What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-05-23 compared with 2023-05-25 · 279 added, 277 removed, 895 unchanged (38% of the section changed)

3 unchanged sentences

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders' Equity

4 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hamilton Lane Incorporated (the Company) as of March 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Hamilton Lane Incorporated (the Company) as of March 31, 2024 and 2023, the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with U.S.

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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Investment valued under the measurement alternative

Description of the Matter As more fully described in Note 4 to the consolidated financial statements, the Company performs qualitative impairment assessments each quarter on its investments recorded under the measurement alternative.

During the year ended March 31, 2023, as a result of this assessment, the Company determined that a quantitative assessment was required to be performed for one of its investments given a significant decrease in earnings performance and overall economic and market conditions.

The fair value assessment performed at December 31, 2022, indicated that the fair value of the investment was less than the carrying value of the investment.

As a result, the Company reduced the carrying amount to the estimated fair value and recognized a $43.3 million impairment loss, which is the amount by which the carrying value exceeded the estimated fair value of this investment.

Auditing the Company's impairment measurement involved a high degree of subjectivity as estimates underlying the determination of fair value were based on assumptions about future market and economic conditions.

The significant assumption used in the Company’s fair value estimate was the selection of the revenue multiple under the market approach.

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 processes to determine the fair value of the investment and measure the impairment.

This included controls over management's review of the significant assumption underlying the fair value determination

Our testing of the Company's fair value measurement and related impairment included, among other procedures, evaluating the significant assumption and operating data used to estimate fair value.

For example, we compared the prospective financial information to company specific and current industry and economic trends, performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair value estimate that would result from changes in the assumptions and recalculated management's estimate.

We also involved our valuation specialists to assist in our evaluation of the methodology and significant assumption used in the fair value estimate.

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

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 $44.7 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.

Realization of this deferred tax asset is dependent upon, among other things, the future tax deductions of tax basis step-ups related to the Transactions.

Auditing the Company’s recognition of the net deferred tax asset related to the Transactions is especially challenging, as the Company’s determination of the tax basis step-ups and related future tax deductions requires the application of complex tax laws and regulations for partnerships and the identification of historical basis differences.

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 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.

/s/ Ernst & Young LLP

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In our opinion, Hamilton Lane Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes and our report dated May 25, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2024 and 2023, the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and our report dated May 23, 2024 expressed an unqualified opinion thereon .

Basis for Opinion

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Cash and cash equivalents — 12,062

Investments held in trust — 276,016

Investments 28,575 57,044

1 unchanged sentence

Total assets $ 1,271,200 $ 1,140,543

Liabilities, redeemable non-controlling interests and equity

Liabilities and equity

Accounts payable $ 4,505 $ 4,559

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Commitments and contingencies (Note 16)

Redeemable non-controlling interests — 276,000

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none issued

Class A common stock, $ 0.001 par value, 300,000,000 authorized;

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Total equity $ 675,958 $ 574,192

Total liabilities, redeemable non-controlling interests and equity $ 1,140,543 $ 1,294,946

Total liabilities and equity $ 1,271,200 $ 1,140,543

See accompanying notes to the consolidated financial statements.

18 unchanged sentences

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

1 unchanged sentence

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

1 unchanged sentence

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.

9 unchanged sentences

Hamilton Lane Incorporated

Consolidated Statements of Comprehensive Income

(In Thousands)

Year Ended March 31,

2023 2022 2021

Net income $ 187,185 $ 247,253 $ 168,785

Other comprehensive income, net of tax:

Foreign currency translation — — 130

Total other comprehensive income, net of tax $ — $ — $ 130

Comprehensive income $ 187,185 $ 247,253 $ 168,915

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

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

71,027 96,548 69,772

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

5,617 4,343 1,293

Comprehensive income attributable to non-controlling interests in consolidated funds 435 — —

Total comprehensive income attributable to Hamilton Lane Incorporated $ 109,120 $ 145,986 $ 98,100

See accompanying notes to the consolidated financial statements.

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 Interest in Consolidated Funds Non-Controlling

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Non-Controlling

Interests in General Partnerships Non-Controlling

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

Non-Controlling Interest in Consolidated Funds Total Equity

Balance at March 31, 2021

1 unchanged sentence

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

Other comprehensive income — — — — 78 — — 52 130

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

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Dividends declared — — — ( 59,462 ) — — — ( 59,462 )

Capital contributions from non-controlling interests, net — — — — — — 836 — 836

Capital contributions from (distributions to) non-controlling interests, net — — — — ( 532 ) — 18,734 18,202

Member distributions — — — — — ( 52,048 ) — ( 52,048 )

8 unchanged sentences

(In Thousands)

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

Comprehensive

Income (Loss) Non-Controlling Interest in Consolidated Funds Non-Controlling

Class A Common Stock Class B Common Stock Additional Paid in Capital Retained Earnings Non-Controlling

Interests in General Partnerships Non-Controlling

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

Non-Controlling Interest in Consolidated Funds Total Equity

Balance at March 31, 2023

9 unchanged sentences

Employee Share Purchase Plan share issuance — — 1,585 — — 668 — 2,253

Adjustment of redeemable non-controlling interest to redemption value — — — 9,016 — — — 4,056 13,072

Deconsolidation of consolidated fund — — — — — — ( 167,073 ) ( 167,073 )

Equity reallocation between controlling and non-controlling interests — — 4,520 — — ( 4,520 ) — —

15 unchanged sentences

Equity in income of investees ( 34,893 ) ( 5,088 ) ( 78,813 )

Gain on sale of investment ( 12,230 ) ( 11,936 ) —

Net realized loss (gain) on sale of investments 288 ( 12,230 ) ( 11,936 )

Fair value adjustment of other investments 333 ( 20,730 ) ( 47,487 )

15 unchanged sentences

Change in warrant liability measured at fair value — ( 2,883 ) ( 4,485 )

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

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

Other assets and liabilities 5,779 441 ( 667 )

