Slide 1: Third Quarter Fiscal Year 2022 Earnings Presentation
Third Quarter Fiscal Year 2022 Earnings Presentation FEBRUARY 8, 2022
Slide 2: Today's Presenters
Today’s Presenters Scott Hart Jason Ment Mike McCabe Johnny Randel 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 $126.3 million for the quarter and $380.7 million year-to-date. GAAP net income attributable to StepStone Group Inc. was $48.3 million (or $0.83 per share) for the quarter and $152.1 million (or $3.22 per share) year-to-date. ($ in thousands, e
Slide 4: Robust Growth Profile Since Inception
Robust Growth Profile Since Inception TOTALS ASSETS UNDER MANAGEMENT AND ADVISEMENT ($B) $548 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 FQ3'22 Note: Fi
Slide 5: Fiscal Q3 2022 Overview
Fiscal Q3 2022 Overview FQ3’22 FQ3’21 vs. FQ3’21 FQ2’22 vs. FQ2’22 Assets under management (“AUM”) $127.0 B $80.5 B 58% $121.3 B 5% Fee-Earning AUM (“FEAUM”) $71.2 B $46.6 B 53% $66.7 B 7% KEY BUSINESS DRIVERS Undeployed fee-earning capital $17.3 B $17.4 B -1% $17.8 B -3% Gross accrued carry $1,347.
Slide 6: Overview
OVERVIEW
Slide 7: StepStone's Growth Drivers
StepStone’s Growth Drivers AUM AUA SEPARATELY MANAGED ACCOUNTS FOCUSED COMMINGLED FUNDS ADVISORY $75B $42B1 $421B 24% growth from prior year 38% organic growth from prior year2 • A total of ~$12B of new capital • A total of ~$4B raised in focused • Net client activity increased AUA by additions duri
Slide 8: Fee-earning AUM Evolution
FEAUM Growth 35% SMAs +30% from prior year Fee-earning AUM Evolution clients with exposure to more Commingled +23% organic than one asset class growth from prior year FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $40 $53 $67 $86 $1271 $71.2 Focused commingled funds FEAUM + UNDEPLOYED FEE-EA
Slide 9: Trend in Management and Advisory Fees
Trend in Management and Advisory Fees MANAGEMENT & ADVISORY FEES ($M)1 MANAGEMENT & ADVISORY FEES PER SHARE ($M) $3432 $3.32 Advisory fees 53 $2.91 $285 Focused commingled funds $234 52 $2.40 Separately managed accounts 122 $190 48 $1.95 97 $140 45 $1.44 79 40 59 49 168 136 107 86 52 FY'18 FY'19 FY'
Slide 10: Financial Update
FINANCIAL UPDATE
Slide 11: Financial Highlights
Financial Highlights • FEAUM growth of 53% drove fee revenue increases of 52% for the quarter and 28% year-to-date • ANI per share increased 50% for the quarter and 98% year-to-date, reflecting higher FRE and net realized performance fees in the first nine months of the fiscal year • Results for the
Slide 12: Adjusted Revenues
Adjusted Revenues MGMT. & ADVISORY FEES ($M) CAGR Per Share +20% $2.56 +25% $3.34 $2.13 • Management fees per share increased 26% YTD driven by strong FEAUM growth $268 $344 $209 $1.44 – SMA and Commingled Funds fees per share each increased by 25% $141 • Management fees per share increased by a com
Slide 13: Profitability
Profitability FEE-RELATED EARNINGS ($M) Per Share +17% $0.82 $1.04 $0.70 $86 CAGR $107 • Fee-related earnings growth driven primarily by growth in FEAUM in the fiscal year-to- +48% date and by growth in FEAUM and margin expansion in the long-term growth period $68 • FRE margins were 32% YTD as compa
Slide 14: Accrued Carry and Fund Investments
Accrued Carry and Fund Investments1 ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 12/31/2021 BY VINTAGE AND TYPE $1,600 2012 & Prior +112% $1,347 8% 2013 Private $1,400 Equity 95% $1,216 $1,200 $1,073 Post 2016 1% $1,000 $897 42% 2014 $800 14% Infrastructure $637 2% $600 2015 $400 18% Real Estate $
Slide 15: Appendix
APPENDIX
Slide 16: Consolidated Balance Sheets
Consolidated Balance Sheets ($ in thousands) Dec '2 0 Mar '2 1 Dec '2 1 Assets Cash and cash equivalents $ 185,020 $ 179,886 $ 135,885 Restricted cash 3,971 3,977 1,031 Fees and accounts receivable 27,640 32,096 32,641 Due from affiliates 5,388 7,474 11,092 Investments: Investments in funds 63,449 7
Slide 17: Non-GAAP Financial Results
Non-GAAP Financial Results ($ in thousands, unless otherwise mentioned) Quarter Year-to-Date Dec '20 Dec '21 % Fav / Unfav Dec '20 Dec '21 % Fav / Unfav Management and advisory fees, net $ 70,093 $ 106,384 52% $ 209,245 $ 268,028 28% Less: Cash-based compensation 36,732 51,665 -41% 113,858 138,217 -
