Hamilton Lane (HLNE)

Alternative investment management firm Hamilton Lane (NASDAQ:HLNE) announced better-than-expected revenue in Q3 CY2025, with sales up 27.3% year on year to $190.9 million. Its non-GAAP profit of $1.54 per share was 39.8% above analysts’ consensus estimates.

Company Overview

With over $100 billion in assets under management and supervision, Hamilton Lane (NASDAQ:HLNE) is an investment management firm that specializes in private markets, offering advisory services and fund solutions to institutional and private wealth investors.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

Hamilton Lane competes with other private markets investment firms including Blackstone (NYSE:BX), KKR (NYSE:KKR), The Carlyle Group (NASDAQ:CG), and Partners Group (SWX:PGHN), as well as the alternative asset management divisions of traditional asset managers like BlackRock (NYSE:BLK).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Hamilton Lane’s 19.6% annualized revenue growth over the last five years was excellent. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Hamilton Lane’s annualized revenue growth of 22.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Hamilton Lane reported robust year-on-year revenue growth of 27.3%, and its $190.9 million of revenue topped Wall Street estimates by 12.8%.

While assets under management are the committed capital by clients - not revenue itself - they directly influence how much firms can earn in the form of management fees, which are charged as a percentage of AUM.

Hamilton Lane’s management fees have grown at an annual rate of 15.4% over the last five years, better than the broader financials industry but slower than its total revenue. Ignoring performance fees that typically range from 10-20% of investment gains, this tells us its asset management division was a net detractor to the company. When analyzing Hamilton Lane’s management fees over the last two years, we can see that growth decelerated to 14% annually.

Hamilton Lane’s management fees punched in at $142.1 million this quarter, beating analysts’ expectations by 1.2%. This print was 18.7% higher than the same quarter last year.

EBITDA is a good way of judging operating profitability for Custody Bank companies because it excludes various one-time or non-cash expenses (depreciation), providing a more standardized view of the business’s profit potential.

Over the last five years, Hamilton Lane’s EBITDA margin has fallen by 2.1 percentage points, going from 51.2% to 53.3%. It has also expanded by 3.8 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q3, Hamilton Lane’s EBITDA margin was 52.8%. This result was 2.4 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Hamilton Lane’s EPS grew at a spectacular 21.9% compounded annual growth rate over the last five years, higher than its 19.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Hamilton Lane, its two-year annual EPS growth of 28.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Hamilton Lane reported adjusted EPS of $1.54, up from $1.07 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Hamilton Lane’s full-year EPS of $5.31 to grow 1.8%.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Hamilton Lane has averaged an ROE of 38.3%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Hamilton Lane has a strong competitive moat.

Hamilton Lane reported $240.8 million of cash and $361.2 million of debt on its balance sheet in the most recent quarter.

As investors in high-quality companies, we primarily focus on whether a company’s profits can support its debt.

With $391 million of EBITDA over the last 12 months, we view Hamilton Lane’s 0.3× net-debt-to-EBITDA ratio as safe. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Hamilton Lane beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 1.8% to $117 immediately following the results.

Updated: December 4, 2025 at 11:18 PM EST

Are you wondering whether to buy Hamilton Lane or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Hamilton Lane is truly a cream-of-the-crop financials company. First of all, the company’s revenue growth was impressive over the last five years. On top of that, its stellar ROE suggests it has been a well-run company historically, and its expanding pre-tax profit margin shows the business has become more efficient.

Hamilton Lane’s P/E ratio based on the next 12 months is 22x. Analyzing the financials landscape today, Hamilton Lane’s positive attributes shine bright. We think it’s one of the best businesses in our coverage and like the stock at this price.

Wall Street analysts have a consensus one-year price target of $163.50 on the company (compared to the current share price of $123.16), implying they see 32.8% upside in buying Hamilton Lane in the short term.