Hamilton Lane Inc (HLNE) 2018 Q4 法說會逐字稿

Hello, and welcome to the Hamilton Lane Q4 Earnings Call. On the call today from the Hamilton Lane team are Mario Giannini, CEO; Erik Hirsch, Vice Chairman; Randy Stilman, CFO; Jeff Meeker, Chief Client Officer; and Dmitry Sidberry, Head of Investor Relations.

Before the Hamilton Lane team discusses the quarter's results, I want to remind you that they will be making forward-looking statements based on their current expectations for the business. Those statements are subject to risks and uncertainties that may cause the actual results to differ materially. For a discussion of these risks, please review the risk factors included in Hamilton Lane's Fiscal 2017 10-K and subsequent reports the company files with the SEC.

Management will also be referring to non-GAAP measures that they view as important in assessing the performance of the business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials, which are available on the IR section of Hamilton Lane's website. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane's funds or stock. The company's detailed financial results will be made available when the 10-K is filed.

Finally, for this call this morning, the Hamilton Lane team will be referencing pages in the earnings release presentation available on the Hamilton Lane IR website and shown on the webcast version of this call.

With that, I will turn the call over to Demetrius Sidberry, Head of Investor Relations.

Thanks, Sara. And thanks, everyone for joining us.

Slide 3 of our presentation provides a snapshot of our financial performance for fiscal 2018. For the fiscal year, our revenue for management and advisory fees grew by 13% versus last year, with double-digit growth in each of our offerings. We also experienced double-digit growth in our fee-related earnings, which increased 12% year-over-year. Non-GAAP EPS for fiscal 2018 was $1.64, and this is based on approximately $87 million of adjusted net income. Our GAAP net income for the year was approximately $17 million, which translated into GAAP EPS of $0.93.

Finally, our board approved an increase in our quarterly dividend from $0.175 per share to slightly more than $0.21 per share, an increase of more than 20%. This increase reflects a full year dividend target of $0.85 per share.

With that, I'll now turn the call over to Mario to cover additional highlights for the year.

Thanks, Demetrius, and thanks, everyone for taking the time to join us.

Last fiscal year was another strong year for our business. We added to an already broad and diverse client base. We grew our team to over 340 people, and we had our offices in key markets around the world.

Slide 4 of the presentation shows that we continue to steadily grow our asset base across asset management and advisory offerings. For the year, we reached another new high of more than $450 billion in combined AUM and AUA, and the pipeline for opportunities continues to be as strong as we've ever seen it.

Slide 5 dives deeper, and shows some detail around our AUM and AUA build for the year. During fiscal 2018, we added $3.9 billion to fee-earning AUM with strong growth across both our customized separate accounts and specialized products. Almost $3 billion of the fee-earning AUM growth happened within the customized separate account offering and was driven by contributions from both existing and new separate account clients.

Existing clients, which continue to be a significant part of the growth in separate account offering, accounted for nearly 70% of the contributions. As we stated in the past, we have high retention amongst our separate account clients, with long-term re-ups rate of approximately 80%.

As for our new clients, they continue to generally fall into 1 of 3 categories. The first is an entity that is completely new to the private markets. They're just looking to enter the asset class and want to do so with a partner. The second is an entity who's electing to switch service providers. And the third is someone who's been utilizing internal resources and is now electing to add us as an additional resource. Over the past year, we've added all 3 types of relationships.

Looking forward, and as you've heard from us on prior calls, the new client and the client re-up opportunity set within our customized separate accounts offering remains very robust.

Regarding our commingled funds, the most notable recent development was the close of our credit-oriented fund. We launched this strategy in 2015 with the idea of raising an annual vehicle that would deploy capital in a single year, allowing investors to be more tactical with their capital allocation. That first year, we raised approximately $70 million. The series that followed grew in size as the brand strengthened and our capital deployment was successful. The 2016 series increased to $214 million, and the 2017 series further increased to $435 million.

For our 2018 series, we held our final close earlier this week on yet another record amount of capital, raising approximately $900 million. Our credit strategy is the most recent example of our ability to introduce the new Hamilton Lane product to the market; see and make compelling investments on behalf of our clients; and as a result, scale the new products in a meaningful way. While we've had a presence in the credit space for some time, this product didn't exist 4 years ago. Today, the platform stands at over $1.6 billion with strong visibility into future growth.

