Hello and welcome to the Hamilton Lane Q4 Earnings Call. On the call today from the Hamilton Lane team are Mario Giannini, CEO; Erik Hirsch, Vice Chairman; Randy Stilman, CFO; Jeff Meeker, Chief Client Officer; and Demetrius Sidberry, Head of Investor Relations. Before the Hamilton Lane team discusses the quarter’s results, I want to remind you that they will be making forward-looking statements based on their current expectations for the business. Those 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 presentation materials, which are available on the IR section of Hamilton Lane’s website. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane’s funds or stock. The company’s detailed financial results will be made available when the 10-K is filed. Finally, for the call this morning, the Hamilton Lane team will be referencing pages in the earnings release presentation available on the Hamilton Lane IR website and shown on the webcast version of this call. With that, I will turn the call over to Demetrius Sidberry, Head of Investor Relations.

Thanks, Sarah and thanks everyone for joining us. Slide 3 of our presentation provides a snapshot of our financial performance for fiscal 2018. For the fiscal year, our revenue for management and advisory fees grew by 13% versus last year with double-digit growth in each of our offerings. We also experienced double-digit growth in our fee-related earnings, which increased 12% year-over-year. Non-GAAP EPS for fiscal 2018 was $1.64 and this is based on approximately $87 million of adjusted net income. Our GAAP net income for the year was approximately $17 million, which translated into GAAP EPS of $0.93. Finally, our board approved an increase in our quarterly dividend from $0.175 per share to slightly more than $0.21 per share, an increase of more than 20%. This increase reflects a full year dividend target of $0.85 per share. With that, I will now turn the call over to Mario to cover additional highlights for the year.

Thanks, Demetrius and thanks everyone for taking the time to join us. Past fiscal year was another strong year for our business. We added to an already broad and diverse client base. We grew our team to over 340 people and we had our offices in key markets around the world. Slide 4 of the presentation shows that we continue to steadily grow our asset base across asset management and advisory offerings. For the year, we reached another new high of more than $450 billion in combined AUM and AUA and the pipeline for opportunities continues to be as strong as we have ever seen it. Slide 5 dives deeper and showed some detail around our AUM and AUM built for the year. During fiscal 2018, we added $3.9 billion to fee-earning AUM with strong growth across both our customized separate accounts and specialized products. Almost $3 billion of the fee-earning AUM growth happened within the customized separate account offering and was driven by contributions from both existing and new separate account clients. Existing clients, which continue to be a significant part of the growth in separate account offering accounted for nearly 70% of the contributions. As we have stated in the past, we have high retention amongst our separate account clients with long-term re-ups rate of approximately 80%. As for our new clients, they continue to generally fall into one of three categories. The first is an entity that is completely new to the private markets. They are just looking to enter the asset class and want to do so with a partner. The second is an entity who is electing to switch service providers. And the third is someone who has been utilizing internal resources and is now electing to add us as an additional resource. Over the…

Thanks, Mario and hello everyone. As Chief Client Officer, I spend virtually all of my time interfacing with clients, discussing their objectives in the private markets and driving towards successful outcomes. In this role, I lead a team of over 100 relationship managers and client service professionals whose sole focus is to partner with our clients to ensure their needs are not only met, but exceeded. A basic illustration of how we interact with our clients depicted on Slide 8. Our customized approach in active client engagement often means we are interacting weekly and sometimes daily with clients discussing the pipeline of market opportunities, specific managers and market trends. So what are we hearing? Overall, our clients are happy with the asset class for a number of reasons. It continues to provide diversification benefits in the form of access to small to midsize companies around the globe and exposure to both equity and debt as well as growth in value strategies. Distributions remain strong as the asset class continues to be a net distributor of capital back to investors. Said differently, developed private market plans are sending back more money to investors than they are contributing in new capital calls. As the markets continue to grow and expand, investors also have more choices than ever allowing them to be more tactical and deliberate in obtaining private markets exposure that both complement existing portfolios and target areas of opportunity. Last and most important, the asset class continues to deliver the performance that our clients expect. I want to spend a minute on this point, because it’s the topic we are discussing a lot today. As you know, our asset class tends to lag the public markets. We mark our companies quarterly, not daily and the data is clear that managers in…

