Hamilton Lane INC: Form 10-Q for the period ended Dec 31, 2025

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 2025 Form 10-K for a more complete understanding of our financial position and results of operations.

The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Investors should review the “Cautionary Note Regarding Forward-Looking Information” above and the “Risk Factors” detailed in Part I, Item 1A of our 2025 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 2025 and fiscal 2024 are to our fiscal years ended March 31, 2025, and 2024, respectively.

Business Overview

We are a global private markets investment solutions provider and operate our business in a single segment. 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, real assets, growth equity, venture capital and impact. These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct 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 $98.1 billion of our assets under management (“AUM”) as of December 31, 2025.
• Specialized Funds: We organize, invest and manage commingled specialized primary, secondary and direct 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. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised $48.0 billion of our AUM as of December 31, 2025.
• Advisory Services: We offer non-discretionary 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, 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 $871.5 billion of assets under advisement (“AUA”) as of December 31, 2025.
• Distribution Management: We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind 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 also on a stand-alone, fee-for-service basis. We also provide comprehensive research and analytical services as part of our investment solutions, leveraging our large, global, proprietary and high-quality database for transparency and powerful analytics. Our data, as well as our benchmarking and forecasting models, are accessible through our proprietary technology solution, Cobalt LP, on a stand-alone, subscription basis.

Our client and investor base is broadly diversified by type, size and geography. Our client base ranges 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 we offer a highly customized, flexible service, 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, Canada, Europe, the Middle East, Asia, Australia and Latin America. We provide private markets solutions and services to some of the largest global pension, sovereign wealth and U.S. state pension funds. In addition, 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 high-net-worth individuals.

Recent Transactions

Credit Facility Amendment

On October 1, 2025, we amended our existing 2022 Multi-Draw Term Loan Agreement. The amendment included a decrease in the aggregate principal amount available to be borrowed from $75 million to $50 million, changed dates related to principal and interest payments and changed interest rates for borrowings to the greater of the prime rate minus 1.35% or 3.00%.

Sale of Consolidated Fund

On October 23, 2025, we completed the sale of our interests in a wholly-owned entity for $92.3 million in cash to an investment fund, that we manage, but, in which we do not hold an equity interest.

Strategic Partnership

On November 2, 2025, we entered into a long-term strategic partnership with The Guardian Life Insurance Company of America (“Guardian”). Through this partnership, we will oversee Guardian’s existing nearly $5 billion private equity portfolio, and Guardian has also committed to invest approximately $500 million per year in private equity for the next 10 years through us. To support the partnership’s shared goals, Guardian was granted, at closing, a warrant related to a maximum of 400,000 shares of our Class A common stock (the “Warrant”) along with additional financial incentives. The Warrant is subject to applicable exercise prices and vesting and forfeiture conditions, may be settled in cash or shares at our election, expires approximately 10 years after issuance, and includes customary anti‑dilution adjustments for stock splits, stock dividends and similar events. The transaction closed, and the Warrant was issued, on December 31, 2025.

Key Financial and Operating Measures

Our key financial measures are discussed below.

Revenues

We generate revenues primarily from management and advisory fees and incentive fees.

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

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

Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value (“NAV”) in, our specialized funds. The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or NAV. 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, whether the limited partners commit early in the offering period or if the limited partners are investors in our other funds. Revenues from specialized funds that charge management fees during their fundraising periods include retroactive fees. Retroactive fees are management fees earned from investors that commit to a specialized fund after the first close of the fund and are required to pay a catch-up management fee as if they had committed to the fund at the first closing.

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

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

Incentive fees comprise carried interest earned from our specialized funds and certain customized separate accounts structured as single-client funds in which we have a commitment, and performance fees earned on certain other specialized funds and customized separate accounts.

For each of our secondary funds, direct investment funds, strategic opportunity funds and some of our evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%. To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5.0% of net profits, subject to the fund’s compounded annual preferred return. We recognize carried interest when it is probable that a significant reversal will not occur.

Performance fees are based on the aggregate amount of unrealized or realized gains earned by the applicable specialized fund or customized separate account, subject to the achievement of defined minimum returns to the clients or high-water marks. Performance fees range from 5.0% to 12.5% of net profits, with some subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when it is probable that a significant reversal will not occur.

