Slide 1: Fiscal Year 2024 Fourth Quarter and Full Year Earnings Presentation
Fiscal Year 2024 Fourth Quarter and Full Year Earnings Presentation May 23, 2024 STEPSTONE GROUP 1
Slide 2: Today's presenters
Today’s Scott Hart CEO Jason Ment President & Co-COO presenters Mike McCabe David Park Head of Strategy CFO STEPSTONE GROUP 2
Slide 3: GAAP consolidated statements of income (loss)
GAAP consolidated statements of income (loss) ($ in thousands, except per share amounts) Quarter Full Year Mar '23 Mar '24 % Fav / Unfav Mar '23 Mar '24 % Fav / Unfav Revenues Management and advisory fees, net $ 132,573 $ 153,410 16% $ 497,179 $ 585,140 18% Performance fees: Incentive fees 1,318 2,4
Slide 4: Non-GAAP financial results
Non-GAAP financial results1 ($ in thousands, unless otherwise mentioned) Quarter Full Year Mar '23 Mar '24 % Fav / Unfav Mar '23 Mar '24 % Fav / Unfav Adjusted management and advisory fees, net(2) $ 132,720 $ 153,808 16% $ 497,326 $ 586,379 18% Less: Adjusted cash-based compensation 69,337 73,950 -7
Slide 5: Fiscal Q4 and full year 2024 overview
Fiscal Q4 and full year 2024 overview FQ4’24 FQ3’24 FQ4’23 vs. FQ3’24 vs. FQ4’23 Assets under management (“AUM”) $156.6 B $149.0 B $138.4 B 5% 13% Fee-earning AUM (“FEAUM”) $93.9 B $89.4 B $85.4 B 5% 10% Key Business Drivers Undeployed fee-earning capital $22.6 B $21.4 B $15.7 B 6% 44% Gross accrued
Slide 6: Overview
Overview STEPSTONE GROUP 6
Slide 7: Scale that delivers
Scale that delivers Opportunity Assets under management $157 The capital and relationships that unlock growth BILLION Total capital Reach Assets under advisement $521 responsibility True global presence, deep local knowledge BILLION $678 Flexibility Average annual private markets allocations ~$70 BI
Slide 8: Progress since investor day
Progress since investor day FY 2023 (Investor Day) FY 2024 % Change Fee-earning AUM $85.4B $93.9B +10% Undeployed fee-earning capital (UFEC) $15.7B $22.6B +44% Total of fee-earning AUM and UFEC $101.1B $116.5B +15% Fee-related earnings $156M $190M +22% Fee-related earnings margin 31.4% 32.4% +100 bp
Slide 9: Growth drivers
Growth drivers AUM & AUA Separately Managed Accounts Focused Commingled Funds Advisory $94 billion $49 billion $521 billion 14% growth from the prior year 13% growth from the prior year • $39 billion of net client activity increased AUA over the LTM $11 billion of new capital additions during the LT
Slide 10: Evolution of fee-earning AUM
Evolution of fee-earning AUM 35% clients with exposure to more than one asset class FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $53 $67 $86 $134 $138 $157 $93.9 FEAUM + UNDEPLOYED FEE-EARNING CAPITAL ($B) Organic CAGR1: 21% $85.4 $75.2 $116.5 Focused 30.1 35.0 Organic CAGR1: 19% $52.0 25.