Thank you, Jeff. Slide 12 of our presentation shows the financial highlights for fiscal year 2018. As shown on the slide, we continue to see solid growth in our business with year-over-year total revenue up 36%. Each of our core products and services were up double-digit for the year and as a result of fiscal 2018 management advisory fee revenue grew by 13% over the prior year. Biggest driver of this growth was our specialized fund revenue, which was up 11% over fiscal 2017. The growth of our specialized fund revenue line is driven by successful fundraises. The fundraise that had the largest impact was that of our latest secondary fund, which held its final close in June of 2017. We recognized nearly $7.5 million in new specialized fund revenue relative to the prior year from that funds. Included in the fund’s year-to-date revenue was $5.8 million in retroactive fees, which compares to $2.9 million in retro fees in the prior year. Revenue from our customized separate accounts offering year-to-date was also up 11% compared to the prior year. Our customized separate account fee earning AUM grew by nearly $3 billion during fiscal 2018 as we continue to add new clients and receive additional allocations from our existing clients. For our advisory and distribution management offerings, we experienced 19% and 49% year-over-year growth respectively. For the advisory business, the addition of new clients was the main driver of the increase. Growth in distribution management revenue was driven by higher stock distribution activity year-to-date, which led to higher base and performance fees. The final component of our revenue is incentive fees. On a reported basis, we saw a meaningful uptick in incentive fees, which reached $49 billion for the fiscal year. While we received cash carry during the year, a sizable…

[Operator Instructions] Our first question comes from the line of Ken Worthington from JP Morgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. First, you have been in the market with your flagship direct funds, you raised record secondary fund – you just raised a record-sized strat ops fund. Can you talk about product extension, I think Mario you mentioned extensions in credit, so what are your thoughts about other specialized funds and private equity or even broadening out to real estate and to what extent might we see something in the coming fiscal year? Thanks.

Thanks, Ken. It’s Mario. I think there are a couple of areas, I mean we alluded to the fact that we are looking at expanding on the credit side. And I think that there are a couple of areas we are looking actively on the product side that are different from the strategic opportunities fund that we just finished and raised. So I would expect that we will be looking at doing something on that side. Clearly, we have talked in prior calls about our Real Assets acquisition that we made. And I think there I would expect that we would be looking at our product offering on that side also. I think those are the two that are clearly top of mind, but again even on the private equity side as you think about different things on the retail side as you think about different things as we have talked about in this call where there are a number of different and new entrants on the private equity side that a product might be a better way to do that, I think we have anything immediate, but as you think about that over the next couple of years, those are also places we would be looking at expanding.

Okay, great. And then Real Assets closed last summer a year later maybe what have you learned from doing that deal and that integration and to what extent are there opportunities and ultimately interest from Hamilton Lane to maybe do more here?

To do more in Real Assets or to do more on acquisitions?

Acquisitions?

Yes. Well, I think what we learned in the Real Assets acquisition is what we have talked about in this call, I mean, it’s been very successful, but it’s just been successful because it’s just been a people-oriented acquisition where the culture of the firm we acquired was very similar to ours, but it takes a lot of work to make sure that everyone is aligned and everyone is looking at the client side the same way. And so what we learned – I don’t think we learned anything other than to say that there is a financial part of it, but probably a more important part, which is the culture and people side of it and making sure clients on both the acquirer or acquiree side are benefiting. I think for us we have said that we look at acquisitions, but that, that is not a core part of our strategy going forward that we will – we are very interested in acquisitions that bring in key people that can help us either expand or go into new areas, but I don’t think you should be thinking about us as a firm that will grow through acquisitions as the fundamental business strategy.

Okay, great. Fair enough. Thank you very much.

