employee Investment Program (“EIP”) through which certain employees are able to invest directly into certain company managed funds as individual limited partners (“LP”).

The employees also have an option to enter into a loan agreement with a third-party lender to fund committed capital.

We offer an Employee Investment Program (“EIP”) through which certain employees are able to invest directly into certain company managed funds as individual limited partners (“LPs”).

The employees also have an option to enter into a loan agreement with the Company or a third-party lender to fund committed capital.

The loan is collateralized by the underlying LP interest in the fund and return of capital distributions are utilized to pay the outstanding loan balance.

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These judgments include:

(a) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the economic performance of the entity, (c) determining whether two or more parties’ equity interests should be aggregated, and (d) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity.

aggregated, and (d) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity.

For entities that are determined to be VIEs, we are required to consolidate those entities where we have concluded that we are the primary beneficiary.

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Revenue Recognition of Incentive Fees

Incentive fees include both carried interest earned from certain specialized funds and performance fees received from certain customized separate accounts.

Incentive fees include both carried interest earned from certain specialized funds and performance fees received from certain specialized funds and customized separate accounts.

We recognized $101.9 million of incentive fees in fiscal 2024 and have $1.2 billion of unrecognized carried interest as of March 31, 2024.

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

We evaluate 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.

We evaluate 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.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities.

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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 7. Management’s Discussion and Analysis