StepStone (US:STEP)2025-09-09 15:32Summary of StepStone FY Conference Call - September 09, 2025 Company Overview - Company: StepStone (NasdaqGS:STEP) - Industry: Private Markets, Asset Management Key Points Current Market Trends - Strong Appetite for Private Markets: Despite some LPs being over-allocated, most are maintaining or increasing their long-term allocations to private markets, particularly in private credit and infrastructure [5][6] - Realization Cycle Impact: The upcoming realization cycle is causing some LPs to slow down current deployments, but it is not affecting long-term appetite for private markets [5][6] Fundraising and Growth - Separate Account Business: StepStone has maintained a re-up rate above 90% across its separate account business, with clients increasing account sizes by an average of 30% upon re-up [9][10] - Diversified Growth: Approximately 40% of gross AUM flows came from new relationships or expansions into new strategies, indicating a healthy balance of growth [10] - Co-Mingled Funds: StepStone raised $10 billion in commitments to co-mingled funds, representing a 21% year-over-year growth [15] Asset Class Performance - Diversification Across Asset Classes: StepStone has a well-diversified business across private equity, venture capital, private debt, infrastructure, and real estate, with all asset classes contributing to growth [11][12] - Geographic Mix: About two-thirds of revenue comes from clients outside the U.S., with significant growth potential in international LP allocations [12] Wealth Management - Growth Milestone: StepStone's wealth management business reached $10 billion in AUM, with a solutions-oriented approach driving growth [27][28] - Distribution Strategy: The company is expanding its distribution footprint internationally, particularly in Europe, Asia, and Australia, while maintaining a strong presence in the U.S. [30][31] Product Development - Emerging Products: StepStone is launching a private equity-specific vehicle called StepX and has seen significant growth in its Spring product, which offers unique access to venture and growth strategies [39][34] - Private Credit Differentiation: StepStone's multi-manager approach in private credit sets it apart from competitors, emphasizing diversification and downside protection [36][37] Partnerships and Innovations - Index Development: Partnerships with FTSE Russell and Kroll aim to create benchmarking indices for private markets, enhancing transparency and potentially increasing allocations to private markets [43][44] - Future Product Opportunities: The company plans to develop additional indices and products based on its data capabilities, with a focus on private equity and infrastructure [50][51] M&A Strategy - Embedded M&A Activity: StepStone has a successful track record in M&A, with plans to continue leveraging this strategy to enhance its platform across various asset classes [56] Financial Considerations - Profit Sharing Structure: For every dollar of management fee from wealth management, 50% contributes directly to StepStone's bottom line, enhancing margins [40][41] Additional Insights - Client Relationships: The high re-up rate and client satisfaction indicate strong performance and trust in StepStone's offerings [9] - Market Positioning: StepStone's unique position as a connector between LPs and GPs allows it to capitalize on trends in private markets and innovate accordingly [4][6]