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. Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt. In the event that a payment is made before it can be recognized as revenue, this amount would be included as deferred incentive fee revenue on our Condensed Consolidated Balance Sheets and recognized as income in accordance with our revenue recognition policy.

Expenses

Compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock and performance 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.

Other Income (Expense)

Equity in income of investees primarily represents our share of earnings from our investments in our specialized funds and certain customized separate accounts in which we have a 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 commitments in our specialized funds and certain customized separate accounts that invest solely in primary funds, secondary funds and direct investments, as well as those that invest across investment types. Equity in income of investees will increase or decrease as the change in underlying fund investment valuations increases or decreases. Since our direct 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 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 outstanding debt, along with the amortization of deferred financing costs, amortization of original issue discount and the write-off of deferred financing costs due to the repayment of previously outstanding debt.

Interest income is income earned on cash and cash equivalents.

Non-operating gain, net 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.

Other income (expense) of Consolidated Funds and Partnerships consists of earnings from funds in which consolidated general partner entities, that are not wholly-owned by us, have commitments as well as interest income, net gain on investments and interest expense on Consolidated Funds.

Income Tax Expense

We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. HLA is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by HLA flows through to its limited partners, including us, and is generally not subject to U.S. federal or state income tax at the Partnership level. Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to non-U.S. income taxes. Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such NCI.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA contains several provisions revising the U.S. federal corporate income tax by, among other things, extending many expiring provisions from the Tax Cuts and Jobs Act of 2017, modifying the international tax framework, and restoring favorable tax treatment for certain business provisions. As of December 31, 2025, the OBBBA did not have a material impact on the Company’s income tax expense.

Non-controlling interests

NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. NCI are presented as separate components in our Condensed Consolidated Statements of Income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Fee-Earning AUM

Fee-earning AUM is a metric we use to measure the assets from which we earn management fees. Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees that are generally derived from applying a certain percentage to the appropriate fee base. 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 NAV of our customized separate accounts and specialized funds depending on the fee terms. The vast majority 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.

Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for the three and nine months ended December 31, 2025 and 2024. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.

(in thousands)

35

Revenues

The following table shows our total revenues (excluding consolidated funds and general partner entities that are not wholly-owned (“Consolidated Funds and Partnerships”)):

(in thousands)

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Total revenues increased $31.1 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due to increases in both management and advisory fees and incentive fees.

Management and advisory fees increased $26.9 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Specialized funds revenue increased $22.8 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to an increase of $17.9 million in revenue from our evergreen funds and increase of $4.4 million in revenue from our latest direct equity fund, which added $6.2 billion and $0.7 billion, respectively, in fee-earning AUM between periods. Revenue from our specialized funds for the three months ended December 31, 2025 included $2.8 million of retroactive fees from our latest direct equity fund. Customized separate accounts revenue increased $2.2 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 due to the addition of new accounts, additional allocations from existing accounts and continued investment activity. Reporting, monitoring, data and analytics revenue increased $2.2 million, due primarily to increased subscriptions of our technology solutions.

Incentive fees increased $4.2 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to an increase in evergreen-related performance fees partially offset by proceeds realized on the sale of underlying investments in one of our specialized funds during the three months ended December 31, 2024.

Nine Months Ended December 31, 2025 compared to nine months ended December 31, 2024

Total revenues increased $47.0 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due to increases in both management and advisory fees and incentive fees.

Management and advisory fees increased $43.0 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024. Specialized funds revenue increased $35.3 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to an increase of $50.0 million in revenue from our evergreen funds and an increase of $8.2 million in revenue from our latest direct equity fund, partially offset by $20.7 million of retroactive fees from our latest secondary fund recognized during the nine months ended December 31, 2024 compared to $2.4 million from our latest direct equity fund during the nine months ended December 31, 2025. Reporting, monitoring, data and analytics revenue increased $5.1 million, due primarily to increased subscriptions of our technology solutions. Customized separate accounts revenue increased $4.3 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 due to the addition of several new accounts, additional allocations from existing accounts, and continued investment activity.

Incentive fees increased $4.0 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to an increase in evergreen-related performance fees partially offset by proceeds realized on the sale of underlying investments in one of our specialized funds during the nine months ended December 31, 2024.

Expenses

The following table shows our expenses (excluding Consolidated Funds and Partnerships):

(in thousands)

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Total expenses increased $19.8 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due to increases in both compensation and benefits and general, administrative and other expenses.

