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    STEP
    Earnings call· Mar 2026(Q4 FY26)

    StepStone Group Q4 FY26 earnings call STEP

    May 20, 2026 Source

    Executive summary

    StepStone Group Inc. Q4 FY26 — Record Fee-Related Earnings and Fundraising

    StepStone Group achieved record fee-related earnings and fundraising in Q4 FY26, driven by strong private wealth inflows and a diverse private markets platform. Despite a GAAP net loss and lower performance-related earnings, the company is investing in growth opportunities like data monetization and defined contribution solutions, while maintaining a robust capital distribution strategy. Management expressed confidence in continued FRE growth and margin expansion for fiscal 2027.

    Highlights

    5

    • Record fee-related earnings (FRE) of $105 million, up 12% YoY, with a 40% FRE margin.

    • Record quarterly capital formation of nearly $14 billion, contributing to a best-ever fiscal year of $38 billion gross AUM additions.

    • Highest-ever organic private wealth subscriptions on both gross and net basis, totaling $2.3 billion in the quarter.

    • Strong performance in Spring venture fund with 11% YTD return through April, following 39% in 2025.

    • Board declared a $0.55 per share supplemental dividend, on top of $0.28 base quarterly dividend, totaling $1.67 per share for the full year (up 23%).

    Concerns

    4

    • GAAP net loss attributable to StepStone Group, Inc. of $7.8 million or $0.10 per share due to fair value change of Private Wealth profits interest.

    • Adjusted net income of $69 million ($0.57 per share) was down from $81 million ($0.68 per share) in prior year, primarily due to lower performance-related earnings.

    • Gross realized performance fees of $46 million were lighter than recent quarters due to lower capital market activity.

    • Blended management fee rate slightly down to 64 bps (from 65 bps in FY25) due to moderation in retroactive fees.

    Guidance & targets

    4
    CategoryTargetConfidence
    Fee-Related Earnings (FRE) growth
    Continued growth
    high materiality
    High
    Cash compensation ratio
    43%
    medium materiality
    High
    Equity-based compensation
    $6 million to $7 million
    medium materiality
    High
    Blended statutory tax rate
    22.6%
    medium materiality
    High

    Operational metrics

    53
    GAAP net loss attributable to StepStone Group, Inc.
    $7.8 million
    Q4 FY26

    Driven by change in fair value of Private Wealth profits interest.

    GAAP EPS attributable to StepStone Group, Inc.
    $0.10
    Q4 FY26

    Driven by change in fair value of Private Wealth profits interest.

    Adjusted net income
    $69 milliondown from $81 million prior year
    Q4 FY26

    Primarily due to lower performance-related earnings, partially offset by higher fee-related earnings.

    Adjusted net income per share
    $0.57down from $0.68 prior year, down from $0.65 last quarter
    Q4 FY26

    Reflecting lower performance-related earnings, offset by growth in fee-related earnings.

    Fee revenues
    $260 millionup 21% YoY
    Q4 FY26

    Reflecting growth in fee-earning AUM across commercial structures.

    Retroactive fees contribution to revenue
    $4.4 millioncompared to $15.7 million in Q4 FY25
    Q4 FY26

    From infrastructure secondaries fund and multi-strategy global venture capital fund.

    Adjusted cash-based compensation
    $111 million
    Q4 FY26

    Lower than roughly 45% ratio of last 3 quarters.

    Equity-based compensation
    $6 million$1 million higher than last quarter
    Q4 FY26

    Primarily due to acceleration of expense for awards tied to certain retirees.

    General and administrative expenses
    $38 milliondown $2 million from last quarter, up $6 million from last year's fiscal 4Q
    Q4 FY26

    Sequential decline due to timing of client events, marketing, and travel-related expenses.

    Gross realized performance fees
    $46 million
    Q4 FY26

    Lighter than recent quarters due to lower levels of capital market activity.

    Net realized performance fees
    $18 million
    Q4 FY26

    Net of related compensation expense.

    Realized investment income from own portfolio
    $14 million
    Q4 FY26

    Includes $11 million of realized gains from one seed capital investment.

    ANI tax rate
    23.5%
    Q4 FY26

    Slightly elevated due to true-up to reflect full year tax rate of 22.6%.

    Full year tax rate
    22.6%roughly 30 bps higher than blended statutory tax rate last year
    FY26

    Driven by shift in mix of income to states with relatively higher tax rates.

    Net accrued carry
    $936 millionup 7% from last quarter
    Q4 FY26

    Approximately 60% tied to programs older than 5 years, ready to harvest.

    Own investment portfolio
    $347 millionup from $33 million last quarter
    Q4 FY26
    NCI buy-in (third tranche)
    $177 million
    Q1 FY27

    Expected to be executed at a 14% discount to Step public PE multiple.

