10-Q

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2017
or
o 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  (State or other jurisdiction of incorporation or organization)	26-2482738 (I.R.S. Employer Identification No.)
	One Presidential Blvd., 4th Floor Bala Cynwyd, PA (Address of principal executive offices)	19004 (Zip Code)
	(610) 934-2222 (Registrant’s telephone number, including area code)

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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 o	Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o
Emerging growth company x

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. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o 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 5, 2018, there were 19,281,837 shares of the registrant’s Class A common stock, par value $0.001, and 27,935,255 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, 2017 and March 31, 2017	3
Condensed Consolidated Statements of Income for the three and nine months ended December 31, 2017 and 2016	4
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2017 and 2016	5
Condensed Consolidated Statements of Shareholders’ Equity for the nine months ended December 31, 2017	6
Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2017 and 2016	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Qualitative and Quantitative Disclosures about Market Risk	44
Item 4. Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6. Exhibits	49
Signatures	50

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

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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” and similar expressions are used 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, risk, 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 us; our ability to comply with investment guidelines set by our clients; our ability to consummate planned acquisitions and successfully integrate the acquired business with ours; the time, expense and effort associated with being a newly public company; 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, 2017 (our “2017 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.

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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,
	2017			2017
Assets
Cash and cash equivalents	$	68,677		$	32,286
Restricted cash	1,787			1,849
Fees receivable	13,287			12,113
Prepaid expenses	1,584			2,593
Due from related parties	4,275			3,313
Furniture, fixtures and equipment, net	4,061			4,063
Investments	130,765			120,147
Deferred income taxes	39,766			61,223
Other assets	8,844			3,030
Total assets	$	273,046		$	240,617
Liabilities and Equity
Accounts payable	$	1,080		$	1,366
Accrued compensation and benefits	28,051			3,417
Deferred incentive fee revenue	31,422			45,166
Debt	84,617			84,310
Accrued members’ distributions	4,520			2,385
Dividends payable	3,172			—
Payable to related parties pursuant to tax receivable agreement	6,436			10,734
Other liabilities	5,730			6,612
Total liabilities	165,028			153,990
Commitments and contingencies (Note 14)
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	—			—
Class A common stock, $0.001 par value, 300,000,000 authorized; 19,287,882 and 19,151,033 issued and 19,287,882 and 19,036,504 outstanding as of December 31, 2017 and March 31, 2017, respectively	19			19
Class B common stock, $0.001 par value, 50,000,000 authorized; 27,935,255 issued and outstanding as of December 31, 2017 and March 31, 2017	28			28
Additional paid-in-capital	62,853			61,845
Accumulated other comprehensive loss	—			(311		)
(Accumulated deficit) retained earnings	(5,057		)	612
Less: Treasury stock, at cost, 114,529 shares of Class A common stock as of March 31, 2017	—			(2,151		)
Total Hamilton Lane Incorporated stockholders’ equity	57,843			60,042
Non-controlling interests in general partnerships	8,363			9,901
Non-controlling interests in Hamilton Lane Advisors, L.L.C.	41,812			16,684
Total equity	108,018			86,627
Total liabilities and equity	$	273,046		$	240,617

See accompanying notes to the condensed consolidated financial statements.

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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,
	2017			2016			2017			2016
Revenues
Management and advisory fees	$	48,344		$	42,009		$	146,326		$	126,273
Incentive fees	16,670			322			20,098			6,868
Total revenues	65,014			42,331			166,424			133,141
Expenses
Compensation and benefits	20,006			16,739			60,247			53,161
General, administrative and other	10,704			8,840			27,586			22,925
Total expenses	30,710			25,579			87,833			76,086
Other income (expense)
Equity in income of investees	2,895			3,085			13,066			8,882
Interest expense	(664		)	(2,924		)	(5,282		)	(8,780		)
Interest income	67			39			472			159
Other non-operating income	4,188			222			4,169			232
Total other income	6,486			422			12,425			493
Income before income taxes	40,790			17,174			91,016			57,548
Income tax expense (benefit)	22,957			111			29,337			(264		)
Net income	17,833			17,063			61,679			57,812
Less: Income attributable to non-controlling interests in general partnerships	768			64			1,750			1,024
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	23,374			16,999			56,086			56,788
Net (loss) income attributable to Hamilton Lane Incorporated	$	(6,309	)	$	—		$	3,843		$	—
Basic (loss) earnings per share of Class A common stock (1)	$	(0.35	)	—			$	0.21		—
Diluted (loss) earnings per share of Class A common stock (1)	$	(0.35	)	—			$	0.21		—
Dividends declared per share of Class A common stock (1)	$	0.175		—			$	0.525		—

⁽¹⁾  There were no shares of Class A common stock outstanding prior to March 6, 2017, therefore no per-share information has been presented for any period prior to that date.

See accompanying notes to the condensed consolidated financial statements.

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Hamilton Lane Incorporated

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended December 31,					Nine Months Ended December 31,
	2017			2016		2017		2016
Net income	$	17,833		$	17,063	$	61,679	$	57,812
Other comprehensive income (loss), net of tax:
Unrealized loss on cash flow hedge	—			—		—		(142		)
Amounts reclassified to net income:
Realized loss on cash flow hedge	—			2		922		2
Total other comprehensive income (loss), net of tax	—			2		922		(140		)
Comprehensive income	17,833			17,065		62,601		57,672
Less:
Comprehensive income attributable to non-controlling interests in general partnerships	768			64		1,750		1,024
Comprehensive income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	23,374			17,001		56,697		56,648
Total comprehensive (loss) income attributable to Hamilton Lane Incorporated	$	(6,309	)	$	—	$	4,154	$	—

See accompanying notes to the condensed consolidated financial statements.

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Hamilton Lane Incorporated

Condensed Consolidated Statement of Stockholders' Equity

(Unaudited)

(In thousands)

	Class A Common Stock		Class B Common Stock		Additional Paid in Capital			(Accumulated Deficit) Retained Earnings			Treasury Stock			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, 2017	$	19	$	28	$	61,845		$	612		$	(2,151	)	$	(311	)	$	9,901		$	16,684		$	86,627
Net income	—		—		—			3,843			—			—			1,750			56,086			61,679
Other comprehensive loss	—		—		—			—			—			311			—			611			922
Equity-based compensation	—		—		1,519			—			—			—			—			2,825			4,344
Retirement of treasury stock	—		—		(2,151		)	—			2,151			—			—			—			—
Proceeds received from option exercises	—		—		108			—			—			—			—			205			313
Issuance of shares for acquisition	—		—		212			—			—			—			—			400			612
Repurchase of Class A shares for employee tax withholding	—		—		(234		)	—			—			—			—			(446		)	(680		)
Deferred tax adjustment	—		—		1,456			—			—			—			—			—			1,456
Dividends declared	—		—		—			(9,512		)	—			—			—			—			(9,512		)
Capital contributions from (distributions to) non-controlling interests, net	—		—		—			—			—			—			(3,288		)	—			(3,288		)
Member distributions	—		—		—			—			—			—			—			(34,455		)	(34,455		)
Equity reallocation between controlling and non-controlling interests	—		—		98			—			—			—			—			(98		)	—
Balance at December 31, 2017	$	19	$	28	$	62,853		$	(5,057	)	$	—		$	—		$	8,363		$	41,812		$	108,018

See accompanying notes to the condensed consolidated financial statements.

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Hamilton Lane Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended December 31,
	2017			2016
Operating activities:
Net income	$	61,679		$	57,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,396			1,440
Change in deferred income taxes	22,913			—
Change in payable to related parties pursuant to tax receivable agreement	(4,298		)	—
Amortization of deferred financing costs	153			661
Write-off of deferred financing costs	1,657			—
Equity-based compensation	4,272			3,506
Equity in income of investees	(13,066		)	(8,882		)
Proceeds received from investments	11,337			6,825
Other	1,029			—
Changes in operating assets and liabilities:
Fees receivable	(987		)	1,033
Prepaid expenses	1,016			(222		)
Due from related parties	(962		)	(353		)
Other assets	(311		)	(5,132		)
Accounts payable	(286		)	981
Accrued compensation and benefits	24,634			20,736
Deferred incentive fees	(13,744		)	—
Other liabilities	(1,089		)	(778		)
Net cash provided by operating activities	95,343			77,627
Investing activities:
Purchase of furniture, fixtures and equipment	(1,152		)	(719		)
Cash paid for acquisition of business	(5,227		)	—
Distributions received from investments	10,792			6,991
Contributions to investments	(19,609		)	(20,622		)
Net cash used in investing activities	(15,196		)	(14,350		)
Financing activities:
Repayments of debt	(86,569		)	(1,950		)
Borrowings of debt, net of deferred financing costs	85,066			—
Contributions from non-controlling interest in general partnerships	231			489
Distributions to non-controlling interest in general partnerships	(3,519		)	(2,372		)
Sale of membership interests	—			4,668
Repurchase of Class A shares for employee tax withholding	(680		)	—
Purchase of membership interests	—			(6,059		)
Proceeds received from option exercises	313			879
Dividends paid	(6,340		)	—
Members’ distributions	(32,320		)	(72,467		)
Other	—			(611		)
Net cash used in financing activities	(43,818		)	(77,423		)
Increase (decrease) in cash, cash equivalents, and restricted cash	36,329			(14,146		)
Cash, cash equivalents, and restricted cash at beginning of the period	34,135			70,382
Cash, cash equivalents, and restricted cash at end of the period	$	70,464		$	56,236

See accompanying notes to the condensed consolidated financial statements.

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

1. Organization

Hamilton Lane Incorporated (“HLI”) was incorporated in the State of Delaware on December 31, 2007. As of March 6, 2017, following its initial public offering (“IPO”) and related transactions (the “Reorganization”), the Company became a publicly-traded entity, and both the holding company for and sole managing member of Hamilton Lane Advisors, L.L.C. (“HLA”). Unless otherwise specified, “the Company” refers to the consolidated group of HLI and HLA and its subsidiaries throughout the remainder of these notes.

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 generates revenues primarily from management fees, by managing assets on behalf of customized separate accounts, specialized fund products and distribution management accounts, and advisory fees, by providing asset supervisory and reporting services. HLA sponsors the formation, and 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 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- or majority-owned entities through which it conducts its foreign operations.

Reorganization

In connection with the IPO, the Company completed a series of transactions on March 6, 2017, which are described below:

• the certificate of incorporation of HLI was amended and restated to, among other things, (i) provide for Class A common stock and Class B common stock, (ii) set forth the voting rights of the Class A common stock (one vote per share) and Class B common stock (ten votes per share) and (iii) establish a classified board of directors;

• the limited liability company agreement of HLA was amended and restated to, among other things, (i) appoint HLI as the sole managing member of HLA and (ii) classify the interests that were acquired by HLI as Class A Units, the voting interests held by the continuing members of HLA as Class B Units, and the non-voting interests held by the continuing members of HLA as Class C Units;

• HLA effectuated a reverse unit split of 0.68-for-1 for each unit class;

• certain HLA members exchanged their HLA units for 3,899,169 shares of Class A common stock of HLI;

• HLI issued to the Class B unitholders of HLA one share of Class B common stock for each Class B unit that they owned, in exchange for a payment of its par value;

• certain Class B unitholders of HLA entered into a stockholders agreement pursuant to which they agreed to vote all their shares of voting stock in accordance with the instructions of HLA Investments, LLC; and

• HLI entered into an exchange agreement with the direct owners of HLA pursuant to which they will be entitled to exchange HLA units for shares of HLI’s Class A common stock on a one-for-one basis (the “Exchange Agreement”).

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Initial Public Offering

On March 6, 2017, HLI issued 13,656,250 shares of Class A common stock in the IPO at a price of $16.00 per share. The net proceeds totaled $203,205 after deducting underwriting commissions of $15,295 and before offering costs of $5,844 that were incurred by HLA. The net proceeds were used to purchase 11,156,250 newly issued Class A units in HLA for $166,005 and 2,500,000 Class A units from existing HLA owners for $37,200.

Subsequent to the IPO and Reorganization transactions, HLI is a holding company whose principal asset is a controlling equity interest in 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 deferred tax assets and liabilities, payable to related parties pursuant to a tax receivable agreement, and dividends payable. As of December 31, 2017 and March 31, 2017, HLI held approximately 34.5% and 34.2%, respectively, of the economic interest in HLA. As future exchanges of HLA units occur, the economic interest in HLA held by HLI will increase.

The Reorganization is considered a transaction between entities under common control.  As a result, the condensed consolidated financial statements for periods prior to the IPO and the Reorganization are the condensed consolidated financial statements of HLA as the predecessor to HLI for accounting and reporting purposes.  

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, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of March 31, 2017.

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.

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

• 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.

Distributions and Dividends

Distributions and dividends are reflected in the condensed consolidated financial statements when declared. Distributions to members represent amounts paid to the non-controlling interest holders of HLA. All distributions received by HLI from HLA are eliminated in the condensed consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. The new standards will be effective for the Company on April 1, 2018. The standard permits the use of either a full retrospective or modified retrospective approach. The Company plans to adopt the guidance using the modified retrospective approach. The Company currently recognizes incentive fee revenue when required return levels are met and all contingencies have been resolved. Under the new standard, the Company will recognize incentive fee revenue when it concludes that it is probable that a significant reversal in the cumulative amount of incentive fee revenue will not occur. The Company is continuing to assess the impact of adoption of the new standard on other revenue-related items, including evaluating the impact of certain revenue related costs, principal versus agent reporting considerations that would affect whether certain transactions are reported gross or net in the consolidated statement of operations, as well as the additional disclosures required by the new standard.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and entities may early adopt. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (ASU 2016-02). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted.

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Payments” (ASU 2016-15). ASU 2016-15 clarifies cash flow classification of several discrete cash flows issues including debt prepayment costs and distributions received from equity method investees. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company will adopt ASU 2016-15 on April 1, 2018 and the adoption is not expected to have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash” (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments in this update are effective for years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted the standard on October 1, 2016 and retrospectively applied the amendment. Other than the change in presentation of restricted cash within the Condensed Consolidated Statements of Cash Flows, the adoption of this standard did not have a material impact on its consolidated financial statements.

Reclassifications

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

3. Investments

Investments consist of the following:

	December 31,		March 31,
	2017		2017
Equity method investments in Partnerships	$	113,485	$	103,141
Other equity method investments	994		661
Investments carried at cost	16,286		16,345
Total Investments	$	130,765	$	120,147

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 generally has a 1% interest in each of the Partnerships, although the Company has interests in certain Partnerships ranging from 0%-7%. 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, Private Market Connect (“PMC”), that automates the collection of fund and underlying portfolio company data from general partners. The Company recognized equity method income related to its investments in Partnerships and other equity method investments of $2,895and $13,066 for the three and nine months ended December 31, 2017, respectively, and $3,085 and $8,882 for the three and nine months ended December 31, 2016, respectively.

11

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

The Company evaluates each of its equity method investments to determine if any were significant pursuant to the requirements of Regulation S-X. As of December 31, 2017 and March 31, 2017, no individual equity method investment held by the Company met the significance criteria, and as a result, the Company is not required to present separate financial statements for any of its equity method investments.

The Company’s investments carried at cost include other proprietary investments that are not consolidated, over which the Company does not exert significant influence and for which fair value is not readily determinable. The Company has determined in accordance with the applicable guidance that it is impracticable to estimate the fair value of the investments carried at cost due to limited information available. As of December 31, 2017 and March 31, 2017, the Company did not identify any significant events or changes in circumstances that have a significant adverse effect on the carrying value of these investments carried at cost.

4. 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 $16,710 and $19,653 as of December 31, 2017 and March 31, 2017, respectively, and are recorded in Investments in the Condensed Consolidated Balance Sheets. The consolidated VIEs had no liabilities other than deferred incentive fee revenue of $31,422 and $45,166 as of December 31, 2017 and March 31, 2017. 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 claw back 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. 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, 2017, the total commitments and remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIEs are $12,591,114 and $4,744,430, 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.

12

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,
	2017			2017
Investments	$	70,559		$	60,597
Fees receivable	2,212			430
Due from related parties	2,792			1,742
Total VIE Assets	75,563			62,769
Deferred incentive fee revenue	31,422			45,166
Non-controlling interests	(8,363		)	(9,901		)
Maximum Exposure to Loss	$	98,622		$	98,034

5. Acquisition

On August 11, 2017, HLA acquired substantially all the assets of Real Asset Portfolio Management LLC (“RAPM”) for a total aggregate purchase price of approximately $5,839, of which $5,227 was paid in cash with the remainder settled in 27,240 shares of Class A common stock valued at approximately $612. An additional amount based upon an agreed upon multiple of earnings, which is currently estimated at approximately $3,485, could be payable to the principals of RAPM who are now employees of HLA if they remain employed by HLA through the expected payment date in October 2018. As the amount is contingent upon future employment, the amount will be recognized as compensation expense over the required performance period. The Company recorded approximately $2,948 of intangible assets related to the acquired investment management contracts, which assets will be amortized over eight years, and $2,874 of goodwill, which are both recorded in other assets in the Condensed Consolidated Balance Sheets. The remaining assets acquired and liabilities assumed were not material to the condensed consolidated financial statements. Revenue and net income attributable to the acquisition of RAPM were not material for the three and nine months ended December 31, 2017, and pro forma information related to this acquisition is not included because the impact on the Company’s Condensed Consolidated Statements of Income is not considered to be material.