With this strategy, there are 2 points worth emphasizing. The first is around the growth of the vehicle and what that means for future growth. While we are extremely proud that investors have entrusted us with close to $900 million, an increase of more than double the prior series, we would not expect that to be the growth trajectory going forward. Given that the base amount has grown and the investment period is currently 1 year, there is a limit to the amount of capital such a strategy can successfully deploy. Now, we don't believe we're at that limit, but it would be challenging to see a path forward that has this continued growth rate.

Where we do see opportunity for other large-scale growth is around the addition of other credit-oriented vehicles. We're only covering a small portion of the credit market today through this vehicle, and so one could appreciate the potential to expand into other areas within credit.

The second point is simply a reminder. That being, this product charges fees based on invested capital. As a result, none of the nearly $900 million of commitments is currently reflected in the fee-earning AUM. It will be added to that figure as they are deployed and as charged over the course of the 1-year adjustment period.

As far as other products are concerned, we are currently in market with several of our specialized products, including our fourth co-investment fund and our 10th private equity fund-of-funds. For each of these products, we have until the spring of 2019 to wrap up fundraising, so we are still in the relatively early days of raising products. To date, we have closed on more than $800 million in limited partner commitments across the 2 funds combined, with nearly $700 million closed in our coinvestment product, and more than $120 million closed in our fund-of-funds product.

Finally, we added $96 billion to our AUA during the fiscal year. The client roster in this part of our business continues to expand with some of the largest and most sophisticated investors in the private markets globally. While there is not a direct correlation between the scale of this business and revenue generation, there is a direct correlation between the scale of this business and our influence in the private markets. Our firm continues to be positioned as we sought after provider advice and assistance in the private markets, and as such, we would expect to continue to add to our AUA over time.

Slide 6 gives you an aggregate view of our fee-earning AUM over time. Over 80% of our management and advisory fee revenue is derived from fee-earning AUM, which continues to have an attractive growth profile. During fiscal 2018, we added $3.9 billion in net fee-earning AUM, which represented a 14% growth rate.

Let me wrap up my section with a few thoughts on our capital allocation policy. Our goals as a firm are to drive successful outcomes for our clients and increase shareholder value. We believe that these goals are inherently linked. On the latter, we are often asked our philosophy on sharing the firm's growth with our shareholders, and we believe that our approach is a simple one: Have a steady and progressively growing dividend that increases in line with the earnings growth of the business.

For our first full year as a public company, we announced and paid a dividend of $0.70 per share starting in our very first quarter. Going forward, our strategy around the payout ratios have a target of at least 50% of non-GAAP EPS. This strategy allows us to account for fee-related earnings as well as cash carry, while maintaining the overall approach of a steady and progressively growing dividend.

As Dmitry has stated at the beginning of the call, our board approved a dividend target of $0.85 for fiscal 2019, which represents an increase in the annual dividend of more than 20%. We believe that this increase reflects our commitment to driving shareholder value while remaining focused on utilizing some portion of our cash flow to grow the business.

As we stated in the past, we continue to see many avenues of growth ahead of us, such as growing our team, expanding our geographic presence, investing in our funds, and adding new strategies. We believe there are a number of levers available to drive further growth in our business, and we think each of these areas, at certain times, will warrant capital.

Before we turn to the financial review, I've invited Jeff Meeker, our Chief Client Officer, to share some insights into a topic about which we are frequently asked: How our clients are seeing the world today and, specifically, how are they looking at the private markets? This is where Jeff focuses his time, and I thought you'd appreciate hearing directly from him. Jeff?

Thanks, Mario, and hello everyone.

As Chief Client Officer, I spend virtually all of my time interfacing with clients, discussing their objectives in the private markets, and driving toward successful outcomes. In this role, I lead a team of over 100 relationship managers and client service professionals whose sole focus is to partner with our clients to ensure their needs are not only met, but exceeded. A basic illustration of how we interact with our clients is depicted on Slide 8.

Our customized approach and active client engagement often means we are interacting weekly and, sometimes, daily, with clients discussing the pipeline of market opportunities, specific managers and market trends. So what are we hearing?

Overall, our clients are happy with the asset class for a number of reasons. It continues to provide diversification benefits in the form of access to small to midsized companies around the globe, and exposure to both equity and debt as well as growth and value strategies. Distributions remain strong as the asset class continues to be a net distributor of capital back to investors. Said differently, developed private market plans are sending back more money to investors than they are contributing in new capital calls.

