10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to ___________________________

Commission file number 001-38021

HAMILTON LANE INCORPORATED

(Exact name of Registrant as specified in its charter)

Delaware		26-2482738
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Presidential Blvd.,	4th Floor
Bala Cynwyd,	PA	19004
(Address of principal executive offices)		(Zip Code)

(610) 934-2222

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share	HLNE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of February 1, 2021, there were 34,918,397 shares of the registrant’s Class A common stock, par value $0.001, and 17,841,211 shares of the registrant’s Class B common stock, par value $0.001, outstanding.

Table of Contents

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020	3
Condensed Consolidated Statements of Income for the three and nine months ended December 31, 2020 and 2019	4
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2020 and 2019	5
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2020 and 2019	6
Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2020 and 2019	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures about Market Risk	44
Item 4. Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6. Exhibits	48
Signatures	49

This Quarterly Report on Form 10-Q (“Form 10-Q”) includes certain information regarding the historical performance of our specialized funds and customized separate accounts. An investment in shares of our Class A common stock is not an investment in our specialized funds or customized separate accounts. In considering the performance information relating to our specialized funds and customized separate accounts contained herein, current and prospective Class A common stockholders should bear in mind that the performance of our specialized funds and customized separate accounts is not indicative of the possible performance of shares of our Class A common stock and is also not necessarily indicative of the future results of our specialized funds or customized separate accounts, even if fund investments were in fact liquidated on the dates indicated, and there can be no assurance that our specialized funds or customized separate accounts will continue to achieve, or that future specialized funds and customized separate accounts will achieve, comparable results.

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are owned by us or licensed by us. We also own or have the rights to copyrights that protect the content of our solutions. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, trade names and copyrights.

This Form 10-Q may include trademarks, service marks or trade names of other companies. Our use or display of other parties’ trademarks, service marks, trade names or products is not intended to, and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, service mark or trade name owners.

Unless otherwise indicated, information contained in this Form 10-Q concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources (including industry publications, surveys and forecasts), and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets that we believe to be reasonable. Although we believe the data from these third-party sources is reliable, we have not independently verified any third-party information.

Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” the “Company,” “Hamilton Lane” and similar terms refer to Hamilton Lane Incorporated and its consolidated subsidiaries. As used in this Form 10-Q, (i) the term “HLA” refers to Hamilton Lane Advisors, L.L.C. and (ii) the terms “Hamilton Lane Incorporated” and “HLI” refer solely to Hamilton Lane Incorporated, a Delaware corporation, and not to any of its subsidiaries.

Cautionary Note Regarding Forward-Looking Information

Some of the statements in this Form 10-Q may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expect,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements discuss management’s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. All forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different, including risks relating to: our ability to manage growth, fund performance, changes in our regulatory environment and tax status; market conditions generally; our ability to access suitable investment opportunities for our clients; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; defaults by clients and third-party investors on their obligations to fund commitments; our ability to comply with investment guidelines set by our clients; our ability to consummate planned acquisitions and successfully integrate the acquired businesses with ours; our ability to manage risks associated with pursuing new lines of business; our ability to manage the effects of events outside of our control; and our ability to receive distributions from HLA to fund our payment of dividends, taxes and other expenses.

The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the “Risk Factors” detailed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (our “2020 Form 10-K”) and in our subsequent reports filed from time to time with the Securities and Exchange Commission (the “SEC”). The forward-looking statements included in this Form 10-Q are made only as of the date we filed this report. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law.

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Hamilton Lane Incorporated

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share amounts)

	December 31,		March 31,
	2020		2020
Assets
Cash and cash equivalents	$	92,895	$	50,124
Restricted cash	3,042		3,086
Fees receivable	26,624		30,384
Prepaid expenses	4,920		6,988
Due from related parties	3,987		2,605
Furniture, fixtures and equipment, net	14,010		7,402
Lease right-of-use assets, net	66,170		9,577
Investments	264,613		207,747
Deferred income taxes	216,139		137,941
Other assets	23,429		17,675
Total assets	$	715,829	$	473,529
Liabilities and Equity
Accounts payable	$	2,069	$	1,968
Accrued compensation and benefits	40,786		10,804
Deferred incentive fee revenue	3,704		3,704
Debt	73,630		74,524
Accrued members’ distributions	7,906		5,829
Payable to related parties pursuant to tax receivable agreement	176,046		98,956
Dividends payable	10,775		8,027
Lease liabilities	73,967		10,184
Other liabilities (includes $18,162 and $13,394 at fair value)	27,094		22,132
Total liabilities	415,977		236,128
Commitments and contingencies (Note 13)
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	—		—
Class A common stock, $0.001 par value, 300,000,000 authorized; 34,918,578 and 29,842,784 issued and outstanding as of December 31, 2020 and March 31, 2020, respectively	35		30
Class B common stock, $0.001 par value, 50,000,000 authorized; 17,841,211 and 22,049,727 issued and outstanding as of December 31, 2020 and March 31, 2020, respectively	18		22
Additional paid-in-capital	142,564		107,727
Retained earnings	73,703		47,090
Accumulated other comprehensive loss	—		(78)
Total Hamilton Lane Incorporated stockholders’ equity	216,320		154,791
Non-controlling interests in general partnerships	2,086		4,853
Non-controlling interests in Hamilton Lane Advisors, L.L.C.	81,446		77,757
Total equity	299,852		237,401
Total liabilities and equity	$	715,829	$	473,529

See accompanying notes to the condensed consolidated financial statements.

3

Hamilton Lane Incorporated

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Revenues
Management and advisory fees	$	75,279	$	59,837	$	208,913	$	179,584
Incentive fees	9,304		8,301		29,845		17,532
Total revenues	84,583		68,138		238,758		197,116
Expenses
Compensation and benefits	28,536		23,773		93,914		71,570
General, administrative and other	13,328		15,473		34,978		42,736
Total expenses	41,864		39,246		128,892		114,306
Other income (expense)
Equity in income of investees	11,923		4,454		8,699		14,331
Interest expense	(468)		(651)		(1,448)		(2,213)
Interest income	658		196		775		624
Non-operating income	6,229		97		6,830		4,175
Total other income (expense)	18,342		4,096		14,856		16,917
Income before income taxes	61,061		32,988		124,722		99,727
Income tax expense	6,429		4,551		20,522		11,564
Net income	54,632		28,437		104,200		88,163
Less: (Loss) income attributable to non-controlling interests in general partnerships	(68)		44		(346)		593
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	21,497		14,896		46,283		47,393
Net income attributable to Hamilton Lane Incorporated	$	33,203	$	13,497	$	58,263	$	40,177
Basic earnings per share of Class A common stock	$	0.96	$	0.46	$	1.79	$	1.45
Diluted earnings per share of Class A common stock	$	0.96	$	0.46	$	1.78	$	1.44
Dividends declared per share of Class A common stock	$	0.313	$	0.275	$	0.938	$	0.825

See accompanying notes to the condensed consolidated financial statements.

4

Hamilton Lane Incorporated

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Net income	$	54,632	$	28,437	$	104,200	$	88,163
Other comprehensive income (loss), net of tax
Foreign currency translation	—		16		130		(13)
Total other comprehensive income (loss), net of tax	—		16		130		(13)
Comprehensive income	54,632		28,453		104,330		88,150
Less:
Comprehensive (loss) income attributable to non-controlling interests in general partnerships	(68)		44		(346)		593
Comprehensive income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	21,497		14,903		46,335		47,385
Total comprehensive income attributable to Hamilton Lane Incorporated	$	33,203	$	13,506	$	58,341	$	40,172

See accompanying notes to the condensed consolidated financial statements.

5

Hamilton Lane Incorporated

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)

	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Total Equity
Balance at September 30, 2020	$	35	$	18	$	141,010	$	51,275	$	—	$	3,506	$	67,351	$	263,195
Net income (loss)	—		—		—		33,203		—		(68)		21,497		54,632
Other comprehensive income	—		—		—		—		—		—		—		—
Equity-based compensation	—		—		1,136		—		—		—		623		1,759
Deferred tax adjustment	—		—		(4)		—		—		—		—		(4)
Dividends declared	—		—		—		(10,775)		—		—		—		(10,775)
Capital distributions to non-controlling interests, net	—		—		—		—		—		(1,352)		—		(1,352)
Member distributions	—		—		—		—		—		—		(7,973)		(7,973)
Employee Share Purchase Plan share issuance	—		—		239		—		—		—		131		370
Equity reallocation between controlling and non-controlling interests	—		—		183		—		—		—		(183)		—
Balance at December 31, 2020	$	35	$	18	$	142,564	$	73,703	$	—	$	2,086	$	81,446	$	299,852

	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Total Equity
Balance at March 31, 2020	$	30	$	22	$	107,727	$	47,090	$	(78)	$	4,853	$	77,757	$	237,401
Net income (loss)	—		—		—		58,263		—		(346)		46,283		104,200
Other comprehensive income	—		—		—		—		78		—		52		130
Equity-based compensation	—		—		3,251		—		—		—		2,079		5,330
Repurchase of Class A shares for employee tax withholding	—		—		(22)		—		—		—		(14)		(36)
Deferred tax adjustment	—		—		14,424		—		—		—		—		14,424
Dividends declared	—		—		—		(31,650)		—		—		—		(31,650)
Capital distributions to non-controlling interests, net	—		—		—		—		—		(2,421)		—		(2,421)
Member distributions	—		—		—		—		—		—		(28,599)		(28,599)
Secondary Offerings	5		(4)		15,933		—		—		—		(15,938)		(4)
Employee Share Purchase Plan share issuance	—		—		658		—		—		—		419		1,077
Equity reallocation between controlling and non-controlling interests	—		—		593		—		—		—		(593)		—
Balance at December 31, 2020	$	35	$	18	$	142,564	$	73,703	$	—	$	2,086	$	81,446	$	299,852

See accompanying notes to the condensed consolidated financial statements.

6

Hamilton Lane Incorporated

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)

	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Total Equity
Balance at September 30, 2019	$	30	$	22	$	107,718	$	28,998	$	(7)	$	5,592	$	62,278	$	204,631
Net income	—		—		—		13,497		—		44		14,896		28,437
Other comprehensive income	—		—		—		—		9		—		7		16
Equity-based compensation	—		—		981		—		—		—		800		1,781
Deferred tax adjustment	—		—		20		—		—		—		—		20
Dividends declared	—		—		—		(8,026)		—		—		—		(8,026)
Capital distributions to non-controlling interests, net	—		—		—		—		—		(195)		—		(195)
Member distributions	—		—		—		—		—		—		(10,607)		(10,607)
Secondary offerings	—		—		—		—		—		—		—		0
Employee Share Purchase Plan share issuance	—		—		161		—		—		—		132		293
Equity reallocation between controlling and non-controlling interests	—		—		170		—		—		—		(170)		—
Balance at December 31, 2019	$	30	$	22	$	109,050	$	34,469	$	2	$	5,441	$	67,336	$	216,350

	Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Non-Controlling Interests in General Partnerships		Non-Controlling Interests in Hamilton Lane Advisors, L.L.C.		Total Equity
Balance at March 31, 2019	$	27	$	24	$	92,482	$	17,686	$	7	$	5,716	$	53,780	$	169,722
Net income	—		—		—		40,177		—		593		47,393		88,163
Other comprehensive loss	—		—		—		—		(5)		—		(8)		(13)
Equity-based compensation	—		—		2,758		—		—		—		2,525		5,283
Repurchase of Class A shares for employee tax withholding	—		—		(23)		—		—		—		(22)		(45)
Issuance of shares for contingent compensation payout	—		—		214		—		—		—		211		425
Deferred tax adjustment	—		—		6,231		—		—		—		—		6,231
Dividends declared	—		—		—		(23,394)		—		—		—		(23,394)
Capital distributions to non-controlling interests, net	—		—		—		—		—		(868)		—		(868)
Member distributions	—		—		—		—		—		—		(30,037)		(30,037)
Secondary Offering	3		(2)		6,367		—		—		—		(6,370)		(2)
Employee Share Purchase Plan share issuance	—		—		462		—		—		—		423		885
Equity reallocation between controlling and non-controlling interests	—		—		559		—		—		—		(559)		—
Balance at December 31, 2019	$	30	$	22	$	109,050	$	34,469	$	2	$	5,441	$	67,336	$	216,350

See accompanying notes to the condensed consolidated financial statements.

7

Hamilton Lane Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended December 31,
	2020		2019
Operating activities:
Net income	$	104,200	$	88,163
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,982		2,379
Change in deferred income taxes	13,382		7,197
Change in payable to related parties pursuant to tax receivable agreement	(73)		150
Equity-based compensation	5,310		5,244
Equity in income of investees	(8,699)		(14,331)
Gain on investments valued under the measurement alternative	(6,229)		(4,973)
Proceeds received from investments	704		8,475
Non-cash lease expense	4,352		3,645
Other	(105)		688
Changes in operating assets and liabilities:
Fees receivable	3,760		856
Prepaid expenses	2,068		126
Due from related parties	(1,382)		(39)
Other assets	(1,291)		329
Accounts payable	101		(108)
Accrued compensation and benefits	29,982		14,510
Lease liability	(1,466)		(3,735)
Other liabilities	195		(521)
Net cash provided by operating activities	147,791		108,055
Investing activities:
Purchase of furniture, fixtures and equipment	(8,558)		(1,207)
Purchase of other investments	(500)		(3,967)
Proceeds from sales of investments valued under the measurement alternative	—		6,419
Purchase of intangible assets	(1,000)		—
Loan to investee	—		(157)
Distributions received from investments	19,764		6,878
Contributions to investments	(57,119)		(37,196)
Net cash used in investing activities	(47,413)		(29,230)
Financing activities:
Proceeds from offerings	354,629		147,122
Purchase of membership interests	(354,629)		(147,122)
Repayments of debt	(937)		(3,750)
Draw-down on revolver	—		15,000
Repayment of revolver	—		(15,000)
Secured financing	—		15,750
Contributions from non-controlling interest in general partnerships	70		30
Distributions to non-controlling interest in general partnerships	(2,491)		(898)
Repurchase of Class B common stock	(4)		(2)
Repurchase of Class A shares for employee tax withholding	(36)		(45)
Proceeds received from issuance of shares under Employee Share Purchase Plan	1,077		885
Payments to related parties, pursuant to tax receivable agreement	(36)		—
Dividends paid	(28,902)		(21,041)
Members’ distributions paid	(26,522)		(36,613)
Net cash used in financing activities	(57,781)		(45,684)
Effect of exchange rate changes on cash and cash equivalents	130		(37)
Increase in cash, cash equivalents, and restricted cash	42,727		33,104
Cash, cash equivalents, and restricted cash at beginning of the period	53,210		51,590
Cash, cash equivalents, and restricted cash at end of the period	$	95,937	$	84,694

See accompanying notes to the condensed consolidated financial statements.

8

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

1. Organization

Hamilton Lane Incorporated (“HLI”) 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 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, payable 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 December 31, 2020 and March 31, 2020, HLI held approximately 64.6% and 55.1%, respectively, of the economic interest in HLA. As future exchanges of HLA units occur pursuant to the exchange agreement in place with HLA’s members, 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 sponsors the formation, and/or serves as the general partner or managing member, of various limited partnerships or limited liability companies 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 co-investments, including investments in debt, equity, and other equity-based instruments. HLA, which includes certain subsidiaries that serve as the general partner or managing member of substantially all 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 unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Management believes it has made all necessary adjustments (which consisted of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. Results of operations for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in HLI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic, which has resulted in significant disruption and uncertainty in the global economic markets. Given the amount of uncertainty regarding the scope and duration of the

9

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

COVID-19 pandemic, it is currently not possible to predict the precise impact it will have on the Company’s financial statements. In addition, certain impacts may not be reported in the current quarter due to the Company’s investments in partnerships and unrealized carried interest amounts, which are reported on a three month lag, as discussed below in “Accounting for Differing Fiscal Periods”.

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

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 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.

The carrying amount of the term loan of $73,630 as of December 31, 2020 approximated fair value based on then-current market rates for similar debt instruments and is classified as Level 2 within the fair value hierarchy.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”. ASU 2018-13 changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while others were added. Early adoption of any removed or modified disclosure requirements is permitted upon issuance of ASU 2018-13 and adoption of the additional disclosure requirements may be delayed until the effective date. The Company elected to early adopt the removed or modified disclosure requirements of the standard on October 1, 2018. The Company adopted the remaining requirements on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

10

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

In June 2016, the FASB issued ASU 2016-13, “Accounting for Financial Instruments - Credit Losses (Topic 326)”. ASU 2016-13 replaces the incurred loss methodology in current GAAP with a methodology that reflects expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted ASU 2016-13 using the modified retrospective transition method on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

Reclassifications

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

3. Revenue

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

	Three Months Ended December 31,				Nine Months Ended December 31,
Management and advisory fees	2020		2019		2020		2019
Specialized funds	$	38,155	$	27,789	$	102,103	$	81,733
Customized separate accounts	23,285		22,618		70,600		67,047
Advisory	6,618		5,878		19,928		18,091
Reporting and other	2,673		2,237		8,093		6,492
Distribution management	2,827		1,108		5,291		3,169
Fund reimbursement revenue	1,721		207		2,898		3,052
Total management and advisory fees	$	75,279	$	59,837	$	208,913	$	179,584

	Three Months Ended December 31,				Nine Months Ended December 31,
Incentive fees	2020		2019		2020		2019
Specialized funds	$	6,802	$	3,638	$	26,740	$	11,257
Customized separate accounts	2,502		4,663		3,105		6,275
Total incentive fees	$	9,304	$	8,301	$	29,845	$	17,532

Cost to obtain contracts

The Company incurs incremental costs related to sales commissions paid to certain employees directly related to customized separate account contracts. These incremental costs are capitalized and amortized over the expected contract length proportionately to the management fee revenue expected to be recognized in each year as a percentage of the total expected revenue for the contract. The contract asset related to the cost to obtain contracts was $1,006 and $994 as of December 31, 2020 and March 31, 2020, respectively, and is included in other assets in the Condensed Consolidated Balance Sheets. Amortization expense related to this contract asset was $135 and $389 for the three and nine months ended December 31, 2020, respectively, and $120 and $363 for the three and nine months ended December 31, 2019, respectively, and is included in compensation and benefits in the Condensed Consolidated Statements of Income.