6. Debt

On August 23, 2017, HLA entered into a Term Loan and Security Agreement (the “Term Loan Agreement”) and a Revolving Loan and Security Agreement (the “Revolving Loan Agreement” and, together with the Term Loan Agreement, the “Loan Agreements”) with First Republic Bank (“First Republic”) for $75,000 and $10,450, respectively. After expenses, the net amount of cash received was $85,066 and was utilized to pay off the outstanding principal amount and accrued interest of the predecessor credit facility. The previous unamortized deferred financing costs of $1,657 were written off and are included in interest expense in the Condensed Consolidated Statements of Income.

The Term Loan Agreement provides for a term loan facility in an aggregate principal amount of $75,000 and also contains an accordion feature that allows HLA to increase the commitment under the facility by up to $25,000 under certain conditions (the “Term Loan Facility”). Borrowings under the Term Loan Facility accrue interest at a floating per annum rate equal to the prime rate minus 1.25%, subject to a floor of 2.75%. The Term Loan Facility matures on November 1, 2024. At December 31, 2017, the Company had an outstanding balance net of deferred financing costs on the Term Loan Facility of

13

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

$74,167.

The Revolving Loan Agreement provides for a revolving credit facility up to an aggregate principal amount of $25,000 (the “Revolving Loan Facility”). Borrowings under the Revolving Loan Facility accrue interest at a floating per annum rate equal to the prime rate minus 1.50%, subject to a floor of 2.50%. The Revolving Loan Facility matures on August 21, 2020 and requires compliance with conditions precedent that must be satisfied prior to any borrowing. At December 31, 2017, the Company had an outstanding balance on the Revolving Loan Facility of $10,450.

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, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain (i) a specified amount of management fees in each fiscal year during the term of each of the Loan Agreements, (ii) adjusted EBITDA, as defined in the Term Loan Agreement, less dividend distributions on a trailing six-month basis of $12,500 or greater, tested semi-annually, and (iii) a specified tangible net worth during each fiscal year during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all of the assets of HLA.

The fair value of the outstanding balance of the Term Loan at December 31, 2017 and predecessor credit facility at March 31, 2017 approximated par value based on then-current market rates for similar debt instruments and is classified as Level II within the fair value hierarchy.

In July 2015, the Company purchased interest rate caps through June 30, 2020 to limit exposure to fluctuations in LIBOR above 2.5% on a portion of the Company’s predecessor credit facility. In October 2016, the Company de-designated its remaining interest rate caps as cash flow hedges and discontinued hedge accounting. In August 2017, in connection with the payoff of the predecessor credit facility with the proceeds from the Loan Agreements, which accrue interest indexed to the prime rate, the amount accumulated in other comprehensive income (loss) was reclassified into earnings through interest expense in the Condensed Consolidated Statements of Income because the cash flows of future interest payments indexed to LIBOR will no longer occur. The changes in the fair value of these interest rate caps are recorded in other non-operating income in the Condensed Consolidated Statements of Income. The fair value of the interest rate caps was $84 and $194 as of December 31, 2017 and March 31, 2017, respectively, and is included in other assets in the Condensed Consolidated Balance Sheets. The fair value of the interest rate caps is determined utilizing quoted prices in active markets for the same or similar instruments and is classified as Level II within the fair value hierarchy.

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

7. Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2017:

	Class A Common Stock		Class B Common Stock
March 31, 2017	19,036,504		27,935,255
Restricted stock granted	49,357		—
Shares issued due to option exercise, net	200,244		—
Shares issued in connection with RAPM acquisition	27,240		—
Shares repurchased for employee tax withholdings	(757	)	—
Forfeitures of restricted stock	(24,706	)	—
December 31, 2017	19,287,882		27,935,255

During the nine months ended December 31, 2017, the Company retired 114,529 shares of Class A common stock held as treasury stock (that were outstanding as of March 31, 2017) at a total cost of $2,151 and 34,008 shares of Class A common stock at a total cost of $680, which were purchased from employees to fund statutory tax withholding requirements.

8. Equity-Based Compensation

Summary of Option Activity

A summary of option activity for the nine months ended December 31, 2017 is presented below:

	Number of Options		Weighted- Average Exercise Price
Options outstanding at March 31, 2017	233,495		$	1.34
Options exercised	(233,495	)	$	1.34
Options outstanding at December 31, 2017	—		$	—

The intrinsic value of options exercised during the nine months ended December 31, 2017 was $4,350.

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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Restricted Stock

A summary of restricted stock activity for the nine months ended December 31, 2017 is presented below:

	Total Unvested		Weighted- Average Grant-Date Fair Value of Award
March 31, 2017	1,138,521		$	14.49
Granted	49,357		$	19.68
Vested	(1,835	)	$	13.76
Forfeited	(24,706	)	$	13.91
December 31, 2017	1,161,337		$	14.72

As of December 31, 2017, total unrecognized compensation expense related to restricted stock was $11,463.

9. 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,
	2017		2016		2017		2016
Base compensation and benefits	$	17,428	$	15,489	$	53,397	$	47,938
Incentive fee compensation	523		81		1,380		1,717
Equity-based compensation	1,284		1,169		4,272		3,506
Contingent compensation related to acquisition	771		—		1,198		—
Total compensation and benefits	$	20,006	$	16,739	$	60,247	$	53,161

10. Income Taxes

As a result of the Reorganization and IPO, HLI became the sole managing member of HLA, which is organized as a limited liability company and treated as a “flow-through” entity for income tax purposes. As a “flow-through” entity, HLA is not subject to income taxes apart from certain local taxes assessed at the limited liability company level and foreign taxes attributable to its operations in foreign jurisdictions. Any taxable income or loss generated by HLA is passed through to and included in the taxable income or loss of its members, including HLI following the Reorganization and IPO, on a pro rata basis. As a result, the Company does not record income taxes on pre-tax income or loss attributable to the non-controlling interests in the general partnerships and HLA, except for certain local and foreign taxes discussed above. HLI is subject to U.S. federal and applicable state corporate income taxes with respect to its allocable share of any taxable income from HLA following the Reorganization and IPO.

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

16

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

subject to income tax; therefore, the effective tax rate can vary from period to period.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, which enacts significant changes to U.S. federal income tax laws, including a reduction of the corporate income tax rate from 35% to 21%, limitation of the tax deduction for interest expense, expensing the cost of acquired qualified property, and a one-time transition tax on accumulated, undistributed foreign earnings.

As a result of the Tax Act, the estimated annual effective tax rate was revised to reflect the change in the federal statutory rate from 35% to 21% effective January 1, 2018. Consequently, the blended federal statutory tax rate for the Company’s 2018 fiscal year is 31.55% based on the weighted average of a 35% rate for 275 days and 21% for 90 days.

The Company’s effective tax rate was 56.3% and 32.2% for the three and nine months ended December 31, 2017, respectively, and 0.6% and (0.5)% for the three and nine months ended December 31, 2016, respectively. The increase in the effective income tax rate for the three and nine months ended December 31, 2017 was due to U.S. federal and state corporate income tax expense related to HLI’s allocable share of taxable income from HLA and a provisional discrete tax expense of $21,200 related to the re-measurement of estimated deferred tax assets as of December 31, 2017 due to the tax rate change pursuant to enactment of the Tax Act.

The Tax Act also requires taxpayers to pay a one-time transition tax on accumulated, undistributed earnings of certain foreign subsidiaries. The Company recorded a provisional tax liability of $442 for certain of its foreign subsidiaries based on estimated accumulated, undistributed earnings. As a result of the transition tax estimate, the Company reversed $1,100 of a previously recorded deferred tax liability on unremitted earnings of foreign subsidiaries.

The Company has not completed its analysis of the new Global Intangible Low-Taxed Income (“GILTI”) tax law, and as a result, is not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, the Company has not yet included any potential GILTI tax in its condensed consolidated financial statements and has not elected the related accounting policy.

The Company will continue to analyze the effects of the Tax Act on its consolidated financial statements. Any additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement 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.

As of December 31, 2017, the Company had no unrecognized tax positions.

Tax Receivable Agreement

HLI’s purchase of HLA Class A units in connection with the IPO, and the subsequent and future exchanges by holders of HLA units for shares of HLI’s Class A common stock pursuant to the Exchange Agreement, are expected to result in increases in HLI’s share of the tax basis of the tangible and intangible assets of HLA. This will increase the tax depreciation and amortization deductions that otherwise would not have been available to HLI. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that HLI would otherwise be required to pay in the future. On

17

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

March 6, 2017, HLI entered into a tax receivable agreement (“TRA”) with the other members of HLA that requires HLI to pay exchanging HLA unitholders (the “TRA Recipients”) 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that HLI actually realizes (or, under certain circumstances, is deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the TRA. The payable to related parties pursuant to the TRA decreased to $6,436 as of December 31, 2017 from $10,734 as of March 31, 2017 as a result of being re-measured due to the tax rate change enacted by the Tax Act. The change in liability was recorded to other non-operating income in the Condensed Consolidated Statements of Income. No amounts were paid to TRA Recipients during the nine months ended December 31, 2017.

11. Earnings per Share

There were no shares of Class A common stock outstanding during the three and nine months ended December 31, 2016. Therefore, no earnings per share information has been presented for that period.

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 each share of Class B common stock, together with a corresponding Class B unit, is exchangeable for a share of Class A common stock on a one-for-one basis.

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							Nine Months Ended
	December 31, 2017							December 31, 2017
	Net loss 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	$	(6,309	)	18,126,532	$	(0.35	)	$	3,843	18,075,035	$	0.21
Adjustment to net income:
Assumed exercise and vesting of employee awards	—							87
Effect of dilutive securities:
Assumed exercise and vesting of employee awards				—						628,615
Diluted EPS of Class A common stock	$	(6,309	)	18,126,532	$	(0.35	)	$	3,930	18,703,650	$	0.21

The calculation of diluted earnings per share for the three months ended December 31, 2017 excludes 1,161,337 shares of restricted stock under the treasury stock method, and the calculations of diluted earnings per share for the three and nine months ended December 31, 2017 excludes 34,438,669 outstanding Class B and C Units of HLA, 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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Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

12. 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 incentive fees from Partnerships of $43,649 and $104,966 for the three and nine months ended December 31, 2017, respectively, and $25,503 and $82,208 for the three and nine months ended December 31, 2016, respectively.

The Company entered into a service agreement on June 1, 2017 with PMC pursuant to which it had expenses of $1,115 and $2,478 for the three and nine months ended December 31, 2017, respectively, which 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 $372 as of December 31, 2017, which is included in other liabilities in the Condensed Consolidated Balance Sheets.

Due from related parties in the Condensed Consolidated Balance Sheets consists primarily of advances made on behalf of the Partnerships for the payment of certain operating costs and expenses for which the Company is subsequently reimbursed and refundable tax distributions made to members.

Fees receivable from the Partnerships were $3,412 and $918 as of December 31, 2017 and March 31, 2017, respectively, and are included in fees receivable in the Condensed Consolidated Balance Sheets.

13. Supplemental Cash Flow Information

	Nine Months Ended December 31,
	2017			2016
Non-cash investing activities:
Shares issued for acquisition of business	$	(612	)	$	—

14. 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.

19

Hamilton Lane Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

Incentive Fees

In connection with carried interest from the Partnerships, the Company only recognizes its allocable share of the Partnerships’ earnings to the extent that this income is not subject to continuing contingencies. Carried interest allocated to the Company from the Partnerships that is subject to continuing contingencies is not recognized in the accompanying Condensed Consolidated Balance Sheets. The Partnerships have allocated carried interest still subject to contingencies in the amounts of $300,527 and $236,857, net of amounts attributable to non-controlling interests, at December 31, 2017 and March 31, 2017, respectively, of which $31,422 and $45,166 at December 31, 2017 and March 31, 2017, respectively, has been received and deferred by the Company. The Company recognized $13,744 of incentive fee revenue during the three and nine months ended December 31, 2017 that was received and deferred in fiscal 2016. The Company previously recognized incentive fee compensation expense related to the receipts of these carried interest distributions in fiscal 2016.

If the Company ultimately receives the unrecognized carried interest, a total of $68,202 and $48,849 as of December 31, 2017 and March 31, 2017, 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 aggregate unfunded commitment of the general partners to the Partnerships was $86,942 and $76,908 as of December 31, 2017 and March 31, 2017, respectively.

15. Management and Advisory Fees

The following presents management and advisory fee revenues by product offering:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		2017		2016
Customized separate accounts	$	19,860	$	17,826	$	58,253	$	52,794
Specialized funds	19,132		17,124		63,582		53,407
Advisory and reporting	7,479		6,021		20,958		17,680
Distribution management	1,873		1,038		3,533		2,392
Total management and advisory fees	$	48,344	$	42,009	$	146,326	$	126,273

16. Subsequent Events

On February 6, 2018, the Company declared a quarterly dividend of $0.175 per share of Class A common stock to record holders at the close of business on March 15, 2018. The payment date will be April 5, 2018.

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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 2017 Form 10-K for a more complete understanding of our financial position and results of operations. The historical consolidated financial data discussed below reflect the historical results of operations and financial condition of HLA prior to our IPO in February 2017. The consolidated financial statements of HLA, our predecessor for accounting purposes, are our historical financial statements for this Form 10-Q.

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 2017 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 2017, fiscal 2016 and fiscal 2015 are to our fiscal years ended March 31, 2017, 2016 and 2015, 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 $41 billion of our assets under management (“AUM”) as of December 31, 2017.

• 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 $10 billion of our AUM as of December 31, 2017.

• 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 $374 billion of assets under advisement (“AUA”) as of December 31, 2017.

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• Distribution Management: We offer distribution management services through active portfolio management to enhance the realized value of publicly traded stock they 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 smaller 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.

Key Transactions in Calendar 2017

New Term Loan and Revolving Credit Facility

On August 23, 2017, we entered into a Term Loan and Security Agreement (the “Term Loan Agreement”) and a Revolving Loan and Security Agreement (the “Revolving Loan Agreement” and, together with the Term Loan Agreement, the “Loan Agreements”) with First Republic Bank (“First Republic”) for $75.0 million and $10.5 million, respectively. After expenses, the net amount of cash received was $85.1 million and was utilized to pay off the outstanding principal amount and accrued interest of the predecessor credit facility.

Acquisition

On August 11, 2017, we acquired substantially all of the assets of Real Asset Portfolio Management LLC (“RAPM”), a Portland, Oregon-based investment management firm focused exclusively on real assets, for a total aggregate purchase price of approximately $5.8 million, of which $5.2 million was paid in cash with the remainder settled in 27,240 shares of Class A common stock valued at approximately $0.6 million. An additional amount of up to approximately $3.5 million related to compensation is payable to the principals of RAPM who are now employees and is contingent upon those individuals remaining employed through the expected payment date in October 2018.

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Reorganization and Initial Public Offering

On March 6, 2017, we completed an initial public offering (“IPO”) pursuant to which we sold an aggregate of 13,656,250 shares of Class A common stock at a public offering price of $16.00 per share, receiving $203.2 million in net proceeds. We used $37.2 million of the net proceeds from our IPO to purchase membership units in Hamilton Lane Advisors, L.L.C. (“HLA”) from certain of its existing owners. We used $160.0 million of the net proceeds from the IPO to repay principal on our then-current credit facility and the remaining $6.0 million for IPO transaction expenses and general corporate purposes.

In connection with the IPO, we completed a series of reorganization transactions that included the following:

• our certificate of incorporation was amended and restated to, among other things, (i) provide for Class A common stock and Class B common stock, (ii) set forth the voting rights of the Class A common stock (one vote per share) and Class B common stock (ten votes per share), and (iii) establish a classified board of directors;

• the limited liability company agreement of HLA was amended and restated to, among other things, (i) appoint Hamilton Lane Incorporated (“HLI”) as the sole managing member of HLA and (ii) classify the interests that were acquired by HLI as Class A Units, the voting interests held by the continuing members of HLA as Class B Units and the non-voting interests held by the continuing members of HLA as Class C Units;

• HLA effectuated a reverse unit split of 0.68-for-1 for each unit class;

• certain HLA members exchanged their HLA units for 3,899,169 shares of Class A common stock of HLI;

• HLI issued to the Class B unitholders of HLA one share of Class B common stock for each Class B unit that they owned, in exchange for a payment of its par value;

• certain Class B unitholders of HLA entered into a stockholders agreement pursuant to which they agreed to vote all their shares of voting stock in accordance with the instructions of HLA Investments, LLC; and

• HLI entered into an exchange agreement with the direct owners of HLA pursuant to which they will be entitled to exchange HLA units for shares of our Class A common stock on a one-for-one basis.

We refer to the above-mentioned transactions, as well as the other transactions completed in connection with the IPO, collectively as the “Reorganization.”

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, incentive fees.