Cash relinquished with deconsolidation of fund ( 101,712 ) — —

Net unrealized gain on investment ( 1,406 ) — —

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

Change in other assets and liabilities ( 426 ) 5,779 441

Net cash provided by operating activities $ 120,852 $ 226,589 $ 169,523

2 unchanged sentences

Cash paid for acquisition of business — ( 1,500 ) ( 10,096 )

Loans to investees ( 2,535 ) — —

Purchase of convertible notes ( 8,000 ) ( 2,535 ) —

Purchase of investments ( 6,352 ) ( 37,025 ) ( 18,997 )

Proceeds from sales of investments 1,343 13,478 12,623

Proceeds from sale of intangible assets 3,305 — —

Distributions received from investments — 1,406 12,739

1 unchanged sentence

Contributions to Partnerships ( 57,722 ) ( 84,557 ) ( 73,240 )

Purchase of intangible assets — — ( 1,000 )

Consolidated variable interest entities related:

Sale (purchase) of investments held in trust 278,954 — ( 276,000 )

Net cash provided by (used in) investing activities $ 177,912 $ ( 70,487 ) $ ( 421,781 )

(Purchase) sale of investments ( 57,832 ) 278,954 —

Net cash (used in) provided by investing activities $ ( 122,184 ) $ 177,912 $ ( 70,487 )

Year Ended March 31,

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Distributions to non-controlling interest in general partnerships ( 138 ) ( 1,257 ) ( 588 )

(Proceeds) redemption from Class A units of Hamilton Lane Alliance Holdings I, Inc.

( 278,205 ) — 276,000

Offering costs paid for issuance of Class A units of Hamilton Lane Alliance Holdings I, Inc.

Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc.

— ( 278,205 ) —

Contributions from consolidated funds 18,991 — —

Net cash (used in) provided by financing activities $ ( 364,146 ) $ ( 113,216 ) $ 270,660

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

Increase (decrease) in cash, cash equivalents, and restricted cash 40,355 ( 14,180 ) 37,167

Cash, cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the year 76,197 90,377 53,210

Contributions from non-controlling interests in consolidated funds 142,924 18,991 —

Net cash provided by (used in) financing activities $ 4,399 $ ( 364,146 ) $ ( 113,216 )

Increase (decrease) in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities 3,067 40,355 ( 14,180 )

Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the year 116,552 76,197 90,377

Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the year $ 119,619 $ 116,552 $ 76,197

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As the sole managing member of HLA, HLI operates and controls all of the business and affairs of HLA, and through HLA, conducts its business.

As a result, HLI consolidates HLA’s financial results and reports a non-controlling interest related to the portion of HLA units not owned by HLI.

As a result, HLI consolidates HLA’s financial results and reports a non-controlling interest (“NCI”) related to the portion of HLA units not owned by HLI.

The assets and liabilities of HLA represent substantially all of HLI’s consolidated assets and liabilities with the exception of certain cash, certain deferred tax assets and liabilities, payables to related parties pursuant to a tax receivable agreement, and dividends payable.

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HLA is a registered investment advisor with the United States Securities and Exchange Commission (“SEC”), providing asset management and advisory services, primarily to institutional investors, to design, build and manage private markets portfolios.

HLA generates revenues primarily from management fees, by managing assets on behalf of customized separate accounts, specialized fund products and distribution management accounts, and advisory fees and by providing asset supervisory and reporting services.

HLA generates revenues primarily from management and advisory fees, comprised of specialized fund and customized separate account management fees, advisory and reporting fees and distribution management fees and, to a lesser extent, incentive fees, comprised of carried interest earned from our specialized funds and certain customized separate accounts structured as single-client funds in which we have a general partner commitment, and performance fees earned on certain other specialized funds and customized separate accounts.

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.

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All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

Use of Estimates

Actual results could differ from those estimates.

Consolidation

13 unchanged sentences

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 6 for additional disclosure on VIEs.

Accounting for Differing Fiscal Periods

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The Company records its share of capital contributions to and distributions from the Partnerships in investments in the Consolidated Balance Sheets during the three month lag period.

The results of our consolidated VIEs are reported on a three-month lag, due to the timing of the receipt of related financial statements.

To the extent that the Company is aware of material events during the intervening period, the impact of the events would be disclosed in the Notes to the Consolidated Financial Statements.

The results of the consolidated VIEs are reported on a three-month lag, due to the timing of the receipt of related financial statements.

To the extent that management is aware of material events that affect the Partnerships or the consolidated VIEs during the intervening period, the impact of the events would be disclosed in the Notes to Consolidated Financial Statements.

The Company’s revenue earned from Partnerships, including both management and advisory fee revenue and incentive fee revenue, is not accounted for on a lag.

To the extent that management is aware of material events that affect the Partnerships during the intervening period, the impact of the events would be disclosed in the Notes to Consolidated Financial Statements.

Foreign Currency

The Company and substantially all of its foreign subsidiaries utilize the U.S.

The Company and all of its foreign subsidiaries utilize the U.S.

dollar as their functional currency.

The assets and liabilities of the Company’s foreign subsidiaries with non-U.S.

dollar functional currencies are translated at exchange rates prevailing at the end of each reporting period.

The results of foreign operations are translated at the weighted average exchange rate for each reporting period.

Translation adjustments are included in other comprehensive income (loss) within the consolidated financial statements until realized.

Foreign currency transaction gains (losses) are included in general, administrative and other expenses in the Consolidated Statements of Income.

3 unchanged sentences

Restricted cash at March 31, 2024 and 2023 was primarily cash held by the Company’s foreign subsidiaries to meet applicable government regulatory capital requirements.

Investments Held in Trust by Consolidated Variable Interest Entities

Investments held in trust represented a money market fund of Hamilton Lane Alliance Holdings I, Inc.

(“HLAH”), a special purpose acquisition company (“SPAC”) that was previously consolidated, which was invested in U.S.

Treasury securities purchased with funds raised through the IPO of the consolidated entity.

Investments held in trust were classified as trading securities and were presented on the balance sheet at fair value at the end of the reporting period.

Gains and losses resulting from the change in fair value of these securities were 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 were determined

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

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

Fees Receivable

3 unchanged sentences

Due from Related Parties

Due from related parties in the Consolidated Balance Sheets consists primarily of advances made on behalf of the Partnerships for the payment of certain operating costs and expenses for which the Company is subsequently reimbursed and refundable tax distributions made to members of HLA.

