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StepStone Group Inc. (STEP)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered record non-GAAP profitability: Adjusted Net Income (ANI) per share rose to $0.68 and Fee-Related Earnings (FRE) hit $94.1M with a 44% FRE margin; results were aided by $15.7M of retroactive fees and strong realized performance fees .
  • Against S&P Global consensus, STEP posted a significant beat on revenue ($377.7M vs $229.4M*) and ANI/EPS ($0.68 vs $0.445*), while EBITDA missed materially ($5.2M vs $97M*) due to non-core items and Consolidated Funds effects; management emphasized FRE/ANI as the core profitability lenses .
  • Private wealth AUM doubled to >$8B YoY, FEAUM grew ~29% YoY to $121.4B, and gross inflows were $9.9B in the quarter, underpinning fee revenue growth and margin expansion .
  • Capital return and structure actions: Board declared a $0.24 base dividend plus $0.40 supplemental (payable 6/30/25) and plans a Q1 FY2026 buy-in of non-controlling interests (~$10M cash and $161M stock; ~3.2M shares) at >15% discount to STEP’s public PE multiple, a positive earnings accretion catalyst .

What Went Well and What Went Wrong

What Went Well

  • Record non-GAAP profitability: “We generated record earnings this quarter… our fee-related earnings, FRE margin and adjusted net income per share were all at our highest levels ever” .
  • Strong fee momentum and mix: Fee revenues rose to $214.7M (+40% YoY), boosted by private wealth offering mix and retroactive fees ($15.7M this quarter vs $5.4M in FQ4’24) .
  • Performance fee realization: Gross realized performance fees reached $81.2M; PRE $41.5M—both records, reflecting closings of previously announced deals .

What Went Wrong

  • EBITDA miss vs consensus and volatile GAAP optics: S&P Global’s EBITDA actual of ~$5.2M* versus ~$97M* consensus reflects Consolidated Funds and non-core items; management continues to steer investors to FRE/ANI metrics .
  • Macro/market volatility: Management flagged rapid shifts in trade policy and widening private-market bid/ask spreads in April/May, tempering realization timing near term .
  • Non-controlling interest and comp dynamics: Income attributable to NCI rose to $33M (+$21M YoY) and equity-based compensation will increase by ~$1M in Q1 FY2026, modestly pressuring near-term margins .

Financial Results

MetricQ4 2024 (Mar 31, 2024)Q2 2025 (Sep 30, 2024)Q3 2025 (Dec 31, 2024)Q4 2025 (Mar 31, 2025)
Management & Advisory Fees, net ($USD Millions)$153.4 $184.8 $190.8 $213.4
Total Revenues ($USD Millions)$356.8 $271.7 $339.0 $377.7
Total Performance Fees ($USD Millions)$203.4 $86.9 $148.2 $164.3
GAAP Diluted EPS ($USD)$0.48 $0.26 $(2.61) $(0.24)
Fee Revenues (non-GAAP) ($USD Millions)$153.8 $185.5 $191.8 $214.7
Adjusted Revenues ($USD Millions)$177.4 $208.8 $243.9 $295.9
FRE ($USD Millions)$50.9 $72.3 $74.1 $94.1
FRE Margin (%)33% 39% 39% 44%
Gross Realized Performance Fees ($USD Millions)$23.5 $23.3 $52.1 $81.2
PRE ($USD Millions)$12.1 $14.5 $26.6 $41.5
ANI ($USD Millions)$37.7 $53.6 $52.7 $80.6
ANI per Share ($USD)$0.33 $0.45 $0.44 $0.68

Versus Estimates (S&P Global):

  • Revenue: $229.4M* consensus vs $377.7M actual — bold beat .
  • Primary EPS: $0.445* consensus vs $0.68 actual (ANI per share) — bold beat .
  • EBITDA: $97.0M* consensus vs $5.2M* actual — bold miss.
    Values marked with * were retrieved from S&P Global.

Segment Fee Revenue Breakdown (non-GAAP):

Component ($USD Thousands)Q4 2024Q2 2025Q3 2025Q4 2025
Focused Commingled Funds$80,434 $107,855 $105,718 $124,604
Separately Managed Accounts$55,945 $61,393 $66,245 $67,695
Advisory & Other Services$16,147 $14,907 $17,458 $19,927
Fund Reimbursement Revenues$1,282 $1,326 $2,411 $2,436
Fee Revenues Total$153,808 $185,481 $191,832 $214,662

Key KPIs:

KPIQ4 2024Q2 2025Q3 2025Q4 2025
AUM ($USD Billions)$156.6 $176.1 $179.2 $189.4
AUA ($USD Billions)$521.1 $505.9 $518.7 $519.7
FEAUM ($USD Billions)$93.9 $104.4 $114.2 $121.4
UFEC ($USD Billions)$22.6 $29.7 $21.7 $24.6

Asset Class FEAUM ($USD Millions):

Asset ClassQ4 2024Q2 2025Q3 2025Q4 2025
Private Equity49,869 57,136 62,811 65,007
Infrastructure20,114 20,986 23,411 23,830
Private Debt15,477 16,975 17,882 19,517
Real Estate8,398 9,318 10,062 13,036
Total FEAUM93,858 104,415 114,166 121,390

