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StepStone Group Inc. (STEP)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 delivered strong non-GAAP results: Primary EPS (ANI/share) of $0.54 vs $0.45 YoY and $0.40 QoQ, driven by higher performance-related earnings and core FRE; GAAP loss widened to $(4.66) per share due to large equity-based compensation tied to the private wealth profits interests accounting . Revenue was $454.2M as performance fees surged; fee revenues were $217.5M, FRE $78.6M with a 36% FRE margin .
  • StepStone posted a record private wealth quarter: $2.4B subscriptions (StepX produced ~$700M in the first 30 days), FEAUM +$5.6B to $132.8B; AUM reached $209.1B and AUA $561.6B .
  • S&P Global consensus comparison: Q2 beat on revenue and Primary EPS; note Street revenue models can diverge from GAAP because StepStone’s total revenues include unrealized carry, while “adjusted revenues” exclude it . See tables below for specifics (S&P Global values marked with *).
  • Outlook/catalysts: management expects strong gross performance fees in Q3 (Spring crystallization), but only a small portion drops to ANI after comp and private wealth profit interests; G&A to be seasonally higher; strategic indices (FTSE Russell) and DC-channel partnerships (Aviva) broaden medium-term growth vectors .

What Went Well and What Went Wrong

  • What Went Well

    • “Momentum is nothing short of spectacular” in Private Wealth: $2.4B subscriptions; StepX launched as a tickerized pure-play PE interval fund, raising >$700M in first 30 days .
    • Institutional fundraising remained robust with $3.8B managed account gross additions in the quarter and >$10B 1H inflows; re-up rate >90% and re-ups grow nearly 30% per vintage .
    • FEAUM growth and operating leverage: FEAUM rose to $132.8B; core FRE up 34% YoY; FRE margin at 36% on both reported and core bases .

  • What Went Wrong

    • Advisory fees normalized to $16M vs ~$20M in prior two quarters (project-based spike), pressuring sequential FRE; management views $16M as a more normalized near-term level .
    • G&A increased sequentially on travel/IT/operations and will be seasonally elevated in Q3 (StepStone 360) and Q4 (VC conference) .
    • GAAP results are noisy: equity-based compensation of $884.5M (related to private wealth profits interests accounting) drove a GAAP net loss of $(575.5)M; management emphasized long-term accretion from exercising the call option in 2027 .

Financial Results

Headline actuals (oldest → newest)

MetricQ4 FY25 (Mar 31, 2025)Q1 FY26 (Jun 30, 2025)Q2 FY26 (Sep 30, 2025)
Total Revenues ($USD Millions)$377.7 $364.3 $454.2
Fee Revenues ($USD Millions, non-GAAP)$214.7 $212.7 $217.5
Total Performance Fees ($USD Millions)$164.3 $153.1 $238.7
Gross Realized Performance Fees ($USD Millions)$81.2 $24.7 $64.9
PRE ($USD Millions)$41.5 $13.0 $33.9
FRE ($USD Millions)$94.1 $81.2 $78.6
FRE Margin (%)44% 38% 36%
Primary EPS (ANI/share, $)$0.68 $0.40 $0.54
GAAP EPS ($)N/A in table$(0.49) $(4.66)
Quarterly Dividend Declared ($/share)$0.24 base + $0.40 supplemental $0.28 base $0.28 base (Dec 15 pay date; Nov 28 record)

Results vs S&P Global consensus (estimates marked with *)

MetricQ4 FY25Q1 FY26Q2 FY26
Revenue Estimate* ($USD)$229,366,500*$238,448,000*$272,148,500*
Revenue Actual ($USD)$377,729,000 $364,287,000 $454,225,000
Primary EPS Estimate* ($)$0.4448*$0.42533*$0.4882*
Primary EPS Actual ($)$0.68 $0.40 $0.54

Values with asterisks are from S&P Global consensus. Values retrieved from S&P Global.

Segment-like fee revenue breakdown (non-GAAP) (oldest → newest)

Fee Revenues ($USD Thousands)Q4 FY25Q1 FY26Q2 FY26
Focused Commingled Funds124,604 120,036 127,085
Separately Managed Accounts67,695 70,379 71,685
Advisory & Other Services19,927 19,939 16,259
Fund Reimbursement Revenues2,436 2,386 2,432
Total Fee Revenues214,662 212,740 217,461

KPIs (oldest → newest)

KPIQ4 FY25Q1 FY26Q2 FY26
FEAUM ($B)121.4 127.2 132.8
AUM ($B)189.4 199.3 209.1
AUA ($B)519.7 524.2 561.6
UFEC ($B)24.6 28.7 29.8
Net Accrued Carry ($M)738 783 842

Context on beats/misses: Q2 revenue and EPS beat S&P, primarily due to strong performance fees including unrealized carry (revenue uplift) and higher core FRE; Q1 EPS missed S&P on lower performance/retro fees despite core FRE growth .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base quarterly dividendQ2 FY26$0.28 (Q1) $0.28; payable Dec 15, record Nov 28 Maintained
Gross realized performance feesQ3 FY26N/AExpect strong gross performance fees on Spring’s annual crystallization; limited net drop-through after comp/profit interests Introduced/Stronger QoQ
Cash compensation ratioFY26~46% model assumption 46% in Q2; in line with full-year expectation Maintained
G&AQ3–Q4 FY26N/ASeasonally elevated in Q3 (StepStone 360) and Q4 (VC conference) Seasonally higher
Advisory feesNear term~$20M in prior two quarters ~$16M viewed as normalized near-term level Lower vs prior run-rate

No formal revenue/EPS guidance provided.

