Stepstone Group Inc. · NASDAQ:STEP
Stepstone — Q1 FY2023 Earnings Presentation
37 slides from Stepstone's earnings presentation, Aug 4, 2022
Slide 1: First Quarter Fiscal Year 2023 Earnings Presentation
First Quarter Fiscal Year 2023 Earnings Presentation AUGUST 4, 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 (loss) was $(21.5) million for the quarter. GAAP net income (loss) attributable to StepStone Group Inc. was $(11.0) million (or $(0.18) per share) for the quarter. ($ in thousands, except per share amounts) Qu ar t er Jun '21 Jun '22 % Fav / Unfav
Slide 4: Robust Growth Profile Since Inception
Robust Growth Profile Since Inception TOTALS ASSETS UNDER MANAGEMENT AND ADVISEMENT ($B) $588 $570 Assets under management Assets under advisement $427 $296 $266 $155 $130 $116 $84 $62 $64 $47 $54 $27 $1 $5 $9 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FY'17 FY'18 FY'19 FY'20 FY’21 FY'22 FQ1'
Slide 5: Fiscal Q1 2023 Overview
Fiscal Q1 2023 Overview FQ1’23 FQ1’22 vs. FQ1’22 FQ4’22 vs. FQ4’22 Assets under management (“AUM”) $136.5 B $89.8 B 52% $134.5 B 1% Fee-Earning AUM (“FEAUM”) $78.6 B $52.9 B 48% $75.2 B 4% KEY BUSINESS DRIVERS Undeployed fee-earning capital $17.1 B $13.6 B 26% $17.0 B 1% Gross accrued carry $1,366.3
Slide 6: Overview
OVERVIEW
Slide 7: StepStone's Growth Drivers
StepStone’s Growth Drivers AUM AUA SEPARATELY MANAGED ACCOUNTS FOCUSED COMMINGLED FUNDS ADVISORY $80B $45B1 $452B 18% growth from prior year 44% organic growth from prior year2 • A total of ~$17B of new capital additions • A total of ~$7B raised in focused commingled • Net client activity increased
Slide 8: Fee-earning AUM Evolution
FEAUM Growth 36% SMAs +26% from prior year Fee-earning AUM Evolution clients with exposure to more Commingled +30% organic than one asset class growth from prior year FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $40 $53 $67 $86 $1341 $137 $75.2 $78.6 Focused commingled funds FEAUM + UNDEPL
Slide 9: Trend in Management and Advisory Fees
Trend in Management and Advisory Fees MANAGEMENT & ADVISORY FEES ($M)1 $4172 MANAGEMENT & ADVISORY FEES PER SHARE6 $3792 55 Advisory fees 56 Focused commingled funds $3.77 $285 $3.55 Separately managed 177 $234 52 149 $2.91 accounts $190 48 $2.40 97 $1.95 $140 45 79 $1.44 40 59 174 184 49 136 86 107
Slide 10: Financial Update
FINANCIAL UPDATE
Slide 11: Financial Highlights
Financial Highlights • FEAUM growth of 48% drove fee revenue increases of 50% for the quarter • Results for the quarter include $2.4M of revenue, and $2.2M of FRE and pre-tax ANI from retroactive fees (Final closing on SCP V) FINANCIAL HIGHLIGHTS1 Three Months Ended June 30 ($M, except per share amo
Slide 12: Adjusted Revenues
Adjusted Revenues ($M, except per share amounts) MGMT. & ADVISORY FEES Per Share +29% CAGR $1.02 $3.77 • Management fees per share increased 36% for the quarter driven by strong FEAUM growth +25% $0.79 $117 $419 • Management fees per share increased by a compound annual growth rate of 31% over the $
Slide 13: Profitability
Profitability ($M, except per share amounts) FEE-RELATED EARNINGS Per Share $0.32 $1.22 +39% CAGR $37 $136 • Fee-related earnings per share growth driven primarily by growth in FEAUM for the +47% quarter and by growth in FEAUM and margin expansion in the long-term growth period $0.23 $23 • FRE margi
Slide 14: Accrued Carry and Fund Investments
Accrued Carry and Fund Investments1 ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 6/30/2022 BY VINTAGE AND TYPE +27% $1,600 $1,481 2013 & Prior $1,347 $1,366 Private $1,400 $1,216 7% Equity 95% $1,200 Post 2017 $1,073 36% 2014 $1,000 12% $800 Infrastructure 2015 2% $600 11% $400 Real Estate 2016 $2
Slide 15: Appendix
APPENDIX
Slide 16: Consolidated Balance Sheets
Consolidated Balance Sheets ($ in thousands) Ju n '2 1 Mar '2 2 Ju n '2 2 Asset s Cash and cash equivalents $ 218,580 $ 116,386 $ 106,354 Restricted cash 4,011 1,063 978 Fees and accounts receivable 42,004 34,141 34,892 Due from affiliates 6,819 19,369 38,456 Investments: Investments in funds 82,894
Slide 17: Non-GAAP Financial Results
Non-GAAP Financial Results1 ($ in thousands, unless otherwise mentioned) Qua rter Jun '21 Jun '22 % Fav / Unfav Management and advisory fees, net $ 78,061 $ 116,732 50% Less: Adjusted cash-based compensation 42,564 59,370 -39% Adjusted equity-based compensation 108 643 -495% Adjusted general, admini
Slide 18: FEAUM Overview