Due from related parties in the Consolidated Balance Sheets consists primarily of advances made on behalf of the Partnerships for the payment of certain operating costs, expenses for which the Company is subsequently reimbursed and amounts due from current employees.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Furniture, Fixtures and Equipment

18 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

Intangible assets

The Company’s intangible assets consist of customer relationship assets identified as part of previous acquisitions and purchased software.

5 unchanged sentences

The accumulated amortization of intangibles was $ 8,367 and $ 6,666 as of March 31, 2024 and 2023, respectively.

Amortization of intangible assets was $ 2,277 , $ 2,503 , and $ 1,403 for each of the years in the three-year period ended March 31, 2023, respectively, and is included in general, administrative and other expenses in the Consolidated Statements of Income.

Amortization of intangible assets was $ 1,701 , $ 2,277 , and $ 2,503 for each of the years in the three-year period ended March 31, 2024, respectively, and is included in general, administrative and other expenses in the Consolidated Statements of

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The estimated amortization expense for each of the next five fiscal years is $ 1,701 , $ 1,465 , $ 1,154 , $ 264 , and $ 0 , respectively.

5 unchanged sentences

The Company performed the annual impairment assessment as of December 31, 2023 noting that no goodwill impairment existed.

Convertible notes receivable

Convertible notes receivable of $ 10,215 and $ 2,028 as of March 31, 2024 and 2023 are included in other assets in the Consolidated Balance Sheets.

Each note is recognized at amortized cost with interest accrued quarterly.

Principal and interest obligations may be satisfied by a cash payment or converted to equity of the note issuers at the end of term or upon triggering events as defined in the note agreements.

The Company considers the notes receivable to be fully collectible;

accordingly, no allowance for credit losses has been established as of March 31, 2024 or 2023.

Equity Method Investments

1 unchanged sentence

For investments accounted for under the equity method of accounting, the Company’s share of income (losses) is included in equity in income of investees in the Consolidated Statements of Income.

The Company’s equity in income of investees is generally comprised of realized and unrealized gains from the underlying funds and portfolio companies held by the Partnerships.

The Company’s equity in income of investees is generally comprised of realized and unrealized gains from the underlying funds, portfolio companies held by the Partnerships and certain technology investments.

The carrying amounts of equity method investments are reflected in investments in the Consolidated Balance Sheets.

3 unchanged sentences

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

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

Values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Hamilton Lane Incorporated

1 unchanged sentence

(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.

V alues are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The Company uses these levels of hierarchy to measure the fair value of certain financial instruments on a recurring basis, such as for investments;

3 unchanged sentences

The carrying amount of cash and cash equivalents, fees receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments.

Recent Accounting Pronouncements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

The amendments in this ASU incorporate 14 of the 27 disclosure requirements published in SEC Release No.

33-10532 - Disclosure Update and Simplification into various topics within the Accounting Standards Codification (“ASC”).

The amendments represent clarifications to, or technical corrections of, current requirements.

For SEC registrants, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

Early adoption is prohibited.

The amendments will be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently assessing the impact of the new requirements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.

This ASU enhances segment disclosures primarily around significant segment expenses for both interim and annual periods.

The amendments in this ASU are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years after December 15, 2024.

Early adoption is permitted.

The Company is currently assessing the impact of the new requirements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted.

The Company is currently assessing the impact of the new requirements.

In March 2024, the SEC adopted final rules to require disclosures about certain climate-related information in registration statements and annual reports.

In April 2024, the SEC issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules.

The rules, if implemented, would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.

The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions, if material.

In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements.

The Company is currently assessing the impact of the new requirements should the rules be implemented.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15%.

While the U.S.

has not yet adopted the Pillar Two rules, various other governments around the world are enacting similar legislation.

The Company is currently evaluating the rules and assessing the impact of the new requirements.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Redeemable Non-Controlling Interest

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

Redeemable non-controlling interests represented the Class A shares issued by Hamilton Lane Alliance Holdings I, Inc (“HLAH”), that were 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 were initially recorded at their original issue price, net of issuance costs and the initial fair value of separately traded warrants.

12 unchanged sentences

The Company also incurs certain costs, primarily employee travel, organization and syndication costs, for which it receives reimbursement from its customers in connection with satisfying these performance obligations.

For reimbursable travel, organization and syndication costs, the Company concluded it controls

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

the services provided by its employees and other parties and therefore is a principal.

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

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The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised services to the customer.

Management fees from these performance obligations for contracts where the Company has discretion over investment decisions are generally calculated by applying a percentage to unaffiliated committed capital or net invested capital under management and are usually billed quarterly.

For many partnerships, fees are based on committed capital during the investment period and then net invested capital through the remainder of the partnership term.

Management fees from these performance obligations for contracts where the Company has discretion over investment decisions are generally calculated by applying a percentage to unaffiliated

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

committed capital, net invested capital under management or net asset value and are usually billed quarterly.

For many partnerships, fees are based on committed capital during the investment period or net invested capital through the remainder of the partnership term.

The management fee base is subject to factors outside the Company’s control and therefore estimates of future period management fees are not included in the transaction price, as those estimates would be considered constrained.

2 unchanged sentences

Distribution management fees are generally calculated by applying a percentage to the amounts sold/liquidated and are billed at the completion of each transaction.

For reporting services, the Company satisfies these performance obligations over time as the services are rendered and the customer simultaneously receives and consumes the benefits of the services as they are performed.

Reporting fees are generally calculated by applying a fixed rate multiplied by the number of funds monitored and are billed quarterly.

For reporting, monitoring, data and analytics services, the Company satisfies these performance obligations over time as the services are rendered and the customer simultaneously receives and consumes the benefits of the services as they are performed.

Reporting and monitoring fees are generally calculated by applying a fixed rate multiplied by the number of funds monitored and are billed quarterly.

Data and analytics fees are generally received on an annual basis and recognized over the service term.

The Company incurs certain costs related to the organization and syndication of new Partnerships.

