Welcome to the Hamilton Lane First Quarter 2018 Earnings Call. On the call today, from the Hamilton Lane team, are Mario Giannini, CEO; Erik Hirsch, Vice Chairman; Randy Stilman, CFO; and Demetrius Sidberry, Head of Investor Relations. Before the Hamilton Lane team discusses the quarter's result, I want to remind you that they will be making forward-looking statements based on their current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For a discussion of these risks, please review the risk factors included in Hamilton Lane's fiscal 2017 10-K and subsequent reports the company files with the SEC. Management will also be referring to non-GAAP measures that they view as important in assessing the performance of the business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings release which is available on the IR section of the Hamilton Lane website. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane's funds. The company's detailed financial results will be made available when the 10-Q is filed over the next week. Finally, for the call this morning, the Hamilton Lane team will be referencing pages in their earnings release presentation available on the Hamilton Lane IR websites and shown on the webcast version of this call. With that, I will turn the call over to Demetrius Sidberry, Head of Investor Relations.

Thanks, Kelly and thanks, everyone, for joining us. Earlier this morning, we released our first quarter results for fiscal 2018. As you can see on Page 3 of the slide deck, the results continue to be strong. Total revenue grew by 33% versus the same quarter from the prior year and we experienced growth across all 3 key business areas, separate accounts, products and advisory services. We had new adds in each of these areas and received re-ups from existing separate account clients. Revenue from management and advisory fees grew by approximately 38% year-over-year and converted nicely into fee related earnings which were up 50% over the prior-year period. Lastly and importantly, we had successful closings of our secondary and strategic opportunities credit funds. Both funds exceeding their target sizes and both grew significantly versus their prior iteration. A quick look at the numbers shows the following highlights for the quarter. GAAP net income was approximately $5.5 million which translated into GAAP EPS of $0.30. Non-GAAP EPS was $0.33 and this is based on approximately $18 million of non-GAAP net income or nearly 53 million adjusted shares. Finally, as announced on the previous call, we anticipate quarterly dividend that is steady and that will grow over time as our earnings grow. For this quarter, that dividend is $0.175 per share which is the same as the prior quarter. Based on our expectations for the business, we believe that $0.175 per share will be the quarterly dividend for the balance of fiscal 2018. With that, I will now turn the call over to our CEO, Mario Giannini.

Thanks, Demetrius. And moving to Slide 4 of the presentation. We spent extensive time on our previous call reviewing the core of Hamilton Lane. Who we are and what we do for our clients. While we won't belabor these same points here, we are cognizant of the uniqueness of our business model and so there are a few aspects of our business that are worth reemphasizing. First, our firm is solely dedicated to the private markets, covering this asset class from now 14 offices around the globe utilizing our team of approximately 300 employees. Like our employees, our client base is also global. We serve a diverse and sophisticated array of investors, designing and constructing customized portfolios across increasingly complex private markets. Given the longer term nature of the asset class, we seek to develop deep relationships with our clients and then expand those relationships over time. Lastly and I suspect something we will continue to discuss for some time to come, the industry tailwinds are strong and that trend is expected to continue for years. The drivers of this are primarily growth in assets globally, expanding liability gaps and investors struggling to hit or maintain their targeted rates of returns. It is also simply driven by the successful expansion of the private markets themselves. Essentially, we continue to see a bifurcation of asset allocation with more money flowing into passive low-cost public strategies and then the balance flowing to the opposite end, intensively actively managed higher fee strategies namely the private alternatives market. Our business has benefited from these trends and we expect that to continue to be the case. In addition to the macro industry tailwinds and our strong performance, one of the other core pillars of the firm's success has been our people. They really are our…

Thank you, Mario. Page 6 is the refresher of the core products and services we offer. In order to successfully meet the various needs of the clients around the globe of all shapes and sizes, we must offer them a wide array of value-added propositions. So, while the vast majority of our revenue comes from asset management solutions, the advisory and back office related services make us a one-stop service provided within the industry. As a result, they are critical components of our business model. Further, as we had mentioned before, many of our clients utilize us for multiple services, often combining AUA and AUM or simply a multitude of AUM solutions. Across our top 20 clients, 95% have a multiple product and/or service relationship with the firm and across our entire client base, that number stands at 40%. As we turn to Page 8, I remind you that Q1 of fiscal '18 was our first full quarter as a public company. There has certainly been excitement around this milestone from within the company, as well as externally from our clients and fund managers and we've been very busy. Over the next few slides, we will cover some of the recent highlights in the business. Starting here with the opportunity set on Page 9. We typically measure activity by our pipeline of new opportunities, but while we will not discuss specifics around count or particulars for competitive reasons, let me simply say that the pipeline across each aspect of the business; separate accounts, products and advisory, is as robust as we have ever seen it. It is also not isolated to a particular client type, size or geography. The industry tailwinds and our strong reputation in the market are apparent throughout each of our core products and services. On the…