Slide 18: FEAUM Overview
FEAUM Overview Fav / Unfav Change ($B, unless noted) FQ3'22 FQ3'21 $ % Walk from AUM to FEAUM $B Total AUM as of 12/31/21 $ 127.0 SMAs Less: Non-Fee Earning AUM (12.4) Beginning balance $ 43.2 $ 33.4 $ 9.8 29% Contributions 3.1 1.8 1.3 70% Less: Market appreciation included in AUM (26.0) Distributio
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 $75B 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 $ 548B $ 127B $ 71B $ 75B+ 758 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
230 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% ($251B) Investment Expertise Across All Private Markets Asset Classes combined AUM / AUA in RE / INFRA / PD asset classes As of December 31, 2021 BY AUM1 BY AUA Private Debt Private Debt $21B / 16% Infrastructure $14B / 3% $42B / 10% Private Equity $74B / 58% Private Equity Infrastructure $222B
Slide 24: Net Realized Performance Fees
Net Realized Performance Fees QUARTERLY NET REALIZED PERFORMANCE FEES LTM NET REALIZED PERFORMANCE FEES ($m, unless otherwise mentioned) ($m, unless otherwise mentioned) $110 $110 $107 $100 $100 $91 $90 $90 $80 $80 $70 $70 $68 $60 $60 $50 $50 $43 $40 $40 $33 $33 $31 $29 $29 $30 $30 $27 $24 $23 $25 $
Slide 25: Revenues - Management and Advisory Fees, Net
Revenues - Management and Advisory Fees, Net ($ in thousands) Q u arter Year-to-Date Last Twelv e Mon th s Dec '20 Dec '21 otal % Fav / Unfav Dec '20 Dec '21 otal % Fav / Unfav Dec '20 Dec '21 otal % Fav / Unfav Focused commingled funds $ 23,567 ## $ 46,523 ## 97% $ 74,241 ## $ 99,173 ## 34% $ 96,72
Slide 26: Blue-chip, Sophisticated, Global Clientele
Blue-chip, Sophisticated, Global Clientele As of December 31, 2021 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) 5% Pension Funds 3% 6% Insurance Companies North America 7% 19% Private Wealth/ 30% 39% Defined Contribution Plans Asia/Australia 10% Sove
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: $74B • Total AUM: $9B • Total AUM: $23B • Total AUM: $21B - SMA AUM: $38B - SMA AUM: $4B - SMA AUM: $22B - SMA AUM: $12B - FCF AUM: $36B - FCF AUM: $3B - FCF AUM: -- -
Slide 28: Track Record Disclosures
Track Record Disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 33 of this presentation. 1 Investment returns reflect NAV data for underlying investments as of September 30, 2021, as reported by underlying managers up to 100 days following Septemb
Slide 29: Notable StepStone Focused Commingled Funds
Notable StepStone Focused Commingled Funds1 Vintage Fund Fund Name 2 Description Year Size ($M) PRIVATE EQUITY StepStone Capital Partners IV Private Equity Co-Investments 2018 $ 1,302 StepStone Secondary Opportunities Fund IV Private Equity Secondaries 2019 2,097 StepStone VC Global Partners X Multi
Slide 30: Reconciliation of GAAP to ANI and FRE
Reconciliation of GAAP to ANI and FRE ($ in thousands) Q uarter Year-to-Date Full Year Last Twelve Months Dec '20 Dec '21 Dec '20 Dec '21 Mar '18 Dec '21 Income before income tax $ 116,935 $ 142,080 $ 174,983 $ 396,739 $ 85,805 $ 559,605 Net income attributable to non-controlling interests in subsid
Slide 31: 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 Dec '20 Dec '21 Dec '20 Dec '21 Mar '18 Dec '21 Adjusted net income $ 27,035 $ 48,581 $ 60,776 $ 129,229 $ 35,020 $ 153,855 Weighted-average shares o
Slide 32: Reconciliation of Gross and Net Realized Performance Fees
Reconciliation of Gross and Net Realized Performance Fees ($ in millions) Q u arter 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 FQ3'22 Realized carried interest allocations(1) $ 9.9 $ 11.3 $ 10.1 $ 5.4 $ 9.9 $ 12.9 $ 11.1 $ 19.6 $ 2.6 $ 3.
Slide 33: 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 34: 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 35: Definitions (continued)
Definitions (continued) • Net Realized Performance Fees represents gross realized performance fees, less realized performance fee-related compensation. Excludes legacy Greenspring entities. • Invested Capital refers to the total amount of all investments made by a fund, including commitment-reducing
Slide 36: 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