Slide 11: Trend in adjusted management and advisory fees
Trend in adjusted management and advisory fees ADJUSTED MANAGEMENT & ADVISORY FEES ($M)1,2,6 ADJUSTED MANAGEMENT & ADVISORY FEES PER SHARE ($)6 Advisory fees $5.09 $581 Focused commingled funds $4.34 $494 60 Separately managed accounts 56 $3.55 $379 $2.91 297 $285 56 227 $2.40 $234 $1.95 $190 52 149
Slide 12: Financial update
Financial update STEPSTONE GROUP 12
Slide 13: Financial highlights
Financial highlights • Adjusted management and advisory fees, net increased 16% for the quarter and 18% for the full year, driven by FEAUM growth • Fee-related earnings increased 35% for the quarter and 22% for the full year, driven by growth in fee revenues and expansion of FRE margins • ANI per sh
Slide 14: Adjusted revenues
Adjusted revenues ($M, except per share amounts) CAGR ADJUSTED Per Share +17% +21% Management fees per share increased 18% for the full year $5.09 $5.09 MANAGEMENT and by a compound annual growth rate of 25% over the $4.34 $1.95 long-term growth period driven by strong FEAUM growth & ADVISORY $586 $
Slide 15: Profitability
Profitability ($M, except per share amounts) FEE-RELATED CAGR EARNINGS Per Share +29% $1.65 • Fee-related earnings per share growth driven primarily by +21% $190 growth in FEAUM $1.65 $1.36 • FRE margins were 32% for the full year as compared with 31% $190 $0.46 in the prior year and 24% five fiscal
Slide 16: Accrued carry and fund investments
Accrued carry and fund investments1 NET ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 3/31/2024 BY VINTAGE AND TYPE 2014 & Prior Private Equity Post 2018 13% $634 $635 91% 26% $609 2015 $583 11% $569 Infrastructure 2016 2018 6% 19% 17% Real Estate FQ4'23 FQ1'24 FQ2'24 FQ3'24 FQ4'24 2017 74% from 20
Slide 17: Appendix
Appendix STEPSTONE GROUP 17
Slide 18: Consolidated balance sheets
Consolidated balance sheets ($ in thousands) Mar '23 Dec '23 Mar '24 Assets Cash and cash equivalents $ 102,565 $ 139,970 $ 143,430 Restricted cash 955 751 718 Fees and accounts receivable 44,450 58,126 56,769 Due from affiliates 54,322 64,021 67,531 Investments: Investments in funds (1) 115,187 126
Slide 19: FEAUM overview
FEAUM overview Fav / Unfav Change ($B, unless noted) FQ4'24 FQ4'23 $ % Walk from AUM to FEAUM $B Total AUM as of 3/31/24 $ 156.6 SMAs Less: Non-fee earning AUM 16.7 Beginning balance $ 56.7 $ 53.4 $ 3.2 6% Contributions 1 2.8 2.4 0.4 16% Less: Market appreciation included in AUM 23.5 Distributions 2
Slide 20: StepStone occupies an important position within the GP & LP ecosystem
StepStone occupies an important position within the GP & LP ecosystem A strategic partner to our clients and managers, we listen deeply, share generously, and search diligently for new ways to address each challenge. CLIENTS A self-reinforcing Corporations growth cycle of STEPSTONE clients, capital,
Slide 21: Our global reach powers possibility
Our global reach powers possibility Local teams with valuable regional insights collaborate across 27 cities, 16 countries and 5 continents. London Dublin Frankfurt Toronto Luxembourg Zurich San Francisco Rome Chicago New York Seoul Palo Alto Cleveland Baltimore Beijing Dallas Charlotte Tokyo La Jol
Slide 22: Comprehensive private markets solutions
Comprehensive private markets solutions StepStone’s flexible business model helps clients access opportunities across all asset classes: ASSET MANAGEMENT ADVISORY RESEARCH Separately managed accounts Focused commingled funds Advisory & data services Portfolio analytics & reporting • Owned by one cli
Slide 23: Offering a full-service model to clients seeking a customized solution
314 35% Offering a full-service model to clients seeking a bespoke SMAs + focused commingled funds of advisory clients with an AUM relationship customized solution to private markets investing Industry-transforming technology capabilities create a virtuous cycle of client engagement and provide a si
