StepStone (STEP) 8 Aug 242025 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the First Fiscal Quarter 2025 StepStone Group, Inc. Earnings Conference Call. [Operator Instructions]. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Seth Weiss, Vice President of Investor Relations. ahead. go Please

good and Thank afternoon. you,

David Joining me Executive McCabe, Scott Officer. and Chief call Jason today's Head Ment, Strategy; Mike are Officer; Officer; President Hart, Operating Financial on and Chief Park, of Co-Chief

During which available shareholders.stepstonegroup.com. presentation, our to website Investor is prepared be on we referring remarks, a Relations our at will

financial periods. begin, we well remind the the contains presentation to expected as statements company's this regarding future that Before everyone like performance operating and certain I'd as conference for forward-looking call

Forward-looking filings. current are and section to periods of described or Factors SEC. directly non-GAAP of risks as assumptions. or management's forward-looking from Reconciliations most and statements inherently comparable except various are that due in factors these as our for of our statements the other update Risk by to materially included results statements earnings measures and and financial circumstances StepStone's GAAP expectations the a reflect those to and number estimates plans, implied in are expressed uncertainties uncertain revise in of only undertake future subject and filings differ to Actual or periodic may our are references release, risks, are made the to today, presentation obligation contains presentation or we with These required, measures. forward-looking financial no them. Today's any changes

first of StepStone net XXXX. $XX.X fiscal to quarter the or was Beginning X, for income results $XX.X of per income GAAP million financial million. we Inc. share. Slide our reported to GAAP Turning Group $X.XX attributable with net

the million estate secondaries in equity secondaries co-investment of quarter $XX.X fund. compares and fund Retroactive of revenue, margin special $X.X XX%. XXXX. private from the prior fees retroactive $XX.X of fee-related The which to generated from quarter X. our million contributed fees year an first XX% fiscal Slide reflected we to Moving generated fees situation up earnings We quarter, retroactive of to and infrastructure FRE fund, primarily million, real

$XX.X $X.XX hand Finally, we quarter $X.XX net and now to higher performance share call or million in share. adjusted the the earned driven last of up the Scott. both fiscal This by quarter income $XX.X for realized per higher million in earnings fee-related fees. I'll over or from year, per is first

Thanks, the year fiscal our operating period momentum Seth. over We we and carried enter last very performance. as from with new financial strong

reached contribution several Our strongest and With on which period billion, fee to first beyond growth strongest highest was for up earning additions level ever $XXX our assets, our XXXX and $XX.X period This ever year. this key billion. which fundraising, strong net capital, quarter our record to net a surpassed ever period period for for sustained of ever earning for fronts. StepStone fee undeployed a strongest fiscal our sets for

in-demand billion managed contributed of record was of $XX.X billion. strategies and over Fundraising accounts raising with client array our $X across funds we In $X commercial diverse quarter, the base to billion asset strong over gross structures additions. commingled supportive all and classes offerings, results. Our and raising generated separately a AUM

raised closed and nearly our fund commingled several ramp strongest ever have particularly have managed and we $XX as private on venture raises, months, XX-month the Over capital in successfully on to equity successful wealth billion, and we re-ups last XX executed mandates account secondaries continue secondaries our new several period private offerings.

capabilities capital XX the efforts. raising fruits last records. building of relationships, track months, result emblematic in is and Our of of in of are particular, The success those years a

fundraising consistent $XXX quarter which wealth in be strongest the capital episodic at is can in our subscriptions, this private growth. Included top a million AUM the wealth over While times, of corresponding the and quarter's private growth provides fee-earning fee-earning build for is in fundraising pacing undeployed ever. runway of line

