Hamilton Lane INC 10-K

Item 8. Financial Statements and Supplementary Data Index Page Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 42 ) 99 Consolidated Balance Sheets 102 Consolidated Statements of Income 103 Consolidated Statements of Stockholders' Equity 105 Consolidated Statements of Cash Flows 107 Notes to Consolidated Financial Statements 109 98 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hamilton Lane Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hamilton Lane Incorporated (the Company) as of March 31, 2025 and 2024, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 30, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter 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) 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. 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 $58.7 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. 99 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 We have served as the Company’s auditor since 2008. Philadelphia, Pennsylvania May 30, 2025 100 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hamilton Lane Incorporated Opinion on Internal Control Over Financial Reporting We have audited Hamilton Lane Incorporated’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hamilton Lane Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, 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, 2025 and 2024, 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, 2025, and the related notes and our report dated May 30, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Philadelphia, Pennsylvania May 30, 2025 101 Hamilton Lane Incorporated Consolidated Balance Sheets (In thousands, except share and per share amounts) March 31, 2025 2024 Assets Cash and cash equivalents $ 229,161 $ 114,634 Restricted cash 6,331 4,985 Fees receivable 181,411 108,291 Prepaid expenses 11,258 11,073 Due from related parties 16,217 8,150 Furniture, fixtures and equipment, net 37,586 33,013 Lease right-of-use assets, net 61,413 62,425 Investments 664,354 603,697 Deferred income taxes 308,525 261,887 Other assets 28,827 34,435 Assets of consolidated variable interest entities: Cash and cash equivalents 48,112 — Investments 96,700 28,575 Other assets 460 35 Total assets $ 1,690,355 $ 1,271,200 Liabilities and equity Accounts payable $ 5,469 $ 4,505 Accrued compensation and benefits 48,556 35,979 Accrued members’ distributions 26,810 23,815 Accrued dividend 20,233 17,628 Debt 290,303 196,159 Payable to related parties pursuant to tax receivable agreement 240,648 201,422 Lease liabilities 78,017 79,033 Other liabilities (includes $ 12,190 and $ 13,071 at fair value) 55,502 36,700 Liabilities of consolidated variable interest entities: Other liabilities 922 1 Total liabilities $ 766,460 $ 595,242 Commitments and contingencies (Note 16) Class A common stock, $ 0.001 par value, 300,000,000 authorized; 43,497,538 and 40,547,806 issued and outstanding as of March 31, 2025 and 2024, respectively 43 41 Class B common stock, $ 0.001 par value, 50,000,000 authorized; 12,178,412 and 13,664,635 issued and outstanding as of March 31, 2025 and 2024, respectively 12 14 Additional paid-in-capital 261,856 208,402 Accumulated other comprehensive (loss) income ( 141 ) — Retained earnings 455,511 316,696 Total Hamilton Lane Incorporated stockholders’ equity $ 717,281 $ 525,153 Non-controlling interests in general partnerships 6,024 5,043 Non-controlling interests in Hamilton Lane Advisors, L.L.C. 176,731 145,762 Non-controlling interests in consolidated funds 23,859 — Total equity $ 923,895 $ 675,958 Total liabilities and equity $ 1,690,355 $ 1,271,200 See accompanying notes to the consolidated financial statements. 102 Hamilton Lane Incorporated Consolidated Statements of Income (In thousands, except per share amounts) Year Ended March 31, 2025 2024 2023 Revenues Management and advisory fees $ 513,864 $ 451,936 $ 371,874 Incentive fees 198,296 101,906 149,931 Consolidated variable interest entities related: Incentive fees 803 — 6,948 Total revenues 712,963 553,842 528,753 Expenses Compensation and benefits 274,497 204,004 198,412 General, administrative and other 120,929 103,403 89,395 Consolidated variable interest entities related: General, administrative and other 985 617 906 Total expenses 396,411 308,024 288,713 Other income (expense) Equity in income of investees 29,016 34,893 5,088 Interest expense ( 13,332 ) ( 11,169 ) ( 8,617 ) Interest income 7,874 5,427 1,789 Non-operating gain (loss) 8,434 ( 2,515 ) ( 5,243 ) Consolidated variable interest entities related: Equity in income of investees 1,613 1,598 1,455 Unrealized gain 11,915 3,034 4,773 Interest expense — ( 6 ) — Interest income 205 4,581 3,325 Total other income (expense) 45,725 35,843 2,570 Income before income taxes 362,277 281,661 242,610 Income tax expense 48,509 54,454 55,425 Net income 313,768 227,207 187,185 Less: Income attributable to non-controlling interests in general partnerships 739 534 986 Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 92,843 80,835 71,027 Less: Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — — 5,617 Less: Income attributable to non-controlling interests in consolidated funds 2,769 4,980 435 Net income attributable to Hamilton Lane Incorporated $ 217,417 $ 140,858 $ 109,120 Basic earnings per share of Class A common stock $ 5.45 $ 3.72 $ 3.05 Diluted earnings per share of Class A common stock $ 5.41 $ 3.69 $ 3.01 Dividends declared per share of Class A common stock $ 1.96 $ 1.78 $ 1.60 See accompanying notes to the consolidated financial statements. 103 Hamilton Lane Incorporated Consolidated Statements of Comprehensive Income (In Thousands) Year Ended March 31, 2025 2024 2023 Net income $ 313,768 $ 227,207 $ 187,185 Other comprehensive income, net of tax: Foreign currency translation ( 184 ) — — Total other comprehensive income, net of tax $ ( 184 ) $ — $ — Comprehensive income $ 313,584 $ 227,207 $ 187,185 Less: Comprehensive income attributable to non-controlling interests in general partnerships 739 534 986 Comprehensive income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 92,800 80,835 71,027 Comprehensive income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — — 5,617 Comprehensive income attributable to non-controlling interests in consolidated funds 2,769 4,980 435 Total comprehensive income attributable to Hamilton Lane Incorporated $ 217,276 $ 140,858 $ 109,120 See accompanying notes to the consolidated financial statements. 104 Hamilton Lane Incorporated Consolidated Statements of Stockholders' Equity (In Thousands) Class A Common Stock Class B Common Stock Additional Paid in Capital Accumulated Other Comprehensive Income 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, 2022 $ 37 $ 16 $ 161,676 $ — $ 185,149 $ 3,423 $ 111,185 $ — $ 461,486 Net income — — — — 109,120 986 71,027 435 181,568 Equity-based compensation — — 6,873 — — — 3,077 — 9,950 Purchase and retirement of Class A stock for tax withholding — — ( 1,611 ) — — — ( 714 ) — ( 2,325 ) Deferred tax adjustment — — 1,813 — — — — — 1,813 Dividends declared — — — — ( 59,462 ) — — — ( 59,462 ) Capital (distributions to) contributions from non-controlling interests, net — — — — — ( 532 ) — 18,734 18,202 Member distributions — — — — — — ( 52,048 ) — ( 52,048 ) Offering adjustment 1 ( 1 ) 5,013 — — — ( 5,014 ) — ( 1 ) Employee Share Purchase Plan share issuance 1 — 1,337 — — — 599 — 1,937 Adjustment of redeemable non-controlling interest to redemption value — — — 9,016 — 4,056 — 13,072 Equity reallocation between controlling and non-controlling interests — — ( 3,534 ) — — — 3,534 — — Balance at March 31, 2023 $ 39 $ 15 $ 171,567 $ — $ 243,823 $ 3,877 $ 135,702 $ 19,169 $ 574,192 Net income — — — — 140,858 534 80,835 4,980 227,207 Equity-based compensation — — 8,533 — — — 3,600 — 12,133 Purchase and retirement of Class A stock for tax withholding — — ( 2,491 ) — — — ( 1,016 ) — ( 3,507 ) Deferred tax adjustment — — 7,147 — — — — — 7,147 Dividends declared — — — — ( 67,985 ) — — — ( 67,985 ) Capital contributions from non-controlling interests, net — — — — — 632 — 142,924 143,556 Member distributions — — — — — — ( 51,965 ) — ( 51,965 ) Offering adjustment 2 ( 1 ) 17,541 — — — ( 17,542 ) — — Employee Share Purchase Plan share issuance — — 1,585 — — — 668 — 2,253 Deconsolidation of consolidated fund — — — — — — ( 167,073 ) ( 167,073 ) Equity reallocation between controlling and non-controlling interests — — 4,520 — — — ( 4,520 ) — — Balance at March 31, 2024 $ 41 $ 14 $ 208,402 $ — $ 316,696 $ 5,043 $ 145,762 $ — $ 675,958 105 Hamilton Lane Incorporated Consolidated Statements of Stockholders' Equity (In Thousands) Class A Common Stock Class B Common Stock Additional Paid in Capital Accumulated Other Comprehensive Income 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, 2024 $ 41 $ 14 $ 208,402 $ — $ 316,696 $ 5,043 $ 145,762 $ — $ 675,958 Net income — — — — 217,417 739 92,843 2,769 313,768 Other comprehensive income — — — ( 141 ) — — ( 43 ) — ( 184 ) Equity-based compensation — — 23,303 — — — 8,104 — 31,407 Purchase and retirement of Class A stock for tax withholding — — ( 4,096 ) — — — ( 1,372 ) — ( 5,468 ) Deferred tax adjustment — — 9,689 — — — — — 9,689 Dividends declared — — — — ( 78,602 ) — — — ( 78,602 ) Capital contributions from non-controlling interests, net — — — — — 242 — 21,090 21,332 Member distributions — — — — — — ( 46,798 ) — ( 46,798 ) Offering adjustment 2 ( 2 ) 21,356 — — — ( 21,360 ) — ( 4 ) Employee Share Purchase Plan share issuance — — 2,071 — — — 726 — 2,797 Equity reallocation between controlling and non-controlling interests — — 1,131 — — — ( 1,131 ) — — Balance at March 31, 2025 $ 43 $ 12 $ 261,856 $ ( 141 ) $ 455,511 $ 6,024 $ 176,731 $ 23,859 $ 923,895 See accompanying notes to the consolidated financial statements. 