Good morning. My name is Shelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Lane Incorporated Third Quarter Fiscal Year 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Ms. Karen Greene, Head of Investor Relations, you may begin your conference.

Thank you, and good morning. Welcome to the Hamilton Lane Q3 earnings call. This is Karen Greene, Head of Investor Relations. And I'm joined on the call today by our Chairman, Hartley Rogers; Erik Hirsch, our Vice Chairman; and Randy Stilman, our CFO. Before we discuss the quarter's results, I want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For a discussion of these risks, please review the risk factors included in Hamilton Lane's fiscal 2018 10-K. Management will also be referring to non-GAAP measures that they view as important in assessing the performance of the business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials, which are available on the IR section of the Hamilton Lane website. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane's funds or stock. The company's detailed financial results will be made available when the 10-Q is filed. Finally, for the call this morning, we will be referencing pages in the earnings release presentation available on the Hamilton Lane IR website and shown on the webcast version of this call. With that, I will review our third quarter highlights. Slide three of the presentation summarizes our financial performance for Q3 of fiscal 2019. Year-to-date, our revenue from management and advisory fees grew 9% versus the prior year period. This resulted in non-GAAP EPS year-to-date of $0.0155 based on over $82 million of adjusted net income. Our GAAP net income year-to-date with over $25 million, which translated into GAAP EPS of $0.0108. You will notice that both non-GAAP EPS and GAAP EPS experienced a significant move during the quarter. Hamilton Lane's effective tax rate dropped from 27% to 23.7% due to changes in our state income allocation, which were finalized with the filing of the first full year corporate income tax returns for the public company. This has resulted in significant cash savings and we'll continue to do so on a go-forward basis, assuming no change to current tax law. The change has reduced Q3 GAAP EPS by $0.27 due to a one-time reduction of our deferred tax assets and TRA liability more than offsetting the lower tax rate. Q3 and year-to-date non-GAAP EPS increased by $0.18 due to the lower tax rate. Despite the negative movement to GAAP EPS, we see the increase to non-GAAP EPS and continued beneficial cash impact as a very positive development. Lastly, as in the prior quarter, we declared a quarterly dividend of $0.2125 per share, which keeps us on track for our full fiscal year target of $0.85 per share. With that, I will turn the call over to Erik, who will review additional operating highlights.

Thanks, Karen, and good morning. I will begin with our AUM build. The theme on Page four remains similar to what you have heard on prior calls; AUM continues to grow and with it our size, scale and market influence. Our asset footprint of approximately $469 billion was up 10% versus the prior year period. This continued growth drives best-in-class deal flow, data and proprietary information and increases our negotiating leverage, all benefiting our clients. The expansion in our asset base is coming from a diverse set of clients from around the globe. Broadly speaking, we are seeing new client additions coming from three types of clients: one, those who are brand new to the asset class; two, those who have chosen to switch service providers; and three, those who previously took an in-house approach to investing in private markets and are now seeking a partner. We are also continuing to see positive fund flows across different geographies and from different types of investors, as we continue to have success with both our specialized fund offerings and our customized separate account solutions. Lastly, over 40% of our revenue comes from clients outside of the U.S. And given that this number has remained relatively stable over the past several years, it tells you that despite a much more mature market, we are seeing similar growth inside the U.S. as we see in non-U.S. markets. On Slide five, we highlight a byproduct of our asset growth, that being fee earning AUM. This is a combination of our customized separate accounts and our specialized funds. Our total fee earning AUM was up over $2.5 billion, or nearly 9% versus the prior year, with solid growth across both our specialized products and our customized separate accounts for the quarter. As we have stated in…