SPRIM, market; private our we We venture to have in fund, fund; our credit X CRDEX, growth was markets accepted infrastructure fund; for all wealth fund; that announce SPRING pleased subscriptions second our and added SPRING, a and recently first our wirehouse. STRUX, our private June. also evergreen I'm to which equity private funds in

now partners earnings, growth. Pivoting which evergreen $XXX XX% strong retroactive respectively. an StepStone funds advisory for We million and strong margin FRE with XX% continue in with and and fees. in distributing private million thrilled wirehouses. to on $XX financial with are management X results, and year-over-year, see each and runway of the offerings SPRIM We XXX were benefited XX%, we and generated generated our nearly to fees development from of up our of uptake which We're fee-related a suite SPRING wealth

increased Excluding along well with by activations impact achieve have from to StepStone and fund fee-related fee-related fee-earning XX deliver doubling Day. of would growth growth driven set and Investor commingled we AUM. last year-on-year, combination XX% XXXX has fundraising fiscal past established financial earnings, XX% X-year of recent the earnings revenue year respectively, up retro robust our performance over the months, fees, strong The in and the to strong which us fee-related our at target positions our in

million performance highest the level realized last $XX were Lastly, in X the of years. fees

largely As on performance aware, are you a healthy are realization fees dependent environment.

to quarter anticipate quarter. we So some volatility

excellent expect pass our excited clicking. longer-term accomplishments persist. about progress undeployed fee-earning metrics the assets recent fee-earning base and not volatility growth periods earnings. than stock levels towards to to market We clearly the of all feel territory Mike. we quarter retroactive for indices key higher activity still an was capital major has strong financial and more correction creates more realizations for sustainable sum last public one week markets, the that, a even with we been doubling, sources call of this capital of the do and The operating is measures and very up this and year. To continue are to and I'll the up, to entering fees goals. With making While of eventful muted of about off last We with a low expect the fees trend performance relatively pace

Thanks, Scott.

Turning X. to Slide

As billion over separately $XX in coming $XX billion secondaries fund our of months our private generated $X quarter, accounts commingled million our equity our billion additions with and Scott highlighted, we over from commingled coming during AUM $XXX included inflows from the the fund. XX nearly gross In funds. last managed

PE and fund size PE has billion. $X fund Our the is reach the prior first secondaries now well raised $X to over mark fund above $X.X secondaries billion, of StepStone billion which the is

the close of billion, secondaries few special raised fund. we this $X.X We real vintage and of size at million dollars situation fiscal in in calendar of second market surpassed it expect has fund remain anticipate in the we hundred final our the $XXX year. This million estate, quarter. In this a will least over through prior now end

on consistent $X.X secondaries relatively fund, secondaries real history brings include the approximately in the This $XXX which million situation remain the our billion, size spot largest of estate, the earnings partners strategy notable a venture fund we of limited venture amount discussed secondaries close capital bright final is special capital remains in the with for to While fund additions cautious industry. on total our May our commingled call. market. Other fund our the

venture $XXX over generated in and million million capital other private We funds. debt approximately and $XXX across raised subscriptions infrastructure, private also wealth

our we include Page As presentation. on of funds earnings a a XX list our reminder, major of

additions private to with from class. and billion ability of clients. with illustrates X solutions are an grow essential client win AUM existing strength our that XX% and offer from for accounts gross provider. Slide equity are generated existing client and We asset accounts accounts. we to fee-earning SMA new result managed This to as value expansion shows combination of strength relationships. relationships additions the infrastructure. our and XX% exceptional proposition the of in new structure a core re-ups and a StepStone came and by $X a Turning came Managed is of

our grew our capital by For fee history. assets the billion, quarter, quarterly of largest earning fee-earning we in addition $X

quarter's benefited balance. contributing the AUM from This an billion secondaries to fee $X.X of venture activation earning our fund, fee-earning capital growth

continue undeployed to capital, we fee-earning to up billion, $X our billion or grow quarter-over-quarter. UFEC Additionally, $XX.X

undeployed offerings. up a our high XX% management of greatest $XXX continued with record providing secondaries points net rate a visibility growth and evolution and combination basis end has the our increase deployed advisory over of mentioned, activating calendar for the blended at prior Scott $X billion is UFEC, from retroactive higher capital XX quarterly from from rate anticipate and AUM our our of from us basis the stands management We UFEC of XX the degree in points shows and this notable activated. XX than our in this from balance months, last benefited as activated management highest BC sequentially by which considering $X.X or fee generated billion year-over-year, As is fund. The higher we fee-earning accounts private year. Slide year is our XX fee a managed and wealth XX% billion, up fees the of fees for capital fee-earning We as fees. capital of on the

turn quarterly Before in concluding per share over call we fee-related and I'll our pleased David. from the reflects to strong our This to remarks, dividend share. my in announce $X.XX raising sustainable I are $X.XX that, that to am earnings. With per growth confidence

