StepStone Group Q3 Earnings Call Highlights

Core Insights - StepStone reported adjusted net income (ANI) of $80 million, or $0.65 per share, an increase from $53 million, or $0.44 per share, in the prior-year quarter, attributed to higher fee-related and performance-related earnings [1] - The company generated fee-related earnings (FRE) of $89 million, up 20% year-over-year, with a core FRE of $88 million, reflecting a 35% increase year-over-year [2] - Despite a GAAP net loss of $123 million, or $1.55 per share, due to accounting adjustments, operational results showed strong profitability [3][7] Financial Performance - StepStone's fiscal third-quarter 2026 earnings call highlighted record core fee-related earnings and significant incentive fees from the Spring Evergreen Fund [4] - The Spring Evergreen Fund produced over $200 million in gross incentive fees, contributing to a NAV of $5.5 billion, with performance described as 39% over the year [6][8] - Gross realized performance fees were reported at $253 million, including $47 million of realized carried interest [9] Fundraising and AUM - The company achieved record gross AUM additions of over $8 billion in the quarter and $34 billion over the last 12 months, with private wealth subscriptions exceeding $2.2 billion [5][11] - Fee-earning assets plus undeployed fee-earning capital (UFEC) grew to over $171 billion, marking the strongest one-year growth in the company's history [14] - Approximately two-thirds of inflows came from outside North America, with Asia and Europe identified as key contributors [12] Growth Drivers - StepStone's private wealth platform expanded to $15 billion, with consistent quarterly subscriptions exceeding $2 billion [13] - The firm is actively fundraising for various funds, including private equity co-investment and secondaries, with notable quarterly commingled fund closes expected [15][16] Expense Management - Adjusted cash-based compensation was reported at $107 million, with general and administrative expenses rising to $40 million due to events like the StepStone 360 conference [17] Portfolio Positioning - The company estimates that about 11% of total AUM is in software investments, with a focus on diversification as a defense against disruption [20][21] - Net accrued carry ended the quarter at $875 million, with a significant portion tied to older programs [22]