Thanks, Erik. Let's switch gears to our continued global expansion highlighted here on Page 12. Over the past several months, we officially added 2 new offices is Sydney, Australia and Munich, Germany. Once our recently announced acquisition of RAPM closes, we will also have an office in Portland, Oregon. With these additions will add 15 offices across the globe in some of the most prominent markets for alternative investing. Our view is that in order to be successful in this business, you need to be where the clients and investment opportunities are. We were well positioned globally prior to these openings but each further enhances our reach as an organization. If the past is any indicator, new offices have typically resulted in new business opportunities as well as increased investment deal flow by simply being closer to the markets. Let's turn to Page 13 which focuses on the RAPM acquisition. RAPM is a Portland-based firm that focuses exclusively on real asset and real estate investing. The acquisition which is still pending final client consent is a very exciting strategic development for us as it builds upon our long history of investing in the real asset space and significantly expands our resources and footprint. The acquisition adds a great list of clients and $4 billion of capital, both AUA and AUM to our existing footprint. We've not historically grown by acquisition because we felt it was easier to develop and maintain our unique culture organically. In this case, however, we share a similar vision with RAPM on how to successfully run and grow a business. Putting clients first is at the core of why both firms have been successful throughout our histories and that resonated with both parties throughout our discussions. Before I turn the call over to our CFO, Randy Stilman, to review the financials, let me close by saying we continue to feel very good about the outlook for our business given our strong market position and the macro trends around growth and asset allocation. We continue to reinvest in our business adding people, offices and services all in an effort to deliver an outstanding experience for our clients and our shareholders. With that, I'll turn it over to Randy.

Thanks, Mario. And now for the financial highlights for the quarter, starting on Page 15. As Demetrius stated earlier, our financial performance continues to be strong throughout the business and specifically within the core areas of management and advisory services which represent the majority of our revenue and earnings. We experienced growth across each of our core business offerings during the quarter. As a result, our management and advisory fees for the quarter were up meaningfully year-over-year at 38%. The biggest driver of this growth came from our specialized products. As noted earlier, we closed on 2 of our flagship products in quarter 1. Secondary Fund 4 and the 2017 series of the strategic opportunity fund. The final close of Secondary Fund 4 during the quarter, in particular, had a meaningful impact on the specialized product revenue line due to the retroactive fee dynamic. As many of you are likely aware, investors that come into later closes of the fund raise for many of our products pay retroactive fees dating back to the fund's first close. Therefore, we typically see a spike in management fees related to that fund for the quarter in which subsequent closes occur. For this quarter, the retroactive fee impact for secondary Fund 4 was $5.8 million for additional historical perspective, retro fess related to Secondary Fund 4 in the prior quarter and Q1 of fiscal '17, with $3.4 million and $500,000, respectively. For separate accounts, we experienced high single-digit growth during the quarter due to re-ups from existing clients and the addition of several new accounts. We expect this growth trend to continue over the longer term in this part of our business. However, importantly, due to the timing of new separate account clients signings and client re-ups been beyond our control, the growth is…

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

First on RAPM, can you just talk about how it fits with the existing real estate offering and how you are thinking about extending your and RPM's capability as in terms of new products? And then there would appear to be some cross-selling opportunities, how long do you think it will take to start to approach those opportunities and where is the best potential there?

Ken, it's Mario. I'll take those parts. On the first part, they have a team of 9 or 10 people, we have a team of 5 or 6 and so as you look at that, it becomes one of the larger teams dedicated to real assets in the market. I think the teams will dovetail nicely but since we haven't completed the acquisition, the integration of it and figuring out who is doing what, hasn't started yet. In terms of the growth of that, you know our business and how we operate, we operate across advisory, separate account and product because you look at the real estate combined, real assets, it is advisory and separate accounts robust businesses on both sides of that and we would anticipate that we will look at developing products on that side of it also, consistent with everything we do across the other lines. When that happens, I'm just not sure, I think the first order of business will be making sure that all the clients, both of Hamilton Lane and RAPM, are completely satisfied with everything going on and figuring out what works for them but as you look at it, we've been pretty fast in terms of developing things that the market wants and needs. So I would anticipate that it wouldn't be that long a period of time before we start doing more advisory, more separate account and developing products for that area.

