StepStone Group Inc. Q3 FY2026 earnings call

• Financial Performance: Delivered best quarter ever in core fee-related earnings; strong performance fees with over $200 million in gross incentive fees. - Fundraising: Generated over $34 billion in AUM additions for the year, with over $8 billion in Q3, balanced across regions and strategies. Managed accounts had strong new/expanded business. - Private Wealth: Grew to $15 billion, with $2.2 billion in new subscriptions; private equity evergreen funds had strong subscriptions. - Pipeline: In market with multiple funds, expecting infrastructure and private equity co-investment funds to activate by end of 2027; flagship private equity secondaries and GP-led funds to close soon. - AI Exposure: Diversified private markets approach, limited software exposure (approx 11% of AUM), strong Spring performance due to AI tailwind.

StepStone reported a GAAP net loss of $123 million or $1.55 per share. Fee-related earnings were $89 million, up 20% from the prior year quarter, with an FRE margin of 37%. Excluding retroactive fees, core fee-related earnings were $88 million, up 35% y-o-y. Adjusted net income was $80 million, or $0.65 per share. Fundraising saw over $34 billion in AUM additions for the calendar year, with managed accounts having over $10 billion from new/expanded accounts. Private wealth grew to $15 billion with $2.2 billion in new subscriptions for the quarter.

• Spring incentive fees expected to moderate slightly next year if mid-teens return is achieved, but dependent on actual performance. - Infrastructure co-investment fund and private equity co-investment fund expected to activate by end of 2027. - Flagship private equity secondaries and GP-led private equity secondaries fund to have first closes in coming quarters with activation shortly after.

• AI disruption risk, creating winners and losers in private markets. - Competitive fundraising environment. - Uncertainty in performance fees depending on actual investment performance, as much of incentive fees are shared with investment and private wealth teams.

Q: Alex Blostein asked about software exposure across the portfolio and Spring's retail vehicle exposures.

A: Scott Hart responded about diversified exposure (approx 11% of AUM in software), Spring's focus on pure play AI, infrastructure, etc., with 39% performance.

Q: Kenneth Worthington inquired about Spring inflows and fund next vintages.

A: Scott Hart said inflows haven't been an issue due to strong opportunities; expectations for modest growth in fund size due to matching fundraising to opportunity.

Q: Brennan Hawken asked about Spring performance breakdown (markup vs returns).

A: Scott Hart and Jason Ment explained Spring's performance with 34% primary directs, 64% through secondaries (mostly direct).

Q: Michael Cyprys asked about software risk mitigation for GPs.

A: Scott Hart mentioned GPs managing existing portfolios and focusing on new investment selection to mitigate AI risk.

Q: John Dunn asked about fundraising regions and private credit.

A: Scott Hart discussed strong non-US fundraising in Asia, Europe, Middle East; private credit interest in Asia, Middle East, and US with diversified portfolios.