StepStone Group NASDAQ: STEP reported a fiscal first-quarter 2027 GAAP net loss attributable to the company of $116 million, or $1.41 per share, while fee-related earnings and adjusted net income increased from the prior-year period.
Head of Investor Relations Seth Weiss said the GAAP result reflected accounting for a change in the fair value of StepStone’s planned buy-in of profits interests associated with its private wealth business. The private wealth team entered its put period during the June quarter, and StepStone expects to enter its call period in the third quarter of calendar 2027.
On a non-GAAP basis, StepStone generated fee-related earnings of $106 million, up 30% year over year, with a 39% fee-related earnings margin. Adjusted net income rose to $60 million, or $0.48 per share, from $49 million, or $0.40 per share, a year earlier.
Fee Revenue and Assets Expand
Chief Financial Officer David Park said fee revenue increased 27% from the prior-year quarter to $271 million, supported by growth in fee-earning assets across the company’s platform. The company ended the quarter with nearly $10 billion of sequential growth in fee-earning assets.
StepStone’s fee-earning assets plus undeployed fee-earning capital reached approximately $193 billion, up $9 billion sequentially and $37 billion from a year earlier. Undeployed fee-earning capital totaled more than $39 billion after the company activated two private equity secondaries funds in June, adding nearly $3 billion of fee-earning assets.
Park said StepStone’s blended management fee rate was 65 basis points over the trailing 12 months, unchanged from fiscal 2025. Growth in evergreen funds offset lower fee rates associated with recently revised terms for the company’s private equity secondaries and GP-led secondaries funds.
Management said it expects the commingled-fund fee rate to remain relatively flat over the next several quarters to a year as the secondaries funds continue raising capital. The company expects fee-rate expansion to resume after the funds are fully raised, driven by private wealth growth and fee-rate step-ups in the secondaries strategies.
The company also expects a managed-account mandate of roughly $1.5 billion to expire in the next quarter. The mandate carries a fee rate in line with StepStone’s average separate managed account fee rate, though management noted there will be a partial offset to adjusted net income from non-controlling interests.
Fundraising Led by Private Wealth and Secondaries
Chief Executive Officer Scott Hart said the company recorded $10 billion of gross inflows during the quarter, split between managed accounts and commingled funds. Over the past 12 months, StepStone generated nearly $40 billion of gross asset additions, its strongest 12-month fundraising period, with roughly equal contributions from managed accounts and commingled funds.
Private wealth was a major contributor. The platform recorded a quarterly record of $2.8 billion in subscriptions, lifting private wealth assets above $21 billion. Platform redemptions were below 2% during the quarter, according to Hart.
The company’s SPRING venture and growth equity fund accounted for nearly $1.7 billion of private wealth subscriptions. Hart said the quarter’s subscription pace was elevated but that StepStone expects SPRING to continue generating healthy ongoing subscriptions. S Prime, the company’s all-private-markets offering, raised more than $400 million during the quarter, while other inflows were spread across private equity, credit and infrastructure evergreen funds.
StepStone’s evergreen non-traded business development company, S-Cred, generated more than $500 million of subscriptions and grew to $2.8 billion. The company said more than 800 partners now distribute its private wealth funds. Among platforms that have been selling StepStone products for at least one year, the average platform distributes two funds.
In drawdown funds, StepStone cited a $1 billion first close for its newest venture capital secondaries fund, $500 million of closes for an infrastructure co-investment fund, $300 million for private equity secondaries funds, and $200 million for a private equity co-investment fund.
SPRING Performance and Carry Outlook
Park said SPRING generated a 23% net return during the first half of the calendar year, supported by several value-creation events. The fund’s incentive fees are expected to be recognized in StepStone’s fiscal third quarter because they crystallize annually at the end of December.
Management said the fund’s results could experience more near-term volatility because of public-market valuation movements. Hart said SPRING has more than 2,000 positions, with approximately 75 investments accounting for 75% of net asset value. He said a previously larger public position had declined to a mid-teens percentage of the fund after recent trading and ongoing fundraising and portfolio markups.
Net accrued carry rose 19% year over year to $935 million. Park said more than 70% of accrued carry was tied to programs older than five years. Hart said improving realization activity has not always translated directly into performance fees because many transactions have involved partial rather than full realizations, and because of preferred-return and waterfall structures. However, he said the company has seen a number of announced full exits that could contribute in coming quarters.
Private Wealth Buy-In and Shareholder Returns
Hart said StepStone intends to buy in the private wealth profits interests as soon as it is contractually permitted. The transaction would allow the company to capture the full economics of one of its fastest-growing businesses, he said.
Head of Strategy Mike McCabe said the transaction can be funded with up to 75% StepStone equity, with the remainder in cash. StepStone expects to use available cash, operating cash flow and potentially capital markets financing for the cash portion while seeking to maintain its investment-grade credit rating. Hart said a portion of equity consideration would be immediately tradable, while the balance would be subject to a three-year lockup.
The company raised its quarterly dividend by 18% to $0.33 per share from $0.28 per share. It also repurchased an additional $21 million of stock since the end of fiscal 2026. Since announcing its $100 million authorization in March, StepStone has repurchased $30 million of shares, or more than 710,000 shares, at an average price of $41.87.
About StepStone Group (NASDAQ:STEP)
StepStone Group is a global private markets investment firm that provides specialized investment solutions across private equity, private credit and real assets. The firm offers customized portfolios, secondary interests, direct co-investments and tailored advisory services to institutional investors worldwide. StepStone's integrated research and data analytics platform supports its investment teams in sourcing opportunities and monitoring portfolio companies.
Founded in 2007 as an independent private markets specialist, the company has grown its presence through both organic expansion and strategic partnerships.
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