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1. Company Snapshot

1.a. Company Description

StepStone Group Inc.is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments.For direct investment, it seeks to invest in venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, and buyout investments in mature and middle market companies.


It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, consumer staples, financials, telecommunication services, energy, infrastructure, real estate, and real asset.The firm invests globally with a focus on United States, North America, Europe, Asia, Latin America, Middle East, Africa, Brazil, Mexico, Argentina, Colombia, New Zealand, China, India, Korea, Japan, Taiwan, and Australia region.It typically invests between $15 million and $200 million in firms with enterprise value between $150 million and $25000 million.


The firm invests between 5% and 40% in emerging markets.For fund of fund investment, it seeks to invest in private equity funds, venture capital funds, Special situation funds, Real estate funds, Infrastructure funds, mezzanine funds, and turnaround/distressed funds.It considers investments in both domestic and international funds.


It also seeks to make co-investments and follow-on investments and considers partial interests in funds.StepStone Group Inc.was founded in 2007 and is based in New York, New York with additional offices across North America, South America, Europe, Australia, and Asia.

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1.b. Last Insights on STEP

StepStone Group Inc.'s recent performance was negatively impacted by a GAAP loss driven by an accounting item, despite strong underlying profitability and fundraising momentum. The company's Q3 earnings beat estimates, with record core fee-related earnings and sizable incentive fees. However, a sell recommendation from one research analyst and a hold recommendation from three others may have tempered investor enthusiasm. Additionally, Cim LLC's significant reduction of its stake in the company by 83.7% may have raised concerns.

1.c. Company Highlights

2. StepStone Group's Earnings Report Reveals Strong Fee-Related Earnings Growth

The company's financial performance for the quarter showed a GAAP net loss attributable to StepStone Group Incorporated of $123 million or $1.55 per share. However, fee-related earnings were $89 million, up 20% from the prior year quarter, with an FRE margin of 37%. Fee revenues were $241 million, up 26% from the prior year quarter. Adjusted net income was $80 million, or $0.65 per share, beating estimates of $0.6 per share. The strong performance was driven by higher fee-related earnings and higher performance-related earnings, with total performance fees being very strong, driven by over $200 million of gross incentive fees related to the 39% returns in their Spring fund.

Publication Date: Feb -17

📋 Highlights
  • Strong Fee-Related Earnings (FRE):: Generated FRE of $89 million, up 20% YoY, with a 37% FRE margin driven by retroactive fees and higher performance fees ($200 million in gross incentive fees).
  • Record Core FRE Growth:: Core FRE rose 35% YoY to $89 million, fueled by 26% growth in fee revenues ($241 million) and strong performance fees from 39% returns in venture funds.
  • Substantial Fundraising Momentum:: Added $8 billion in AUM quarterly, $34 billion annually, with $2.2 billion in private wealth subscriptions and $21 billion from separately managed accounts.
  • Software Exposure & AI Strategy:: ~11% of total AUM in software (7% excluding venture), with venture teams focusing on AI infrastructure and vertical software despite down 30% public software indices.
  • Geographic & Strategic Diversification:: Fundraising strength in Asia, Europe, and the Middle East, with private credit gaining traction via multi-manager diversification and under-1% per-position allocations.

Revenue Growth and Margin Analysis

The 26% year-over-year growth in fee revenues was a significant driver of the company's financial performance. Excluding retroactive fees, fee revenues grew by 32% year over year. The FRE margin remained stable at 37% for the quarter, both on a reported and core basis. As David Park mentioned, "Fee-related earnings were $89 million, up 20% from a year ago, while core FRE was up 35% driven by strong growth in fee revenues."

Valuation Metrics and Growth Expectations

The company's P/S Ratio is 3.98, and analysts estimate next year's revenue growth at 19.3%. With an EPS of $0.65, the P/E Ratio is -8.25, indicating that the market is pricing in significant growth expectations. The company's ROE is 783.65%, and the ROIC is -25.56%. These metrics suggest that the market is expecting the company to continue its strong performance.

Business Highlights and Fundraising Success

The company generated growth AUM additions of over $8 billion in the quarter, and over $34 billion for the calendar year. The private wealth platform grew to $15 billion, and the company generated over $2.2 billion in new subscriptions for the quarter. The fundraising is balanced across commercial structure, geography, and strategy, with a strong mix of re-ups, expansions, and new accounts.