    NCI buy-in (third tranche) discount
    14%
    Q1 FY27

    Discount to Step public PE multiple.

    NCI buy-in (third tranche) shares issued
    3.4 million
    Q1 FY27

    Effective as of April 1.

    Supplemental dividend per share
    $0.55
    Q4 FY26

    Tied to performance-related earnings.

    Base quarterly dividend per share
    $0.28
    Q4 FY26
    Total dividends per share (full year)
    $1.67up 23% YoY
    FY26

    For Class A common stock.

    Share repurchase authorization
    $100 million
    null

    Authorized in March.

    Share repurchase executed
    $9 million
    March

    Part of the $100 million authorization.

    Gross AUM additions
    $38 billionbest 12-month period ever
    FY26

    $22 billion from separately managed accounts, $16 billion from commingled funds.

    Gross AUM additions
    $13.5 billion
    Q4 FY26

    Includes $7 billion of managed account additions and $6.5 billion of commingled fund inflows.

    Managed account additions from new/expanded accounts
    $8 billion35% of total managed account additions
    FY26

    From new accounts or expansion into new asset classes/strategies.

    Commingled fund inflows
    $6.5 billion
    Q4 FY26

    Part of $13.5 billion gross additions.

    Private equity secondaries fund first close
    $2.2 billion
    Q4 FY26

    Part of commingled fund inflows.

    Private equity GP-led secondaries fund first close
    $200 million
    Q4 FY26

    Part of commingled fund inflows.

    Corporate opportunistic lending fund final close
    $400 million
    Q4 FY26

    Part of commingled fund inflows.

    Infrastructure secondaries fund closes
    $300 million
    Q4 FY26

    Part of commingled fund inflows.

    Infrastructure co-investment fund closes
    $300 million
    Q4 FY26

    Activated during the quarter, bringing total to over $1 billion.

    Infrastructure co-investment fund total
    $1 billion
    Q4 FY26

    Equivalent in size to last vintage.

    Private wealth subscriptions
    $2.3 billion
    Q4 FY26

    Organic subscriptions, highest ever.

    Private wealth total platform
    $18 billion
    Q4 FY26

    As of end of quarter.

    Evergreen nontraded BDC Cred total
    $2 billion
    Q4 FY26

    In net assets.

    Fee-earning assets increase
    $5.5 billion
    Q4 FY26
    Undeployed fee-earning capital (UFC) increase
    $7 billion
    Q4 FY26

    Bringing total to $40 billion, highest ever.

    Undeployed fee-earning capital (UFC) total
    $40 billionhighest level ever
    Q4 FY26

    Roughly $6 billion subject to activation, $33-34 billion subject to deployment.

    PE co-invest fund activated
    $1 billion
    April

    Activated post quarter end.

    PE secondaries and GP-led PE secondaries fund UTEC balance
    $2.5 billion
    March 31

    Expected to activate within next 2 quarters.

    Total AUM + UFC
    $184 billionup $12 billion sequentially, up $38 billion YoY
    Q4 FY26

    Strongest year of growth in history.

    Organic growth rate (AUM+UFC)
    21%
    since FY21
    Private debt capital raised
    $3 billion
    Q4 FY26

    Across managed accounts and commingled funds.

    Spring venture fund subscriptions
    $1.2 billion
    Q4 FY26

    Part of private wealth subscriptions.

    Spring venture fund YTD performance
    11%
    YTD through April

    Following 39% performance in 2025.

    Spring venture fund 2025 performance
    39%
    2025
    CredX first $100 million month
    $100 million
    April

    For subscriptions.

    Spring net return from asset appreciation
    9 points
    year ending March 31

    Out of 11% total net return.

    Spring net return from asset appreciation
    33 points
    last year

    Out of 37% total net return.

    NCI buy-in trading multiple threshold
    28.5%
    LTM

    When Step is trading above this multiple, transaction becomes more accretive.

    NCI buy-in equity lockup
    30%
    null

    Not subject to lockup, rest locked up for over 3 years, released 30% per year.

    Industry KPIs

    5
    MetricValueDetails
    Fee rate64 bpsbps
    Fundraising inflows$14 billionUSD
    Performance revenue$46 millionUSD
    Fee related earnings$105 millionUSD
    Deployment realizations—

    Product announcements

    1
    ProductTypeDetails
    Deal-level performance and operating measures solutionlaunch

    Deals & partnerships

    3
    FTSE RussellLaunching a suite of private market indices.

    Launched last fall.

    KrollLaunching a private credit benchmarking and analytics tool.

    Launched last fall.

    PitchBookProviding deal-level performance and operating measures.

    Leverages StepStone's SPY research and reporting platform and PitchBook's market data and research.