11

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

4. Investments

Investments consist of the following:

	December 31,		March 31,
	2020		2020
Equity method investments in Partnerships	$	217,823	$	166,106
Equity method investments in Partnerships held by consolidated VIEs	4,319		9,988
Other equity method investments	1,194		1,168
Other investments	18,162		13,394
Investments valued under the measurement alternative	23,115		17,091
Total Investments	$	264,613	$	207,747

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. The Company’s other equity method investments represent its ownership in a technology company that provides benchmarking and analytics of private equity data and its ownership in a joint venture that automates the collection of fund and underlying portfolio company data from general partners. The Company recognized an equity method income related to its investments in Partnerships and other equity method investments of $11,923 and $8,699 for the three and nine months ended December 31, 2020, respectively, and $4,454 and $14,331 for the three and nine months ended December 31, 2019, respectively.

Other investments

The Company’s other investments represent investments in private equity funds and direct credit and equity co-investments. 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 co-investments are debt securities classified as trading securities. The direct equity co-investments and private equity funds are measured at fair value with unrealized holding gains and losses included in earnings. During the quarter ended December 31, 2020, one of the Company's direct equity co-investments held through a special purpose vehicle was transferred out of Level 3 and into Level 2 as the lockup restrictions from its initial public offering expired. The special purpose vehicle now predominately attributes its fair value to a publicly traded share price and is therefore classified as Level 2 in the hierarchy. As of December 31, 2020, the fair value of the Company's investment in the special purpose vehicle was $4,271. The Company’s remaining other investments are recorded at estimated fair value utilizing significant unobservable inputs and are therefore classified in Level 3 of the fair value hierarchy.

12

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

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

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2020	$	6,208	$	1,889	$	9,606	$	17,703
Contributions	218		—		—		218
Distributions	(896)		—		(139)		(1,035)
Net gain	252		6		1,018		1,276
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2020	$	5,786	$	1,756	$	5,852	$	13,394
Contributions	246		—		—		246
Distributions	(1,264)		(74)		(139)		(1,477)
Net gain	1,014		213		4,772		5,999
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2019	$	5,836	$	3,093	$	6,984	$	15,913
Contributions	392		—		—		392
Distributions	(748)		—		—		(748)
Net gain	457		36		345		838
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2019	$	3,734	$	3,940	$	4,814	$	12,488
Contributions	2,484		—		1,875		4,359
Distributions	(748)		(973)		—		(1,721)
Net gain	467		162		640		1,269
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

13

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

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, as of December 31, 2020:

				Significant
	Fair		Valuation	Unobservable				Weighted
	Value		Methodology	Inputs	Range			Average
Private equity funds	$	5,782	Adjusted net asset value	Selected market return	5.6%	-	7.9%	6.2%
Direct credit co-investments	$	1,895	Discounted cash flow	Market yield	9.5%	-	10.4%	9.9%
Direct equity co-investments	$	6,214	Market approach	EBITDA multiple	7.75x	-	13.75x	9.6x
			Market approach	Equity multiple	1.4x			1.4x

For the significant unobservable inputs listed in the table above, (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively; (2) a significant increase or decrease in the market yield would result in a significantly lower or higher fair value measurement, respectively; and (3) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.

In May 2019, the Company transferred these investments for an agreed amount of cash of $15,750 to a Partnership that is a Variable Interest Entity (“VIE”) of which the Company is the general partner but does not consolidate as the Company is not the primary beneficiary. Due to continuing involvement with these assets at the Partnership, the Company accounted for this transfer as a secured financing as it has not met the criteria in ASC 860, “Transfers and Servicing”, to qualify as a sale and therefore has recorded a financial liability for the secured financing which is included in other liabilities in the Condensed Consolidated Balance Sheets. The cash received was recorded as secured financing in financing activities in the Condensed Consolidated Statements of Cash Flows. As of December 31, 2020, all other investments were pledged as collateral on the Company’s secured financing.

The Company accounts for this financial liability at fair value under the fair value option. The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes. The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral. As of December 31, 2020, the secured financing had a fair value of $18,162 and an amortized cost of $11,845. The fair value of the secured financing is estimated using Level 3 inputs with the significant input being the fair value of the other investments utilized as collateral as shown above.

The Company recognized a gain on other investments of $1,276 and $5,999 during the three and nine months ended December 31, 2020, respectively, and $838 and $1,269 during the three and nine months ended December 31, 2019, respectively, that are recorded in other non-operating income. The Company recognized a loss on the secured financing liability of $1,276 and $5,999 during the three and nine months ended December 31, 2020, respectively, and $838 and $1,973 during the three and nine months ended December 31, 2019, respectively, that are recorded in other non-operating income.

14

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Investments valued under the measurement alternative

During the quarter ended December 31, 2020, there was an observable price change for an investment held by the Company and valued under the measurement alternative. As a result of the transaction, the Company marked that investment to fair value based upon the transaction price, which resulted in an unrealized gain of $6,229 that was recorded in other non-operating income for the three and nine months ended December 31, 2020.

5. Variable Interest Entities

The Company consolidates certain VIEs in which it is determined that the Company is the primary beneficiary. The consolidated VIEs are general partner entities of the Partnerships, which are not wholly owned by the Company. The total assets of the consolidated VIEs are $4,319 and $9,988 as of December 31, 2020 and March 31, 2020, respectively, and are recorded in investments in the Condensed Consolidated Balance Sheets. The consolidated VIEs had no liabilities as of December 31, 2020 and March 31, 2020 other than deferred incentive fee revenue of $3,704 as of both December 31, 2020 and March 31, 2020. The assets of the consolidated VIEs may only be used to settle obligations of the 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.

The Company holds variable interests in certain Partnerships that are VIEs, which are not consolidated, as it is determined that the Company is not the primary beneficiary based upon the Company’s equity interest percentage in each of the VIEs. Certain Partnerships are considered VIEs because limited partners lack the ability to remove the general partner or dissolve the entity without cause, by simple majority vote (i.e. do not have substantive “kick out” or “liquidation” rights). The Company’s involvement with such entities is in the form of direct equity interests in, and fee arrangements with, the Partnerships in which it also serves as the general partner or managing member. In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable Partnership and makes all investment and operating decisions. As of December 31, 2020, the total commitments and remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIEs are $21,618,870 and $8,407,279, respectively. These commitments are the primary source of financing for the unconsolidated VIEs.

The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these unconsolidated entities. The Company believes that its maximum exposure to loss is limited because it establishes separate limited partnerships or limited liability companies to serve as the general partner or managing member of the Partnerships.

15

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

The carrying amount of assets and liabilities recognized in the Condensed 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:

	December 31,		March 31,
	2020		2020
Investments	$	122,651	$	118,696
Fees receivable	7,305		8,703
Due from related parties	1,028		1,194
Total VIE Assets	130,984		128,593
Deferred incentive fee revenue	3,704		3,704
Non-controlling interests	(2,086)		(4,853)
Maximum exposure to loss	$	132,602	$	127,444

6. Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2020:

	Class A Common Stock	Class B Common Stock
March 31, 2020	29,842,784	22,049,727
Shares issued (repurchased) in connection with registered offerings	5,056,895	(4,208,516)
Forfeitures	(1,299)	—
Shares repurchased for employee tax withholdings	(511)	—
Restricted stock granted	2,503
Shares issued pursuant to Employee Share Purchase Plan	18,206	—
December 31, 2020	34,918,578	17,841,211

June 2020 Offering

In June 2020, the Company and certain selling stockholders completed a registered offering of an aggregate of 2,995,757 shares of Class A common stock at a price to the underwriters of $70.09 per share (the “June 2020 Offering”). The shares sold consisted of 71,242 shares held by the selling stockholders and 2,924,515 shares newly issued by the Company. The Company received approximately $204,979 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 2,271,636 Class B units and 652,879 Class C units. In connection with the exchange of the Class B units, the Company also repurchased for par value and canceled a corresponding number of shares of Class B common stock. The Company did not receive any proceeds from the sale of shares by the selling stockholders.

September 2020 Offering

In September 2020, the Company and a certain selling stockholder completed a registered offering of an aggregate of 2,207,380 shares of Class A common stock at a price to the underwriter of $70.18 per share (the “September 2020 Offering”). The shares sold consisted of 75,000 shares held by the selling stockholder and 2,132,380 shares newly issued by the Company. The Company received approximately $149,650 in net proceeds from the sale of its shares and used all of the proceeds to settle exchanges by

16

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

certain members of HLA of a total of 1,936,880 Class B units and 195,500 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.

7. Equity-Based Compensation

A summary of restricted stock activity for the nine months ended December 31, 2020 is presented below:

	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2020	441,515	$	36.87
Granted	2,503	$	73.56
Vested	(9,630)	$	32.92
Forfeited	(1,299)	$	14.33
December 31, 2020	433,089	$	37.24

As of December 31, 2020, total unrecognized compensation expense related to restricted stock was $10,888.

8. Compensation and Benefits

The Company has recorded the following amounts related to compensation and benefits:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Base compensation and benefits	$	24,448	$	19,966	$	81,317	$	62,012
Incentive fee compensation	2,329		2,046		7,287		4,314
Equity-based compensation	1,759		1,761		5,310		5,244
Total compensation and benefits	$	28,536	$	23,773	$	93,914	$	71,570

During the quarter ended December 31, 2020, the Company changed its estimate of certain discretionary compensation amounts that are based upon overall Company performance and paid annually. The overall Company performance in the current fiscal year caused the previously estimated amount to be in excess of the targeted payout amount as of December 31, 2020. The result of this change in estimate was to reduce compensation and benefits expense by $6,267 for the three months ended December 31, 2020, of which $4,009 was related to amounts recorded in prior quarters.

9. Income Taxes

The Company’s effective tax rate used for interim periods is based on an estimated annual effective tax rate including the tax effect of items required to be recorded discretely in the interim period in which those items occur. The effective tax rate is dependent on many factors, including the estimated amount of income subject to income tax; therefore, the effective tax rate can vary from period to period. The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation

17

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized.

The Company’s effective tax rate was 10.5% and 13.8% for the three months ended December 31, 2020 and 2019, respectively, and 16.5% and 11.6% for the nine months ended December 31, 2020 and 2019, respectively. The effective tax rates were different from the statutory rates due to the portion of income allocated to the non-controlling entities, valuation allowance recorded against deferred tax assets and discrete tax adjustments recorded in the periods.

In connection with the June 2020 Offering and unit exchanges, the Company recorded a deferred tax asset in the amount of $56,314, which is net of a valuation allowance of $3,521 related to the portion of tax benefits that it is more likely than not will not be realized. Additionally, in connection with the June 2020 Offering and unit exchange and recording of the deferred tax asset, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $44,450.

In connection with the September 2020 Offering and unit exchanges, the Company recorded a deferred tax asset in the amount of $41,539, which is net of a valuation allowance of $2,712 related to the portion of tax benefits that it is more likely than not will not be realized. Additionally, in connection with the September 2020 Offering and unit exchange and recording of the deferred tax asset, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $32,787.

As of December 31, 2020, the Company had no unrecognized tax positions and believes there will be no changes to uncertain tax positions within the next 12 months.

10. Earnings per Share

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 securities. As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included. Shares of the Company’s Class B common stock are, however, considered potentially dilutive to the Class A common stock because the Class B units to which the Class B common stock corresponds are exchangeable for shares of Class A common stock on a one-for-one basis, at which time the share of Class B common stock is surrendered in exchange for a payment of its par value.

18

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

	Three Months Ended December 31, 2020					Three Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	33,203	34,478,437	$	0.96	$	13,497	29,185,039	$	0.46
Adjustment to net income:
Assumed vesting of employee awards	94					88
Effect of dilutive securities:
Assumed vesting of employee awards			272,955					423,167
Diluted EPS of Class A common stock	$	33,297	34,751,392	$	0.96	$	13,585	29,608,206	$	0.46

	Nine Months Ended December 31, 2020					Nine Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	58,263	32,567,754	$	1.79	$	40,177	27,710,607	$	1.45
Adjustment to net income:
Assumed vesting of employee awards	156					267
Effect of dilutive securities:
Assumed vesting of employee awards			240,194					386,988
Diluted EPS of Class A common stock	$	58,419	32,807,948	$	1.78	$	40,444	28,097,595	$	1.44

The calculations of diluted earnings per share exclude 18,912,099 outstanding Class B and Class C units of HLA for the three and nine months ended December 31, 2020 and 23,968,994 outstanding Class B and Class C units of HLA for the three and nine months ended December 31, 2019, which are exchangeable into Class A common stock under the “if-converted” method, because the inclusion of such shares would be antidilutive.

19

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

11. Related-Party Transactions

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 $52,080 and $140,883 for the three and nine months ended December 31, 2020, respectively, and $39,141 and $117,941 for the three and nine months ended December 31, 2019, respectively. The Company earned incentive fees from Partnerships of $8,153 and $28,332 for the three and nine months ended December 31, 2020, respectively, and $5,731 and $14,850 for the three and nine months ended December 31, 2019, respectively.

The Company entered into a service agreement on June 1, 2017 with its joint venture pursuant to which it had expenses of $1,047 and $3,001 for the three and nine months ended December 31, 2020, respectively, and $1,261 and $4,006 for the three and nine months ended December 31, 2019, respectively, that are included in general, administrative and other expenses in the Condensed Consolidated Statements of Income. The Company also has a payable to the joint venture of $354 and $428 as of December 31, 2020 and March 31, 2020, respectively, which is included in other liabilities in the Condensed Consolidated Balance Sheets.

During the quarter ended December 31, 2020, the Company paid the remaining $1,000 related to its purchase of the Cobalt LP software from January 2020.

Fees receivable from the Partnerships were $13,297 and $16,970 as of December 31, 2020 and March 31, 2020, respectively, and are included in fees receivable in the Condensed Consolidated Balance Sheets.

12. Supplemental Cash Flow Information

	Nine Months Ended December 31,
	2020		2019
Shares issued for contingent compensation payment	$	—	$	425
Establishment of lease liability in exchange for right of use asset	$	61,597	$	12,675
Non-cash financing activities:
Dividends declared but not paid	$	10,775	$	8,026
Member distributions declared but not paid	$	7,906	$	10,505
Establishment of net deferred tax assets related to offerings	$	91,580	$	37,394

13. 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 condensed consolidated financial statements.

20

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Incentive Fees

The Partnerships have allocated carried interest still subject to contingencies and that did not meet the Company’s criteria for recognition in the amounts of $497,383 and $441,150, net of amounts attributable to non-controlling interests, at December 31, 2020 and March 31, 2020, respectively, and $3,704 at both December 31, 2020 and March 31, 2020 that has been received and deferred by the Company.

If the Company ultimately receives the unrecognized carried interest, a total of $124,346 and $110,288 as of December 31, 2020 and March 31, 2020, 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 Condensed Consolidated Balance Sheets or Condensed Consolidated Statements of Income as the payment is not yet probable.

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 $154,964 and $143,489 as of December 31, 2020 and March 31, 2020, respectively.

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 17 years. 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. Short-term leases (leases with a term of less than 12 months) have not been recorded on the balance sheet. Short-term lease costs were not material for the three and nine months ended December 31, 2020 and 2019.

The Company entered into a 17-year lease agreement for its new headquarters in suburban Philadelphia, which is currently being constructed. The Company was granted access to the space in October 2020 to begin building various leasehold improvements and expects to move into the property in the first quarter of fiscal 2022.

The following table shows lease costs and other supplemental information related to the Company’s operating leases:

21

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020			2019
Operating lease costs	$	2,471	$	1,239	$	4,908		$	3,649
Variable lease costs	$	387	$	134	$	688		$	395
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,338	$	1,323	$	3,889		$	3,898
Weighted average remaining lease term (in years)					15.4			2.5
Weighted average discount rate					3.2		%	5.5		%

As of December 31, 2020, the maturities of operating lease liabilities were as follows:

Remainder of FY2021	$	1,321
FY2022	6,236
FY2023	6,856
FY2024	6,233
FY2025	5,724
Thereafter	76,886
Total lease payments	103,256
Less: imputed interest	(29,289)
Total operating lease liabilities	$	73,967

14. Subsequent Events

On February 2, 2021, the Company declared a quarterly dividend of $0.3125 per share of Class A common stock to record holders at the close of business on March 15, 2021. The payment date will be April 6, 2021.

On January 15, 2021, Hamilton Lane Alliance Holdings I, Inc. (“HLAH”), a special purpose acquisition company, closed its initial public offering of 27.6 million units for $276,000. HLAH is sponsored by a wholly-owned subsidiary of the Company that will assist in identifying and effectuating a merger between HLAH and a target company. Until the merger occurs, HLAH is expected be consolidated by the Company. As part of the IPO, the Company was issued 4.9 million shares for sponsoring HLAH and purchased 5 million warrants for $7,520. The shares and warrants vest or become exercisable upon a successful merger and at certain share price targets.

On January 28, 2021, the Company entered into an asset purchase agreement with 361 Capital LLC for an estimated $13,000. The transaction is expected to close during the Company’s fiscal fourth quarter and is subject to customary closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Form 10-Q, and our audited financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2020 Form 10-K for a more complete understanding of our financial position and results of operations.

The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Investors should review the “Cautionary Note Regarding Forward-Looking Information” above and the “Risk Factors” detailed in Part I, Item 1A of our 2020 Form 10-K for a discussion of those risks and uncertainties that have the potential to cause actual results to be materially different. Our results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period. Unless otherwise indicated, references in this Form 10-Q to fiscal 2020 and fiscal 2019 are to our fiscal years ended March 31, 2020, and 2019, respectively.

Business Overview

We are a global private markets investment solutions provider. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity and venture capital. These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct/co-investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types. These solutions are offered in a variety of formats covering some or all phases of private markets investment programs:

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised approximately $59 billion of our assets under management (“AUM”) as of December 31, 2020.

•Specialized Funds: We organize, invest and manage specialized primary, secondary and direct/co-investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997, and our product offerings have grown steadily, comprising approximately $17 billion of our AUM as of December 31, 2020.

•Advisory Services: We offer investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, legal negotiations, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had approximately $581 billion of assets under advisement (“AUA”) as of December 31, 2020.