As the markets continue to grow and expand, investors also have more choices than ever, allowing them to be more tactical and deliberate in obtaining private markets exposure that both complement existing portfolios and target areas of opportunity. Last and most important, the asset class continues to deliver the performance that our clients expect. I want to spend a minute on this point because it's a topic we are discussing a lot today.

As you know, our asset class tends to lag the public markets. We mark our companies quarterly, not daily. And the data is clear that managers in this asset class lean conservatively in their valuation approach. Thus, we tend to move up more slowly in a bull market and move down more slowly in a bear market. During the global financial crisis, our portfolios outperformed the public markets by a significant margin, not because we don't have some correlation to the public markets -- we do -- but because of when and how our companies are valued. The same was true as global markets recovered and the stock market soared. For a time, our performance trailed the public markets.

That's the case in today's market. Private assets have performed well, but have slightly trailed the public markets, particularly the U.S. market on a 1-year comparison. However, the private markets continue to materially outperform public markets over 3-, 5-, 10-, and 15-year periods, and you can see our data here on Slide 9. Our investors are all focused on long-term performance and understand this dynamic and continue to be pleased with the asset class.

Perhaps the best evidence of their continued support and belief in the private markets can be seen through their allocation of the asset class and the resulting growth in our own business. Across our client base and the broader industry, the dollars committed to private markets continue to increase. We host an annual conference for clients each fall to discuss the markets and their portfolios. For the past 5 years, we've asked our clients about their intentions for private market allocation going forward, and not once over that time period has the client indicated a desire to reduce their exposure to the asset class. And surveys conducted by reputable third parties show a similar theme. Investors believe they are under-allocated to this asset class, and aim to address that over time.

There are 4 factors driving this growth, which are shown on Slide 10. First, remember the nuance of our asset class. Clients need to continually commit new capital to reach and maintain their target allocation. Our managers return the capital when they exit a deal, and limited partners must re-up to simply maintain their exposure to the private markets.

Second, many of our clients are not yet at their targeted allocation and are still building their exposure to private markets, making significant contributions annually to new opportunities.

Third, as Mario noted earlier, we continue to meet investors globally with no current exposure to the private markets. They range from large, sovereign wealth entities to pension plans to high-net-worth platforms that are getting into the asset class for the first time. As they hire us to design and implement new portfolios, they are making significant new capital contributions.

And fourth, also as mentioned previously, the asset class continues to perform well. Existing private markets investors, in many cases, have returned hurdles they need to hit to meet their financial obligations. The expectation is that private markets should continue to outperform the public markets going forward over the long term, and are a necessary component to achieving those overall return goals.

With that, I'll turn the call over to our CFO, Randy Stilman.

Thank you, Jeff. Slide 12 of our presentation shows the financial highlights for fiscal year 2018. As shown on the slide, we continue to see solid growth in our business with year-over-year total revenue up 36%. Each of our core products and services were up double digits for the year, and as a result, fiscal 2018 management and advisory fee revenue grew by 13% over the prior year. The biggest driver of this growth was our specialized fund revenue, which was up 11% over fiscal 2017. The growth of our specialized fund revenue line is driven by successful fundraisers. The fundraise that had the largest impact was that of our latest secondary fund, which held its final close in June of 2017. We recognized nearly $7.5 million in new specialized fund revenue relative to the prior year from that fund. Included in the fund's year-to-date revenue was $5.8 million in retroactive fees, which compares to $2.9 million in retro fees in the prior year.

Revenue from our customized separate accounts offering year-to-date was also up 11% compared to the prior year. Our customized separate account fee-earning AUM grew by nearly $3 billion during fiscal 2018 as we continue to add new clients and receive additional allocations from our existing clients.

For advisory and distribution management offerings, we experienced 19% and 49% year-over-year growth respectively. For the advisory business, the addition of new clients was the main driver of the increase. Growth and distribution management revenue was driven by higher stock distribution activity year-to-date, which led to higher base and performance fees.

The final component of our revenue is incentive fees. On a reported basis, we saw a meaningful uptick in incentive fees, which reached $49 billion for the fiscal year. While we received cash carry during the year, a sizable portion of the incentive fee revenue came from the recognition of $40.6 million in carry from one of our coinvestment funds. This amount was related to the cash incentive fees we received in fiscal 2016, but did not recognize it as revenue at that time. Therefore, the recognition of this carry was a noncash event that reduced our deferred incentive fee liability for this coinvestment fund to $2.5 million. This deferred incentive fee reduction brings this coinvestment fund closer to being in a cash carry position. In terms of our earnings per share, the recognition of this noncash carry had a positive impact on this quarter's EPS of approximately $0.30. For the year, the EPS impact was $0.46.