Slide 24: Uncommon insights
Uncommon insights Our view is both panoramic and precise, framed by a powerful combination of proprietary data and technology that empowers clients to act with uncommon clarity and conviction. Investment selection Portfolio planning StepStone’s consolidated due diligence library contains qualitative
Slide 25: Investment expertise across all private markets asset classes
Investment expertise across all private markets asset classes As of March 31, 2024 BY AUM BY AUA 48% / $325B Private Debt combined AUM/AUA Private Debt $22B / 4% in RE / INFRA / PD $28B / 18% Infrastructure $60B / 12% Private Equity $82B / 52% $157 $521 BILLION Private Equity BILLION Infrastructure
Slide 26: Net realized performance fees
Net realized performance fees QUARTERLY NET REALIZED PERFORMANCE FEES ($M) LTM NET REALIZED PERFORMANCE FEES ($M) $123 $122 $107 $110 $33 $33 $32 $91 $29 $85 $28 $68 $65 $18 $18 $16 $43 $41 $12 $12 $38 $36 $31 $9 $27 $26 $8 $8 $7 $23$25$24 $7 $6 $6 $19 $18 $20 $5 $5 $6 $1 Note: Net realized performa
Slide 27: Revenues – Adjusted management and advisory fees, net
Revenues – Adjusted management and advisory fees, net FULL YEAR MAR ’23 FULL YEAR MAR ’24 SMAs SMAs 42% 38% Advisory and Advisory and other services other services 11% 10% Fund Fund Focused reimbursement Focused reimbursement commingled revenues commingled revenues funds 1% funds 1% 46% 51% ($ in th
Slide 28: Blue-chip, sophisticated, global clientele
Blue-chip, sophisticated, global clientele As of March 31, 2024 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) Pension Funds 3% 2% North America 5% Insurance Companies 9% Asia/Australia Private Wealth/ 16% 34% Europe 11% Defined Contribution Plans 38%
Slide 29: Our diversified platform spans private markets solutions
Our diversified platform spans private markets solutions Private Equity Real Estate Infrastructure Private Debt • Total AUM: $82B • Total AUM: $16B • Total AUM: $30B • Total AUM: $28B - SMA AUM: $42B - SMA AUM: $8B - SMA AUM: $27B - SMA AUM: $17B - FCF AUM: $40B - FCF AUM: $4B - FCF AUM: $1B - FCF A
Slide 30: Notable StepStone focused commingled funds
Notable StepStone focused commingled funds Fund Vintage Fund Name Description Size Year ($M) Current funds in market include: PRIVATE EQUITY • Private equity secondaries fund StepStone Secondary Opportunities Fund IV Private equity secondaries 2019 $ 2,097 StepStone Tactical Growth Fund III Multi-st
Slide 31: Reconciliation of GAAP income (loss) before income tax to ANI and FRE
Reconciliation of GAAP income (loss) before income tax to ANI and FRE ($ in thousands) Quarter Full Year Full Year Mar '23 Mar '24 Mar '23 Mar '24 Mar '19 Income (loss) before income tax $ 67,505 $ 94,515 $ (41,454) $ 195,396 $ 61,599 Net income attributable to non-controlling interests in subsidiar
Slide 32: Reconciliation of GAAP measures to adjusted measures
Reconciliation of GAAP measures to adjusted measures ($ in thousands) Quarter Full Year Full Year Mar '23 Mar '24 Mar '23 Mar '24 Mar '19 Total revenues $ 172,374 $ 356,810 $ (67,574) $ 711,631 $ 256,268 Unrealized carried interest allocations (100,753) (151,757) 253,342 (126,908) (27,254) Deferred
Slide 33: Calculation and reconciliation of adjusted net income per share
Calculation and reconciliation of adjusted net income per share ($ in thousands, except share and per share amounts) Quarter Full Year Full Year Mar '23 Mar '24 Mar '23 Mar '24 Mar '19 ANI $ 27,115 $ 37,716 $ 142,663 $ 139,393 $ 39,792 Weighted-average shares of Class A common stock outstanding – Ba
Slide 34: Reconciliation of total performance fees to gross and net realized performance fees
