Slide 1: Second Quarter Fiscal Year 2022 Earnings Presentation
Second Quarter Fiscal Year 2022 Earnings Presentation NOVEMBER 9, 2021
Slide 2: Today's Presenters
Today’s Presenters Scott Hart Jason Ment Mike McCabe Johnny Randel Co-CEO President & Co-COO Head of Strategy Chief Financial Officer STEPSTONE GROUP 2
Slide 3: GAAP Consolidated Income Statements
GAAP Consolidated Income Statements GAAP net income was $127.9 million for the quarter and $254.4 million year-to-date. GAAP net income attributable to StepStone Group Inc. was $62.1 million (or $1.45 per share) for the quarter and $103.7 million (or $2.50 per share) year-to-date. ($ in thousands, e
Slide 4: Robust Growth Profile Since Inception
Robust Growth Profile Since Inception TOTALS ASSETS UNDER MANAGEMENT AND ADVISEMENT ($B) $519 Assets under management $427 Assets under advisement $296 $266 $155 $116 $130 $84 $62 $64 $47 $54 $27 $5 $9 $1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FY'17 FY'18 FY'19 FY'20 FY’21 FQ2'22 Note: Fi
Slide 5: Fiscal Q2 2022 Overview
Fiscal Q2 2022 Overview FQ2’22 FQ2’21 vs. FQ2’21 FQ1’22 vs. FQ1’22 Assets under management (“AUM”) $121.3 B $72.0 B 68% $89.8 B 35% Fee-Earning AUM (“FEAUM”) $66.7 B 44.3 B 50% 52.9 B 26% KEY BUSINESS DRIVERS Undeployed fee-earning capital 17.8 B 16.4 B 9% 13.6 B 31% Gross accrued carry 1,215.9 M 48
Slide 6: Overview
OVERVIEW
Slide 7: StepStone's Growth Drivers
StepStone’s Growth Drivers AUM AUA SEPARATELY MANAGED ACCOUNTS FOCUSED COMMINGLED FUNDS ADVISORY $74B $39B1 $397B 33% growth from prior year 21% organic growth from prior year2 • A total of ~$16B of new capital • A total of ~$2B raised in focused • Net client activity increased AUA by additions duri
Slide 8: Fee-earning AUM Evolution
FEAUM Growth 36% SMAs +29% from prior year Fee-earning AUM Evolution clients with exposure to more Commingled +11% organic than one asset class growth from prior year FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $40 $53 $67 $86 $1211 $66.7 Focused commingled funds FEAUM + UNDEPLOYED FEE-EA
Slide 9: Trend in Management and Advisory Fees
Trend in Management and Advisory Fees MANAGEMENT & ADVISORY FEES ($M)1 $3082 MANAGEMENT & ADVISORY FEES PER SHARE ($M) Advisory fees $285 51 $3.11 $2.91 Focused commingled funds 52 $234 $2.40 Separately managed $190 48 99 accounts $1.95 97 45 $140 79 $1.44 40 59 49 157 136 107 86 52 FY'18 FY'19 FY'2
Slide 10: Financial Update
FINANCIAL UPDATE
Slide 11: Financial Highlights
Financial Highlights • Organic FEAUM growth (excluding Greenspring) of 25% drove fee revenue increases of 10% for the quarter and 16% year-to-date • ANI per share increased 111% for the quarter and 138% year-to-date, reflecting higher FRE and net realized performance fees in the first six months of
Slide 12: Adjusted Revenues
Adjusted Revenues MGMT. & ADVISORY FEES ($M) CAGR Per Share +14% +25% $3.11 • Management fees per share increased 18% YTD driven by strong FEAUM growth $1.62 $1.42 $1.44 $308 $162 – SMA and Commingled Funds fees per share increased by 32% and 2%, respectively $139 $141 • Management fees per share in
Slide 13: Profitability
Profitability FEE-RELATED EARNINGS ($M) +6% Per Share $0.50 $0.94 $0.47 $50 $93 • Fee-related earnings growth driven primarily by growth in FEAUM in the fiscal year-to- $46 CAGR +48% date and by growth in FEAUM and margin expansion in the long-term growth period • FRE margins were 31% YTD as compare
Slide 14: Accrued Carry and Fund Investments