Slide 13 profiles our earnings. Our fee-related earnings were up 12% year-over-year.

In regards to our expenses, total expenses increased by 17% during the year. Our comp and benefits line was up 15%, and G&A was up 21%. Much of this increase was driven by the organic growth of our platform, along with the implementation of various business initiatives and the buildout of our public company infrastructure. The increase in compensation and benefits was due primarily to growing headcount and contingent compensation totaling $3.4 million related to the Real Assets firm acquisition. It should be noted that the reported compensation of benefits for this period excludes the compensation expense related to the $40.6 million of noncash carry recognized this fiscal year. The reason for this exclusion is that the expense was paid and recognized in fiscal 2016 when the incentive fee cash was received.

Going forward, this mismatch of revenue and expenses related to the deferred incentive fee revenue will occur only in relation to the remaining $2.5 million from this fiscal 2016 occurrence.

As for G&A, the year-over-year increase was due primarily to a $4.2 million increase in consulting professional fees, which included $3.6 million in fees related to our new joint venture with Ipreo Private Market Connect, as well as increases in accounting, legal and recruiting fees. As a reminder, the Private Market Connect joint venture is staffed with former employees whose costs was previously included in our compensation and benefits line, and is now accounted for in G&A. It is important to note that some of our G&A is variable and can increase based on our revenue growth. This is particularly true with our reporting offering.

Wrapping up with our balance sheet on Slide 14. Our investments alongside clients and products, which is the largest asset on our balance sheet, increased $17 million in fiscal 2018. This balance will likely continue to grow as we commit capital to client relationships and new funds, several of which are currently in the market. With the $137 million of expense -- of investments on our balance sheet, there is approximately $17 million of technology-related investments, including a stake in a company called Ipreo. Recall that this strategy is us aligning ourselves with leading off in early-stage SaaS businesses focused on the private markets. Our stake in Ipreo resulted from an investment in a business called iLEVEL that Ipreo acquired in 2015. In that transaction, we opted to rollover proceeds given the strategic relationship. Subsequent to the end of this reporting period, Ipreo announced that it will be acquired. This will result in us receiving proceeds once the transaction closes of over 1.5x our current carrying value.

Now the main driver of our technology strategy is not simply trying to invest for profit, but rather to align with our strategic partners. We see our technology strategy as both defensive and offensive. Defensive in the sense that we are finding ways to be even more efficient and effective for our clients; and offensive in that we are finding ways to expand our addressable market and drive financial benefits. Our partnership with, and investment in, Ipreo has been a prime example of this philosophy. It is also worth emphasizing that this transaction does not impact our Private Market Connect JV. That relationship remains and continues to be an important one.

Lastly, wrapping up on the liability side of our balance sheet. Our senior debt is our largest liability. As you can see, we continue to be modestly levered at well less than 1x adjusted EBITDA.

With that, we are happy to take questions.

(Operator Instructions) Our first question comes from the line of Ken Worthington from JPMorgan.

First, you've been in the market with your flagship direct funds. You raised a record secondary fund, you just raised a record-sized strat ops fund. Can you talk about product extension? I think, Mario, you mentioned extensions in credit. So what are your thoughts about other specialized funds in private equity or even broadening out to real estate? And to what extent might we see something in the coming fiscal year?

Thanks, Ken. It's Mario. I think there are a couple of areas, and we alluded to the fact that we are looking at expanding on the credit side, and I think that there are a couple of areas we are looking actively on the product side that are different on the strategic opportunities fund that we just finished and raised. So I would expect that we would be looking at doing something on that side. Clearly, we have talked in prior calls about our Real Assets acquisition that we made. And I think there, I would expect that we would be looking at a product offering on that side also. I think those are the 2 that are clearly top of mind. But again, even on the private equity side, as you think about different things on the retail side, as you think about different things -- as we've talked about in this call, where there are a number of different and new entrants on the private equity side, that a product might be a better way to do that. I don't think we have anything immediate, but as you think about that over the next couple of years, those are also places we would be looking at expanding.

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

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

Acquisitions.

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

(Operator Instructions) Your next question comes from the line of Michael Cyprys from Morgan Stanley.