Thanks, to Mike. I'd financial speak like our to turn XX Slide your to to highlights. attention

fee-earning basis XX% prior was impact ago. up we blended retroactive AUM We growth FRE year higher XX% earned driven to for basis commercial fees, period. XXX up from retroactive fees FRE $XX a For prior Normalizing margin over points quarter, points the average quarter, million, a increase from margins the quarter. favorable of expanded a $XXX for The and strong XX% fees from up million advisory prior year the were in quarter, versus rate. Fee-related structures, the the management XXX across of year quarter. earnings by an for fee and year generated core

to up Moving to and call. the was the fees the on seasonal the in million, XX% The $XX sharing from cash step-up year. reflected last business Cash-based which revenue and growth X% and last compensation development from prior retroactive bonus we accrual, signaled up tied expenses. quarter higher

hires we growth RSU analyst invest Looking we and awards. wealth of expense it administrative million continue quarter. year's were to vest class related of to $X.X team the for of million expenses Gross quarter our $XX million a issuance XXXX. General expect expenses years. Add million, areas years, up, higher of compensation to net the income million, the cash realized up This net the as of fiscal to X slightly first our expense. so Both a down from XX% see $X.X $XX in expansion and continued impact RSU were up year revenues, to ago from team, fee-related fees. our in all growth and the see new remainder level private ago, quarter in were to was in due highest in up performance $X.XX, driven business our the in $XX we've from sequentially. compensation seen grew RSUs support year you X layering the of year, development the and incremental to $X fees for and FRE per final and third of in share business. Equity-based reflects expect can adjusted layering growth performance over by net the the other prior compensation margin million

balance underlying Moving key primarily fund the quarter, on carry up by X% Net $XXX sheet on accrued to at quarter appreciation. Slide from finished XX. last million, the valuation items driven

are reported our X lag. reminder, quarter a valuations fund a As on

of our portfolio Unfunded quarter as commitments Our million. $XXX to $XXX the own ended quarter million end. investment at programs were investment

XX% investment from of periods the remarks. realized for and to their investment our exit. This which over had these fee vintages and As of turn programs at amount, deal-by-deal this and mode. capital, any widely is waterfalls, billion multiple is carry XX% over of the tied of be Of prepared may which out vintage concludes to to in we open years questions. our programs with XXX XX, I'll vehicles now across of payable means unrealized XXXX is programs. carry harvest of over meaning June operator sourced $XX diversified back it eligible line earlier, that performance largely time are the or net

our to come with line Worthington Instructions] [Operator is going JPMorgan. of Kenneth first from question And the

with start to wanted in the around wealth I tickers. the innovation management

ticker-based So and you've independent sort of the of where you're million advisers the of endorsement sales of developed and question is the what of products. around do feedback a $XXX you strong in getting of now of strength terms sort begs making is the of is the structure? education see what the sort just here the can you here? performance is it it on the you been Or talk Is of ticker think attribution of that terms the in solid. the in good, of Anything ticker has sales? about brand really terms difference process name

all off to these hard how products Look, the is of is to sand individual it invest edges Jason the of of investor all for rough in markets. goal here. the private overall

lengthy. subscription alone, rough are offer in for these et think, tax of probably is the and the development K-Xs document. up by percentage process sanded has seen of The for cetera. off some funds feedback we've subscription versus we rough material because edges in right, a between no versus fund And capital the the private The edges seen ticker those ticker and that the XXXX terms is very to ticker, those reporting flows continue calls, structure creep off sanding supportive, innovation, those the mix we've most been

but growth, of from the flows point contributing. So we're U.S. funds it's to opposed exactly as Hard ticker offer now in the see much the ticker half about are that doc. at the to it's we to coming sub quantify the certainly where how contributing