These costs generally include professional fees, legal fees, and other related items.

The Company expenses these costs as they are incurred.

Once the Partnership is successfully formed and has held its first closing, the Company recognizes those costs as revenue in the Consolidated Statements of Income as the Partnership is then able to reimburse the Company for these costs.

Incentive Fees

7 unchanged sentences

The additional future capital contributions relate to unfunded commitments or follow-on investment opportunities in underlying portfolio investments.

Incentive fees received before the revenue

Incentive fees received before the revenue recognition criteria have been met are deferred and recorded within deferred incentive fee revenue in the Consolidated Balance Sheets.

Compensation and Benefits

Compensation and Benefits consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock and performance awards and (c) incentive fee compensation, which consists of carried interest and performance fee allocations as detailed below.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

recognition criteria have been met are deferred and recorded within deferred incentive fee revenue in the Consolidated Balance Sheets.

Fund reimbursement revenue

The Company incurs certain costs related to the organization and syndication of new Partnerships.

These costs generally include professional fees, legal fees, and other related items.

The Company expenses these costs as they are incurred.

Compensation and Benefits

Compensation and Benefits consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock awards to employees and (c) incentive fee compensation, which consists of carried interest and performance fee allocations as detailed below.

Equity-based awards issued are measured at fair value at the date of grant.

The fair value of the restricted stock grant is based on the closing stock price on the trading day before the date of grant less the present value of expected future dividends.

Expenses related to employee equity-based compensation are recorded evenly over the vesting period using the straight-line method.

The fair value of the performance awards are based on a Monte-Carlo simulation valuation model at the date of grant.

Expense related to employee equity-based compensation is recorded using the straight-line method over the vesting period.

See Note 10 for more information regarding accounting for equity-based awards.

3 unchanged sentences

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

Non-Operating Income (loss)

Non-operating income (loss) consists primarily of gains recorded on sales of other assets, other investments, fair value adjustments on investments valued under the measurement alternative and adjustments to the payable to related parties pursuant to the tax receivable agreement.

Non-Operating Gain (Loss)

Non-operating gain (loss) consists primarily of gains or losses recorded on sales of other assets, fair value adjustments on investments and adjustments to the payable to related parties pursuant to the tax receivable agreement.

The Company accounts for income taxes using the asset and liability method.

4 unchanged sentences

Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

HLA is organized as a limited liability company and treated as a “flow-through” entity for income taxes purposes.

HLA is organized as a limited liability company and treated as a “flow-through” entity for income tax purposes.

As a “flow-through” entity, HLA is not subject to income taxes apart from certain U.S.

8 unchanged sentences

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.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Tax Receivable Agreement

1 unchanged sentence

These increases in tax basis and tax depreciation and amortization deductions reduce the amount of cash taxes that HLI would otherwise be required to pay in the future.

HLI has entered into a tax receivable agreement (“TRA”) with the other members of HLA (the “TRA Recipients”) that requires it to pay them 85 % of the amount of cash savings, if any, in U.S.

federal, state, and local income tax that HLI actually realizes (or, under certain circumstances, is deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the TRA.

The Company operates its business in a single segment, which is how the chief operating decision maker (who is the chief executive officer) reviews financial performance and allocates resources.

HLI has entered into a tax receivable agreement with the other members of HLA (the “TRA Recipients”) that requires it to pay them 85 % of the amount of cash savings, if any, in U.S.

The Company operates its business in a single segment, which is how the chief operating decision makers (who are the co-chief executive officers) review financial performance and allocate resources.

Accordingly, the Company considers itself to be in a single operating and reportable segment structure.

5 unchanged sentences

The Company derives revenues from clients located in the United States and other foreign countries.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The below table presents revenues by geographic location:

3 unchanged sentences

Other foreign countries (1)

329,142 320,799 189,669

Total revenues (2)

$ 553,842 $ 528,753 $ 367,919

(1) For the years ended March 31, 2024, 2023 and 2022, no individual foreign country had material attributed revenue.

(2) Revenues are attributed to countries based on location of the client or investor.

The Company recognized approximately 10 % of its total revenues for the fiscal year ended March 31, 2024 from its latest secondary fund.

Dividends and Distributions

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

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Reclassifications

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

The Company reclassified certain prior period amounts to conform to current year presentation in the Notes to the Consolidated Financial Statements.

In Note 4, the Company reclassified $ 61,637 from primary funds to evergreen funds within the types of equity method investments in partnership table.

There was no impact to prior period amounts reported in our Consolidated Balance Sheets.

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

4 unchanged sentences

Advisory 24,229 24,785 24,972

Reporting and other 24,792 23,327 11,134

Reporting, monitoring, data and analytics

24,711 24,792 23,327

Distribution management 5,054 2,560 10,466

5 unchanged sentences

Customized separate accounts 11,918 31,719 17,801

Consolidated variable interest related:

Consolidated variable interest entities related:

Specialized funds — 6,948 5,558

Total incentive fees $ 101,906 $ 156,879 $ 53,691

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

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Investments consist of the following:

1 unchanged sentence

Other equity method investments 1,576 —

Other investments 21,586 19,820

Fair value investments 17,984 21,586

Investments valued under the measurement alternative 175,522 168,732

Total Investments $ 603,697 $ 530,921

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Investments of consolidated VIEs consist of the following:

5 unchanged sentences

The strategies and geographic location of investments within the Partnerships vary by fund.

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

During the year ended March 31, 2023, the Company sold its ownership interests in its joint venture, Private Markets Connect, for $ 10,000 and recognized a gain of $ 9,783 , which is recorded in non-operating (loss) income in the Consolidated Statements of Income.

The Company has a 1 % interest in substantially all of the Partnerships, representing a general partner interest.

The Company’s other equity method investments represent its ownership in a technology company to develop an AI-powered investment assistant for private markets.

Immediately preceding the sale, the Company received a distribution from the joint venture of $ 1,406 , which was treated as a return of capital.

4 unchanged sentences

Customized separate accounts 126,176 111,141

Evergreen funds 102,161 61,637

Total equity method investments in Partnerships $ 408,615 $ 340,603

21 unchanged sentences

Net income $ 2,894,158 $ ( 428,224 ) $ 7,438,736

Other 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.

