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StepStone Group (STEP)
NASDAQ:STEP
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StepStone Group
(NASDAQ:STEP)
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Select Model
Rating:51Neutral
Price Target:
$48.00
▲(10.78% Upside)
Action:ReiteratedDate:02/28/26
The score is held back primarily by weak financial statement quality—especially the sharp profitability downturn and negative equity—plus bearish technicals. These are partly offset by a constructive earnings-call backdrop showing strong FRE/fundraising momentum and an attractive dividend yield, though the negative P/E reflects ongoing GAAP losses.
Positive Factors
Record Fundraising and AUM Growth
Sustained, record fundraising and rising fee-earning assets expand the durable base of management fees and UFEC, reducing reliance on one-off realizations. A larger, growing AUM base supports predictable recurring fees, scalability of operating leverage, and long-term client relationships.
Strong Fee-Related Earnings Growth
Material year-over-year core fee-related earnings growth and healthy FRE margin indicate improving underlying profitability from recurring fee streams. This strengthens cash-generative capacity and resiliency of operating earnings even if incentive fees fluctuate, supporting medium-term financial stability.
Mature Accrued Carry and Harvest Readiness
A large, mature accrued carry balance concentrated in older vintages increases visibility into future incentive fee realizations. As these programs move into harvest, they can drive lumpy but meaningful upside to cash generation and profitability over the next 2–6+ months as realizations convert to cash.
Negative Factors
Negative Shareholders' Equity
Negative shareholders' equity and elevated leverage reduce financial flexibility for investments, buybacks, or dividend policy. It raises solvency perceptions with counterparties, constrains strategic optionality, and increases sensitivity to earnings shocks or unexpected cash needs over the medium term.
GAAP Net Loss and Profitability Swing
A sizable GAAP loss driven by profits-interest buy-in, together with a sharp deterioration from 2024 profitability, undermines reported earnings durability. Accounting-driven volatility can affect shareholder returns, regulatory/reporting optics, and executive compensation alignment even if cash metrics are stronger.
Incentive Fee Volatility and Weak Realizations
Material reliance on performance fees creates earnings cyclicality; realizations below long-term trends and the potential moderation of Spring-related incentives heighten revenue volatility. This limits predictability of net income and cash flow in periods without outsized fund performance.
StepStone Group (STEP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.37B
Dividend Yield2.17%
Average Volume (3M)1.70M
Price to Earnings (P/E)―
Beta (1Y)1.39
Revenue Growth92.02%
EPS Growth-1386.34%
CountryUS
Employees1,090
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.65
Shares Outstanding80,143,960
10 Day Avg. Volume1,821,495
30 Day Avg. Volume1,701,110
Financial Highlights & Ratios
PEG Ratio0.06
Price to Book (P/B)20.72
Price to Sales (P/S)3.16
P/FCF Ratio62.11
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue3.16
Enterprise Value/Gross Profit7.89
Enterprise Value/Ebitda-6.73
Forecast
1Y Price Target
$77.50Price Target Upside78.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)2.08
Revenue Forecast (FY)$1.13B
StepStone Group Business Overview & Revenue Model
Company DescriptionStepStone Group Inc. is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, and buyout investments in mature and middle market companies. It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, consumer staples, financials, telecommunication services, energy, infrastructure, real estate, and real asset. The firm invests globally with a focus on United States, North America, Europe, Asia, Latin America, Middle East, Africa, Brazil, Mexico, Argentina, Colombia, New Zealand, China, India, Korea, Japan, Taiwan, and Australia region. It typically invests between $15 million and $200 million in firms with enterprise value between $150 million and $25000 million. The firm invests between 5% and 40% in emerging markets. For fund of fund investment, it seeks to invest in private equity funds, venture capital funds, Special situation funds, Real estate funds, Infrastructure funds, mezzanine funds, and turnaround/distressed funds. It considers investments in both domestic and international funds. It also seeks to make co-investments and follow-on investments and considers partial interests in funds. StepStone Group Inc. was founded in 2007 and is based in New York, New York with additional offices across North America, South America, Europe, Australia, and Asia.