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

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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 therefore we 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 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, or net invested capital in, our specialized funds. The management fee during the commitment period is generally charged on capital commitments and after the commitment period (or a defined anniversary of the fund’s initial closing) is reduced by a percentage of the management fee for the preceding year or 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. Distribution management clients are charged basis point fees on either the net proceeds received from the sale of their securities or the aggregate amount of a client’s managed assets and vary depending on whether the account is for managed liquidation or active management services. Alternatively, active management clients may elect a fee structure under which they are charged an asset-based fee plus a fee based on net realized and unrealized gains and income net of realized and unrealized losses. This fee is then credited to a notional account, and we are entitled to a fixed percentage of any positive balance in the notional account on an annual basis. The remaining portion of any positive balance in the notional account is carried forward to the following year. If the incentive fee calculation results in a negative amount in a given year, that amount is applied to reduce the balance in the notional account. We are not required to repay any negative amount in the notional account.

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 and Strategic Opportunities funds, we 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 do not recognize carried interest until it is realized and all contingencies have been resolved. In the event that a payment is made to us before all contingencies are resolved, this amount would be

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included as deferred incentive fee revenue on our consolidated balance sheet and recognized as income when all contingencies have been resolved. The primary contingency regarding incentive fees is the “clawback,” 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 no contingencies exist or where the risk of clawback has been eliminated.

Expenses

Compensation and benefits isour 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 program 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.

We expect that we will incur additional expenses as compared to prior periods as a result of becoming a public company for director and officer insurance, independent director compensation and additional personnel. This includes the cost of investor relations professionals, tax professionals, SEC reporting and Sarbanes-Oxley Act compliance professionals, and other similar expenses.

Other Income (Expense)

Equity in income (loss) of investees primarilyrepresents 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

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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.

Interest expense includes interest paid and accrued on our Term Loan Agreement and Revolving Loan Agreement and our predecessor senior secured credit facility, amortization of deferred financing costs and original issue discount, the write-down of deferred financing costs and the reclassification of unrealized loss on interest rate caps to realized loss.

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

We view fee-earning AUM as a metric 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, 2017 and 2016. 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)	2017			2016			2017			2016
Revenues
Management and advisory fees	$	48,344		$	42,009		$	146,326		$	126,273
Incentive fees	16,670			322			20,098			6,868
Total revenues	65,014			42,331			166,424			133,141
Expenses
Compensation and benefits	20,006			16,739			60,247			53,161
General, administrative and other	10,704			8,840			27,586			22,925
Total expenses	30,710			25,579			87,833			76,086
Other income (expense)
Equity in income of investees	2,895			3,085			13,066			8,882
Interest expense	(664		)	(2,924		)	(5,282		)	(8,780		)
Interest income	67			39			472			159
Other non-operating income	4,188			222			4,169			232
Total other income	6,486			422			12,425			493
Income before income taxes	40,790			17,174			91,016			57,548
Income tax expense (benefit)	22,957			111			29,337			(264		)
Net income	17,833			17,063			61,679			57,812
Less: Income attributable to non-controlling interests in general partnerships	768			64			1,750			1,024
Less: Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	23,374			16,999			56,086			56,788
Net (loss) income attributable to Hamilton Lane Incorporated	$	(6,309	)	$	—		$	3,843		$	—

Revenues

	Three Months Ended December 31,				Nine Months Ended December 31,
($ in thousands)	2017		2016		2017		2016
Management and advisory fees
Customized separate accounts	$	19,860	$	17,826	$	58,253	$	52,794
Specialized funds	19,132		17,124		63,582		53,407
Advisory and reporting	7,479		6,021		20,958		17,680
Distribution management	1,873		1,038		3,533		2,392
Total management and advisory fees	48,344		42,009		146,326		126,273
Incentive fees	16,670		322		20,098		6,868
Total revenues	$	65,014	$	42,331	$	166,424	$	133,141

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Three months ended December 31, 2017 compared to three months ended December 31, 2016

Total revenues increased $22.7 million, or 54%, to $65.0 million, for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due to an increase in both management and advisory fees and incentive fees.

Management and advisory fees increased $6.3 million, or 15%, to $48.3 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016. Specialized funds revenue increased $2.0 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to a $2.0 million increase from our latest secondary fund, which added $0.8 billion in fee-earning AUM between periods. Customized separate accounts revenue increased $2.0 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 due to the addition of several new accounts and additional allocations from existing accounts as compared to the prior year period. Customized separate accounts revenue for the three months ended December 31, 2017 included $0.5 million from accounts added in the RAPM acquisition. Advisory and reporting fees increased $1.5 million to $7.5 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to the addition of new accounts during the preceding 12 months. In addition, distribution management fees increased $0.8 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 due to higher stock distribution activity and stock valuations.

Incentive fees increased $16.3 million to $16.7 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to $14.6 million recognized from one of our co-investment funds in the period. The $14.6 million recognition of carried interest did not result in cash incentive fee payments for the period as $0.8 million was attributable to non-controlling interests and $13.7 million was related to the $41.5 million of incentive fee payments that were received in fiscal 2016 but were not recognized as revenue in that period.

Nine months ended December 31, 2017 compared to nine months ended December 31, 2016

Total revenues increased $33.3 million, or 25%, to $166.4 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to higher specialized funds revenue and incentive fees.

Management and advisory fees increased $20.1 million, or 16%, to $146.3 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016. Specialized funds revenue increased $10.2 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to a $9.8 million increase in revenues from our latest secondary fund, which added $0.8 billion in fee-earning AUM since December 31, 2016. Included in our latest secondary fund’s revenue for the period was $5.8 million in retroactive fees compared to $1.9 million in retroactive fees in the prior year period. 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 $5.5 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016 due to the addition of several new accounts and additional allocations from existing accounts as compared to the prior year period. Customized separate accounts revenue for the nine months ended December 31, 2017 included $0.8 million from accounts added in the RAPM acquisition. Advisory and reporting fees increased $3.3 million to $21.0 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to the addition of new accounts during the

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preceding 12 months. In addition, distribution management fees increased $1.1 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016 due to higher stock distribution activity and stock valuations.

Incentive fees increased $13.2 million to $20.1 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to $14.6 million recognized from the co-investment fund discussed above in the results for the quarter.

Expenses

Three months ended December 31, 2017 compared to three months ended December 31, 2016

Total expenses increased $5.1 million, or 20%, to $30.7 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 due to increases in base compensation and general, administrative and other expenses.

Compensation and benefits expenses increased $3.3 million, or 20%, to $20.0 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to increased base compensation. Base compensation increased $1.9 million, or 13%, for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to increased salary expense from additional headcount in the current year period compared to the prior year period. This was partially offset by a $0.7 million reduction in expense due to the impact of tax rate changes on the $1.9 million expense accrued in fiscal 2017 to induce members of HLA to exchange their HLA units for HLI common stock in the Reorganization. This amount is expected to be paid during the third quarter of fiscal year 2019. Contingent compensation related to the RAPM acquisition was $0.8 million for the three months ended December 31, 2017. The $20.0 million of compensation expense reported above excludes compensation expense related to the $14.6 million recognition of incentive fees from one of our co-investment funds. The compensation expense related to these incentive fees was recognized in fiscal 2016 when the incentive fee payments were received. Of the $10.4 million of incentive fee compensation and the $9.9 million of base compensation and benefits recognized in advance of the associated revenue in fiscal 2016, $3.4 million and $3.3 million, respectively, was related to the $14.6 million of incentive fees recognized in this period.

General, administrative and other expenses increased by $1.9 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016. This change consisted primarily of a $1.4 million increase in consulting and professional fees, which included $1.1 million in fees related to PMC, our new joint venture, as well as increases in accounting and legal fees.

Nine months ended December 31, 2017 compared to nine months ended December 31, 2016

Total expenses increased $11.7 million, or 15%, to $87.8 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016 due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Compensation and benefits expenses increased $7.1 million, or 13%, to $60.2 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to higher base compensation. Base compensation increased $5.5 million, or 11%, for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to increased salary expense from additional headcount in the current year period compared to the prior year period. This was partially offset by a $0.7 million reduction in expense due to the impact of tax rate changes on the $1.9 million expense accrued in fiscal 2017 to induce members of HLA to exchange their HLA units for HLI common stock in the Reorganization. Contingent compensation related to the RAPM

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acquisition was $1.2 million for the nine months ended December 31, 2017. The $60.2 million of compensation expense reported above excludes compensation expense related to the $14.6 million recognition of incentive fees from the co-investment fund discussed above in the results for the quarter.

General, administrative and other expenses increased by $4.7 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016. This change consisted primarily of a $5.0 million increase in consulting and professional fees, which included $2.5 million in fees related to PMC, our new joint venture, as well as increases in accounting, legal and recruiting fees.

Other Income (Expense)

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

	Three Months Ended December 31,					Nine Months Ended December 31,
($ in thousands)	2017		2016			2017			2016
Equity in income of investees
Primary funds	$	727	$	560		$	1,779		$	1,299
Direct/co-investment funds	261		713			5,099			3,580
Secondary funds	320		212			1,428			486
Customized separate accounts	1,585		1,759			5,098			3,676
Other equity method investments	2		(159		)	(338		)	(159		)
Total equity in income of investees	$	2,895	$	3,085		$	13,066		$	8,882

Three months ended December 31, 2017 compared to three months ended December 31, 2016

Other income increased $6.1 million to $6.5 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to an increase in other non-operating income and a decrease in interest expense.

Interest expense decreased $2.3 million to $0.7 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due to a $161.8 million reduction in our debt balance between periods driven by the $160.0 million paydown using proceeds of our IPO as well as an interest rate reduction from our debt refinancing in the prior quarter.

Equity in income of investees decreased $0.2 million to $2.9 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016. This included a $0.5 million decrease in gains from our direct/co-investment funds and a $0.2 million decrease in gains from our customized separate accounts, partially offset by a $0.2 million increase in gains from our primary funds and a $0.2 million increase in gains from other equity method investments.

Other non-operating income increased $4.0 million to $4.2 million for the three months ended December 31, 2017 compared to the three months ended December 31, 2016, due primarily to a $4.2 million decrease to the TRA liability due to the re-measurement related to changes in tax rates enacted by the Tax Act.

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Nine months ended December 31, 2017 compared to nine months ended December 31, 2016

Other income increased $11.9 million to $12.4 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to an increase in gains from our investments, an increase in other non-operating income and a decrease in interest expense.

Interest expense decreased $3.5 million to $5.3 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due to a $161.8 million reduction in our debt balance between periods driven by the $160.0 million paydown using proceeds of our IPO. Included in the $5.3 million in interest expense for the nine months ended December 31, 2017 is a $1.7 million write-off of deferred financing costs and a $0.9 million reclassification of an unrealized loss on interest rate caps to a realized loss as part of the payoff of our predecessor credit facility during the period.

Equity in income of investees increased $4.2 million to $13.1 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016. This included a $1.5 million increase in gains from our direct/co-investment funds, a $1.4 million increase in gains from our customized separate accounts, a $0.9 million increase in gains from our secondary funds and a $0.5 million increase in gains from our primary funds.

Interest income increased by $0.3 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to late closing interest received from one of our funds.

Other non-operating income increased $3.9 million to $4.2 million for the nine months ended December 31, 2017 compared to the nine months ended December 31, 2016, due primarily to a $4.2 million TRA liability re-measurement related to changes in tax rates enacted by the Tax Act.

Income Tax Expense

On December 22, 2017, the Tax Act was signed into law, which enacts significant changes to U.S federal income tax laws, including, but not limited to, a reduction of the corporate income tax rate from 35% to 21%, limitation of the tax deduction for interest expense, expensing the cost of acquired qualified property, and a one-time transition tax on accumulated, undistributed foreign earnings.

As a result of the Tax Act, the estimated annual effective tax rate was revised to reflect the change in the federal statutory rate from 35% to 21% effective January 1, 2018. Consequently, the blended federal statutory tax rate for our 2018 fiscal year is 31.55%.

Our effective tax rate was 56.3% and 32.2% for the three and nine months ended December 31, 2017, respectively, and 0.6% and (0.5)% for the three and nine months ended December 31, 2016, respectively. The increase in the effective income tax rate for the three and nine months ended December 31, 2017 was due to U.S. federal and state corporate income tax expense related to HLI’s allocable share of taxable income from HLA and a provisional discrete tax expense of $21,200 related to the re-measurement of deferred tax assets due to the tax rate change pursuant to enactment of the Tax Act.

The Tax Act also requires taxpayers to pay a one-time transition tax on accumulated, undistributed earnings of certain foreign subsidiaries. We recorded a provisional tax liability of $442 for certain of our foreign subsidiaries based on estimated accumulated, undistributed earnings. As a result of the transition tax estimate, we reversed $1,100 of a previously recorded deferred tax liability on unremitted earnings of foreign subsidiaries.

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We have not completed our analysis of the new GILTI tax law, and as a result, are not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, we have not yet included any potential GILTI tax in our condensed consolidated financial statements and have not elected the related accounting policy.

While we are continuing to analyze the effects of the Tax Act on our consolidated financial statements, we generally expect it to have a net positive impact on our profitability and cash flows as a result of a reduction in the federal corporate income tax rate. Any additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement period.

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)	2017									2017
	Customized Separate Accounts			Specialized Funds			Total			Customized Separate Accounts			Specialized Funds			Total
Balance, beginning of period	$	19,721		$	9,439		$	29,160		$	18,028		$	8,793		$	26,821
Contributions (1)	783			240			1,023			3,075			1,096			4,171
Distributions (2)	(443		)	(401		)	(844		)	(1,426		)	(612		)	(2,038		)
Foreign exchange, market value and other (3)	322			(4		)	318			706			(3		)	703
Balance, end of period	$	20,383		$	9,274		$	29,657		$	20,383		$	9,274		$	29,657

(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, (ii) market value appreciation (depreciation) from customized separate accounts that earn fees on a NAV fee base and (iii) the addition of assets from the RAPM acquisition.

Three months ended December 31, 2017

Fee-earning AUM increased $0.5 billion, or 2%, to $29.7 billion during the three months ended December 31, 2017, due primarily to new customized separate accounts commitments.

Customized separate accounts fee-earning AUM increased $0.7 billion, or 3%, to $20.4 billion for the three months ended December 31, 2017. Customized separate accounts contributions were $0.8 billion for three months ended December 31, 2017, due to new allocations from existing clients and new clients. Distributions were $0.4 billion for the three months ended December 31, 2017, due primarily to returns of capital in accounts earning fees on a net invested capital or NAV fee base. Included in foreign exchange, market value and other for the three months ended December 31, 2017 is a $0.3 billion increase in fee-earning AUM from the RAPM acquisition.

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Specialized funds fee-earning AUM decreased $0.2 billion, or 2%, to $9.3 billion for the three months ended December 31, 2017. Specialized fund contributions were $0.2 billion for the three months ended December 31, 2017, due primarily to contributions from accounts earning fees on a net invested capital fee base. Distributions were $0.4 billion for the three months ended December 31, 2017, due to $0.2 billion from accounts reaching the end of their term and $0.2 billion from returns of capital in funds earning fees on a net invested capital fee base.

Nine Months Ended December 31, 2017

Fee-earning AUM increased $2.8 billion, or 11%, to $29.7 billion during the nine months ended December 31, 2017, due primarily to new specialized funds and customized separate accounts commitments.

Customized separate accounts fee-earning AUM increased $2.4 billion, or 13%, to $20.4 billion for the nine months ended December 31, 2017. Customized separate accounts contributions were $3.1 billion for the nine months ended December 31, 2017, due to new allocations from existing clients and new clients. Distributions were $1.4 billion for the nine months ended December 31, 2017 due to $0.2 billion from accounts reaching the end of their account term, $0.2 billion from a client moving to an advisory relationship, $0.4 billion from accounts moving from a committed capital to a net invested fee base as their investment period expired and $0.6 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base. Included in foreign exchange, market value and other for the nine months ended December 31, 2017 is a $0.7 billion increase in fee-earning AUM from the RAPM acquisition.

Specialized funds fee-earning AUM increased $0.5 billion, or 5%, to $9.3 billion during the nine months ended December 31, 2017. Specialized fund contributions were $1.1 billion during the nine months ended December 31, 2017, due primarily to $0.5 billion in new commitments to our latest secondary fund during the period and contributions from accounts earning fees on a net invested capital fee base. Distributions were $0.6 billion for the nine months ended December 31, 2017, due primarily to returns of capital in funds earning fees on a net invested capital 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.

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 Loan Agreements and predecessor credit facility, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) non-operating income (loss) and (f) certain other significant items that we believe are not indicative of our core performance.

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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.