Fair value investments

The Company’s fair value 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.

1 unchanged sentence

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 investments held as collateral 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 direct equity investments and private equity funds are measured at fair value with unrealized gains and losses recorded in non-operating (loss) gain in the Consolidated Statements of Income.

In May 2019, the Company transferred investments held as collateral to a Partnership of which the Company is the general partner.

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

The Company accounts for its secured financing 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.

The significant input to the fair value of the secured financing is the fair value of the fair value 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 of $ 1,434 , $ 1,130 , and $ 7,281 on other investments during the years ended March 31, 2023, 2022, and 2021, respectively, and recognized a loss of $ 1,434 , $ 1,130 , and $ 7,281 on the secured financing liability during the years ended March 31, 2023, 2022 and 2021, respectively.

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

The Company recognized a gain of $ 130 , $ 1,434 , and $ 1,130 on the fair value assets held as collateral during the years ended March 31, 2024, 2023, and 2022, respectively, and recognized a loss of $ 130 , $ 1,434 , and $ 1,130 on the secured financing liability during the years ended March 31, 2024, 2023 and 2022, respectively.

Gains and losses related to fair value assets held as collateral and the secured financing liability are recorded in non-operating (loss) gain in the Consolidated Statements of Income.

Investments valued under the measurement alternative

9 unchanged sentences

Sales / return of capital ( 176 ) — ( 13,903 )

Net unrealized (loss) gain 1

( 24,944 ) 47,189 5,303

Reclassifications 2

Net change in unrealized gain (loss) 1

1,177 ( 24,944 ) 47,189

Net realized loss ( 522 ) — ( 6,003 )

Carrying amount, end of year $ 175,522 $ 168,732 $ 156,100

(1) Net unrealized (loss) gain consists of fair value adjustments for observable price changes of identical or similar investments or impairments.

(2) Reclassifications relate to investments that no longer qualify for the measurement alternative or for which the Company elects to no longer apply the measurement alternative.

The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses related to our investments under the measurement alternative:

(1) Net change in unrealized gain (loss) consists of fair value adjustments for observable price changes of identical or similar investments or impairments.

The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses related to the Company’s investments under the measurement alternative:

As of March 31,

6 unchanged sentences

Prior to the impairment recorded, the carrying value of the investment was $ 74,189 .

The impairment amount was $ 43,289

The impairment amount was $ 43,289 and is included in non-operating (loss) gain in the Consolidated Statements of Income for the year ended March 31, 2023.

The fair value was estimated using Level 3 inputs with the significant input as shown in Note 5.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

and is included in non-operating (loss) income in the Condensed Consolidated Statements of Income.

The fair value was estimated using Level 3 inputs with the significant input as shown in Note 5.

Fair Value Measurement

3 unchanged sentences

Financial assets:

Other investments

Fair value investments

$ 4,913 $ — $ 13,071 $ — $ 17,984

9 unchanged sentences

Financial assets:

Other investments

Fair value investments

$ 7,358 $ — $ 14,228 $ — $ 21,586

Investments held in trust

Consolidated VIEs

Fair value investments

— — 21,163 23,589 44,752

1 unchanged sentence

Financial liabilities:

Warrant liability (2)

$ 2,484 $ 399 $ — $ — $ 2,883

Secured financing (1)

2 unchanged sentences

(1) Secured financing is recorded within other liabilities in the Consolidated Balance Sheets.

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

(2) Investments are recorded at estimated fair value based upon the net asset value of the fund utilizing the practical expedient under ASC 820, “Fair Value Measurement.” The fair value amounts presented in this column are intended to permit reconciliation of the fair value hierarchy to the amounts presented in Note 4.

2 unchanged sentences

(In thousands, except share and per share amounts)

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 investments Direct equity investments Publicly traded equity security Total other investments

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

Private equity funds Direct credit investments Direct equity investments Total investments

Balance as of March 31, 2022

2 unchanged sentences

Distributions ( 1,283 ) ( 25 ) — ( 1,308 )

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

Transfer in — — — 6,455 6,455

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

Net gain 639 41 754 1,434

Balance as of March 31, 2023

2 unchanged sentences

Distributions ( 656 ) ( 798 ) — ( 1,454 )

Net gain 639 41 754 — 1,434

Net (loss) gain ( 656 ) 8 778 130

Balance as of March 31, 2024

7 unchanged sentences

Balance as of March 31, 2023

Contributions 24,787

Distributions ( 180 )

Transfer in (1)

Transfer out (2)

Balance as of March 31, 2024

(1) Represents amounts previously recorded at estimated fair value based upon the net asset value of the fund utilizing the practical expedient under ASC 820, “Fair Value Measurement.”.

(2) Represents assets held by a previously consolidated fund that was deconsolidated.

The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in recurring Level 3 fair value measurements of assets were as follows:

March 31, 2023

Fair Valuation Unobservable Weighted

Value Methodology Inputs Range Average

Private equity funds $ 6,664 Adjusted net asset value Selected market return 4.9 % - 10.4 % 9.1 %

Direct credit investments $ 790 Discounted cash flow Market yield 12.4 % - 12.4 % 12.4 %

Direct equity investments $ 6,774 Market approach EBITDA multiple 8.25 x

Market approach Equity multiple 1.7 x

Investments of consolidated VIE

Direct credit investments $ 21,163 Recent precedent transactions

Hamilton Lane Incorporated

5 unchanged sentences

Private equity funds $ 5,519 Adjusted net asset value Selected market return 5.1 % - 19.2 % 7.9 %

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

The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in non-recurring Level 3 fair value measurements of financial assets were as follows, as of December 31, 2022:

Direct equity investments $ 7,552 Market approach EBITDA multiple 7.50 x - 16.00 x 12.14 x

Market approach Equity multiple 1.6 x 1.6 x

March 31, 2023

Fair Valuation Unobservable Weighted

Value Methodology Inputs Range Average

Investment valued under the measurement alternative

$ 30,900 Market approach Revenue Multiple 3.50 x

Private equity funds $ 6,664 Adjusted net asset value Selected market return 4.9 % — 10.4 % 9.1 %

Direct credit investments $ 790 Discounted cash flow Market yield 12.4 % — 12.4 % 12.4 %

Direct equity investments $ 6,774 Market approach EBITDA multiple 8.25 x — 14.5 x 11.77 x

Market approach Equity multiple 1.7 x 1.7 x

Investments of consolidated VIE

Direct credit investments $ 21,163 Recent precedent transactions

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;

2 unchanged sentences

Variable Interest Entities

The Company consolidates certain VIEs for which it is determined that the Company is the primary beneficiary as described in Note 2.

