Slide 1: Fiscal Year 2021 Fourth Quarter and Full Year Earnings Presentation
Fiscal Year 2021 Fourth Quarter and Full Year Earnings Presentation JUNE 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 $151.2 million for the quarter and $314.6 million year-to-date. GAAP net income attributable to StepStone Group Inc. was $37.8 million (or $1.22 per share) for the quarter and $62.6 million (or $2.06 per share) year-to-date since IPO in Septemb
Slide 4: 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 5: 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 $ 427B $ 86B $ 52B $ 50B+ 571 firm focused on providing customized investment combined assets under fee-earning annual private professionals AUM/AUA1 management1 assets under market
Slide 6: Fiscal 4Q and Full Year 2021 Overview
Fiscal 4Q and Full Year 2021 Overview FQ4’21 FQ3’21 FQ4’20 vs. FQ3’21 vs. FQ4’20 Assets under management (“AUM”) $86.4 B $80.5 B $67.2 B 7% 29% Fee-Earning AUM (“FEAUM”) 52.0 B 46.6 B 41.2 B 12% 26% KEY BUSINESS DRIVERS Undeployed fee-earning capital 14.0 B 17.4 B 14.4 B -20% -3% Gross accrued carry
Slide 7: Overview
OVERVIEW
Slide 8: Robust Growth Profile Since Inception
Robust Growth Profile Since Inception TOTALS ASSETS UNDER MANAGEMENT AND ADVISEMENT ($B) $427 Assets under management Assets under advisement $296 $266 $155 $130 $116 $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 Note: Fiscal 2017-20
Slide 9: Strategic Priorities
Strategic Priorities CONTINUE TO GROW WITH EXISTING CLIENTS LEVERAGE SCALE TO ENHANCE OPERATING MARGINS ADD NEW CLIENTS GLOBALLY MONETIZE DATA AND ANALYTICS CAPABILITIES CONTINUE TO EXPAND DISTRIBUTION CHANNEL PURSUE ACCRETIVE TRANSACTIONS TO COMPLEMENT FOR PRIVATE WEALTH CLIENTS OUR PLATFORM STEPST
Slide 10: StepStone’s Growth Drivers
StepStone’s Growth Drivers AUM AUA SEPARATELY MANAGED ACCOUNTS FOCUSED COMMINGLED FUNDS ADVISORY $65B $15B $340B 27% growth from prior year 19% growth from prior year • Over $11B of new capital additions in • A total of ~$2B raised in focused • Net client activity increased AUA by fiscal 2021 commin
Slide 11: Fee-earning AUM Evolution
FEAUM Growth 35% SMAs +30% from prior year Fee-earning AUM Evolution clients with exposure to more Commingled +13% from prior than one asset class year FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM 40 53 67 86 Focused commingled funds $52.0 FEAUM + UNDEPLOYED FEE-EARNING CAPITAL ($B) Separa
Slide 12: Trend in Management and Advisory Fees
Trend in Management and Advisory Fees MANAGEMENT FEES ($M) ADVISORY FEES ($M) % of mgmt. & advisory fees1 72% 76% 80% 82% % of mgmt. & 28% 24% 20% 18% advisory fees1 $233 $187 97 Focused commingled funds $145 Separately managed 79 accounts $100 59 49 $52 136 $45 $48 107 $40 86 52 FY'18 FY'19 FY'20 F
Slide 13: Financial Update
FINANCIAL UPDATE
Slide 14: Financial Highlights
Financial Highlights • FEAUM growth of 26% drove fee revenue increases of 19% for the quarter and 21% for the year • Fee-Related Earnings increased 38% for the quarter and 45% for the year, primarily driven by fee revenue growth and lower travel-related expenses • Adjusted Net Income per share incre
Slide 15: Adjusted Revenues
Adjusted Revenues MGMT. & ADVISORY FEES ($M) • FEAUM growth and client advisory activity drove revenue growth of 21% YTD and by a +21% $285 $285 compound annual growth rate (“CAGR”) of 27% over the past three fiscal years $300 $235 CAGR: +27% • Advisory fees increased 9% for the full year and increa
Slide 16: Profitability
Profitability FEE-RELATED EARNINGS ($M) FRE 26% 31% 17% 31% Margin % $100 +45% $89 $89 • FEAUM growth, client advisory activity and favorable expense environment driving FRE growth and margin improvement $80 CAGR: $62 +55% • FRE increased 45% for the year and by a compound annual growth rate of 55%
Slide 17: Accrued Carry and Fund Investments
Accrued Carry and Fund Investments ACCRUED CARRY ($M) +95% $1,000 $897 • Gross accrued carried interest of $897 million, an increase of 95% from March 31, 2020 $900 driven by increases in the unrealized gains of the underlying portfolios (note: valuations $800 reported on a one quarter lag) $700 $63
Slide 18: Unrealized Carry
Unrealized Carry NET UNREALIZED CARRY AS OF 3/31/2021 BY VINTAGE NET UNREALIZED CARRY AS OF 3/31/2021 BY TYPE 2012 & Prior 15% Private Equity 95% Post 2015 2013 43% 1% Infrastructure 2% 2014 Real Estate 22% 3% 57% from 2015 or 2015 prior vintages 19% • Gross accrued carried interest of $897 million,