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

Hi, good morning. Thanks for taking the question. I am just hoping you could update us on some of your thoughts and strategy around data and technology initiatives, you have a number of strategic investments that you had mentioned just curious how you see data technology changing the private market industry as you look out over the next decade and if you could speak to some of the initiative that that you have in place today and what you are looking to do over the next couple of years?

Thanks Mike. It’s Erik. I will take that. I think as you heard from us in the path we are sort of taking this from an offensive and defensive perspective. To-date, our whole asset class has been kind of very people dependent, folks have not rushed to embrace technology, a lot of kind of manually oriented client oriented approaches to that. I think over the coming years and I think you are right to think about this not in month or quarters, but in years this is not an asset class that has historically changed or adapted to change rapidly, I think what you are starting to see is more of a move towards this demising some of the analytics data mining utilizing kind of the wealth of data that we have at our disposal to increase transparency, I think big theme around that is clients want to see more, know more and to have it at their fingertips more quickly. And I think the more we can embrace technology, I think we just further increase the client experience. I think with that experience getting better, I think what you see is what Jeff and Mario alluded to which is there is a couple of things that are driving allocation to be increasing partly the performance, but as they get more and more comfortable with the asset class given some of its illiquidity nature that you sort of see the fun close coming in. So once the Ipreo investment comes off of our balance sheet as that transaction settles out we will have three remaining stakes in again kind of early stage oriented SaaS businesses. Each of them focused on very different parts of the market. And I think our reputation in the market as somebody who understands this space who is willing to put capital behind this space and who is willing to help these businesses grow and be successful as all of that continues we are just seeing more and more opportunities, so more meetings, more entrepreneurs reaching out. And I think it’s our expectation over the longer term that there are more positions than initiatives for us to take in that field and I would expect to see us doing that.

Great. And just as a little follow-up question, I think you had mentioned earlier that at 70% of their growth capital contributions coming from existing clients, but 30% from new customers, can you talk about where and how you are finding new customers, what’s the process and what do you expect that sort of contribution from new customers kind of goes to, because that reached 50% at some point. How do you see that playing out?

Thanks Mike. This is Jeff. I will take that on the new investors side there is really three things going on there that we are seeing. The first is we continue to find investors who historically have invested in the private markets on their own and they with the increased complexity and options out there have decided that they want to outsource that and so that’s an avenue for us where we get hired sort of frequently. The second is we have successfully continued to take business from competitors. So we continue to see our market share grow. The third is that and we have said this, a couple of times on the call is the number of institutional investors who have no exposure to the private market is still a fairly significant one. So, this is investors with no private markets exposure that are coming to us and asking us to start from scratch and help them build that allocation and all three of those I will wrap up by saying, all three of those once they become clients, it goes back to another point that’s made a couple of times today is remember that, that means that they need to continually commit to the asset class, they need to continually re-up even once they get to that target allocation to maintain those allocations going forward.

Mike, it’s Erik. I will take the second part of that. Does the 30% go to 40% go to 50%, I think for us, I think what we are focused on is that you are getting kind of that double-digit growth across the combination of the two. The fact that it’s the 30 and not something higher, I think is also reflective of the fact that the existing customer base is growing very, very nicely and as that existing customer base gets bigger, you have a bigger base on which you are continuing to get that growth. I know we have emphasized this before, but it’s worth repeating that re-up nature of when their kind of overall asset value was growing even in a static allocation to the asset class means there is still more dollars that need to come into the asset class just to maintain a steady state and you can see that continuing to come through our numbers today.

Great. Thanks very much.

Your next question comes from the line of Chris Harris from Wells Fargo. Please go ahead.

Thanks. So, you guys had nice growth in your fee earnings this year, but the fee earning margins didn’t really grow. And I know you guys are investing in the business, but how should we be thinking about the potential for margin expansion as we progress into fiscal ‘19?