The following table shows a reconciliation of net (loss) income attributable to HLI to Fee Related Earnings and Adjusted EBITDA for the three and nine months ended December 31,2017 and 2016:

	Three Months Ended December 31,						Nine Months Ended December 31,
($ in thousands)	2017			2016			2017			2016
Net (loss) income attributable to Hamilton Lane Incorporated (1)	$	(6,309	)	$	—		$	3,843		$	—
Income attributable to non-controlling interests in general partnerships	768			64			1,750			1,024
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	23,374			16,999			56,086			56,788
Incentive fees (2)	(16,670		)	(322		)	(20,098		)	(6,868		)
Incentive fee related compensation (3)	1,027			158			2,709			3,370
Interest income	(67		)	(39		)	(472		)	(159		)
Interest expense	664			2,924			5,282			8,780
Income tax expense (benefit)	22,957			111			29,337			(264		)
Equity in income of investees	(2,895		)	(3,085		)	(13,066		)	(8,882		)
Contingent compensation related to acquisition	771			—			1,198			—
Other non-operating income	(4,188		)	(222		)	(4,169		)	(232		)
Fee Related Earnings	$	19,432		$	16,588		$	62,400		$	53,557
Depreciation and amortization	486			467			1,396			1,440
Equity-based compensation	1,284			1,169			4,272			3,506
Incentive fees (2)	16,670			322			20,098			6,868
Incentive fees attributable to non-controlling interests (2)	(834		)	—			(834		)	—
Incentive fee related compensation (3)	(1,027		)	(158		)	(2,709		)	(3,370		)
Interest income	67			39			472			159
Adjusted EBITDA	$	36,078		$	18,427		$	85,095		$	62,160

(1) Prior to our IPO, HLI was a wholly-owned subsidiary of HLA with no operations or assets.

(2) Incentive fees for the three and nine months ended December 31, 2017 include $14.6 million of non-cash carry related to the $41.5 million of incentive fee payments received in fiscal 2016. Of the $14.6 million, $13.7 million is included in net income and $0.8 million is attributable to non-controlling interests.

(3) Incentive fee related compensation includes incentive fee compensation expense, bonus and other revenue sharing related to carried interest that is classified as base compensation. Incentive fee related compensation for the three and nine months ended December 31,2017 excludes compensation expense related to the $13.7 million recognition of incentive fees included in net income from one of our co-investment funds during the period as the related incentive fee compensation was recognized in fiscal 2016.

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Non-GAAP Earnings Per Share

Non-GAAP earnings per share measures our per-share earnings 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 (loss) income attributable to HLI and adjusted shares outstanding to weighted-average shares of Class A common stock outstanding. The three and nine months ended December 31, 2016 are not presented below as there were no comparable diluted earnings per share of Class A common stock in those periods.

	Three Months Ended December 31,			Nine Months Ended December 31,
	2017			2017
(in thousands, except share and per-share amounts)
Net (loss) income attributable to Hamilton Lane Incorporated	$	(6,309	)	$	3,843
Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C.	23,374			56,086
Income tax expense	22,957			29,337
Write-off of deferred financing costs (1)	—			2,544
Impact of Tax Act on TRA liability(2)	(4,186		)	(4,186		)
Impact of Tax Act on IPO related compensation(3)	(669		)	(669		)
Contingent compensation related to acquisition	771			1,198
Adjusted pre-tax net income	35,938			88,153
Adjusted income taxes (4)	(11,450		)	(32,185		)
Adjusted net income	$	24,488		$	55,968
Weighted-average shares of Class A common stock outstanding - diluted	18,126,532			18,703,650
Exchange of Class B and Class C units in HLA (5)	34,438,669			34,438,669
Assumed exercise and vesting of employee awards (6)	751,764			—
Adjusted shares	53,316,965			53,142,319
Non-GAAP earnings per share	$	0.46		$	1.05

(1) Represents write-off of debt issuance costs and realized loss on interest rate caps related to the payoff of our predecessor credit facility during the nine months ended December 31, 2017.

(2) Represents change in payable to related parties pursuant to the TRA related to changes in tax rates enacted by the Tax Act. The change in liability was recorded to other non-operating income in the Condensed Consolidated Statements of Income.

(3) Represents reduction in expense due to the impact of tax rate changes on the $1.9 million expense accrued in fiscal 2017 to induce members of HLA to exchange their HLA units for HLI common stock in the Reorganization.

(4) Represents corporate income taxes at our estimated statutory tax rate of 36.51% for the nine month period ended December 31, 2017 applied to adjusted pre-tax net income. The 36.51% is based on a blended federal tax statutory rate of 35.00% for 275 days and 21.00% for 90 days and a combined state income tax rate net of federal benefits of 4.96%. The three month period ended December 31, 2017 includes an adjustment for the difference between the 39.71% estimated statutory tax rate used for the six month period ended September 30, 2017 and the 36.51% estimated statutory tax rate used for the nine month period ended December 31, 2017.

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(5) 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.

(6) Assumed exercise and vesting of employee awards includes 1,161,337 shares of restricted stock net of assumed vesting under the treasury stock method for the three months ended December 31, 2017. Since the inclusion of such shares would be antidilutive, they were excluded from the calculation of GAAP dilutive earnings per share of Class A common stock for the three months ended December 31, 2017.

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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 date indicated through September 30,2017 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 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 take to 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. 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. 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. 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	1,171 bps
PEF V	2003	135	127	1.7	15.2%	958 bps	1,072 bps
PEF VI	2007	494	452	1.6	12.9%	217 bps	552 bps
PEF VII	2010	262	88	1.5	17.6%	212 bps	644 bps
PEF VIII	2012	427	5	1.7	19.3%	921 bps	1,289 bps
PEF IX	2015	517	5	1.3	58.1%	4,086 bps	4,181 bps
Secondaries
Pre-Fund	—	—	363	1.5	17.1%	1,321 bps	1,167 bps
Secondary Fund I	2005	360	353	1.3	5.5%	138 bps	367 bps
Secondary Fund II	2008	591	523	1.6	22.6%	747 bps	1,155 bps
Secondary Fund III	2012	909	185	1.8	31.1%	1,557 bps	2,023 bps
Secondary Fund IV	2016	1,917	—	—	—	—	—
Co-investments
Pre-Fund	—	—	239	2.0	21.7%	1,716 bps	1,658 bps
Co-Investment Fund	2005	604	342	1.5	6.5%	74 bps	311 bps
Co-Investment Fund II	2008	1,195	765	2.6	23.2%	1,083 bps	1,456 bps
Co-Investment Fund III	2014	1,243	15	5.0	136.8%	12,937 bps	13,523 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. ML HY II PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015	2015	71	27	1.3	24.7%	1,425 bps	1,882 bps
Strat Opps 2016	2016	214	22	1.2	68.6%	5,355 bps	5,977 bps
Strat Opps 2017	2017	435	—	—	—	—	—

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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	1,171 bps	708 bps
PEF V	2003	135	132	1.7	1.6	14.7%	10.1%	884 bps	407 bps	996 bps	513 bps
PEF VI	2007	494	507	1.6	1.6	12.3%	9.5%	140 bps	(98) bps	474 bps	230 bps
PEF VII	2010	262	269	1.4	1.4	14.5%	10.1%	38 bps	(407) bps	430 bps	(23) bps
PEF VIII	2012	427	305	1.2	1.2	11.3%	7.3%	(113) bps	(537) bps	163 bps	(268) bps
PEF IX	2015	517	236	1.2	1.2	21.2%	20.8%	555 bps	354 bps	668 bps	399 bps
Secondaries
Pre-Fund	—	—	363	1.5	N/A	17.1%	N/A	1,321 bps	N/A	1,167 bps	N/A
Secondary Fund I	2005	360	353	1.3	1.2	5.5%	4.2%	138 bps	(32) bps	367 bps	189 bps
Secondary Fund II	2008	591	570	1.6	1.5	20.7%	14.7%	533 bps	(68) bps	946 bps	334 bps
Secondary Fund III	2012	909	794	1.4	1.3	20.3%	16.6%	726 bps	313 bps	1,097 bps	685 bps
Secondary Fund IV	2016	1,917	418	1.3	1.6	44.1%	>100%	2,627 bps	8,932 bps	2,580 bps	8,833 bps
Co-investments
Pre-Fund	—	—	244	2.0	N/A	21.4%	N/A	1,651 bps	N/A	1,602 bps	N/A
Co-Investment Fund	2005	604	577	1.1	1.0	1.5%	0.1%	(457) bps	(626) bps	(204) bps	(378) bps
Co-Investment Fund II	2008	1,195	1,127	2.1	1.8	20.5%	16.6%	824 bps	418 bps	1,197 bps	787 bps
Co-Investment Fund III	2014	1,243	1,092	1.4	1.3	26.9%	21.4%	1,319 bps	775 bps	1,512 bps	936 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. ML HY II PME	Net Spread vs. ML HY II PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015	2015	71	67	1.2	1.2	16.6%	12.9%	589 bps	219 bps	1,054 bps	679 bps
Strat Opps 2016	2016	214	211	1.1	1.1	18.0%	15.5%	712 bps	482 bps	1,206 bps	998 bps
Strat Opps 2017	2017	435	130	1.0	1.0	7.2%	6.5%	(30) bps	(241) bps	377 bps	239 bps

Performance Methodology

The indices presented for comparison are the S&P 500, MSCI World, Credit Suisse High Yield II (“CS HY II”) and Bank of America Merrill Lynch High Yield Master II (“ML HY II”), calculated on a 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 ML HY II Index consists of below investment grade U.S. dollar denominated corporate bonds that are publicly issued in the U.S. domestic market. Issues included in the index have maturities of one year or more and have a credit rating lower than BBB-/Baa3, but are not in default.

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Our IRR represents the pooled IRR for all discretionary investments for the period from inception to September 30,2017. The returns are net of management fees, carried interest and expenses charged by the underlying fund managers, but do not include our management fees, carried interest or expenses. Our IRR would decrease with the inclusion of our management fees, carried interest and expenses.

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.

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 distributions to holders of HLA units and dividend payments to our stockholders; and (5) borrowings, interest payments and repayments under our predecessor credit facility and Loan Agreements. As of December 31, 2017 and March 31, 2017, our cash and cash equivalents, including investments in money market funds, were $68.7 million and $32.3 million, respectively.

Ourmaterialsources 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 inour 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. We also use our cash flows to fund commitments to certain of ourspecialized 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.

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We previously utilized a $260.0 million term loan credit facility with Morgan Stanley Senior Funding, Inc. as administrative agent, which was executed in July 2015 and subsequently amended effective in November 2016. Loans under this predecessor credit facility bore interest at our option of either LIBOR subject to a floor of 0.75% plus 3.50% per annum, or base rate subject to a floor of 1.75% plus 2.50% per annum. This facility was guaranteed by all of our direct and indirect subsidiaries, with certain exceptions, and was secured by pledges of our and our guarantor subsidiaries’ personal property assets and material real property. The credit agreement governing the facility contained financial and operating covenants. We made quarterly amortization payments of principal and interest and were permitted to make voluntary prepayments. We used a portion of the proceeds of the IPO to make a voluntary principal prepayment of $160.0 million in March 2017. The outstanding balance of $85.5 million under the predecessor credit facility was refinanced using proceeds of the Term Loan Agreement and Revolving Loan Agreement described below. As of August 23, 2017, the predecessor term loan credit facility was paid off and terminated.

Term Loan and Revolving Credit Facility

In August 2017, we entered into the Term Loan Agreement and the Revolving Loan Agreement with First Republic Bank. Proceeds from the Loan Agreements were utilized to pay off the outstanding principal amount and accrued interest of the predecessor credit facility.

The Term Loan Agreement provides for a term loan facility in an aggregate principal amount of $75.0 million and also contains an accordion feature that allows HLA to increase the commitment under the facility by up to $25.0 million under certain conditions (the “Term Loan Facility”). Borrowings under the Term Loan Facility accrue interest at a floating per annum rate equal to the greater of (i) the prime rate minus 1.25% and (ii) 2.75%. The Term Loan Facility matures on November 1, 2024.

The Revolving Loan Agreement provides for a revolving credit facility up to an aggregate principal amount of $25.0 million (the “Revolving Loan Facility”). The Revolving Loan Facility is for working capital and general corporate purposes. Borrowings under the Revolving Loan Facility accrue interest at a floating per annum rate equal to the greater of (i) the prime rate minus 1.50% and (ii) 2.50%. The Revolving Loan Facility matures on August 21, 2020 and requires compliance with conditions precedent that must be satisfied prior to any borrowing.

As of December 31, 2017 and March 31, 2017, the principal amount of debt outstanding equaled $85.0 million and $86.1 million, respectively. 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, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain (i) a specified amount of management fees in each fiscal year during the term of each of the Loan Agreements, (ii) adjusted EBITDA less dividend distributions on a trailing six-month basis of $12.5 million or greater, tested semi-annually, and (iii) a specified tangible net worth during each fiscal year during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all the assets of HLA.

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.

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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 Loan Agreements, (7) pay income taxes, and (8) make distributions and dividend payments to our stockholders and holders of HLA units in accordance with our distribution policy.

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 December 31, 2017 and March 31, 2017, we were required to maintain approximately $1.8 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.

Cash Flows

Nine Months Ended December 31, 2017 and 2016

	Nine Months Ended December 31,
($ in thousands)	2017			2016
Net cash provided by operating activities	$	95,343		$	77,627
Net cash used in investing activities	(15,196		)	(14,350		)
Net cash used in financing activities	(43,818		)	(77,423		)
Increase (decrease) in cash, cash equivalents and restricted cash	$	36,329		$	(14,146	)

Operating Activities

Net cash provided by operating activities was $95.3 million and $77.6 million during the nine months ended December 31,2017 and 2016, respectively. These operating cash flows were driven primarily by:

• net income of $61.7 million and $57.8 million during the nine months ended December 31, 2017 and 2016, respectively;

• proceeds received from investments of $11.3 million and $6.8 million during the nine months ended December 31, 2017 and 2016, respectively, which represent a return on investment from specialized funds and certain customized separate accounts;

• net change in operating assets and liabilities of $8.3 million and $16.3 million during the nine months ended December 31, 2017 and 2016, respectively, primarily for the accrual related to our annual bonus program that is paid in March, which was partially offset during the nine months ended December 31, 2017 by the deferred incentive fee recognized from one of our co-investment funds.

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Investing Activities

Our net cash flow (used in) investing activities was ($15.2) million and ($14.4) million during the nine months ended December 31, 2017 and 2016, respectively. These amounts were driven primarily by:

• net contributions to investments of ($8.8) million and ($13.6) million during the nine months ended December 31, 2017 and 2016, respectively;

• the cash purchase amount of ($5.2) million for the RAPM acquisition during the nine months ended December 31, 2017; and

• purchases of furniture, fixtures and equipment consisting primarily of computers and equipment of ($1.2) million and ($0.7) million during the nine months ended December 31, 2017 and 2016, respectively.

Financing Activities

Our net cash flow (used in) financing activities was ($43.8) million and ($77.4) million during the nine months ended December 31, 2017 and 2016, respectively. Cash used in financing activities was attributable primarily to:

• debt issuance under the Loan Agreements net of deferred financing fees of $85.1 million during the nine months ended December 31, 2017;

• debt repayments of ($86.6) million and ($2.0) million during the nine months ended December 31, 2017 and 2016, respectively;

• distributions to non-controlling interest in general partnerships of ($3.5) million and ($2.4) million during the nine months ended December 31, 2017 and 2016, respectively;

• purchases of shares of Class A common stock for tax withholdings of ($0.7) million during the nine months ended December 31, 2017 and purchases of membership interests of ($6.1) million during the nine months ended December 31,2016;

• sales of membership interests of $4.7 million during the nine months ended December 31,2016;

• dividends paid of ($6.3) million during the nine months ended December 31, 2017; and

• distributions to HLA members of ($32.3) million and ($72.5) million during the nine months ended December 31, 2017 and 2016, respectively.

Off-Balance Sheet Arrangements

There has been no material change in our off-balance sheet arrangements discussed in our 2017 Form 10-K.

Contractual Obligations, Commitments and Contingencies 

The following table represents our contractual obligations as of December 31, 2017, aggregated by type.

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	Contractual Obligations, Commitments and Contingencies
(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating leases	$	18,679	$	4,896	$	9,056	$	3,987	$	740
Debt obligations payable (1)	84,981		12,794		13,594		27,188		31,405
Interest on debt obligations payable (2)	11,134		2,717		4,432		2,940		1,045
Capital commitments to our investments (3)	86,942		86,942		—		—		—
Total	$	201,736	$	107,349	$	27,082	$	34,115	$	33,190

(1) Represents scheduled debt obligation payments under our Loan Agreements.

(2) Represents interest to be paid over the maturity of the related debt obligations, which has been calculated assuming no pre-payments will be made and debt will be held until its final maturity date. The future interest payments are calculated using the variable interest rate of 3.25% on our Term Loan Agreement and 3.00% on our Revolving Loan Agreement in effect as of December 31, 2017.

(3) Represents commitments by us to fund a portion of each investment made by our specialized funds and certain customized separate account entities. These amounts are generally due on demand and are therefore presented in the less than one year category.

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 2017 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. Qualitative and Quantitative 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

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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.

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 over 3,000 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 $31.4 million of deferred incentive fee revenue on our balance sheet as of December 31, 2017. Minor decreases in underlying fair value would not affect the amount of deferred incentive fee revenue subject to clawback. In order for any amount of our deferred incentive fee revenue to have been subject to clawback, the NAV across our funds as of December 31, 2017 would have needed to decline by over 50%.