Thanks, Erik, and good morning. The public markets are seeing increased volatility during the past few months and forecast of continuing volatility abound. Understandably, this has led to questions from shareholders regarding the impact of public market volatility on the private markets. From our clients perspective they've seen the data and experience these cycles before and many of them look forward to these periods as creating opportunities to find interesting investments at attractive prices. Regardless of whether you are a limited partner or a shareholder, we believe these questions need to be addressed using data, and as you have heard from us before, one of our unique advantages is the magnitude and quality of our proprietary databases and the suite of state-of-the-art tools that we have developed to analyze that data. As you can see on Slide seven, today our private markets database covers more than 40 vintage years, close to $5 trillion in fund commitments over 1,500 fund managers and over 60,000 private companies, where we possess underlying financial information. So what is that data telling us. Well, as shown on Slide 8, even considering the long bull run in the public equity market, private markets returns are showing well, against the public markets over 5,10 and 20-year period. On a vintage year basis, as shown on Slide 9, it is a fairly similar story, private markets beating the public markets across nearly every year going back to 1997, on a pooled basis across both equity and credit strategies. Many of you are familiar with these charts, but specifically what about periods of volatility, while the data is interesting. Looking at Slide 10, the chart on the left shows the increased volatility has correlated to lower public market return. The same is not true for private market performance as…

Thank you, Hartley. Slide 14 of our presentation shows the financial highlights for the quarter. We continue to see very solid growth in our business with total year-to-date revenue up 11% versus the prior year period. Management and advisory fees grew 9% versus the prior-year period, driven by strong results across each of our core products and services. Revenue from our customized separate accounts offering increased $4.8 million compared to the prior year-to-date period, due to the addition of several new accounts and additional allocations from existing accounts. For our advisory and reporting management offerings, we experienced 18% growth compared to the prior year-to-date period, driven by new client adds in our advisory back office reporting and technology and analytics offerings. Our specialized funds revenue increased $3.6 million compared to the prior year-to-date period, driven by the $1.2 billion raised to date in our co-investment fund currently in market. This fund had retro fees of almost $900,000 for the quarter. As many of you are likely aware, investors that come into later closes of the fund raise for many of our products pay retroactive fees dating back to the funds first close. Therefore, we typically see a spike in management fees related to that funds, for the quarter in which subsequent closes occur. The final component of our revenue is incentive fees. Incentive fees year-to-date were $25.3 million, up more than $5 million from the prior year period. We also saw strong growth in our unrealized carry balance, which is up over 18% from the prior year, even as we've recognized over $50 million of incentive fees between periods. As a reminder, we do not recognize carry until it comes through its cash on our balance sheet. Overall, we think the carry story continues to be a strong one. Significant…

[Operator Instructions] Your first question comes from the line of Ken Worthington from JP Morgan. Your line is now open.

Hi, good morning. Thank you for taking my questions. I guess, maybe first, the results you report are somewhat lagged. And as you're getting December, the December quarter sort of performance and return information from the underlying investments, I guess what are you seeing thus far and what sort of implications does it have for accrued carry as we think about the next quarter?

Yeah. Thanks, Ken. It's Erik. Look, I think certainly on the unrealized carry marks, there is some level of correlation to the public markets. So as you noted here, we're reporting balances that are off of 930. We would expect to see some movement and some impact from what the fourth quarter looks like in the public market as we see the evaluations. That said, I think the other big driver of the carry is what Randy had mentioned, which is we just continue to expand the number of carry earning vehicles and the carry earning dollars, and that expansion is coming from a lot of different diverse sources. And so those assets are also not going to perform all-in direct line with each other. Some of the credit exposure, which continues to increase will be different than the equity exposure. We've got exposure across different industries, different sized businesses and different geographies. We think all of that is a real strength for what that book of carry dollars looks like.

Great. Thank you. And then on the tax rate, so it's declining last year. Can you talk about -- did something actually changed here? Was this just Hamilton Lane being conservative as it approached sort of its tax outlook? And then just to confirm the lower tax rate is really a permanently lower tax rate than what you had been accruing sort of heretofore?

Yeah. Ken, it's Erik again. I think this is the question of when you're dealing with taxes, our view is that, we want to be certain rather than to be speculative. And so now we have certainty. And that certainty is the result of a change in a lower tax rate. That change is permanent. Again, as the lawyers will say, borrowing any changes to state income tax regulations. But we do see this is a significant move on the tax rate. And as we noted here, we think it's a significant move on cash flow.

[Operator Instructions] There are no further questions at this time. I'll turn the call back over to the presenters.

Great. We want to thank everyone for your time and we appreciate it. Thank you.

This concludes today's conference call. You may now disconnect.