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    STEP
    Earnings call· Jun 2026(Q1 FY27)

    StepStone Group Q1 FY27 earnings call STEP

    Aug 6, 2026 Source

    Executive summary

    StepStone Group Q1 FY27 — Strong FRE Growth and Record Private Wealth Inflows

    StepStone Group delivered robust Q1 FY27 results, driven by strong fee-related earnings and record inflows into its Private Wealth platform, which now exceeds $21 billion in assets. The company continues to execute its growth playbook through client expansion, strategic long-term investments, and opportunistic M&A, including the planned buy-in of Private Wealth profits interest for future EPS accretion. Management expressed confidence in sustained earnings growth and capital returns, despite a GAAP loss tied to accounting for the Private Wealth buy-in.

    Highlights

    5

    • Fee-related earnings (FRE) grew 30% year-over-year to $106 million, with a 39% FRE margin.

    • Adjusted net income increased to $60 million, or $0.48 per share, up from $49 million or $0.40 per share in the prior year.

    • Private Wealth platform achieved record subscriptions of $2.8 billion, with total assets surpassing $21 billion, more than doubling year-over-year.

    • Gross AUM additions reached $40 billion over the last 12 months, the best 12-month period ever for the company.

    • Quarterly dividend raised by 18% from $0.28 to $0.33 per share, reflecting sustainable earnings growth.

    Concerns

    3

    • GAAP net loss attributable to StepStone Group, Inc. was $116 million or $1.41 per share, primarily due to the change in fair value of the Private Wealth profits interest buy-in.

    • A managed account expiration of roughly $1.5 billion is anticipated next quarter, which will impact fee-earning AUM.

    • The blended management fee rate of 65 basis points over the last 12 months remained consistent with FY25, as favorable mix shift was offset by moderation in retroactive fees and fee pressure from lower-fee secondaries funds.

    Guidance & targets

    8
    CategoryTargetConfidence
    Earnings per share accretion from Private Wealth buy-in
    Material accretion, compounding into the future
    high materiality
    High
    Private Wealth platform annual inflows
    Strong level, consistent with pace highlighted at beginning of year
    high materiality
    High
    Cash compensation ratio
    43%
    medium materiality
    High
    Adjusted equity-based compensation
    $7 million
    medium materiality
    High
    Private Wealth platform distribution fees
    Grow in line with Private Wealth assets
    low materiality
    High
    Managed account expiration
    $1.5 billion
    medium materiality
    High
    Commingled fund fee rate
    Relatively flattish
    medium materiality
    Medium
    Revenue from tech/index partnerships (FTSE Russell, Kroll, PitchBook)
    Start seeing line item in P&L
    low materiality
    Medium

    Operational metrics

    41
    Fee-related earnings (FRE)
    $106 millionup 30% YoY
    Q1 FY27

    Reported FRE.

    Core Fee-related earnings (FRE)
    $105 millionup 33% YoY
    Q1 FY27

    Excluding $1.1 million retroactive fees this quarter (vs. $2.9 million prior year).

    Adjusted Net Income
    $60 millionup from $49 million YoY
    Q1 FY27

    Driven primarily by higher fee-related earnings.

    Adjusted Net Income per share
    $0.48up from $0.40 YoY
    Q1 FY27

    Driven by growth in fee-related earnings.

    Run rate management and advisory fees
    over $1 billion
    Annual

    Comfortably generating.

    Run rate Fee-related earnings (FRE)
    over $400 million
    Annual

    Comfortably generating.

    Gross AUM additions
    $40 billion
    LTM

    Best 12-month period ever.

    Gross AUM additions
    $10 billion
    Q1 FY27

    Split between managed accounts and commingled funds.

    Private Wealth platform subscriptions
    $2.8 billion
    Q1 FY27

    Record quarter.

    Private Wealth platform assets
    over $21 billionmore than doubling YoY
    Q1 FY27

    Total assets.

    Private Wealth platform redemptions
    under 2%
    Q1 FY27

    Total platform redemptions.

    SPRING fund subscriptions
    $1.7 billion
    Q1 FY27

    Elevated level of inflows.

    SPRING fund net returns
    23%
    H1 CY26

    Supported by several significant value creation events.

    Venture capital secondaries fund first close
    $1 billion
    Q1 FY27

    Newest fund.

    Infrastructure co-investment fund closes
    $500 million
    Q1 FY27

    Additional closes.

    Private equity secondaries funds closes
    $300 million
    Q1 FY27

    Additional closes.