106 Hamilton Lane Incorporated Consolidated Statements of Cash Flows (In Thousands) Year Ended March 31, 2025 2024 2023 Operating activities: Net income $ 313,768 $ 227,207 $ 187,185 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,285 8,186 7,443 Change in deferred income taxes 12,081 16,697 20,433 Change in payable to related parties pursuant to tax receivable agreement 2,122 318 ( 3,251 ) Equity-based compensation 31,407 12,133 9,950 Equity in income of investees ( 29,016 ) ( 34,893 ) ( 5,088 ) Net realized (gain) loss on sale of investments ( 654 ) 288 ( 12,230 ) Fair value adjustment of other investments ( 10,147 ) 333 ( 20,730 ) Proceeds received from Partnerships 47,250 28,254 15,981 Non-cash lease expense 9,007 8,696 7,460 Gain on sale of intangible asset — — 2,771 Impairment of other investment — — 43,289 Other 1,211 706 ( 2,813 ) Changes in operating assets and liabilities: Fees receivable ( 73,120 ) ( 61,151 ) 4,729 Prepaid expenses ( 185 ) ( 1,256 ) ( 2,959 ) Due from related parties ( 8,067 ) ( 528 ) ( 5,313 ) Other assets 39 15,344 ( 6,721 ) Accounts payable 964 ( 54 ) 1,733 Accrued compensation and benefits 12,577 11,789 4,072 Lease liability ( 9,012 ) ( 8,578 ) ( 7,577 ) Other liabilities 19,016 2,503 ( 13,216 ) Consolidated variable interest entities related: Change in warrant liability measured at fair value — — ( 2,883 ) Cash relinquished from deconsolidation of fund ( 12,173 ) ( 101,712 ) — Net unrealized gain on investment ( 10,848 ) ( 1,406 ) — Equity in income of investees ( 1,613 ) ( 1,598 ) ( 1,455 ) Change in other assets and liabilities ( 3,072 ) ( 426 ) 5,779 Net cash provided by operating activities $ 300,820 $ 120,852 $ 226,589 Investing activities: Purchase of furniture, fixtures and equipment ( 12,156 ) ( 11,073 ) ( 4,747 ) Cash paid for acquisition of business — — ( 1,500 ) Purchase of convertible notes ( 1,000 ) ( 8,000 ) ( 2,535 ) Purchase of investments ( 11,692 ) ( 6,352 ) ( 37,025 ) Proceeds from sale of investments 6,948 1,343 13,478 Proceeds from sale of intangible assets 2,078 3,305 — Distributions received from investments — — 1,406 Distributions received from Partnerships 22,696 14,147 14,438 Contributions to Partnerships ( 58,408 ) ( 57,722 ) ( 84,557 ) Consolidated variable interest entities related: (Purchase) sale of investments ( 78,142 ) ( 57,832 ) 278,954 Cash from consolidating funds 12,100 — — Net cash (used in) provided by investing activities $ ( 117,576 ) $ ( 122,184 ) $ 177,912 107 Year Ended March 31, 2025 2024 2023 Financing activities: Proceeds from offering $ 248,403 $ 201,671 $ 43,686 Purchase of membership interests ( 248,403 ) ( 201,671 ) ( 43,686 ) Borrowings of debt, net of deferred financing costs 97,658 — 31,682 Repayments of long term debt ( 3,750 ) ( 2,500 ) ( 4,496 ) Draw-down of revolver — 10,000 40,000 Repayment of revolver — ( 25,000 ) ( 25,000 ) Repurchase of Class B common stock ( 2 ) ( 2 ) — Repurchase of Class A common stock for employee tax withholding ( 5,468 ) ( 3,507 ) ( 2,325 ) Proceeds received from issuance of shares under Employee Share Purchase Plan 2,797 2,253 1,937 Payments to related parties pursuant to the tax receivable agreement ( 11,924 ) ( 11,123 ) ( 10,345 ) Dividends paid ( 75,997 ) ( 65,406 ) ( 72,409 ) Members’ distributions paid ( 43,803 ) ( 43,872 ) ( 63,444 ) Consolidated variable interest entities related: Contributions from non-controlling interest in general partnerships 461 770 725 Distributions to non-controlling interest in general partnerships ( 219 ) ( 138 ) ( 1,257 ) Redemption of Class A common shares of Hamilton Lane Alliance Holdings I, Inc. — — ( 278,205 ) Contributions from non-controlling interests in consolidated funds 21,090 142,924 18,991 Net cash (used in) provided by financing activities $ ( 19,157 ) $ 4,399 $ ( 364,146 ) Effect of exchange rate changes on cash and cash equivalents ( 102 ) — — Increase in cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities 163,985 3,067 40,355 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at beginning of the year 119,619 116,552 76,197 Cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities at end of the year $ 283,604 $ 119,619 $ 116,552 Reconciliation of Cash and Cash Equivalents, Restricted Cash and Cash and Cash Equivalents Held at Consolidated Variable Interest Entities to the Consolidated Statements of Financial Condition: Cash and cash equivalents $ 229,161 $ 114,634 $ 99,686 Restricted cash 6,331 4,985 4,804 Cash and cash equivalents held at consolidated variable interest entities 48,112 — 12,062 Total cash and cash equivalents, restricted cash, and cash and cash equivalents held at consolidated variable interest entities $ 283,604 $ 119,619 $ 116,552 See accompanying notes to the consolidated financial statements. 108 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 1. Organization Hamilton Lane Incorporated (“HLI”) was incorporated in the State of Delaware on December 31, 2007 and, following its 2017 initial public offering (“IPO”), is a holding company whose principal asset is a controlling equity interest in Hamilton Lane Advisors, L.L.C. (“HLA”). 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 (“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. Unless otherwise specified, “the Company” refers to the consolidated entity of HLI, HLA and subsidiaries throughout the remainder of these notes. As of March 31, 2025 and 2024, HLI held approximately 76.6 % and 73.6 %, respectively, of the economic interest in HLA. As future exchanges of HLA units occur pursuant to the exchange agreement, the economic interest in HLA held by HLI will increase. 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 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. The Partnerships may also make direct investments, including investments in debt, equity, and other equity-based instruments. The Company, which includes certain subsidiaries that serve as the general partner or managing member of the Partnerships, may invest its own capital in the Partnerships and generally makes all investment and operating decisions for the Partnerships. HLA operates several wholly owned entities through which it conducts its foreign operations. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries, and entities that the Company controls. Certain of the Company’s consolidated funds are investment companies that follow specialized accounting guidance and reflect their investments at estimated fair value. All intercompany transactions and balances have been eliminated in consolidation. 109 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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. Consolidation The Company consolidates all entities that it controls either as the primary beneficiary of a variable interest entity (“VIE”) or through a majority voting interest. The Company performs a variable interest analysis primarily for entities where the Company serves as the sponsor, general partner or managing member, and general partner entities not wholly owned by the Company. If the entity is determined to be a VIE and the Company has a variable interest in it, the Company will then determine if it is the primary beneficiary of this entity and whether consolidation is required. For entities determined not to be a VIE, the Company evaluates its control via the voting interest model. In evaluating whether it has a variable interest in the entity, the Company reviews the equity ownership and whether the Company absorbs risk created and distributed by the entity, as well as whether the fees charged to the entity are customary and commensurate with the level of effort required to provide services. Fees received by the Company are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length and (iii) the Company’s other economic interests in the VIE held directly and indirectly through its related parties, as well as economic interests held by related parties under common control, where applicable, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. Evaluation of these criteria requires judgment. For entities determined to be a VIE in which the Company has a variable interest, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination on whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. VIEs which the Company controls as the primary beneficiary have been included in the Company’s consolidated financial statements. The portion of the consolidated subsidiaries owned by third parties and any related activity is eliminated through non-controlling interests in the Consolidated Balance Sheets and income (loss) attributable to non-controlling interests in the Consolidated Statements of Income. At each reporting date, the Company determines whether any reconsideration events have occurred that require it to revisit the VIE analysis and will consolidate or deconsolidate accordingly. See Note 6 for additional disclosure on VIEs. 110 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) Accounting for Differing Fiscal Periods The Partnerships primarily have a fiscal year end as of December 31, and the Company accounts for its investments in the Partnerships using a three-month lag due to the timing of financial information received from the investments held by the Partnerships. The Partnerships primarily invest in private equity funds, which generally require at least 90 days following the calendar year end to present audited 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. 