Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $366 million, or $4.66 per share, which is significantly larger than prior periods due to the progress of the Private Wealth platform [3][4] - Fee-related earnings were $79 million, up 9% year-over-year, with a core FRE margin of 36% [4][5] - Adjusted net income for the quarter was $66.7 million, or $0.54 per share, an increase from $53.6 million, or $0.45 per share, in the same quarter last year [5][18] Business Line Data and Key Metrics Changes - The Private Wealth platform generated $2.4 billion in new subscriptions, nearly double the previous highest quarter [6][7] - Institutional fundraising saw $3.8 billion in managed account gross additions for the quarter, contributing to over $10 billion for the first half of the fiscal year [8][9] - Commingled funds generated $3.4 billion in gross additions, with notable contributions from the PE co-investment fund and the PE secondaries fund [10][13] Market Data and Key Metrics Changes - Fee-earning AUM increased by more than $5.5 billion in the quarter to nearly $133 billion, reflecting strong fundraising momentum [11][12] - The company generated $29 billion of gross AUM additions over the last 12 months, with $18 billion from separately managed accounts and $11 billion from commingled funds [13] Company Strategy and Development Direction - The company is focusing on enhancing data and technology offerings, including the launch of the Kroll StepStone Private Credit Benchmarks and FTSE StepStone Global Private Market Indices [11][12] - The partnership with Aviva aims to establish a presence in the U.K. defined contribution market, with expectations for material flows starting in 2026 [37] Management's Comments on Operating Environment and Future Outlook - Management believes current low distributions in private markets are temporary, with indicators suggesting improved realizations ahead [17] - The company is committed to monitoring market conditions and providing solutions for clients despite geopolitical and market challenges [17] Other Important Information - The company opened new offices in the Netherlands, Spain, South Korea, and Saudi Arabia, expanding its global footprint [10] - The adjusted cash-based compensation ratio was 46%, in line with expectations, while general and administrative expenses increased due to higher travel and IT costs [19] Q&A Session Summary Question: What drove the strong demand for StepX and any cannibalization risk? - The strong demand for StepX was driven by specific requests from channel partners for PE-exclusive exposure and the availability of a ticker [23] - Some rotation from SPRIME to StepX was expected and has mostly occurred [24] Question: How far along is the company in selling through distribution partners? - The company has room to grow, with many large distribution partners currently focused on two or three funds rather than all five [26][28] Question: What are the expectations for StepX's subscription rate going forward? - Initial subscriptions for StepX were around $750 million, but a pullback is expected in future quarters [31] Question: What drove the increase in G&A expenses? - The increase was primarily due to travel, IT, and general operating costs, with expectations for continued investment in infrastructure [33] Question: Can you discuss the partnership with Aviva and its potential? - The partnership with Aviva is significant in the U.K. defined contribution market, with material flows expected to build over time starting in 2026 [37] Question: How is the company expanding deal-sourcing capabilities? - The company maintains a balanced approach to deal flow, focusing on primary fund commitments to drive market position and data acquisition [43][44] Question: What are the future product strategies in the private wealth channel? - The company plans to focus on existing products while exploring innovative solutions and models for private markets [46][49]