    Private equity co-investment fund closes
    $200 million
    Q1 FY27

    Additional closes.

    SPRIM fund subscriptions
    over $400 million
    Q1 FY27

    All private markets fund.

    SCRED (non-traded BDC) subscriptions
    over $500 million
    Q1 FY27

    Growing fund.

    SCRED (non-traded BDC) total assets
    $2.8 billion
    Q1 FY27

    Total fund size.

    Private Wealth distribution partners
    over 800
    Q1 FY27

    Number of partners selling StepStone Private Wealth funds.

    Average funds per Private Wealth partner
    2 funds
    Q1 FY27

    For platforms selling for at least a year, steadily increased over time.

    Fee-earning assets (FEAUM) increase
    nearly $10 billion
    Q1 FY27

    Drivers include record Private Wealth subscriptions, commingled fund activations, new commitments, and managed account deployment.

    Undeployed fee-earning capital (UFEC)
    over $39 billion
    Q1 FY27

    Maintained healthy balance.

    FEAUM + UFEC
    $193 billionup $9 billion sequentially, up $37 billion YoY
    Q1 FY27

    Combined total.

    Blended management fee rate
    65 bpsconsistent with FY25
    LTM

    Favorable mix shift to evergreen funds offset moderation in retroactive fees.

    Quarterly dividend
    $0.33up 18% from $0.28
    Q1 FY27

    Reflects strong, consistent, and sustainable growth of fee-related earnings.

    Share repurchase executed
    $21 million
    since end of FY26

    Additional repurchase.

    Total share repurchase executed
    $30 million
    since March

    Part of $100 million authorization.

    Fee revenue
    $271 millionup 27% YoY
    Q1 FY27

    Driven by growth in fee-earning AUM.

    Adjusted cash-based compensation
    $117 millionup from $111 million QoQ
    Q1 FY27

    Reflected annual merit increase and headcount growth.

    Cash compensation ratio
    43%
    Q1 FY27

    Adjusted for retroactive fees.

    Adjusted equity-based compensation
    $7 million
    Q1 FY27

    In line with expectations.

    General and administrative expenses
    $42 millionup $10 million YoY
    Q1 FY27

    Includes platform distribution fees.

    Platform distribution fees
    $5 million
    per quarter

    Run rate, expected to grow with Private Wealth assets.

    Gross realized performance fees
    $30 million
    Q1 FY27

    Episodic in nature.

    Net realized performance fees
    $16 million
    Q1 FY27

    Net of related compensation expense.

    Net accrued carry
    $935 millionup 19% YoY
    Q1 FY27

    Relatively mature and ready to harvest.

    Own investment portfolio
    $363 million
    Q1 FY27

    Ended the quarter.

    Private Wealth platforms adopting multiple funds
    over 50%
    Q1 FY27

    Of seasoned platforms (with company for >1 year) have adopted at least 2 funds.

    Private Wealth average funds per platform
    2 funds
    Q1 FY27

    For platforms selling for at least a year.

    Industry KPIs

    5
    MetricValueDetails
    Fee rate65 bpsbps
    Fundraising inflows$10 billionUSD
    Performance revenue$30 millionUSD
    Fee related earnings$106 millionUSD
    Deployment realizations—

    Product announcements

    2
    ProductTypeDetails
    Special Situations Real Estate Secondaries Fundlaunch
    Multi-Strategy Growth Equity Fundlaunch

    Deals & partnerships

    4
    Private Wealth team membersBuy-in of Private Wealth profits interest.up to 75% of the consideration in StepStone equity3-year period

    StepStone has a put-call option agreement. The Private Wealth team entered the put period in the June quarter, and StepStone will enter the call period in Q3 CY27. The equity portion will have lockups, with 30% tradable immediately and the remainder locked up over 3 years. The cash portion will be funded by cash on hand, operating cash flows, and debt capital markets access.

    FTSE RussellCollaboration on benchmarking tools and analytical tools for private markets.

    Focus on creating indices for defined contribution and retirement markets.

    PitchBookCollaboration to enable deal-level performance analysis for GPs and service providers.

    Provides data points like GICS code, sector, geography, enterprise value, entry multiple for benchmarking.

    KrollCollaboration to provide tools for measuring risk at the loan level in private credit.

    Addresses the need for better risk understanding in private credit.

