Good morning, ladies and gentlemen, and welcome to the Hamilton Lane Fiscal Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Tuesday, November 4, 2025. I would now like to turn the conference over to John Oh, Head of Shareholder Relations. Please go ahead.

Thank you, Danny. Good morning, and welcome to the Hamilton Lane Q2 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 full financial statements 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 just over $1 trillion and represents a 6% increase to our footprint year-over-year. While this number can and…

Thank you, John, and good morning, everyone. We have had another very strong quarter. Our job is difficult but not complicated. Take care of the customer, build thoughtfully constructed portfolios, deliver strong risk-adjusted returns. We did all of those things this quarter, and the reward for that is being entrusted with more clients and more capital. Let me start here by recognizing the hard work and dedication of the entire team at Hamilton Lane. Our unrelenting focus on delivering for our clients has continued to fuel our growth and success. As I said before, we're building Hamilton Lane for the long term. Every decision we make is about positioning ourselves for sustainable growth and success well into the future. This quarter was another great example of that approach. We extended our product offerings, including the launch of additional Evergreen products. And just yesterday, we announced a significant new strategic partnership. Let me dive into some initial details on that now. Guardian Life Insurance Company of America has partnered with Hamilton Lane to be their core strategic partner within the private equity markets. Guardian is one of the nation's largest life insurers and a leading provider of employee benefits. With this partnership, Hamilton Lane will take on the management of Guardian's current and future private equity portfolio. Hamilton Lane will oversee Guardian's existing private equity portfolio of nearly $5 billion, and Guardian will also commit to invest approximately $500 million per year for the next 10 years with Hamilton Lane. This commitment maintains Guardian's typical annual contribution to the asset class and supports its general account target allocation goals. This capital will be managed by Hamilton Lane through a separately managed account and like most of our current SMAs, will include meaningful capital into our various investment funds. Part of the…

Thank you, Erik, and good morning, everyone. I'll begin with some commentary on our business during the first half of fiscal 2026, and then I'll provide some additional details on the Guardian Life partnership and the potential impacts for our business. For the first half of fiscal 2026, management and advisory fees were up 6% from the prior year period. However, this includes the impact of $20.7 million of retro fees from specialized funds, namely the final close for our sixth secondary fund in the prior year period versus $800,000 of retro fees in this quarter stemming from our latest direct equity fund. Total fee-related revenue was up 23%, largely driven by fee-related performance revenue recognized in the first half of fiscal 2026 versus a minimal amount during the first half of fiscal 2025. Specialized funds revenue increased by $12 million or 8% compared to the prior year period. Growth in specialized fund revenue was driven by continued growth in our Evergreen platform, which continues to be a key driver of specialized fund fee-earning AUM. Again, the year-over-year growth here was impacted by the retro fee element that I just alluded to. Moving on to customized separate accounts. Revenue increased $2 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 $3 million or 21% 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 $91 million for the period. This amount includes fee-related performance revenues, or FRPR, stemming primarily from the quarterly crystallization of performance fees from our U.S. private assets Evergreen fund…

[Operator Instructions] Your first question comes from Alex Blostein from Goldman Sachs.

On the Guardian announcement. Maybe we could start there. I heard your comments around just the structure of the arrangements, but maybe you could help us with the actual fees that are likely to hit P&L. I heard the geography of different line items. But as you sort of think about the $5 billion that's going to come over, maybe help us with the fee structure there and also with the $500 million a year that's going to get allocated over time. So maybe we can start there.

Thanks, Alex. It's Erik. I think you should expect that the vast majority of the revenue that we're generating is on the $5 billion that will be coming in over the next 10 years because the existing $5 billion is basically a monitoring assignment. That -- those are dollars already in the ground in a variety of partnerships. And so if you look at the $5 billion that will be coming over, we clearly called out the $250 million going into Evergreen. And then the SMA portion, I think, again, hard to predict exactly what the next decade looks like. But that's going to be a mix of primary funds and a bunch of our specialized funds at whatever the prevailing fee rate is for those vehicles.

Your next question comes from Michael Cyprys of Morgan Stanley.

I wanted to ask about the Bloomberg partnership and more broadly partnerships on the data side. I was hoping you could elaborate a bit around that. What's the scope for more broadly enhanced monetization of your data sets as you look out from here as well as indices? And what's the scope for creating investable index products as you think about looking at over time?

Yes. Thanks, Mike. It's Erik. So the Bloomberg arrangement is going to be a revenue share model where that will grow over time as that installed base continues to grow and usage grows. I think we've been very tactical and selective at where we've been partnering. We view our data to be valuable. And so simply just running out and licensing it here, there and everywhere has not been part of our strategy. I think we've been thoughtful about where we see both chances for revenue and as I mentioned in my script, real chance for brand enhancement. And I think for us, this was a big opportunity for brand just given the number of RIAs who are regularly daily, minute by minute using Bloomberg terminals and Bloomberg data. And as we think about that world increasingly needing and wanting more private market benchmarks and information, we're going to be the provider of that. And we think that is a huge brand enhancer for us. I think investable indices, I don't see that as a focus. I know some have spoken of that. I haven't seen traction for that. I think trying to sort of synthetically replicate what happens inside of private market portfolios using publicly listed securities has been tried by many smart people, and generally, they've all failed. And so I don't see that as our focus today. I think it's really around data as an education tool, data as a brand enhancer and data for making better investment in portfolio selections.