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•Distribution Management: We offer distribution management services through active portfolio management to enhance the realized value of publicly traded stock our clients receive as distributions from private equity funds.

•Reporting, Monitoring, Data and Analytics: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but occasionally on a stand-alone, fee-for-service basis. Private markets investments are unusually difficult to monitor, report on and administer, and our clients are able to benefit from our sophisticated infrastructure, which provides clients with real time access to reliable and transparent investment data, and our high-touch service approach, which allows for timely and informed responses to the multiplicity of issues that can arise. We also provide comprehensive research and analytical services as part of our investment solutions, leveraging our large, global, proprietary and high-quality database of private markets investment performance and our suite of proprietary analytical investment tools.

Our client base primarily comprises institutional investors that range from those seeking to make an initial investment in alternative assets to some of the world’s largest and most sophisticated private markets investors. As a highly customized, flexible outsourcing partner, we are equipped to provide investment services to institutional clients of all sizes and with different needs, internal resources and investment objectives. Our clients include prominent institutional investors in the United States, Europe, the Middle East, Asia, Australia and Latin America. We believe we are a leading provider of private markets solutions for U.S. labor union pension plans, and we serve numerous public and corporate pension plans, sovereign wealth funds, financial institutions and insurance companies, endowments and foundations, as well as family offices and selected high-net-worth individuals.

Recent Transactions

Special Purpose Acquisition Company

On January 15, 2021, we closed an initial public offering on our first special purpose acquisition company, Hamilton Lane Alliance Holdings I, Inc. (“HLAH”), of 27.6 million units for $276 million. HLAH is sponsored by a wholly-owned subsidiary of HLA that will assist in identifying and effectuating a merger between HLAH and a target company. As part of the IPO, we were issued 4.9 million shares for sponsoring HLAH and purchased 5 million warrants for $7.5 million. The shares and warrants vest or become exercisable upon a successful merger and at certain share price targets. Our goal is to raise additional special purpose acquisition companies in the future, depending on market and other conditions.

Trends Affecting Our Business

Impact of Covid-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic, which continues to spread and cause significant disruption and uncertainty in the global economic markets. We are closely monitoring developments related to the COVID-19 pandemic and assessing any negative impacts to our business.

During the quarter ended September 30, 2020, we began to see a recovery in both the public and private markets compared to the downward movements in the two previous quarters due to the effects of the COVID-19 pandemic. That recovery generally continued through the quarter ended December 31, 2020. Given the amount of uncertainty regarding the scope and duration of the COVID-19 pandemic, it is

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currently not possible to predict the precise impact it will have on future quarters, but it has impacted, and may further impact, our business in various ways, including but not limited to the following:

•Investment valuations may be subject to significant volatility and adversely impacted due to the disruption in global economic markets, whether because of valuation methodologies that rely on public market comparables or as a result of decreases in current or future estimated performance of underlying portfolio companies. Our underlying investments reflect valuations as of September 30, 2020. Decreases in public markets and credit indices in quarters ending after that date may result in negative valuation adjustments that will be reported on a three-month lag in accordance with our accounting policy. Adverse investment valuations directly impact our investments, equity in income of investees, unrealized carried interest, AUM and AUA for the period.

•Incentive fee revenue, which is typically volatile and largely unpredictable, has in the past and may in the future decrease as the ability of general partners to exit existing investments may be limited due to uncertainty in the global economic markets.

•While the market dislocation caused by COVID-19 may present attractive investment opportunities due to increased volatility in the financial markets, we may not be able to complete those investments, which could impact revenue, particularly for specialized funds and customized separate accounts that charge fees on invested capital.

•Restrictions on travel and social distancing requirements implemented globally have challenged our ability to fundraise for new products and raise new business, which may result in lower or delayed revenue growth compared to prior periods. Investors may also limit the amount of capital they are willing to commit given the current uncertainties in global markets and economies.

•The vast majority of our employees are continuing to work remotely. This extended duration of remote working could lead to additional operational risks, such as greater cybersecurity threats. COVID-19 also presents a threat to our employees’ well-being and morale. While we have implemented a business continuity plan to protect the health of our employees and have contingency plans in place for key employees or executive officers who may become sick or otherwise unable to perform their duties for an extended period of time, such plans cannot anticipate all scenarios, and we may experience potential loss of productivity or a delay in the implementation of certain strategic plans.

As of December 31, 2020, we have adequate liquidity with $92.9 million in available cash and $125 million in availability under our Loan Agreements (defined below). For more information on our Loan Agreements, see “—Liquidity and Capital Resources—Loan Agreements”.

Operating Segments

We operate our business in a single segment, which is how our chief operating decision maker (who is our chief executive officer) reviews financial performance and allocates resources.

Key Financial and Operating Measures

Our key financial measures are discussed below.

Revenues

We generate revenues primarily from management and advisory fees, and to a lesser extent from incentive fees.

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Management and advisory fees comprise specialized fund and customized separate account management fees, advisory and reporting fees and distribution management fees.

Revenues from customized separate accounts are generally based on a contractual rate applied to committed capital or net invested capital under management. These fees often decrease over the life of the contract due to built-in declines in contractual rates and/or as a result of lower net invested capital balances as capital is returned to clients. In certain cases, we also provide advisory and/or reporting services, and we therefore also receive fees for services such as monitoring and reporting on a client’s existing private markets investments. In addition, we may provide for investments in our specialized funds as part of our customized separate accounts. In these cases, we reduce the management and/or incentive fees on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.

Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value in, our specialized funds. The management fee during the commitment period is often charged on capital commitments. After the commitment period (or a defined anniversary of the fund’s initial closing), such fee is typically reduced by a percentage of the management fee charged for the preceding year, or the management fee is charged on net invested capital. In the case of certain funds, we charge management fees on capital commitments, with the management fee increasing during the early years of the fund’s term and declining in the later years. Management fees for certain funds are discounted based on the amount of the limited partners’ commitments or if the limited partners are investors in our other funds.

Revenues from advisory and reporting services are generally annual fixed fees, which vary depending on the services we provide. In limited cases, advisory service clients are charged basis point fees annually based on the amounts they have committed to invest pursuant to their agreements with us. In other cases where our services are limited to monitoring and reporting on investment portfolios, clients are charged a fee based on the number of investments in their portfolio.

Distribution management fees are generally earned by applying a percentage to AUM or proceeds received. Certain active management clients may elect a fee structure under which they are charged an asset-based fee plus a performance fee based on net realized and unrealized gains and income net of realized and unrealized losses.

Incentive fees comprise 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 customized separate accounts.

For each of our secondary funds, direct/co-investment funds, credit funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%.  To the extent that our primary funds also directly make secondary investments and direct/co-investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5.0% of net profits, subject to the fund’s compounded annual preferred return.

We recognize carried interest when it is probable that a significant reversal will not occur. In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our consolidated balance sheet and recognized as income in accordance with our revenue recognition policy. The primary contingency regarding incentive fees is the “clawback,”

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or the obligation to return distributions in excess of the amount prescribed by the applicable fund or separate account documents.

Performance fees, which are a component of incentive fees, are based on the aggregate amount of realized gains earned by the applicable customized separate account, subject to the achievement of defined minimum returns to the clients. Performance fees range from 5.0% to 12.5% of net profits, subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when the risk of clawback or reversal is not probable.

Expenses

Compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock awards and (c) incentive fee compensation, which consists of carried interest and performance fee allocations. We expect to continue to experience a general rise in compensation and benefits expense commensurate with expected growth in headcount and with the need to maintain competitive compensation levels as we expand geographically and create new products and services.

Our compensation arrangements with our employees contain a significant bonus component driven by the results of our operations. Therefore, as our revenues, profitability and the amount of incentive fees earned by our customized separate accounts and specialized funds increase, our compensation costs rise.

Certain current and former employees participate in a carried interest plan whereby approximately 25% of incentive fees from certain of our specialized funds and customized separate accounts are awarded to plan participants. We record compensation expense payable to plan participants as the incentive fees become estimable and collection is probable.

General, administrative and other includes travel, accounting, legal and other professional fees, commissions, placement fees, office expenses, depreciation and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.

Other Income (Expense)

Equity in income (loss) of investees primarily represents our share of earnings from our investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Equity income primarily comprises our share of the net realized and unrealized gains (losses) and investment income, partially offset by the expenses from these investments.

We have general partner commitments in our specialized funds and certain customized separate accounts that invest solely in primary funds, secondary funds and direct/co-investments, as well as those that invest across investment types. Equity in income (loss) of investees will increase or decrease as the change in underlying fund investment valuations increases or decreases. Since our direct/co-investment funds invest in underlying portfolio companies, their quarterly and annual valuation changes are more affected by individual company movements than our primary and secondary funds that have exposures across multiple portfolio companies in underlying private markets funds. Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our general partner investments do not include any significant concentrations in a specific sector or area outside the United States.

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Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs, amortization of original issue discount and the write-off of deferred financing costs due to the repayment of previously outstanding debt.

Interest income is income earned on cash and cash equivalents.

Other non-operating income (loss) consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

Fee-Earning AUM

Fee-earning AUM is a metric we use to measure the assets from which we earn management fees. Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees. We classify customized separate account revenue as management fees if the client is charged an asset-based fee, which includes the majority of our discretionary AUM accounts but also includes certain non-discretionary AUA accounts. Our fee-earning AUM is equal to the amount of capital commitments, net invested capital and net asset value (“NAV”) of our customized separate accounts and specialized funds depending on the fee terms. Substantially all of our customized separate accounts and specialized funds earn fees based on commitments or net invested capital, which are not affected by market appreciation or depreciation. Therefore, revenues and fee-earning AUM are not significantly affected by changes in market value.

Our calculations of fee-earning AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. Our definition of fee-earning AUM is not based on any definition that is set forth in the agreements governing the customized separate accounts or specialized funds that we manage.

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Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for the three and nine months ended December 31, 2020 and 2019. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.

	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2020		2019		2020		2019
Revenues
Management and advisory fees	$	75,279	$	59,837	$	208,913	$	179,584
Incentive fees	9,304		8,301		29,845		17,532
Total revenues	84,583		68,138		238,758		197,116
Expenses
Compensation and benefits	28,536		23,773		93,914		71,570
General, administrative and other	13,328		15,473		34,978		42,736
Total expenses	41,864		39,246		128,892		114,306
Other income (expense)
Equity in income of investees	11,923		4,454		8,699		14,331
Interest expense	(468)		(651)		(1,448)		(2,213)
Interest income	658		196		775		624
Non-operating income	6,229		97		6,830		4,175
Total other income (expense)	18,342		4,096		14,856		16,917
Income before income taxes	61,061		32,988		124,722		99,727
Income tax expense	6,429		4,551		20,522		11,564
Net income	54,632		28,437		104,200		88,163
Less: (Loss) income attributable to non-controlling interests in general partnerships	(68)		44		(346)		593
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	21,497		14,896		46,283		47,393
Net income attributable to Hamilton Lane Incorporated	$	33,203	$	13,497	$	58,263	$	40,177

Revenues

	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2020		2019		2020		2019
Management and advisory fees
Specialized funds	$	38,155	$	27,789	$	102,103	$	81,733
Customized separate accounts	23,285		22,618		70,600		67,047
Advisory	6,618		5,878		19,928		18,091
Reporting and other	2,673		2,237		8,093		6,492
Distribution management	2,827		1,108		5,291		3,169
Fund reimbursement revenue	1,721		207		2,898		3,052
Total management and advisory fees	75,279		59,837		208,913		179,584
Incentive fees	9,304		8,301		29,845		17,532
Total revenues	$	84,583	$	68,138	$	238,758	$	197,116

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Three months ended December 31, 2020 compared to three months ended December 31, 2019

Total revenues increased $16.4 million, or 24%, to $84.6 million, for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to an increase in management and advisory fees.

Management and advisory fees increased $15.4 million, or 26%, to $75.3 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Specialized funds revenue increased $10.4 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to a $10.1 million increase in revenue from our latest secondary fund, which added $1.7 billion in fee-earning AUM between periods. Management fees for our latest secondary fund included $7.2 million in retroactive fees for the three months ended December 31, 2020 compared to $1.1 million for the three months ended December 31, 2019. Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period. Customized separate accounts revenue increased $0.7 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 due to the addition of several new accounts and additional allocations from existing accounts as compared to the prior year period. Advisory and reporting fees increased $1.2 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 due to the addition of new accounts. Distribution management revenue increased $1.7 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to higher performance fees. Fund reimbursement revenue increased $1.5 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due to the recognition of fund reimbursements from our latest direct equity fund in the current year period.

Incentive fees increased $1.0 million to $9.3 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019.

Nine months ended December 31, 2020 compared to nine months ended December 31, 2019

Total revenues increased $41.6 million, or 21%, to $238.8 million, for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due to an increase in both management and advisory fees and incentive fees.

Management and advisory fees increased $29.3 million, or 16%, to $208.9 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019. Specialized funds revenue increased $20.4 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to a $22.5 million increase in revenue from our latest secondary fund, which added $1.7 billion in fee-earning AUM between periods. Management fees for our latest secondary fund included $10.8 million in retroactive fees for the nine months ended December 31, 2020 compared to $2.8 million from a direct equity fund for the nine months ended December 31, 2019. Customized separate accounts revenue increased $3.6 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019 due to the addition of several new accounts and additional allocations from existing accounts as compared to the prior year period. Advisory and reporting fees increased $3.4 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019 due to the addition of new accounts. Distribution management revenue increased $2.1 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to higher performance fees.

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Incentive fees increased $12.3 million to $29.8 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to a $11.1 million increase in incentive fees from one of our specialized funds.

Expenses

Three months ended December 31, 2020 compared to three months ended December 31, 2019

Total expenses increased $2.6 million, or 7%, to $41.9 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 due to an increase in compensation and benefits expenses, partially offset by a decrease in general, administrative and other expenses.

Compensation and benefits expenses increased $4.8 million, or 20%, to $28.5 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to an increase in base compensation and benefits. Base compensation and benefits increased $4.5 million, or 22%, for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to an increase in our bonus plan accrual from stronger company performance compared to the prior year period.

General, administrative and other expenses decreased $2.1 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. This change consisted primarily of a $1.5 million decrease in legal related expenses, a $1.3 million decrease in travel expenses, and a $0.7 million decrease in conference and marketing expenses. This was partially offset by a $1.6 million increase in rent expense which included expenses for our new headquarters in the current year period.

Nine months ended December 31, 2020 compared to nine months ended December 31, 2019

Total expenses increased $14.6 million, or 13%, to $128.9 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019 due to an increase in compensation and benefits expenses, partially offset by a decrease in general, administrative and other expenses.

Compensation and benefits expenses increased $22.3 million, or 31%, to $93.9 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to an increase in base compensation and benefits. Base compensation and benefits increased $19.3 million, or 31%, for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to an increase in our bonus plan accrual from stronger company performance compared to the prior year period. Incentive fee compensation increased $3.0 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due to the increase in incentive fee revenue.

General, administrative and other expenses decreased $7.8 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019. This change consisted primarily of a $3.3 million decrease in travel expenses, a $2.6 million decrease in legal related expenses, a $1.1 million decrease in commissions expense, and a $1.0 million decrease in consulting expenses. This was partially offset by a $1.6 million increase in rent expense which included expenses for our new headquarters in the current year period.

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Other Income (Expense)

The following table shows the equity in income of investees included in other income (expense):

	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2020		2019		2020		2019
Equity in income of investees
Primary funds	$	1,365	$	235	$	69	$	1,691
Direct/co-investment funds	3,513		2,947		2,928		7,512
Secondary funds	2,413		367		2,126		1,302
Customized separate accounts	4,006		875		2,761		4,002
Other equity method investments	626		30		815		(176)
Total equity in income of investees	$	11,923	$	4,454	$	8,699	$	14,331

Three months ended December 31, 2020 compared to three months ended December 31, 2019

Other income increased $14.2 million to an income of $18.3 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due to increases in equity in income of investees and non-operating income.

Equity in income of investees increased $7.5 million to income of $11.9 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. This was due primarily to the increases in public and private market valuations during the quarter ended September 30, 2020.

Non-operating income increased $6.1 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due primarily to a $6.2 million unrealized gain recognized on a technology investment accounted for under the measurement alternative in the current year period.

Nine months ended December 31, 2020 compared to nine months ended December 31, 2019

Other income decreased $2.1 million to income of $14.9 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to a decrease in equity in income of investees.

Equity in income of investees decreased $5.6 million to a gain of $8.7 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019. This was due primarily to a $4.6 million decrease in gain from our direct/co-investment funds.

Non-operating income increased $2.7 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due primarily to a $6.2 million unrealized gain recognized on a technology investment accounted for under the measurement alternative in the current year period compared to $5.1 million in the prior year period.

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Income Tax Expense

The Company’s effective tax rate was 10.5% and 13.8% for the three months ended December 31, 2020 and 2019, respectively, and 16.5% and 11.6% for the nine months ended December 31, 2020 and 2019, respectively. The effective tax rates were different from the statutory tax rates due to the portion of income allocated to the non-controlling entities, valuation allowance recorded against deferred tax assets and discrete tax adjustments recorded in the periods. The effective tax rate for the three months ended December 31, 2020 was less than the three months ended December 31, 2019 due primarily to excess taxable income over GAAP equity in income of investees, which was less in the three months ended December 31, 2020 as compared to the three months ended December 31, 2019. The effective tax rate for the nine months ended December 31, 2020 was higher than the nine months ended December 31, 2019 due primarily to less income allocated to the non-controlling entities, taxable income exceeding GAAP equity in income of investees and discrete tax adjustments that increased taxable income in the nine months ended December 31, 2020 compared to discrete tax adjustments that lowered taxable income in the nine months ended December 31, 2019.

Fee-Earning AUM

The following table provides the period to period rollforward of our fee-earning AUM.