And then just in terms of separate account business, you've had some large wins in capital raise over the last couple of quarters, there've also been some large distributions or conversions. So if possible, can you tell us maybe what was going on in this particular quarter? And I know you're reluctant for competitive reasons to give too much detail but any additional color you can give in terms of pipeline or outlook for both the sales side and the distribution side would be helpful as well.

Ken, it's Erik. Let me start on kind of the new growth side. I think it has been a good quarter as I said earlier, the pipeline is strong. I think what I would put in context here is it -- that growth is coming from a few areas, one is we are definitely adding new clients on the separate account side and the pipeline of that looks as big as it has ever been for us, historically. The second piece and again a huge focus for us, are these existing client re-ups, particularly in a market environment where you are seeing liquidity and you're seeing kind of growth in overall plan values, the clients are trying to stay on target with an allocation level and that requires them to continue to move more money into the next subsequent allocation for their private markets portfolio, we have absolutely experienced that. And so I think as our -- as we look out both of [Technical Difficulty] continue. On the distribution side, there is a little bit of an anomaly this quarter in particular. There was a conversion from a separate account client who moved to become an advisory client and so that accounted for a meaningful portion of the distribution. That is not something that has happened to any great degree [Technical Difficulty] is not something that we would expect to happen to any great degree going forward [Technical Difficulty]. The revenue impact was negligible. It was simply [Technical Difficulty] duration of the relationship.

[Operator Instructions]. Your next question comes from the line of Michael Cyprys from Morgan Stanley.

Just curious as you are building out your business today, what are some of the items that you're prioritizing? And how does M&A fit into that broader thinking?

Michael, it's Mario. In terms of prioritizing around M&A, I think nothing has changed on that. M&A is not an area of focus for us. If you look at our history we haven't done much of it, it's really been more around teams and people and bringing them in. We've talked at some length about how the M&A side is difficult in any business like ours because it's such a people and culture-oriented situation and you have to get that right. So I would say that M&A for us is opportunistic and not something that we're focused on as driving growth or driving strategy.

Great. And just maybe you could touch on some of the items that you're prioritizing today, as you had mentioned you are looking to kind of build out the business from here. What are some of the items at the top of your list?

Sure. I will hit on a couple and then let Erik hit on a couple. Certainly, as we've always talked about it sounds cliché, but the #1 priority remains the existing business and the existing clients and employees. I think you have to focus on that. We have a good core, that as Erik has described, drives a significant amount of growth and so that is always the #1 priority. Clearly with RAPM, real assets becomes a priority in terms of developing and growing that business and as Erik and Randy alluded to earlier, the credit side of the business is one that we continue to focus on and is a very interesting space for us.

Michael, it's Erik. I think if you look at the platform today and sort of think about the pillars within that, we are now active and large in each of what we would think of as the key areas within the private market side, the RAPM piece bolsters that. The Private Market Connect. I think one of the things that we are very focused on is what's happening around back office and technology. I think that has been a significantly under-penetrated part of the industry in its entirety and I think you see us putting a lot of pieces on the board here to take advantage of that and to spend time focusing there. So there I think you sort of see some other priorities and then when you move in to the product side, as we mentioned, a number of products coming to market this year, we just finished successful fundraising of a couple of existing products and so we continue to see good interest, good demand and good growth coming from those pieces as well.

Great. If I can just sneak another last one in here. You mentioned that the SMA, the separate accounts you have the pipeline strong there, how should we think about the incremental margins on -- incremental assets raised in your separate account?

Michael, it's Erik. So if you look at the pipeline and if you look at what we think of is kind of the fee-earning AUM, you can see that we're just not seeing a lot of change there. So I think pipeline is good, we're not seeing a lot of alteration to the fee mix and so again, from our margin perspective, I think we would message what we've always messaged is that our margins have been steady, although they have been improving slightly over longer periods of time. This is not a quarter-to quarter movement but this is a extracting kind of operating leverage within the business over a year, multiyear cycle. Again, from what we are seeing in the market, we would expect that to be no different than it's been historically.