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 Company’s 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 or the consolidated VIEs 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. 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 using the exchange rate on the respective transaction dates. Translation adjustments are included in other comprehensive income (loss) within the consolidated financial statements until realized. Foreign currency transaction gains and losses are included in general, administrative and other expenses in the Consolidated Statements of Income . Cash, Cash Equivalents and Restricted Cash Cash deposits in interest-bearing money market accounts and highly liquid investments, with an original maturity of three months or less, are classified as cash equivalents. Interest earned on cash and cash equivalents is recorded as interest income in the Consolidated Statements of Income. Restricted cash at March 31, 2025 and 2024 was primarily cash held by the Company’s foreign subsidiaries to meet applicable government regulatory capital requirements and cash related to self-funded medical insurance for U.S. employees. Fees Receivable Fees receivable are equal to contractual amounts reduced for allowances, if applicable. The Company considers fees receivable to be fully collectible; accordingly, no allowance for credit losses has been established as of March 31, 2025 or 2024. 111 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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, expenses for which the Company is subsequently reimbursed and amounts due from current employees. Furniture, Fixtures and Equipment Furniture, fixtures and equipment consist primarily of leasehold improvements, office equipment, furniture and fixtures, and computer hardware and software and are recorded at cost, less accumulated depreciation. Depreciation is recognized in accordance with the straight-line method over the estimated useful lives as follows: Computer hardware and software 3 - 7 years Furniture and fixtures 5 years Office equipment 3 years Leasehold improvements are capitalized and depreciated over the shorter of their useful life or the life of the lease. Expenditures for improvements that extend the useful life of an asset are capitalized. Expenditures for ordinary repairs and maintenance are expensed as incurred. Leases The Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. The Company accounts for lease components and non-lease components as a single lease component. Lease right of use (“ROU”) assets and lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. Lease ROU assets include initial direct costs incurred by the Company and are presented net of deferred rent and lease incentives. Generally, the Company’s leases do not provide an implicit rate and as a result, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Some leases have the option to extend for an additional term or terminate early. Where it is reasonably certain that the Company will exercise the option, the option has been included in the lease term and reflected in the ROU asset and liability. The Company does not recognize a lease ROU asset or lease liability for short-term leases, which have lease terms of 12 months or less. Lease expense for lease payments on operating leases is recognized on a straight-line basis over the lease term. Other Assets Intangible assets The Company’s intangible assets consist of customer relationship assets identified as part of previous acquisitions and purchased software. Identifiable finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 7 to 10 years. The Company does not hold any indefinite-lived intangible assets. Intangible assets are reviewed for impairment quarterly, or when events or changes in 112 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) circumstances indicate that the carrying amount may not be recoverable. The Company has no t recognized any impairment charges in any of the periods presented. The carrying value of the intangible assets was $ 2,884 and $ 4,584 , and is included in other assets in the Consolidated Balance Sheets as of March 31, 2025 and 2024, respectively. The accumulated amortization of intangibles was $ 9,286 and $ 8,367 as of March 31, 2025 and 2024, respectively. Amortization of intangible assets was $ 1,701 , $ 1,701 , and $ 2,277 for each of the years in the three-year period ended March 31, 2025, respectively, and is included in general, administrative and other expenses in the Consolidated Statements of Income. The estimated amortization expense for each of the next five fiscal years is $ 1,465 , $ 1,154 , $ 264 , $ 0 , and $ 0 , respectively. Goodwill Goodwill of $ 9,566 is included in other assets in the Consolidated Balance Sheets as of March 31, 2025 and 2024, and was recorded in conjunction with previous acquisitions. Goodwill is reviewed for impairment at least annually utilizing a qualitative or quantitative approach, and more frequently if circumstances indicate impairment may have occurred. The impairment testing for goodwill is based first on a qualitative assessment to determine if it is more likely than not that the fair value of the Company’s reporting unit is less than the respective carrying value. The reporting unit is the reporting level for testing the impairment of goodwill. If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value or when the quantitative approach is used, a two-step quantitative assessment is performed to (a) calculate the fair value of the reporting unit and compare it to its carrying value, and (b) if the carrying value exceeds its fair value, to measure an impairment loss. The Company performed the annual impairment assessment as of December 31, 2024 noting that no goodwill impairment existed. Convertible notes receivable Convertible notes receivable of $ 9,657 and $ 10,215 as of March 31, 2025 and 2024, respectively, 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, 2025 or 2024. Investments Equity method investments Investments over which the Company is deemed to exert significant influence but not control are accounted for using the equity method of accounting. 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, portfolio companies held by the Partnerships and a technology investment. The carrying amounts of equity method investments are reflected in investments in the Consolidated Balance Sheets. Measurement alternative investments The Company’s investments valued under the measurement alternative include investments for which the Company does not exert significant influence and fair value is not readily determinable. These investments 113 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) are recorded at cost, less impairment, if any, and subsequently adjusted for observable price changes of identical or similar investments of the same issuer. The Company performs qualitative impairment assessments at each quarter end on its investments recorded under the measurement alternative. Fair value investments The Company’s fair value investments represent a publicly traded security previously held by the Company, investments held by the consolidated funds and investments in private equity funds and direct credit and equity investments that are held as collateral on the Company’s secured financing. The private equity fund investments can only be redeemed through distributions received from the liquidation of underlying investments of the fund, and the timing of distributions is currently indeterminable. The direct credit investments were debt securities classified as trading securities. Unrealized gains and losses from investments held by the consolidated funds are recorded in unrealized gains in the Consolidated Statements of Income. Unrealized gains and losses from the publicly traded security and the investments held as collateral are recorded in non-operating gain (loss) in the Consolidated Statements of Income. The Company previously transferred investments 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 Accounting Standards Codification (“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 elected to account for this secured financing at fair value under the fair value option 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 fair value investments delivered as collateral which are estimated using Level 3 inputs with the significant inputs as disclosed in Note 5. Fair Value of Financial Instruments The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). The levels of the hierarchy are described below: • Level 1: Values are determined using quoted market prices for identical financial instruments in an active market. • Level 2: Values are determined using quoted prices for similar financial instruments and valuation models whose inputs are observable. • Level 3: 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. The Company uses these levels of hierarchy to measure the fair value of certain financial instruments on a recurring basis, such as for investments; on a non-recurring basis, such as for acquisitions and impairment testing; for disclosure purposes, such as for long-term debt; and for other applications, as discussed in their respective notes. Categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. For a portion of our investments, net asset value (“NAV”) per share (or its equivalent) provides the lowest level of input. These investments are considered investment companies, 114 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) or are the equivalent of investment companies, as they carry all investments at fair value, with unrealized gains and losses resulting from changes in fair value reflected in earnings. Investments valued using NAV are excluded from the fair value hierarchy. See Note 5 for further information. 