	Three Months Ended December 31,						Nine Months Ended December 31,
($ in millions)	2020						2020
	Customized Separate Accounts		Specialized Funds		Total		Customized Separate Accounts		Specialized Funds		Total
Balance, beginning of period	$	24,588	$	14,639	$	39,227	$	24,545	$	14,118	$	38,663
Contributions (1)	1,054		916		1,970		3,431		2,075		5,506
Distributions (2)	(759)		(438)		(1,197)		(2,968)		(1,095)		(4,063)
Foreign exchange, market value and other (3)	143		50		193		18		69		87
Balance, end of period	$	25,026	$	15,167	$	40,193	$	25,026	$	15,167	$	40,193

(1)Contributions represent (i) new commitments from customized separate accounts and specialized funds that earn fees on a committed capital fee base and (ii) capital contributions to underlying investments from customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base.

(2)Distributions represent (i) returns of capital in customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base, (ii) reductions in fee-earning AUM from separate accounts and specialized funds that moved from a committed capital to net invested capital fee base and (iii) reductions in fee-earning AUM from customized separate accounts and specialized funds that are no longer earning fees.

(3)Foreign exchange, market value and other consists primarily of (i) the impact of foreign exchange rate fluctuations for customized separate accounts and specialized funds that earn fees on non-U.S. dollar denominated commitments and (ii) market value appreciation (depreciation) from customized separate accounts and specialized funds that earn fees on a NAV fee base.

Three months ended December 31, 2020

Fee-earning AUM increased $1.0 billion to $40.2 billion during the three months ended December 31, 2020, due to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $0.4 billion, or 2%, to $25.0 billion for the three months ended December 31, 2020. Customized separate accounts contributions were $1.1 billion for the three months ended December 31, 2020, due to new allocations from existing clients and the addition

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of new clients. Distributions were $0.8 billion for the three months ended December 31, 2020 due to $0.3 billion from accounts reaching the end of their fund term, $0.2 billion from accounts moving from a committed to net invested capital fee base, and $0.2 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base.

Specialized funds fee-earning AUM increased $0.5 billion, or 4%, to $15.2 billion for the three months ended December 31, 2020. Specialized fund contributions were $0.9 billion for the three months ended December 31, 2020, due primarily to $0.6 billion from new commitments to our secondary fund in market during the period. Distributions were $0.4 billion for the three months ended December 31, 2020, due to $0.2 billion from funds reaching the end of their fund term and $0.2 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base.

Nine months ended December 31, 2020

Fee-earning AUM increased $1.5 billion to $40.2 billion during the nine months ended December 31, 2020, due to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $0.5 billion, or 2%, to $25.0 billion for the nine months ended December 31, 2020. Customized separate accounts contributions were $3.4 billion for the nine months ended December 31, 2020, due to new allocations from existing clients and the addition of new clients. Distributions were $3.0 billion for the nine months ended December 31, 2020 due to $1.6 billion from accounts reaching the end of their fund term, $0.7 billion from accounts moving from a committed to net invested capital fee base, and $0.6 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base.

Specialized funds fee-earning AUM increased $1.0 billion, or 7%, to $15.2 billion for the nine months ended December 31, 2020. Specialized fund contributions were $2.1 billion for the nine months ended December 31, 2020, due primarily to $1.3 billion from new commitments to our secondary fund in market during the period. Distributions were $1.1 billion for the nine months ended December 31, 2020, due to $0.7 billion from funds reaching the end of their fund term and $0.4 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base.

Non-GAAP Financial Measures

Below is a description of our unaudited non-GAAP financial measures. These are not measures of financial performance under GAAP and should not be considered a substitute for the most directly comparable GAAP measures, which are reconciled below. These measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these measures in isolation or as a substitute for GAAP measures. Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

Fee Related Earnings

Fee Related Earnings (“FRE”) is used to highlight our earnings from recurring management fees. FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) other non-operating income and (f) certain other significant items that we believe are not indicative of our core performance. We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business. FRE is presented before income taxes.

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Adjusted EBITDA

Adjusted EBITDA is our primary internal measure of profitability. We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods. Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) other non-operating income and (f) certain other significant items that we believe are not indicative of our core performance.

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to Fee Related Earnings and Adjusted EBITDA for the three and nine months ended December 31, 2020 and 2019:

	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2020		2019		2020		2019
Net income attributable to Hamilton Lane Incorporated	$	33,203	$	13,497	$	58,263	$	40,177
(Loss) income attributable to non-controlling interests in general partnerships	(68)		44		(346)		593
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	21,497		14,896		46,283		47,393
Incentive fees	(9,304)		(8,301)		(29,845)		(17,532)
Incentive fee related compensation (1)	4,408		3,895		13,828		8,204
Interest income	(658)		(196)		(775)		(624)
Interest expense	468		651		1,448		2,213
Income tax expense	6,429		4,551		20,522		11,564
Equity in income of investees	(11,923)		(4,454)		(8,699)		(14,331)
Non-operating loss	(6,229)		(97)		(6,830)		(4,175)
Fee Related Earnings	$	37,823	$	24,486	$	93,849	$	73,482
Depreciation and amortization	1,005		771		2,982		2,379
Equity-based compensation	1,759		1,761		5,310		5,244
Incentive fees	9,304		8,301		29,845		17,532
Incentive fees attributable to non-controlling interests	(25)		(102)		(735)		(262)
Incentive fee related compensation (1)	(4,408)		(3,895)		(13,828)		(8,204)
Interest income	658		196		775		624
Adjusted EBITDA	$	46,116	$	31,518	$	118,198	$	90,795

(1) Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation.

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Non-GAAP Earnings Per Share

Non-GAAP earnings per share measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI. Non-GAAP earnings per share is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate. We believe non-GAAP earnings per share is useful to investors because it enables them to better evaluate per-share operating performance across reporting periods.

The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated and adjusted shares outstanding to weighted-average shares of Class A common stock outstanding for the three and nine months ended December 31, 2020 and 2019:

	Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands, except share and per-share amounts)	2020		2019		2020		2019
Net income attributable to Hamilton Lane Incorporated	$	33,203	$	13,497	$	58,263	$	40,177
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	21,497		14,896		46,283		47,393
Income tax expense	6,429		4,551		20,522		11,564
Adjusted pre-tax net income	61,129		32,944		125,068		99,134
Adjusted income taxes (1)	(14,488)		(7,841)		(29,641)		(23,594)
Adjusted net income	$	46,641	$	25,103	$	95,427	$	75,540
Weighted-average shares of Class A common stock outstanding - diluted	34,751,392		29,608,206		32,807,948		28,097,595
Exchange of Class B and Class C units in HLA (2)	18,912,099		23,968,994		20,812,989		25,431,059
Adjusted shares outstanding	53,663,491		53,577,200		53,620,937		53,528,654
Non-GAAP earnings per share	$	0.87	$	0.47	$	1.78	$	1.41

(1) Represents corporate income taxes at our estimated statutory tax rate of 23.7% and 23.8% for the three and nine month periods ended December 31, 2020 and 2019, respectively, applied to adjusted pre-tax net income. The 23.7% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.7%. The 23.8% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.8%.

(2) Assumes the full exchange of Class B and Class C units in HLA for Class A common stock of HLI pursuant to the exchange agreement.

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Investment Performance

The following tables present information relating to the historical performance of our discretionary investment accounts. The data for these investments is presented from the vintage date indicated through September 30, 2020 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.

When considering the data presented below, you should note that the historical results of our discretionary investments are not indicative of the future results you should expect from such investments, from any future investment funds we may raise or from an investment in our Class A common stock, in part because:

•market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future;

•the performance of our funds is generally calculated on the basis of the net asset value (“NAV”) of the funds’ investments, including unrealized gains, which may never be realized;

•our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed;

•our newly established funds may generate lower returns during the period that they initially deploy their capital;

•in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; and

•the performance of particular funds also will be affected by risks of the industries and businesses in which they invest.

The historical and potential future returns of the investment funds we manage are not directly linked to returns on our Class A common stock. Therefore, you should not conclude that continued positive performance of the investment funds we manage will necessarily result in positive returns on an investment in our Class A common stock. As used in this discussion, internal rate of return (“IRR”) is calculated on a pooled basis using daily cash flows. See “Performance Methodology” below for more information on how our returns are calculated.

Specialized Fund Performance

We organize, invest and manage primary, secondary and direct/co-investment funds. Our funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. Below is performance information across our various specialized funds. Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized.

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Gross Returns — Realized

Fund	Vintage year	Fund size ($M)	Realized Capital invested ($M)	Realized Gross multiple	Realized Gross IRR (%)	Realized Gross Spread vs. S&P 500 PME	Realized Gross Spread vs. MSCI World PME
Primaries (Diversified)
PEF I	1998	122	117	1.3	5.4%	378 bps	322 bps
PEF IV	2000	250	238	1.7	16.2%	1,302 bps	1,170 bps
PEF V	2003	135	133	1.7	14.3%	847 bps	961 bps
PEF VI	2007	494	479	1.6	12.1%	140 bps	479 bps
PEF VII	2010	262	237	1.6	15.2%	129 bps	546 bps
PEF VIII	2012	427	59	1.2	8.0%	(343) bps	22 bps
PEF IX	2015	517	37	1.9	36.9%	2,226 bps	2,536 bps
PEF X	2018	278	N/A	N/A	N/A	N/A	N/A
Secondaries
Pre-Fund	-	-	362	1.5	17.1%	1,330 bps	1,173 bps
Secondary Fund I	2005	360	353	1.2	5.2%	113 bps	341 bps
Secondary Fund II	2008	591	579	1.5	20.6%	560 bps	979 bps
Secondary Fund III	2012	909	580	1.5	18.8%	573 bps	980 bps
Secondary Fund IV	2016	1,916	159	2.0	35.3%	2,098 bps	2,414 bps
Secondary Fund V	2019	2,477	N/A	N/A	N/A	N/A	N/A
Co-investments
Pre-Fund	-	-	244	1.9	21.3%	1,655 bps	1,600 bps
Co-Investment Fund	2005	604	486	1.1	2.1%	(376) bps	(123) bps
Co-Investment Fund II	2008	1,195	850	2.5	21.4%	913 bps	1,293 bps
Co-Investment Fund III	2014	1,243	313	2.4	43.4%	2,997 bps	3,347 bps
Co-Investment Fund IV	2018	1,698	38	2.3	57.2%	4,552 bps	5,063 bps
Fund	Vintage year	Fund size ($M)	Realized Capital invested ($M)	Realized Gross multiple	Realized Gross IRR (%)	Realized Gross Spread vs. CS HY II PME	Realized Gross Spread vs. CS LL PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015	2015	71	50	1.3	17.8%	810 bps	1,177 bps
Strat Opps 2016	2016	214	114	1.2	21.6%	1,353 bps	1,591 bps
Strat Opps 2017	2017	435	215	1.2	17.6%	1,380 bps	1,390 bps
Strat Opps 2018	2018	889	206	1.2	16.9%	1,624 bps	1,853 bps
Strat Opps 2019	2019	762	25	1.1	10.8%	1,279 bps	1,335 bps

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Gross Returns — Realized and Unrealized

Fund	Vintage year	Fund size ($M)	Capital invested ($M)	Gross multiple	Net Multiple	Gross IRR (%)	Net IRR (%)	Gross Spread vs. S&P 500 PME	Net Spread vs. S&P 500 PME	Gross Spread vs. MSCI World PME	Net Spread vs. MSCI World PME
Primaries (Diversified)
PEF I	1998	122	117	1.3	1.2	5.4%	2.5%	378 bps	76 bps	322 bps	16 bps
PEF IV	2000	250	238	1.7	1.5	16.2%	11.2%	1,302 bps	828 bps	1,170 bps	708 bps
PEF V	2003	135	133	1.7	1.6	14.3%	9.7%	847 bps	374 bps	961 bps	481 bps
PEF VI	2007	494	512	1.6	1.6	11.6%	8.8%	69 bps	(173) bps	409 bps	161 bps
PEF VII	2010	262	284	1.5	1.5	12.4%	8.5%	(124) bps	(502) bps	291 bps	(94) bps
PEF VIII	2012	427	407	1.3	1.3	8.1%	5.5%	(421) bps	(692) bps	(51) bps	(325) bps
PEF IX	2015	517	439	1.5	1.4	16.9%	14.7%	364 bps	156 bps	731 bps	525 bps
PEF X	2018	278	109	1.2	1.1	13.7%	8.0%	(125) bps	(902) bps	320 bps	(471) bps
Secondaries
Pre-Fund	-	-	362	1.5	N/A	17.1%	N/A	1,330 bps	N/A	1,173 bps	N/A
Secondary Fund I	2005	360	353	1.2	1.2	5.2%	3.8%	113 bps	(62) bps	341 bps	159 bps
Secondary Fund II	2008	591	596	1.5	1.4	20.1%	13.8%	481 bps	(156) bps	900 bps	251 bps
Secondary Fund III	2012	909	830	1.4	1.3	13.9%	11.4%	103 bps	(174) bps	509 bps	237 bps
Secondary Fund IV	2016	1,916	1,940	1.4	1.3	18.7%	19.2%	497 bps	639 bps	901 bps	1,049 bps
Secondary Fund V	2019	2,477	561	1.3	1.3	55.3%	79.0%	4,058 bps	5,187 bps	4,567 bps	5,322 bps
Co-investments
Pre-Fund	-	-	244	1.9	N/A	21.3%	N/A	1,655 bps	N/A	1,600 bps	N/A
Co-Investment Fund	2005	604	577	1.0	0.9	0.2%	(1.3)%	(569) bps	(745) bps	(318) bps	(499) bps
Co-Investment Fund II	2008	1,195	1,140	2.0	1.8	17.9%	14.2%	568 bps	183 bps	954 bps	564 bps
Co-Investment Fund III	2014	1,243	1,258	1.7	1.5	18.0%	14.5%	516 bps	194 bps	884 bps	556 bps
Co-Investment Fund IV	2018	1,698	1,320	1.2	1.2	18.5%	16.3%	473 bps	68 bps	889 bps	468 bps
Fund	Vintage year	Fund size ($M)	Capital invested ($M)	Gross multiple	Net Multiple	Gross IRR (%)	Net IRR (%)	Gross Spread vs. CS HY II PME	Net Spread vs. CS HY II PME	Gross Spread vs. CS LL PME	Net Spread vs. CS LL PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015	2015	71	67	1.3	1.2	14.0%	10.7%	542 bps	218 bps	856 bps	527 bps
Strat Opps 2016	2016	214	214	1.3	1.2	12.1%	9.7%	590 bps	365 bps	761 bps	535 bps
Strat Opps 2017	2017	435	445	1.2	1.2	11.7%	9.2%	770 bps	514 bps	846 bps	606 bps
Strat Opps 2018	2018	889	842	1.1	1.1	9.5%	7.8%	623 bps	401 bps	824 bps	605 bps
Stat Opps 2019	2019	762	361	1.1	1.0	11.8%	8.9%	1,165 bps	177 bps	1,180 bps	154 bps

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Performance Methodology

The indices presented for comparison are the S&P 500, MSCI World, Credit Suisse High Yield II (“CS HY II”) and Credit Suisse Leverage Loan (“CS LL”), calculated on a public market equivalent (“PME”) basis. We believe these indices are commonly used by private markets and credit investors to evaluate performance. The PME calculation methodology allows private markets investment performance to be evaluated against a public index and assumes that capital is being invested in, or withdrawn from, the index on the days the capital was called and distributed from the underlying fund managers. The S&P 500 Index is a total return capitalization-weighted index that measures the performance of 500 U.S. large cap stocks. The MSCI World Index is a free float-adjusted market capitalization-weighted index of over 1,600 world stocks that is designed to measure the equity market performance of developed markets. The CS HY II Index, formerly known as the DLJ High Yield Index, is designed to mirror the investable universe of the U.S. dollar denominated high yield debt market. Prices for the CS HY II Index are available on a weekly basis. The CS LL Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Loans must be rated 5B or lower and the index frequency is monthly.

Our IRR represents the pooled IRR for all discretionary investments for the period from inception to September 30, 2020. Gross IRR is presented net of management fees, carried interest and expenses charged by the general partners of the underlying investments, but does not include our management fees, carried interest or expenses. Our gross IRR would decrease with the inclusion of our management fees, carried interest and expenses. Net IRR is net of all management fees, carried interest and expenses charged by the general partners of the underlying investments, as well as by us. Net IRR figures for our funds do not include cash flows attributable to the general partner. Note that secondary portfolio IRRs can be initially impacted by purchase discounts (or premiums) paid at the closing of a transaction, the impact of which will diminish over time.

The “Realized IRR” represents the pooled IRR for those discretionary investments that we consider realized for purposes of our track record, which are investments where the underlying investment fund has been fully liquidated, has generated a distributions to paid-in capital ratio (“DPI”) greater than or equal to 1.0 or is older than six years and has a residual value to paid-in capital ratio (“RVPI”) less than or equal to 0.2. Hamilton Lane Secondary Realized includes investments that have been fully liquidated, have a DPI greater than or equal to 1.0 or a RVPI less than or equal to 0.2. Hamilton Lane Realized Co-Investment and Hamilton Lane Realized Strategic Opportunities include investments that have been fully liquidated or have a DPI greater than or equal to 1.0. “Unrealized” includes all investments that do not meet the aforementioned criteria. DPI represents total distributions divided by total invested capital. RVPI represents the remaining market value divided by total invested capital. “Capital Invested” refers to the total amount of all investments made by a fund, including commitment-reducing and non-commitment-reducing capital calls. “Multiple” represents total distributions from underlying investments to the fund plus the fund’s market value divided by total contributed capital. “Gross Multiple” is presented net of management fees, carried interest and expenses charged by the fund managers of the underlying investments.

Specialized fund and pre-fund performance does not include ten funds-of-funds that have investor-specific investment guidelines.

Certain of our specialized funds utilize revolving credit facilities, which provide capital that is available to fund investments or pay partnership expenses and management fees. Borrowings may be paid down from time to time with investor capital contributions or distributions from investments. The use of a credit facility affects the fund’s return and magnifies the performance on the upside or on the downside.

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Liquidity and Capital Resources

Historical Liquidity and Capital Resources

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of December 31, 2020 and March 31, 2020, our cash and cash equivalents, including investments in money market funds, were $92.9 million and $50.1 million, respectively.

