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StepStone (STEP) - 2025 Q4 - Earnings Call Transcript
STEPStepStone (STEP)2025-05-22 22:00

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of 18.5millionor18.5 million or 0.24 per share for the fourth quarter [4] - Fee related earnings (FRE) reached 94.1million,anincreaseof8594.1 million, an increase of 85% from the prior year quarter, with an FRE margin of 44% [4][12] - Adjusted net income for the quarter was 80.6 million or 0.68pershare,upfrom0.68 per share, up from 37.7 million or 0.33pershareinthesamequarterlastyear[5][12]−Thetotaldividendpayoutforthefiscalyearwas0.33 per share in the same quarter last year [5][12] - The total dividend payout for the fiscal year was 1.36, up from 0.99thepreviousyear[5][28]BusinessLineDataandKeyMetricsChanges−Thecompanyraisedover0.99 the previous year [5][28] Business Line Data and Key Metrics Changes - The company raised over 31 billion in assets under management (AUM) for the fiscal year, with a growth of 27.5billioninfeeearningAUM,markinga2927.5 billion in fee earning AUM, marking a 29% increase [6][12] - Managed account re-up rates remained above 90%, with an average growth of approximately 30% [6] - The private wealth platform saw AUM increase from 3.4 billion to over 8billion[10]−Totalgrossinflowsforthequarterwere8 billion [10] - Total gross inflows for the quarter were 9.9 billion, with 1.2billionofevergreensubscriptions,markingthebestprivatewealthquarterever[11][20]MarketDataandKeyMetricsChanges−Thecompanyexperiencedstrongfundraisinganddeploymentofundeployedfeeearningcapital,drivingfeeearningAUMtoover1.2 billion of evergreen subscriptions, marking the best private wealth quarter ever [11][20] Market Data and Key Metrics Changes - The company experienced strong fundraising and deployment of undeployed fee earning capital, driving fee earning AUM to over 121 billion, an increase of 7.2billionfromthepreviousquarter[12][22]−Theundeployedfeeearningcapital(UFEC)grewfromapproximately7.2 billion from the previous quarter [12][22] - The undeployed fee earning capital (UFEC) grew from approximately 22 billion to 25billion[22]−Theblendedmanagementfeerateincreasedto65basispointsfrom59basispointsinthepriorfiscalyear[22]CompanyStrategyandDevelopmentDirection−ThecompanyaimstodoubleitsfeerelatedearningsoverfiveyearsandexpanditsFREmargintothemid−30s,achievingadoublingoffeerelatedearningsinjusttwoyears[23][24]−Thecompanyisfocusedonscenarioplanningtoassessimpactsbyassetclass,strategy,region,andsectorduetomarketuncertainties[13]−Thecompanyisexpandingitsprivatewealthofferingsanddistributionpartners,increasingfrom300tonearly500uniqueplatforms[10][26]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedcautiousoptimismregardingtheevolvingglobaltradepolicyanditsimpactonmarketvolatility[13]−Thecompanybelievesthatprivatemarketswillcontinuetooutperformpublicmarkets,emphasizingtheimportanceofalong−termdisciplinedinvestmentapproach[14][15]−Managementhighlightedtheimportanceofleveragingdataandtechnologytoenhanceclientacquisitionandretention[26]OtherImportantInformation−Thecompanyplanstoconductabuy−inofnon−controllinginterestsusing25 billion [22] - The blended management fee rate increased to 65 basis points from 59 basis points in the prior fiscal year [22] Company Strategy and Development Direction - The company aims to double its fee related earnings over five years and expand its FRE margin to the mid-30s, achieving a doubling of fee related earnings in just two years [23][24] - The company is focused on scenario planning to assess impacts by asset class, strategy, region, and sector due to market uncertainties [13] - The company is expanding its private wealth offerings and distribution partners, increasing from 300 to nearly 500 unique platforms [10][26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the evolving global trade policy and its impact on market volatility [13] - The company believes that private markets will continue to outperform public markets, emphasizing the importance of a long-term disciplined investment approach [14][15] - Management highlighted the importance of leveraging data and technology to enhance client acquisition and retention [26] Other Important Information - The company plans to conduct a buy-in of non-controlling interests using 10 million in cash and 161millioninequity[27]−Thecompanydeclaredasupplementaldividendof161 million in equity [27] - The company declared a supplemental dividend of 0.40 per share, in addition to a base quarterly dividend of 0.24 [28] Q&A Session Summary Question: What were the one-time fees in the quarter? - The one-time fees were approximately 4 million in advisory fees, which impacted the FRE margin [38] Question: How does the pipeline of new business look? - The company is optimistic about the pipeline of new opportunities, with a healthy mix of re-ups and new business expected [44] Question: How do you see the secondaries marketplace evolving? - The company anticipates increased selling in the secondaries market and is positioned as an active buyer across various private markets [60] Question: What is the outlook for the private wealth product platform? - The company sees significant growth potential in both the US and European markets, with plans to expand its product offerings [64]