The Company holds variable interests in entities that are considered variable interest entities because limited partners lack the ability to remove the general partner or dissolve the entity without cause by simple majority vote (i.e., do not have substantive “kick out” or “liquidation” rights).

The Company’s variable interest in such entities is in the form of direct equity interests in, and/or fee arrangements with, the Partnerships in which it also serves as the general partner or managing member.

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.

The Company consolidates VIEs in which it is determined that the Company is the primary beneficiary.

Consolidated Variable Interest Entities

The Company consolidates general partner entities of certain Partnerships and a fund in which it is currently the primary beneficiary, which are not wholly-owned by the Company.

The assets of the consolidated general partner VIEs represent equity method-investments in direct investment funds and customized separate accounts and the assets of the consolidated fund represent cash and direct credit investments.

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

The assets of the consolidated general partner VIEs represent equity method investments in direct investment funds and customized separate accounts.

The assets may only be used to settle obligations of the respective consolidated VIEs, if any.

In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities, except for certain entities in which there could be a clawback of previously distributed carried interest.

In addition, there is no recourse to the Company for the

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

The Company previously sponsored and consolidated Hamilton Lane Alliance Holdings I, Inc.

(“HLAH”) through HL Alliance Holdings Sponsor LLC, an indirect wholly-owned subsidiary of the Company.

consolidated VIEs’ liabilities, except for certain entities in which there could be a clawback of previously distributed carried interest.

The Company previously sponsored and consolidated HLAH through HL Alliance Holdings Sponsor LLC, an indirect wholly-owned subsidiary of the Company.

On January 15, 2021, HLAH completed an IPO raising total gross proceeds of $ 276,000 , which were placed in a trust and could only be utilized for funding a business combination or the redemption of Class A shares of HLAH.

2 unchanged sentences

In connection with the liquidation, HLAH redeemed all of the outstanding shares of Class A common stock, cancelled all of the outstanding public and private warrants and settled all other outstanding liabilities.

The Company previously consolidated a Partnership in which it is was the primary beneficiary.

On October 1, 2023, the Company no longer qualified as the primary beneficiary because of additional investors joining the fund, and deconsolidated all the assets and liabilities of the non-controlling interest in the Partnership from its consolidated financial statements.

The impact of the deconsolidation on the Company’s Consolidated Statements of Income for the year ended March 31, 2024 was not material.

Subsequent to the deconsolidation of the Partnership, the Company records its interest in the Partnership using the equity method, within investments in the Consolidated Balance Sheets.

Nonconsolidated Variable Interest Entities

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

The Company’s involvement with such entities is in the form of direct equity interests in, and fee arrangements with, the Partnerships in which it also serves as the general partner or managing member.

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, 2023, the total remaining unfunded commitments from the Company’s general partner entities to the unconsolidated VIEs was $ 136,097 .

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

Certain Partnerships that are VIEs are not consolidated because the Company has determined it is not the primary beneficiary based upon the Company’s equity interest percentage in each of the applicable VIEs.

As of March 31, 2024, the total remaining unfunded commitments from the Company’s general partner entities to the nonconsolidated VIEs was $ 156,579 .

Investor commitments are the primary source of financing for the nonconsolidated 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.

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:

The carrying value 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:

Investments $ 232,743 $ 199,858

29 unchanged sentences

The Loan Agreements contain financial and operational covenants, events of default and remedies that the Company believes to be customary.

The Term Loan Agreement has a maturity date of January 1, 2030, and the Company is entitled to request additional uncommitted term advances not to exceed $ 25 million in the aggregate through December 31, 2023, subject to the overall cap described above.

The Revolving Loan Agreement has a $ 50,000 borrowing capacity, a maturity date of March 24, 2025, and the interest rate is a floating per annum rate equal to the

The Term Loan Agreement has a maturity date of January 1, 2030.

The Revolving Loan Agreement has a $ 50,000 borrowing capacity, a maturity date of March 24, 2025, and the interest rate is a floating per annum rate equal to the prime rate minus 1.50 % subject to a floor of 2.25 %.

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $ 100,000 that the Company has fully

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

prime rate minus 1.50 % subject to a floor of 2.25 %.

The 2020 Multi-Draw Term Loan Agreement 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 3.50 % and matures on July 1, 2030.

Borrowings accrue interest at a fixed per annum rate of 3.50 % and mature on July 1, 2030.

The 2022 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $ 75,000 .

5 unchanged sentences

For the fiscal year ending March 31,

2024 $ 17,500

Thereafter 92,500

6 unchanged sentences

Additionally, holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Board of Directors, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Class B common stock

1 unchanged sentence

Holders of Class B units of HLA hold shares of Class B common stock at a one -to-one ratio.

Shares of Class B common stock (together with the corresponding Class B units) may be exchanged for shares of Class A common stock on a one -to-one basis, or, at the Company’s election, for cash in an amount equal to the net proceeds from the sale of shares of Class A common stock equal to the number of shares of Class B common stock being exchanged, subject to certain restrictions.

Class B units (together with the corresponding

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

shares of Class B common stock) may be exchanged for shares of Class A common stock on a one -to-one basis, or, at the Company’s election, for cash in an amount equal to the net proceeds from the sale of shares of Class A common stock equal to the number of shares of Class B common stock being exchanged, subject to certain restrictions.

Shares of Common Stock Outstanding

25 unchanged sentences

Income and equity allocations to non-controlling interests are based upon the relative ownership percentage of the consolidated VIE held by non-controlling owners.