Our material sources of cash from our operations include: (1) management and advisory fees, which are collected monthly or quarterly; (2) incentive fees, which are volatile and largely unpredictable as to amount and timing; and (3) fund distributions related to investments in our specialized funds and certain customized separate accounts that we manage. We use cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, debt service, capital expenditures and distributions to our owners and to fund commitments to certain of our specialized funds and customized separate accounts. If cash flow from operations were insufficient to fund distributions to our owners, we expect that we would suspend paying such distributions.

We have also accessed the capital markets and used proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.

Loan Agreements

In August 2017, we entered into the Term Loan and Security Agreement (as amended, the “Term Loan Agreement”) and the Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”) with First Republic Bank. Proceeds from these agreements were utilized to pay off the outstanding principal amount and accrued interest of the predecessor credit facility. In March 2020, the Term Loan Agreement was amended to include an incremental term advance of approximately $9 million on the closing date of the amendment (increasing the outstanding balance to $75 million), provide for additional uncommitted term advances not to exceed $25 million in the aggregate for a period of three years from the closing date of the amendment, revise the principal amortization schedule beginning July 1, 2020 through the maturity date of July 1, 2027 and change the interest rate to a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. In addition, the Revolving Loan Agreement’s maturity date was amended to March 24, 2023 and the interest rate was changed to a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%.

In March 2020, we also entered into a Multi-Draw Term Loan and Security Agreement (as amended, the “Multi-Draw Term Loan Agreement”, and, together with the Term Loan Agreement and Revolving Loan Agreement, the “Loan Agreements”) with First Republic Bank, which provides for a term loan in the aggregate principal amount of $75 million with a maturity date of July 1, 2030. In September 2020, the Multi-Draw Term Loan Agreement was amended to provide that advances may be drawn through September 30, 2021 and to decrease the interest rate to a fixed per annum rate of 3.50%.

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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, make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of December 31, 2020 and March 31, 2020, the principal amount of debt outstanding equaled $74.1 million and $75.0 million, respectively.

Future Sources and Uses of Liquidity

We generate significant cash flows from operating activities. We believe that we will be able to continue to meet our current and long-term liquidity and capital requirements through our cash flows from operating activities, existing cash and cash equivalents and our ability to obtain future external financing.

We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets and use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement. The timing or size of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs. There can be no assurance that any such transactions will be completed on favorable terms, or at all.

In November 2018, we authorized a program to repurchase up to 6% of the outstanding shares of our Class A common stock, not to exceed $50 million (the “Stock Repurchase Program”). The Stock Repurchase Program does not include specific price targets or timetables and may be suspended or terminated by us at any time. We intend to finance the purchases using available working capital and/or external financing. The Stock Repurchase Program expires 12 months after the date of the first acquisition under the authorization. We have not repurchased any of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available.

We expect that our primary current and long-term liquidity needs will comprise cash to (1) provide capital to facilitate the growth of our business, (2) fund commitments to our investments, (3) pay operating expenses, including cash compensation to our employees, (4) make payments under the tax receivable agreement, (5) fund capital expenditures, (6) pay interest and principal due on our outstanding debt, (7) pay income taxes, (8) make dividend payments to our stockholders and distributions to holders of HLA units in accordance with our distribution policy, (9) settle exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement from time to time and (10) fund purchases of our Class A common stock pursuant to the Stock Repurchase Program.

We are required to maintain minimum net capital balances for regulatory purposes for our Hong Kong, United Kingdom and broker-dealer subsidiaries. These net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of each of December 31, 2020 and March 31, 2020, we were required to maintain approximately $3.0 million in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.

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Cash Flows

Nine Months Ended December 31, 2020 and 2019

	Nine Months Ended December 31,
($ in thousands)	2020		2019
Net cash provided by operating activities	$	147,791	$	108,055
Net cash used in investing activities	(47,413)		(29,230)
Net cash used in financing activities	(57,781)		(45,684)

Operating Activities

Our net cash flow provided by operating activities was $147.8 million and $108.1 million during the nine months ended December 31, 2020 and 2019, respectively. These operating cash flows were driven primarily by:

•net income of $104.2 million and $88.2 million during the nine months ended December 31, 2020 and 2019, respectively;

•change in deferred income taxes of $13.4 million and $7.2 million during the nine months ended December 31, 2020 and 2019, respectively;

•proceeds received from investments of $0.7 million and $8.5 million during the nine months ended December 31, 2020 and 2019, respectively, which represent a return on investment from specialized funds and certain customized separate accounts; and

•net increase in operating assets and liabilities of $32.0 million and $11.4 million during the nine months ended December 31, 2020 and 2019, respectively, primarily for the accruals related to our annual bonus program that is paid in March.

Investing Activities

Our net cash flow used in investing activities was $47.4 million and $29.2 million during the nine months ended December 31, 2020 and 2019, respectively. These amounts were driven primarily by:

•net contributions to investments of $37.4 million and $30.3 million during the nine months ended December 31, 2020 and 2019, respectively;

•proceeds from the sale of a technology investment of $6.4 million during the nine months ended December 31, 2019; and

•purchases of other investments of $0.5 million and $4.0 million during the nine months ended December 31, 2020 and 2019, respectively.

Financing Activities

Our net cash flow used in financing activities was $57.8 million and $45.7 million during the nine months ended December 31, 2020 and 2019, respectively. Cash used in financing activities was attributable primarily to:

•dividends paid of $28.9 million and $21.0 million during the nine months ended December 31, 2020 and 2019, respectively;

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•distributions to HLA members of $26.5 million and $36.6 million during the nine months ended December 31, 2020 and 2019, respectively; and

•secured financing proceeds received of $15.8 million during the nine months ended December 31, 2019.

Off-Balance Sheet Arrangements

There have been no material changes in our off-balance sheet arrangements discussed in our 2020 Form 10-K.

Contractual Obligations, Commitments and Contingencies 

There have been no material changes outside of the ordinary course of business in our contractual obligations, commitments and contingencies from those specified in our 2020 Form 10-K.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent liabilities. We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a more complete discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our condensed consolidated financial statements, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Form 10-K.

Recent Accounting Pronouncements

Information regarding recent accounting developments and their impact on our results can be found in Note 2, “Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk. Potentially negative effects of these risks may be mitigated to a certain extent by those aspects of our investment approach, investment strategies, fundraising practices or other business activities that are designed to benefit, either in relative or absolute terms, from periods of economic weakness, tighter credit or financial market dislocations.

Our predominant exposure to market risk is related to our role as general partner or investment manager for our specialized funds and customized separate accounts and the sensitivities to movements in the fair value of their investments, which may adversely affect our equity in income of investees. Since our management fees are generally based on commitments or net invested capital, our management fee and advisory fee revenue is not significantly impacted by changes in investment values.

44

Fair value of the financial assets and liabilities of our specialized funds and customized separate accounts may fluctuate in response to changes in the value of securities, foreign currency exchange rates, commodity prices and interest rates. The impact of investment risk is as follows:

•Equity in income of investees changes along with the realized and unrealized gains of the underlying investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Our general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States.

•Management fees from our specialized funds and customized separate accounts are not significantly affected by changes in fair value as the management fees are not generally based on the value of the specialized funds or customized separate accounts, but rather on the amount of capital committed or invested in the specialized funds or customized separate accounts, as applicable.

•Incentive fees from our specialized funds and customized separate accounts are not materially affected by changes in the fair value of unrealized investments because they are based on realized gains and subject to achievement of performance criteria rather than on the fair value of the specialized fund’s or customized separate account’s assets prior to realization. We had $3.7 million of deferred incentive fee revenue on our balance sheet as of December 31, 2020. Minor decreases in underlying fair value would not affect the amount of deferred incentive fee revenue subject to clawback.

Exchange Rate Risk

Several of our specialized funds and customized separate accounts hold investments denominated in non-U.S. dollar currencies that may be affected by movements in the rate of exchange between the U.S. dollar and foreign currency, which could impact investment performance. The currency exposure related to investments in foreign currency assets is limited to our general partner interest, which is typically one percent of total capital commitments. We do not possess significant assets in foreign countries in which we operate or engage in material transactions in currencies other than the U.S. dollar. Therefore, changes in exchange rates are not expected to materially impact our financial statements.

Interest Rate Risk

 As of December 31, 2020, we had $74.1 million in borrowings outstanding under our Loan Agreements. The annual interest rate on the Term Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 2.25% as of December 31, 2020. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 2.25% as of December 31, 2020.

Based on the floating rate component of the Term Loan Agreement and the Revolving Loan Agreement payable as of December 31, 2020, we estimate that a 100 basis point increase in interest rates would result in increased interest expense related to the loan of $0.4 million over the next 12 months.

45

Credit Risk

We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the respective counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2020. Our disclosure controls and procedures are intended to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at December 31, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

46

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we 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, we do not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our 2020 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our repurchase activity with respect to shares of our Class A common stock for the quarter ended December 31, 2020:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
October 1-31, 2020	—	$	—	—	$	50,000,000
November 1-30, 2020	—	$	—	—	$	50,000,000
December 1-31, 2020	—	$	—	—	$	50,000,000
Total	—	$	—	—	$	50,000,000

(1) On November 6, 2018, we announced that our board of directors authorized a program to repurchase, in the aggregate, up to 6% of the outstanding shares of our Class A common stock as of the date of the authorization, not to exceed $50 million (the “Stock Repurchase Program”). The authorization provides us the flexibility to repurchase shares in the open market or in privately negotiated transactions from time to time, based on market conditions and other factors. We have not repurchased any of our Class A common stock under the Stock Repurchase Program, so the full purchase authority remains available under this program, which expires 12 months after the date of the first acquisition under the authorization.

47

Item 6. Exhibits

		Incorporated By Reference				Filed Herewith
Exhibit No.	Description of Exhibit	Form	Exhibit	Filing Date	File No.
3.1	Amended and Restated Certificate of Incorporation of Hamilton Lane Incorporated	8-K	3.1	3/10/17	001-38021
3.2	Amended and Restated Bylaws of Hamilton Lane Incorporated	10-K	3.2	6/27/17	001-38021
10.1	Amendment No. 1 to Tax Receivable Agreement, dated as of December 31, 2020, by and among Hamilton Lane Incorporated, Hamilton Lane Advisors, L.L.C., and each of the other persons and entities party thereto					X
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32‡	Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Stockholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.					X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)					X

‡ Furnished herewith.

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 2nd day of February, 2021.

HAMILTON LANE INCORPORATED
By:	/s/ Atul Varma
	Name: Atul Varma
	Title: Chief Financial Officer and Treasurer
By:	/s/ Michael Donohue
	Name: Michael Donohue
	Title: Managing Director and Controller

EX-10.1

EXHIBIT 10.1

AMENDMENT NO. 1

TO

TAX RECEIVABLE AGREEMENT

    This Amendment No. 1 (this “Amendment”) is entered into as of December 31, 2020 (the “Effective Date”) by and among HLI, HLA and the Partners signatory hereto. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Agreement (as defined below).

WHEREAS, reference is made to the Tax Receivable Agreement (the “Agreement”) dated as of March 6, 2017, by and among Hamilton Lane Incorporated, a Delaware Corporation (“HLI”), Hamilton Lane Advisors, L.L.C., a Pennsylvania limited liability company (“HLA”) and each of the HLA Members.

WHEREAS, the Agreement may be amended in writing by HLI, HLA and the Partners (the “Supermajority Partners”) who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Partners under the Agreement if HLI had exercised its right of early termination under Section 4.01(a) of the Agreement on the date of the most recent Exchange prior to such amendment; and

WHEREAS, the parties hereto, including Partners sufficient to constitute the Supermajority Partners, have agreed to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

1.The following defined terms appearing in Article I of the Agreement are hereby amended and restated in their respective entireties to read as follows:

    “Agreed Rate” means SOFR plus 100 basis points.

    “Default Rate” means SOFR plus 500 basis points.

    “Early Termination Rate” means the lesser of (i) 7.5% and (ii) SOFR plus 400 basis points.

2.The defined term “LIBOR” appearing in Article I of the Agreement is hereby removed in its entirety.

3.The following defined terms are hereby added to Article I of the Agreement immediately following the definition of “Share of Liabilities” and immediately preceding the definition of “Specified Partner”:

    “SOFR” means, with respect to any Business Day, a rate per annum equal to the secured    overnight financing rate for such Business Day published by the SOFR Administrator on    the SOFR Administrator’s Website on the immediately succeeding Business Day, or, if such rate is unavailable or otherwise unacceptable to HLI, such other rate as may be selected in HLI’s reasonable discretion.

    “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor    administrator of the secured overnight financing rate).

    “SOFR Administrator Website” means the website of the Federal Reserve Bank of New    York, currently at http://www.newyorkfed.org, or any successor source for the secured     overnight financing rate identified as such by the SOFR Administrator from time to time.

4.Except as explicitly modified by Sections 1, 2 and 3 above, the other provisions, terms and conditions of the Agreement are and will remain in full force and effect. On and after the Effective Date, each reference in the Agreement to “this Agreement,” “the Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference to the Agreement in any other agreements, documents, or instruments executed and delivered pursuant to, or in connection with, the Agreement, will mean and be a reference to the Agreement as amended by this Amendment.

5.This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Amendment by facsimile or email transmission shall be as effective as delivery of a manually signed counterpart of this Amendment.

6.This Amendment shall be governed by, and construed in accordance with, the law of the Commonwealth of Pennsylvania (and, to the extent applicable, federal law), without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

7.If any term or other provision of this Amendment is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Amendment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

*    *    *

IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to be duly executed and delivered as of the date first set forth above.

HAMILTON LANE INCORPORATED
By:	/s/ Atul Varma
	Name: Atul Varma
	Title: Chief Financial Officer
HAMILTON LANE ADVISORS, L.L.C.
By:	/s/ Atul Varma
	Name: Atul Varma
	Title: Chief Financial Officer
HLA INVESTMENTS, LLC
By:	HRHLA, LLC, its managing member
By:	/s/ Hartley R. Rogers
	Name: Hartley R. Rogers
	Title: Manager
HRHLA, LLC
By:	/s/ Hartley R. Rogers
	Name: Hartley R. Rogers
	Title: Manager
HAMILTON LANE ADVISORS, INC.
By:	/s/ Mario L. Giannini
	Name: Mario L. Giannini
	Title: President

/s/ Mario L. Giannini

 Mario L. Giannini

/s/ Erik R. Hirsch

 Erik R. Hirsch

The 2008 Sexton Des. Trust FBO Matthew Sexton
By:	/s/ O. Griffith Sexton
	Name: O. Griffith Sexton
	Title: Trustee

The 2008 Sexton Des. Trust FBO Laura Sexton
By:	/s/ O. Griffith Sexton
	Name: O. Griffith Sexton
	Title: Trustee

EX-31.1

EXHIBIT 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mario L. Giannini, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hamilton Lane Incorporated;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 2, 2021
/s/ Mario L. Giannini
Mario L. Giannini
Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Atul Varma, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hamilton Lane Incorporated;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 2, 2021
/s/ Atul Varma
Atul Varma
Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Mario L. Giannini, Chief Executive Officer, and I, Atul Varma, Chief Financial Officer, of Hamilton Lane Incorporated, hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Hamilton Lane Incorporated.

Date: February 2, 2021

/s/ Mario L. Giannini

Mario L. Giannini

Chief Executive Officer

Date: February 2, 2021

/s/ Atul Varma

Atul Varma

Chief Financial Officer

XML

Cover Page - shares	9 Months Ended
	Dec. 31, 2020	Feb. 01, 2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	001-38021
Entity Registrant Name	HAMILTON LANE INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-2482738
Entity Address, Address Line One	One Presidential Blvd.,
Entity Address, Address Line Two	4th Floor
Entity Address, City or Town	Bala Cynwyd,
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19004
City Area Code	610
Local Phone Number	934-2222
Title of 12(b) Security	Class A Common Stock, $0.001 par value per share
Trading Symbol	HLNE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001433642
Current Fiscal Year End Date	--03-31
Common Class A
Entity Common Stock, Shares Outstanding		34,918,397
Common Class B
Entity Common Stock, Shares Outstanding		17,841,211

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Assets
Cash and cash equivalents	$ 92,895	$ 50,124
Restricted cash	3,042	3,086
Fees receivable	26,624	30,384
Prepaid expenses	4,920	6,988
Due from related parties	3,987	2,605
Furniture, fixtures and equipment, net	14,010	7,402
Lease right-of-use assets, net	66,170	9,577
Investments	264,613	207,747
Deferred income taxes	216,139	137,941
Other assets	23,429	17,675
Total assets	715,829	473,529
Liabilities and Equity
Accounts payable	2,069	1,968
Accrued compensation and benefits	40,786	10,804
Deferred incentive fee revenue	3,704	3,704
Debt	73,630	74,524
Accrued members’ distributions	7,906	5,829
Payable to related parties pursuant to tax receivable agreement	176,046	98,956
Dividends payable	10,775	8,027
Lease liabilities	73,967	10,184
Other liabilities (includes $18,162 and $13,394 at fair value)	27,094	22,132
Total liabilities	415,977	236,128
Commitments and contingencies (Note 13)
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	0	0
Additional paid-in-capital	142,564	107,727
Accumulated other comprehensive loss	0	(78)
Total Hamilton Lane Incorporated stockholders’ equity	216,320	154,791
Total equity	299,852	237,401
Total liabilities and equity	715,829	473,529
Common Class A
Liabilities and Equity
Common stock	35	30
Common Class B
Liabilities and Equity
Common stock	18	22
General Partnerships
Liabilities and Equity
Stockholders' equity attributable to noncontrolling interest	2,086	4,853
Hamilton Lane Advisors, L.L.C.
Liabilities and Equity
Retained earnings	73,703	47,090
Stockholders' equity attributable to noncontrolling interest	$ 81,446	$ 77,757

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Class of Stock [Line Items]
Other investments	$ 18,162	$ 13,394
Preferred stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Common Class A
Class of Stock [Line Items]
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	34,918,578	29,842,784
Common stock, shares outstanding (in shares)	34,918,578	29,842,784
Common Class B
Class of Stock [Line Items]
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	17,841,211	22,049,727
Common stock, shares outstanding (in shares)	17,841,211	22,049,727