    Risks & headwinds

    5
    GAAP net loss due to fair value change of Private Wealth profits interestQ1 FY27

    $116 million or $1.41 per share

    Mitigation: This is an GAAP accounting requirement; the underlying business is strong, and the buy-in is expected to be accretive to adjusted net income.

    Managed account expirationNext quarter (Q2 FY27)

    $1.5 billion

    Mitigation: Partial offset to adjusted net income from noncontrolling interest.

    Fee rate pressure from new secondaries fundsNext few quarters to a year

    Commingled fund fee rate expected to be 'relatively flattish'

    Mitigation: Expected to resume progress once secondaries funds are fully raised; offset by Private Wealth asset growth.

    Volatility from public positions in SPRING fundAs lockups expire

    SpaceX position is now 'mid-teens-ish'

    Mitigation: Will look to exit in an orderly way as a private market investor; fund is diversified with over 2,000 positions.

    Episodic nature of performance feesOngoing

    Gross realized performance fees were '$30 million' for the quarter, net '$16 million'

    Mitigation: Strong investment performance supports a growing backlog of future carry; more consistent flow expected in a couple of years as European waterfall vehicles mature.

    What to watch in Q2 FY27

    5

    Managed account expiration

    Next quarter (Q2 FY27)
    CurrentAnticipated $1.5 billion
    TargetConfirmation of expiration and impact

    Why it matters

    This represents a reduction in fee-earning AUM and will impact fee revenue.

    Consistent with our commitment to communicate forthcoming distributions out of fee-earning AUM, we anticipate an expiration of a managed account of roughly $1.5 billion next quarter.

    Q&A highlights

    6

    Why did base fees not translate as expected given AUM growth, and what is the impact of UFEC conversion on fee rates?

    UFEC remains a pipeline for future FEAUM growth with an average fee rate in line with the overall fee rate. The commingled fund fee rate is expected to remain flat for the next few quarters due to a fee structure change in PE secondaries funds, offsetting Private Wealth growth.

    “you should expect to see the commingled fund fee rate stay relatively flattish over the next few quarters to a year as the secondaries funds continue to fundraise.”

    asked by Brennan Hawken · answered by David Park

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Growth Initiatives

    StepStone is pursuing a three-pronged growth strategy: consistent growth from existing business through client retention and expansion, investment in long-term initiatives like data/technology and the U.S. defined contribution market, and opportunistic M&A focused on acquiring noncontrolling interests. The company aims to replicate its Private Wealth success in the defined contribution space, leveraging its commitment to investing for the long term in client solutions.

    02

    Private Wealth Platform Momentum

    The Private Wealth platform continues to be a significant growth driver, achieving record subscriptions of $2.8 billion in the quarter and growing total assets to over $21 billion, more than doubling year-over-year. The SPRING venture and growth equity fund contributed $1.7 billion of these inflows, demonstrating strong performance with 23% net returns in the first half of the calendar year, supported by significant value creation events.

    03

    Capital Management and Buy-in Strategy

    The company is prioritizing the buy-in of Private Wealth profits interest, which is expected to materially increase adjusted net income and provide EPS accretion. This transaction allows for up to 75% equity funding (with 30% immediately tradable and the rest locked up over 3 years) and the balance in cash. The cash portion will be funded through cash on hand, operating cash flows, and accessing capital markets (revolver/debt) while maintaining an investment-grade rating and conservative leverage ratios.

    04

    Fundraising and AUM Growth

    StepStone generated over $10 billion in gross AUM additions this quarter, contributing to a total of $40 billion over the last 12 months, marking its best 12-month period ever. Fee-earning assets increased by nearly $10 billion, and the combination of fee-earning assets and undeployed fee-earning capital (UFEC) reached approximately $193 billion, representing a 19% annual organic growth rate since fiscal 2022.

    05

    Fee Rate Dynamics

    The blended management fee rate remained consistent at 65 basis points over the last 12 months, as a favorable mix shift towards evergreen funds offset a moderation in retroactive fees. The fee structure change for PE secondaries and GP-led secondaries funds is expected to keep the commingled fund fee rate relatively flat for the next few quarters to a year, with growth resuming once these funds are fully raised and Private Wealth assets continue to grow.

    06

    Data and Technology Partnerships

    StepStone is leveraging its extensive private markets data through partnerships with FTSE Russell, PitchBook, and Kroll. These initiatives aim to provide benchmarking tools, deal-level performance analysis, and risk measurement at the loan level, positioning StepStone as a leading source of truth in private markets data. Management expects to see revenue from these partnerships reflected in the P&L by the end of the fiscal year.

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