Slide 1: First Quarter Fiscal Year 2024 Earnings Presentation
First Quarter Fiscal Year 2024 Earnings Presentation August 3, 2023 STEPSTONE GROUP 1
Slide 2: Today's presenters
Today’s Scott Hart CEO Jason Ment President & Co-COO presenters Mike McCabe Johnny Randel Head of Strategy Chief Financial Officer STEPSTONE GROUP 2
Slide 3: GAAP Consolidated Income (Loss) Statements
GAAP Consolidated Income (Loss) Statements ($ in thousands, except per share amounts) Quarter Jun '22 Jun '23 % Fav / Unfav Revenues Management and advisory fees, net $ 116,732 $ 138,115 18% Performance fees: Incentive fees - 6 na Carried interest allocations: GAAP net income was $49.4 million for R
Slide 4: Fiscal Q1 2024 overview
Fiscal Q1 2024 overview FQ1’24 FQ1’23 vs. FQ1’23 FQ4’23 vs. FQ4’23 Assets under management (“AUM”) $142.6 B $136.5 B 4% $138.4 B 3% Fee-earning AUM (“FEAUM”) $87.4 B $78.6 B 11% $85.4 B 2% Key Business Drivers Undeployed fee-earning capital $16.9 B $17.1 B -1% $15.7 B 8% Gross accrued carry $1,277.8
Slide 5: Overview
Overview STEPSTONE GROUP 5
Slide 6: Scale that delivers
Scale that delivers Opportunity Assets under management $143 The capital and relationships that unlock growth BILLION Total capital Reach Assets under advisement $497 responsibility True global presence, deep local knowledge BILLION $640 Flexibility Annual private markets allocations $80 BILLION Off
Slide 7: Growth drivers
Growth drivers AUM & AUA Separately Managed Accounts Focused Commingled Funds Advisory $85 billion $44 billion $497 billion 7% growth from the prior year 1% decline from the prior year • $45 billion of net client activity increased AUA over the LTM $11 billion of new capital additions during the LTM
Slide 8: Evolution of fee-earning AUM
Evolution of fee-earning AUM 35% clients with exposure to more than one asset class FEE-EARNING AUM BY COMMERCIAL STRUCTURE ($B) Total AUM $53 $67 $86 $1341 $138 $143 Organic CAGR2: 22% $85.4 $87.4 FEAUM+ UNDEPLOYED FEE-EARNING CAPITAL ($B)1 $75.2 Focused $52.0 30.1 30.8 Organic CAGR2: 19% 25.6 $104
Slide 9: Trend in management and advisory fees
Trend in management and advisory fees MANAGEMENT & ADVISORY FEES ($M)1,2 MANAGEMENT & ADVISORY FEES PER SHARE ($)6 Advisory fees $514 $4.54 $494 $4.34 Focused commingled funds 57 Separately managed accounts 56 $3.55 $379 $2.91 56 241 $285 227 $2.40 $234 52 $1.95 $190 149 48 45 97 79 59 210 216 174 1
Slide 10: Financial update
Financial update STEPSTONE GROUP 10
Slide 11: Financial highlights
Financial highlights • Management and advisory fees, net increased Three Months Ended June 30 18% over the prior year quarter, driven by FEAUM ($M, except per share amounts and where noted) 2023 2022 % ∆ YTY growth AUM ($B) $142.6 $136.5 4% • Fee-related earnings increased 21% over the prior FEAUM (
Slide 12: Adjusted revenues
Adjusted revenues ($M, except per share amounts) CAGR MGMT. & Per Share +22% $4.52 Management fees per share increased 19% over the prior ADVISORY FEES +19% year quarter and by a compound annual growth rate of $1.21 $1.95 $1.02 $519 26% over the long-term growth period driven by strong $138 FEAUM gr
Slide 13: Profitability
Profitability ($M, except per share amounts) FEE-RELATED EARNINGS Per Share $1.43 • Fee-related earnings per share growth driven primarily by CAGR growth in FEAUM and margin expansion +22% $0.39 +31% $164 $0.32 • FRE margins were 32% for the quarter as compared with 31% in $44 $0.46 the prior year q
Slide 14: Accrued carry and fund investments
Accrued carry and fund investments1 NET ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 6/30/2023 BY VINTAGE AND TYPE Post 2018 2013 & Prior Private Equity 22% 16% 93% $657 $609 $567 $535 $583 2015 11% 2018 Infrastructure 2016 4% 18% 18% Real Estate FQ1'23 FQ2'23 FQ3'23 FQ4'23 FQ1'24 2017 78% from 20
Slide 15: Appendix
Appendix STEPSTONE GROUP 15
Slide 16: Consolidated balance sheets
Consolidated balance sheets ($ in thousands) Jun '22 Mar '23 Jun '23 1 The Company’s investments in funds were $154 million Assets and $147 million as of June 30, 2023 and March 31, Cash and cash equivalents $ 106,354 $ 102,565 $ 91,733 2023, respectively. The consolidation of the Restricted cash 97
Slide 17: Non-GAAP financial results
Non-GAAP financial results1 ($ in thousands, unless otherwise mentioned) Quarter 1 Excludes the impact of consolidating the Consolidated Funds. See slides 31 and 32 for reconciliation of GAAP income (loss) before Jun '22 Jun '23 % Fav / Unfav income tax to ANI and FRE, and GAAP measures to adjusted
Slide 18: FEAUM overview