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenues
Total revenues	$ 84,583	$ 68,138	$ 238,758	$ 197,116
Expenses
Compensation and benefits	28,536	23,773	93,914	71,570
General, administrative and other	13,328	15,473	34,978	42,736
Total expenses	41,864	39,246	128,892	114,306
Other income (expense)
Equity in income of investees	11,923	4,454	8,699	14,331
Interest expense	(468)	(651)	(1,448)	(2,213)
Interest income	658	196	775	624
Non-operating income	6,229	97	6,830	4,175
Total other income (expense)	18,342	4,096	14,856	16,917
Income before income taxes	61,061	32,988	124,722	99,727
Income tax expense	6,429	4,551	20,522	11,564
Net income	54,632	28,437	104,200	88,163
Net income attributable to Hamilton Lane Incorporated	$ 33,203	$ 13,497	$ 58,263	$ 40,177
Common Class A
Other income (expense)
Basic earnings per share of Class A common stock (in dollars per share)	$ 0.96	$ 0.46	$ 1.79	$ 1.45
Diluted earnings per share of Class A common stock (in dollars per share)	0.96	0.46	1.78	1.44
Dividends declared per share of Class A common stock (in dollars per share)	$ 0.313	$ 0.275	$ 0.938	$ 0.825
General Partnerships
Other income (expense)
Less: Income (loss) attributable to non-controlling interests	$ (68)	$ 44	$ (346)	$ 593
Hamilton Lane Advisors, L.L.C.
Other income (expense)
Less: Income (loss) attributable to non-controlling interests	21,497	14,896	46,283	47,393
Management and advisory fees
Revenues
Total revenues	75,279	59,837	208,913	179,584
Incentive fees
Revenues
Total revenues	$ 9,304	$ 8,301	$ 29,845	$ 17,532

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Net income	$ 54,632	$ 28,437	$ 104,200	$ 88,163
Other comprehensive income (loss), net of tax
Foreign currency translation	0	16	130	(13)
Total other comprehensive income (loss), net of tax	0	16	130	(13)
Comprehensive income	54,632	28,453	104,330	88,150
Less:
Total comprehensive income attributable to Hamilton Lane Incorporated	33,203	13,506	58,341	40,172
General Partnerships
Less:
Comprehensive (loss) income attributable to non-controlling interests	(68)	44	(346)	593
Hamilton Lane Advisors, L.L.C.
Less:
Comprehensive (loss) income attributable to non-controlling interests	$ 21,497	$ 14,903	$ 46,335	$ 47,385

XML

Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	General Partnerships Noncontrolling Interests	Hamilton Lane Advisors, L.L.C. Noncontrolling Interests
Beginning balance at Mar. 31, 2019	$ 169,722	$ 27	$ 24	$ 92,482	$ 17,686	$ 7	$ 5,716	$ 53,780
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	88,163				40,177		593	47,393
Other comprehensive income (loss)	(13)					(5)		(8)
Equity-based compensation	5,283			2,758				2,525
Deferred tax adjustment	6,231			6,231
Dividends declared	(23,394)				(23,394)
Capital distributions to non-controlling interests, net	(868)						(868)
Member distributions	(30,037)							(30,037)
Employee Share Purchase Plan share issuance	885			462				423
Equity reallocation between controlling and non-controlling interests	0			559				(559)
Repurchase of Class A shares for employee tax withholding	(45)			(23)				(22)
Secondary Offering	(2)	3	(2)	6,367				(6,370)
Issuance of shares for contingent compensation payout	425			214				211
Ending balance at Dec. 31, 2019	216,350	30	22	109,050	34,469	2	5,441	67,336
Beginning balance at Sep. 30, 2019	204,631	30	22	107,718	28,998	(7)	5,592	62,278
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	28,437				13,497		44	14,896
Other comprehensive income (loss)	16					9		7
Equity-based compensation	1,781			981				800
Deferred tax adjustment	20			20
Dividends declared	(8,026)				(8,026)
Capital distributions to non-controlling interests, net	(195)						(195)
Member distributions	(10,607)							(10,607)
Employee Share Purchase Plan share issuance	293			161				132
Equity reallocation between controlling and non-controlling interests	0			170				(170)
Secondary Offering	0
Ending balance at Dec. 31, 2019	216,350	30	22	109,050	34,469	2	5,441	67,336
Beginning balance at Mar. 31, 2020	237,401	30	22	107,727	47,090	(78)	4,853	77,757
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	104,200				58,263		(346)	46,283
Other comprehensive income (loss)	130					78		52
Equity-based compensation	5,330			3,251				2,079
Deferred tax adjustment	14,424			14,424
Dividends declared	(31,650)				(31,650)
Capital distributions to non-controlling interests, net	(2,421)						(2,421)
Member distributions	(28,599)							(28,599)
Employee Share Purchase Plan share issuance	1,077			658				419
Equity reallocation between controlling and non-controlling interests	0			593				(593)
Repurchase of Class A shares for employee tax withholding	(36)			(22)				(14)
Secondary Offering	(4)	5	(4)	15,933				(15,938)
Issuance of shares for contingent compensation payout	0
Ending balance at Dec. 31, 2020	299,852	35	18	142,564	73,703	0	2,086	81,446
Beginning balance at Sep. 30, 2020	263,195	35	18	141,010	51,275	0	3,506	67,351
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	54,632				33,203		(68)	21,497
Other comprehensive income (loss)	0
Equity-based compensation	1,759			1,136				623
Deferred tax adjustment	(4)			(4)
Dividends declared	(10,775)				(10,775)
Capital distributions to non-controlling interests, net	(1,352)						(1,352)
Member distributions	(7,973)							(7,973)
Employee Share Purchase Plan share issuance	370			239				131
Equity reallocation between controlling and non-controlling interests	0			183				(183)
Ending balance at Dec. 31, 2020	$ 299,852	$ 35	$ 18	$ 142,564	$ 73,703	$ 0	$ 2,086	$ 81,446

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Operating activities:
Net income	$ 104,200	$ 88,163
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,982	2,379
Change in deferred income taxes	13,382	7,197
Change in payable to related parties pursuant to tax receivable agreement	(73)	150
Equity-based compensation	5,310	5,244
Equity in income of investees	(8,699)	(14,331)
Gain on investments valued under the measurement alternative	(6,229)	(4,973)
Proceeds received from investments	704	8,475
Non-cash lease expense	4,352	3,645
Other	(105)	688
Changes in operating assets and liabilities:
Fees receivable	3,760	856
Prepaid expenses	2,068	126
Due from related parties	(1,382)	(39)
Other assets	(1,291)	329
Accounts payable	101	(108)
Accrued compensation and benefits	29,982	14,510
Lease liability	(1,466)	(3,735)
Other liabilities	195	(521)
Net cash provided by operating activities	147,791	108,055
Investing activities:
Purchase of furniture, fixtures and equipment	(8,558)	(1,207)
Purchase of other investments	(500)	(3,967)
Proceeds from sales of investments valued under the measurement alternative	0	6,419
Purchase of intangible assets	(1,000)	0
Loan to investee	0	(157)
Distributions received from investments	19,764	6,878
Contributions to investments	(57,119)	(37,196)
Net cash used in investing activities	(47,413)	(29,230)
Financing activities:
Proceeds from offerings	354,629	147,122
Purchase of membership interests	(354,629)	(147,122)
Repayments of debt	(937)	(3,750)
Draw-down on revolver	0	15,000
Repayment of revolver	0	(15,000)
Secured financing	0	15,750
Contributions from non-controlling interest in general partnerships	70	30
Distributions to non-controlling interest in general partnerships	(2,491)	(898)
Repurchase of Class B common stock	(4)	(2)
Repurchase of Class A shares for employee tax withholding	(36)	(45)
Proceeds received from issuance of shares under Employee Share Purchase Plan	1,077	885
Payments to related parties, pursuant to tax receivable agreement	(36)	0
Dividends paid	(28,902)	(21,041)
Members’ distributions paid	(26,522)	(36,613)
Net cash used in financing activities	(57,781)	(45,684)
Effect of exchange rate changes on cash and cash equivalents	130	(37)
Increase in cash, cash equivalents, and restricted cash	42,727	33,104
Cash, cash equivalents, and restricted cash at beginning of the period	53,210	51,590
Cash, cash equivalents, and restricted cash at end of the period	$ 95,937	$ 84,694

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Organization

9 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Hamilton Lane Incorporated (“HLI”) 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 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, payable 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 December 31, 2020 and March 31, 2020, HLI held approximately 64.6% and 55.1%, respectively, of the economic interest in HLA. As future exchanges of HLA units occur pursuant to the exchange agreement in place with HLA’s members, 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 sponsors the formation, and/or serves as the general partner or managing member, of various limited partnerships or limited liability companies 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 co-investments, including investments in debt, equity, and other equity-based instruments. HLA, which includes certain subsidiaries that serve as the general partner or managing member of substantially all 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.

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Summary of Significant Accounting Policies

9 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Management believes it has made all necessary adjustments (which consisted of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. Results of operations for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in HLI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic, which has resulted in significant disruption and uncertainty in the global economic markets. Given the amount of uncertainty regarding the scope and duration of the

COVID-19 pandemic, it is currently not possible to predict the precise impact it will have on the Company’s financial statements. In addition, certain impacts may not be reported in the current quarter due to the Company’s investments in partnerships and unrealized carried interest amounts, which are reported on a three month lag, as discussed below in “Accounting for Differing Fiscal Periods”.

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

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 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.

The carrying amount of the term loan of $73,630 as of December 31, 2020 approximated fair value based on then-current market rates for similar debt instruments and is classified as Level 2 within the fair value hierarchy.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”. ASU 2018-13 changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while others were added. Early adoption of any removed or modified disclosure requirements is permitted upon issuance of ASU 2018-13 and adoption of the additional disclosure requirements may be delayed until the effective date. The Company elected to early adopt the removed or modified disclosure requirements of the standard on October 1, 2018. The Company adopted the remaining requirements on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Accounting for Financial Instruments - Credit Losses (Topic 326)”. ASU 2016-13 replaces the incurred loss methodology in current GAAP with a methodology that reflects expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted ASU 2016-13 using the modified retrospective transition method on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

Reclassifications

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

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Revenue

9 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

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

	Three Months Ended December 31,				Nine Months Ended December 31,
Management and advisory fees	2020		2019		2020		2019
Specialized funds	$	38,155	$	27,789	$	102,103	$	81,733
Customized separate accounts	23,285		22,618		70,600		67,047
Advisory	6,618		5,878		19,928		18,091
Reporting and other	2,673		2,237		8,093		6,492
Distribution management	2,827		1,108		5,291		3,169
Fund reimbursement revenue	1,721		207		2,898		3,052
Total management and advisory fees	$	75,279	$	59,837	$	208,913	$	179,584

	Three Months Ended December 31,				Nine Months Ended December 31,
Incentive fees	2020		2019		2020		2019
Specialized funds	$	6,802	$	3,638	$	26,740	$	11,257
Customized separate accounts	2,502		4,663		3,105		6,275
Total incentive fees	$	9,304	$	8,301	$	29,845	$	17,532

Cost to obtain contracts

The Company incurs incremental costs related to sales commissions paid to certain employees directly related to customized separate account contracts. These incremental costs are capitalized and amortized over the expected contract length proportionately to the management fee revenue expected to be recognized in each year as a percentage of the total expected revenue for the contract. The contract asset related to the cost to obtain contracts was $1,006 and $994 as of December 31, 2020 and March 31, 2020, respectively, and is included in other assets in the Condensed Consolidated Balance Sheets. Amortization expense related to this contract asset was $135 and $389 for the three and nine months ended December 31, 2020, respectively, and $120 and $363 for the three and nine months ended December 31, 2019, respectively, and is included in compensation and benefits in the Condensed Consolidated Statements of Income.

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Investments

9 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments

Investments consist of the following:

	December 31,		March 31,
	2020		2020
Equity method investments in Partnerships	$	217,823	$	166,106
Equity method investments in Partnerships held by consolidated VIEs	4,319		9,988
Other equity method investments	1,194		1,168
Other investments	18,162		13,394
Investments valued under the measurement alternative	23,115		17,091
Total Investments	$	264,613	$	207,747

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. The Company’s other equity method investments represent its ownership in a technology company that provides benchmarking and analytics of private equity data and its ownership in a joint venture that automates the collection of fund and underlying portfolio company data from general partners. The Company recognized an equity method income related to its investments in Partnerships and other equity method investments of $11,923 and $8,699 for the three and nine months ended December 31, 2020, respectively, and $4,454 and $14,331 for the three and nine months ended December 31, 2019, respectively.

Other investments

The Company’s other investments represent investments in private equity funds and direct credit and equity co-investments. 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 co-investments are debt securities classified as trading securities. The direct equity co-investments and private equity funds are measured at fair value with unrealized holding gains and losses included in earnings. During the quarter ended December 31, 2020, one of the Company's direct equity co-investments held through a special purpose vehicle was transferred out of Level 3 and into Level 2 as the lockup restrictions from its initial public offering expired. The special purpose vehicle now predominately attributes its fair value to a publicly traded share price and is therefore classified as Level 2 in the hierarchy. As of December 31, 2020, the fair value of the Company's investment in the special purpose vehicle was $4,271. The Company’s remaining other investments are recorded at estimated fair value utilizing significant unobservable inputs and are therefore classified in Level 3 of the fair value hierarchy.

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

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2020	$	6,208	$	1,889	$	9,606	$	17,703
Contributions	218		—		—		218
Distributions	(896)		—		(139)		(1,035)
Net gain	252		6		1,018		1,276
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2020	$	5,786	$	1,756	$	5,852	$	13,394
Contributions	246		—		—		246
Distributions	(1,264)		(74)		(139)		(1,477)
Net gain	1,014		213		4,772		5,999
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2019	$	5,836	$	3,093	$	6,984	$	15,913
Contributions	392		—		—		392
Distributions	(748)		—		—		(748)
Net gain	457		36		345		838
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2019	$	3,734	$	3,940	$	4,814	$	12,488
Contributions	2,484		—		1,875		4,359
Distributions	(748)		(973)		—		(1,721)
Net gain	467		162		640		1,269
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

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, as of December 31, 2020:

				Significant
	Fair		Valuation	Unobservable				Weighted
	Value		Methodology	Inputs	Range			Average
Private equity funds	$	5,782	Adjusted net asset value	Selected market return	5.6%	-	7.9%	6.2%
Direct credit co-investments	$	1,895	Discounted cash flow	Market yield	9.5%	-	10.4%	9.9%
Direct equity co-investments	$	6,214	Market approach	EBITDA multiple	7.75x	-	13.75x	9.6x
			Market approach	Equity multiple	1.4x			1.4x

For the significant unobservable inputs listed in the table above, (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively; (2) a significant increase or decrease in the market yield would result in a significantly lower or higher fair value measurement, respectively; and (3) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.

In May 2019, the Company transferred these investments for an agreed amount of cash of $15,750 to a Partnership that is a Variable Interest Entity (“VIE”) of which the Company is the general partner but does not consolidate as the Company is not the primary beneficiary. Due to continuing involvement with these assets at the Partnership, the Company accounted for this transfer as a secured financing as it has not met the criteria in ASC 860, “Transfers and Servicing”, to qualify as a sale and therefore has recorded a financial liability for the secured financing which is included in other liabilities in the Condensed Consolidated Balance Sheets. The cash received was recorded as secured financing in financing activities in the Condensed Consolidated Statements of Cash Flows. As of December 31, 2020, all other investments were pledged as collateral on the Company’s secured financing.

The Company accounts for this financial liability at fair value under the fair value option. The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes. The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral. As of December 31, 2020, the secured financing had a fair value of $18,162 and an amortized cost of $11,845. The fair value of the secured financing is estimated using Level 3 inputs with the significant input being the fair value of the other investments utilized as collateral as shown above.

The Company recognized a gain on other investments of $1,276 and $5,999 during the three and nine months ended December 31, 2020, respectively, and $838 and $1,269 during the three and nine months ended December 31, 2019, respectively, that are recorded in other non-operating income. The Company recognized a loss on the secured financing liability of $1,276 and $5,999 during the three and nine months ended December 31, 2020, respectively, and $838 and $1,973 during the three and nine months ended December 31, 2019, respectively, that are recorded in other non-operating income.

Investments valued under the measurement alternativeDuring the quarter ended December 31, 2020, there was an observable price change for an investment held by the Company and valued under the measurement alternative. As a result of the transaction, the Company marked that investment to fair value based upon the transaction price, which resulted in an unrealized gain of $6,229 that was recorded in other non-operating income for the three and nine months ended December 31, 2020.

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Variable Interest Entities

9 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Variable Interest Entities

The Company consolidates certain VIEs in which it is determined that the Company is the primary beneficiary. The consolidated VIEs are general partner entities of the Partnerships, which are not wholly owned by the Company. The total assets of the consolidated VIEs are $4,319 and $9,988 as of December 31, 2020 and March 31, 2020, respectively, and are recorded in investments in the Condensed Consolidated Balance Sheets. The consolidated VIEs had no liabilities as of December 31, 2020 and March 31, 2020 other than deferred incentive fee revenue of $3,704 as of both December 31, 2020 and March 31, 2020. The assets of the consolidated VIEs may only be used to settle obligations of the 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.

The Company holds variable interests in certain Partnerships that are VIEs, which are not consolidated, as it is determined that the Company is not the primary beneficiary based upon the Company’s equity interest percentage in each of the VIEs. Certain Partnerships are considered VIEs because limited partners lack the ability to remove the general partner or dissolve the entity without cause, by simple majority vote (i.e. do not have substantive “kick out” or “liquidation” rights). The Company’s involvement with such entities is in the form of direct equity interests in, and fee arrangements with, the Partnerships in which it also serves as the general partner or managing member. In the Company’s role as general partner or managing member, it generally considers itself the sponsor of the applicable Partnership and makes all investment and operating decisions. As of December 31, 2020, the total commitments and remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIEs are $21,618,870 and $8,407,279, respectively. These commitments are the primary source of financing for the unconsolidated VIEs.

The maximum exposure to loss represents the potential loss of assets recognized by the Company relating to these unconsolidated entities. The Company believes that its maximum exposure to loss is limited because it establishes separate limited partnerships or limited liability companies to serve as the general partner or managing member of the Partnerships.