Compensation and benefits expenses increased $16.0 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Base compensation and benefits increased $21.3 million for the three months ended December 31, 2025, due primarily to an increase in salary expense from additional headcount and an increase in our annual bonus plan accrual related to stronger operating performance compared to the prior year period. Equity-based compensation increased $1.2 million driven primarily by awards granted between December 31, 2024 and December 31, 2025. Incentive fee compensation decreased $6.4 million for the three months ended December 31, 2025 primarily due to a decrease in carried interest revenue compared to the prior year period.

General, administrative and other expenses increased $3.7 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to an increase in consulting and professional fees.

Nine Months Ended December 31, 2025 compared to nine months ended December 31, 2024

Total expenses increased $39.0 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due to increases in both compensation and benefits and general, administrative and other expenses.

Compensation and benefits expenses increased $29.1 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024. Base compensation and benefits increased $26.6 million, due primarily to an increase in salary expense from additional headcount and an increase in our annual bonus plan accrual related to stronger operating performance compared to the prior year period. Equity-based compensation increased $18.5 million for the nine months ended December 31, 2025, driven primarily by awards granted in the prior fiscal year ended March 31, 2025. Incentive fee compensation decreased $16.1 million for the nine months ended December 31, 2025 due to a decrease in carried interest revenue compared to the prior year period.

General, administrative and other expenses increased $10.0 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024. This change consisted primarily of a $5.3 million increase in consulting and professional fees, a $2.8 million increase in third-party commissions primarily attributed to the increase in gross subscriptions to our evergreen funds, and a $1.1 million increase in technology-related expenses.

Other Income (Expense)

The following table shows our total other income (expense) (excluding Consolidated Funds and Partnerships):

(in thousands)

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Other income (expense) increased $1.9 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to an increase in non-operating gain, net, partially offset by a decrease in equity income of investees.

Non-operating gain, net increased $2.2 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 due primarily to a decrease in our liability under the tax receivable agreement.

Equity in income of investees decreased $0.3 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 due primarily to smaller increases in investment valuations.

Nine Months Ended December 31, 2025 compared to nine months ended December 31, 2024

Other income (expense) increased $8.1 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to an increase in equity in income of investees, partially offset by a decrease in non-operating gain, net.

Equity in income of investees increased $15.4 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to larger increases in investment valuations.

Non-operating gain, net decreased $8.6 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to a decrease in our liability under the tax receivable agreement, offset by gains on our technology investments during the nine months ended December 31, 2024.

Consolidated Funds and Partnerships

The following table shows the results of operations of Consolidated Funds and Partnerships:

(in thousands)

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Incentive fees decreased $0.8 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due to decreased carried interest from our specialized funds.

Other income (expense) of Consolidated Funds and Partnerships increased $17.7 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to increased investment activity of Funds consolidated between periods.

Nine Months Ended December 31, 2025 compared to nine months ended December 31, 2024

Incentive fees increased $3.4 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due to increased carried interest from our specialized funds.

Other income (expense) of Consolidated Funds and Partnerships increased $40.8 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to increased investment activity of Funds consolidated between periods.

Income Tax Expense

Our effective tax rate was 22.7% and 14.1% for the three months ended December 31, 2025 and 2024, respectively, and 17.9% and 12.3% for the nine months ended December 31, 2025 and 2024, respectively. These rates were different from the statutory tax rates due to the portion of income allocated to NCI, change in valuation allowance recorded against deferred tax assets and discrete tax adjustments to true-up prior fiscal year estimated investment taxable income to actual investment taxable income reported to us after the prior fiscal year end. The effective tax rates for the three and nine months ended December 31, 2025 were higher than the effective tax rates for the three and nine months ended December 31, 2024 due primarily to an increase in valuation allowances against deferred tax assets recorded at December 31, 2025.

Non-Controlling Interests

The following table shows income attributable to NCI:

(in thousands)

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Net income attributable to NCI increased by $9.9 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to an increase in overall net income during the period.

Net income attributable to NCI in consolidated Funds increased $9.6 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The increase was due primarily to gains on investments held by Funds consolidated between periods and increased NCI ownership driven by increased subscriptions in the consolidated Funds by NCI holders.