Earnings Call Themes & Trends

TopicQ4 FY25 (Prev)Q1 FY26 (Prev)Q2 FY26 (Current)Trend
Private Wealth growth & tickersEvergreen subs $1.2B; ticker adoption ~80% eligible flows ~>$1B subs; crossed $10B platform; broadened distribution to >550 partners Record $2.4B; StepX ~$700M first 30 days; 650 partners; 50% multi-product adoption after 1 year Accelerating
Data/indices partnershipsFTSE Russell framework; data central to brand/economics Expect initial licensing; indices launch later in year FTSE StepStone Global PM Indices launched (daily pricing); initial licensing with longer-term product potential Building
Fundraising & FEAUMRecord year; strong SMA & commingled closes ~$9B gross adds; UFEC up; fee rate stable ex retro fees ~$7B gross adds; FEAUM +$5.6B QoQ; blended fee ~63 bps TTM (down on retro fee moderation) Strong, steady
Macro/realizations/secondariesImproving backdrop; barbell closes for funds Realizations picked up post-tariff pause; pipeline growing LP distributions low for 3 years; signs of improvement (IPOs, IB); expect better realizations ahead Cautious optimism
Regional expansionGlobal platform; broad demand Strength in Australia/Middle East/Asia New offices NL/ES/KR/SA; Riyadh office announced Expanding
Retirement/DC channelN/AExec action improved DC inclusion prospects; multi-year build; custom TDFs likely Partnered with Aviva to provide UK DC access; flows expected to build from 2026 Early innings
Costs/marginsCore FRE margin ~37% baseline Core FRE margin ~37%; comp ratio ~46% FRE margin 36%; comp ratio 46%; G&A seasonal step-ups Stable core; seasonal G&A

Management Commentary

  • “Our momentum is nothing short of spectacular... we generated $2.4 billion of new subscriptions [in Private Wealth]... StepX... led to over $700 million in gross subscriptions in the first 30 days.” — Scott Hart (CEO) .
  • “We generated $78 million of core fee-related earnings, representing 34% year-over-year growth.” — Scott Hart (CEO) .
  • “FRE was $79 million, up 9% from the prior year quarter... FRE margin of 36%... Advisory fees of $16 million... a more normalized level near-term.” — David Park (CFO) .
  • “We expect strong gross performance fees next quarter, driven by the annual crystallization of incentive fees in our Spring Evergreen Fund... a relatively small portion... drops to the bottom line after compensation and private wealth profits interest.” — David Park (CFO) .

Q&A Highlights

  • StepX demand and cannibalization: designed to meet channel demand for PE-only exposure and broader ticker availability; some rotation from SPRIME was expected and largely completed .
  • Distribution scaling: 650 partners; aim to broaden multi-product selling over time; large partners currently focus on 2–3 funds, leaving room to expand .
  • Expenses: QoQ G&A increase driven by travel/IT/ops; expect seasonal elevation in Q3 (StepStone 360) and Q4 (VC conference) .
  • Retirement/DC opportunity: Aviva partnership to broaden UK access; meaningful flows expected to start in calendar 2026; exploring model portfolios and operational solutions to integrate private markets .
  • Indices monetization: initial revenue via licensing with FTSE Russell; longer-term potential for asset management products referencing indices (not simple replication) .

Estimates Context

  • S&P Global consensus: Q2 revenue and EPS beats; Q1 EPS miss and revenue beat; Q4 revenue and EPS beats. StepStone’s GAAP revenue can diverge from Street modeling because it includes unrealized carry (a major Q2 uplift), while adjusted/realized measures (adjusted revenues, gross realized performance fees) better reflect cash-like economics . Values retrieved from S&P Global.
  • Potential estimate recalibration: normalize advisory fees closer to ~$16M near-term vs ~$20M prior quarters; embed seasonal G&A in Q3/Q4; incorporate expected Q3 gross performance fee uplift from Spring with limited ANI drop-through given compensation and profit interests .

Key Takeaways for Investors

  • Core earnings power is intact and compounding: FEAUM +27% YoY to $132.8B and core FRE up strongly; focus on fee revenues and FRE margin (36%) as the durable driver vs GAAP noise from equity comp .
  • Private Wealth is a major growth flywheel: Record $2.4B in subs; StepX launch broadened access; expect Q3 moderation from the launch surge but platform expansion (650 partners) and multi-product penetration support sustained growth .
  • Q3 setup: anticipate stronger gross performance fees from Spring crystallization; model modest ANI contribution after comp and profit interests; watch for seasonal G&A pressure .
  • Street models should emphasize adjusted/realized metrics: large GAAP revenue beats can be carry-driven; use adjusted revenues, gross realized performance fees, and PRE to assess cash-like performance .
  • Strategic optionality increasing: FTSE Russell indices provide new licensing revenue lanes and potential future products; DC-channel entry via Aviva could be a multi-year TAM unlock .
  • Regional expansion and product breadth support pipeline resilience: new offices in Europe/Asia/Middle East, strong managed account re-ups (>90%), and diversified secondaries/co-invest strategies underpin fundraising durability .

Appendix: Additional Relevant Press Releases (Q2 FY26 context)

  • FTSE Russell and StepStone launch FTSE StepStone Global Private Market Indices; daily pricing enables faster, more granular benchmarking; initial monetization via licensing .
  • StepStone opens Riyadh office, establishing formal presence in the Middle East to deepen client relationships .
  • Partnership with Aviva to broaden UK DC savers’ access to private markets via My Future Vision default strategy (20–25% private markets allocation) .