Perfect.

it. better it than answered You I asked

So that. I appreciate

on, I believe Moving quarter. back you Greenspring sold, office the you this the think, interest. I noncontrolling acquired

I think to this had April prepared And quarter, throughout missed your remarks. it was hopefully June. in maybe from the I

take of quarter? can the terms on if P&L, you this after P&L what in next terms impacting of quarter, us events quarter should what did talk we the those in the about expect and this different If timing of in quarter sort based anything there's the

this Ken, Yes, David. is

office buy-in occurred think at don't is effective The in fully X. end next sale expect I this The quarter. quarter. Greenspring April back should of NCI So the December. Everything baked different anything you was

So back first was did fully benefit what Greenspring about calendar this we $X we to was quarter. in think line before XQ again, office. fiscal expect bottom baked million communicated a with the I the had and of see the to That the sale

should it run all again, rate. in So be

Goldman question next the Sachs. come of is Alex And line with our to from going Blostein

the for well as hit and the for a few ones fiscal to now, there's get on generating fees I I rest on wanted fundraising funds expect size retro wanted market Alex. Anthony as is and to fund year? of commingle to in This know I expectations on funds. update an which be the right you

quarter final business, $XXX the about secondaries the remarks I million capital the the Mike venture heard And million capital and secondaries secondaries fund And private quarter. number over private set our about our aside for infrastructure, real the to was during was you debt equity that the remainder brought special a across fund, was close fund. venture recap of estate So just raised commingled during talk There prepared strategies. private $XXX there about wealth during was spread $XXX key those, fund. that to flows situations raised the across if the remainder, of million us the

that And still no but of was again, we the around getting the continue billion. of real progress it to to a close to that of there. mentioned So We now we few a where the to the in completed. I mentioned vehicles final over in final close final about would a up terms expect in as previous we remaining as on months had year, secondaries any of at specific secondaries a get dollars. have the venture fund end compared of $X.X the during additional size the of $X.X raise the fund equity where Mike size, relates billion. has terms funds in is But at to that $X call million private capital now fund the estate wrap those fund, guidance coming that bit about and hundred other our fund mentioned, billion,

second my And on margins. follow-up Great. is

quarter, the you in expect point, given retro just upside that this still off for is benefiting margins year? mid-XXs? Do FRE from jumping the fee fees. retro high the the there given some Or Just to fiscal number dynamic

This David. is

margin Scott healthy the from like expect majority next do saw the hit retro again, we of that, was as the XX% with So secondaries to retro even retro in increase just fees your the the close PE pretty of last to and another largely we with fees $XX And point, mentioned, fees But this a quarter. benefit the related fund, a margin. year. quarter million

retro the the to pretty we some of today on we've So medium throughout level margins do made to achieve see the about are you even feel good that, progress can where firmly we And the we over year. without fees expect mid-XXs we're term. But and track to date. in feel the

from come question line next our to Barclays. of going Ben is Budish And the with

tonight. This think pipeline like going maybe picked last ask the just flows. up rest to is quarters. looks to more SMA And year the SMAs and for we call normalized should the how want want for Nick [ the few just on the the of about over It Benoit trajectory we about what Ben for outlook levels ] have I think forward?

