Q1 2027 StepStone Group Inc Earnings Call

August 6, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the first quarter fiscal year 2027 StepStone Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Seth Weiss, Head of Investor Relations. Please go ahead.

Ben Budish: Ladies and gentlemen, thank you for standing by. Welcome to the first quarter fiscal year 2027 StepStone Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star one one on your telephone.

Speaker #1: speaker's presentation, there will be a question-and-answer session. To ask a question during the After the session, you would need to press star 11 on your telephone you will then hear an automated message advising your hand is raised.

Ben Budish: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Seth Weiss, Head of Investor Relations. Please go ahead.

Speaker #1: And to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Seth Weiss, Head of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Joining me on today's call are Scott Hart, Chief Executive Officer; Jason Ment, President and Co-Chief Operating Officer; Mike McCabe, Head of Strategy; and David Park, Chief Financial Officer.

Seth Weiss: Thank you. Joining me on today's call are Scott Hart, Chief Executive Officer, Jason Ment, President and Co-Chief Operating Officer, Michael McCabe, Head of Strategy, and David Park, Chief Financial Officer. During our prepared remarks, we will be referring to a presentation which is available on our investor relations website at shareholders.stepstonegroup.com. Before we begin, I would like to remind everyone that this conference call, as well as the presentation, contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods. Forward-looking statements reflect management's current plans, estimates, and expectations and are inherently uncertain and are subject to various risks, uncertainties, and assumptions. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to changes in circumstances or a number of risks or other factors that are described in the risk factor section of StepStone's periodic filings.

Seth Weiss: Thank you. Joining me on today's call are Scott Hart, Chief Executive Officer, Jason Ment, President and Co-Chief Operating Officer, Mike McCabe, Head of Strategy, and David Park, Chief Financial Officer. During our prepared remarks, we will be referring to a presentation which is available on our investor relations website at shareholders.stepstonegroup.com.

Speaker #2: During our prepared remarks, we will be referring to a presentation which is available on our Investor Relations website at shareholders.stepstonegroup.com. Before we begin, I would like to remind everyone that this conference call, as well as the presentation, contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods.

Seth Weiss: Before we begin, I would like to remind everyone that this conference call, as well as the presentation, contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods. Forward-looking statements reflect management's current plans, estimates, and expectations and are inherently uncertain and are subject to various risks, uncertainties, and assumptions.

Speaker #2: Forward-looking statements reflect management's current plans, estimates, and expectations, and are inherently uncertain and are subject to various risks, uncertainties, and assumptions. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements, due to changes in circumstances or a number of risks or other factors that are described in the risk factors section of StepStone's periodic filings.

Seth Weiss: Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to changes in circumstances or a number of risks or other factors that are described in the risk factor section of StepStone's periodic filings.

Speaker #2: These forward-looking statements are made only as of today, and accept as required, we undertake no obligation to update or revise any of them. Today's presentation contains references to non-GAAP financial measures.

Seth Weiss: These forward-looking statements are made only as of today, and except as required, we undertake no obligation to update or revise any of them. Today's presentation contains references to non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our earnings release, our presentation, and our filing with the SEC. Turning to our financial results for Q1 of fiscal 2027. Beginning with slide three, we reported a GAAP net loss attributable to StepStone Group Inc. of $116 million or $1.41 per share. As a reminder, GAAP accounting requires us to factor the change in fair value of the buy-in of the StepStone Private Wealth profits interests to our income statement, which drove the negative GAAP earnings result this quarter.

Speaker #2: Reconciliations to the most directly comparable GAAP financial measures are included in our earnings release our presentation and our filing with the SEC. Turning to our financial results for the first quarter of fiscal 2027.

Seth Weiss: Turning to our financial results for Q1 of fiscal 2027. Beginning with slide three, we reported a GAAP net loss attributable to StepStone Group Incorporated of $116 million or $1.41 per share. As a reminder, GAAP accounting requires us to factor the change in fair value of the buy-in of the StepStone Private Wealth profits interests to our income statement, which drove the negative GAAP earnings result this quarter.

Speaker #2: Beginning with slide 3, we reported a GAAP net loss attributable to StepStone Group Incorporated of $116 million or $1.41 per share. As a reminder, GAAP accounting requires us to factor the change in fair value of the buy-in of the StepStone Private Wealth profits interests through our income statement, which drove the negative GAAP earnings result this quarter.

Speaker #2: We have a put-call option agreement in place with an entity composed of members of the private wealth team that enables StepStone's buy-in of these profits interests.

Seth Weiss: We have a put call option agreement in place with an entity composed of members of the private wealth team that enable StepStone's buy-in of these profits interests. The private wealth team entered the put period in the June quarter, and StepStone will enter into the call period in Q3 of 2027. Moving to slide five, we generated Fee Related Earnings of $106 million, up 30% from the prior year quarter, and we generated an FRE margin of 39%. The quarter reflected retroactive fees, primarily from our infrastructure secondaries fund. Retroactive fees contributed $1.1 million to revenue, which compares to retroactive fees of $2.9 million in Q1 of the prior fiscal year. When excluding the impact of retroactive fees, core Fee Related Earnings were $105 million, up 33% relative to the prior year quarter.

Speaker #2: The private wealth team entered the put period in the June quarter and StepStone will enter into the call period in the third quarter of calendar 2027.

Speaker #2: Moving to slide 5, we generated fee-related earnings of $106 million up 30% from the prior year quarter. And we generated an FRE margin of 39%.