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, 2017, we had $85.0 million in borrowings outstanding under our Loan Agreements. The annual interest rate on the Term Loan Agreement, which is at the prime rate minus 1.25%, subject to a floor of 2.75%, was 3.25% as of December 31, 2017. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.50%, was 3.00% as of December 31, 2017.

Based on the floating rate component of our Loan Agreements payable as of December 31, 2017, we estimate that a 100 basis point increase in interest rates would result in increased interest expense related to the loan of $0.9 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, 2017. 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 ineffective at December 31, 2017 due to the existence of a previously reported material weakness in our internal control over financial reporting related to our calculation of deferred taxes and amounts payable under the tax receivable agreement we entered into in connection with our IPO. The material weakness was identified and discussed in Part II, Item 9A of our 2017 Form 10-K.

Notwithstanding the identified material weakness, management, including our Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements included in this Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented in accordance with GAAP.

Changes in Internal Control over Financial Reporting

We are continuing our remediation efforts in connection with the identification of the material weakness discussed above and have taken the following steps during the quarter ended December 31, 2017:

• We continued to implement procedures intended to ensure that future calculations are performed correctly.

• We are establishing additional monitoring and oversight controls designed to ensure the accuracy and completeness of our consolidated financial statements and related disclosures.

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While we took considerable action to remediate the material weakness, such remediation has not been fully evidenced. Accordingly, we continue to test our controls implemented in the first quarter to assess whether our controls are operating effectively. While there can be no assurance, we believe our material weakness will be remediated during the course of fiscal 2018.

Other than the changes discussed above, there have been no changes to our internal control over financial reporting during the quarter ended December 31, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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. Currently, there are no material proceedings pending or, to our knowledge, threatened against us.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our 2017 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 share repurchase activity for the quarter ended December 31, 2017:

Period	Total Number of Shares Purchased(1)	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
October 1-31, 2017	—	$	—	—	—
November 1-30, 2017	13	$	27.49	—	—
December 1-31, 2017	—	$	—	—	—
Total	13	$	27.49

(1) Includes shares of Class A common stock tendered by an employee as payment of taxes withheld on the vesting of restricted stock granted under HLI’s 2017 Equity Incentive Plan.

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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	Form of Director Restricted Stock Award Agreement under the 2017 Equity Incentive Plan					*
10.2	Amendment No. 1 to the Hamilton Lane Incorporated 2017 Equity Incentive Plan					*
10.3	Amendment No. 1 to the Exchange Agreement					*
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley					*
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley					*
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
100.INS	XBRL Instance Document					*
101.SCH	XBRL Taxonomy Extension Schema					*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase					*
101.LAB	XBRL Taxonomy Extension Label Linkbase					*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase					*
101.DEF	XBRL Taxonomy Extension Definition Linkbase					*

‡ Furnished herewith.

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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 9th day of February, 2018.

HAMILTON LANE INCORPORATED
By:	/s/ Randy M. Stilman
	Name: Randy M. Stilman
	Title: Chief Financial Officer and Treasurer
By:	/s/ Michael Donohue
	Name: Michael Donohue
	Title: Managing Director and Controller

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EX-10.1

Exhibit 10.1

DIRECTOR RESTRICTED STOCK AWARD AGREEMENT

UNDER THE HAMILTON LANE INCORPORATED 2017 EQUITY INCENTIVE PLAN

This Restricted Stock Award Agreement (this “Agreement”) is entered into as of the Grant Date (as defined below), by and between the Grantee (as defined below) and Hamilton Lane Incorporated (the “Company”). Except as otherwise defined herein, capitalized terms used in this Agreement have the respective meanings set forth in the Plan (as defined below).

WITNESSETH THAT:

WHEREAS, the Company maintains the Hamilton Lane Incorporated 2017 Equity Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement; and

WHEREAS, the Grantee has been selected by the committee administering the Plan (the “Committee”) to receive a Restricted Stock Award under the Plan.

NOW, THEREFORE, IT IS AGREED, by and between the Company and the Grantee as follows:

1.    Award. Subject to the terms of this Agreement and the Plan, the Grantee is hereby granted the Restricted Stock as described in paragraph 2.

2.    Terms of Award.

(a)    The “Grantee” is _______________.

(b)    The “Grant Date” is _______________.

(c)    The number of Class A common shares of the Company (“Common Shares”) granted under this Agreement is _______ (the “Restricted Stock”).

3.    Vesting Schedule. (a) Except as otherwise provided herein, the Restricted Stock that has not been previously forfeited shall become vested according to the following schedule:

Shares of Restricted Stock Becoming Vested Vesting Date

(b)    The Grantee’s right to vest in this Award is conditioned upon the Grantee’s continuous service as a director on the Board of the Company. If the Grantee incurs a Termination of Service, the Grantee’s rights with respect to the Award shall be affected as follows:

(i) If the Grantee’s Termination of Service occurs by reason of the Grantee’s death or disability, 100% of the unvested Restricted Stock shall vest as of the date of such termination.

(ii) If the Grantee experiences a Termination of Service for Cause, any Restricted Stock granted to the Grantee shall be forfeited at the time of such termination (or, if earlier, at the time that the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service), and the Committee may require that such Grantee disgorge any profit, gain or other benefit received in respect of the lapse of restrictions on any prior grant of Restricted Stock for a period of up to twelve months prior to the Grantee’s Termination of Service for Cause.

(iii) Except as otherwise provided in subparagraphs (b)(i) or (b)(ii) above, if the Grantee experiences a Termination of Service for any reason, a pro rata portion of any Restricted Stock granted to the Grantee that is not fully vested as of the date of Termination of Service shall vest on the vesting date noted above, such pro rata portion to be calculated by the Committee based on the length of Grantee’s service on the Board during the Restricted Period; if, however, the Grantee serves his or her then-current full term, but such term ends prior to the end of the Restricted Period, any unvested Restricted Stock shall not be forfeited and shall instead fully vest on the vesting date noted above.

(c) Subject to Subsection 12(d) and Section 13 of the Plan, upon the occurrence of a Change in Control, 100% of the unvested Restricted Stock shall vest as of the date of the Change in Control.

4.    Legend on Stock Certificates. The Company may require that certificates for shares distributed to the Grantee pursuant to this Agreement bear any legend that counsel to the Company believes is necessary or desirable to facilitate compliance with applicable securities laws. The Company shall not be obligated to transfer any stock to the Grantee free of the restrictive legend described in this paragraph 4 or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate any applicable law or any applicable regulation or requirement of any securities exchange or similar entity.

5.    Transferability. The Grantee shall not transfer or assign, in whole or in part, Restricted Stock subject to this Agreement in which the Grantee is not vested, other than (a) by will or by the laws of descent and distribution, or (b) by designation, in a manner established by the Company, of a beneficiary or beneficiaries to exercise the rights of the Grantee and to receive any property distributable with respect to this Agreement upon the death of the Grantee upon satisfaction of the vesting conditions described in paragraph 3 above.

6.    Withholding. Any tax consequences arising from the grant of this Award shall be borne solely by the Grantee. The Company and/or its Company Affiliates shall withhold taxes according to requirements under the applicable laws, rules and regulations, including withholding taxes at source. The Grantee will not be entitled to receive from the Company any Common Shares hereunder prior to the full payment of the Grantee’s tax liabilities relating to this Award. The Committee may, in its discretion, permit the Grantee to elect, subject to such conditions as the Committee shall impose, (a) to have Common Shares otherwise issuable under the Plan withheld by the Company or (b) to deliver to the Company previously acquired Common Shares (through actual tender or attestation), in either case for the greatest number of whole shares having a Fair Market Value on the date immediately preceding the date of vesting not in excess of the amount required to satisfy the withholding tax obligations.

7.    Compliance with Applicable Law. Notwithstanding any other provision of this Agreement, the Company shall have no obligation to issue any shares of Restricted Stock under this Agreement if such issuance would violate any applicable law or any applicable regulation or requirement of any securities exchange or similar entity.

8.    Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding on all parties. Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.

9.    Not an Employment Contract. This Award will not confer on the Grantee any right with respect to the continuance of employment or other service to the Company or any Company Affiliate, nor will it interfere in any way with any right the Company or any Company Affiliate would otherwise have to terminate or modify the terms of such Grantee’s employment or other service at any time.

10.    Noncompetition. In consideration of the Restricted Stock, the Grantee agrees and covenants as follows:

(a)     The Grantee shall never engage in the form of Competition described in Section 1(b)(12)(E) of the Plan while employed by, or providing services to, the Company or any Company Affiliate or after his or her Termination of Service (for any reason).

(b)    This subparagraph 10(b) shall apply if the Grantee is not otherwise subject to a Non-Competition Agreement. The Grantee may not engage in Competition while he or she is employed by, or is providing services to, the Company or any Company Affiliate. If the Grantee has a voluntary Termination of Service that is without Good Reason, the Grantee may not engage in Competition for a period of six months from the date of such Termination of Service; provided, however that with respect to that form of Competition described in subparagraph 10(a) above, the applicable time period shall be indefinite. If the Grantee violates the provisions of this paragraph 10, the Company may exercise any rights it has, in law or in equity (including rights to consequential damages) stemming from the fact that the Grantee has engaged in Competition in violation of the provisions of this paragraph 10.

(c)     This subparagraph 10(c) shall apply if the Grantee is subject to a Non-Competition Agreement. The Grantee shall be bound by and comply with the terms and conditions of any Non-Competition Agreement as a condition of receiving the Restricted Stock. If the Grantee violates the provisions of this paragraph 10, the Company may exercise any rights it has, in law or in equity (including rights to consequential damages) stemming from the fact that the Grantee has violated the provisions of this paragraph 10 or his or her Non-Competition Agreement.

11.    Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Grantee, at the Grantee’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.

12.    Amendment. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Grantee and the Company without the consent of any other person.

13.    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

14.    Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company and the Grantee and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the transfer restrictions set forth in this Agreement and the Plan.

15.    Applicable Law. This Agreement shall be construed in accordance with the laws of Delaware (without reference to principles of conflict of laws).

16.    Clawback Policy. Notwithstanding any other provision of this Agreement, this Award will be subject to any compensation recovery or clawback policy the Company adopts, including any policy required to comply with applicable law or listing standards, as such policy may be amended from time to time in the Company’s sole discretion.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Restricted Stock Award Agreement on ___________________, ____.

HAMILTON LANE INCORPORATED
By:
	Name:
	Title:
	Grantee
	Address:

EX-10.2

EXHIBIT 10.2

AMENDMENT NO. 1

TO THE

HAMILTON LANE INCORPORATED

2017 EQUITY INCENTIVE PLAN

WHEREAS, Hamilton Lane Incorporated, a Delaware corporation (the “Company”) maintains the Hamilton Lane Incorporated 2017 Equity Incentive Plan (the “Plan”); and

WHEREAS, the Company desires to amend the Plan to provide additional flexibility relating to the forfeiture of unvested awards in the event written notice of intent to effect a termination of service is provided.

NOW, THEREFORE,BE IT RESOLVED, that, effective as of the date hereof, the Plan be, and it hereby is, amended as follows:

1. The definition of “Committee” is amended to read as follows:

“Committee”shall mean the Compensation Committee of the Board or such other committee of the Board as the Board shall designate from time to time, which committee shall consist of not fewer than two directors of the Company, each of whom shall be appointed byand serve at the pleasure of the Board. During any period during which the Company is required by applicable law or stock exchange rule, after giving effect to all applicable exemptions, to have a compensation committee consisting in whole or in part of “independent directors” (as defined in such law or rule), the Board shall cause the Committee to have the requisite composition.

2. The second sentence of Section 5(f)(2) of the Plan is amended to read as follows:

Such Option may be exercised to the extent of the number of shares with respect to which the Grantee could have exercised on the date of such Termination of Service (or, if earlier, on the date that the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service), or to any greater extent permitted by the Committee, and shall terminate with respect to the remaining shares; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 5(f)(2) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee, in which case any Option may be exercised to the extent of the number of shares with respect to which the Grantee could have exercised on the date of such Termination of Service, or to any greater extent permitted by the Committee, and shall terminate with respect to the remaining shares.

3. The first sentence of Section 7(d)(1) of the Plan is amended to read as follows:

Unless the Committee shall otherwise determine at the date an Award of Restricted Stock is made to the Grantee by the Committee, the Restricted Period shall lapse in four (4) equal annual installments beginning on the one (1) year anniversary of the date of grant, unless sooner terminated as otherwise provided herein; provided, however, in no event shall the Restricted Period lapse earlier than one year after the date of grant.

4. Section 7(d)(2)(C) of the Plan is amended to read as follows:

Due to Any Other Reason. In the event a Grantee experiences a Termination of Service for any reason other than death, disability, or Cause, any Restricted Stock granted to such Grantee that is subject to a Restricted Period as of the date of Termination of Service (or, if earlier, as of the date that the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service) shall be forfeited at the time of such termination or notice of termination, as applicable; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 7(d)(2)(C) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee, in which case any Restricted Stock granted to the Grantee that is subject to a Restricted Period as of the date of Termination of Service shall be forfeited at the time of such termination.

5. The fourth sentence of Section 7(d)(3) of the Plan is amended to read as follows:

Except as provided in Section 12 or in a Grantee’s employment agreement, and unless the Committee shall otherwise determine at the date of grant and sets forth in the Award Agreement, if the Grantee’s Termination of Service occurs for any reason prior to the end of the Performance Period (or if prior to the end of the Performance Period, the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service), the Grantee shall forfeit all Performance Stock granted with respect to such Performance Period; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 7(d)(3) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee, in which case the Grantee shall forfeit all Performance Stock granted with respect to the Performance Period if the Grantee’s Termination of Service occurs for any reason prior to the end of such Performance Period.

2

6. Section 8(c)(2)(C) of the Plan is amended to read as follows:

Due to Any Other Reason. In the event a Grantee experiences a Termination of Service for any reason other than death, disability, or Cause, any RSUs granted to such Grantee that are subject to a Restricted Period as of the date of Termination of Service (or, if earlier, as of the date that the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service) shall be forfeited at the time of such termination or notice of termination, as applicable; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 8(c)(2)(C) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee, in which case any RSUs granted to a Grantee that are subject to a Restricted Period as of the date of Termination of Service shall be forfeited at the time of such termination.

7. The fourth sentence of Section 8(c)(3) of the Plan is amended to read as follows:

Except as provided in Section 12 or in a Grantee’s employment agreement that is approved by the Committee, and unless the Committee shall otherwise determine at the date of grant and sets forth in the Award Agreement, if the Grantee’s Termination of Service occurs for any reason prior to the end of the Performance Period (or if prior to the end of the Performance Period, the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service), the Grantee shall forfeit all PSUs granted with respect to such Performance Period; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 8(c)(3) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee, in which case the Grantee shall forfeit all PSUs granted with respect to the Performance Period if the Grantee’s Termination of Service occurs for any reason prior to the end of such Performance Period.

8. The second sentence of Section 9(b) of the Plan is amended to read as follows:

Unless the Committee shall otherwise determine at the date an Award of Dividend Equivalents is made to the Grantee by the Committee, such Dividend Equivalents shall accumulate until the third anniversary of the date of grant, shall vest and be paid upon such third anniversary provided the Grantee has not incurred a Termination of Service (and none of the Company, Company Affiliate, or Grantee has provided notice of intention to effect a Termination of Service) prior to such date and shall thereafter prior to the earliest of (i) the expiration date of such

3

Award, (ii) the Grantee’s Termination of Service or (iii) the date on which the Company, Company Affiliate, or Grantee, as applicable, provides written notice of its (or his or her) intention to effect a Termination of Service, be paid to the Grantee at the same time as the corresponding cash dividends are paid to shareholders; provided, however, that in the Committee’s sole discretion, written notice of an intention to effect a Termination of Service may be disregarded for purposes of this Section 9(b) for retirement and succession planning purposes or any other purpose deemed appropriate by the Committee.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered, all as of February 6, 2018.

HAMILTON LANE INCORPORATED
By:	/s/ Lydia A. Gavalis
	Name: Lydia A. Gavalis
	Title: Secretary and General Counsel

4

EX-10.3

EXHIBIT 10.3

AMENDMENT No. 1

TO THE

EXCHANGE AGREEMENT

This AMENDMENT No. 1 TO THE EXCHANGE AGREEMENT is entered into as of February 6, 2018 among Hamilton Lane Incorporated (the “Corporation”), Hamilton Lane Advisors, Inc., Hamilton Lane Advisors, L.L.C. (the “Company”), HL Management Investors, LLC, HLA Investments, LLC and Mario L. Giannini. Capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed to them in that certain Exchange Agreement as of March 6, 2017, by and among the Corporation, Hamilton Lane Advisors, Inc., the Company, Hamilton Lane Advisors, L.L.C., HL Management Investors, LLC, HLA Investments, LLC and the other persons and entities party thereto (the “Exchange Agreement”).