The carrying amount of assets and liabilities recognized in the Condensed 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:

	December 31,		March 31,
	2020		2020
Investments	$	122,651	$	118,696
Fees receivable	7,305		8,703
Due from related parties	1,028		1,194
Total VIE Assets	130,984		128,593
Deferred incentive fee revenue	3,704		3,704
Non-controlling interests	(2,086)		(4,853)
Maximum exposure to loss	$	132,602	$	127,444

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Equity

9 Months Ended

Dec. 31, 2020

Equity [Abstract]

Equity

Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2020:

	Class A Common Stock	Class B Common Stock
March 31, 2020	29,842,784	22,049,727
Shares issued (repurchased) in connection with registered offerings	5,056,895	(4,208,516)
Forfeitures	(1,299)	—
Shares repurchased for employee tax withholdings	(511)	—
Restricted stock granted	2,503
Shares issued pursuant to Employee Share Purchase Plan	18,206	—
December 31, 2020	34,918,578	17,841,211

June 2020 Offering

In June 2020, the Company and certain selling stockholders completed a registered offering of an aggregate of 2,995,757 shares of Class A common stock at a price to the underwriters of $70.09 per share (the “June 2020 Offering”). The shares sold consisted of 71,242 shares held by the selling stockholders and 2,924,515 shares newly issued by the Company. The Company received approximately $204,979 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 2,271,636 Class B units and 652,879 Class C units. In connection with the exchange of the Class B units, the Company also repurchased for par value and canceled a corresponding number of shares of Class B common stock. The Company did not receive any proceeds from the sale of shares by the selling stockholders.

September 2020 Offering

In September 2020, the Company and a certain selling stockholder completed a registered offering of an aggregate of 2,207,380 shares of Class A common stock at a price to the underwriter of $70.18 per share (the “September 2020 Offering”). The shares sold consisted of 75,000 shares held by the selling stockholder and 2,132,380 shares newly issued by the Company. The Company received approximately $149,650 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 1,936,880 Class B units and 195,500 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.

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Equity-Based Compensation

9 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Equity-Based Compensation

Equity-Based Compensation

A summary of restricted stock activity for the nine months ended December 31, 2020 is presented below:

	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2020	441,515	$	36.87
Granted	2,503	$	73.56
Vested	(9,630)	$	32.92
Forfeited	(1,299)	$	14.33
December 31, 2020	433,089	$	37.24

As of December 31, 2020, total unrecognized compensation expense related to restricted stock was $10,888.

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Compensation and Benefits

9 Months Ended

Dec. 31, 2020

Compensation Related Costs [Abstract]

Compensation and Benefits

Compensation and Benefits

The Company has recorded the following amounts related to compensation and benefits:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Base compensation and benefits	$	24,448	$	19,966	$	81,317	$	62,012
Incentive fee compensation	2,329		2,046		7,287		4,314
Equity-based compensation	1,759		1,761		5,310		5,244
Total compensation and benefits	$	28,536	$	23,773	$	93,914	$	71,570

During the quarter ended December 31, 2020, the Company changed its estimate of certain discretionary compensation amounts that are based upon overall Company performance and paid annually. The overall Company performance in the current fiscal year caused the previously estimated amount to be in excess of the targeted payout amount as of December 31, 2020. The result of this change in estimate was to reduce compensation and benefits expense by $6,267 for the three months ended December 31, 2020, of which $4,009 was related to amounts recorded in prior quarters.

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Income Taxes

9 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesThe Company’s effective tax rate used for interim periods is based on an estimated annual effective tax rate including the tax effect of items required to be recorded discretely in the interim period in which those items occur. The effective tax rate is dependent on many factors, including the estimated amount of income subject to income tax; therefore, the effective tax rate can vary from period to period. The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation

allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized.

The Company’s effective tax rate was 10.5% and 13.8% for the three months ended December 31, 2020 and 2019, respectively, and 16.5% and 11.6% for the nine months ended December 31, 2020 and 2019, respectively. The effective tax rates were different from the statutory rates due to the portion of income allocated to the non-controlling entities, valuation allowance recorded against deferred tax assets and discrete tax adjustments recorded in the periods.

In connection with the June 2020 Offering and unit exchanges, the Company recorded a deferred tax asset in the amount of $56,314, which is net of a valuation allowance of $3,521 related to the portion of tax benefits that it is more likely than not will not be realized. Additionally, in connection with the June 2020 Offering and unit exchange and recording of the deferred tax asset, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $44,450.

In connection with the September 2020 Offering and unit exchanges, the Company recorded a deferred tax asset in the amount of $41,539, which is net of a valuation allowance of $2,712 related to the portion of tax benefits that it is more likely than not will not be realized. Additionally, in connection with the September 2020 Offering and unit exchange and recording of the deferred tax asset, the Company recorded a payable to related parties pursuant to the tax receivable agreement of $32,787.

As of December 31, 2020, the Company had no unrecognized tax positions and believes there will be no changes to uncertain tax positions within the next 12 months.

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Earnings per Share

9 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share 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 securities. As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included. Shares of the Company’s Class B common stock are, however, considered potentially dilutive to the Class A common stock because the Class B units to which the Class B common stock corresponds are exchangeable for shares of Class A common stock on a one-for-one basis, at which time the share of Class B common stock is surrendered in exchange for a payment of its par value.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

	Three Months Ended December 31, 2020					Three Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	33,203	34,478,437	$	0.96	$	13,497	29,185,039	$	0.46
Adjustment to net income:
Assumed vesting of employee awards	94					88
Effect of dilutive securities:
Assumed vesting of employee awards			272,955					423,167
Diluted EPS of Class A common stock	$	33,297	34,751,392	$	0.96	$	13,585	29,608,206	$	0.46

	Nine Months Ended December 31, 2020					Nine Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	58,263	32,567,754	$	1.79	$	40,177	27,710,607	$	1.45
Adjustment to net income:
Assumed vesting of employee awards	156					267
Effect of dilutive securities:
Assumed vesting of employee awards			240,194					386,988
Diluted EPS of Class A common stock	$	58,419	32,807,948	$	1.78	$	40,444	28,097,595	$	1.44

The calculations of diluted earnings per share exclude 18,912,099 outstanding Class B and Class C units of HLA for the three and nine months ended December 31, 2020 and 23,968,994 outstanding Class B and Class C units of HLA for the three and nine months ended December 31, 2019, which are exchangeable into Class A common stock under the “if-converted” method, because the inclusion of such shares would be antidilutive.

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Related-Party Transactions

9 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

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 $52,080 and $140,883 for the three and nine months ended December 31, 2020, respectively, and $39,141 and $117,941 for the three and nine months ended December 31, 2019, respectively. The Company earned incentive fees from Partnerships of $8,153 and $28,332 for the three and nine months ended December 31, 2020, respectively, and $5,731 and $14,850 for the three and nine months ended December 31, 2019, respectively.

The Company entered into a service agreement on June 1, 2017 with its joint venture pursuant to which it had expenses of $1,047 and $3,001 for the three and nine months ended December 31, 2020, respectively, and $1,261 and $4,006 for the three and nine months ended December 31, 2019, respectively, that are included in general, administrative and other expenses in the Condensed Consolidated Statements of Income. The Company also has a payable to the joint venture of $354 and $428 as of December 31, 2020 and March 31, 2020, respectively, which is included in other liabilities in the Condensed Consolidated Balance Sheets.

During the quarter ended December 31, 2020, the Company paid the remaining $1,000 related to its purchase of the Cobalt LP software from January 2020.

Fees receivable from the Partnerships were $13,297 and $16,970 as of December 31, 2020 and March 31, 2020, respectively, and are included in fees receivable in the Condensed Consolidated Balance Sheets.

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Supplemental Cash Flow Information

9 Months Ended

Dec. 31, 2020

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Nine Months Ended December 31,
	2020		2019
Shares issued for contingent compensation payment	$	—	$	425
Establishment of lease liability in exchange for right of use asset	$	61,597	$	12,675
Non-cash financing activities:
Dividends declared but not paid	$	10,775	$	8,026
Member distributions declared but not paid	$	7,906	$	10,505
Establishment of net deferred tax assets related to offerings	$	91,580	$	37,394

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 condensed consolidated financial statements.

Incentive Fees

The Partnerships have allocated carried interest still subject to contingencies and that did not meet the Company’s criteria for recognition in the amounts of $497,383 and $441,150, net of amounts attributable to non-controlling interests, at December 31, 2020 and March 31, 2020, respectively, and $3,704 at both December 31, 2020 and March 31, 2020 that has been received and deferred by the Company.

If the Company ultimately receives the unrecognized carried interest, a total of $124,346 and $110,288 as of December 31, 2020 and March 31, 2020, 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 Condensed Consolidated Balance Sheets or Condensed Consolidated Statements of Income as the payment is not yet probable.

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 $154,964 and $143,489 as of December 31, 2020 and March 31, 2020, respectively.

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 17 years. 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. Short-term leases (leases with a term of less than 12 months) have not been recorded on the balance sheet. Short-term lease costs were not material for the three and nine months ended December 31, 2020 and 2019.

The Company entered into a 17-year lease agreement for its new headquarters in suburban Philadelphia, which is currently being constructed. The Company was granted access to the space in October 2020 to begin building various leasehold improvements and expects to move into the property in the first quarter of fiscal 2022.

The following table shows lease costs and other supplemental information related to the Company’s operating leases:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020			2019
Operating lease costs	$	2,471	$	1,239	$	4,908		$	3,649
Variable lease costs	$	387	$	134	$	688		$	395
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,338	$	1,323	$	3,889		$	3,898
Weighted average remaining lease term (in years)					15.4			2.5
Weighted average discount rate					3.2		%	5.5		%

As of December 31, 2020, the maturities of operating lease liabilities were as follows:

Remainder of FY2021	$	1,321
FY2022	6,236
FY2023	6,856
FY2024	6,233
FY2025	5,724
Thereafter	76,886
Total lease payments	103,256
Less: imputed interest	(29,289)
Total operating lease liabilities	$	73,967

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Subsequent Events

9 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On February 2, 2021, the Company declared a quarterly dividend of $0.3125 per share of Class A common stock to record holders at the close of business on March 15, 2021. The payment date will be April 6, 2021.

On January 15, 2021, Hamilton Lane Alliance Holdings I, Inc. (“HLAH”), a special purpose acquisition company, closed its initial public offering of 27.6 million units for $276,000. HLAH is sponsored by a wholly-owned subsidiary of the Company that will assist in identifying and effectuating a merger between HLAH and a target company. Until the merger occurs, HLAH is expected be consolidated by the Company. As part of the IPO, the Company was issued 4.9 million shares for sponsoring HLAH and purchased 5 million warrants for $7,520. The shares and warrants vest or become exercisable upon a successful merger and at certain share price targets.

On January 28, 2021, the Company entered into an asset purchase agreement with 361 Capital LLC for an estimated $13,000. The transaction is expected to close during the Company’s fiscal fourth quarter and is subject to customary closing conditions.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Management believes it has made all necessary adjustments (which consisted of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. Results of operations for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in HLI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Accounting for Differing Fiscal Periods

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

Fair Value of Financial Instruments

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 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

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”. ASU 2018-13 changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while others were added. Early adoption of any removed or modified disclosure requirements is permitted upon issuance of ASU 2018-13 and adoption of the additional disclosure requirements may be delayed until the effective date. The Company elected to early adopt the removed or modified disclosure requirements of the standard on October 1, 2018. The Company adopted the remaining requirements on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Accounting for Financial Instruments - Credit Losses (Topic 326)”. ASU 2016-13 replaces the incurred loss methodology in current GAAP with a methodology that reflects expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted ASU 2016-13 using the modified retrospective transition method on April 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

Reclassifications

Reclassifications

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

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Revenue (Tables)

9 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

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

	Three Months Ended December 31,				Nine Months Ended December 31,
Management and advisory fees	2020		2019		2020		2019
Specialized funds	$	38,155	$	27,789	$	102,103	$	81,733
Customized separate accounts	23,285		22,618		70,600		67,047
Advisory	6,618		5,878		19,928		18,091
Reporting and other	2,673		2,237		8,093		6,492
Distribution management	2,827		1,108		5,291		3,169
Fund reimbursement revenue	1,721		207		2,898		3,052
Total management and advisory fees	$	75,279	$	59,837	$	208,913	$	179,584

	Three Months Ended December 31,				Nine Months Ended December 31,
Incentive fees	2020		2019		2020		2019
Specialized funds	$	6,802	$	3,638	$	26,740	$	11,257
Customized separate accounts	2,502		4,663		3,105		6,275
Total incentive fees	$	9,304	$	8,301	$	29,845	$	17,532

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Investments (Tables)

9 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Investments

Investments consist of the following:

	December 31,		March 31,
	2020		2020
Equity method investments in Partnerships	$	217,823	$	166,106
Equity method investments in Partnerships held by consolidated VIEs	4,319		9,988
Other equity method investments	1,194		1,168
Other investments	18,162		13,394
Investments valued under the measurement alternative	23,115		17,091
Total Investments	$	264,613	$	207,747

Reconciliation of Other Investments

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

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2020	$	6,208	$	1,889	$	9,606	$	17,703
Contributions	218		—		—		218
Distributions	(896)		—		(139)		(1,035)
Net gain	252		6		1,018		1,276
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2020	$	5,786	$	1,756	$	5,852	$	13,394
Contributions	246		—		—		246
Distributions	(1,264)		(74)		(139)		(1,477)
Net gain	1,014		213		4,772		5,999
Transfer out of Level 3	—		—		(4,271)		(4,271)
Balance as of December 31, 2020	$	5,782	$	1,895	$	6,214	$	13,891

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of September 30, 2019	$	5,836	$	3,093	$	6,984	$	15,913
Contributions	392		—		—		392
Distributions	(748)		—		—		(748)
Net gain	457		36		345		838
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2019	$	3,734	$	3,940	$	4,814	$	12,488
Contributions	2,484		—		1,875		4,359
Distributions	(748)		(973)		—		(1,721)
Net gain	467		162		640		1,269
Balance as of December 31, 2019	$	5,937	$	3,129	$	7,329	$	16,395

Schedule of Assumptions Used

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, as of December 31, 2020:

				Significant
	Fair		Valuation	Unobservable				Weighted
	Value		Methodology	Inputs	Range			Average
Private equity funds	$	5,782	Adjusted net asset value	Selected market return	5.6%	-	7.9%	6.2%
Direct credit co-investments	$	1,895	Discounted cash flow	Market yield	9.5%	-	10.4%	9.9%
Direct equity co-investments	$	6,214	Market approach	EBITDA multiple	7.75x	-	13.75x	9.6x
			Market approach	Equity multiple	1.4x			1.4x

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Variable Interest Entities (Tables)

9 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

The carrying amount of assets and liabilities recognized in the Condensed 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:

	December 31,		March 31,
	2020		2020
Investments	$	122,651	$	118,696
Fees receivable	7,305		8,703
Due from related parties	1,028		1,194
Total VIE Assets	130,984		128,593
Deferred incentive fee revenue	3,704		3,704
Non-controlling interests	(2,086)		(4,853)
Maximum exposure to loss	$	132,602	$	127,444

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Equity (Tables)

9 Months Ended

Dec. 31, 2020

Equity [Abstract]

Rollforward of Common Stock

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2020:

	Class A Common Stock	Class B Common Stock
March 31, 2020	29,842,784	22,049,727
Shares issued (repurchased) in connection with registered offerings	5,056,895	(4,208,516)
Forfeitures	(1,299)	—
Shares repurchased for employee tax withholdings	(511)	—
Restricted stock granted	2,503
Shares issued pursuant to Employee Share Purchase Plan	18,206	—
December 31, 2020	34,918,578	17,841,211

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Equity-Based Compensation (Tables)

9 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Summary of Restricted Stock Activity

A summary of restricted stock activity for the nine months ended December 31, 2020 is presented below:

	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2020	441,515	$	36.87
Granted	2,503	$	73.56
Vested	(9,630)	$	32.92
Forfeited	(1,299)	$	14.33
December 31, 2020	433,089	$	37.24

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Compensation and Benefits (Tables)

9 Months Ended

Dec. 31, 2020

Compensation Related Costs [Abstract]

Schedule of Compensation and Benefits

The Company has recorded the following amounts related to compensation and benefits:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Base compensation and benefits	$	24,448	$	19,966	$	81,317	$	62,012
Incentive fee compensation	2,329		2,046		7,287		4,314
Equity-based compensation	1,759		1,761		5,310		5,244
Total compensation and benefits	$	28,536	$	23,773	$	93,914	$	71,570

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Earnings per Share (Tables)

9 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

	Three Months Ended December 31, 2020					Three Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	33,203	34,478,437	$	0.96	$	13,497	29,185,039	$	0.46
Adjustment to net income:
Assumed vesting of employee awards	94					88
Effect of dilutive securities:
Assumed vesting of employee awards			272,955					423,167
Diluted EPS of Class A common stock	$	33,297	34,751,392	$	0.96	$	13,585	29,608,206	$	0.46

	Nine Months Ended December 31, 2020					Nine Months Ended December 31, 2019
	Net income attributable to HLI		Weighted-Average Shares	Per share amount		Net income attributable to HLI		Weighted-Average Shares	Per share amount
Basic EPS of Class A common stock	$	58,263	32,567,754	$	1.79	$	40,177	27,710,607	$	1.45
Adjustment to net income:
Assumed vesting of employee awards	156					267
Effect of dilutive securities:
Assumed vesting of employee awards			240,194					386,988
Diluted EPS of Class A common stock	$	58,419	32,807,948	$	1.78	$	40,444	28,097,595	$	1.44

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Dec. 31, 2020

Supplemental Cash Flow Information [Abstract]

Schedule of Supplemental Cash Flow Disclosures

	Nine Months Ended December 31,
	2020		2019
Shares issued for contingent compensation payment	$	—	$	425
Establishment of lease liability in exchange for right of use asset	$	61,597	$	12,675
Non-cash financing activities:
Dividends declared but not paid	$	10,775	$	8,026
Member distributions declared but not paid	$	7,906	$	10,505
Establishment of net deferred tax assets related to offerings	$	91,580	$	37,394

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Commitments and Contingencies (Tables)

9 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Lease Cost, Cash Flows, and Other Supplemental Cash Flow Information Regarding Leases

