Good morning, ladies and gentlemen, and welcome to the Hamilton Lane First Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Tuesday, August 5, 2025. I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

Thank you, Constantine. Good morning, and welcome to the Hamilton Lane Q1 Fiscal 2026 Earnings Call. Today, I will be joined by Erik Hirsch, Co-Chief Executive Officer; and Jeff Armbrister, Chief Financial Officer. Earlier this morning, we issued a press release and a slide presentation, which are available on our website. Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. These forward-looking statements do not guarantee future events or performance and are subject to risks and uncertainties that may cause our actual results to differ materially from those projected. For a discussion of these risks, please review the cautionary statements and risk factors included in the Hamilton Lane fiscal 2025 10-K and subsequent reports we file with the SEC. These forward-looking statements are made only as of today, and except as required, we undertake no obligation to update or revise any of them. We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the shareholders section of the Hamilton Lane website. Our detailed financial results will be made available when our 10-Q is filed. Please note that nothing on this call represents an offer to sell or a solicitation of an offer to purchase interest in any of Hamilton Lane's products. Let's begin with the highlights, and I'll start with our total asset footprint. At quarter-end, our total asset footprint stood at $986 billion and represents a 5% increase to our footprint year-over-year. AUM stood at $141 billion and grew $11 billion or 9% compared to the prior year period. The growth came from both our specialized funds and customized separate accounts. AUA came in at $845 billion and grew $35 billion or 4% relative to the prior year period. This stemmed primarily from market value growth and the addition of a variety of technology solutions and back-office mandates. For this first quarter of fiscal year 2026, total management and advisory fees were down 4% year-over-year. However, this decrease was due primarily to the impact from retro fees, which were $21 million in fiscal Q1 of 2025 versus approximately $300,000 in this current reported quarter. Fee-related earnings for the quarter grew by 31% versus the prior year period. We generated quarterly GAAP EPS of $1.28 based on $54 million of GAAP net income and non-GAAP EPS of $1.31 based on $72 million of adjusted net income. We have also declared a dividend of $0.54 per share this quarter, which keeps us on track for the 10% increase over last fiscal year, equating to the targeted $2.16 per share for fiscal year 2026. With that, I'll now turn the call over to Erik.

Thank you, John, and good morning, everyone. Our growth story continues with another solid quarter, and that growth is coming across the totality of the business, clients, assets, revenues, deal flow and people. The Hamilton Lane team is executing well across all fronts, and our results this quarter are certainly reflective of that. Turning now to fee-earning AUM. Total fee-earning AUM stood at $74 billion and grew $6.7 billion or 10% relative to the prior year period. Net quarter-over-quarter growth was $2.4 billion or 3%. Fee-earning AUM growth continues to be largely driven by our specialized fund platform. Specifically, our semi-liquid Evergreen products continue to experience strong momentum. The combination of our fundraising, new product additions and strong performance has driven the growth of total fund net asset value. Our blended fee rate also continues to benefit from the shift of fee-earning AUM towards higher fee rate specialized funds, most notably our Evergreen products. Today, our blended fee rate stands at 64 basis points. At quarter-end, customized separate account fee-earning AUM stood at $40 billion and grew $2.1 billion or 5% over the last 12 months. Net quarter-over-quarter growth was $937 million or 2%, with the gross contribution stemming from a mix of new client wins. These wins came from both U.S. and non-U.S. prospects and the mandates ranged across geographies and sub-asset classes. We also continue to see re-up activity from existing clients and contributions for investment activity. These gains were offset by fee-based decreases from exit activity and the migration from committed to invested capital in certain accounts. We maintain large amounts of committed and contractual dry powder to continue to deploy, along with a strong backlog of business that has been won and is now in the contracting phase. As we've mentioned in the past, the sale…

Thank you, Erik, and good morning, everyone. For this first quarter of fiscal 2026, we continue to generate solid growth in our business. Management and advisory fees were down 4% from the prior year period. However, this includes the impact of $21 million of retro fees from specialized funds, namely the final close for our sixth secondary fund in the prior year period versus $290,000 of retro fees in this quarter stemming from our latest direct equity fund. As a reminder, investors that come into later closes during a fundraise pay retroactive fees dating back to the fund's first close. Specialized funds revenue decreased by $7 million or 8% compared to the prior year period due to the retro fee impact I just detailed. And while specialized fund revenue was down due to the retro fee comparison, specialized fund fee earning AUM increased due primarily to a $4.5 billion increase in our Evergreen platform relative to the prior year period. Overall, specialized fund fee rates continue to remain strong and again, largely due to the continued growth in Evergreen fee-earning AUM. Moving on to customized separate accounts. Revenue increased $1 million or 3% compared to the prior year period due to the addition of new accounts, re-ups from existing clients and continued investment activity. Revenue from our reporting, monitoring, data and analytics offerings increased by over $1 million or 20% compared to the prior year period as we continue to produce strong growth in our technology solutions offering. Lastly, the final component of our revenue is incentive fees, which totaled $42 million for the quarter. This amount includes $29 million of fee-related performance revenues stemming primarily from the quarterly crystallization of performance fees from our U.S. private assets, Evergreen Fund, as we detailed on our last call. Let's turn now…

[Operator Instructions] Your first question comes from the line of Ken Worthington from JPMorgan.