Reconciliation of total performance fees to gross and net realized performance fees ($ in millions) Quarter FQ4'19 FQ1'20 FQ2'20 FQ3'20 FQ4'20 FQ1'21 FQ2'21 FQ3'21 FQ4'21 FQ1'22 FQ2'22 FQ3'22 FQ4'22 FQ1'23 FQ2'23 FQ3'23 FQ4'23 FQ1'24 FQ2'24 FQ3'24 FQ4'24 Incentive fees $ 0.1 $ 1.6 $ 0.8 $ 0.2 $ 0.8
Slide 35: Definitions
Definitions Adjusted net income, or “ANI,” is a non-GAAP performance measure that we present Assets under advisement, or “AUA,” consists of client assets for which we do not have full before the consolidation of StepStone Funds on a pre-tax and after-tax basis used to discretion to make investment d
Slide 36: Definitions (continued)
Definitions (continued) Assets under management, or “AUM,” primarily reflects the assets associated with our Fee-earning AUM, or “FEAUM,” reflects the assets from which we earn management fee separately managed accounts (“SMAs”) and focused commingled funds. We classify revenue (i.e., fee basis) and
Slide 37: Definitions (continued)
Definitions (continued) Gross realized performance fees represent realized carried interest allocations and Partnership refers solely to StepStone Group LP, a Delaware limited partnership, and not to any adjusted incentive fees, including the deferred portion. We believe gross realized of its subsid
Slide 38: Footnotes
Footnotes GAAP consolidated statements of income (loss) (slide 3) 1 Reflects amounts attributable to consolidated VIEs for which we did not acquire any direct economic interests. Such amounts are attributable to employees and therefore have been reflected as legacy Greenspring performance fee-relate
Slide 39: Footnotes (continued)
Footnotes (continued) Evolution of fee-earning AUM (slide 10) 1 Organic CAGR excludes $11.4B of FEAUM and $0.5B of undeployed fee-earning capital acquired as part of Greenspring as of 9/20/21. Trend in adjusted management and advisory fees (slide 11) 1 Excludes fund reimbursement revenues. 2 The acq
Slide 40: Footnotes (continued)
Footnotes (continued) Consolidated balance sheets (slide 18) 1 The Company’s investments in funds were $205 million as of March 31, 2024. The consolidation of the Consolidated Funds results in the elimination of the Company’s investments in such funds under GAAP. 2 Represents amounts attributable to
Slide 41: Footnotes (continued)
Footnotes (continued) Our diversified platform spans private markets solutions (slide 29) 1 Investment returns reflect NAV data for underlying investments as of December 31, 2023, as reported by underlying managers up to the business day occurring on or after 115 days following December 31, 2023. Fo
Slide 42: Footnotes (continued)
Footnotes (continued) Our diversified platform spans private markets solutions (continued) (slide 29) 4 Investments of former clients are included in performance summary past the client termination date until such time as StepStone stops receiving current investment data (quarterly valuations and ca
Slide 43: Footnotes (continued)
Footnotes (continued) Reconciliation of GAAP income (loss) before income tax to ANI and FRE (continued) (slide 31) 3 Includes (income) expense related to compensation paid to certain equity holders as part of an acquisition earn-out ($2.9 million in fiscal 2019), transaction costs ($4.0 million for
Slide 44: Footnotes (continued)
Footnotes (continued) Reconciliation of GAAP measures to adjusted measures (slide 32) 1 Reflects the add-back of management and advisory fee revenues for the Consolidated Funds, which have been eliminated in consolidation. 2 Reflects the add-back of incentive fee revenues for the Consolidated Funds,
Slide 45: Disclosure
Disclosure Some of the statements in this presentation may constitute “forward-looking statements” The non-GAAP financial measures contained in this presentation (including, without limitation, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the adjusted revenues, adj
Slide 46: stepstonegroup.com
stepstonegroup.com STEPSTONE GROUP 46