The following table shows lease costs and other supplemental information related to the Company’s operating leases:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020			2019
Operating lease costs	$	2,471	$	1,239	$	4,908		$	3,649
Variable lease costs	$	387	$	134	$	688		$	395
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,338	$	1,323	$	3,889		$	3,898
Weighted average remaining lease term (in years)					15.4			2.5
Weighted average discount rate					3.2		%	5.5		%

Maturity of Operating Lease Liabilities

As of December 31, 2020, the maturities of operating lease liabilities were as follows:

Remainder of FY2021	$	1,321
FY2022	6,236
FY2023	6,856
FY2024	6,233
FY2025	5,724
Thereafter	76,886
Total lease payments	103,256
Less: imputed interest	(29,289)
Total operating lease liabilities	$	73,967

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Organization - Narrative (Details)	Dec. 31, 2020	Mar. 31, 2020
HLA
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Percent of economic interest held	64.60%	55.10%

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Debt Instrument [Line Items]
Debt	$ 73,630	$ 74,524
Term Loan
Debt Instrument [Line Items]
Debt	$ 73,630

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 84,583	$ 68,138	$ 238,758	$ 197,116
Management and advisory fees
Disaggregation of Revenue [Line Items]
Revenues	75,279	59,837	208,913	179,584
Specialized funds
Disaggregation of Revenue [Line Items]
Revenues	38,155	27,789	102,103	81,733
Customized separate accounts
Disaggregation of Revenue [Line Items]
Revenues	23,285	22,618	70,600	67,047
Advisory
Disaggregation of Revenue [Line Items]
Revenues	6,618	5,878	19,928	18,091
Reporting and other
Disaggregation of Revenue [Line Items]
Revenues	2,673	2,237	8,093	6,492
Distribution management
Disaggregation of Revenue [Line Items]
Revenues	2,827	1,108	5,291	3,169
Fund reimbursement revenue
Disaggregation of Revenue [Line Items]
Revenues	1,721	207	2,898	3,052
Incentive fees
Disaggregation of Revenue [Line Items]
Revenues	9,304	8,301	29,845	17,532
Specialized funds
Disaggregation of Revenue [Line Items]
Revenues	6,802	3,638	26,740	11,257
Customized separate accounts
Disaggregation of Revenue [Line Items]
Revenues	$ 2,502	$ 4,663	$ 3,105	$ 6,275

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Revenue - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Revenue from Contract with Customer [Abstract]
Contract asset related to the cost to obtain contracts	$ 1,006		$ 1,006		$ 994
Contract asset amortization expense	$ 135	$ 120	$ 389	$ 363

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Investments - Schedule of Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Schedule of Equity Method Investments [Line Items]
Other investments	$ 18,162	$ 13,394
Investments valued under the measurement alternative	23,115	17,091
Total Investments	264,613	207,747
Equity method investments in Partnerships
Schedule of Equity Method Investments [Line Items]
Equity method investments	217,823	166,106
Equity method investments in Partnerships held by consolidated VIEs
Schedule of Equity Method Investments [Line Items]
Equity method investments	4,319	9,988
Other equity method investments
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 1,194	$ 1,168

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Investments - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	May 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Schedule of Equity Method Investments [Line Items]
Equity in income of investees		$ 11,923	$ 4,454	$ 8,699	$ 14,331
Other investments		18,162		18,162		$ 13,394
Cash received on transfer of other investments	$ 15,750			0	15,750
Secured financing		18,162		18,162
Amortized cost		11,845		11,845
Net gain		1,276	838	5,999	1,269
Unrealized loss on secured borrowings, fair value adjustment		$ 1,276	$ 838	$ 5,999	$ 1,973
Equity method investments in Partnerships
Schedule of Equity Method Investments [Line Items]
Percent interest in partnerships		1.00%		1.00%
Direct Equity Co-Investments, Special Purpose Vehicle
Schedule of Equity Method Investments [Line Items]
Other investments		$ 4,271		$ 4,271
Investment, Measurement Alternative
Schedule of Equity Method Investments [Line Items]
Net gain		$ 6,229

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Investments - Reconciliation of Other Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Reconciliation Of Other Investments [Roll Forward]
Other investments, beginning balance			$ 13,394
Net gain	$ 1,276	$ 838	5,999	$ 1,269
Other investments, ending balance	18,162		18,162
Fair Value, Inputs, Level 3
Reconciliation Of Other Investments [Roll Forward]
Other investments, beginning balance	17,703	15,913	13,394	12,488
Contributions	218	392	246	4,359
Distributions	(1,035)	(748)	(1,477)	(1,721)
Net gain	1,276	838	5,999	1,269
Transfer out of Level 3	(4,271)		(4,271)
Other investments, ending balance	13,891	16,395	13,891	16,395
Private equity funds
Reconciliation Of Other Investments [Roll Forward]
Other investments, ending balance	5,782		5,782
Private equity funds | Fair Value, Inputs, Level 3
Reconciliation Of Other Investments [Roll Forward]
Other investments, beginning balance	6,208	5,836	5,786	3,734
Contributions	218	392	246	2,484
Distributions	(896)	(748)	(1,264)	(748)
Net gain	252	457	1,014	467
Transfer out of Level 3	0		0
Other investments, ending balance	5,782	5,937	5,782	5,937
Direct credit co-investments
Reconciliation Of Other Investments [Roll Forward]
Other investments, ending balance	1,895		1,895
Direct credit co-investments | Fair Value, Inputs, Level 3
Reconciliation Of Other Investments [Roll Forward]
Other investments, beginning balance	1,889	3,093	1,756	3,940
Contributions	0	0	0	0
Distributions	0	0	(74)	(973)
Net gain	6	36	213	162
Transfer out of Level 3	0		0
Other investments, ending balance	1,895	3,129	1,895	3,129
Direct equity co-investments
Reconciliation Of Other Investments [Roll Forward]
Other investments, ending balance	6,214		6,214
Direct equity co-investments | Fair Value, Inputs, Level 3
Reconciliation Of Other Investments [Roll Forward]
Other investments, beginning balance	9,606	6,984	5,852	4,814
Contributions	0	0	0	1,875
Distributions	(139)	0	(139)	0
Net gain	1,018	345	4,772	640
Transfer out of Level 3	(4,271)		(4,271)
Other investments, ending balance	$ 6,214	$ 7,329	$ 6,214	$ 7,329

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Investments - Valuation Methodologies (Details) $ in Thousands	Dec. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)
Schedule of Equity Method Investments [Line Items]
Other investments	$ 18,162	$ 13,394
Private equity funds
Schedule of Equity Method Investments [Line Items]
Other investments	5,782
Direct credit co-investments
Schedule of Equity Method Investments [Line Items]
Other investments	1,895
Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Other investments	$ 6,214
Selected market return | Adjusted net asset value | Minimum | Private equity funds
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.056
Selected market return | Adjusted net asset value | Maximum | Private equity funds
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.079
Selected market return | Adjusted net asset value | Weighted Average | Private equity funds
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.062
Market yield | Discounted cash flow | Minimum | Direct credit co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.095
Market yield | Discounted cash flow | Maximum | Direct credit co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.104
Market yield | Discounted cash flow | Weighted Average | Direct credit co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	0.099
EBITDA multiple | Market approach | Minimum | Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	7.75
EBITDA multiple | Market approach | Maximum | Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	13.75
EBITDA multiple | Market approach | Weighted Average | Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	9.6
Equity multiple | Market approach | Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	1.4
Equity multiple | Market approach | Weighted Average | Direct equity co-investments
Schedule of Equity Method Investments [Line Items]
Range of and weighted-average inputs	1.4

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Variable Interest Entities - Consolidated VIEs (Details) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
Variable Interest Entity [Line Items]
Total VIE Assets	$ 715,829,000	$ 473,529,000
Total liabilities of consolidated VIEs	415,977,000	236,128,000
Deferred incentive fee revenue	3,704,000	3,704,000
Primary Beneficiary
Variable Interest Entity [Line Items]
Total VIE Assets	4,319,000	9,988,000
Total liabilities of consolidated VIEs	0	0
Deferred incentive fee revenue	$ 3,704,000	$ 3,704,000

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Variable Interest Entities - Unconsolidated VIEs (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Variable Interest Entity [Line Items]
Total commitments from the limited partners and general partners to the unconsolidated VIE	$ 21,618,870
Remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIE	8,407,279
Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]
Investments	264,613	$ 207,747
Fees receivable	26,624	30,384
Due from related parties	3,987	2,605
Total assets	715,829	473,529
Deferred incentive fee revenue	3,704	3,704
Not Primary Beneficiary
Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]
Investments	122,651	118,696
Fees receivable	7,305	8,703
Due from related parties	1,028	1,194
Total assets	130,984	128,593
Deferred incentive fee revenue	3,704	3,704
Non-controlling interests	(2,086)	(4,853)
Maximum exposure to loss	$ 132,602	$ 127,444

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Equity - Shares of Common Stock Outstanding (Details)	9 Months Ended
	Dec. 31, 2020 shares
Common Class A
Common Stock, Shares Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	29,842,784
Shares issued in connection with registered offerings (in shares)	5,056,895
Forfeitures (in shares)	(1,299)
Shares repurchased for employee tax withholdings (in shares)	(511)
Restricted stock granted (in shares)	2,503
Shares issued pursuant to Employee Share Purchase Plan (in shares)	18,206
Outstanding, end of period (in shares)	34,918,578
Common Class B
Common Stock, Shares Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	22,049,727
Stock (repurchased) in connection with registered offerings (in shares)	(4,208,516)
Forfeitures (in shares)	0
Shares repurchased for employee tax withholdings (in shares)	0
Restricted stock granted (in shares)
Shares issued pursuant to Employee Share Purchase Plan (in shares)	0
Outstanding, end of period (in shares)	17,841,211

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Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Class of Stock [Line Items]
Proceeds from offering			$ 354,629	$ 147,122
Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)			5,056,895
June 2020 Offering | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)		2,995,757
Shares sold in connection with secondary offering (in dollars per share)		$ 70.09
Proceeds from offering		$ 204,979
June 2020 Offering Current Stockholder Issuance | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)		71,242
June 2020 Offering New Issuance | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)		2,924,515
September 2020 Offering | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)	2,207,380
Shares sold in connection with secondary offering (in dollars per share)	$ 70.18
Proceeds from offering	$ 149,650
September 2020 Offering Current Stockholder Issuance | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)	75,000
September 2020 Offering New Issuance | Common Class A
Class of Stock [Line Items]
Stock sold in connection with secondary public offering (in shares)	2,132,380
Members’ Equity (Deficit) | Common Class B
Class of Stock [Line Items]
Purchase of interest by parent (in shares)	1,936,880	2,271,636
Members’ Equity (Deficit) | Common Class C
Class of Stock [Line Items]
Purchase of interest by parent (in shares)	195,500	652,879

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Equity-Based Compensation - Summary of Restricted Stock (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares
Total Unvested
Unvested at beginning of period (in shares) | shares	441,515
Granted (in shares) | shares	2,503
Vested (in shares) | shares	(9,630)
Forfeited (in shares) | shares	(1,299)
Unvested at end of period (in shares) | shares	433,089
Weighted- Average Grant-Date Fair Value of Award
Unvested at beginning of period (in dollars per share) | $ / shares	$ 36.87
Granted (in dollars per share) | $ / shares	73.56
Vested (in dollars per share) | $ / shares	32.92
Forfeited (in dollars per share) | $ / shares	14.33
Unvested at end of period (in dollars per share) | $ / shares	$ 37.24
Total unrecognized compensation expense relating to restricted stock | $	$ 10,888

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Compensation and Benefits - Schedule of Compensation and Benefits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Compensation Related Costs [Abstract]
Base compensation and benefits	$ 24,448	$ 19,966	$ 81,317	$ 62,012
Incentive fee compensation	2,329	2,046	7,287	4,314
Equity-based compensation	1,759	1,761	5,310	5,244
Total compensation and benefits	$ 28,536	$ 23,773	$ 93,914	$ 71,570

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Compensation and Benefits - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Change in Accounting Estimate [Line Items]
Decrease in compensation and benefits expense	$ (28,536)	$ (23,773)		$ (93,914)	$ (71,570)
Change In Estimate From Change In Process
Change in Accounting Estimate [Line Items]
Decrease in compensation and benefits expense	$ 6,267		$ 4,009

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Income Taxes - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Related Party Transaction [Line Items]
Effective tax rate	10.50%	13.80%	16.50%	11.60%
Payable to related parties pursuant to tax receivable agreement	$ 176,046,000		$ 176,046,000		$ 98,956,000
Unrecognized tax positions	0		0
June 2020 Offering
Related Party Transaction [Line Items]
Deferred tax asset	56,314,000		56,314,000
Valuation allowance	3,521,000		3,521,000
June 2020 Offering | Tax Receivable Agreement
Related Party Transaction [Line Items]
Payable to related parties pursuant to tax receivable agreement	44,450,000		44,450,000
September 2020 Offering
Related Party Transaction [Line Items]
Deferred tax asset	41,539,000		41,539,000
Valuation allowance	2,712,000		2,712,000
September 2020 Offering | Tax Receivable Agreement
Related Party Transaction [Line Items]
Payable to related parties pursuant to tax receivable agreement	$ 32,787,000		$ 32,787,000

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Earnings per Share - Schedule of Earnings Per Share - Basic and Diluted (Details) - Common Class A - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Net income attributable to HLI
Basic EPS of Class A common stock	$ 33,203	$ 13,497	$ 58,263	$ 40,177
Assumed vesting of employee awards	94	88	156	267
Diluted EPS of Class A common stock	$ 33,297	$ 13,585	$ 58,419	$ 40,444
Weighted-Average Shares
Weighted-average basic EPS of Class A common stock (in shares)	34,478,437	29,185,039,000	32,567,754	27,710,607,000
Weighted-average assumed vesting of employee awards (in shares)	272,955	423,167,000	240,194	386,988,000
Weighted-average diluted EPS of Class A common stock (in shares)	34,751,392	29,608,206,000	32,807,948	28,097,595,000
Per share amount
Basic EPS of Class A common stock (in dollars per share)	$ 0.96	$ 0.46	$ 1.79	$ 1.45
Diluted EPS of Class A common stock (in dollars per share)	$ 0.96	$ 0.46	$ 1.78	$ 1.44

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Earnings per Share - Narrative (Details) - shares	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Class B and Class C Units of Hamilton Lane Advisors, L.L.C.
Class of Stock [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	18,912,099	23,968,994	18,912,099	23,968,994

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Related-Party Transactions - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Related Party Transaction [Line Items]
Revenues	$ 84,583	$ 68,138	$ 238,758	$ 197,116
Payable to related parties pursuant to tax receivable agreement	176,046		176,046		$ 98,956
Fees receivable	26,624		26,624		30,384
Purchase of intangible assets	1,000		1,000	0
General Partnerships
Related Party Transaction [Line Items]
Fees receivable	13,297		13,297		16,970
Joint Venture
Related Party Transaction [Line Items]
Payable to related parties pursuant to tax receivable agreement	354		354		$ 428
Service Agreement Fees Paid | Joint Venture
Related Party Transaction [Line Items]
Fees paid to joint venture	1,047	1,261	3,001	4,006
Management and advisory fees
Related Party Transaction [Line Items]
Revenues	75,279	59,837	208,913	179,584
Management and advisory fees | General Partnerships
Related Party Transaction [Line Items]
Revenues	52,080	39,141	140,883	117,941
Incentive fees
Related Party Transaction [Line Items]
Revenues	9,304	8,301	29,845	17,532
Incentive fees | General Partnerships
Related Party Transaction [Line Items]
Revenues	$ 8,153	$ 5,731	$ 28,332	$ 14,850

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Supplemental Cash Flow Information [Abstract]
Shares issued for contingent compensation payment	$ 0	$ 425
Establishment of lease liability in exchange for right of use asset	61,597	12,675
Non-cash financing activities:
Dividends declared but not paid	10,775	8,026	$ 8,027
Member distributions declared but not paid	7,906	10,505	$ 5,829
Establishment of net deferred tax assets related to offerings	$ 91,580	$ 37,394

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Commitments and Contingencies - Incentive Fees (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Carried Interest still subject to contingencies	$ 497,383	$ 441,150
Deferred incentive fee revenue	3,704	3,704
Incentive fees, unrecorded estimate	$ 124,346	$ 110,288

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Commitments and Contingencies - Commitments (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Other commitment	$ 154,964	$ 143,489

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Commitments and Contingencies - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Lessee, Lease, Description [Line Items]
Lease not yet commenced, term	17 years		17 years
Operating lease costs	$ 2,471	$ 1,239	$ 4,908	$ 3,649
Variable lease costs	387	134	688	395
Cash paid for amounts included in the measurement of operating lease liabilities	$ 1,338	$ 1,323	$ 3,889	$ 3,898
Weighted average remaining lease term (in years)	15 years 4 months 24 days	2 years 6 months	15 years 4 months 24 days	2 years 6 months
Weighted average discount rate	3.20%	5.50%	3.20%	5.50%
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term			1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term			17 years

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Commitments and Contingencies - Operating Lease Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Remainder of FY2021	$ 1,321
FY2022	6,236
FY2023	6,856
FY2024	6,233
FY2025	5,724
Thereafter	76,886
Total lease payments	103,256
Less: imputed interest	(29,289)
Total operating lease liabilities	$ 73,967	$ 10,184

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Subsequent Events - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions				3 Months Ended		9 Months Ended
	Feb. 02, 2021	Jan. 28, 2021	Jan. 15, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Subsequent Event
Subsequent Event [Line Items]
Investment balance (in shares)			4.9
Warrant investment (in shares)			5.0
Warrants investment			$ 7,520
Subsequent Event | Scenario, Forecast
Subsequent Event [Line Items]
Payment for asset purchase agreement		$ 13,000
Subsequent Event | HLAH
Subsequent Event [Line Items]
Number of shares issued (in shares)			27.6
Proceeds from sale of stock			$ 276,000
Common Class A
Subsequent Event [Line Items]
Dividends declared per share of Class A common stock (in dollars per share)				$ 0.313	$ 0.275	$ 0.938	$ 0.825
Common Class A | Subsequent Event
Subsequent Event [Line Items]
Dividends declared per share of Class A common stock (in dollars per share)	$ 0.3125