How the Company Makes MoneyStepStone Group generates revenue primarily through management fees, performance fees, and advisory fees. Management fees are charged on the assets under management (AUM) and are typically calculated as a percentage of the committed capital or invested capital in the funds they manage. Performance fees, also known as carried interest, are earned when the investments exceed a predetermined threshold return, aligning the firm's interests with those of its investors. Additionally, StepStone provides advisory services to clients looking to navigate private market investments, charging fees for these consulting services. The firm's strategic partnerships with various investment funds and its extensive network within the private equity and alternative investment markets further enhance its ability to source lucrative investment opportunities, contributing to its overall earnings.
StepStone Group Key Performance Indicators (KPIs)
Any
Revenue by Type
Highlights the different sources of revenue, providing insight into the company's business model and how diversified its income streams are.
Highlights the different sources of revenue, providing insight into the company's business model and how diversified its income streams are.
Data provided by:
The Fly
The FlyStepStone Group Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 21, 2026
Earnings Call Sentiment Positive
The call highlighted multiple strong operational and financial achievements: record fundraising, robust fee-related earnings growth (core FRE +35% YoY), materially higher adjusted net income (+~51%), large incentive fee generation driven by standout Spring performance, and growth in fee-earning AUM and undeployed fee-earning capital. Key risks and drag items were acknowledged, including a GAAP net loss driven by the profits-interest buy-in accounting, a drop in retroactive fees that modestly reduced blended fee rates, realizations that remain below long-term trends, seasonal G&A increases, and concentrated software/AI exposure that presents disruption risk. On balance, the positive growth in recurring fee earnings, fundraising momentum, mature accrued carry, and the size of performance-related revenues outweigh the acknowledged headwinds and risks.Q3-2026 Updates
Positive Updates
Strong Fee-Related Earnings Growth
Fee-related earnings (FRE) of $89 million, up 20% year-over-year; core FRE (ex-retroactive fees) $88 million, up 35% year-over-year. FRE margin was 37% for the quarter (roughly +1 percentage point sequentially).
Record Fundraising and AUM Additions
Generated over $8 billion of gross AUM additions in the quarter and over $34 billion for the calendar year — the firm's best twelve-month period ever for fundraising; fee-earning assets plus undeployed fee-earning capital (UFEC) grew to over $171 billion, up >$8 billion sequentially and >$35 billion year-over-year.
Private Wealth Momentum
Private wealth platform grew to $15 billion with over $2.2 billion in new subscriptions during the quarter (management commentary: comfortably generating >$2 billion in private wealth subscriptions each quarter). Evergreen BDC S Credex grew to nearly $2 billion in net assets.
Material Increase in Fee Revenues and Adjusted Net Income
Fee revenues of $241 million, up 26% year-over-year (32% growth ex-retroactive fees). Adjusted net income of $80 million ($0.65 per share), up from $53 million ($0.44 per share) a year ago (adjusted net income per share +~48%; adjusted net income +~51%).
Exceptional Performance from Spring
Spring delivered 39% performance for the year with total NAV of $5.5 billion (more than tripled over the year). Spring-related incentive activity drove over $200 million of gross incentive fees this year; approximately $25 million of the quarter's Spring incentive fees flowed to pretax adjusted net income.
Growing Pipeline of Fee-Earning Vehicles
Multiple funds in market or coming to market (private equity co-investment, private equity secondaries, infrastructure co-investment second vintage, venture capital secondaries, special situation real estate secondaries, multi-strategy growth equity). Prior vintages represent >$16 billion of capital; infrastructure co-invest vintage had a >$600 million close this quarter.
Improving Accrued Carry and Harvest Readiness
Net accrued carry of $875 million, up 4% from last quarter; ~65% of net accrued carry tied to programs older than five years (indicating a relatively mature accrual profile and readiness to harvest).
Strong Organic Growth Trend
Combination of fee-earning assets and UFEC growth implies a ~20% annual organic growth rate since fiscal 2021 (management commentary highlighted this as the firm's strongest one-year growth in history).