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 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 and expanded single segment disclosure requirements. 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 beginning after December 15, 2024. The Company adopted ASU 2023-07 on April 1, 2024. The adoption did not have a material impact on the Company’s disclosures in the consolidated financial statements. 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. In March 2025, the SEC announced that it had voted to end its defense of the final rules to require disclosures about certain climate related information. 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. In December 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced a 15% global minimum tax under the Pillar Two Global Anti-Base Erosion model rules. Several OECD member countries have enacted tax legislation based on certain elements of these rules that became effective on January 1, 2024. Other jurisdictions have announced the intent to implement these rules, but the rules remain subject to significant negotiation, potential change, and phase-in periods. As of March 31, 2025, the 115 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) Company is not subject to the Pillar Two model rules and will continue to monitor legislative developments and the potential impact on future periods. In November 2024, the FASB issued ASU 2024-03, “Income Statement (Topic 220): Reporting Comprehensive Income - Income-Expense Disaggregation Disclosures,” which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. The amendments in this ASU will be effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the impact of the new requirements. Revenues Management and advisory fees The Company earns management fees from services provided to its specialized funds, customized separate accounts, and distribution management clients, and advisory fees from services provided to advisory clients where the Company does not have discretion over investment decisions. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. Specialized funds are structured as partnerships having multiple investors with a subsidiary of the Company serving as general partner or managing member. Customized separate accounts are generally contractual arrangements involving an investment management agreement between the Company and a single client. In some cases, a customized separate account will be structured as a partnership with a subsidiary of the Company serving as general partner or managing member. The Company determined that the partnership is generally considered to be the customer with respect to specialized funds, while the individual investor or single limited partner is the customer with respect to customized separate accounts and advisory clients. Management fees generally exclude the reimbursement of any partnership expenses paid by the Company on behalf of its customers pursuant to its contracts, including amounts related to professional fees and other fund administrative expenses. For the professional and administrative services performed by third parties that the Company arranges for the partnerships, the Company concluded that the nature of its promise is to arrange for the services to be provided and it does not control the services provided by third parties before they are transferred to the customer. Therefore, the Company is acting as an agent. Accordingly, the reimbursement for these professional fees paid on behalf of the partnerships is generally presented on a net basis. 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 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. The Company considers its performance obligations in its customer contracts to be one of the following based upon the services promised: asset management services, arrangement of administrative services, distribution management services, or reporting services. For asset management and arrangement of administrative 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. The transaction price is the amount of 116 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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, net invested capital under management or NAV 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. Advisory fees from these performance obligations for contracts where the Company does not have discretion over investment decisions are generally based upon fixed amounts and are usually billed quarterly. For distribution management services, the Company satisfies these performance obligations at a point in time when shares are sold/liquidated and the proceeds are delivered and the customer receives and consumes the benefits of the services. 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, 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 Contracts with certain customized separate accounts and specialized funds provide incentive fees, which generally range from 5 % to 12.5 % of profits, when investment returns exceed minimum return levels or other performance targets. Investment returns are highly susceptible to market factors and judgments and actions of third parties that are outside of the Company’s control. Accordingly, incentive fees are considered variable consideration in asset management services. Some incentive fees are constrained by a contingency relating to “clawback,” or the obligation to return distributions in excess of the amount prescribed by the applicable fund or separate account documents. Any incentive fees considered to be constrained are not recognized until it is probable that a significant reversal will not occur. Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is, therefore, recognized as revenue immediately upon receipt. The Company estimates the amount and probability of additional future capital contributions to specialized funds and customized separate accounts, which could impact the probability of a significant reversal occurring, when applicable. The additional future capital contributions relate to unfunded commitments or follow-on investment opportunities 117 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) in underlying portfolio investments. 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. 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. 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. Incentive fee compensation expense includes compensation directly related to incentive fees. Certain employees of the Company are granted allocations or profit-sharing interests and are thereby, as a group, entitled to a 25 % portion of the incentive fees earned by the Company from certain Partnerships and certain managed accounts subject to vesting. Amounts payable pursuant to these arrangements are recorded as compensation expense when they have become probable and reasonably estimable. Incentive fee compensation may be expensed before the related incentive fee revenue is recognized. 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. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are expected to be recovered or settled. The principal items giving rise to temporary differences are certain basis differences resulting from the acquisitions of HLA units. Realization of the deferred tax assets is primarily dependent upon (1) historic earnings, (2) forecasted taxable income, (3) future tax deductions of tax basis step-ups related to the IPO and subsequent unit exchanges, (4) future tax deductions related to payments under the tax receivable agreement, and (5) the Company’s share of HLA’s temporary differences that result in future tax deductions. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. 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. state and local taxes and foreign taxes attributable to its operations in foreign jurisdictions. Any taxable income or loss generated by HLA is passed through to and included in the taxable income or loss of its members, including HLI. As a result, the Company does not record income taxes on pre-tax income or loss attributable to the NCI 118 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) in the general partnerships and HLA, except for certain U.S. state and local taxes and foreign taxes discussed above. HLI is subject to U.S. federal and applicable state corporate income taxes with respect to its allocable share of any taxable income of HLA. The Company analyzes its tax filing positions in all of the U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. The Company evaluates tax positions taken or expected to be taken in the course of preparing an entity’s tax returns to determine whether it is “more-likely-than-not” that each tax position will be sustained by the applicable tax authority. Tax Receivable Agreement The Company’s purchase of HLA Class A units concurrent with its IPO and periodic exchanges by holders of HLA units for shares of the Company’s Class A common stock, or cash, pursuant to the exchange agreement, result in increases in its share of the tax basis of the tangible and intangible assets of HLA, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to HLI. 