FEAUM Overview F a v / U nf a v Cha ng e ( $B, unl es s noted) F Q1' 23 F Q1' 22 $ % W a l k f rom A U M to F EA U M $B Total AUM as of 6/30/22 $ 136.5 SMA s Less: Non-Fee Earning AUM 15.0 Beginning balance $ 49.6 $ 40.6 $ 9.0 22% Less: Market appreciation included in AUM 25.9 Contributions 3.4 1.3
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 $ 588B $ 137B $ 79B $ 75B+ 840 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
247 36% 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
47% ($278B) Investment Expertise Across All Private Markets Asset Classes combined AUM / AUA in RE / INFRA / PD asset classes As of June 30, 2022 BY AUM1 BY AUA Private Debt Private Debt $24B / 17% Infrastructure $16B / 3% $45B / 10% Private Equity $76B / 55% Private Equity Infrastructure $234B / 52
Slide 24: Net Realized Performance Fees
Net Realized Performance Fees QUARTERLY NET REALIZED PERFORMANCE FEES LTM NET REALIZED PERFORMANCE FEES ($m, unless otherwise mentioned) ($m, unless otherwise mentioned) $130 $130 $123 $122 $120 $120 $110 $110 $107 $100 $100 $91 $90 $90 $80 $80 $70 $68 $70 $60 $60 $50 $50 $43 $40 $40 $33 $33 $32 $31
Slide 25: Revenues - Management and Advisory Fees, Net
Revenues - Management and Advisory Fees, Net ($ in thousands) Quarter Last Twelve Months Jun '21 Jun '22 % Fav / Unfav Jun '21 Jun '22 tal % Fav / Unfav Focused commingled funds $ 24,150 $ 52,742 118% $ 101,520 $ 177,317 # 75% SMAs 40,605 50,460 24% 145,667 184,173 # 26% Advisory and other services
Slide 26: Blue-chip, Sophisticated, Global Clientele
Blue-chip, Sophisticated, Global Clientele As of June 30, 2022 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) Pension Funds 3% North America 6% Insurance Companies 7% 18% Asia/Australia 8% Private Wealth/ 33% 39% Defined Contribution Plans Europe Sover
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: $76B • Total AUM: $11B • Total AUM: $26B • Total AUM: $24B - SMA AUM: $38B - SMA AUM: $4B - SMA AUM: $25B - SMA AUM: $13B - FCF AUM: $38B - FCF AUM: $3B - FCF AUM: $--
Slide 28: Track Record Disclosures
Track Record Disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 34 of this presentation. 1 Investment returns reflect NAV data for underlying investments as of March 31, 2022, as reported by underlying managers up to 100 days following March 31, 2
Slide 29: Notable StepStone Focused Commingled Funds
Notable StepStone Focused Commingled Funds1 Vintage Fund Size Fund Name 2 Desc ription Year ($ M) PRIV A T E EQU IT Y StepStone Secondary Opportunities Fund IV Private Equity Secondaries 2019 $ 2,097 StepStone VC Global Partners X Multi-Strategy Global Venture Capital 2020 1,480 StepStone Tactical G
Slide 30: Reconciliation of GAAP to ANI and FRE
Reconciliation of GAAP to ANI and FRE ($ in thousands) Qu ar t er Fu ll Year L ast Tw elv e Mo n t h s Jun '21 Mar '22 Jun '22 Mar '18 Jun '22 Income before income tax $ 140,942 $ 115,842 $ (20,185) $ 85,805 $ 351,454 Net income attributable to non-controlling interests in subsidiaries(1) (5,720) (8
Slide 31: Reconciliation of Adjusted Revenues and Expenses
Reconciliation of Adjusted Revenues and Expenses ($ in thousands) Q uarter Full Year Last Twelve Months Jun '21 Mar '22 Jun '22 Mar '18 Jun '22 Total revenues $ 3 0 8 ,6 0 5 $ 3 6 4 ,6 9 0 $ (7 7 ,2 1 8 ) $ 2 6 4 ,2 7 5 $ 9 7 9 ,7 0 2 Unrealized carried interest allocations (176,399) (133,062) 113,9
Slide 32: Reconciliation of Adjusted Net Income Per Share
Reconciliation of Adjusted Net Income Per Share ($ in thousands, except share and per share amounts) Q uarter Full Year Last Twelve Months Jun '21 Jun '22 Mar '18 Jun '22 Adjusted net income $ 40,533 $ 47,134 $ 35,020 $ 179,544 Weighted-average shares of Class A common stock outstanding – Basic (1)
Slide 33: Reconciliation of Gross and Net Realized Performance Fees
Reconciliation of Gross and Net Realized Performance Fees(1) ($ in millions) Q uarter 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 FQ4'22 FQ1'23 Realized carried interest allocations $ 9.9 $ 11.3 $ 10.1 $ 5.4 $ 9.9 $ 12.9 $ 11.1 $ 19
Slide 34: Definitions
Definitions • Company refers to SSG and its consolidated subsidiaries, including the Partnership, following the Reorganization and IPO and to the Partnership and its consolidated subsidiaries prior to the Reorganization and IPO. • StepStone Group Inc. or “SSG” refers solely to StepStone Group Inc.,
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. Excludes legacy Greenspring entities. • Invested Capital refers to the total amount of all investments made by a fund, including commitment-reducing
Slide 37: 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