Accrued Carry and Fund Investments1 ACCRUED CARRY ($M) NET UNREALIZED CARRY AS OF 9/30/2021 BY VINTAGE AND TYPE $1,400 +150% 2012 & Prior $1,216 Post 2016 10% Private $1,200 $1,073 2013 35% Equity 95% $1,000 $897 1% $800 2014 Infrastructure $637 $600 $486 18% 2% $400 Real Estate 2015 3% $200 18% 201
Slide 15: Appendix
APPENDIX
Slide 16: Consolidated Balance Sheets
Consolidated Balance Sheets ($ in thousands) Sep '20 Mar '21 Sep '21 Assets Cash and cash equivalents $ 156,908 $ 179,886 $ 175,015 Restricted cash 2,919 3,977 1,016 Fees and accounts receivable 27,486 32,096 34,264 Due from affiliates 5,252 7,474 10,236 Investments: Investments in funds 57,870 74,3
Slide 17: Non-GAAP Financial Results
Non-GAAP Financial Results ($ in thousands, unless otherwise mentioned) Quarter Year-to-Date Sep '20 Sep '21 % Fav / Unfav Sep '20 Sep '21 % Fav / Unfav Management and advisory fees, net $ 75,652 $ 83,583 10% $ 139,152 $ 161,644 16% Less: Cash-based compensation 37,473 43,881 -17% 77,126 86,552 -12%
Slide 18: FEAUM Overview
FEAUM Overview Fav / Unfav Change ($B, unless noted) FQ2'22 FQ2'21 $ % Walk from AUM to FEAUM $B Total AUM as of 9/30/21 $ 121.3 SMAs Beginning balance $ 41.4 $ 31.6 $ 9.8 31% Less: Non-Fee Earning AUM (11.8) Contributions 2.2 1.5 0.8 52% Less: Market appreciation included in AUM (25.0) Distribution
Slide 19: StepStone Occupies a Critical Position within the GP & LP Ecosystem
StepStone Occupies a Critical Position within the GP & LP Ecosystem Global Private Markets Primaries Secondaries Co-investments Over $50B in annual private markets capital allocations¹ Corporations Endowments/Foundations Family Offices Asset management Private Equity Private Wealth/Defined Advisory
Slide 20: StepStone is a Global Private Markets Solutions and Services Provider
StepStone is a Global Private Markets Solutions and Services Provider StepStone is a global private markets investment $ 519B $ 121B $ 67B $ 50B+ 731 firm focused on providing customized investment combined assets under fee-earning annual private professionals AUM/AUA1 management1 assets under marke
Slide 21: 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 ADVISORY & PORTFOLIO ANALYTICS & FOCUSED COMMINGLED FUNDS ACCOUNTS DATA SERVICES REPORTING • Owned by one cli
Slide 22: Comprehensive, Full Service Model
225 37% Comprehensive, Full Service Model bespoke SMA accounts and focused commingled funds of advisory clients also have an AUM relationship • Offers a comprehensive, full-service model to clients seeking a customized solution to private markets investing • Each solution is offered across each of t
Slide 23: Investment Expertise Across All Private Markets Asset Classes
46% ($239B) Investment Expertise Across All Private Markets Asset Classes combined AUM / AUA in RE / INFRA / PD asset classes As of September 30, 2021 BY AUM1 BY AUA Private Debt Private Debt $14B / 4% $20B / 17% Infrastructure $36B / 9% Private Equity $71B / 58% Private Equity $209B / 52% Infrastru
Slide 24: Net Realized Performance Fees
Net Realized Performance Fees QUARTERLY NET REALIZED PERFORMANCE FEES LTM NET REALIZED PERFORMANCE FEES ($m, unless otherwise mentioned) ($m, unless otherwise mentioned) $100 $100 $91 $90 $90 $80 $80 $70 $70 $68 $60 $60 $50 $50 $43 $40 $40 $33 $31 $29 $29 $30 $30 $27 $24 $23 $25 $24 $23 $20 $19 $20
Slide 25: Revenues - Management and Advisory Fees, Net