Net income attributable to NCI in Hamilton Lane Advisors, L.L.C. remained mostly unchanged for the three months ended December 31, 2025 compared to the three months ended December 31, 2024, due primarily to a decrease in NCI holders’ economic ownership percentage of Hamilton Lane Advisors, L.L.C. between periods, partially offset by an overall increase in net income.

Nine Months Ended December 31, 2025 compared to nine months ended December 31, 2024

Net income attributable to NCI increased by $16.9 million for the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, due primarily to an increase in overall net income during the period.

Net income attributable to NCI in consolidated Funds increased by $17.4 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024. The increase was due primarily to gains on investments held by Funds consolidated between periods and increased NCI ownership driven by increased subscriptions in the consolidated Funds by NCI holders.

Net income attributable to NCI in Hamilton Lane Advisors, L.L.C. remained mostly unchanged for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024, due primarily to a decrease in NCI holders’ economic ownership percentage of Hamilton Lane Advisors, L.L.C. during the period, partially offset by an overall increase in net income.

Fee-Earning AUM

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

(in millions)

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

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

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

Three months ended December 31, 2025

Fee-earning AUM increased $2.7 billion during the three months ended December 31, 2025, due primarily to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $0.3 billion for the three months ended December 31, 2025. Customized separate accounts contributions were $1.3 billion for the three months ended December 31, 2025, due to the addition of new accounts, additional allocations from existing accounts and continued investment activity. Distributions were $1.1 billion for the three months ended December 31, 2025, due primarily to $0.6 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, $0.3 billion from accounts moving from a committed to net invested capital fee base, and $0.2 billion from accounts reaching the end of their fund term.

Specialized funds fee-earning AUM increased $2.4 billion for the three months ended December 31, 2025. Specialized fund contributions were $2.7 billion for the three months ended December 31, 2025, due primarily to $2.0 billion from our evergreen funds. Distributions were $0.8 billion for the three months ended December 31, 2025, due primarily to $0.7 billion from returns of capital and redemptions in funds earning fees on a net invested capital or NAV fee base.

Nine Months Ended December 31, 2025

Fee-earning AUM increased $7.1 billion during the nine months ended December 31, 2025, due primarily to contributions from customized separate accounts and specialized funds.

Customized separate accounts fee-earning AUM increased $1.7 billion for the nine months ended December 31, 2025. Customized separate accounts contributions were $4.3 billion for the nine months ended December 31, 2025, due to the addition of new accounts, additional allocations from existing accounts and continued investment activity. Distributions were $2.9 billion for the nine months ended December 31, 2025, due primarily to $1.5 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, $0.7 billion from accounts moving from a committed to net invested capital fee base and $0.7 billion from accounts reaching the end of their fund term.

Specialized funds fee-earning AUM increased $5.4 billion for the nine months ended December 31, 2025. Specialized fund contributions were $6.1 billion for the nine months ended December 31, 2025, due primarily to $4.6 billion from our evergreen funds. Distributions were $2.0 billion for the nine months ended December 31, 2025 due primarily to $1.6 billion from returns of capital and redemptions in funds earning fees on a net invested capital or NAV fee base and $0.4 billion from accounts reaching the end of their fund term.

Non-GAAP Financial Measures

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

Fee Related Earnings

Fee Related Earnings (“FRE”) is used to highlight earnings from revenues that are measured and received on a recurring basis. FRE represents net income excluding (a) incentive fees, net of fee related performance revenues, and related compensation, (b) equity-based compensation, (c) interest income and expense, (d) income tax expense, (e) equity in income of investees, (f) non-operating gain, net and (g) 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.

Fee related performance revenues (“FRPR”) are incentive fees expected to be measured and received from certain of our funds on a recurring basis and are not dependent on realization events of the fund’s underlying investments. FRPR includes incentive fees earned from consolidated Funds that are eliminated under GAAP. We believe FRPR is useful to investors because it provides additional insight into our recurring revenues.

Beginning in the fourth quarter of fiscal 2025, we modified our definition of FRE to exclude equity-based compensation and include FRPR. Equity-based compensation is non-cash compensation provided to retain employees and align employee and stockholder interest. It is not directly correlated with our operating results. Fee related performance revenues are expected to be received on a recurring basis depending upon performance of certain funds that pay incentive fees on a high-water mark basis. We believe that reporting non-GAAP results inclusive of these changes provides a supplemental view of our ongoing performance that is useful and relevant to our investors. As a result of the change, prior period amounts have been recast to reflect the updated presentation.

