Slide 1: Second Quarter Fiscal Year 2024 Earnings Presentation
Second Quarter Fiscal Year 2024 Earnings Presentation NOVEMBER 6, 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 Statements of Income (Loss)
GAAP Consolidated Statements of Income (Loss) ($ in thousands, except per share amounts) Quarter Year-to-Date Sep '22 Sep '23 % Fav / Unfav Sep '22 Sep '23 % Fav / Unfav Revenues Management and advisory fees, net $ 119,121 $ 142,123 19% $ 235,853 $ 280,238 19% Performance fees: Incentive fees 5,365
Slide 4: Fiscal Q2 2024 overview
Fiscal Q2 2024 overview FQ2’24 FQ2’23 vs. FQ2’23 FQ1’24 vs. FQ1’24 Assets under management (“AUM”) $145.8 B $135.0 B 8% $142.6 B 2% Fee-earning AUM (“FEAUM”) $87.3 B $80.1 B 9% $87.4 B -% Key Business Drivers Undeployed fee-earning capital $18.1 B $16.5 B 10% $16.9 B 7% Gross accrued carry $1,331.8
Slide 5: Overview
Overview STEPSTONE GROUP 5
Slide 6: Scale that delivers
Scale that delivers Opportunity Assets under management $146 The capital and relationships that unlock growth BILLION Total capital Reach Assets under advisement $513 responsibility True global presence, deep local knowledge BILLION $659 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 $46 billion $513 billion 8% growth from the prior year 5% growth from the prior year • $46 billion of net client activity increased AUA over the LTM $9 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 $146 Organic CAGR2: 21% $85.4 $87.3 FEAUM + UNDEPLOYED FEE-EARNING CAPITAL ($B)1 $75.2 Focused $52.0 30.1 30.9 Organic CAGR2: 18% 25.6 $10
Slide 9: Trend in adjusted management and advisory fees
Trend in adjusted management and advisory fees ADJUSTED MANAGEMENT & ADVISORY FEES ($M)1,2 ADJUSTED MANAGEMENT & ADVISORY FEES PER SHARE ($)6 Advisory fees $537 $4.72 Focused commingled funds $494 $4.34 57 Separately managed accounts 56 $3.55 $379 $2.91 56 260 $285 227 $2.40 $234 52 $1.95 $190 149 4
Slide 10: Financial update
Financial update STEPSTONE GROUP 10
Slide 11: Financial highlights
Financial highlights • Adjusted management and advisory fees, net increased 19% for the quarter and year-to-date, driven by FEAUM growth • Fee-related earnings increased 12% for the quarter and 17% year-to-date, primarily driven by growth in fee revenues • ANI per share decreased 21% for the quarter
Slide 12: Adjusted revenues
Adjusted revenues ($M, except per share amounts) CAGR ADJUSTED Per Share +22% Management fees per share increased 20% YTD and by a +18% $4.72 compound annual growth rate of 26% over the long-term MANAGEMENT $2.44 & ADVISORY $2.06 $281 $1.95 $542 growth period driven by strong FEAUM growth FEES $236
Slide 13: Profitability
Profitability ($M, except per share amounts) FEE-RELATED CAGR EARNINGS Per Share +29% $1.47 • Fee-related earnings per share increased YTD driven primarily +17% $169 by growth in FEAUM $0.77 $0.66 • FRE margins were 31% YTD as compared with 32% in the prior $88 year and 24% four fiscal years ago $76
Slide 14: Accrued carry and fund investments
Accrued carry and fund investments1 NET ACCRUED CARRY ($M)2 NET UNREALIZED CARRY AS OF 9/30/2023 BY VINTAGE AND TYPE 2013 & Prior Private Equity Post 2018 15% 93% 23% $634 $609 2015 $583 $567 11% $535 Infrastructure 2018 2016 4% 18% 18% Real Estate FQ2'23 FQ3'23 FQ4'23 FQ1'24 FQ2'24 2017 77% from 20
Slide 15: Appendix
Appendix STEPSTONE GROUP 15
Slide 16: Consolidated balance sheets
Consolidated balance sheets ($ in thousands) Sep '22 Mar '23 Sep '23 1 The Company’s investments in funds were $188 million Assets and $147 million as of September 30, 2023 and March Cash and cash equivalents $ 143,562 $ 102,565 $ 117,484 31, 2023, respectively. The consolidation of the Restricted c
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 Sep '22 Sep '23 % Fav / Unfav Sep '22 Sep '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) FQ2'24 FQ2'23 $ % Walk from AUM to FEAUM $B SMAs Total AUM as of 9/30/23 $ 145.8 Beginning balance $ 56.6 $ 52.2 $ 4.4 9% Less: Non-fee earning AUM 16.5 Contributions 1 1.0 1.8 (0.7) -41% Less: Market appreciation included in AUM 23.9 Distribution
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
295 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 September 30, 2023 BY AUM1 BY AUA 48% / $318B Private Debt combined AUM/AUA Private Debt $18B / 4% in RE / INFRA / PD $28B / 19% Infrastructure $55B / 11% Private Equity $76B / 52% $146 $513 BILLION Private Equity BILLION Infrastruc
Slide 25: Net realized performance fees
Net realized performance fees QUARTERLY NET REALIZED PERFORMANCE FEES ($M) LTM NET REALIZED PERFORMANCE FEES ($M) $123 $122 $107 $110 $33 $33 $32 $91 $29 $85 $28 $68 $65 $18 $16 $43 $12 $38 $31 $9 $27 $26 $8 $8 $7 $23 $25 $24 $7 $6 $6 $19 $18 $20 $5 $5 $6 $1 Note: Net realized performance fees is a
Slide 26: Revenues – Adjusted management and advisory fees, net
Revenues – Adjusted management and advisory fees, net LTM SEP’22 LTM SEP’23 SMAs SMAs 43% 41% Advisory and Advisory and other services other services 12% 10% Fund Fund Focused reimbursement Focused reimbursement commingled revenues commingled revenues funds 1% funds 1% 44% 48% ($ in thousands) Quart
Slide 27: Blue-chip, sophisticated, global clientele
Blue-chip, sophisticated, global clientele As of September 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 9% Asia/Australia Private Wealth/ 17% 36% Defined Contribution Plans 35% 12% Eur
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: $76B • Total AUM: $14B • Total AUM: $29B • Total AUM: $28B - SMA AUM: $38B - SMA AUM: $5B - SMA AUM: $26B - SMA AUM: $16B - FCF AUM: $38B - 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
1 Reflects the portion of pre-tax ANI of our subsidiaries attributable to non-controlling interests. Reconciliation of GAAP income (loss) before 2 Reflects equity-based compensation for awards granted prior to and in connection with the IPO, profits interests issued by our non-wholly owned subsidiar
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 Tw elve Months Sep '22 Sep '23 Sep '22 Sep '23 Mar '19 Sep '23 Total revenues $ (158,495) $ 191,422 $ (235,713) $ 369,433 $ 256,268 $ 537,572 Unrealized carried interest allocations 176,778 (55,
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 Sep '22 Sep '23 Sep '22 Sep '23 Mar '19 Sep '23 ANI $ 37,261 $ 30,173 $ 84,395 $ 59,561 $ 39,792 $ 117,829 Weighted-average shares of
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 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 FQ2'24 Incentive fees $ 0.1 $ 1.6 $ 0.8 $ 0.2 $ 0.8 $ 3.6 $ 1.2 $
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 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