I wanted to first dig into the DBS Private Banking relationship. It seems possibly like this is a different spin on distribution for your wealth products. Maybe first, describe what you're doing here? And is there something different? And if there is something different, what is the opportunity to kind of do more of this over time? And are you delivering just asset management solutions? Or is there some component of technology, data or administration that goes along with the relationship?

Sure. Ken, it's Erik. Happy to take that. I think this is simply us doing more of what we've been doing, which is identifying a variety of strategic relationships, utilizing technology, different types of distribution where we can offer our products, services, technology and data in a variety of fashions. I think when you look at the success that we're having in both institutional traditional drawdown world as well as Evergreen, more retail-oriented world, I think it's a combination of factors that's driving that. And I've noted its expansion of relationships. It's expanding within those relationships. It's adding new partnerships that we think are different. One of the things that we're seeing, particularly when we're now talking about accessing the retail investor is that we need to meet the customer where they are and these customers are not homogeneous. They are looking to transact in different ways. Some want to exist in a digital world, and so we're going to have to transact with them in more of a tokenized fashion. Some are going to continue to transact very traditionally through wealth advisers. Others are going to access through different technology platforms. And for Hamilton Lane, we're simply focused on making sure that we are having our goods and services available in all of those various channels.

Okay. I guess I respect that, but it does seem like this is different here. Like what you're doing through the wirehouses is delivering a product and you're a solutions-based company. This seems to be a solution. So again, it seems to be different. And it's in Asia, it would seem like there might be potentially more to do similarly to this elsewhere. And it also seems to me like products maybe can come and go, but the relationship sort of persists. So am I just reading too much into what this is?

No, it's Erik again. I don't. I think this is differentiated. It's a differentiated platform and the services that we're offering through that are more customized around what they and their client at the end of the day is looking for. And I think this sort of goes to my earlier point of the clients and the customers are not all looking for the same thing in the same fashion. And so I think you should expect to see that you will see additional announcements as we are simply aligning with different kinds of distribution partners who are accessing their own type of customer that is comfortable operating on their particular platform. And yes, we agree that we can expand. We can do more. We can do more of these. All of that, we see as a fantastic opportunity in front of us.

Just administratively, how far along is fund -- Secondary Fund VI invested, have you started to more actively market Fund VII?

So we have not started -- this is Erik again. We've not started to actively market the next fund. We are more than halfway through. So while we're putting up significant amounts of activity on the secondary investment side. We are deploying capital in that space across a multitude of vehicles, including the traditional commingled secondary fund as well as a number of those activities are flowing into Evergreen and SMAs. But we're investing at a good clip. We continue to see tremendous deal flow, really unique opportunities. We've been generating significant performance there. And so the fundraising for the next fund will be coming in the near future.

Your next question is from the line of Michael Cyprys from Morgan Stanley.

This is Steph on for Mike. Maybe just diving into the customized separate account growth. Nice to see that organic growth accelerating. I recall last quarter, you had called out elongated sales cycle. Just curious how would you rank order some of the drivers of the reacceleration this quarter between new sales, re-ups or investment activity? And then how to think about that pipeline here as we look out?

Thanks for the question. It's Erik. So it's all of that. And I think what I said last quarter, and I will reiterate again, the sales cycle for SMAs is not short. So I think people should be confident in the fact that the flows that we're seeing coming in this quarter were certainly not started in the sales cycle in this quarter. So we're not identifying marketing to and closing and doing that in a couple of months' time period. Process takes longer than that. And so what I've been saying is, we have a huge pipeline of business that we are both working on. And in a number of cases, we've already won that we're just simply moving through the contracting phase. And so that just takes time with some of these customers and then we start to activate. So this quarter, what you saw was brand-new wins getting contracted and activated. You're seeing existing customers re-up getting contracted and activated and you're seeing an increase in investment activity, which was also causing that fee basis to go up.

Okay. Great. And then maybe just one more for me on cap markets. Some of the GPs are noting that the DPI drought that's seen some signs of relief here, especially if this better macro persists. I think your incentive fees been lighter over the last 2 quarters or so. Just curious what's that pipeline you're seeing and then how to think about the incentive fee trajectory into the back half of this year and next year?