I was just hoping you could update us on some of your thoughts and strategy around data and technology initiatives. You have a number of strategic investments that you had mentioned. Just curious how you see data technology changing the private markets industry as you look out over the next decade. And if you could speak to some of the initiatives that you have in place today and what you're looking to do over the next couple of years.

Thanks, Mike, it's Erik. I'll take that. I think as you've heard from us in the past, we are sort of taking this from an offensive and defensive perspective. To date, our whole asset class has been kind of very people-dependent. Folks have not rushed to embrace technology, a lot of kind of manually-oriented, client-oriented approaches to that. I think over the coming years, and I think you're right to think about this not in months or quarters, but in years. This is not an asset class that has historically changed or adapted to change rapidly. I think what you're starting to see is more of a move towards systematizing some of the analytics, data mining, utilizing kind of the wealth of data that we have at our disposal, to increase transparency. I think big theme around that is clients want to see more, know more, and to have it at their fingertips more quickly. And I think the more we can embrace technology, I think we just further increase the client experience. I think with that experience getting better, I think what you see is what Jeff and Mario alluded to, which is there's a couple of things that are driving allocations to be increasing, partly the performance. But as they get more and more comfortable with the asset class given some of this illiquidity nature, you start to see the fund flows coming in. So once the Ipreo investment comes off of our balance sheet, as that transaction settles out, we will have 3 remaining stakes in, again, kind of early-stage-oriented SaaS businesses, each of them focused on very different parts of the market. And I think our reputation in the market as somebody who understands this space, who's willing to put capital behind this space, and who's willing to help these businesses grow and be successful, as all of that continues, we're just seeing more and more opportunities. So more meetings, more entrepreneurs reaching out. And I think it's our expectation over the longer-term that there are more positions and initiatives for us to take in that field, and I would expect to see us doing that.

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

Thanks, Mike. This is Jeff. I'll take that. On the new investor side, there's really 3 things going on there that we're seeing. The first is, we continue to find investors who historically have invested in the private markets on their own, and they, with the increased complexity and options out there, have decided that they want to outsource that. And so that's an avenue for us where we get higher sort of frequently. The second is we've successfully continued to take business from competitors. So we continue to see our market share grow. The third is that, and we've said this a couple of times on the call, is the number of investors, institutional investors who have no exposure to the private market is still a fairly significant one. So this is investors with no private market exposures that are coming to us and asking us to start from scratch and help them build that allocation. And all 3 of those -- I'll wrap up by saying, all 3 of those, once they become clients -- it goes back to another point that's been made a couple of times today -- is remember that, that means that they need to continually commit to the asset class, they need to continually re-up, even once they get to that target allocation, to maintain those allocations going forward.

Mike, it's Erik. I'll take the second part of that. Does the 30%, go to 40%, go to 50%? I think, for us, I think what we're focused on is that you're getting kind of that double-digit growth across the combination of the 2. The fact that it's 30% and not something higher, I think, is also reflective of the fact that the existing customer base is growing very, very nicely. And as that existing customer base gets bigger, you have a bigger base on which you're continuing to get that growth. I know we've emphasized this before, but it's worth repeating, that re-up nature of -- when they're kind of overall asset value was growing, even in a static allocation to the asset class means there's still more dollars that need to come into the asset class just to maintain a steady state. And you can see that continuing to come through our numbers today.

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

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

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

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

Sure. It's Erik, let me take that one. I think the message that we said is we're sort of setting, to your point, of a sort of payout ratio at a minimum level of 50%. What we had messaged in the prior calls was not necessarily focusing on us trying to grow the payout ratio, and so I think today's message is not at all a change, but rather to grow the dividend in line with the earnings of the overall business. And I think our up 20-plus-percent here really reflects that, which is we see continued strong growth in the earnings of the business, and thus, we are seeing a very strong and healthy increase in the dividend. I think what we said in the prior call and what's worth repeating here is -- and it goes really to the last question around our growth and our need for capital -- we just don't see a scenario where we've been asked in the past about 100% payout ratio. And I think given the growth mode that we're in, and we addressed in the earnings call sort of the white space that we see and the need for the capital, you should expect us to continue to see good opportunities for us to reinvest back in the business, and we're doing that.

Your next question comes from Rob Lee from KBW.

This actually Pell Bermingham on for Rob. I was just wondering if you could give us any color on the G&A expectations going forward. It looks like a step function. I'm wondering if the current level is the right run rate going forward.

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

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

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

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

Well, thanks, everyone for joining us today.

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