Slide 19: Appendix
APPENDIX
Slide 20: Consolidated Balance Sheets
Consolidated Balance Sheets ($ in thousands) Mar '20 Dec '20 Mar '21 Assets Cash and cash equivalents $ 89,939 $ 185,020 $ 179,886 Restricted cash - 3,971 3,977 Fees and accounts receivable 25,121 27,640 32,096 Due from affiliates 9,690 5,388 7,474 Investments: Investments in funds 53,386 63,449 74,
Slide 21: Non-GAAP Financial Results
Non-GAAP Financial Results ($ in thousands, unless otherwise mentioned) Quarter Full Year Mar '20 Mar '21 % Fav / Unfav Mar '20 Mar '21 % Fav / Unfav Management and advisory fees, net $ 64,179 $ 76,217 19% $ 235,205 $ 285,462 21% Less: Cash-based compensation 35,947 43,265 -20% 130,730 157,123 -20%
Slide 22: FEAUM Overview
FEAUM Overview Fav / Unfav Change ($B, unless noted) 4Q FY'21 4Q FY'20 $ % Walk from AUM to FEAUM $B Total AUM as of 3/31/21 $ 86.4 SMAs Less: Non-Fee Earning AUM (9.5) Beginning balance $ 35.4 $ 29.6 $ 5.7 19% Contributions 5.1 2.7 2.3 87% Less: Market appreciation included in AUM (10.9) Distributi
Slide 23: 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 24: Comprehensive, Full Service Model
200+ 38% 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
Slide 25: Investment Expertise Across All Private Markets Asset Classes
50% ($215B) Investment Expertise Across All Private Markets Asset Classes combined AUM / AUA in RE / INFRA / PD asset classes As of March 31, 2021 BY AUM1 BY AUA Private Debt Private Debt $13B / 4% $17B / 20% Infrastructure $32B / 10% Private Equity $43B / 50% Private Equity $170B / 49% Infrastructu
Slide 26: Net Realized Performance Fees
Net Realized Performance Fees QUARTERLY NET REALIZED PERFORMANCE FEES LTM NET REALIZED PERFORMANCE FEES ($m, unless otherwise mentioned) ($m, unless otherwise mentioned) $50 $50 $43 $40 $40 $31 $30 $30 $29 $27 $24 $25 $24 $23 $20 $20 $20 $20 $19 $18 $16 $13 $9 $10 $8 $10 $7 $7 $6 $6 $5 $5 $2 $1 $0 $
Slide 27: Revenues - Management and Advisory Fees, Net
Revenues - Management and Advisory Fees, Net ($ in thousands) Quarter Full Year Mar '20 Mar '21 % o % Fav / Unfav Mar '20 Mar '21 % o % Fav / Unfav Focused commingled funds $ 22,485 # $ 22,982 # 2% $ 79,402 # $ 97,223 # 22% SMAs 28,965 # 40,754 # 41% 107,286 # 135,784 # 27% Advisory and other servic
Slide 28: Blue-chip, Sophisticated, Global Clientele
Blue-chip, Sophisticated, Global Clientele As of March 31, 2021 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) 4% 3% Pension Funds 6% North America 6% Private Wealth/ 23% 28% Defined Contribution Plans Asia/Australia 11% 41% Insurance Companies Soverei
Slide 29: 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: $43B • Total AUM: $9B • Total AUM: $18B • Total AUM: $17B - SMA AUM: $33B - SMA AUM: $3B - SMA AUM: $18B - SMA AUM: $11B - FCF AUM: $9B - FCF AUM: $3B - FCF AUM: -- -
Slide 30: Track Record Disclosures
Track Record Disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 34 of this presentation. 1 Investment returns reflect NAV data for underlying investments as of December 31, 2020, as reported by underlying managers up to 130 days following December
Slide 31: Reconciliation of GAAP to ANI and FRE
Reconciliation of GAAP to ANI and FRE ($ in thousands) Quarter Full Year Mar '20 Mar '21 Mar '20 Mar '21 Income before income tax $ 51,463 $ 162,866 $ 148,740 $ 337,849 Net income attributable to non-controlling interests in subsidiaries(1) (2,716) (4,655) (12,052) (23,952) Unrealized carried intere
Slide 32: Reconciliation of Adjusted Net Income Per Share
Reconciliation of Adjusted Net Income Per Share ($ in thousands, except share and per share amounts) Quarter Full Year Mar '20 Mar '21 Mar '20 Mar '21 Adjusted net income $ 8,476 $ 24,626 $ 50,143 $ 85,402 Weighted-average shares of Class A common stock outstanding – Basic(1) 29,237,500 30,157,500 2
Slide 33: Reconciliation of Gross and Net Realized Performance Fees
Reconciliation of Gross and Net Realized Performance Fees ($ in millions) Quarter 1Q FY19 2Q FY19 3Q FY19 4Q FY19 1Q FY20 2Q FY20 3Q FY20 4Q FY20 1Q FY21 2Q FY21 3Q FY21 4Q FY21 Realized carried interest revenue $ 11.3 $ 10.1 $ 5.4 $ 9.9 $ 12.9 $ 11.1 $ 19.6 $ 2.6 $ 3.6 $ 8.6 $ 26.1 $ 24.7 Incentive
Slide 34: 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 35: 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 36: 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 37: Disclosure
Disclosure Some of the statements in this release 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 statem