Adjusted EBITDA

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

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to FRE and Adjusted EBITDA for the three and nine months ended December 31, 2025 and 2024:

(in thousands)

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

Non-GAAP Earnings Per Share

Non-GAAP earnings per share (“EPS”) measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI. Non-GAAP EPS 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 and excludes any impact of changes in carrying amount of our redeemable NCI. Adjusted shares outstanding for the three and nine months ended December 31, 2025 and 2024 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP EPS are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.

The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated for the three and nine months ended December 31, 2025 and 2024:

(in thousands, except share and per-share amounts)

(1) Represents corporate income taxes at our estimated statutory tax rate of 23.3% and 23.4% for the three and nine months ended December 31, 2025 and 2024, respectively, applied to adjusted pre-tax net income. The 23.3% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.3%. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%.

Investment Performance

The following tables present information relating to the historical performance of our specialized funds with fund families having at least two distinct vintages and most recent fund sizes of greater than $500 million per fund. The data are presented from the date indicated through September 30, 2025 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.

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

• market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future;
• the performance of our funds is generally calculated on the basis of the NAV of the funds’ investments, including unrealized gains, which may never be realized;
• our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed;
• our newly-established funds may generate lower returns during the period that they initially deploy their capital;
• competition for investment opportunities, resulting from the increasing amount of capital invested in private markets alternatives, may increase the cost and reduce the availability of suitable investments, thereby reducing investment returns in the future;
• the performance of particular funds also will be affected by risks of the industries and businesses in which they invest; and
• we may create new funds that reflect a different asset mix and new investment strategies, as well as a varied geographic and industry exposure, compared to our historical funds, and any such new funds could have different returns than our previous funds.

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

Specialized Fund Performance

We organize, invest and manage specialized primary, secondary and direct 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. Below is performance information across our various specialized funds. Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized.

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Performance Methodology

The indices presented for comparison are the S&P 500, MSCI World, Dow Jones Brookfield Global Infrastructure (“DJB GI”), MSCI World Infrastructure (“MSCI Infra”), ICE BofA US High Yield Index (“ICE BofA US HY”) and Credit Suisse Leverage Loan (“CS LL”), calculated on a public market equivalent (“PME”) basis. We believe these indices are commonly used by private markets and credit investors to evaluate performance. The PME calculation methodology allows private markets investment performance to be evaluated against a public index and assumes that capital is being invested in, or withdrawn from, the index on the days the capital was called and distributed from the underlying fund managers. The S&P 500 Index is a total return capitalization-weighted index that measures the performance of 500 U.S. large cap stocks. The DJB GI Index includes companies domiciled globally that qualify as “pure-play” infrastructure companies, which are companies whose primary business is the ownership and operation of infrastructure assets, activities that generally generate long-term stable cash flows. The MSCI Infra Index covers mid and large cap infrastructure assets across the 23 developed market countries. 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 ICE BofA HY Index tracks the performance of US dollar denominated below investment grade rated corporate debt publicly issued in the US domestic market. The ICE BofA HY Index is rebalanced monthly. The CS LL Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Loans must be rated 5B or lower and the index frequency is monthly.

Our IRR represents the pooled IRR for all discretionary investments for the period from inception to September 30, 2025. Gross IRR is presented net of management fees, carried interest and expenses charged by the general partners of the underlying investments, but does not include our management fees, carried interest or expenses. Our gross IRR would decrease with the inclusion of our management fees, carried interest and expenses. Net IRR is net of all management fees, carried interest and expenses charged by the general partners of the underlying investments, as well as by us. Net IRR figures for our funds do not include cash flows attributable to the general partner. Note that secondary portfolio IRRs can be initially impacted by purchase discounts (or premiums) paid at the closing of a transaction, the impact of which will diminish over time.

“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.

Many 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 dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of December 31, 2025 and March 31, 2025, our cash and cash equivalents were $338.5 million and $229.2 million, respectively.

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

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

Finally, we have used available cash and borrowings from our Loan Agreements (defined below) to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions. We have used proceeds from the issuance of our Senior Notes (defined below) to seed new specialized funds and for general corporate purposes.

