StepStone Group (STEP) AI Stock Analysis

Company Guidance

Management’s guidance emphasized continued earnings growth underpinned by strong run‑rates and specific near‑term catalysts: GAAP net loss was $116m (−$1.41/sh) this quarter but adjusted net income was $60m ($0.48/sh) vs $49m ($0.40) a year ago; fee‑related earnings (FRE) were $106m (up 30% YoY) with an FRE margin of 39% and fee revenue of $271m (up 27% YoY) on a blended management fee rate of 65 bps LTM. They said they are generating run‑rate management & advisory fees of >$1.0bn/year and run‑rate FRE well over $400m/year, reported $10bn of gross inflows this quarter and nearly $40bn of gross AUM additions over the last 12 months, and grew fee‑earning assets plus UFEC to ~ $193bn (up $9bn QoQ, $37bn YoY; 19% organic growth since FY2022) with UFEC > $39bn (≈$3bn recently activated, ≈$3bn remaining to activate). Private Wealth subscriptions were $2.8bn this quarter (platform > $21bn; SPRING $1.7bn of subs, SPRIM > $400m, SCRED > $500m to $2.8bn), platform redemptions were <2%, and SPRING’s strong YTD performance (≈23% net) should drive Private Wealth incentive fees that crystallize in fiscal Q3 (Dec). Management reiterated the planned Private Wealth profits‑interest buy‑in (call period calendar Q3 2027), which they expect will materially increase adjusted net income and be EPS‑accretive, and flagged capital plans to fund the cash portion with available cash, operating cash flow and/or debt while preserving an investment‑grade stance (A+); they also raised the quarterly dividend 18% to $0.33/sh, have executed $30m of repurchases of a $100m program ($21m since FY26 end; ~710k shares at $41.87 avg). Other operating metrics called out: net accrued carry $935m (up 19% YoY; >70% tied to programs >5 years), gross realized performance fees $30m ($16m net), adjusted cash compensation $117m (cash comp ratio ~43%), adjusted equity comp $7m, and G&A $42m (including ~$5m/quarter of Private Wealth distribution fees).