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base Quarterly Dividend per ShareQ4 FY2025 payout$0.24 (Q3 declared) $0.24 (payable 6/30/25) Maintained
Supplemental Dividend per ShareQ4 FY2025 payoutNone in Q3 $0.40 (payable 6/30/25) Added/Raised
Core FRE Margin ExpectationFY2026 starting pointNot previously quantified~37% baseline (ex retro fees, advisory one-time, bonus accrual) New disclosure
Cash Compensation Ratio (ex retro fees)FY2026~46% of fee-related revenues (FY2025 run-rate) ~46% expected for FY2026 Maintained
Equity-Based CompensationQ1 FY2026N/AIncrease by ~$1M vs Q4 FY2025 Increased
NCI Buy-in (Tranche 2)Effective Apr 1, FY2026N/A~$10M cash + ~$161M equity (~3.2M shares) Announced
Tax Rate (Blended statutory)Q4 FY202522.3% prior quarters ~22.2% in Q4 table Essentially unchanged

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 FY2025)Current Period (Q4 FY2025)Trend
Private Wealth GrowthPlatform momentum; evergreen fund inflows and expanding distribution Private wealth AUM >$8B; $1.2B quarterly subscriptions; ~500 platforms; ~80% eligible flows via tickers Accelerating
Fee Rates/MixFee rate uplift from private wealth; retroactive fees present Blended fee rate higher; $15.7M retro fees; commingled fee rate ex retro ~94bps (LTM low-90s ex retro) Positive
Secondaries MarketActive across private equity/real estate; barbell close dynamics Largest real estate secondaries fund (SREP V) $3.77B; active LP/GP-led pipeline; PE secondaries fund to return to market Scaling
Macro/Trade PolicyStable to improving backdrop late 2024 April volatility and widening spreads; cautious optimism with May improvements; scenario planning focus Mixed/volatile
Operating Leverage & MarginsFRE margin ~39–40%; core margin building FRE margin 44% (40% ex retro); core margin ~37% baseline; long-term trajectory higher Improving
Capital Returns & StructureDividends maintained; secondary offering (earlier) $0.40 supplemental dividend; NCI buy-in at >15% discount to public PE multiple Shareholder-friendly

Management Commentary

  • “We generated record earnings this quarter… our fee-related earnings, FRE margin and adjusted net income per share were all at our highest levels ever.” — Scott Hart, CEO .
  • “Retroactive fees contributed $15.7 million to fee revenues… We earned $80.6 million in adjusted net income for the quarter or $0.68 per share.” — David Park, CFO .
  • “Total gross inflows were $9.9 billion… included $1.2 billion of Evergreen subscriptions, our best private wealth quarter ever.” — Scott Hart .
  • “If you exclude retroactive fees, our FRE margin was 40% for the quarter and 37% for the trailing 12 months, our highest core margin levels on record.” — Scott Hart .
  • “We expect to conduct the second tranche of our buy-in… $10 million of cash and $161 million of equity (~3.2 million shares) effective April 1… at a >15% discount to STEP’s public PE multiple.” — Michael McCabe .

Q&A Highlights

  • Margin normalization: CFO detailed one-time advisory fees (~$4M) and a favorable bonus accrual adjustment; core FRE margin would have been ~37% (fair baseline into FY2026) .
  • Fundraising pipeline: Management sees healthy RFP activity and new pools of capital (esp. outside U.S.), plus private credit allocations emerging; solid re-up pipeline despite seasonality .
  • Fee rate dynamics: Commingled fee rates trending up; ex retroactive fees ~94bps in quarter, LTM low-90s after timing normalization .
  • NCI buyout modeling: ~3.2M shares issued; cash ≤20% of consideration; step-down in NCI trajectory expected over several years; low-single-digit incremental impact FY2026 .
  • Distribution channels: U.S. wires and RIAs each >1/3 of U.S. distribution; competitive evergreen landscape growing but STEP’s differentiated products and ticker adoption drive best-ever quarters .

Estimates Context

  • Revenue: $377.7M actual vs $229.4M* consensus — significant beat driven by fee growth, retroactive fees, and record performance fee realization .
  • Primary EPS (ANI/share): $0.68 actual vs $0.445* consensus — significant beat on record FRE and PRE .
  • EBITDA: $5.2M* actual vs $97.0M* consensus — miss; EBITDA and GAAP optics impacted by Consolidated Funds and non-core items; management guides investors to FRE/ANI as primary KPIs .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • FRE/ANI-driven beat: Focus on FRE margin durability (core ~37%) and mix uplift from private wealth; expect medium-term margin trajectory higher as operating leverage scales .
  • Private wealth flywheel: Distribution platforms expanded to ~500 with ~80% ticker execution; sustainable inflows ($1.2B in Q4) should support fee growth and blended fee rate .
  • Performance fee harvesting: Net accrued carry is mature (75% >5 years), setting up continued realization potential as macro stabilizes, though near-term timing remains sensitive to market volatility .
  • Capital returns/catalysts: $0.40 supplemental dividend and NCI buy-in at >15% discount to public PE multiple are accretive, supporting EPS growth and shareholder returns .
  • Estimates likely to move up: Given revenue/ANI beats and FEAUM growth to $121.4B, Street models may raise fee revenues and PRE forecasts; watch for normalization of retro fees .
  • Risk monitor: Macro/trade policy volatility and widening private-market spreads can delay realizations; management’s scenario planning and diversified platform mitigate deployment risks .
  • Near-term trading lens: Positive sentiment on dividend and record non-GAAP results; expect investors to discount GAAP volatility and focus on FRE/ANI trajectory and private wealth momentum .

Appendix: Additional Relevant Q4 Press Releases

  • Largest real estate secondaries fund closed: SREP V final close at $3.77B; >$4.5B program capacity; $1.7B committed across 8 investments .
  • Tactical Growth Fund IV: $705M raised; focus on tech/healthcare founder-led growth equity .
  • European distribution expansion: Evergreen funds added to Bergos platform; ELTIF approval for private credit in Europe .