Workflow
StepStone (STEP) - 2025 Q3 - Earnings Call Transcript
STEPStepStone (STEP)2025-02-07 03:57
Filings
Slide

Financial Data and Key Metrics Changes - The company recorded a GAAP net loss of 287million,withanetlossattributabletoStepStoneGroupof287 million, with a net loss attributable to StepStone Group of 190 million or 2.61pershare[7][8]−Fee−relatedearningswere2.61 per share [7][8] - Fee-related earnings were 74.1 million, up 46% from the prior year quarter, with an FRE margin of 39% [9][19] - Adjusted net income was 52.7millionor52.7 million or 0.44 per share, an increase from 42.1millionor42.1 million or 0.37 per share in the same quarter last year [10][40] Business Line Data and Key Metrics Changes - Fee-earning assets under management (AUM) increased by nearly 10billion,reachingover10 billion, reaching over 114 billion, a 28% increase year-over-year [11][12] - Management and advisory fees totaled 192million,up26192 million, up 26% year-over-year [18][35] - The private wealth platform grew to over 6 billion, with over 1billioninnewsubscriptions,markingthebestgrowthquarterforprivatewealth[16][24]MarketDataandKeyMetricsChanges−Thecompanygeneratedover1 billion in new subscriptions, marking the best growth quarter for private wealth [16][24] Market Data and Key Metrics Changes - The company generated over 27 billion in gross AUM inflows over the last twelve months, with 18billionfromseparatelymanagedaccountsandover18 billion from separately managed accounts and over 9 billion from focused commingled funds [21][22] - The infrastructure co-investment fund closed at approximately 1.2billion,markingasignificantmilestoneforafirst−timefund[15][22]CompanyStrategyandDevelopmentDirection−Thecompanyemphasizesadiversifiedstrategyacrossassetclassesandgeographicreach,whichhasprovenresilientduringperiodsoffundraisingpressureintheprivatemarket[14]−Thefocusoninfrastructureandprivatewealthmanagementisexpectedtodrivefuturegrowth,withsignificantcapitaldeploymentopportunitiesidentified[15][16]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutthegrowthinprivatewealthandinfrastructure,highlightingstrongfundraisinganddeploymentactivities[11][12]−Thecompanyanticipatescontinuedgrowthinfee−relatedearningsandmargins,supportedbyarobustpipelineofinvestmentopportunities[19][38]OtherImportantInformation−ThecompanynotedthatGAAPaccountingrequirespresentingchangesinfairvaluerelatedtopotentialfuturebuy−ins,whichimpactedthenetlossreported[43]−Netaccruedcarryfinishedthequarterat1.2 billion, marking a significant milestone for a first-time fund [15][22] Company Strategy and Development Direction - The company emphasizes a diversified strategy across asset classes and geographic reach, which has proven resilient during periods of fundraising pressure in the private market [14] - The focus on infrastructure and private wealth management is expected to drive future growth, with significant capital deployment opportunities identified [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth in private wealth and infrastructure, highlighting strong fundraising and deployment activities [11][12] - The company anticipates continued growth in fee-related earnings and margins, supported by a robust pipeline of investment opportunities [19][38] Other Important Information - The company noted that GAAP accounting requires presenting changes in fair value related to potential future buy-ins, which impacted the net loss reported [43] - Net accrued carry finished the quarter at 744 million, indicating potential future performance fees [44] Q&A Session Summary Question: Highlights of wealth management build-out - Management highlighted the addition of 450 platforms globally, with 40% selling multiple funds, indicating strong cross-selling capabilities [50] Question: Market for secondaries - Management noted a very active year in the secondaries market, with average market pricing slightly increasing [55] Question: Drivers of non-private wealth NCI - The largest driver was retroactive fees associated with the real estate secondaries fund, with general growth from other asset classes [64] Question: Infrastructure business focus - Key areas of investment include power and renewables, transportation, and communications, including data centers [68] Question: Deployment activity drivers - Deployment was broad-based across asset classes, with significant activity in private equity co-investments and real estate [75] Question: GreenSpring earn-out details - The GreenSpring earn-out target of $75 million is fully accrued and will be payable 100% in cash [81]