StepStone Group Inc (STEP) Q2 2025 Earnings Call Highlights: Strong Fee-Related Earnings and ...

In This Article:

  • GAAP Net Income: $53.1 million.

  • GAAP Net Income Attributable to StepStone Group Inc.: $17.6 million, or $0.26 per share.

  • Fee-Related Earnings (FRE): $72.3 million, up 65% year-over-year.

  • FRE Margin: 39% for the quarter.

  • Retroactive Fees Contribution: $14.9 million to revenue.

  • Adjusted Net Income: $53.6 million, or $0.45 per share.

  • Management and Advisory Fees: $185 million, up 30% year-over-year.

  • Gross AUM Inflows: Over $30 billion in the last 12 months.

  • Fee-Earning AUM Growth: $4 billion for the quarter.

  • Blended Management Fee Rate: 63 basis points for the last 12 months.

  • Cash-Based Compensation: $83 million, up 11% year-over-year.

  • General and Administrative Expenses: $28 million, up $5 million year-over-year.

  • Gross Realized Performance Fees: $23 million for the quarter.

  • Net Accrued Carry: Over $700 million.

  • Private Debt Offering: $175 million of 5.52% senior notes with a five-year maturity.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • StepStone Group Inc (NASDAQ:STEP) reported a significant increase in fee-related earnings, up 65% from the prior year quarter, driven by growth in fee-earning assets.

  • The company achieved several fundraising milestones, including closing the fifth vintage of its private equity secondaries fund at $4.8 billion, the largest commingled fund to date.

  • StepStone Group Inc (NASDAQ:STEP) generated nearly $850 million in private wealth subscriptions, surpassing $5 billion in net asset value in its private wealth platform.

  • The firm reported strong growth in management and advisory fees, up 30% year-over-year, with a fee-related earnings margin of 39%, indicating strong operational efficiency.

  • The company successfully issued $175 million of 5.52% senior notes, reducing interest costs by approximately 200 basis points, enhancing financial flexibility.

Negative Points

  • The pace of monetization in private markets has been slow, with annual realizations cut in half over the last three years, impacting liquidity.

  • Realized performance fees were down from the previous quarter, highlighting the potential volatility and unpredictability in performance fee income.

  • Cash-based compensation and general and administrative expenses increased, reflecting higher headcount and costs associated with the annual StepStone 360 conference.

  • The company faces challenges in liquidity due to extended periods of subdued market activity and corresponding realizations.

  • Despite growth, the private wealth platform still represents a relatively modest share of total fee-earning AUM, indicating room for improvement in this segment.

Waiting for permission
Allow microphone access to enable voice search

Try again.