    Risks & headwinds

    5
    Geopolitical shocks, AI disruption, and media scrutiny on private creditCurrent macro environment (Q4 FY26)

    null

    Mitigation: StepStone's client-focused diverse private markets platform.

    Lower performance-related earningsQ4 FY26

    Adjusted net income down from $0.68 to $0.57 per share. Gross realized performance fees of $46 million, lighter than recent quarters.

    Mitigation: Optimistic that realization activity may accelerate if M&A picks up and IPOs reopen; secondary market provides liquidity.

    Interest rate volatility and geopolitical eventsOngoing

    Add an element of uncertainty to realization activity.

    Mitigation: Management does not control timing of exits but remains optimistic.

    Potential for increased default rates in private creditFuture

    Expected to increase from current low levels.

    Mitigation: Underlying credit trends remain strong, spreads are attractive, and portfolios are well diversified.

    Fee rate change for flagship PE secondaries fundDuring investment period

    Approximate 3 to 4 basis points initial impact on firm-wide blended commingled fund fee rate.

    Mitigation: Offset by higher fee rate following investment period; continued growth in private wealth funds should more than offset this impact.

    What to watch in Q1 FY27

    5

    Activation of flagship PE secondaries funds

    Within the next 2 quarters
    Current$2.5 billion of UTEC balance as of March 31
    TargetActivation of flagship PE secondaries fund and GP-led private equity secondaries fund

    Why it matters

    Conversion of undeployed capital to fee-earning AUM will drive fee revenue growth.

    And within the next 2 quarters, we plan to activate our flagship PE secondaries fund and our GP-led private equity secondaries fund, which collectively accounted for $2.5 billion of our UTEC balance as of March 31.

    Q&A highlights

    6

    Addressing concerns about short-term mispricing in secondaries for evergreen funds and how valuation methodologies account for day 1 markups vs. underlying asset performance.

    Mike McCabe explained that initial marks for acquired fund interests are typically the sponsor's latest reported fair value. If bought at a discount, the buyer may report a value above cost, reflecting the difference between purchase price and fair value. He emphasized that StepStone's returns primarily come from asset appreciation after purchase, not just the initial discount, citing Spring's 37% net return with 33 points from post-purchase appreciation.

    “The real question here is not whether purchase price and fair value can differ, of course, they can. The question is whether the fair value is backed by rigorous independent and transparent valuation processes.”

    asked by Ben Budish · answered by Michael McCabe

    2 min read6 chapters

    Detailed Narrative

    01

    Record Performance and Profitability

    StepStone achieved its first-ever quarter with over $100 million in fee-related earnings (FRE), reaching $105 million, a 12% increase year-over-year, with a strong FRE margin of 40%. Core FRE, excluding retroactive fees, grew 28% YoY to $101 million, maintaining the 40% margin. This performance was driven by growth in earning assets across the platform.

    02

    Exceptional Fundraising and AUM Growth

    The company reported a record quarter of nearly $14 billion in capital formation, culminating in its best fiscal year ever with $38 billion of gross AUM additions. This included $22 billion from separately managed accounts and over $16 billion from commingled funds, growing total fee-earning AUM by $5.5 billion in the quarter and total assets under management and undeployed capital (AUM+UFC) to over $184 billion, up $38 billion YoY.

    03

    Private Wealth Momentum

    StepStone's private wealth offerings saw their best quarter for organic subscriptions, generating $2.3 billion in new subscriptions against $300 million in reductions. The Spring venture fund was a highlight, with $1.2 billion in subscriptions and an 11% year-to-date performance through April, following 39% in 2025. The CredX interval fund also saw an uptick in subscriptions, with April being its first $100 million month.

    04

    Strategic Investments in Data & Technology

    StepStone is expanding its data monetization efforts, leveraging its SPY research and reporting platform. Following partnerships with FTSE Russell and Kroll, the company announced a new collaboration with PitchBook to provide deal-level performance and operating measures, enhancing transparency and benchmarking capabilities across private markets. These initiatives are expected to be accretive to FRE margin with modest near-term revenue.

    05

    Defined Contribution Market Expansion

    The company hired its first Head of Defined Contribution solutions, signaling a strategic focus on integrating private markets into 401(k) and other retirement plans. Management expressed encouragement regarding the DOL's process-based safe harbor proposal, believing it will enable significant growth in this channel and position StepStone as a leading solutions provider.

    06

    Capital Allocation and Shareholder Returns

    The Board declared a $0.55 per share supplemental dividend, bringing the full-year dividend to $1.67 per share, a 23% increase YoY. The company also executed $9 million of its $100 million share repurchase authorization in March, buying back 200,000 shares at an average price of $44.77. Additionally, StepStone plans to conduct the third tranche of its noncontrolling interest buy-in in Q1 FY27, utilizing $11 million cash and $166 million equity.

    AI-generated summary of the company’s earnings call. Not investment advice.