Revenues - Management and Advisory Fees, Net ($ in thousands) Quarter Year-to-Date Last Twelve Months Sep '20 Sep '21 tal % Fav / Unfav Sep '20 Sep '21 tal % Fav / Unfav Sep '20 Sep '21 tal % Fav / Unfav Focused commingled funds(1) $ 30,821 # $ 28,500 # -8% $ 50,674 # $ 52,650 # 4% $ 97,470 # $ 99,1
Slide 26: Blue-chip, Sophisticated, Global Clientele
Blue-chip, Sophisticated, Global Clientele As of September 30, 2021 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) 3% Pension Funds 3% 6% Insurance Companies North America 6% 20% 28% Private Wealth/ 11% 40% Defined Contribution Plans Asia/Australia Sov
Slide 27: StepStone's Diversified Platform Spans Private Markets Solutions
StepStone’s Diversified Platform Spans Private Markets Solutions PRIVATE EQUITY REAL ESTATE INFRASTRUCTURE PRIVATE DEBT • Total AUM: $71B • Total AUM: $9B • Total AUM: $22B • Total AUM: $20B - SMA AUM: $37B - SMA AUM: $4B - SMA AUM: $21B - SMA AUM: $12B - FCF AUM: $33B - FCF AUM: $3B - FCF AUM: -- -
Slide 28: Track Record Disclosures
Track Record Disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 32 of this presentation. 1 Investment returns reflect NAV data for underlying investments as of June 30, 2021, as reported by underlying managers up to 100 days following June 30, 202
Slide 29: Reconciliation of GAAP to ANI and FRE
Reconciliation of GAAP to ANI and FRE ($ in thousands) Q u arter Year-to -Date Fu ll Year Last Twelv e Mo n th s Sep '20 Sep '21 Sep '20 Sep '21 Mar '18 Sep '21 Income before income tax $ 109,250 $ 113,717 $ 58,048 $ 254,659 $ 85,805 $ 534,460 Net income attributable to non-controlling interests in
Slide 30: Reconciliation of Adjusted Net Income Per Share
Reconciliation of Adjusted Net Income Per Share ($ in thousands, except share and per share amounts) Quarter Year-to-Date Full Year Last Twelve Months Sep '20 Sep '21 Sep '20 Sep '21 Mar '18 Sep '21 Adjusted net income $ 18,262 $ 40,115 $ 33,741 $ 80,648 $ 35,020 $ 132,309 (1) Weighted-average share
Slide 31: Reconciliation of Gross and Net Realized Performance Fees
Reconciliation of Gross and Net Realized Performance Fees ($ in millions) Quarter FQ4'18 FQ1'19 FQ2'19 FQ3'19 FQ4'19 FQ1'20 FQ2'20 FQ3'20 FQ4'20 FQ1'21 FQ2'21 FQ3'21 FQ4'21 FQ1'22 FQ2'22 1 Realized carried interest revenue $ 9.9 $ 11.3 $ 10.1 $ 5.4 $ 9.9 $ 12.9 $ 11.1 $ 19.6 $ 2.6 $ 3.6 $ 8.6 $ 26.1
Slide 32: Definitions
Definitions • StepStone Group Inc. or “SSG” refers solely to StepStone Group Inc., a Delaware corporation, and not to any of its subsidiaries. • Partnership refers solely to StepStone Group LP, a Delaware limited partnership, and not to any of its subsidiaries. • Reorganization refers to the series
Slide 33: Definitions (continued)
Definitions (continued) • Fee-Earning AUM, or “FEAUM”, reflects the assets from which we earn management fee revenue (i.e., fee basis) and includes assets in our SMAs, focused commingled funds and assets held directly by our clients for which we have fiduciary oversight and are paid fees as the mana
Slide 34: Definitions (continued)
Definitions (continued) • Net Realized Performance Fees represents gross realized performance fees, less realized performance fee-related compensation. • Invested Capital refers to the total amount of all investments made by a fund, including commitment-reducing and non-commitment-reducing capital c
Slide 35: Disclosure
Disclosure Some of the statements in this presentation may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than s