[Operator Instructions]. Your next question comes from the line of Robert Lee from KBW.

First one may be a question on the accrued carry. Clearly, it's been building nicely and as you pointed out, is a pretty strong realization environment out there so presumably some products are getting close to -- where you could hit cash carries. Is there any sense you can give us on your current kind of expectations for the pace at which you think some of that accrued could start flowing through to the P&L? Should we think that gee, it's still like a year away and it will kind of be a gusher? How should we kind of think about the pace of cash realization?

Rob, it's Erik. I think what we would say is that the carry comes, from as Randy mentioned an incredibly diversified underpinning of assets. Today we're over 3,000 underlying companies across over 40 different investment vehicles. Then because you also recall, we're not in control of a lot of those assets so we're not controlling the timing of the exit. So from our end, what we sort of see is a very large, very diversified growing and appreciating net asset value dollar amount related to the carry. If you look at the weighted average life of those dollars, our expectation is that you begin to see carry coming more meaningfully going out '18, '19, '20, '21, but we've also as Randy alluded to, given the diversity of that, we think over time that this, again getting a more mature base, we just start to see a large amount of recurring carried interest -- it's just flows through as although even part of the revenue, although even in those out years our expectation is that the carry portion of total revenue still remains a very small portion of overall revenue dollars.

Okay, thanks. And maybe just going back to a question on RAPM, you gave some expense guidance that I think reflects the -- reflects that transaction. Can you maybe just update us a little bit on how we should we view it from a revenue and asset perspective the assets there you are taking on and some of the revenue impacts?

Rob, it's Randy. I'll take that. On the RAPM front, the revenue and expense line items are really not material to our results. And in fact, we believe that you're not going to see much movement on the expense side. One thing to remember on the compensation expense, we had a high quarter for our compensation expense or a higher quarter based on the results of the revenue coming in from Secondary Fund IV increased our total profit for the quarter which increased our accrued bonuses. We expect next quarter you're going to see a normalization of that, so revenue will decrease which means compensation related to bonuses will decrease but, what we'll have is that the RAPM employees will then join us and be included in the compensation totals. Overall again, we don't see much of a revenue uptick or much of an expense uptick with RAPM.

Okay. And then maybe one last question, I mean as, you've talked about business services and delivering technology or using technology in your solutions for clients is an important part of what you do so with that in mind, kind of as you look across the asset management industry broadly, I mean it feels like there's been an acceleration in different types of managers, investment and infrastructure around data analytics and whatnot. So as you look at your own platform, how do you think about -- do you see that there's any kind of new platform builds you're kind of planning over the next couple of years or is it -- how do you think of kind of the pace of investment in your own platform? Do you target a certain percentage of revenues or infrastructure, how do you think about that?

Yes, Rob, it's Erik. I would say a couple of things, one, we would like to think that we are clearly on the forefront of both thinking about this and investing in it. I think the history for us across all expenses has been, we have always kind of invested early in anticipation of growth and new strategic opportunity. That's been no different across the technology side. I would point to 2 things specifically, one we have a number of investments on the balance sheet that are strategic in nature into technology partners and while those today are not super material, in the dollar amount, we think they are positioning us for 2 things, one is to increase our efficiency internally in better serving our customers by better using technology ourselves and two, it's positioning us to begin to monetize in the future, so a couple of those products we are sellers of it's either an individual service that we're able to offer clients or it's something that we're able to add to on to their existing revenue relationship with us. So -- while it's early days, our view is that we've put a lot of the investments in place to begin to capitalize on that. I think our industry has been slowly moving towards technology and to embrace kind of an increased transparency of data. The private markets element of our business they've kept the private very seriously. We think that changes over time, we think it's changing now. Our clients want more transparency, I think that leads to the second part which is the back office. So that Private Market Connect is about us providing clients better back office services, more efficiently, increased transparency and from a business perspective, doing that at an increased cost efficiency. So we sort of see a lot of the pieces that are needed in place today will be opportunistic going forward as we continue to look for new things but I think a lot of the base is already there.

And there are no further questions at this time. I turn the call back over to the presenters.

Thanks everyone for joining us today. We really appreciate your support. Have a good day.

This does conclude today's conference call. You may now disconnect.