Slide 1: Third Quarter Fiscal Year 2024 Earnings Presentation
Third Quarter Fiscal Year 2024 Earnings Presentation FEBRUARY 8, 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 Year-to-Date Dec '22 Dec '23 % Fav / Unfav Dec '22 Dec '23 % Fav / Unfav Revenues Management and advisory fees, net $ 128,753 $ 151,492 18% $ 364,606 $ 431,730 18% Performance fees: Incentive fees 2,980
Slide 4: Fiscal Q3 2024 overview
Fiscal Q3 2024 overview FQ3’24 FQ3’23 vs. FQ3’23 FQ2’24 vs. FQ2’24 Assets under management (“AUM”) $149.0 B $134.0 B 11% $145.8 B 2% Fee-earning AUM (“FEAUM”) $89.4 B $83.0 B 8% $87.3 B 2% Key Business Drivers Undeployed fee-earning capital $21.4 B $14.0 B 53% $18.1 B 18% Gross accrued carry $1,203.
Slide 5: Overview
Overview STEPSTONE GROUP 5
Slide 6: Scale that delivers
Scale that delivers Opportunity Assets under management $149 The capital and relationships that unlock growth BILLION Total capital Reach Assets under advisement $510 responsibility True global presence, deep local knowledge BILLION $659 Flexibility Annual private markets allocations ~$50 BILLION Of
Slide 7: Growth drivers
Growth drivers AUM & AUA Separately Managed Accounts Focused Commingled Funds Advisory $89 billion $45 billion $510 billion 14% growth from the prior year 5% growth from the prior year • $43 billion of net client activity increased AUA over the LTM $11 billion of new capital additions during the LTM
Slide 8: Evolution of fee-earning AUM
Evolution of fee-earning AUM1 34% clients with exposure to more than one asset class FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $53 $67 $86 $134 $138 $149 $85.4 $89.4 FEAUM + UNDEPLOYED FEE-EARNING CAPITAL ($B) Organic CAGR2: 20% $75.2 30.1 32.8 Organic CAGR2: 18% $110.8 Focused $52.0 25
Slide 9: Trend in adjusted management and advisory fees
Trend in adjusted management and advisory fees ADJUSTED MANAGEMENT & ADVISORY FEES ($M)1,2,6 ADJUSTED MANAGEMENT & ADVISORY FEES PER SHARE ($)6 Advisory fees $4.92 $560 Focused commingled funds $4.34 $494 59 Separately managed accounts 56 $3.55 $379 $2.91 56 278 $285 227 $2.40 $234 $1.95 $190 52 149
Slide 10: Financial update
Financial update STEPSTONE GROUP 10
Slide 11: Financial highlights
Financial highlights • Adjusted management and advisory fees, net increased 18% for the quarter and 19% year-to-date, driven by FEAUM growth • Fee-related earnings increased 19% for the quarter and 17% year-to-date, primarily driven by growth in fee revenues • ANI per share increased 37% for the qua
Slide 12: Adjusted revenues
Adjusted revenues ($M, except per share amounts) CAGR ADJUSTED Per Share +18% +22% $4.92 Management fees per share increased 19% YTD and by a MANAGEMENT $3.76 compound annual growth rate of 25% over the long-term & ADVISORY $3.18 $1.95 $565 growth period driven by strong FEAUM growth $433 FEES $365
Slide 13: Profitability
Profitability ($M, except per share amounts) FEE-RELATED CAGR EARNINGS Per Share +29% $1.54 • Fee-related earnings per share increased YTD driven primarily +17% by growth in FEAUM $1.21 $177 $1.03 • FRE margins were 32% for both the YTD and prior year periods, $139 and 24% four fiscal years ago $118
Slide 14: Accrued carry and fund investments
Accrued carry and fund investments1 NET ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 12/31/2023 BY VINTAGE AND TYPE 2014 & Prior Private Equity Post 2018 13% 92% $634 25% $609 2015 $583 12% $569 $535 Infrastructure 2016 2018 5% 19% 18% Real Estate FQ3'23 FQ4'23 FQ1'24 FQ2'24 FQ3'24 2017 75% from 2
Slide 15: Appendix
Appendix STEPSTONE GROUP 15
Slide 16: Consolidated balance sheets
Consolidated balance sheets ($ in thousands) Dec '22 Mar '23 Dec '23 Assets Cash and cash equivalents $ 120,093 $ 102,565 $ 139,970 1 The Company’s investments in funds were $188 million Restricted cash 971 955 751 and $147 million as of December 31, 2023 and March Fees and accounts receivable 42,76
Slide 17: Non-GAAP financial results
Non-GAAP financial results1 ($ in thousands, unless otherwise mentioned) Quarter Year-to-Date 1 Excludes the impact of consolidating the Consolidated Funds. See Dec '22 Dec '23 % Fav / Unfav Dec '22 Dec '23 % Fav / Unfav slides 31 and 32 for reconciliation of GAAP income (loss) before income tax to
Slide 18: FEAUM overview
FEAUM overview Fav / Unfav Change ($B, unless noted) FQ3'24 FQ3'23 $ % Walk from AUM to FEAUM $B Total AUM as of 12/31/23 $ 149.0 SMAs Less: Non-fee earning AUM 16.9 Beginning balance $ 56.4 $ 52.9 $ 3.5 7% Less: Market appreciation included in AUM 21.2 Contributions 1 1.1 2.1 (1.0) -48% Less: Undep
Slide 19: 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 20: 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 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 accounts Focused commingled funds Advisory & data services Portfolio analytics & reporting • Owned by one cli
Slide 22: Offering a full-service model to clients seeking a customized solution
299 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 23: 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 24: Investment expertise across all private markets asset classes
Investment expertise across all private markets asset classes As of December 31, 2023 BY AUM1 BY AUA 48% / $315B Private Debt combined AUM/AUA Private Debt $18B / 4% in RE / INFRA / PD $28B / 19% Infrastructure $58B / 11% Private Equity $78B / 53% $149 $510 BILLION Private Equity BILLION Infrastruct
Slide 25: Net realized performance fees
Net realized performance fees QUARTERLY NET REALIZED PERFORMANCE FEES ($M) LTM NET REALIZED PERFORMANCE FEES ($M) $123 $122 $107 $110 $33 $33 $32 $91 $29 $85 $28 $68 $65 $18 $18 $16 $43 $12 $38 $36 $31 $9 $27 $26 $8 $8 $7 $23 $25$24 $7 $6 $6 $19 $18 $20 $5 $5 $6 $1 Note: Net realized performance fee
Slide 26: Revenues – Adjusted management and advisory fees, net
Revenues – Adjusted management and advisory fees, net LTM DEC’22 LTM DEC’23 SMAs SMAs 42% 39% Advisory and Advisory and other services other services 12% 11% Fund Fund Focused reimbursement Focused reimbursement commingled revenues commingled revenues funds 1% funds 1% 45% 49% ($ in thousands) Quart
Slide 27: Blue-chip, sophisticated, global clientele
Blue-chip, sophisticated, global clientele As of December 31, 2023 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% 33% 13% Defined Contribution Plans 37% Euro
Slide 28: Our diversified platform spans private markets solutions
Our diversified platform spans private markets solutions Private Equity Real Estate Infrastructure Private Debt • Total AUM: $78B • Total AUM: $15B • Total AUM: $28B • Total AUM: $28B - SMA AUM: $41B - SMA AUM: $6B - SMA AUM: $25B - SMA AUM: $16B - FCF AUM: $37B - FCF AUM: $4B - FCF AUM: $1B - FCF A
Slide 29: Track record disclosures
Track record disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 35 of this presentation. (v) Private equity and infrastructure secondaries and co-investments include 12.5% and 10.0% of paid and unrealized carry, respectively, with an 8.0% preferre
Slide 30: Notable StepStone focused commingled funds
Notable StepStone focused commingled funds1 Vintage Fund Fund Name2 Description Year Size ($M) PRIVATE EQUITY Current funds in market include: StepStone Secondary Opportunities Fund IV Private equity secondaries 2019 $ 2,097 StepStone VC Global Partners X Multi-strategy global venture capital 2020 1
Slide 31: Reconciliation of GAAP income (loss) before income tax to ANI and FRE
1 Reflects the portion of pre-tax ANI of our subsidiaries attributable to non-controlling interests and the profits interests issued in the private wealth subsidiary. 2 Reflects equity-based compensation for awards granted prior to Reconciliation of GAAP income (loss) before and in connection with t
Slide 32: Reconciliation of GAAP measures to adjusted measures
Reconciliation of GAAP measures to adjusted measures ($ in thousands) Quarter Year-to-Date Full Year Last Twelve Months Dec '22 Dec '23 Dec '22 Dec '23 Mar '19 Dec '23 Total revenues $ (4,235) $ (14,612) $ (239,948) $ 354,821 $ 256,268 $ 527,195 Unrealized carried interest allocations 63,367 129,584
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 Year-to-date Full Year Last Twelve Months Dec '22 Dec '23 Dec '22 Dec '23 Mar '19 Dec '23 ANI $ 31,153 $ 42,116 $ 115,548 $ 101,677 $ 39,792 $ 128,792 Weighted-average shares
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 Incentive fees $ 0.1 $ 1.6 $ 0.8 $ 0.2 $ 0.8 $ 3.6 $
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 incentive fees, including the deferred portion. We believe gross realized performance of its sub
Slide 38: 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 39: stepstonegroup.com
stepstonegroup.com STEPSTONE GROUP 39