Stepstone Group, Inc. ((STEP)) has held its Q3 earnings call. Read on for the main highlights of the call.
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StepStone Group, Inc.’s recent earnings call painted a mixed picture, reflecting both promising growth and some financial setbacks. The sentiment was largely positive, with significant achievements in fee-related earnings and assets under management, as well as successful fundraising and venture capital endeavors. However, these accomplishments were overshadowed by a GAAP net loss and rising non-controlling interests.
Record Fee-Related Earnings and Asset Growth
Fee-related earnings hit a record high of $74 million, demonstrating the strongest quarter of organic growth in the company’s history. Additionally, fee-earning assets under management saw a substantial increase of nearly $10 billion, signaling robust expansion.
Significant Fundraising Achievements
The company successfully closed its inaugural infrastructure co-investment fund, totaling $1.2 billion, and expanded its private wealth platform to over $6 billion, securing over $1 billion in new subscriptions.
High Fee-Related Earnings Margin
StepStone achieved a fee-related earnings margin of 39% for the quarter, marking the highest quarterly and twelve-month core margin levels on record, underscoring efficient operational performance.
Venture Capital Business Success
The venture capital segment exceeded revenue targets, with the fee-earning AUM doubling since the acquisition of GreenSpring, highlighting the success of strategic investments.
GAAP Net Loss
Despite these successes, the company reported a GAAP net loss of $287 million, with $190 million attributable to StepStone Group Incorporated, largely due to changes in fair value related to potential future buy-ins.
Higher Non-Controlling Interests
There was a noticeable rise in non-controlling interests, driven by growth in infrastructure, real estate, and private debt asset classes, alongside strong private wealth expansion.
Forward-Looking Guidance
Looking ahead, StepStone Group anticipates continued growth in fee-related earnings and assets under management. The private wealth platform’s expansion is expected to persist, following its strongest growth quarter ever, with significant capital deployment and activation.
In summary, StepStone Group’s earnings call conveyed a sentiment of cautious optimism. While the company posted impressive growth in several areas, financial challenges such as the GAAP net loss and increased non-controlling interests warrant attention. Investors will likely focus on the company’s ability to sustain its growth trajectory while managing these challenges.