Chris, thanks, this is Mario. To get a stat of that one, we have talked about this before I think for us we view ourselves in a growth mode. And so we will continue to invest across all the different areas that we think will lead to continuing the growth we have seen. In terms of the margin, I think that what you will see and we have talked about in the past is you might have some small margin expansion, but I think for us as long as we are focused on the growth mode, I think that we are going to continue to reinvest in the business. And so I think for us looking at increasing margins substantially as opposed to reinvesting in the business just isn’t a choice that we think makes sense today. It would be different obviously if we didn’t see a lot of white space where we have a lot of opportunity, but as you heard on this call and on the prior calls, there really are a lot that and in order to take advantage of them it does require additional investment in people, in systems you see the growth is really not in one area if you look on our website and see where we are hiring, it’s really across all areas of the firm. And so again it really goes back to – we are obviously mindful of margins, but that’s not the driver today for our business.

Got it, okay. And then I want to ask you a question on the dividends, nice increase you guys are sort of targeting a 50% payout ratio at a minimum, I seem to recall you guys communicating that you wanted to actually grow the payout ratio steadily over time. So I just want to clarify is today’s announcement a somewhat change in policy and if it is maybe what has changed since the previous communication about a rising payout ratio?

Sure. It’s Erik. Let me take that one. I think the methods that we have said, is we are sort of setting to your point of a sort of payout ratio at a minimum level of 50%. What we had messaged in the prior calls was not necessarily focusing on us trying to grow the payout ratio. And so I think today’s message is not at all a change, but rather to grow the dividend in line with the earnings of the overall business and I think our up 24% here really reflects that which is we see continued strong growth in the earnings of the business and thus we are seeing a very strong and healthy increase in the dividend. I think what we have said in the prior call and what’s worth repeating here is and it goes really for the last question around our growth and our need for capital, we just don’t see a scenario where we have been asked in the past about 100% payout ratio. And I think given the growth mode that we are in and we addressed in the earnings calls for the white space that we see and the need for capital, you should expect us to continue to see good opportunities for us to reinvest back in the business and we are doing that.

Okay, great. Thank you.

Your next question comes from Rob Lee from KBW. Please go ahead.

Hi, this is actually Pell Bermingham on for Rob. I was just wondering if you could give us any color on the G&A expectations going forward, it looks like a step function I am wondering if the current level is the right run-rate going forward? Thanks.

Yes, this is Randy. The G&A, the thing to remember with the G&A is our G&A has a variable component to it. We expect that the G&A increase will be lower in that next year than it was this year, but I want to caveat that by saying depending on the revenue growth, if we add additional advisory and reporting businesses we may see an uptick in the G&A more than we expect because of the servicing model with that, but overall we expect the G&A will increase, but not at the rate that it has increased this year. Also during the year, we had an increase in the G&A, because of the wrap on the acquisition and also some additional legal and accounting fees. We do expect that our margins will hold though.

Alright, great. Thank you so much. And just as a follow-up question, can you give us any guidance on performance fee expectations for the next few quarters and then from a compensation standpoint, when do you expect incentive fee compensation to start to pickup?

So, this is Erik. Let me take that. I think in terms of the timing obviously you saw and Randy addressed very strong results kind of coming through although we also again Randy kind of clearly addressed the sort of mismatch of cash and non-cash components. Going forward, what you are going to see from a compensation standpoint is those will kind of be in lockstep with the actual receipt of carry and we don’t expect to see a lot of mismatch in those numbers going forward. From a timing standpoint, I think what we have been messaging is what we will continue to message is that we have an incredibly robust and diversified carry base and we expect that, that’s going to continue to be harvested over the next several coming years. You are seeing that I think becoming a little bit more smooth in nature as that goals continue to get bigger, bigger, bigger and more and more diversified. And so our expectation is that we will be continuing to be harvesting for the foreseeable future here.

Great. Thank you so much for taking my questions.

I am currently showing no other questions at this time. I will turn the call back over to the presenters for any closing comments.

Thanks everyone for joining us today.

Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect.