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StepStone Group Inc. (STEP)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered strong fee revenue growth and expanding core profitability, but lower performance fee realization drove down adjusted EPS to $0.40 and GAAP EPS to -$0.49; total revenues were $364.3M, up 95% YoY and down 3.6% QoQ .
  • Wall Street consensus for Q1 FY2026 was $238.4M revenue and $0.43 EPS; actuals came in materially above on revenue but slightly below on EPS, implying mix skew to carried interest with heightened equity-based comp and lighter realizations in the quarter* [GetEstimates Q1 2026].
  • Core FRE margin was 37% and management reaffirmed modeling cash compensation ratio at ~46% going forward; quarterly dividend increased 17% to $0.28, signaling confidence in underlying fee-related earnings .
  • Catalysts: a growing pipeline of deals and July closings generating nearly $35M of gross realized performance fees post-quarter, plus accelerating private wealth inflows and product expansion (indices/benchmarks partnerships), set up Q2 for stronger performance fee contribution .

What Went Well and What Went Wrong

What Went Well

  • Robust fee revenue growth and expanding core margins: fee revenues rose 19% YoY to $212.7M and core FRE margin reached 37% despite lower retroactive fees; FRE increased 13% YoY to $81.2M .
  • Private wealth momentum: another quarter of >$1B subscriptions with platform surpassing $10B in July; management raised the base dividend to $0.28 reflecting sustainable FRE growth .
  • Strategic data/benchmarking initiatives: management highlighted the FTSE Russell framework for private asset indices and launched Kroll-StepStone Private Credit Benchmarks to enhance transparency and decision-making .
    • CEO quote: “This collaboration aims to enhance transparency and benchmarking capabilities in private markets… enabling asset owners to benchmark private market portfolios within a total portfolio framework” .

What Went Wrong

  • Lower performance fees and retro fees drove down ANI per share to $0.40 vs $0.68 last quarter; gross realized performance fees fell to $24.7M from $81.2M in Q4 .
  • GAAP loss driven by elevated equity-based compensation and unrealized carry dynamics; GAAP diluted EPS was -$0.49 (vs -$0.24 in Q4 and -$2.61 in Q3), highlighting non-GAAP vs GAAP divergence .
  • Tariff-related market pause in April impacted industry-wide wealth subscriptions and timing of realizations, with several transactions slipping to Q2; FX also added ~$2M benefit to fees offset by expense headwinds .

Financial Results

P&L and Profitability vs Prior Year, Prior Quarters, and Estimates

MetricQ1 2025 (Jun 30, 2024)Q3 2025 (Dec 31, 2024)Q4 2025 (Mar 31, 2025)Q1 2026 (Jun 30, 2025)
Total Revenues ($USD Millions)$186.4 $339.0 $377.7 $364.3
Management & Advisory Fees, net ($M)$178.0 $190.8 $213.4 $211.2
Fee Revenues ($M)$178.5 $191.8 $214.7 $212.7
FRE ($M)$71.7 $74.1 $94.1 $81.2
FRE Margin (%)40% 39% 44% 38%
Gross Realized Performance Fees ($M)$42.7 $52.1 $81.2 $24.7
PRE ($M)$21.8 $26.6 $41.5 $13.0
ANI per share ($)$0.48 $0.44 $0.68 $0.40
GAAP Diluted EPS ($)$0.20 $(2.61) $(0.24) $(0.49)

Consensus vs Actual (Q1 FY2026)

MetricConsensusActual# of Estimates
Revenue ($USD)$238.4M*$364.3M 2*
Primary EPS ($)$0.43*$0.40 6*

Values retrieved from S&P Global.

Fee Revenues Components

Component ($USD Thousands)Q1 2025Q4 2025Q1 2026
Focused Commingled Funds$104,798 $124,604 $120,036
Separately Managed Accounts$57,376 $67,695 $70,379
Advisory & Other Services$14,769 $19,927 $19,939
Fund Reimbursement Revenues$1,571 $2,436 $2,386
Total Fee Revenues$178,514 $214,662 $212,740

KPIs

KPIQ3 2025Q4 2025Q1 2026
AUM ($B)$179.2 $189.4 $199.3
AUA ($B)$518.7 $519.7 $524.2
FEAUM ($B)$114.2 $121.4 $127.2
UFEC ($B)$21.7 $24.6 $28.7
Accrued Carried Interest Allocations ($B)$1.47 $1.50 $1.59

