StepStone Group Reports Strong Earnings Amid Challenges

Stepstone Group, Inc. ((STEP)) has held its Q4 earnings call. Read on for the main highlights of the call.

StepStone Group Inc. recently held its earnings call, revealing a generally positive sentiment despite some challenges. The company reported record fee-related earnings and significant growth in asset management, particularly in the private wealth sector. However, they also faced a GAAP net loss and market volatility. Overall, the strength of the positive results, especially in fee-related earnings and asset growth, outweighed the negatives.

Record Fee-Related Earnings and Growth

StepStone Group Inc. announced impressive fee-related earnings of $94.1 million, marking an 85% increase from the previous year. The company achieved a fee-related earnings (FRE) margin of 44%, and adjusted net income for the quarter soared to $80.6 million, up from $37.7 million in the prior year.

Strong Asset Management and Fundraising

The company successfully raised over $31 billion in assets under management for the full year, leading to a fee-earning asset growth of over 29%. The quarter’s total gross inflows were $9.9 billion, making it the second-highest quarter on record for StepStone.

Significant Expansion in Private Wealth

StepStone’s private wealth platform experienced substantial growth, expanding from $3.4 billion to over $8 billion in assets by the end of the fiscal year. This growth was driven by the introduction of new products, expanded distribution, and momentum in existing offerings.

Successful Launch of Infrastructure Fund

The company marked a significant milestone with the closing of its debut infrastructure co-investment fund, which exceeded $1 billion. This launch highlights StepStone’s expansion into new asset classes.

Increased Dividend Payout

StepStone declared a base quarterly dividend of $0.24 and a supplemental dividend of $0.40, bringing the total dividend payout for the fiscal year to $1.36, up from $0.99 the previous year.

GAAP Net Loss

Despite the positive financial performance, StepStone reported a GAAP net loss attributable to the company of $18.5 million, or $0.24 per share, for the quarter.

Market Volatility Challenges

The company faced challenges due to market volatility, influenced by global trade policy changes, which created uncertainties in both public and private markets.

Dependency on Retroactive Fees

The earnings were significantly bolstered by retroactive fees, which may not be consistently recurring in future quarters, posing a potential risk to sustained earnings growth.

Forward-Looking Guidance

Looking ahead, StepStone Group Inc. remains optimistic about its strategic growth and investment opportunities across global private markets, despite the recent GAAP net loss of $18.5 million. The company expects continued strength in fee-related earnings and asset growth, supported by its robust fundraising efforts and expansion in private wealth.

In conclusion, StepStone Group Inc.’s earnings call highlighted a strong financial performance with record fee-related earnings and significant asset growth, particularly in private wealth. Despite facing a GAAP net loss and market volatility, the company’s positive results and strategic growth plans suggest a promising outlook.