StepStone (STEP) - 2024 Q4 - Annual Results

StepStone Group Fourth Quarter and Fiscal Year 2024 Results This section provides an overview of StepStone Group's financial performance for the fourth quarter and fiscal year ended March 31, 2024 Report Overview and Dividend Announcement StepStone Group announced Q4 and FY2024 results, declaring quarterly and supplemental dividends, managing approximately $678 billion in total capital Dividend Declaration | Dividend Type | Amount per Share | Payable Date | Record Date | | :--- | :--- | :--- | :--- | | Quarterly Cash Dividend | $0.21 | June 28, 2024 | June 14, 2024 | | Supplemental Dividend | $0.15 | June 28, 2024 | June 14, 2024 | - As of March 31, 2024, StepStone was responsible for approximately $678 billion of total capital, which includes $157 billion of assets under management (AUM)[4] Financial and Operational Highlights FY2024 GAAP revenues reached $711.6 million with $167.8 million net income, while non-GAAP FRE grew 22% and AUM increased 13% year-over-year Fiscal Year 2024 vs. 2023 Performance | Metric | Fiscal Year 2024 | Fiscal Year 2023 | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Results | | | | | Total Revenues | $711.6M | ($67.6M) | N/A | | Net Income (Loss) | $167.8M | ($45.3M) | N/A | | Diluted EPS | $0.91 | ($0.30) | N/A | | Non-GAAP Results | | | | | Adjusted Revenues | $665.1M | $642.0M | +4% | | Fee-Related Earnings (FRE) | $189.8M | $156.2M | +22% | | Adjusted Net Income (ANI) | $139.4M | $142.7M | -2% | | ANI per Share | $1.21 | $1.24 | -2% | | Operating Metrics | | | | | AUM | $156.6B | $138.4B | +13% | | FEAUM | $93.9B | $85.4B | +10% | Q4 2024 vs. Q4 2023 Performance | Metric | Q4 2024 | Q4 2023 | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Results | | | | | Total Revenues | $356.8M | $172.4M | +107% | | Net Income | $82.5M | $56.8M | +45% | | Non-GAAP Results | | | | | Fee-Related Earnings (FRE) | $50.9M | $37.8M | +35% | | Adjusted Net Income (ANI) | $37.7M | $27.1M | +39% | GAAP Financial Statements This section presents the company's consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) Consolidated Balance Sheets Total assets increased to $3.79 billion as of March 31, 2024, driven by cash and investments, with total liabilities at $1.92 billion and equity at $1.65 billion Balance Sheet Summary (in thousands) | Account | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Total Assets | $3,788,807 | $3,497,403 | | Cash and cash equivalents | $143,430 | $102,565 | | Accrued carried interest allocations | $1,354,051 | $1,227,173 | | Total Liabilities | $1,915,673 | $1,844,086 | | Accrued carried interest-related compensation | $719,497 | $644,517 | | Debt obligations | $148,822 | $98,351 | | Total Stockholders' Equity | $1,654,591 | $1,628,787 | Consolidated Statements of Income (Loss) FY2024 total revenues reached $711.6 million, a significant turnaround from a $67.6 million loss in FY2023, resulting in $167.8 million net income Income Statement Summary - Fiscal Year Ended March 31 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Management and advisory fees, net | $585,140 | $497,179 | | Total performance fees | $126,491 | ($564,753) | | Total revenues | $711,631 | ($67,574) | | Total compensation and benefits | $372,543 | ($214,236) | | Total expenses | $539,860 | ($67,077) | | Net income (loss) | $167,820 | ($45,275) | | Net income (loss) attributable to StepStone Group Inc. | $58,091 | ($18,398) | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles key non-GAAP metrics like Adjusted Revenues, FRE, and ANI, providing insights into the firm's core operating profitability Adjusted Revenues Adjusted revenues, a measure of realized revenues, increased 4% to $665.1 million in FY2024, reconciled from GAAP total revenues by excluding specific non-cash items Reconciliation of Total Revenues to Adjusted Revenues (in thousands) | Line Item | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Total revenues (GAAP) | $711,631 | ($67,574) | | Less: Unrealized carried interest allocations | ($126,908) | $253,342 | | Add: Legacy Greenspring carried interest | $75,157 | $452,163 | | Other adjustments | $4,180 | $3,039 | | Adjusted revenues (Non-GAAP) | $665,060 | $641,970 | Fee-Related Earnings (FRE) and Adjusted Net Income (ANI) FY2024 Fee-Related Earnings (FRE) grew 22% to $189.8 million with a 32% margin, while Adjusted Net Income (ANI) decreased 2% to $139.4 million Reconciliation to FRE and ANI - Fiscal Year Ended March 31 (in thousands) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Income (loss) before income tax (GAAP) | $195,396 | ($41,454) | | Adjustments (Unrealized carry, equity comp, etc.) | ($15,020) | $225,062 | | Pre-tax ANI | $179,376 | $183,608 | | Income taxes | ($39,983) | ($40,945) | | ANI | $139,393 | $142,663 | | Adjustments to derive FRE | $50,400 | ($113,505) | | FRE | $189,793 | $156,158 | - The FRE margin for fiscal year 2024 was 32%, calculated by dividing FRE ($189.8M) by adjusted management and advisory fees, net ($586.4M), an increase from the 31% margin in fiscal 2023[45] Realized Performance Fees Gross realized performance fees decreased 46% to $78.7 million in FY2024, resulting in $41.0 million in net realized performance fees after compensation Realized Performance Fees - Fiscal Year Ended March 31 (in thousands) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Gross realized performance fees | $78,681 | $144,644 | | Less: Realized performance fee-related compensation | ($37,687) | ($79,846) | | Net realized performance fees | $40,994 | $64,798 | Adjusted Net Income Per Share Adjusted Net Income (ANI) per share was $1.21 in FY2024, a slight decrease from $1.24 in FY2023, based on $139.4 million ANI ANI Per Share Calculation - Fiscal Year Ended March 31 | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | ANI (in thousands) | $139,393 | $142,663 | | Adjusted weighted-average shares | 115,134,473 | 114,618,105 | | ANI per share | $1.21 | $1.24 | Key Operating Metrics This section details key business drivers, including Fee-Earning AUM (FEAUM) growth and total capital responsibility across private market asset classes Fee-Earning AUM (FEAUM) Fee-Earning AUM (FEAUM) grew 10% to $93.9 billion by March 31, 2024, driven by contributions, with undeployed fee-earning capital increasing 44% FEAUM Roll-Forward - Fiscal Year 2024 (in millions) | Line Item | Amount | | :--- | :--- | | Beginning balance (April 1, 2023) | $85,431 | | Contributions | $12,442 | | Distributions | ($5,921) | | Market value, FX and other | $1,906 | | Ending balance (March 31, 2024) | $93,858 | - Undeployed fee-earning capital (UFEC) grew 44% from $15.7 billion at the end of FY23 to $22.6 billion at the end of FY24, indicating a strong pipeline for future fee revenue[8] Asset Class Summary Total capital responsibility reached $677.8 billion by March 31, 2024, with AUM growing 13% to $156.6 billion and AUA increasing 8% to $521.1 billion Capital by Asset Class as of March 31, 2024 (in billions) | Asset Class | AUM | AUA | FEAUM | | :--- | :--- | :--- | :--- | | Private equity | $81.9 | $270.4 | $49.9 | | Infrastructure | $30.0 | $60.3 | $20.1 | | Private debt | $28.5 | $22.0 | $15.5 | | Real estate | $16.2 | $168.5 | $8.4 | | Total | $156.6 | $521.1 | $93.9 | - Total capital responsibility, the sum of AUM and AUA, grew 9% year-over-year to $677.8 billion[62][63] Glossary This section defines key terms and metrics, clarifying distinctions between client asset types and fee calculation bases used in the report Key Definitions Key definitions include Assets Under Management (AUM), Assets Under Advisement (AUA), Fee-Earning AUM (FEAUM), and Undeployed Fee-Earning Capital, clarifying asset types and fee bases - Assets under management (AUM): Assets where the firm has full discretion over investment decisions, calculated as the sum of NAV and unfunded commitments[68][69] - Assets under advisement (AUA): Client assets for which the firm provides advisory services but does not have investment discretion, with fees generally fixed and not directly correlated to AUA value[66] - Fee-earning AUM (FEAUM): The specific assets from which the firm earns management fee revenue, typically based on capital commitments or net invested capital rather than market value[71][72] - Undeployed fee-earning capital: Capital commitments that have not yet been invested but will generate management fees once activated[75]