StepStone (US:STEP)2025-11-06 21:26Financial Overview - As of September 30, 2025, the company managed approximately $771 billion in total capital, including $209 billion in assets under management (AUM) and $562 billion in assets under advisement (AUA) [214]. - The company generated $125 billion in AUM from separately managed accounts (SMAs) and $68 billion from focused commingled funds as of September 30, 2025 [216]. - Advisory relationships accounted for $562 billion of AUA and $16 billion of AUM as of September 30, 2025 [220]. - The company provided portfolio analytics and reporting on over $829 billion of client commitments through its proprietary SPI Reporting as of September 30, 2025 [220]. - As of September 30, 2025, the company had over $100 billion of performance fee-eligible capital across over 225 programs [251]. - Assets Under Management (AUM) was $209 billion as of September 30, 2025, up from $176 billion as of September 30, 2024 [333]. - Assets related to advisory accounts were $562 billion as of September 30, 2025, compared to $506 billion as of September 30, 2024 [334]. - Fee-Earning AUM (FEAUM) increased approximately $5.6 billion to $132.8 billion as of September 30, 2025, compared to June 30, 2025 [335]. - FEAUM increased by approximately $11.4 billion to $132.8 billion as of September 30, 2025, compared to March 31, 2025 [336]. Exchange and Ownership - The company completed the 2025 Exchange, acquiring approximately 5% of the equity interests of SRA, SRE, and SPD, resulting in ownership of approximately 60% of SRA and SRE, and 59% of SPD [236]. - The aggregate consideration paid in the 2025 Exchange was approximately $10 million in cash, 756,105 shares of Class A common stock, and 2,438,403 Class D units [236]. Employee and Operational Insights - The company has over 1,240 total employees, including 420 investment professionals, as of September 30, 2025 [215]. - The company operates in 31 cities across 19 countries, enhancing client relationships through local staffing and regional insights [215]. Revenue and Income - Total revenues increased by $182.5 million, or 67%, to $454.2 million for the three months ended September 30, 2025, compared to the same period in 2024 [288]. - Management and advisory fees, net rose by $30.7 million, or 17%, to $215.5 million for the three months ended September 30, 2025, driven by new client activity and a 27% growth in average FEAUM [289]. - Realized carried interest allocation revenues surged by $41.2 million, or 234%, to $58.9 million for the three months ended September 30, 2025, reflecting higher realization activity within private equity funds [291]. - Net income (loss) attributable to StepStone Group Inc. was $(366.1) million for the three months ended September 30, 2025, compared to $17.6 million in the same period of 2024 [290]. - Adjusted revenues increased by $89.9 million, or 21%, to $519.8 million for the six months ended September 30, 2025, compared to the same period in 2024 [355]. - Adjusted net income (ANI) increased by $4.4 million, or 4%, to $115.2 million for the six months ended September 30, 2025, compared to the same period in 2024 [356]. Expenses and Compensation - Total expenses increased by $956.3 million, or 433%, to $1,177.0 million for the three months ended September 30, 2025, primarily due to increases in equity-based compensation and performance fee-related compensation [298]. - Equity-based compensation rose by $847.1 million to $884.5 million for the three months ended September 30, 2025, mainly due to increased expenses for liability classified awards related to profits interest [300]. - Total performance fee-related compensation expense increased by $83.2 million, or 228%, to $119.7 million for the three months ended September 30, 2025, reflecting the increase in carried interest allocation revenue [301]. - Cash-based compensation includes salaries, bonuses, employee benefits, and cash-based incentive awards [259]. - Approximately 50% of carried interest allocation revenue is awarded to employees as performance fee-related compensation, fostering alignment of interest with clients and investors [260]. Market and Economic Factors - The company continues to monitor macroeconomic factors, including inflation and geopolitical tensions, which may impact financial markets and its business operations [225]. - The company highlighted that market conditions and investment opportunities may differ from past experiences, potentially impacting future performance [376]. Cash Flow and Debt - The company generated $62.5 million in net cash from operating activities for the six months ended September 30, 2025, compared to $103.9 million for the same period in 2024 [390]. - The company used $21.6 million in net cash for investing activities for the six months ended September 30, 2025, compared to $34.1 million in 2024 [391]. - Financing activities provided $43.4 million in net cash for the six months ended September 30, 2025, compared to a net cash used of $(23.6) million in 2024 [391]. - The company had $269.9 million in debt obligations as of September 30, 2025, net of debt issuance costs [386]. - The weighted-average interest rate for the Revolver as of September 30, 2025, was 6.40% [393]. - The company has a credit agreement with a revolving facility of $300.0 million, maturing in May 2029 [392]. Dividends - The company announced a dividend of $0.28 per share of Class A common stock, payable on December 15, 2025 [410]. - Total dividends paid in FY2025 amounted to $1.08 per share of Class A common stock [411]. - Total dividends paid in FY2026 to date amounted to $0.92 per share of Class A common stock [411].