FEAUM overview Fav / Unfav Change ($B, unless noted) FQ1'24 FQ1'23 $ % Walk from AUM to FEAUM $B Total AUM as of 6/30/23 $ 142.6 SMAs Less: Non-fee earning AUM 15.0 Beginning balance $ 55.3 $ 49.6 $ 5.8 12% Less: Market appreciation included in AUM 23.3 Contributions 1.4 3.4 (1.9) -58% Less: Undeplo
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 26 cities, 16 countries and 5 continents. London Dublin Frankfurt Toronto Luxembourg Zurich San Francisco Rome Cleveland New York Seoul Palo Alto Baltimore Beijing Dallas Charlotte Tokyo La Jolla Europ
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
288 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 creates a virtuous cycle of client engagement and provides a
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 clarify 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 June 30, 2023 BY AUM1 BY AUA 49% / $314B Private Debt combined AUM/AUA Private Debt $18B / 3% in RE / INFRA / PD $27B / 19% Infrastructure $54B / 11% Private Equity $74B / 52% $143 $497 BILLION Private Equity BILLION Infrastructure
Slide 25: Net realized performance fees
Net realized performance fees QUARTERLY NET REALIZED PERFORMANCE FEES ($M) LTM NET REALIZED PERFORMANCE FEES ($M) $123$122 $107 $110 $33 $33 $32 $91 $29 $85 $28 $68 $65 $18 $16 $43 $13 $38 $31 $9 $27 $8 $8 $7 $23 $25 $24 $7 $6 $6 $19 $18 $20 $5 $5 $1 Note: Net realized performance fees represent gro
Slide 26: Revenues - Management and advisory fees, net
Revenues - Management and advisory fees, net LTM JUNE’22 LTM JUNE’23 SMAs SMAs 44% 41% Advisory and Advisory and other services other services 13% 11% Fund Fund Focused reimbursement Focused reimbursement commingled revenues commingled revenues funds 1% funds 1% 42% 47% ($ in thousands) Quarter Last
Slide 27: Blue-chip, sophisticated, global clientele
Blue-chip, sophisticated, global clientele As of June 30, 2023 BY TYPE BY GEOGRAPHY LTM management and advisory fees (%) LTM management and advisory fees (%) Pension Funds 3% 3% North America 6% Insurance Companies 7% Asia/Australia Private Wealth/ 17% 11% 37% Defined Contribution Plans 35% Europe S
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: $74B • Total AUM: $13B • Total AUM: $29B • Total AUM: $27B - SMA AUM: $37B - SMA AUM: $6B - SMA AUM: $26B - SMA AUM: $16B - FCF AUM: $37B - FCF AUM: $4B - FCF AUM: $1B - FCF A
Slide 29: Track record disclosures
Track record disclosures Note: Descriptions for certain terms can be found on the definitions page starting on slide 35 of this presentation. Net IRR and Net TVM for certain investments may have been impacted by StepStone’s or the underlying fund manager’s use of subscription backed credit facilitie
Slide 30: Notable StepStone focused commingled funds
Notable StepStone focused commingled funds1 Vintage Fund Size Fund Name2 Description Year ($M) Private equity StepStone Secondary Opportunities Fund IV Private equity secondaries 2019 $ 2,097 Current funds in market include: 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
Reconciliation of GAAP income (loss) before 1 Reflects the portion of pre-tax adjusted net income of our subsidiaries attributable to non-controlling interests. 2 Reflects equity-based compensation for awards granted prior to and in connection with the IPO, profits interests income tax to ANI and FR
Slide 32: Reconciliation of GAAP measures to adjusted measures
Reconciliation of GAAP measures to adjusted measures ($ in thousands) Quarter Full Year Last Twelve Months Jun '22 Mar '23 Jun '23 Mar '19 Jun '23 Total revenues $ (77,218) $ 172,374 $ 178,011 $ 256,268 $ 187,655 Unrealized carried interest allocations 113,950 (100,753) (49,364) (27,254) 90,028 Defe
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 Quarter Full Year Last Twelve Jun '22 Jun '23 Mar '23 Mar '19 Jun '23 Adjusted net income $ 47,134 $ 29,388 $ 27,115 $ 39,792 $ 124,917 Weighted-average shares of Class A comm
Slide 34: Reconciliation of GAAP realized performance fees to gross and net
Reconciliation of GAAP realized performance fees to gross and net realized performance fees1 ($ 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 Realized carried interest allocations $ 9.9 $ 12.9 $ 11.1
Slide 35: Definitions
Definitions Adjusted net income, or “ANI”, is a non-GAAP performance measure that we present on Assets under advisement, or “AUA”, consists of client assets for which we do not have full a pre-tax and after-tax basis used to evaluate profitability. ANI represents the after-tax discretion to make inv
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 and excluding legacy Greenspring of its subsidiar
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