Exposure to Software Companies and AI Disruption Risk

The company has a diversified approach to private markets investing, with minimal software exposure across their businesses. Scott Hart mentioned that around 11% of their total AUM is in software investments, dropping to 7% if they exclude venture. The company is focused on understanding the AI disruption risks and has been asking their GPs about their AI-driven opportunities and risks.

3. NewsRoom

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StepStone Group Announces 2026 Partner and Managing Director Promotions

Mar -10

Source: globenewswire.com

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Glade Brook Closes Oversubscribed Gondola Fund at Over $1 Billion

Mar -10

Source: businesswire.com

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StepStone Group Announces $100 Million Stock Repurchase Program

Mar -09

Source: globenewswire.com

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Bain & Company and StepStone Group Release 2026 Private Equity GP Outlook

Mar -02

Source: globenewswire.com

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StepStone Real Estate Awarded Global Indirect Firm of the Year and European Deal of the Year in PERE 2025 Awards

Mar -02

Source: globenewswire.com

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StepStone Group to Present at the RBC Capital Markets Global Financial Institutions Conference

Feb -26

Source: globenewswire.com

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StepStone Group Inc. (NASDAQ:STEP) Receives Average Rating of “Moderate Buy” from Brokerages

Feb -18

Source: defenseworld.net

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StepStone Group partners with Utmost

Feb -12

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.10%)

6. Segments

Private Markets Solutions

Expected Growth: 10.1%

StepStone Group's Private Markets Solutions growth is driven by increasing demand for alternative investments, expansion into new markets, and strategic partnerships. The 10.1% growth rate is also attributed to the firm's expertise in customized portfolio construction, robust risk management, and strong relationships with institutional investors.

7. Detailed Products

Private Equity

StepStone Group Inc. provides private equity solutions to investors, offering a range of strategies and investment vehicles to access private markets.

Infrastructure

StepStone Group Inc. offers infrastructure investment solutions, focusing on energy, transportation, and social infrastructure assets.

Real Assets

StepStone Group Inc. provides real assets investment solutions, including real estate, agriculture, and timberland investments.

Real Estate

StepStone Group Inc. offers real estate investment solutions, including core, value-add, and opportunistic strategies.

Secondaries

StepStone Group Inc. provides secondaries investment solutions, enabling investors to buy and sell existing private equity investments.

Co-Investments

StepStone Group Inc. offers co-investment opportunities, allowing investors to invest alongside private equity firms in specific deals.

8. StepStone Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for StepStone Group Inc. is medium, as there are some alternative products and services available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for StepStone Group Inc. is low, as customers have limited options and the company has a strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers for StepStone Group Inc. is medium, as the company has some dependence on its suppliers, but it also has some bargaining power due to its size and scale.

Threat Of New Entrants

The threat of new entrants for StepStone Group Inc. is high, as the industry is attractive and there are low barriers to entry, making it easy for new companies to enter the market.

Intensity Of Rivalry

The intensity of rivalry for StepStone Group Inc. is high, as the industry is highly competitive and there are many players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.60%
Debt Cost 4.05%
Equity Weight 66.40%
Equity Cost 10.03%
WACC 8.02%
Leverage 50.60%

11. Quality Control: StepStone Group Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Invesco

A-Score: 6.4/10

Value: 7.6

Growth: 2.9

Quality: 6.7

Yield: 7.0

Momentum: 8.5

Volatility: 6.0

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Affiliated Managers Group

A-Score: 5.7/10

Value: 4.2

Growth: 5.4

Quality: 7.7

Yield: 0.0

Momentum: 9.0

Volatility: 8.0

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Franklin Resources

A-Score: 5.6/10

Value: 5.0

Growth: 2.8

Quality: 4.3

Yield: 8.0

Momentum: 5.5

Volatility: 8.0

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Hamilton Lane

A-Score: 4.7/10

Value: 1.6

Growth: 6.1

Quality: 8.3

Yield: 4.0

Momentum: 2.5

Volatility: 5.7

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TPG

A-Score: 4.1/10

Value: 1.1

Growth: 1.6

Quality: 6.0

Yield: 7.0

Momentum: 3.5

Volatility: 5.7

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StepStone Group

A-Score: 4.1/10

Value: 4.2

Growth: 1.9

Quality: 2.5

Yield: 5.0

Momentum: 5.5

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

46.37$

Current Price

46.37$

Potential

-0.00%

Expected Cash-Flows