The reallocation adjustment between HLI stockholders’ equity and non-controlling interests in Hamilton Lane Advisors, L.L.C.

relates to the impact of changes in economic ownership percentages during the period and adjusting previously recorded equity transactions to the economic ownership percentage as of the end of each reporting period.

The reallocation adjustment between HLI stockholders’ equity and non-controlling interests in HLA relates to the impact of changes in economic ownership percentages during the period and adjusting previously recorded equity transactions to the economic ownership percentage as of the end of each reporting period.

HLA Operating Agreement

1 unchanged sentence

The HLA Operating Agreement provides that distributions are made on a pro rata basis to pay income taxes owed by the members on their share of HLA’s taxable income.

In addition to these tax distributions, HLA

In addition to these tax distributions, HLA made distributions in excess of required tax distributions to members in an aggregate amount of $ 43,053 , $ 39,733 , and $ 36,979 for the years ended March 31, 2024, 2023, and 2022, respectively.

Hamilton Lane Incorporated

1 unchanged sentence

(In thousands, except share and per share amounts)

made distributions in excess of required tax distributions to members in an aggregate amount of $ 39,733 , $ 36,979 , and $ 34,167 for the years ended March 31, 2023, 2022, and 2021, respectively.

March 2024 Offering

4 unchanged sentences

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

March 2023 Offering

In March 2023, the Company and a selling stockholder completed a registered offering of an aggregate of 671,737 shares of Class A common stock at a price to the underwriter of $ 76.41 per share (the “March 2023 Offering”).

The shares sold consisted of 100,000 shares held by the selling stockholder and 571,737 shares newly issued by the Company.

The Company received $ 43,686 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 539,237 Class B units and 32,500 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.

September 2021 Offering

4 unchanged sentences

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

March 2021 Offering

In March 2021, the Company and certain selling stockholders completed a registered offering of an aggregate of 1,453,110 shares of Class A common stock at a price of $ 87.36 per share.

The shares sold consisted of 94,245 shares held by the selling stockholders and 1,358,865 shares newly issued by the Company.

The Company received approximately $ 118,710 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 1,101,365 Class B units and 257,500 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)

Equity Based Compensation

4 unchanged sentences

Pursuant to the terms of the Plan, awards may not be granted after February 28, 2027.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Restricted Stock

18 unchanged sentences

In September 2022, the Company granted performance stock awards to certain employees that are subject to both a market-based vesting and a service-based vesting condition (“Performance Awards”).

The Performance Awards will vest based upon (i) the market price of HLI Class A common stock achieving certain price thresholds from $ 150 per share to $ 230 per share and (ii) continued employment through the date the price target is met (with a minimum of five years of service required after the grant date for vesting).

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

the price target is met (with a minimum of five years of service required after the grant date for vesting).

If the price target is met prior to the fifth anniversary of the grant date, the vesting date will be the fifth anniversary of the grant date.

3 unchanged sentences

The fair value of the awards granted are based on a Monte-Carlo simulation valuation model.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

A summary of Performance Award activity for the year ended March 31, 2024 is presented below:

6 unchanged sentences

Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of the Performance Awards granted September 16, 2022:

September 2022

Grant Date Fair Value $ 29.79

6 unchanged sentences

On September 6, 2018, the Company’s stockholders approved the Hamilton Lane Incorporated Employee Share Purchase Plan (as amended, the “ESPP”).

The ESPP provides for a purchase price equal to 85 % of the closing price of the Company’s Class A common stock on the last trading day of each offering period, which begins the first day of each fiscal quarter and ends on the last day of that fiscal quarter.

The ESPP allows eligible employees to elect to purchase the Company’s Class A common stock via paycheck deductions.

The purchase price is 85 % of the closing price of the Company’s Class A common stock on the last trading day of each offering period, which begins the first day of each fiscal quarter and ends on the last day of that fiscal quarter.

Our initial offering period started January 1, 2019.

At inception, there were 1,000,000 shares available for purchase through the ESPP and 884,507 shares were available as of March 31, 2023.

At inception, there were 1,000,000 shares available for purchase through the ESPP and

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

857,328 shares were available as of March 31, 2024.

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.

8 unchanged sentences

Total compensation and benefits $ 204,004 $ 198,412 $ 129,165

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

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

8 unchanged sentences

$ 281,661 $ 242,610 $ 313,676

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Components of income tax expense consist of the following:

23 unchanged sentences

Effective tax rate 19.3 % 22.8 % 21.2 %

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:

11 unchanged sentences

As of March 31, 2024 and 2023, the Company had net operating loss carryforwards of $ 0 and $ 169 .

These net operating losses can be carried forward indefinitely and the tax benefits are expected to be realized.

In connection with the March 2023 Offering and related unit exchanges, the Company recorded a deferred tax asset in the amount of $ 9,299 , which is net of a valuation allowance of $ 1,942 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 March 2023 Offering and related unit exchanges, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $ 7,761 .

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.

The net change in the valuation allowance was an increase of $ 9,629 , which was recorded through additional paid-in-capital and income tax expense.

In connection with the March 2024 Offering and related unit exchanges, the Company recorded a deferred tax asset in the amount of $ 44,656 , which is net of a valuation allowance of $ 6,831 related to the portion of tax benefits that is more likely than not will not be realized.

Additionally, in connection with recording the

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

deferred tax asset for the March 2024 Offering and related unit exchanges, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $ 37,526 .

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 forecasted income.

The net change in the valuation allowance was an increase of $ 13,334 .

As of March 31, 2024, 2023, and 2022, the Company had no unrecognized tax positions.

8 unchanged sentences

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 $ 18,346 .

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Earnings per Share

3 unchanged sentences

As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included.

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.

Shares of the Company’s Class B common stock are, however, considered potentially dilutive to the Class A common stock because the Class B units to which the Class B common stock corresponds are exchangeable for shares of Class A common stock on a one-for-one basis, at which time the share of Class B common stock is surrendered in exchange for a payment of its par value.