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 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 tax receivable agreement. Segments Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM are its co-chief executive officers. The Company is managed as one reportable segment that provides private market investment solutions. These solutions derive revenues from customers and are offered in formats covering some or all phases of private markets investment programs. Financial information, annual operational plans and forecasts are reviewed by the CODM at the consolidated entity level. Consolidated net income is the primary measure of performance used by the CODM to establish objectives and allocate resources, with compensation and benefits being reviewed in more detail as a significant expense. Segment profit and loss is presented in the Consolidated Statements of Income, with additional detail provided in Note 11 Compensation and Benefits relating to the significant expenses reviewed by the CODM. The measure of segment assets is not regularly presented to the CODM. Concentrations of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, restricted cash and fees receivable. The majority of the Company’s cash, cash equivalents, and restricted cash is held with one major financial institution and exposes the Company to a certain degree of credit risk. Substantially all cash amounts on deposit with major financial institutions exceed Federal Deposit Insurance Corporation insured limits. The concentration of credit risk with respect to fees receivable is generally limited due to the short payment terms extended to clients by the Company. 119 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) The Company derives revenues from clients located in the United States and other foreign countries. The below table presents revenues by geographic location: Year Ended March 31, 2025 2024 2023 United States $ 314,608 $ 224,700 $ 207,954 Other foreign countries (1) 398,355 329,142 320,799 Total revenues (2) $ 712,963 $ 553,842 $ 528,753 (1) For the years ended March 31, 2025, 2024 and 2023, 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 14 % of its total revenues for the fiscal year ended March 31, 2025 from one of its evergreen funds and 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. 3. Revenue The following tables present revenues disaggregated by product offering, which aligns with the identified performance obligations and the basis for calculating each amount: Year Ended March 31, Management and advisory fees 2025 2024 2023 Specialized funds $ 315,214 $ 261,012 $ 196,268 Customized separate accounts 134,400 128,826 117,763 Advisory 22,806 24,229 24,785 Reporting, monitoring, data and analytics 29,244 24,711 24,792 Distribution management 2,619 5,054 2,560 Fund reimbursement revenue 9,581 8,104 5,706 Total management and advisory fees $ 513,864 $ 451,936 $ 371,874 Year Ended March 31, Incentive fees 2025 2024 2023 Specialized funds $ 182,092 $ 89,988 $ 118,212 Customized separate accounts 16,204 11,918 31,719 Consolidated variable interest entities related: Specialized funds 803 — 6,948 Total incentive fees $ 199,099 $ 101,906 $ 156,879 120 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 4. Investments Investments consist of the following: March 31, 2025 2024 Equity method investments in Partnerships $ 453,636 $ 408,615 Other equity method investments 386 1,576 Fair value investments 12,190 17,984 Measurement alternative investments 198,142 175,522 Total Investments $ 664,354 $ 603,697 Investments of consolidated VIEs consist of the following: March 31, 2025 2024 Equity method investments in Partnerships $ 19,292 $ 28,575 Fair value investments 77,408 — Total Investments of Consolidated VIEs $ 96,700 $ 28,575 Equity method investments The Company’s equity method investments in Partnerships represent its ownership in certain specialized funds and customized separate accounts. 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, 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. The Company’s equity method investments in Partnerships consist of the following types: March 31, 2025 2024 Primary funds $ 35,251 $ 35,230 Secondary funds 60,545 51,760 Direct investment funds 94,257 93,288 Customized separate accounts 141,088 126,176 Evergreen funds 122,495 102,161 Total equity method investments in Partnerships $ 453,636 $ 408,615 The Company evaluates each of its equity method investments to determine if any were significant pursuant to the requirements of Regulation S-X. As of and for each of the years ended March 31, 2025 and 2024, no individual equity method investment held by the Company met the significance criteria, and, as a result, the Company is not required to present separate financial statements for any of its equity method investments. 121 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) The summarized financial information of the Company’s equity method investments in Partnerships is as follows: March 31, 2025 2024 Assets Investments $ 50,486,273 $ 42,767,080 Other assets 1,242,238 1,717,626 Total assets $ 51,728,511 $ 44,484,706 Liabilities and Partners’ Capital Debt $ 494,430 $ 203,213 Other liabilities 741,822 477,892 Total liabilities 1,236,252 681,105 Partners’ capital 50,492,259 43,803,601 Total liabilities and partners’ capital $ 51,728,511 $ 44,484,706 Year Ended March 31, 2025 2024 2023 Investment income $ 870,828 $ 625,176 $ 362,176 Expenses 487,339 403,517 281,011 Net investment income 383,489 221,659 81,165 Net realized and unrealized gain 1,690,743 2,672,499 ( 509,389 ) Net income $ 2,074,232 $ 2,894,158 $ ( 428,224 ) Fair value investments The Company recognized a loss of $ 429 and gains of $ 130 and $ 1,434 on fair value investments held as collateral during the years ended March 31, 2025, 2024, and 2023, respectively, and recognized a gain of $ 429 and losses of $ 130 and $ 1,434 on the secured financing liability during the years ended March 31, 2025, 2024 and 2023, respectively. Gains and losses related to fair value assets held as collateral and the secured financing liability are recorded in non-operating gain (loss) in the Consolidated Statements of Income. The cost of the assets held as collateral on the Company’s secured financing was $ 5,079 and $ 5,952 as of March 31, 2025 and 2024, respectively. The Company recognized gains of $ 20 and $ 494 and a loss of $ 89 on Level 3 fair value investments held by consolidated VIEs for the years ended March 31, 2025, 2024 and 2023, respectively. Gains and losses related fair value assets held by consolidated VIEs are recorded in unrealized gain in the Consolidated Statements of Income. 122 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) Measurement Alternative Investments The following table summarizes the activity related to the Company’s measurement alternative investments: Year Ended March 31, 2025 2024 2023 Carrying amount, beginning of the year $ 175,522 $ 168,732 $ 156,100 Adjustments related to equity investments Purchases 13,853 6,311 37,576 Sales / return of capital — ( 176 ) — Net change in unrealized gain (loss) 1 8,767 1,177 ( 24,944 ) Net realized loss — ( 522 ) — Carrying amount, end of year $ 198,142 $ 175,522 $ 168,732 (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 measurement alternative investments: As of March 31, 2025 2024 2023 Cumulative gross unrealized gains $ 79,002 $ 70,235 $ 69,058 Cumulative gross unrealized losses $ ( 43,289 ) $ ( 43,289 ) $ ( 43,289 ) During the Company’s quarterly impairment assessments for the period ended December 31, 2022, it was 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 assessment indicated that the fair value was less than the carrying value at December 31, 2022. Prior to the impairment recorded, the carrying value of the investment was $ 74,189 . 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 under the market approach with the significant input being the revenue multiple. 123 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 5. Fair Value Measurement The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level: As of March 31, 2025 Level 1 Level 2 Level 3 NAV (2) Total Financial assets: Fair value investments $ — $ — $ 12,190 $ — $ 12,190 Consolidated VIEs Fair value investments — — 3,916 73,492 77,408 Total financial assets $ — $ — $ 16,106 $ 73,492 $ 89,598 Financial liabilities: Secured financing (1) $ — $ — $ 12,190 $ — $ 12,190 Total financial liabilities $ — $ — $ 12,190 $ — $ 12,190 As of March 31, 2024 Level 1 Level 2 Level 3 NAV (2) Total Financial assets: Fair value investments $ 4,913 $ — $ 13,071 $ — $ 17,984 Total financial assets $ 4,913 $ — $ 13,071 $ — $ 17,984 Financial liabilities: Secured financing (1) $ — $ — $ 13,071 $ — $ 13,071 Total financial liabilities $ — $ — $ 13,071 $ — $ 13,071 (1) Secured financing is recorded within other liabilities in the Consolidated Balance Sheets. (2) 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. The following tables list information regarding all investments recorded at estimated fair value based upon the NAV: Fair Value Unfunded Commitment Direct investment funds $ 13,698 $ 1,232 Secondary funds 59,794 11,126 $ 73,492 $ 12,358 The investments valued under NAV can only be redeemed through distributions received from the liquidation of the underlying investments, and the timing of distributions is currently indeterminable. 