WHEREAS, the Exchange Agreement contemplates exchanges from time to time of Class B units and Class C units of the Company for a corresponding number of shares of common stock of the Corporation or, at the election of the Corporation, for cash;

WHEREAS, the parties hereto constitute the parties sufficient to approve an amendment to the Exchange Agreement pursuant to Section 4.14 of the Exchange Agreement;

WHEREAS, the parties hereto wish to amend the Exchange Agreement to further facilitate such cash settlements;

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 definition of “Cash Settlement” in Section 1.1 of the Exchange Agreement is hereby amended and restated to read in its entirety as follows:

“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Company Unitholder in an Exchange pursuant to Section 2.1, multiplied by (y) the price per share, net of underwriting discounts and commissions, at which Class A Common Stock is issued by the Corporation in an underwritten offering or block trade commenced in anticipation of the applicable Exchange for purposes of providing liquidity for Company Unitholders (a “Liquidity Offering”); or (z) if no such Liquidity Offering in which the Exchanging Company Unitholder participates occurs within 60 days after the receipt of the Exchange Notice, the arithmetic average of the volume weighted average prices for a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by The Wall Street Journal or its successor, for each of the three (3) consecutive full Trading Days ending on and including the last full Trading Day immediately prior to the Exchange Date, in each case subject to appropriate

1

and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then the amount specified in clause (y) shall be determined in good faith by a committee of the Board composed of a majority of the directors of the Corporation that do not have an interest in the Company Exchangeable Units and shares of Class B Common Stock being Exchanged.

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

* * *

2

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered, all as of the date first set forth above.

HAMILTON LANE INCORPORATED
By:	/s/Mario Giannini
	Name: Mario Giannini
	Title: Chief Executive Officer
HAMILTON LANE ADVISORS, L.L.C.
By:	/s/Mario Giannini
	Name: Mario Giannini
	Title: Chief Executive Officer
HAMILTON LANE ADVISORS, INC.
By:	/s/Mario Giannini
	Name: Mario Giannini
	Title: President
HLA INVESTMENTS, LLC
By:	HRHLA, LLC, its managing member
By:	/s/Hartley Rogers
	Name: Hartley Rogers
	Title: Manager
HL MANAGEMENT INVESTORS, LLC
By:	/s/Hartley Rogers
	Name: Hartley Rogers
	Title: Manager
/s/Mario Giannini
Mario Giannini

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)) 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. 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

c. 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 9, 2018
/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, Randy M. Stilman, 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)) 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. 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

c. 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 9, 2018
/s/ Randy M. Stilman
Randy M. Stilman
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, Randy M. Stilman, 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, 2017 (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 9, 2018

/s/ Mario L. Giannini

Mario L. Giannini

Chief Executive Officer

Date: February 9, 2018

/s/ Randy M. Stilman

Randy M. Stilman

Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2017	Feb. 05, 2018
Entity Registrant Name	Hamilton Lane Incorporated
Entity Central Index Key	0001433642
Document Type	10-Q
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Common Class A
Entity Common Stock, Shares Outstanding		19,281,837
Common Class B
Entity Common Stock, Shares Outstanding		27,935,255

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Mar. 31, 2017
Assets
Cash and cash equivalents	$ 68,677	$ 32,286
Restricted cash	1,787	1,849
Fees receivable	13,287	12,113
Prepaid expenses	1,584	2,593
Due from related parties	4,275	3,313
Furniture, fixtures and equipment, net	4,061	4,063
Investments	130,765	120,147
Deferred income taxes	39,766	61,223
Other assets	8,844	3,030
Total assets	273,046	240,617
Liabilities and Equity
Accounts payable	1,080	1,366
Accrued compensation and benefits	28,051	3,417
Deferred incentive fee revenue	31,422	45,166
Debt	84,617	84,310
Accrued members’ distributions	4,520	2,385
Dividends payable	3,172	0
Payable to related parties pursuant to tax receivable agreement	6,436	10,734
Other liabilities	5,730	6,612
Total liabilities	165,028	153,990
Commitments and Contingencies
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued	0	0
Additional paid-in-capital	62,853	61,845
Accumulated other comprehensive loss	0	(311)
(Accumulated deficit) retained earnings	(5,057)	612
Less: Treasury stock, at cost, 114,529 shares of Class A common stock as of March 31, 2017	0	(2,151)
Total Hamilton Lane Incorporated stockholders’ equity	57,843	60,042
Total equity	108,018	86,627
Total liabilities and equity	273,046	240,617
Common Class A
Liabilities and Equity
Common stock	19	19
Common Class B
Liabilities and Equity
Common stock	28	28
General Partnerships
Liabilities and Equity
Stockholders' equity attributable to noncontrolling interest	8,363	9,901
Hamilton Lane Advisors, L.L.C.
Liabilities and Equity
Stockholders' equity attributable to noncontrolling interest	$ 41,812	$ 16,684

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Mar. 31, 2017
Class of Stock [Line Items]
Preferred stock, par value (in dollars 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
Treasury stock (in shares)		114,529
Common Class A
Class of Stock [Line Items]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	19,287,882	19,151,033
Common stock, shares outstanding (in shares)	19,287,882	19,036,504
Common Class B
Class of Stock [Line Items]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	27,935,255	27,935,255
Common stock, shares outstanding (in shares)	27,935,255	27,935,255

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Condensed Consolidated Statements of Income - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Revenues
Management and advisory fees		$ 48,344	$ 42,009	$ 146,326	$ 126,273
Incentive fees		16,670	322	20,098	6,868
Total revenues		65,014	42,331	166,424	133,141
Expenses
Compensation and benefits		20,006	16,739	60,247	53,161
General, administrative and other		10,704	8,840	27,586	22,925
Total expenses		30,710	25,579	87,833	76,086
Other income (expense)
Equity in income of investees		2,895	3,085	13,066	8,882
Interest expense		(664)	(2,924)	(5,282)	(8,780)
Interest income		67	39	472	159
Other non-operating income		4,188	222	4,169	232
Total other income		6,486	422	12,425	493
Income before income taxes		40,790	17,174	91,016	57,548
Income tax expense (benefit)		22,957	111	29,337	(264)
Net income		17,833	17,063	61,679	57,812
Net (loss) income attributable to Hamilton Lane Incorporated		$ (6,309)	$ 0	$ 3,843	$ 0
Common Class A
Other income (expense)
Basic (loss) earnings per share of Class A common stock (in dollars per share)	[1]	$ (0.35)	$ 0.00	$ 0.21	$ 0.00
Diluted (loss) earnings per share of Class A common stock (in dollars per share)	[1]	(0.35)	0.00	0.21	0.00
Dividends declared per share of Class A common stock (in dollars per share)	[1]	$ 0.175	$ 0	$ 0.525	$ 0
Common stock, shares outstanding (in shares)		19,287,882	0	19,287,882	0
General Partnerships
Other income (expense)
Less: (Loss) income attributable to non-controlling interests		$ 768	$ 64	$ 1,750	$ 1,024
Hamilton Lane Advisors, L.L.C.
Other income (expense)
Less: (Loss) income attributable to non-controlling interests		$ 23,374	$ 16,999	$ 56,086	$ 56,788

[1] There were no shares of Class A common stock outstanding prior to March 6, 2017, therefore no per-share information has been presented for any period prior to that date.

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Net income	$ 17,833	$ 17,063	$ 61,679	$ 57,812
Other comprehensive income (loss), net of tax:
Unrealized loss on cash flow hedge	0	0	0	(142)
Realized loss on cash flow hedge	0	2	922	2
Total other comprehensive income (loss), net of tax	0	2	922	(140)
Comprehensive income	17,833	17,065	62,601	57,672
Less:
Total comprehensive (loss) income attributable to Hamilton Lane Incorporated	(6,309)	0	4,154	0
General Partnerships
Less:
Comprehensive income (loss) attributable to non-controlling interests	768	64	1,750	1,024
Hamilton Lane Advisors, L.L.C.
Less:
Comprehensive income (loss) attributable to non-controlling interests	$ 23,374	$ 17,001	$ 56,697	$ 56,648

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Condensed Consolidated Statement of Stockholders' Equity - 9 months ended Dec. 31, 2017 - USD ($) $ in Thousands	Total	Class A Common Stock	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid in Capital	(Accumulated Deficit) Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	General Partnerships Noncontrolling Interests	Hamilton Lane Advisors, L.L.C. Noncontrolling Interests
Beginning balance at Mar. 31, 2017	$ 86,627		$ 19	$ 28	$ 61,845	$ 612	$ (2,151)	$ (311)	$ 9,901	$ 16,684
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	61,679					3,843			1,750	56,086
Other comprehensive loss	922							311		611
Equity-based compensation	4,344				1,519					2,825
Retirement of treasury stock	0	$ (2,151)			(2,151)		2,151
Proceeds received from option exercises	313				108					205
Issuance of shares for acquisition	612				212					400
Repurchase of Class A shares for employee tax withholding	(680)				(234)					(446)
Deferred tax adjustment	1,456				1,456
Dividends declared	(9,512)					(9,512)
Capital contributions from (distributions to) non-controlling interests, net	(3,288)								(3,288)
Member distributions	(34,455)									(34,455)
Equity reallocation between controlling and non-controlling interests	0				98					(98)
Ending balance at Dec. 31, 2017	$ 108,018		$ 19	$ 28	$ 62,853	$ (5,057)	$ 0	$ 0	$ 8,363	$ 41,812

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Operating activities:
Net income	$ 61,679	$ 57,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,396	1,440
Change in deferred income taxes	22,913	0
Change in payable to related parties pursuant to tax receivable agreement	(4,298)	0
Amortization of deferred financing costs	153	661
Write-off of deferred financing costs	1,657	0
Equity-based compensation	4,272	3,506
Equity in income of investees	(13,066)	(8,882)
Proceeds received from investments	11,337	6,825
Other	1,029	0
Changes in operating assets and liabilities:
Fees receivable	(987)	1,033
Prepaid expenses	1,016	(222)
Due from related parties	(962)	(353)
Other assets	(311)	(5,132)
Accounts payable	(286)	981
Accrued compensation and benefits	24,634	20,736
Deferred incentive fees	(13,744)	0
Other liabilities	(1,089)	(778)
Net cash provided by operating activities	95,343	77,627
Investing activities:
Purchase of furniture, fixtures and equipment	(1,152)	(719)
Cash paid for acquisition of business	(5,227)	0
Distributions received from investments	10,792	6,991
Contributions to investments	(19,609)	(20,622)
Net cash used in investing activities	(15,196)	(14,350)
Financing activities:
Repayments of debt	(86,569)	(1,950)
Borrowings of debt, net of deferred financing costs	85,066	0
Contributions from non-controlling interest in general partnerships	231	489
Distributions to non-controlling interest in general partnerships	(3,519)	(2,372)
Sale of membership interests	0	4,668
Repurchase of Class A shares for employee tax withholding	(680)	0
Purchase of membership interests	0	(6,059)
Proceeds received from option exercises	313	879
Dividends paid	(6,340)	0
Members’ distributions	(32,320)	(72,467)
Other	0	(611)
Net cash used in financing activities	(43,818)	(77,423)
Increase (decrease) in cash, cash equivalents, and restricted cash	36,329	(14,146)
Cash, cash equivalents, and restricted cash at beginning of the period	34,135	70,382
Cash, cash equivalents, and restricted cash at end of the period	$ 70,464	$ 56,236

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Organization

9 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Hamilton Lane Incorporated (“HLI”) was incorporated in the State of Delaware on December 31, 2007. As of March 6, 2017, following its initial public offering (“IPO”) and related transactions (the “Reorganization”), the Company became a publicly-traded entity, and both the holding company for and sole managing member of Hamilton Lane Advisors, L.L.C. (“HLA”). Unless otherwise specified, “the Company” refers to the consolidated group of HLI and HLA and its subsidiaries throughout the remainder of these notes.

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 generates revenues primarily from management fees, by managing assets on behalf of customized separate accounts, specialized fund products and distribution management accounts, and advisory fees, by providing asset supervisory and reporting services. HLA sponsors the formation, and 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 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- or majority-owned entities through which it conducts its foreign operations.

Reorganization

In connection with the IPO, the Company completed a series of transactions on March 6, 2017, which are described below:

• the certificate of incorporation of HLI was amended and restated to, among other things, (i) provide for Class A common stock and Class B common stock, (ii) set forth the voting rights of the Class A common stock (one vote per share) and Class B common stock (ten votes per share) and (iii) establish a classified board of directors;

• the limited liability company agreement of HLA was amended and restated to, among other things, (i) appoint HLI as the sole managing member of HLA and (ii) classify the interests that were acquired by HLI as Class A Units, the voting interests held by the continuing members of HLA as Class B Units, and the non-voting interests held by the continuing members of HLA as Class C Units;

• HLA effectuated a reverse unit split of 0.68-for-1 for each unit class;

• certain HLA members exchanged their HLA units for 3,899,169 shares of Class A common stock of HLI;

• HLI issued to the Class B unitholders of HLA one share of Class B common stock for each Class B unit that they owned, in exchange for a payment of its par value;

• certain Class B unitholders of HLA entered into a stockholders agreement pursuant to which they agreed to vote all their shares of voting stock in accordance with the instructions of HLA Investments, LLC; and

• HLI entered into an exchange agreement with the direct owners of HLA pursuant to which they will be entitled to exchange HLA units for shares of HLI’s Class A common stock on a one-for-one basis (the “Exchange Agreement”).

Initial Public Offering

On March 6, 2017, HLI issued 13,656,250 shares of Class A common stock in the IPO at a price of $16.00 per share. The net proceeds totaled $203,205 after deducting underwriting commissions of $15,295 and before offering costs of $5,844 that were incurred by HLA. The net proceeds were used to purchase 11,156,250 newly issued Class A units in HLA for $166,005 and 2,500,000 Class A units from existing HLA owners for $37,200.

Subsequent to the IPO and Reorganization transactions, HLI is a holding company whose principal asset is a controlling equity interest in 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 deferred tax assets and liabilities, payable to related parties pursuant to a tax receivable agreement, and dividends payable. As of December 31, 2017 and March 31, 2017, HLI held approximately 34.5% and 34.2%, respectively, of the economic interest in HLA. As future exchanges of HLA units occur, the economic interest in HLA held by HLI will increase.

The Reorganization is considered a transaction between entities under common control.  As a result, the condensed consolidated financial statements for periods prior to the IPO and the Reorganization are the condensed consolidated financial statements of HLA as the predecessor to HLI for accounting and reporting purposes.

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Summary of Significant Accounting Policies

9 Months Ended

Dec. 31, 2017

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, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of March 31, 2017.

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.

Distributions and Dividends

Distributions and dividends are reflected in the condensed consolidated financial statements when declared. Distributions to members represent amounts paid to the non-controlling interest holders of HLA. All distributions received by HLI from HLA are eliminated in the condensed consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. The new standards will be effective for the Company on April 1, 2018. The standard permits the use of either a full retrospective or modified retrospective approach. The Company plans to adopt the guidance using the modified retrospective approach. The Company currently recognizes incentive fee revenue when required return levels are met and all contingencies have been resolved. Under the new standard, the Company will recognize incentive fee revenue when it concludes that it is probable that a significant reversal in the cumulative amount of incentive fee revenue will not occur. The Company is continuing to assess the impact of adoption of the new standard on other revenue-related items, including evaluating the impact of certain revenue related costs, principal versus agent reporting considerations that would affect whether certain transactions are reported gross or net in the consolidated statement of operations, as well as the additional disclosures required by the new standard.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and entities may early adopt. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (ASU 2016-02). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Payments” (ASU 2016-15). ASU 2016-15 clarifies cash flow classification of several discrete cash flows issues including debt prepayment costs and distributions received from equity method investees. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company will adopt ASU 2016-15 on April 1, 2018 and the adoption is not expected to have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash” (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments in this update are effective for years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted the standard on October 1, 2016 and retrospectively applied the amendment. Other than the change in presentation of restricted cash within the Condensed Consolidated Statements of Cash Flows, the adoption of this standard did not have a material impact on its consolidated financial statements.

Reclassifications

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

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Investments

9 Months Ended

Dec. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments

Investments consist of the following:

	December 31,		March 31,
	2017		2017
Equity method investments in Partnerships	$	113,485	$	103,141
Other equity method investments	994		661
Investments carried at cost	16,286		16,345
Total Investments	$	130,765	$	120,147

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 generally has a 1% interest in each of the Partnerships, although the Company has interests in certain Partnerships ranging from 0%-7%. 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, Private Market Connect (“PMC”), that automates the collection of fund and underlying portfolio company data from general partners. The Company recognized equity method income related to its investments in Partnerships and other equity method investments of $2,895and $13,066 for the three and nine months ended December 31, 2017, respectively, and $3,085 and $8,882 for the three and nine months ended December 31, 2016, respectively.

The Company evaluates each of its equity method investments to determine if any were significant pursuant to the requirements of Regulation S-X. As of December 31, 2017 and March 31, 2017, no individual equity method investment held by the Company met the significance criteria, and as a result, the Company is not required to present separate financial statements for any of its equity method investments.

The Company’s investments carried at cost include other proprietary investments that are not consolidated, over which the Company does not exert significant influence and for which fair value is not readily determinable. The Company has determined in accordance with the applicable guidance that it is impracticable to estimate the fair value of the investments carried at cost due to limited information available. As of December 31, 2017 and March 31, 2017, the Company did not identify any significant events or changes in circumstances that have a significant adverse effect on the carrying value of these investments carried at cost.