Negative Updates
GAAP Net Loss Driven by Buy-In Accounting
Reported GAAP net loss attributable to StepStone of $123 million, or $1.55 per share; the loss was driven by the accounting treatment for the buy-in of the StepStone Private Wealth profits interest being marked through the income statement.
Decrease in Retroactive Fees and Fee Rate Moderation
Retroactive fees contributed only ~$1.0–$1.1 million this quarter versus $9.7 million in the prior year quarter; blended management fee rate moderated to 63 basis points from 65 basis points in fiscal 2025 (partly due to lower retroactive fees).
Realizations Below Long-Term Trends
Management noted that realizations as a percentage of accrued carry remain below long-term trends, although the last two quarters have shown a pickup in activity — indicating some continued short-term pressure on carry realizations.
Potential Moderation of Future Incentive Fees
Management warned Spring-related incentive fees could moderate next year if Spring's investment performance normalizes (e.g., mid-teens return assumption would likely produce lower incentive fees than this year's exceptional 39% result).
Seasonal and Higher G&A Expense
General & administrative expenses were $40 million (up $6 million from last quarter) driven by StepStone 360 conference; management indicated G&A will remain seasonally high in fiscal Q4 due to an upcoming venture capital conference.
Fundraising Competition and Moderated Fund Size Expectations
Although fundraising momentum is strong, management tempered expectations for next vintages (targeting modest growth across funds) citing a competitive fundraising environment and the desire to match fund size to opportunity rather than aggressively scale every vehicle.
Concentration of Software/AI Exposure and Disruption Risk
Estimated software exposure of ~11% of total AUM (and ~7% excluding venture). Management acknowledged AI represents both risk and opportunity; noted software exposure is higher in larger-market segments (software ~24% in large/global PE vs ~13% in small/mid-market), implying potential vulnerability in parts of the portfolio to AI-driven disruption.
Industry Perception Risk in Private Credit
While StepStone reported limited redemption pressure to date in private credit evergreen products, management acknowledged industry headlines around private credit and private wealth could present fundraising or perception challenges; no material redemptions reported but heightened sensitivity remains.
Company Guidance
Management guided to continued earnings momentum, saying core FRE should keep growing and improving markets could boost realizations; they pointed to Q3 FRE of $89M (core FRE $88M ex ~$1.1M retro fees) with a 37% FRE margin, fee revenues of $241M (up 26% YoY; +32% ex-retro), adjusted net income of $80M or $0.65 per share (vs $53M/$0.44 a year ago), and gross realized performance fees of $253M (≈$207M incentive fees and $47M carried interest). On fundraising and activation they noted >$8B gross AUM additions in the quarter and >$34B for the calendar year (their best 12 months), fee-earning assets + UFEC at >$171B (fee-earning assets up ≈$6B, UFEC ≈$33B, up ≈$3B), a 63 bps blended management fee LTM, and plans for modest growth across new vintages (prior vintages represent >$16B) with the infrastructure co‑investment and PE co‑investment funds expected to activate by end of 2027 and flagship PE secondaries / GP‑led first closes anticipated in the coming two quarters. They also signaled shareholder upside via a planned year‑end supplemental dividend (board approval required), highlighted net accrued carry of $875M (≈65% tied to programs >5 years old), and noted Spring’s 39% performance drove >$200M of gross incentive fees, of which ~$25M flowed to pretax ANI this quarter and, after the profit‑interest buy‑in, >50% of Spring incentives should flow to pretax ANI.StepStone Group Financial Statement Overview
Summary
Revenue growth is solid (+16.12% TTM) and operating/free cash flow remain positive, but profitability deteriorated sharply from 2024 to 2025 with a large net loss and deeply negative margins. The balance sheet is a major constraint with negative shareholders’ equity in TTM, signaling weakened financial flexibility despite cash flow holding up better than earnings.Income Statement