124 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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, 2023 $ 6,664 $ 790 $ 6,774 $ 14,228 Contributions 167 — — 167 Distributions ( 656 ) ( 798 ) — ( 1,454 ) Net (loss) gain ( 656 ) 8 778 130 Balance as of March 31, 2024 $ 5,519 $ — $ 7,552 $ 13,071 Contributions — — — — Distributions ( 452 ) — — ( 452 ) Net (loss) gain ( 802 ) — 373 ( 429 ) Balance as of March 31, 2025 $ 4,265 $ — $ 7,925 $ 12,190 The following is a reconciliation of investments held by our consolidated VIEs for which significant unobservable inputs (Level 3) were used in determining value: Direct credit investments Direct equity investments Total investments Balance as of March 31, 2023 $ 21,163 $ — $ 21,163 Contributions 24,787 — 24,787 Distributions ( 180 ) — ( 180 ) Net gain 494 — 494 Transfer in (1) 23,117 — 23,117 Transfer out (2) ( 69,381 ) — ( 69,381 ) Balance as of March 31, 2024 $ — $ — $ — Contributions — 4,391 4,391 Distributions — ( 116 ) ( 116 ) Net gain — 20 20 Transfer out (2) — ( 379 ) ( 379 ) Balance as of March 31, 2025 $ — $ 3,916 $ 3,916 (1) Represents amounts previously recorded at estimated fair value based upon the NAV 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, 2025 Significant Fair Valuation Unobservable Weighted Value Methodology Inputs Range Average Private equity funds $ 4,265 Adjusted NAV Selected market return ( 1.0 )% - 1.4 % ( 0.7 )% Direct equity investments $ 7,925 Adjusted NAV Selected market return 0.62 % 0.62 % Investments of consolidated VIE Direct equity investments $ 3,916 Recent precedent transactions 125 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) March 31, 2024 Significant Fair Valuation Unobservable Weighted Value Methodology Inputs Range Average Private equity funds $ 5,519 Adjusted NAV Selected market return 5.1 % — 19.2 % 7.9 % 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 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; and (2) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively. 6. Variable Interest Entities The Company holds variable interests in entities that 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., 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 funds 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 investments in funds and the assets of the consolidated funds represent cash and investments. 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. Once the Company no longer qualifies as the primary beneficiary of a consolidated VIE, it deconsolidates all the assets and liabilities of the NCI in the respective Partnership from the Consolidated Balance Sheets and records any remaining interest in the Partnership using the equity method within investments in the Consolidated Balance Sheets. The deconsolidations during the years ended March 31, 2025 and 2024 did not impact the Company’s Consolidated Statements of Income. Non-consolidated Variable Interest Entities 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, 2025, the total remaining unfunded commitments from the Company’s general partner entities to the non-consolidated VIEs was $ 185,680 . Investor commitments are the primary source of financing for the non-consolidated VIEs. The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these non-consolidated VIEs. The Company believes that its maximum exposure to loss is limited because 126 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) it establishes separate limited liability or limited partnership entities to serve as the general partner or managing member of the Partnerships. 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: March 31, 2025 2024 Investments $ 256,350 $ 232,743 Fees receivable 48,601 61,694 Due from related parties 4,723 1,699 Total VIE assets 309,674 296,136 Non-controlling interests ( 2,497 ) ( 1,918 ) Maximum exposure to loss $ 307,177 $ 294,218 7. Furniture, Fixtures, and Equipment Furniture, fixtures, and equipment consist of the following: March 31, 2025 2024 Computer hardware and software $ 18,179 $ 14,050 Furniture and fixtures 7,336 5,209 Leasehold improvements 33,317 28,366 Office equipment 3,965 3,649 62,797 51,274 Less: accumulated depreciation 25,211 18,261 Furniture, fixtures, and equipment, net $ 37,586 $ 33,013 Depreciation expense was $ 7,583 , $ 6,485 and $ 5,165 for the years ended March 31, 2025, 2024 and 2023, respectively, and is included in general, administrative and other expenses in the Consolidated Statements of Income. 127 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 8. Debt The Company’s debt consisted of the following: As of March 31, 2025 2024 Principal Outstanding Carrying Value Interest Rate Principal Outstanding Carrying Value Interest Rate Term Loan $ 93,125 $ 92,736 6.25 % $ 96,875 $ 96,531 7.25 % 2020 Multi-Draw Facility 100,000 99,691 3.50 % 100,000 99,628 3.50 % Senior Notes 100,000 97,876 5.28 % — — Total Debt $ 293,125 $ 290,303 $ 196,875 $ 196,159 On October 7, 2024, the Company amended its existing Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”), 2020 Multi-Draw Term Loan and Security Agreement (as amended, the “2020 Multi-Draw Term Loan Agreement”), and 2022 Multi-Draw Term Loan and Security Agreement (as amended, the “2022 Multi-Draw Term Loan Agreement”), (collectively, the “Loan Agreements”). The amendments included naming JP Morgan Chase Bank, N.A. as the successor-in-interest to First Republic Bank, updating the maturity dates for the Loan Agreements and allowing for the incurrence of additional indebtedness. The Term Loan Agreement has a maturity date of July 1, 2029. The Revolving Loan Agreement has a $ 50,000 borrowing capacity, a maturity date of October 6, 2027, 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 drawn down. Borrowings accrue interest at a fixed per annum rate of 3.50 % and mature on April 1, 2030. The 2022 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $ 75,000 . Borrowings accrue interest at a fixed per annum rate equal to the prime rate minus 1.50 % subject to a floor of 3.00 % and matures on October 1, 2029. As of March 31, 2025, the Company had no borrowings outstanding under the 2022 Multi-Draw Term Loan Agreement. The Loan Agreements contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. They also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined therein, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. On October 8, 2024, HLA issued $ 100,000 aggregate principal amount of its 5.28 % senior notes due October 15, 2029 (the “Senior Notes”), pursuant to a note purchase agreement (the “Note Purchase Agreement”), among HLA and the institutional purchasers party thereto in a private placement transaction. Interest on the Senior Notes is payable semi-annually in arrears, commencing on April 15, 2025. Interest on the Senior Notes accrues from and including October 8, 2024. 128 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) The aggregate minimum principal payments on the Company’s outstanding debt are due as follows: For the fiscal year ending March 31, 2026 $ 12,500 2027 21,875 2028 32,500 2029 55,000 2030 158,750 Thereafter 12,500 Total $ 293,125 The carrying value of the Company’s Term Loan Agreement as of each of March 31, 2025 and 2024 approximated fair value. The 2020 multi-draw facility had an estimated fair value of $ 99,305 and $ 87,611 as of March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company’s outstanding Notes had an estimated fair value of $ 99,222 . The estimated fair value of debt is based on then-current market rates for similar debt instruments and is classified as Level 2 within the fair value hierarchy. 9. Equity The Company has two classes of common stock outstanding, Class A common stock and Class B common stock. Class A common stock Holders of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. 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. Class B common stock Holders of Class B common stock are entitled to ten votes for each share held of record on all matters submitted to a vote of stockholders, but have de minimis economic rights. Holders of Class B units of HLA hold shares of Class B common stock at a one -to-one ratio. Class B units (together with the corresponding 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. 129 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) Shares of Common Stock Outstanding The following table shows a rollforward of our common stock outstanding: Class A Class B March 31, 2022 37,280,697 16,033,359 Shares issued (repurchased) in connection with offerings 586,737 ( 539,237 ) Shares issued in connection with ESPP 34,655 — Shares repurchased for employee tax withholdings ( 37,372 ) — Forfeitures ( 9,295 ) ( 84,615 ) Restricted stock granted 756,497 — March 31, 2023 38,611,919 15,409,507 Shares issued (repurchased) in connection with offering 1,867,322 ( 1,744,872 ) Shares issued in connection with ESPP 27,179 — Shares repurchased for employee tax withholdings ( 38,557 ) — Forfeitures ( 54,595 ) — Restricted stock granted 134,538 — March 31, 2024 40,547,806 13,664,635 Shares issued (repurchased) in connection with offering 1,562,281 ( 1,486,223 ) Shares issued in connection with ESPP 22,633 — Shares repurchased for employee tax withholdings ( 35,260 ) — Forfeitures ( 29,826 ) — Restricted stock granted 1,429,904 — March 31, 2025 43,497,538 12,178,412 Income and equity allocations to NCI 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 NCI 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 In accordance with the limited liability company agreement of HLA (the “HLA Operating Agreement”), profits and losses from HLA are allocated on a pro rata basis based upon each member’s economic interests. 