you'll So flows, fee-earning as AUM. this, Mike conversion interfering and AUM both outlined undeployed SMA of then well capital, the have as of the on the some gross flows

fact it $X outside about flows, re-up quite and East parts the undeployed the U.S. the we relates But capital likely parts fee-earning the during to talked AUM world And and activity. of $X.X about Asia, new billion to that bit is over the of opportunities, as look you the AUM. remarks at deployment half muted of had the a of particularly pipeline we as Look, good to Europe, I'd more year. the the billion the well. seen this fact of quarter, end the of as that, we we rebound of Obviously, was billion of I the to but say, look, of a were always that off top quarter, lumpiness secondaries calendar we've guided but continued there you but certainly fee-earning lows the fund, as sizable the of a from look So solid. about year and a we feel On first quarter, the UFEC was of today, both would talked coming deployment from presentation, exciting second with UFEC quarter will be converted think into we venture half to fact of fee-earning we've we're about related the as still to there environment with continues by the be breaking that record the of have pipeline $X.X albeit some quarter a that environment, fee-earning AUM in A activation like here. Middle that well. flows part somewhat activate the if about of then current prepared pipeline about the say XXXX, this to out

So fee-earning of expect AUM. relates into conversion as some positive see we to it UFEC generally momentum the to

on Great. And SPRING great market of much during competition influx you're the was then the the I seeing separately, wirehouse the come touch to hear to product these to on adds on wires products like. its get second of XX all to with and just ago kind to platforms months quarter. seems various it want harder to how the compared

the multi-manager. Look, stands for products well channel, the these we've we versus get we that SPRIM space, sponsors X as the unique Jason the runs particular, wealth as here. what of growth relatively the in created say, bring SPRING, rather believe a as are out able difficult, getting product on. peers. if differentiated elite in more it's it were may wires be, I than on but would fast venture to got SPRING mean I And

dedicated on the we're I our performance space the share we're products large we've that based to of So we've and market going and clients developed, products on the the team think field put service to showing that shelf these get afterwards. the

with question line Cyprys Stanley. next going the come from is Morgan of Michael And to our

into remove thoughts on portfolios to comes the it private the thing Maybe sort done about your getting potential the bit private just markets. development what space. the on seems as market channel, like next of be to One frictions get for that you of investors curious, a it traction for private wealth can in stage coming ticker, And innovation mind, else curious just I'm as to wealth, model with there. you're think of of private

we guys are access journey. you and more think further? opening frictions curious are So as where steps What in removing up that you taking about even

portfolios play that sure. will of believe do private the model inside a in for We portfolios growth of individual markets the That's investors. part

I part that the a We the outside in that friction, of space terms are that will path to to believe to offerings, of that is for there that think as solutions as in expect innovation. help with be And avenues of the there And a each now well. the DC bring space we're i.e. provide We legs, this And understand. that will U.S. product will in ticker U.S. starting that well. be there's people do to aren't different think those for products able we innovation lot the still out yet. bear

so avenues think are I all those different continue to we'll And where innovate.

follow-up Great. profile. margin question And on a the just

if I fees you year-on-year, about think that of retro be mentioned margin of right the up a couple the excluding quarter. underlying XX%, margin the points basis have hundred an suggesting in of profile I would sort

So just investment right why as meaningfully an or hiring a expectation should take any that the not? forward incremental is go would for bit Why accelerate there aside it spend to retro not why putting Is off from fees? or be here, that jumping slower. that we point curious

the Just about think curious parts moving you if there.

here. Yes. David

Like said to think and other XX% retroactive the to invest support if that's like team, you're exclude prepared do business private fees remarks, in about wealth for in margin. this areas. right. team the I We closer I development our quarter, you key expect,

the into So over be But on feel place bit to still medium we're drag mid-XXs trajectory of good is the margins. term. do we going going again, a and that's in a the a little up

And from with come Beatty of will question UBS. the Instructions] next Adam line our [Operator

wealth Obviously, as the a some Just rate wanted fees you to mentioned, nice little And obviously, as in well parse the there. channel. momentum out momentum the fee lift catch-up some bit. from

that basis wealth on positive contribution should the of quarter a of the think maybe wondering a or So could trailing for XX-month we in as just management going sort that of parse if forward? out of terms either you