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Variable Interest Entities

9 Months Ended

Dec. 31, 2017

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 $16,710 and $19,653 as of December 31, 2017 and March 31, 2017, respectively, and are recorded in Investments in the Condensed Consolidated Balance Sheets. The consolidated VIEs had no liabilities other than deferred incentive fee revenue of $31,422 and $45,166 as of December 31, 2017 and March 31, 2017. 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 claw back 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. 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, 2017, the total commitments and remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIEs are $12,591,114 and $4,744,430, 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,
	2017			2017
Investments	$	70,559		$	60,597
Fees receivable	2,212			430
Due from related parties	2,792			1,742
Total VIE Assets	75,563			62,769
Deferred incentive fee revenue	31,422			45,166
Non-controlling interests	(8,363		)	(9,901		)
Maximum Exposure to Loss	$	98,622		$	98,034

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Acquisition

9 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Acquisition

Acquisition

On August 11, 2017, HLA acquired substantially all the assets of Real Asset Portfolio Management LLC (“RAPM”) for a total aggregate purchase price of approximately $5,839, of which $5,227 was paid in cash with the remainder settled in 27,240 shares of Class A common stock valued at approximately $612. An additional amount based upon an agreed upon multiple of earnings, which is currently estimated at approximately $3,485, could be payable to the principals of RAPM who are now employees of HLA if they remain employed by HLA through the expected payment date in October 2018. As the amount is contingent upon future employment, the amount will be recognized as compensation expense over the required performance period. The Company recorded approximately $2,948 of intangible assets related to the acquired investment management contracts, which assets will be amortized over eight years, and $2,874 of goodwill, which are both recorded in other assets in the Condensed Consolidated Balance Sheets. The remaining assets acquired and liabilities assumed were not material to the condensed consolidated financial statements. Revenue and net income attributable to the acquisition of RAPM were not material for the three and nine months ended December 31, 2017, and pro forma information related to this acquisition is not included because the impact on the Company’s Condensed Consolidated Statements of Income is not considered to be material.

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Debt

9 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Debt

Debt

On August 23, 2017, HLA entered into a Term Loan and Security Agreement (the “Term Loan Agreement”) and a Revolving Loan and Security Agreement (the “Revolving Loan Agreement” and, together with the Term Loan Agreement, the “Loan Agreements”) with First Republic Bank (“First Republic”) for $75,000 and $10,450, respectively. After expenses, the net amount of cash received was $85,066 and was utilized to pay off the outstanding principal amount and accrued interest of the predecessor credit facility. The previous unamortized deferred financing costs of $1,657 were written off and are included in interest expense in the Condensed Consolidated Statements of Income.

The Term Loan Agreement provides for a term loan facility in an aggregate principal amount of $75,000 and also contains an accordion feature that allows HLA to increase the commitment under the facility by up to $25,000 under certain conditions (the “Term Loan Facility”). Borrowings under the Term Loan Facility accrue interest at a floating per annum rate equal to the prime rate minus 1.25%, subject to a floor of 2.75%. The Term Loan Facility matures on November 1, 2024. At December 31, 2017, the Company had an outstanding balance net of deferred financing costs on the Term Loan Facility of $74,167.

The Revolving Loan Agreement provides for a revolving credit facility up to an aggregate principal amount of $25,000 (the “Revolving Loan Facility”). Borrowings under the Revolving Loan Facility accrue interest at a floating per annum rate equal to the prime rate minus 1.50%, subject to a floor of 2.50%. The Revolving Loan Facility matures on August 21, 2020 and requires compliance with conditions precedent that must be satisfied prior to any borrowing. At December 31, 2017, the Company had an outstanding balance on the Revolving Loan Facility of $10,450.

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, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain (i) a specified amount of management fees in each fiscal year during the term of each of the Loan Agreements, (ii) adjusted EBITDA, as defined in the Term Loan Agreement, less dividend distributions on a trailing six-month basis of $12,500 or greater, tested semi-annually, and (iii) a specified tangible net worth during each fiscal year during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all of the assets of HLA.

The fair value of the outstanding balance of the Term Loan at December 31, 2017 and predecessor credit facility at March 31, 2017 approximated par value based on then-current market rates for similar debt instruments and is classified as Level II within the fair value hierarchy.

In July 2015, the Company purchased interest rate caps through June 30, 2020 to limit exposure to fluctuations in LIBOR above 2.5% on a portion of the Company’s predecessor credit facility. In October 2016, the Company de-designated its remaining interest rate caps as cash flow hedges and discontinued hedge accounting. In August 2017, in connection with the payoff of the predecessor credit facility with the proceeds from the Loan Agreements, which accrue interest indexed to the prime rate, the amount accumulated in other comprehensive income (loss) was reclassified into earnings through interest expense in the Condensed Consolidated Statements of Income because the cash flows of future interest payments indexed to LIBOR will no longer occur. The changes in the fair value of these interest rate caps are recorded in other non-operating income in the Condensed Consolidated Statements of Income. The fair value of the interest rate caps was $84 and $194 as of December 31, 2017 and March 31, 2017, respectively, and is included in other assets in the Condensed Consolidated Balance Sheets. The fair value of the interest rate caps is determined utilizing quoted prices in active markets for the same or similar instruments and is classified as Level II within the fair value hierarchy.

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Equity

9 Months Ended

Dec. 31, 2017

Equity [Abstract]

Equity

Equity

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2017:

	Class A Common Stock		Class B Common Stock
March 31, 2017	19,036,504		27,935,255
Restricted stock granted	49,357		—
Shares issued due to option exercise, net	200,244		—
Shares issued in connection with RAPM acquisition	27,240		—
Shares repurchased for employee tax withholdings	(757	)	—
Forfeitures of restricted stock	(24,706	)	—
December 31, 2017	19,287,882		27,935,255

During the nine months ended December 31, 2017, the Company retired 114,529 shares of Class A common stock held as treasury stock (that were outstanding as of March 31, 2017) at a total cost of $2,151 and 34,008 shares of Class A common stock at a total cost of $680, which were purchased from employees to fund statutory tax withholding requirements.

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Equity-Based Compensation

9 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

Equity-Based Compensation

Summary of Option Activity

A summary of option activity for the nine months ended December 31, 2017 is presented below:

	Number of Options		Weighted- Average Exercise Price
Options outstanding at March 31, 2017	233,495		$	1.34
Options exercised	(233,495	)	$	1.34
Options outstanding at December 31, 2017	—		$	—

The intrinsic value of options exercised during the nine months ended December 31, 2017 was $4,350.

Restricted Stock

A summary of restricted stock activity for the nine months ended December 31, 2017 is presented below:

	Total Unvested		Weighted- Average Grant-Date Fair Value of Award
March 31, 2017	1,138,521		$	14.49
Granted	49,357		$	19.68
Vested	(1,835	)	$	13.76
Forfeited	(24,706	)	$	13.91
December 31, 2017	1,161,337		$	14.72

As of December 31, 2017, total unrecognized compensation expense related to restricted stock was $11,463.

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Compensation and Benefits

9 Months Ended

Dec. 31, 2017

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,
	2017		2016		2017		2016
Base compensation and benefits	$	17,428	$	15,489	$	53,397	$	47,938
Incentive fee compensation	523		81		1,380		1,717
Equity-based compensation	1,284		1,169		4,272		3,506
Contingent compensation related to acquisition	771		—		1,198		—
Total compensation and benefits	$	20,006	$	16,739	$	60,247	$	53,161

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Income Taxes

9 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

As a result of the Reorganization and IPO, HLI became the sole managing member of HLA, which is organized as a limited liability company and treated as a “flow-through” entity for income tax purposes. As a “flow-through” entity, HLA is not subject to income taxes apart from certain local taxes assessed at the limited liability company level and foreign taxes attributable to its operations in foreign jurisdictions. Any taxable income or loss generated by HLA is passed through to and included in the taxable income or loss of its members, including HLI following the Reorganization and IPO, on a pro rata basis. As a result, the Company does not record income taxes on pre-tax income or loss attributable to the non-controlling interests in the general partnerships and HLA, except for certain local and foreign taxes discussed above. HLI is subject to U.S. federal and applicable state corporate income taxes with respect to its allocable share of any taxable income from HLA following the Reorganization and IPO.

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.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, which enacts significant changes to U.S. federal income tax laws, including a reduction of the corporate income tax rate from 35% to 21%, limitation of the tax deduction for interest expense, expensing the cost of acquired qualified property, and a one-time transition tax on accumulated, undistributed foreign earnings.

As a result of the Tax Act, the estimated annual effective tax rate was revised to reflect the change in the federal statutory rate from 35% to 21% effective January 1, 2018. Consequently, the blended federal statutory tax rate for the Company’s 2018 fiscal year is 31.55% based on the weighted average of a 35% rate for 275 days and 21% for 90 days.

The Company’s effective tax rate was 56.3% and 32.2% for the three and nine months ended December 31, 2017, respectively, and 0.6% and (0.5)% for the three and nine months ended December 31, 2016, respectively. The increase in the effective income tax rate for the three and nine months ended December 31, 2017 was due to U.S. federal and state corporate income tax expense related to HLI’s allocable share of taxable income from HLA and a provisional discrete tax expense of $21,200 related to the re-measurement of estimated deferred tax assets as of December 31, 2017 due to the tax rate change pursuant to enactment of the Tax Act.

The Tax Act also requires taxpayers to pay a one-time transition tax on accumulated, undistributed earnings of certain foreign subsidiaries. The Company recorded a provisional tax liability of $442 for certain of its foreign subsidiaries based on estimated accumulated, undistributed earnings. As a result of the transition tax estimate, the Company reversed $1,100 of a previously recorded deferred tax liability on unremitted earnings of foreign subsidiaries.

The Company has not completed its analysis of the new Global Intangible Low-Taxed Income (“GILTI”) tax law, and as a result, is not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, the Company has not yet included any potential GILTI tax in its condensed consolidated financial statements and has not elected the related accounting policy.

The Company will continue to analyze the effects of the Tax Act on its consolidated financial statements. Any additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement 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.

As of December 31, 2017, the Company had no unrecognized tax positions.

Tax Receivable Agreement

HLI’s purchase of HLA Class A units in connection with the IPO, and the subsequent and future exchanges by holders of HLA units for shares of HLI’s Class A common stock pursuant to the Exchange Agreement, are expected to result in increases in HLI’s share of the tax basis of the tangible and intangible assets of HLA. This will increase the tax depreciation and amortization deductions that otherwise would not have been available to HLI. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that HLI would otherwise be required to pay in the future. On March 6, 2017, HLI entered into a tax receivable agreement (“TRA”) with the other members of HLA that requires HLI to pay exchanging HLA unitholders (the “TRA Recipients”) 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that HLI actually realizes (or, under certain circumstances, is deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the TRA. The payable to related parties pursuant to the TRA decreased to $6,436 as of December 31, 2017 from $10,734 as of March 31, 2017 as a result of being re-measured due to the tax rate change enacted by the Tax Act. The change in liability was recorded to other non-operating income in the Condensed Consolidated Statements of Income. No amounts were paid to TRA Recipients during the nine months ended December 31, 2017.

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Earnings per Share

9 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

There were no shares of Class A common stock outstanding during the three and nine months ended December 31, 2016. Therefore, no earnings per share information has been presented for that period.

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 each share of Class B common stock, together with a corresponding Class B unit, is exchangeable for a share of Class A common stock on a one-for-one basis.

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							Nine Months Ended
	December 31, 2017							December 31, 2017
	Net loss 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	$	(6,309	)	18,126,532	$	(0.35	)	$	3,843	18,075,035	$	0.21
Adjustment to net income:
Assumed exercise and vesting of employee awards	—							87
Effect of dilutive securities:
Assumed exercise and vesting of employee awards				—						628,615
Diluted EPS of Class A common stock	$	(6,309	)	18,126,532	$	(0.35	)	$	3,930	18,703,650	$	0.21

The calculation of diluted earnings per share for the three months ended December 31, 2017 excludes 1,161,337 shares of restricted stock under the treasury stock method, and the calculations of diluted earnings per share for the three and nine months ended December 31, 2017 excludes 34,438,669 outstanding Class B and C Units of HLA, 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, 2017

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 incentive fees from Partnerships of $43,649 and $104,966 for the three and nine months ended December 31, 2017, respectively, and $25,503 and $82,208 for the three and nine months ended December 31, 2016, respectively.

The Company entered into a service agreement on June 1, 2017 with PMC pursuant to which it had expenses of $1,115 and $2,478 for the three and nine months ended December 31, 2017, respectively, which 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 $372 as of December 31, 2017, which is included in other liabilities in the Condensed Consolidated Balance Sheets.

Due from related parties in the Condensed Consolidated Balance Sheets consists primarily of advances made on behalf of the Partnerships for the payment of certain operating costs and expenses for which the Company is subsequently reimbursed and refundable tax distributions made to members.

Fees receivable from the Partnerships were $3,412 and $918 as of December 31, 2017 and March 31, 2017, respectively, and are included in fees receivable in the Condensed Consolidated Balance Sheets.

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Supplemental Financial Information

9 Months Ended

Dec. 31, 2017

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Nine Months Ended December 31,
	2017			2016
Non-cash investing activities:
Shares issued for acquisition of business	$	(612	)	$	—

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2017

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

In connection with carried interest from the Partnerships, the Company only recognizes its allocable share of the Partnerships’ earnings to the extent that this income is not subject to continuing contingencies. Carried interest allocated to the Company from the Partnerships that is subject to continuing contingencies is not recognized in the accompanying Condensed Consolidated Balance Sheets. The Partnerships have allocated carried interest still subject to contingencies in the amounts of $300,527 and $236,857, net of amounts attributable to non-controlling interests, at December 31, 2017 and March 31, 2017, respectively, of which $31,422 and $45,166 at December 31, 2017 and March 31, 2017, respectively, has been received and deferred by the Company. The Company recognized $13,744 of incentive fee revenue during the three and nine months ended December 31, 2017 that was received and deferred in fiscal 2016. The Company previously recognized incentive fee compensation expense related to the receipts of these carried interest distributions in fiscal 2016.

If the Company ultimately receives the unrecognized carried interest, a total of $68,202 and $48,849 as of December 31, 2017 and March 31, 2017, 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 aggregate unfunded commitment of the general partners to the Partnerships was $86,942 and $76,908 as of December 31, 2017 and March 31, 2017, respectively.

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Management and Advisory Fees

9 Months Ended

Dec. 31, 2017

Investment Advisory, Management and Administrative Fees [Abstract]

Management and Advisory Fees

Management and Advisory Fees

The following presents management and advisory fee revenues by product offering:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		2017		2016
Customized separate accounts	$	19,860	$	17,826	$	58,253	$	52,794
Specialized funds	19,132		17,124		63,582		53,407
Advisory and reporting	7,479		6,021		20,958		17,680
Distribution management	1,873		1,038		3,533		2,392
Total management and advisory fees	$	48,344	$	42,009	$	146,326	$	126,273

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Subsequent Events

9 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On February 6, 2018, the Company declared a quarterly dividend of $0.175 per share of Class A common stock to record holders at the close of business on March 15, 2018. The payment date will be April 5, 2018.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

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, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of March 31, 2017.

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.

Distributions and Dividends

Distributions and Dividends

Distributions and dividends are reflected in the condensed consolidated financial statements when declared. Distributions to members represent amounts paid to the non-controlling interest holders of HLA. All distributions received by HLI from HLA are eliminated in the condensed consolidated financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. The new standards will be effective for the Company on April 1, 2018. The standard permits the use of either a full retrospective or modified retrospective approach. The Company plans to adopt the guidance using the modified retrospective approach. The Company currently recognizes incentive fee revenue when required return levels are met and all contingencies have been resolved. Under the new standard, the Company will recognize incentive fee revenue when it concludes that it is probable that a significant reversal in the cumulative amount of incentive fee revenue will not occur. The Company is continuing to assess the impact of adoption of the new standard on other revenue-related items, including evaluating the impact of certain revenue related costs, principal versus agent reporting considerations that would affect whether certain transactions are reported gross or net in the consolidated statement of operations, as well as the additional disclosures required by the new standard.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and entities may early adopt. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (ASU 2016-02). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effect that adoption will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Payments” (ASU 2016-15). ASU 2016-15 clarifies cash flow classification of several discrete cash flows issues including debt prepayment costs and distributions received from equity method investees. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company will adopt ASU 2016-15 on April 1, 2018 and the adoption is not expected to have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash” (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments in this update are effective for years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted the standard on October 1, 2016 and retrospectively applied the amendment. Other than the change in presentation of restricted cash within the Condensed Consolidated Statements of Cash Flows, the adoption of this standard did not have a material impact on its consolidated financial statements.