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 made distributions in excess of required tax distributions to members in an aggregate amount of $ 46,383 , $ 43,053 , and $ 39,733 for the years ended March 31, 2025, 2024, and 2023, respectively. February 2025 Offering In February 2025, the Company and a selling stockholder completed a registered offering of an aggregate of 1,572,536 shares of Class A common stock at a price to the underwriter of $ 159.00 per share (the “February 2025 Offering”). The shares sold consisted of 10,255 shares held by the selling stockholder and 1,562,281 shares newly issued by the Company. The Company received $ 248,403 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 1,486,223 Class B units and 76,058 Class C units. In connection with the exchange of the Class B units, the 130 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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. March 2024 Offering In March 2024, the Company and a selling stockholder completed a registered offering of an aggregate of 1,922,322 shares of Class A common stock at a price to the underwriter of $ 108.00 per share (the “March 2024 Offering”). The shares sold consisted of 55,000 shares held by the selling stockholder and 1,867,322 shares newly issued by the Company. The Company received $ 201,671 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 1,744,872 Class B units and 122,450 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. 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. 10. Equity Based Compensation 2017 Equity Incentive Plan The Company has adopted its 2017 Equity Incentive Plan, as amended and restated (the “Plan”), which permits the issuance of up to 10,000,000 shares of Class A common stock, which may be granted as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance stock, restricted stock units or performance stock units. Awards under the Plan generally vest over four to five years , with options expiring not more than ten years from the date of grant, three months after termination of employment or one year after the date of death or termination due to disability of the grantee. As of March 31, 2025, there were 6,048,176 shares of Class A common stock available to grant under the Plan. Pursuant to the terms of the Plan, awards may not be granted after September 5, 2034. Employee Share Purchase Plan The Company has adopted its Employee Share Purchase Plan, as amended (“ESPP”), which permits 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. The Company’s initial offering period started January 1, 2019. At inception, there were 1,000,000 shares available for purchase through the ESPP and 834,695 shares were available as of March 31, 2025. 131 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) Restricted Stock Awards Holders of restricted stock have all of the rights of a stockholder with respect to such shares, including the right to vote the shares but not the right to receive dividends or other distributions. Substantially all of the awards vest over four years in equal annual installments. On each vesting date, the related employee tax liabilities are either paid in cash by the employee or stock is sold back to the Company at the then-current fair value to offset the required minimum tax withholding obligations. Forfeitures are recognized as they occur. Compensation expense related to the awards is recognized ratably each month over the vesting period. A summary of restricted stock activity for the year ended March 31, 2025 is presented below: Total Unvested Weighted- Average Grant-Date Fair Value of Award March 31, 2024 363,128 $ 80.34 Granted 289,728 $ 138.52 Vested ( 129,524 ) $ 78.10 Forfeited ( 16,782 ) $ 82.28 March 31, 2025 506,550 $ 114.15 The weighted-average grant-date fair value per share of restricted stock awarded during the years ended March 31, 2025, 2024 and 2023 was $ 138.52 , $ 105.48 , and $ 61.36 , respectively. The total fair value of restricted stock that vested during the years ended March 31, 2025, 2024 and 2023 was $ 18,283 , $ 14,122 , and $ 8,029 , respectively. As of March 31, 2025, total unrecognized compensation expense related to restricted stock was $ 54,095 with a weighted-average amortization period of 3.3 years. The total tax (expense) benefit recognized from share-based compensation for the years ended March 31, 2025, 2024 and 2023 was $ 867 , $( 125 ) and $( 115 ), respectively. Performance Awards The Company has 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). 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. Holders of the Performance Awards do not participate in dividends until such awards have met both their market-based and service-based vesting requirements. Due to the existence of the service requirement, the vesting period for these awards will vary with each respective tranche as the employees must be employed with the Company at the point in which the market requirement is met with a minimum of five years of service required after the grant date for vesting. As such, compensation expense will be recognized ratably for each vesting tranche from the grant date to the end of the employee’s minimum service period. The fair value of the awards granted are based on a Monte-Carlo simulation valuation model. 132 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, 2025 is presented below: Total Unvested Weighted- Average Grant-Date Fair Value of Award March 31, 2024 489,150 $ 29.79 Granted 1,140,176 $ 130.75 Vested — $ — Forfeited ( 13,044 ) $ 29.79 March 31, 2025 1,616,282 $ 101.01 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, 2024: September 16, 2024 Grant Date Fair Value $ 130.75 Closing share price as of grant date 153.23 Risk Free Rate 3.5 % Volatility (1) 37.5 % Dividend Yield 1.3 % (1) The Company estimates expected volatility based on the historic volatility of its own Class A common stock as well as a portfolio of selected stocks of companies believed to have market and economic characteristics similar to its own. As of March 31, 2025, total estimated unrecognized expense related to the unvested Performance Awards was $ 139,958 . 11. Compensation and Benefits The Company has recorded the following amounts related to compensation and benefits: Year Ended March 31, 2025 2024 2023 Base compensation and benefits $ 208,222 $ 166,394 $ 149,318 Incentive fee compensation 34,868 25,477 39,144 Equity-based compensation 31,407 12,133 9,950 Total compensation and benefits $ 274,497 $ 204,004 $ 198,412 The Company provides defined contribution plans covering eligible employees subject to minimum age and service guidelines. Eligible employees may contribute a percentage of their annual compensation subject to statutory guidelines. The Company makes discretionary and/or matching contributions to the plans, which amounted to $ 3,215 , $ 4,341 , and $ 2,709 for the years ended March 31, 2025, 2024 and 2023, respectively, and is included in compensation and benefits expense in the Consolidated Statements of Income. 133 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 12. Income Tax The Company’s income before income taxes consisted of the following: Year Ended March 31, 2025 2024 2023 Domestic income before income taxes $ 353,992 $ 276,021 $ 236,198 Foreign income before income taxes 8,285 5,640 6,412 Total income before income taxes $ 362,277 $ 281,661 $ 242,610 Components of income tax expense consist of the following: Year Ended March 31, 2025 2024 2023 Current: Federal $ 27,768 $ 31,551 $ 28,829 State and local 5,619 4,395 5,075 Foreign 3,041 1,811 1,068 Total current income tax expense $ 36,428 $ 37,757 $ 34,972 Deferred: Federal $ 14,144 $ 13,148 $ 15,073 State and local ( 1,760 ) 3,556 4,694 Foreign ( 303 ) ( 7 ) 686 Total deferred income tax expense 12,081 16,697 20,453 Total income tax expense $ 48,509 $ 54,454 $ 55,425 A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows: Year Ended March 31, 2025 2024 2023 Federal tax at statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 1.2 % 2.8 % 3.4 % Non-controlling interest ( 5.6 ) % ( 6.4 ) % ( 6.8 ) % Valuation allowance ( 4.4 ) % 1.6 % 3.5 % Other 1.2 % 0.3 % 1.7 % Effective tax rate 13.4 % 19.3 % 22.8 % The significant components of deferred tax assets and liabilities are as follows: Year Ended March 31, 2025 2024 Deferred tax assets: Basis difference in HLA $ 329,129 $ 293,824 Tax Receivable Agreement 57,255 57,636 Fixed assets — 63 Valuation allowance ( 79,432 ) ( 90,541 ) State taxes 394 141 Other 1,179 764 Total deferred tax assets $ 308,525 $ 261,887 As of March 31, 2025 and 2024, the Company did not have net operating loss carryforwards. 