Sure. It's Erik. I would certainly agree with the comments that you've been hearing from others, which is to the extent that a positive macro backdrop continues to exist, that's going to make exit opportunities more plentiful. I would say that if you look at our data, average hold periods are right now hovering around 5 years. So a lot of the transactions are not yet actually at that age. So I think it's a combo. It's aging of the assets, which we're certainly seeing because time is marching forward, combined with a better economic environment. For us, we have seen -- so while the last 2 quarters have been a little light relative to historical averages, if you look prior to that, we had pulled out a fair amount of carry that had already come through the system. So I don't find that particularly surprising. But yes, I would echo that if we continue to see the macro remain at or better to where it is now, I would expect to see exit activity increasing in the back half of the year.

[Operator Instructions] Your next question comes from the line of Alex Blostein from Goldman Sachs.

Well, I was hoping you guys could double-click into the Evergreen fund. And specifically, I was curious on the institutional demand you guys have seen within that product, both in terms of the existing base, if you think about the sort of fee-paying AUM in the Evergreen products, how much of that is comprised from maybe some of the smaller institutional accounts? And as you think about the growth forward, is that all sort of new incremental demand you're seeing to the firm? Or do you think some of that is coming out of whether separate accounts or other specialized vehicles?

Sure, Alex. It's Erik. I'll take that. I think what we said last call was that if you look at the totality of our flows, about 15% or so was coming from institutional investors into Evergreen and the 85% was coming from traditional retail wealth. I don't -- I'm sure that will move quarter-to-quarter. But I think if you look at the sort of the larger trend, we're not seeing any sort of significant change in how people are utilizing the products from 9 weeks ago to today. And I think if you drill in and look at the institutional customer who is utilizing the Evergreen product, I think you're seeing a multitude of types. One is a smaller customer that historically probably accessed the asset class via a fund-to-funds vehicle. They are too small for an SMA. And so their choices to date since most of us don't really offer fund-to-fund vehicles anymore, was to either go into something like a co-investment fund or a secondary fund that while it provides a nice amount of diversification is not nearly as diversified as some of our Evergreen products. And so those clients either were sitting on the sidelines and doing nothing and now are reemerging, or in some cases, they're deciding to toggle from one type of product offering to something else. The other type of customer that we're seeing on the institutional side is actually a larger institutional customer who is seeing that the Evergreen product is a portfolio management tool. If you're thinking as a CIO of a plan sponsor or sovereign wealth fund, endowment foundation, et cetera, and you wanted to put on a, for example, a credit overweight into your portfolio in the private markets. Doing that with the drawdown fund takes a lot of time because by the time you identify the managers they actually call down the capital, you build up the exposure, years could have passed. In fact, years likely would have passed. And so it became very hard to tactically operate into toggle your portfolio. With these Evergreen products being fully invested, it gives you a real portfolio tool that if you wanted to put on an overweight or take off of an overweight, you can do that now with real ease and simplicity. Again, I'm going to go back to my, it's a marathon, not a sprint. And part of that is you're in early stages of educating and having customers see how these products can be used, how they can be used tactically. And so I think we're going to continue to watch this evolve. But I don't see this as pure cannibalization. I see this as really market expansion primarily, and we think that's a very good thing.

Yes. That's helpful. One just quick cleanup question for you guys on the expenses for the quarter. I think I heard you say on G&A, there was a little bit of a onetime helper, but I think last quarter was also particularly elevated. So maybe kind of help us frame what G&A outlook could look like for the firm as you look into the back half of fiscal or rather calendar 2025? And any framework to kind of think about G&A growth from there?

Yes. This is Jeff Armbrister. Thanks for the question. So we're thinking about it internally that this is about a $33 million per quarter expense. I mean that being said, remember, we've got a portion of that, that is tied to the revenue on the -- on PAF and from the commissions from the wirehouses that are associated with that. But we've been able to generate savings and through our initiatives and cost expense controls, which have been very helpful and offset those increased commissions as well. And as we think about the onetime impact, it's about a couple of million dollars. So all in all, I think we've been outperforming that $33 million kind of target that we've had, but we expect that there will continue to be some increases as we continue to generate revenue from the wirehouses and pay those associated commissions.

Thank you. There are no further questions at this time. I'd like to turn the call over to Erik Hirsch, Co-Chief Executive Officer, for closing comments. Sir, please go ahead.

Great. Thank you, everyone, for the time. We're very pleased with the quarter. We are very optimistic about what we see ahead of us, and the Hamilton Lane team continues to operate strongly. So we look forward to the next call. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.