TTM (Trailing-Twelve-Months) results show solid top-line growth (+16.12%), but profitability is very weak with a large net loss and deeply negative operating and EBITDA margins. The annual trajectory also deteriorated meaningfully from strong profitability in 2024 (positive margins and net income) to losses in 2025, suggesting a sharp swing in earnings power and weaker operating efficiency.28
Negative
Balance Sheet
The balance sheet profile worsened materially in TTM (Trailing-Twelve-Months) with negative shareholders’ equity, which is a major risk signal and reduces financial flexibility. While total debt is shown as zero in TTM, the most recent annual period (2025) shows meaningful leverage (debt running above equity) and negative returns on equity, highlighting balance-sheet strain and inconsistent capitalization.20
Very Negative
Cash Flow
Cash generation remains a relative bright spot: TTM (Trailing-Twelve-Months) operating cash flow and free cash flow are positive, and free cash flow compares favorably to the net loss (cash flow materially stronger than earnings). That said, free cash flow growth is negative in both TTM and 2025, and cash flow is small relative to revenue, indicating weaker cash conversion and a cooling trend versus prior years.52
Neutral
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.78B | 1.17B | 711.63M | -67.57M | 1.37B | 787.72M |
| Gross Profit | 714.69M | -89.47M | 381.44M | 171.60M | 576.83M | 384.55M |
| EBITDA | -837.28M | -205.23M | 252.31M | 10.18M | 540.67M | 350.70M |
| Net Income | -546.52M | -179.56M | 58.09M | -18.40M | 193.88M | 62.63M |
Balance Sheet | ||||||
| Total Assets | 5.24B | 4.59B | 3.79B | 3.50B | 4.19B | 1.32B |
| Cash, Cash Equivalents and Short-Term Investments | 377.45M | 289.30M | 181.59M | 128.56M | 116.39M | 179.89M |
| Total Debt | 376.74M | 382.79M | 268.56M | 219.57M | 133.84M | 0.00 |
| Total Liabilities | 4.72B | 2.81B | 1.92B | 1.84B | 2.36B | 661.08M |
| Stockholders Equity | -378.79M | 179.36M | 324.48M | 771.57M | 817.63M | 249.41M |
Cash Flow | ||||||
| Free Cash Flow | 18.64M | 59.83M | 141.91M | 145.56M | 212.18M | 148.04M |
| Operating Cash Flow | 23.16M | 64.93M | 161.52M | 151.18M | 214.28M | 149.30M |
| Investing Cash Flow | -95.64M | -43.48M | -47.35M | -30.81M | -210.24M | -11.17M |
| Financing Cash Flow | 180.10M | 87.48M | -57.98M | -108.02M | -70.44M | -45.31M |
StepStone Group Technical Analysis
Negative
43.33
Price Trends
60.22
Negative
61.28
Negative
60.38
Negative
Market Momentum
-4.31
Negative
36.45
Neutral
55.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STEP, the sentiment is Negative. The current price of 43.33 is below the 20-day moving average (MA) of 47.58, below the 50-day MA of 60.22, and below the 200-day MA of 60.38, indicating a bearish trend. The MACD of -4.31 indicates Negative momentum. The RSI at 36.45 is Neutral, neither overbought nor oversold. The STOCH value of 55.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STEP.
StepStone Group Risk Analysis
StepStone Group disclosed 68 risk factors in its most recent earnings report. StepStone Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
StepStone Group Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $7.76B | 9.06 | 16.35% | 3.34% | 14.48% | 34.97% | |
78 Outperform | $3.52B | 12.97 | 18.76% | 8.93% | ― | -12.92% | |
73 Outperform | $5.40B | 21.34 | 29.38% | 1.52% | 13.01% | 21.96% | |
72 Outperform | $7.26B | 11.47 | 22.04% | 0.01% | 1.08% | 8.24% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $10.20B | ― | -2.06% | 3.08% | 6.64% | ― | |
51 Neutral | $5.37B | -10.33 | 783.65% | 2.17% | 92.02% | -1386.34% |
* Financial Sector Average
STEP
StepStone Group
45.09
-7.18
-13.74%
AMG
Affiliated Managers
271.95
108.86
66.75%
AB
AllianceBernstein
38.09
3.99
11.71%
IVZ
Invesco
23.00
8.32
56.70%
HLNE
Hamilton Lane
96.85
-44.07
-31.27%
JHG
Janus Henderson Group
50.13
13.67
37.49%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.