134 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) In connection with the February 2025 Offering and related unit exchanges, the Company recorded a deferred tax asset in the amount of $ 58,700 , which is net of a valuation allowance of $ 6,507 , related to the portion of tax benefits that is more likely than not will not be realized. Additionally, in connection with recording of the deferred tax asset for the February 2025 Offering and related unit exchanges, the Company recorded a payable to related parties pursuant to the tax receivable agreement through equity of $ 49,029 . 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 a decrease of $ 11,109 . As of March 31, 2025, 2024, and 2023, the Company had no unrecognized tax positions. The Company does not expect any material increase or decrease in its gross unrecognized tax positions during the next twelve months. If and when the Company does record unrecognized tax positions in the future, any interest and penalties related to unrecognized tax positions will be recorded in the income tax expense line in the Consolidated Statements of Income. The Company files income tax returns as required by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company may be subject to examination by federal and certain state and local tax authorities. As of March 31, 2025, the Company’s federal income tax returns from 2021 remain open and are subject to examination. Tax Receivable Agreement The Company has recorded a liability related to the tax receivable agreement of $ 240,648 and $ 201,422 as of March 31, 2025 and 2024, respectively. Payments of $ 11,924 and $ 11,123 were made during the years ended March 31, 2025 and 2024, respectively. 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 $ 25,264 . 13. Earnings per Share The following table presents the basic earnings per share (“EPS”) for a share of Class A common stock: Year Ended March 31, 2025 2024 2023 Basic net income per share: Net income attributable to HLI $ 217,417 $ 140,858 $ 109,120 Impact of changes in carrying amount of redeemable NCI — — 3,808 Net income attributable to Class A common stockholders - basic 217,417 140,858 112,928 Denominator Weighted Average Shares 39,922,212 37,858,177 37,059,654 Basic EPS of Class A common stock $ 5.45 $ 3.72 $ 3.05 Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to HLI, and, therefore, are not participating shares. As a result, a separate presentation of basic and diluted EPS 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 the Class B units to which the Class B common stock corresponds are exchangeable for shares of Class A common stock 135 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 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 adjustments to net income for dilutive shares are based upon the additional income that would be allocated to HLI for the change in its ownership percentage due to the dilutive shares and adjusted for the incremental income tax expense related to the additional allocated income. 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 following table presents the diluted EPS for a share of Class A common stock: Year Ended March 31, 2025 2024 2023 Numerator Net income attributable to Class A common stockholders - basic $ 217,417 $ 140,858 $ 112,928 Adjustments to net income: Assumed vesting of employee awards 544 90 2 Assumed conversion of Class B and Class C units — 58,209 48,813 Net income attributable to Class A common stockholders $ 217,961 $ 199,157 $ 161,743 Denominator Weighted-average shares of Class A common stock outstanding - basic 39,922,212 37,858,177 37,059,654 Weighted-average effect of dilutive securities: Assumed vesting of employee awards 385,606 82,742 1,773 Assumed conversion of Class B and Class C units — 15,961,548 16,637,254 Weighted-average shares of Class A common stock outstanding 40,307,818 53,902,467 53,698,681 Diluted EPS of Class A common stock $ 5.41 $ 3.69 $ 3.01 The following table presents the weighted-average Performance Awards and Class B and Class C units excluded from diluted EPS that would have been antidilutive or for which the market condition has not been achieved as of the period reported: Year Ended March 31, 2025 2024 2023 Outstanding Class B and C units of HLA 14,016,324 — — Performance Awards 774,359 489,150 528,282 14. Related-Party Transactions The Company considers its employees, directors, and equity method investments to be related parties. Revenue and Receivables The Company has investment management agreements with various specialized funds and customized separate accounts that it manages. The Company earned management and advisory fees from Partnerships of $ 412,952 , $ 350,792 , and $ 270,710 for the years ended March 31, 2025, 2024 and 2023, respectively. The Company earned incentive fees from Partnerships of $ 193,657 , $ 97,860 , and $ 154,578 for the years ended March 31, 2025, 2024 and 2023, respectively. Fees receivable from the Partnerships were $ 156,776 and $ 91,317 as of March 31, 2025 and 2024, respectively, and are included in fees receivable in the Consolidated Balance Sheets. 136 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 15. Supplemental Cash Flow Year Ended March 31, 2025 2024 2023 Cash paid during the year for interest $ 10,399 $ 11,049 $ 8,467 Cash paid during the year for income taxes $ 27,036 $ 39,758 $ 50,880 Non-cash operating activities: Establishment of lease liability in exchange for ROU asset $ 5,087 $ 5,903 $ 2,346 Deconsolidation of net (assets)/ liabilities held by deconsolidated fund $ ( 3,568 ) $ 6,095 $ — Other $ 311 $ — $ — Non-cash investing activities: Deconsolidation of investments held by deconsolidated fund $ 9,758 $ 103,990 $ — Transfer of equity method investment in Partnerships from deconsolidated fund $ 27,240 $ 32,018 $ — Conversion of note receivable $ 2,161 $ — $ 550 Establishment of receivable for intangible assets sold $ — $ — $ 6,776 Purchase of other equity method investment $ — $ 2,000 $ — Non-cash financing activities: Establishment of payable to related parties pursuant to tax receivable agreement $ 49,029 $ 37,526 $ 9,299 Dividends declared but not paid $ 20,233 $ 17,628 $ 15,049 Members’ distributions declared but not paid $ 26,810 $ 23,815 $ 15,723 16. Commitments and Contingencies Litigation In the ordinary course of business, the Company may be subject to various legal, regulatory, and/or administrative proceedings from time to time. Although there can be no assurance of the outcome of such proceedings, in the opinion of management, the Company does not believe it is probable that any pending or, to its knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect its consolidated financial statements. Incentive Fees The Partnerships have allocated carried interest still subject to contingencies that did not meet the Company’s criteria for revenue recognition in the amounts of $ 1,260,277 and $ 1,221,488 , net of amounts attributable to NCI, at March 31, 2025 and 2024, respectively. If the Company ultimately receives the unrecognized carried interest, a total of $ 315,069 and $ 305,372 as of March 31, 2025 and 2024, 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. Leases 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. Some leases have the option to extend for an additional term or terminate early. Short-term lease costs are not material. 137 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) The following table shows lease costs and other supplemental information related to the Company’s operating leases: Year Ended March 31, 2025 2024 2023 Operating lease costs $ 9,275 $ 8,972 $ 7,943 Variable lease costs $ 1,961 $ 1,442 $ 1,475 Cash paid for amounts included in the measurement of operating lease liabilities $ 9,012 $ 8,995 $ 8,302 Weighted average remaining lease term (in years) 11.6 12.6 13.8 Weighted average discount rate 3.5 % 3.5 % 3.3 % As of March 31, 2025, the maturities of operating lease liabilities were as follows: For the fiscal year ending March 31, 2026 $ 9,211 2027 9,117 2028 8,462 2029 7,668 2030 7,253 Thereafter 53,436 Total lease payments $ 95,147 Less: imputed interest ( 17,130 ) Total operating lease liabilities $ 78,017 Commitments The Company serves as the investment manager of the Partnerships. 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 Company’s aggregate unfunded commitment to the Partnerships was $ 312,215 and $ 267,734 as of March 31, 2025 and 2024, respectively. In connection with certain of the Company’s strategic technology investments, a percentage of realized gains will be paid to one of our Co-CEOs for overseeing the initial investments and up to 15 % may be paid as a discretionary bonus to other employees as those gains are realized. The Company has an unrealized net gain on strategic investments of $ 34,058 as of March 31, 2025. 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 LP’s 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, 2025, the total amount of outstanding loans at the third-party lender under the EIP was $ 1,280 , and the Company believes the risk of default by an employee to be remote. 138 Hamilton Lane Incorporated Notes to Consolidated Financial Statements (In thousands, except share and per share amounts) 17. Subsequent Event On May 29, 2025, the Company announced a quarterly dividend of $ 0.54 per share of Class A common stock to record holders at the close of business on June 20, 2025. The payment date will be July 7, 2025. 139 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.