Yes. Adam, this David. is

retroactive you fee certainly basis XX points if did benefit our at this blended So from fees. rate of look quarter, it

you exclude if wealth, $X.X you we're it's So And XXs. at high in assets. in kind look total right the of right back around that, if private billion

grew it billion $X year. So about from last

see to it the rate, at continues billion, little it higher tend going rate. lift the fee it's But needle. of blended as grow, that to can time bit with really a will the to to $X overall move you So take fee

And just mentioned Okay. to on products. to Interesting maybe been on Makes you sense. then some rate, of you've which platforms the wealth were a how that accelerated the you at getting more able management develop. speaks that relationships

in of the in wondering positive terms terms the in what versus distributors or maybe terms by of just So customer segment seeing you're other flows there, maybe wirehouses base? preferences, of

the that even products of about meaning the X point, distributing for X XXX are product, that. we've so than terms In funds, that different we distributing at together and different got syndicate are more half put this or that more about than partners that just

other So as certainly, evaluate us got. products a the cross-sell with it shelf its as experience IBD, as or an international good is among different we've of one platforms mix to opposed providing part be partner they of fund, that play wire they different, here are whether have RIA, had types with an space the additional the

probably I interesting the that So one of this. parts think is of

of to are of non-U.S. to funds. up still have channels, our U.S.-dominated portion growing each of needs, continuing and of we and we're we're In with our ecosystem the equally different where the partners a the of definitely one that invest distribution in all distribution part to and are. important dedicated meet We're to they we terms and happy partners. there, distribution, a continue all but the different an of other be the dedicated wires between this allocation, types we're distribution make They those mix ensuring

of the Cyprys have with we follow-up a And question Michael line Morgan Stanley. from

I unpack you circle of Just substantially billion the hoping end, then the of to capital on confidence wanted year to what just activated, pieces billion growth, help like there. curious $X around just was could balance $X be the calendar it of quarter. so some maybe SMA that the top to the or the moving UFEC And funnel? in Was I you by to added expect the up that. believe, drives back

And that the sort commentary recall hearing so of I don't in past.

Sure.

there about last So balance, activation flows, which the relative and the again, billion, flowed about undeployed SMA $X pieces capital essentially secondaries during moving related you're were think into if the $XXX you AUM all capital billion right, of to fund. then quarter, of venture fee-earned And the the was raised million offsetting $X.X at that was quarter. the was raised was of close final that that

it was out came kind of less of balance. that So that than UFEC the

about investment a once period, the deployment despite the the for that years, that you somewhat billion quarter get just one muted deployment those implies been drivers ways think X-year I to we've but fact to of of And period. billion time just annualize of math to some together our that of question, adjust of X- here, So your $X.X of just through kind always to talked think related I $X-plus with get mentioned the we about are you billion over about billion main this the ability if X-year to deployment specifically reiterate deploy rate, about a to and the UFEC were last that $X.X that over over us to wasn't it activations. walked current has quarter, the the $X.X but And X think it balance. to run that, to

relates on Just to final as the question it activation. your

some As of a committed fact, our reminder, on separate accounts do, pay in capital.

closed prior still that are investing were not quarter mostly have during that accounts re-ups. the we separate the yet were for these so And because those activated fund

activate comes accounts. And the and so separate confidence those we be fully expect therefore, be expectations around we'll able deployed prior from to level to vehicle, our on when

fees Great. on activate step Anything those prior to on as tranche? or vintages fee downs basis on be aware of you the next

all I the base when that of vehicles down past. These step the the in will for in do mean, kind a typically, new are tranche, activate it yes. of prior to a through Well, have gone fee we we re-ups result vehicle.

relates out calling So based, committed here. again, would fee forward nothing unusual call step-downs to it going to we've, for you we out in as which

I to hand would the now to for you. And Thank closing any like remarks. Scott conference back Hart

next for sense updating everyone, time here hopefully, appreciate we as the look going outlook the We the today. quarter. interest thanks, everyone well achieved in And continued to that forward around your you both the Well, again we as level for forward just of excitement and StepStone. Thank as quarter time you.

may for disconnect. call. you This great participating, day. have you concludes today's conference Everyone, a now and Thank