Reclassifications

Reclassifications

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

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Investments (Tables)

9 Months Ended

Dec. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Investments

Investments consist of the following:

	December 31,		March 31,
	2017		2017
Equity method investments in Partnerships	$	113,485	$	103,141
Other equity method investments	994		661
Investments carried at cost	16,286		16,345
Total Investments	$	130,765	$	120,147

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Variable Interest Entities (Tables)

9 Months Ended

Dec. 31, 2017

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,
	2017			2017
Investments	$	70,559		$	60,597
Fees receivable	2,212			430
Due from related parties	2,792			1,742
Total VIE Assets	75,563			62,769
Deferred incentive fee revenue	31,422			45,166
Non-controlling interests	(8,363		)	(9,901		)
Maximum Exposure to Loss	$	98,622		$	98,034

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Equity (Tables)

9 Months Ended

Dec. 31, 2017

Equity [Abstract]

Rollforward of Common Stock

The following table shows a rollforward of the Company’s common stock outstanding since March 31, 2017:

	Class A Common Stock		Class B Common Stock
March 31, 2017	19,036,504		27,935,255
Restricted stock granted	49,357		—
Shares issued due to option exercise, net	200,244		—
Shares issued in connection with RAPM acquisition	27,240		—
Shares repurchased for employee tax withholdings	(757	)	—
Forfeitures of restricted stock	(24,706	)	—
December 31, 2017	19,287,882		27,935,255

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Equity-Based Compensation (Tables)

9 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Option Activity

A summary of option activity for the nine months ended December 31, 2017 is presented below:

	Number of Options		Weighted- Average Exercise Price
Options outstanding at March 31, 2017	233,495		$	1.34
Options exercised	(233,495	)	$	1.34
Options outstanding at December 31, 2017	—		$	—

Summary of Restricted Stock Activity

A summary of restricted stock activity for the nine months ended December 31, 2017 is presented below:

	Total Unvested		Weighted- Average Grant-Date Fair Value of Award
March 31, 2017	1,138,521		$	14.49
Granted	49,357		$	19.68
Vested	(1,835	)	$	13.76
Forfeited	(24,706	)	$	13.91
December 31, 2017	1,161,337		$	14.72

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Compensation and Benefits (Tables)

9 Months Ended

Dec. 31, 2017

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,
	2017		2016		2017		2016
Base compensation and benefits	$	17,428	$	15,489	$	53,397	$	47,938
Incentive fee compensation	523		81		1,380		1,717
Equity-based compensation	1,284		1,169		4,272		3,506
Contingent compensation related to acquisition	771		—		1,198		—
Total compensation and benefits	$	20,006	$	16,739	$	60,247	$	53,161

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Earnings per Share (Tables)

9 Months Ended

Dec. 31, 2017

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							Nine Months Ended
	December 31, 2017							December 31, 2017
	Net loss 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	$	(6,309	)	18,126,532	$	(0.35	)	$	3,843	18,075,035	$	0.21
Adjustment to net income:
Assumed exercise and vesting of employee awards	—							87
Effect of dilutive securities:
Assumed exercise and vesting of employee awards				—						628,615
Diluted EPS of Class A common stock	$	(6,309	)	18,126,532	$	(0.35	)	$	3,930	18,703,650	$	0.21

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Supplemental Financial Information (Tables)

9 Months Ended

Dec. 31, 2017

Supplemental Cash Flow Information [Abstract]

Schedule of Supplemental Cash Flow Disclosures

	Nine Months Ended December 31,
	2017			2016
Non-cash investing activities:
Shares issued for acquisition of business	$	(612	)	$	—

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Management and Advisory Fees (Tables)

9 Months Ended

Dec. 31, 2017

Investment Advisory, Management and Administrative Fees [Abstract]

Management and Advisory Fee Revenues by Product Offering

The following presents management and advisory fee revenues by product offering:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		2017		2016
Customized separate accounts	$	19,860	$	17,826	$	58,253	$	52,794
Specialized funds	19,132		17,124		63,582		53,407
Advisory and reporting	7,479		6,021		20,958		17,680
Distribution management	1,873		1,038		3,533		2,392
Total management and advisory fees	$	48,344	$	42,009	$	146,326	$	126,273

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Organization - Reorganization (Details)	Mar. 06, 2017 vote shares
Common Class A
Class of Stock [Line Items]
Number of votes	1
Shares issued in exchange for units in the Reorganization (in shares) | shares	3,899,169
Common Class B
Class of Stock [Line Items]
Number of votes	10
Member Units | HLA
Class of Stock [Line Items]
Stock split, conversion ratio	0.68

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Organization - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands	Mar. 06, 2017	Dec. 31, 2017	Mar. 31, 2017
Class of Stock [Line Items]
Percent of economic interest held		34.50%	34.20%
Common Class A | IPO
Class of Stock [Line Items]
Common stock shares issued in IPO (in shares)	13,656,250
Common stock issued (in dollars per share)	$ 16.00
Proceeds from IPO, net of underwriting discount	$ 203,205
Underwriting commissions	15,295
Offering costs	$ 5,844
Member Units | Common Class A
Class of Stock [Line Items]
Purchase of interest by parent (in shares)	11,156,250
Purchase of interest by parent	$ 166,005
Member Units | Existing HLA Owners | Common Class A
Class of Stock [Line Items]
Purchase of interest by parent (in shares)	2,500,000
Purchase of interest by parent	$ 37,200

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Investments - Schedule of Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Mar. 31, 2017
Investment [Line Items]
Investments carried at cost	$ 16,286	$ 16,345
Total Investments	130,765	120,147
Partnerships
Investment [Line Items]
Equity method investments	113,485	103,141
Other Equity Method Investments
Investment [Line Items]
Equity method investments	$ 994	$ 661

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Investments - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Equity in income of investees	$ 2,895	$ 3,085	$ 13,066	$ 8,882
Partnerships
Schedule of Equity Method Investments [Line Items]
Percent interest in partnerships	1.00%		1.00%
Partnerships | Minimum
Schedule of Equity Method Investments [Line Items]
Percent interest in partnerships	0.00%		0.00%
Partnerships | Maximum
Schedule of Equity Method Investments [Line Items]
Percent interest in partnerships	7.00%		7.00%

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Variable Interest Entities - Consolidated VIEs (Details) - USD ($)	Dec. 31, 2017	Mar. 31, 2017
Variable Interest Entity [Line Items]
Deferred incentive fee revenue	$ 31,422,000	$ 45,166,000
Primary Beneficiary
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs	16,710,000	19,653,000
Total liabilities of consolidated VIEs	$ 0	$ 0

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Variable Interest Entities - Unconsolidated VIEs (Details) - Not Primary Beneficiary - USD ($) $ in Thousands	Dec. 31, 2017	Mar. 31, 2017
Variable Interest Entity [Line Items]
Total commitments from the limited partners and general partners to the unconsolidated VIE	$ 12,591,114
Remaining unfunded commitments from the limited partners and general partners to the unconsolidated VIE	4,744,430
Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]
Investments	70,559	$ 60,597
Fees receivable	2,212	430
Due from related parties	2,792	1,742
Total VIE Assets	75,563	62,769
Deferred incentive fee revenue	31,422	45,166
Non-controlling interests	(8,363)	(9,901)
Maximum Exposure to Loss	$ 98,622	$ 98,034

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Acquisition - Additional Information (Details) - USD ($) $ in Thousands		9 Months Ended
	Aug. 11, 2017	Dec. 31, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Cash paid for acquisition of business		$ (5,227)	$ 0
Shares issued in connection with RAPM acquisition, value			$ 0
RAPM
Business Acquisition [Line Items]
Total aggregate purchase price of acquisition	$ 5,839
Cash paid for acquisition of business	(5,227)
Shares issued in connection with RAPM acquisition, value	(612)	$ (612)
Additional maximum amount payable to principals	3,485
Goodwill acquired	$ 2,874
RAPM | Common Class A
Business Acquisition [Line Items]
Shares issued in connection with RAPM acquisition (in shares)	27,240
Customer Contracts | RAPM
Business Acquisition [Line Items]
Finite-lived intangible assets acquired	$ 2,948
Finite-lived intangible asset useful life	8 years

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Debt - Additional Information (Details) - USD ($)		9 Months Ended
	Aug. 23, 2017	Dec. 31, 2017	Dec. 31, 2016	Mar. 31, 2017	Jul. 31, 2015
Debt Instrument [Line Items]
Borrowings of debt, net of deferred financing costs		$ 85,066,000	$ 0
Write-off of deferred financing costs		1,657,000	$ 0
Interest Rate Cap | Level II | Other Assets
Debt Instrument [Line Items]
Fair value of interest rate caps		84,000		$ 194,000
Term Loan Agreement | Line of Credit
Debt Instrument [Line Items]
Face amount of loan agreement	$ 75,000
Term Loan Agreement | Secured Debt | Line of Credit
Debt Instrument [Line Items]
Accordion feature, increase to commitment	25,000
Remaining borrowing capacity		$ 74,167
Maximum borrowing capacity	$ 75,000
Term Loan Agreement | Secured Debt | Line of Credit | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%
Variable interest rate, floor	2.75%
Revolving Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Face amount of loan agreement	$ 10,450
Revolving Loan Agreement | Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 25,000
Revolving Loan Agreement | Revolving Credit Facility | Line of Credit | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.50%
Variable interest rate, floor	2.50%
The Loan Agreements
Debt Instrument [Line Items]
Borrowings of debt, net of deferred financing costs	$ 85,066,000
Write-off of deferred financing costs	1,657,000
The Loan Agreements | Line of Credit
Debt Instrument [Line Items]
Minimum EBITDA requirement	$ 12,500,000
Credit Agreement | Secured Debt | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					2.50%

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Equity - Shares of Common Stock Outstanding (Details)	9 Months Ended
	Dec. 31, 2017 shares
Common Class A
Common Stock, Shares Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	19,036,504
Restricted stock granted (in shares)	49,357
Shares issued due to option exercise, net (in shares)	200,244
Shares issued in connection with RAPM acquisition (in shares)	27,240
Shares repurchased for employee tax withholdings (in shares)	(757)
Forfeitures of restricted stock (in shares)	(24,706)
Outstanding, end of period (in shares)	19,287,882
Common Class B
Common Stock, Shares Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	27,935,255
Restricted stock granted (in shares)	0
Shares issued due to option exercise, net (in shares)	0
Shares issued in connection with RAPM acquisition (in shares)	0
Shares repurchased for employee tax withholdings (in shares)	0
Forfeitures of restricted stock (in shares)	0
Outstanding, end of period (in shares)	27,935,255

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Equity - Additional Information (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2017 USD ($) shares
Class of Stock [Line Items]
Treasury stock retired, value	$ 0
Common Class A
Class of Stock [Line Items]
Treasury stock retired (in shares) | shares	114,529
Treasury stock retired, value	$ 2,151
Options and restricted stock retired (in shares) | shares	34,008
Options and restricted stock retired, value	$ 680

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Equity-Based Compensation - Summary of Option Activity (Details) - 2017 Equity Incentive Plan $ / shares in Units, $ in Thousands	9 Months Ended
	Dec. 31, 2017 USD ($) $ / shares shares
Number of Options
Outstanding at beginning of period (in shares) | shares	233,495
Exercised (in shares) | shares	(233,495)
Outstanding at end of period (in shares) | shares	0
Weighted- Average Exercise Price
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 1.34
Exercised (in dollars per share) | $ / shares	1.34
Outstanding at end of period (in dollars per share) | $ / shares	$ 0.00
Intrinsic value of options exercised | $	$ 4,350

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Equity-Based Compensation - Summary of Restricted Stock (Details) - 2017 Equity Incentive Plan - Restricted Stock $ / shares in Units, $ in Thousands	9 Months Ended
	Dec. 31, 2017 USD ($) $ / shares shares
Total Unvested
Unvested at beginning of period (in shares) | shares	1,138,521
Granted (in shares) | shares	49,357
Vested (in shares) | shares	(1,835)
Forfeited (in shares) | shares	(24,706)
Unvested at end of period (in shares) | shares	1,161,337
Weighted- Average Grant-Date Fair Value of Award
Unvested at beginning of period (in dollars per share) | $ / shares	$ 14.49
Granted (in dollars per share) | $ / shares	19.68
Vested (in dollars per share) | $ / shares	13.76
Forfeited (in dollars per share) | $ / shares	13.91
Unvested at end of period (in dollars per share) | $ / shares	$ 14.72
Total unrecognized compensation expense relating to restricted stock | $	$ 11,463

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Compensation and Benefits - Schedule of Compensation and Benefits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Compensation Related Costs [Abstract]
Base compensation and benefits	$ 17,428	$ 15,489	$ 53,397	$ 47,938
Incentive fee compensation	523	81	1,380	1,717
Equity-based compensation	1,284	1,169	4,272	3,506
Contingent compensation related to acquisition	771	0	1,198	0
Total compensation and benefits	$ 20,006	$ 16,739	$ 60,247	$ 53,161

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Income Taxes - Additional Information (Details) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 06, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Mar. 31, 2018	Mar. 31, 2017
Income Tax Contingency [Line Items]
Effective tax rate		56.30%	0.60%	32.20%	(0.50%)
Deferred tax asset expense due to remeasurement from Tax Cuts and Jobs Act				$ 21,200
Transition tax, provisional income tax expense (benefit)				442,000
Revaluation of deferred tax liability, provisional income tax expense (benefit)				1,100,000
Unrecognized tax positions		$ 0		0
Amount payable to related parties		6,436,000		6,436,000			$ 10,734,000
TRA Recipients | Tax Receivable Agreement
Income Tax Contingency [Line Items]
Percentage of cash savings payable	85.00%
Amount payable to related parties		$ 6,436,000		6,436,000			$ 10,734,000
Amounts paid to TRA recipients				$ 0
Scenario, Forecast
Income Tax Contingency [Line Items]
Federal tax at statutory rate						31.55%

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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, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Net income attributable to HLI
Basic EPS of Class A common stock		$ (6,309)		$ 3,843
Assumed exercise and vesting of employee awards		0		87
Diluted EPS of Class A common stock		$ (6,309)		$ 3,930
Weighted-Average Shares
Weighted-average basic EPS of Class A common stock (in shares)		18,126,532		18,075,035
Weighted-average assumed vesting of employee awards (in shares)		0		628,615
Weighted-average diluted EPS of Class A common stock (in shares)		18,126,532		18,703,650
Per share amount
Basic EPS of Class A common stock (in dollars per share)	[1]	$ (0.35)	$ 0.00	$ 0.21	$ 0.00
Diluted EPS of Class A common stock (in dollars per share)	[1]	$ (0.35)	$ 0.00	$ 0.21	$ 0.00

[1] There were no shares of Class A common stock outstanding prior to March 6, 2017, therefore no per-share information has been presented for any period prior to that date.

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Earnings per Share - Additional Information (Details) - shares	3 Months Ended	9 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Mar. 31, 2017	Mar. 05, 2017	Dec. 31, 2016
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)				0
Common Class A
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)	19,287,882	19,287,882	19,036,504		0
Restricted Stock
Class of Stock [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,161,337
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)	34,438,669	34,438,669

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Related-Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Mar. 31, 2017
Related Party Transaction [Line Items]
Total management and advisory fees	$ 65,014	$ 42,331	$ 166,424	$ 133,141
Payable to related parties pursuant to tax receivable agreement	6,436		6,436		$ 10,734
Fees receivable	13,287		13,287		12,113
General Partnerships
Related Party Transaction [Line Items]
Total management and advisory fees	43,649	$ 25,503	104,966	$ 82,208
Fees receivable	3,412		3,412		$ 918
Joint Venture
Related Party Transaction [Line Items]
Payable to related parties pursuant to tax receivable agreement	372		372
Service Agreement Fees Paid | Joint Venture
Related Party Transaction [Line Items]
Fees paid to joint venture	$ 1,115		$ 2,478

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Supplemental Financial Information (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2016 USD ($)
Non-cash investing activities:
Shares issued for acquisition of business	$ 0

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Commitments and Contingencies - Incentive Fees (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Mar. 31, 2017
Loss Contingencies [Line Items]
Carried Interest still subject to contingencies	$ 300,527	$ 300,527	$ 236,857
Deferred incentive fee revenue	31,422	31,422	45,166
Incentive fee revenue	13,744	13,744
Incentive fees, unrecorded estimate	68,202	68,202	48,849
Carried Interest
Loss Contingencies [Line Items]
Deferred incentive fee revenue	$ 31,422	$ 31,422	$ 45,166

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Commitments and Contingencies - Commitments (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Mar. 31, 2017
Aggregate Unfunded Commitment
Other Commitments [Line Items]
Other commitment	$ 86,942	$ 76,908

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Management and Advisory Fees - Management and Advisory Fee Revenues by Product Offering (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Investment Advisory, Management and Administrative Fees [Abstract]
Customized separate accounts	$ 19,860	$ 17,826	$ 58,253	$ 52,794
Specialized funds	19,132	17,124	63,582	53,407
Advisory and reporting	7,479	6,021	20,958	17,680
Distribution management	1,873	1,038	3,533	2,392
Total management and advisory fees	$ 48,344	$ 42,009	$ 146,326	$ 126,273

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Subsequent Events - Additional Information (Details)	Feb. 06, 2018 $ / shares
Common Class A | Subsequent Event
Subsequent Event [Line Items]
Dividends payable (in dollars per share)	$ 0.175