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:

2 unchanged sentences

Basic net income per share:

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Year Ended March 31,

2024 2023 2022

Net income attributable to HLI $ 140,858 $ 109,120 $ 145,986

16 unchanged sentences

The adjustments to net income for dilutive securities are based upon the additional income that would be allocated to HLI for the change in its ownership percentage due to the dilutive securities and adjusted for the incremental income tax expense related to the additional allocated income.

Net income (loss) recorded by HLI

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

on a standalone basis will determine if the Class B and Class C units are dilutive or antidilutive in each respective period.

Net income (loss) recorded by HLI on a standalone basis will determine if the Class B and Class C units are dilutive or antidilutive in each respective period.

The calculations of diluted earnings per share excludes the following:

1 unchanged sentence

2024 2023 2022

Outstanding Class B and C units of HLA — — 17,553,234

Performance Awards

489,150 528,282 —

Related-Party Transactions

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The Company earned incentive fees from Partnerships of $ 97,860 , $ 154,578 , and $ 43,742 for the years ended March 31, 2024, 2023 and 2022, respectively.

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Fees receivable from the Partnerships were $ 91,317 and $ 31,684 as of March 31, 2024 and 2023, respectively, and are included in fees receivable in the Consolidated Balance Sheets.

6 unchanged sentences

Establishment of lease liability in exchange for ROU asset $ 5,903 $ 2,346 $ 7,950

Deconsolidation of net liabilities held by deconsolidated fund $ 6,095 $ — $ —

Non-cash investing activities:

Deconsolidation of investments held by deconsolidated fund $ 103,990 $ — $ —

Transfer of equity method investment in Partnerships from deconsolidated fund $ 32,018 $ — $ —

Conversion of note receivable $ — $ 550 $ —

Establishment of receivable for intangible assets sold $ — $ 6,776 $ —

Non-cash purchase of other equity method investment $ 2,000 $ — $ —

Non-cash financing activities:

Establishment of net deferred tax assets related to tax receivable agreement $ 37,526 $ 9,299 $ 16,996

Deferred underwriter fees related to consolidated entity $ — $ — $ 9,660

Dividends declared but not paid $ 17,628 $ 15,049 $ 12,947

Members’ distributions declared but not paid $ 23,815 $ 15,723 $ 27,119

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Commitments and Contingencies

2 unchanged sentences

Incentive Fees

The Partnerships have allocated carried interest, which has not yet been received or recognized, in the amounts of $ 1,022,250 and $ 1,191,066 at March 31, 2023 and 2022, respectively.

If the Company ultimately receives the unrecognized carried interest, a total of $ 255,562 and $ 297,766 as of March 31, 2023 and 2022, 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 Partnerships have allocated carried interest still subject to contingencies that did not meet the Company’s criteria for revenue recognition in the amounts of $ 1,221,488 and $ 1,022,250 , net of amounts attributable to non-controlling interests, at March 31, 2024 and 2023, respectively.

If the Company ultimately receives the unrecognized carried interest, a total of $ 305,372 and $ 255,562 as of March 31, 2024 and 2023, respectively, would potentially be payable to certain employees and third parties pursuant to compensation arrangements related to carried interest profit-sharing plans.

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

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

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 14 years.

9 unchanged sentences

Weighted average discount rate 3.5 % 3.3 % 3.2 %

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

As of March 31, 2024, the maturities of operating lease liabilities were as follows:

6 unchanged sentences

The general partner or managing member of each Partnership is generally a separate subsidiary of the Company and has agreed to invest funds on the same basis as the limited partners in most instances.

The aggregate unfunded commitment of the general partners to the Partnerships was $ 211,556 and $ 186,164 as of March 31, 2023 and 2022, respectively.

The Company has an unrealized net gain on its investments valued under the measurement alternative of $ 31,157 as of March 31, 2023, of which up to 15 % may be paid as a discretionary bonus as those gains are realized.

The Company offers 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.

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.

The Company entered into a separate agreement with the third-party lender to backstop the employee’s performance under the loan with a commitment to purchase the LP interest from the lender at the greater of fair value or the outstanding balance of the loan in the event of a default by the employee.

As of March 31, 2023, the total amount of outstanding loans under the EIP was $ 693 , and the Company believes the risk of default by an employee to be remote.

The Company’s aggregate unfunded commitment to the Partnerships was $ 267,734 and $ 211,556 as of March 31, 2024 and 2023, respectively.

The Company has an unrealized net gain on its non-fund investments of $ 29,677 as of March 31, 2024, of which up to 15 % may be paid as a discretionary bonus as those gains are realized.

The Company offers 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 LPs’ interest in the fund and return of capital distributions are utilized to pay the outstanding loan balance.

The Company entered into a separate agreement with the third-party lender to backstop the employee’s performance under the loan with a commitment to

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

purchase the LP interest from the lender at the greater of fair value or the outstanding balance of the loan in the event of a default by the employee.

As of March 31, 2024, the total amount of outstanding loans at the third-party lender under the EIP was $ 995 , and the Company believes the risk of default by an employee to be remote.

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

The first anniversary payment of $ 1,500 was paid during the year ended March 31, 2023 and the final anniversary payment was made after the period.

The first anniversary payment of $ 1,500 was paid during the year ended March 31, 2023 and the final anniversary payment was made during the year ended March 31, 2024.

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

2 unchanged sentences

In December 2022, the Company finalized the transfer of the acquired investment management contracts to a third party for an agreed upon percentage of the respective funds’ management fees over two calendar years.

The Company recognized a gain of $ 2,771 on the sale of the investment management contracts that is

Hamilton Lane Incorporated

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

recorded in non-operating (loss) income in the Consolidated Statements of Income for the year ended March 31, 2023.

The Company recognized a gain of $ 2,771 on the sale of the investment management contracts that is recorded in non-operating (loss) income in the Consolidated Statements of Income for the year ended March 31, 2023.

Subsequent Event

On May 25, 2023, the Company declared a quarterly dividend of $ 0.445 per share of Class A common stock to record holders at the close of business on June 15, 2023.

On May 23, 2024, the Company announced a quarterly dividend of $ 0.49 per share of Class A common stock to record holders at the close of business on June 14, 2024.

The payment date will be July 5, 2024.

1 unchanged sentence

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