Senior Notes and Loan Agreements

On October 8, 2024, HLA issued $100 million aggregate principal amount of 5.28% senior notes due October 15, 2029 (the “Senior Notes”) pursuant to a note purchase agreement (the “Note Purchase Agreement”) among HLA and the institutional purchasers party thereto in a private placement transaction. Interest on the Senior Notes is payable semi-annually in arrears and commenced on April 15, 2025. Interest on the Senior Notes accrues from and including October 8, 2024. The Senior Notes will mature on October 15, 2029.

We maintain our Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”), 2020 Multi-Draw Term Loan and Security Agreement (as amended, the “2020 Multi-Draw Term Loan Agreement”), and 2022 Multi-Draw Term Loan Agreement (as amended, the “2022 Multi-Draw Term Loan Agreement” and, together with the Term Loan Agreement, the Revolving Loan Agreement, and the 2020 Multi-Draw Term Loan Agreement, the “Loan Agreements”) with JPMorgan Chase Bank, N.A. (“JPMorgan”). The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

The Term Loan Agreement has a maturity date of July 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of December 31, 2025, we had an outstanding balance of $84 million under the Term Loan Agreement.

The Revolving Loan Agreement provides that the aggregate outstanding balance will not exceed $50 million, subject to the Cap, and has a maturity date of October 6, 2027. The interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. As of December 31, 2025, we did not have an outstanding balance under the Revolving Loan Agreement.

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of April 1, 2030. The interest rate is a fixed per annum rate of 3.50%. As of December 31, 2025, we had an outstanding balance of $98 million under the 2020 Multi-Draw Term Loan Agreement.

The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029. On October 1, 2025, we amended our 2022 Multi-Draw Term Loan Agreement to, among other things, (a) change the aggregate principal amount of term loans from $75 million to $50 million, subject to the Cap, (b) change certain dates related to interest payments and repayments of the term loan thereunder, and (c) change the interest rate for borrowings thereunder to equal the greater of (i) the prime rate minus 1.35% and (ii) 3.00%. As of December 31, 2025, we did not have an outstanding balance under the 2022 Multi-Draw Term Loan Agreement. We are entitled to request term loans not to exceed $50 million in the aggregate, subject to the Cap, through October 6, 2027.

The Loan Agreements and the Note Purchase Agreement 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, among other requirements, (a) a specified amount of management fees, (b) a specified amount of adjusted EBITDA minus dividend distributions (other than tax distributions), as defined in the Loan Agreements, and (c) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The Note Purchase Agreement contains certain covenants, including (a) a Consolidated Leverage Ratio (as defined in the Note Purchase Agreement) of 3.50 to 1.00 as of March 31 and September 30 of each calendar year (each, a “Test Date”), (b) a minimum annual Management Fees (as defined in the Note Purchase Agreement) covenant as of each Test Date of not less than the greater of (i) $185 million and (ii) the amount equal to 80% of the Management Fees received by HLA during the six calendar month period ended on the immediately preceding Test Date, and other customary covenants. The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of December 31, 2025 and March 31, 2025, the principal amount of debt outstanding equaled $281.9 million and $293.1 million, respectively. We had $143.1 million in availability under the Loan Agreements as of December 31, 2025.

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 short-term 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. However, the availability of capital from the Loan Agreements and our cash balances are exposed to the credit risks of the financial institutions at which they are held. If events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about any such events, occur, our ability to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities to pay operational and other costs, may be threatened or lost.

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

We will also continue to evaluate opportunities to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions.

In November 2018, we authorized a program to repurchase up to 6% of the outstanding shares of our Class A common stock, not to exceed $50 million (the “Stock Repurchase Program”). The Stock Repurchase Program does not include specific price targets or timetables and may be suspended or terminated by us at any time. We intend to finance the purchases using available working capital and/or external financing. The Stock Repurchase Program expires 12 months after the date of the first acquisition under the authorization. We have not repurchased any shares of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available. Our board of directors periodically reviews the Stock Repurchase Program and most recently re-approved it in December 2024.

We expect that our primary short-term 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 and/or exercise early termination buyout rights under the tax receivable agreement; (5) fund capital expenditures, make strategic investments and warehouse investments for our Funds; (6) pay interest and principal due on our outstanding debt; (7) pay income taxes; (8) make dividend payments to our stockholders and distributions to holders of HLA units in accordance with our distribution policy; (9) settle exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement from time to time; (10) settle exercises of the Warrant in cash at our election; and (11) fund purchases of our Class A common stock pursuant to the Stock Repurchase Program.