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base Dividend per ShareQ2 FY2026 distribution (declared 8/7/25, payable 9/15/25)$0.24 (Q4 FY2025 base dividend) $0.28 Raised
Cash Compensation Ratio (Adj., ex retro fees)FY2026 modeling~46% (Q4 guide) ~46% reiterated Maintained
Core FRE MarginFY2026 modeling~37% (core, TTM) 37% core (Q1) Maintained
Performance Fees OutlookQ2 FY2026Positive pipeline from deals announced in late 2024/early 2025 Expect stronger Q2 performance fees; ~$35M gross realized fees in July Maintained/strengthened
Index/Data InitiativesFY2026+N/AFTSE Russell index framework; Kroll-StepStone Private Credit Benchmarks launched New initiatives

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025)Previous Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
Private wealth evergreen growthBest quarter >$1B subscriptions; platform >$6B; ticker adoption rising Platform $8.2B; 500 distribution platforms; 80% eligible sales via ticker Another >$1B quarter; platform >$10B in July; >550 partners Accelerating
Performance fees pipelineStrong realizations after late-2024 deals; record carry Q4 Pipeline driven by announced deals; strong gross/net realizations Several closings slipped to Q2; ~$35M gross realized fees in July Improving into Q2
Tariffs/macroNAVolatility from trade policy in April; cautious optimism April pause noted; flows rebounded May/June Stabilizing
FX impactNANA~$800M FEAUM benefit; ~$2M fee benefit offset by expenses Neutral net
Index/benchmarking/dataNAData & tech embedded; SPI featured in reports FTSE Russell index framework; Kroll private credit benchmarks Expanding
Retirement/401(k)NANAEO seen as supportive; target-date entry; partnerships expected Emerging opportunity
Secondaries market2024 record activity; pricing low/mid-90s buyout; VC 70–80% NAV Largest RE secondaries fund; LP secondaries still lighter Visibility across asset classes; RE GP-led focus Active, disciplined

Management Commentary

  • CEO: “We increased fee‑earning AUM by $6B during the quarter… Over the past twelve months, we have grown fee‑earning AUM by $27B… Performance fees were relatively light this quarter… we have visibility for stronger performance fees in the second fiscal quarter” .
  • Strategy Head: “We generated nearly $1.2B of subscriptions in our private wealth suite… we are raising our quarterly dividend by 17% from $0.24 to $0.28 per share” .
  • CFO: “Excluding retroactive fees, fee revenues grew 32% year over year… core FRE margin was 37%… cash compensation ratio adjusted for retroactive fees was 46%… several transactions also closed in July, which generated nearly $35M of gross realized performance fees since the end of the quarter” .

Q&A Highlights

  • Index/Benchmarks: FTSE Russell indices with daily series expected later this year; initial revenue via licensing with long-term asset management solutions potential .
  • Private wealth products: SPRING is “one of one” for diversified venture/growth; Credex scaling with ~50 platforms; roadmap includes pure-play private equity product (in registration) and reduced accredited requirements for broader inclusion .
  • Retirement: EO supportive; adoption likely via custom target-date and glidepaths; partnership ecosystem essential; timelines gradual but conversations warming .
  • FX: ~$800M benefit to FEAUM; ~$2M benefit to fees largely offset by expenses—P&L naturally hedged .
  • Geography/Asset Class: Strength in Australia/Middle East; private credit & infrastructure leading additions; disciplined exit environment with sellers holding for valuation .

Estimates Context

  • Revenue significantly beat consensus ($364.3M vs $238.4M)* while Primary EPS modestly missed ($0.40 vs $0.43)*, reflecting lower retroactive fees and lighter performance realizations in Q1 alongside higher equity-based comp; management guided to stronger realizations in Q2 .
  • Estimate dispersion remains modest (# of estimates: EPS 6, Revenue 2), implying limited coverage breadth; near-term revisions likely to raise performance fee expectations for Q2 while keeping core FRE assumptions roughly unchanged.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core engine healthy: fee revenues and FRE continue to grow with core FRE margin ~37%—model cash comp ratio ~46%; dividend raised to $0.28 supports a yield case tied to fee-related earnings durability .
  • Near-term setup: post-quarter closings (~$35M gross realized fees) and a growing pipeline point to stronger performance fee contribution in Q2; watch for PRE normalization .
  • Private wealth scaling: >$1B quarterly subscriptions and >550 partners indicate accelerating retailification; product breadth (SPRIM/SPRING/STRUX/Credex) and ticker accessibility drive mix and blended fee rates .
  • Data/benchmarks optionality: FTSE Russell indices and Kroll credit benchmarks enhance brand and analytics; potential future monetization via licensing and index-referenced products .
  • Risk watch: GAAP volatility from equity comp and unrealized carry persists; macro/trade policy and FX can impact timing of realizations and quarterly margins—focus on TTM core metrics .
  • Trading implications: expect estimate revisions to lift Q2 performance fee forecasts; positive dividend action and Q2 visibility are supportive near-term; monitor Q2 PRE and any further wealth inflow acceleration .