StepStone Group (STEP) Q2 2025 earnings summary

Executive summary

• Assets under management (AUM) reached $176.1 billion as of September 30, 2024, up 21% year-over-year, with fee-earning AUM (FEAUM) rising 20% to $104.4 billion and total capital responsibility (AUM + AUA) at $682 billion.

• Adjusted revenues for Q2 FY25 grew 39% to $208.8 million, with total GAAP revenues up 42% to $271.7 million, driven by higher management and advisory fees, carried interest allocations, and positive legacy Greenspring carried interest.

• Fee-related earnings (FRE) increased 65% to $72.3 million for the quarter, with a margin of 39–40%, and adjusted net income (ANI) per share rose 73% to $0.45.

• Declared a quarterly cash dividend of $0.24 per share, payable December 13, 2024.

• Private wealth platform assets surpassed $5 billion in net asset value, with private wealth subscriptions reaching nearly $850 million.

Financial highlights

• Management and advisory fees totaled $185 million, up 30% year-over-year, with adjusted management and advisory fees, net, accounting for 90% of fee revenue.

• Gross realized performance fees rose 212% to $23.3 million for the quarter, and net realized performance fees increased 153% to $14.5 million.

• Retroactive fees contributed $14.9 million to revenue, mainly from private equity and real estate secondaries and infrastructure co-investment funds.

• Adjusted net income for Q2 FY25 was $59.6 million, up 78% year-over-year; GAAP net income was $53.1 million.

• Total expenses rose 69% to $220.7 million, driven by a significant increase in equity-based compensation and higher G&A costs.

Outlook and guidance

• Management expects continued growth in management and advisory fees, supported by robust client demand, a strong pipeline of new mandates, and over $4 billion of capital activated in October to be reflected in the next quarter.

• Anticipate seasonal incentive fees in the upcoming fiscal third quarter, primarily from the SPRING private wealth fund, expected to be larger than last year.

• FRE margin, excluding retroactive fees, is expected to remain around 34%, with incremental growth in compensation and G&A as hiring continues.

• Management highlighted forward-looking statements regarding business growth, market conditions, and execution of strategy, noting risks from market and regulatory factors.

• The company is monitoring macroeconomic factors, including inflation, interest rates, and geopolitical risks, which may impact fundraising and performance fee revenues.