Next question comes from Ken Worthington of JPMorgan.

Erik, I wanted to dig a bit further into the SMA business. Can you talk about how the pipeline is developing and at what rate that pipeline is growing? And then if we think about your sales force and the sales effort, to what extent do you have as many resources today sort of allocated to SMAs versus what you've had in the past, given the superior economics you see in Evergreen and the customized funds part of the business?

Thanks, Ken. So none of our sales team are organized by -- around SMAs, in particular, specialized funds. Think of the vast majority of the sales organization organized in geographic territories where they're owning that geography, getting to know all the respective players in that geography and figuring out what problem that customer is struggling with and then how we can be the solutions provider for that. I think what we've been finding is that given the multitude of products that we have in the market, those have been, in many cases, better solutions for a lot of customers. And so that's why you've seen such strong growth coming from that specialized funds. That said, the pipeline and even what you sort of see in kind of one but not contracted is billions of dollars. And so that will all just flow in over time as we get through contracting phase and the pipeline is robust. But from a relative market positioning today, if you think about where we were with SMAs 5 or 10 years ago, we had very few specialized funds. Today, we have a lot more specialized funds, and we're finding that those are able to meet the needs for the customer base, which, as you know, is a good thing for the business model given the superior fee model on those funds.

Okay. Great. And I don't know if I'm allowed to do a follow-up, but I'll take a shot at it. In terms of Guardian, the warrants, you mentioned that the commitments will come over the next decade. Are the warrants being awarded over the next decade? Or are they more front-end loaded? And you mentioned like a rev share. Are the warrants attached to the rev share? Or was that separate?

Ken, this is Jeff Armbrister. So the warrants are front-end loaded, but there is some period of time for additional warrants to be provided. The rev share is not tied to the warrants. They are 2 separate pieces. So that's how you should think about it.

Your next question comes from Brandon (sic) [ Brennan ] Hawken of EMO (sic) [ BMO ].

The core fee rate on specialized funds ex retro ticked up nicely quarter-over-quarter, likely benefited from the scaling of the Evergreen funds. But were there any other factors that impacted the fee rate? And how should we be thinking about that specialized fee rate going forward?

Yes, Brennan, it's Erik. I think this is just what we've been saying, which is as the mix of assets is changing and coming heavier into specialized funds, particularly Evergreen, given that, that comes at a higher fee rate, you're going to see that overall rate continue to blend up. We believe that, that will continue over time. So if you just look at relative flows and relative fee rates, stronger flows in specialized funds, both drawdown and Evergreen continues to be robust. All of those are charging at a higher fee rate than the current blended overall rate that we're showing. And so to the extent that those flows continue, that will continue to lift the overall fee rate.

[Operator Instructions] And your next question comes from Alex Bond of KBW.

Just wanted to ask about how you're thinking about sales incentives or fee holidays on a forward basis for both your more tenured evergreen funds as well as the newer funds. Curious how often this is something you all revisit and then also how this may evolve as more competing Evergreen funds enter the market? And also if you think this is something you may need to extend or enhance as competition continues to increase there?

Alex, it's Erik. Thanks for the question. I would look at it through a different lens. I see this really as when you are launching a brand-new product that's just got some Hamilton Lane balance sheet, seed capital in it, and you are trying to attract that first round of adopters, enticing them is important. It's a fund that's going to have short -- relatively short history, relatively short performance history and getting the folks in for the first, say, 6 to 12 months, which is generally the time frame you're talking about, has become more normalized where you're giving them financial incentive, which is a management [indiscernible]. As Jeff said, where that -- those are still being calculated and paid, and that was part of the driver of the FRPR that you saw this quarter. So I'm not seeing anything on the horizon that would cause us to have to go back and do that with established funds. I'm not seeing anything on the horizon that would cause us to need to do that for longer periods of time than we're already doing. I think what's happening, normal market becoming a lot more standard for that, again, as I said, that first 6 or 12 months on a brand-new offering.

Your next question is from Brennan Hawken of BMO.

It sounds like from the Guardian deal, there's also some folks from Guardian joining Hamilton Lane. Can you speak about the potential impact on the expense side from that? And then a little bit more broadly, it sounds like this deal is one where the overall economics are going to scale over time. Is that right? Is it right to think about this as probably a pretty modest impact initially? And then as you continue to build and deploy that $5 billion, things are going to scale?

Yes, Brennan, it's Erik again. So yes, to answer the second part of that question first, that's the way to think about it because we're going to be building that $500 million per year. The initial impact will be higher in that first year because a lot of that capital going into the Evergreen products and so again, higher fee rate. But yes, you're going to continue to see that stacking. And so we think that's beneficial. The team acquisition, I would say, is a de minimis add. And frankly, while we're in process of working through all the details with the team and with Guardian, I would expect and assume that really what's going to be happening is that those team members are coming over, and they're simply causing us to not need to go fulfill one of our open recs that is currently sitting on our website. So we're in growth mode. We continue to have a lot of open recs and open positions. And this is a talented group of people who are very experienced in the private markets. And so I think the more logical answer is they're coming over and taking positions that would have otherwise gone to a brand-new hire.

There are no further questions at this time. I will now turn the call back over to Erik Hirsch. Please continue.

Again, thank you for the time. Thank you for the questions, and thank you for the support. Have a great day.

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