We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary, and minimum cash balances related to our self-funded medical insurance plan put in place as of January 1, 2025. The net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of each of December 31, 2025 and March 31, 2025, we were required to maintain approximately $7.8 million and $6.3 million, respectively, in liquid net assets to meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.

Dividend Policy

The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors. We intend to continue to pay a cash dividend on a quarterly basis. Subject to funds being legally available, we will cause HLA to make pro rata distributions to its members, including us, in an amount at least sufficient to allow us to pay all applicable taxes, to make payments under the tax receivable agreement, and to pay our corporate and other overhead expenses.

Tax Receivable Agreement

We expect that periodic exchanges of membership units of HLA by members of HLA will result in increases in the tax basis in our share of the assets of HLA that otherwise would not have been available. These increases in tax basis are expected to increase our depreciation and amortization deductions and create other tax benefits and therefore may reduce the amount of tax that we would otherwise be required to pay in the future. The tax receivable agreement will require us to pay 85% of the amount of these and certain other tax benefits, if any, that we realize (or are deemed to realize in the case of an early termination payment, a change in control or a material breach by us of our obligations under the tax receivable agreement) to the pre-IPO members of HLA.

Cash Flows

Nine months ended December 31, 2025 and 2024

(in thousands)

Operating Activities

Operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings. For the nine months ended December 31, 2025 and 2024, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.

Investing Activities

Investing activities generally reflect cash used for fixed asset purchases and contributions to and distributions from our investments. For the nine months ended December 31, 2025 and 2024, our net cash used in investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchases of investments, and net contributions to our Funds. Net cash provided by investing activities for the nine months ended December 31, 2025 was also driven by the sale of a wholly-owned Consolidated Fund.

Financing Activities

Our financing activities generally reflect cash received from debt and equity financings, payments to owners in the form of dividends, distributions and repurchases of shares and scheduled drawdowns and repayments of our outstanding debt. For the nine months ended December 31, 2025 and 2024, our net cash provided by financing activities was driven primarily by dividends paid to stockholders, payments under the tax receivable agreement, distributions to HLA members, repayment of our outstanding debt and contributions from NCI in Consolidated Funds.

Off-Balance Sheet Arrangements

There have been no material changes in our off-balance sheet arrangements discussed in our 2025 Form 10-K.

Contractual Obligations, Commitments and Contingencies

There have been no material changes outside of the ordinary course of business in our contractual obligations, commitments and contingencies from those specified in our 2025 Form 10-K.

Critical Accounting Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP for interim financial information including our accounts, our wholly owned subsidiaries, and entities that we control, for which all intercompany transactions and balances have been eliminated in consolidation. 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. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates.

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 2025 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.

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

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

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

• Equity in income of investees changes along with the realized and unrealized gains of the underlying investments in our specialized funds and certain customized separate accounts in which we have a general partner commitment. Our general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States.
• Management fees from our specialized funds and customized separate accounts are not significantly affected by changes in fair value as the management fees are not generally based on the value of the specialized funds or customized separate accounts, but rather on the amount of capital committed or invested in the specialized funds or customized separate accounts, as applicable.
• Incentive fees from our specialized funds, with the exception of certain evergreen 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. Minor decreases in underlying fair value would not affect the amount of deferred incentive fee revenue subject to clawback.

Exchange Rate Risk

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

Interest Rate Risk

As of December 31, 2025, we had $181.9 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 3.00%, was 5.50% as of December 31, 2025. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 5.25% as of December 31, 2025. The annual interest rate on the 2022 Multi-Draw Term Loan Agreement, which is at the prime rate minus 1.35%, subject to a floor of 3.00%, was 5.40% as of December 31, 2025.

Based on the floating rate component of our Loan Agreements payable as of December 31, 2025, we estimate that a 100 basis point increase in interest rates would result in increased interest expense of approximately $0.8 million over the next 12 months.

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.

Disclosure Controls and Procedures

Our management, including our Co-Chief Executive Officers and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2025. 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 Co-Chief Executive Officers 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 Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level at December 31, 2025.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the quarter ended December 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our 2025 Form 10-K.