Seth Weiss: Moving to slide five, we generated Fee Related Earnings of $106 million, up 30% from the prior year quarter, and we generated an FRE margin of 39%. The quarter reflected retroactive fees, primarily from our infrastructure secondaries fund. Retroactive fees contributed $1.1 million to revenue, which compares to retroactive fees of $2.9 million in Q1 of the prior fiscal year. When excluding the impact of retroactive fees, core Fee Related Earnings were $105 million, up 33% relative to the prior year quarter.

Speaker #2: The quarter reflected retroactive fees, primarily from our infrastructure secondaries fund. Retroactive fees contributed $1.1 million to revenue, which compares to retroactive fees of $2.9 million in the first quarter of the prior fiscal year.

Speaker #2: When excluding the impact of retroactive fees, core fee-related earnings were $105 million up 33% relative to the prior year quarter. And our core FRE margin remains at 39%.

Seth Weiss: Our core FRE margin remains at 39%. We earned $60 million in Adjusted Net Income for the quarter, or $0.48 per share. This is up from $49 million or $0.40 per share in Q1 of the last fiscal year, driven primarily by higher Fee Related Earnings. I'll now hand the call over to Scott.

Speaker #2: We earned $60 million in adjusted net income for the quarter or $48 cents per share. This is up from $49 million or 40 cents per share in the first quarter of the last fiscal year, driven primarily by higher fee-related earnings.

Speaker #2: I'll now hand the call over to Scott.

Speaker #3: Thank you, Seth, and good evening. We kicked off our fiscal 2027 year without standing financial results robust and balanced fundraising, and a healthy pipeline that gives us visibility for continued earnings growth.

Scott Hart: Thank you, Seth, and good evening. We kicked off our fiscal 2027 year with outstanding financial results, robust and balanced fundraising, and a healthy pipeline that gives us visibility for continued earnings growth. Beginning with results, we are comfortably generating run rate management and advisory fees of over $1 billion per year and generating run rate Fee Related Earnings of well over $400 million per year. These are numbers that we frankly could not have imagined just 6 short years ago as we were preparing for our IPO.

Scott Hart: Thank you, Seth, and good evening. We kicked off our fiscal 2027 year with outstanding financial results, robust and balanced fundraising, and a healthy pipeline that gives us visibility for continued earnings growth. Beginning with results, we are comfortably generating run rate management and advisory fees of over $1 billion per year and generating run rate Fee Related Earnings of well over $400 million per year. These are numbers that we frankly could not have imagined just six short years ago as we were preparing for our IPO.

Speaker #3: Beginning with results, we are comfortably generating run-rate management and advisory fees of over $1 billion per year, and generating run-rate fee-related earnings of well over $400 million.

Speaker #3: These are numbers that we frankly could not have imagined just six short years ago as we were preparing for our IPO. As a reflect on our progress, I am proud of both the magnitude of our results and the path we took to get here.

Scott Hart: As I reflect on our progress, I am proud of both the magnitude of our results and the path we took to get here, driven by an unwavering commitment to investing for the long term in solutions that will best serve our clients and provide value for our shareholders, balanced growth across asset classes and geographies, and by pursuing selective, synergistic, and highly strategic M&A. Looking forward, we continue to follow this playbook. First, we are generating consistent growth from our existing business. Our client-centric mission leads to enviable client retention, as well as expansion and expansion opportunities across our advisory, managed account, and commingled fund investors. Second, we are investing in long-term growth initiatives, including data and technology and solutions for the US defined contribution retirement market, where we see potential to replicate the success we are achieving in private wealth.

Speaker #3: Driven by an unwavering commitment to investing for the long term in solutions that will best serve our clients and provide value for our shareholders, balanced growth across asset classes and geographies, and by pursuing selective synergistic and highly strategic M&A.

Speaker #3: Looking forward, we continue to follow this playbook. First, we are generating consistent growth from our existing business. Our client-centric mission leads to enviable client retention, as well as expansion and expansion opportunities across our advisory, managed account, and commingled fund investors.

Scott Hart: First, we are generating consistent growth from our existing business. Our client-centric mission leads to enviable client retention, as well as expansion and expansion opportunities across our advisory, managed account, and commingled fund investors. Second, we are investing in long-term growth initiatives, including data and technology and solutions for the US defined contribution retirement market, where we see potential to replicate the success we are achieving in private wealth.

Speaker #3: Second, we are investing in long-term growth initiatives, including data and technology and solutions for the US defined contribution retirement market, where we see potential to replicate the success we are achieving in private wealth.

Speaker #3: And third, we make continue to pursue opportunistic M&A, with our current focus on acquiring our non-controlling interests at a material discount to our public valuation.

Scott Hart: Third, we may continue to pursue opportunistic M&A with our current focus on acquiring our non-controlling interest at a material discount to our public valuation. We now own 65% of our infrastructure, private debt, and real estate asset classes, and we plan to buy in the Private Wealth profits interest as soon as we are contractually able. The Private Wealth buy-in will materially increase Adjusted Net Income by enabling StepStone to capture the full economics of one of our highest growth businesses at a significant discount to our prevailing multiple. We expect this will provide material earnings per share accretion that should only compound into the future. Shifting to fundraising, we generated another double-digit quarter with $10 billion of gross inflows split between managed accounts and commingled funds.

Speaker #3: We now own 65% of our infrastructure, private debt, and real estate asset classes, and we plan to buy in the private wealth profits interests as soon as we are contractually able.

Speaker #3: The private wealth buy-in will materially increase adjusted net income by enabling StepStone to capture the full economics of one of our highest-growth businesses at a significant discount to our prevailing multiple.

Speaker #3: We expect this will provide material earnings per share accretion that should only compound into the future. Shifting to fundraising, we generated another double-digit quarter with $10 billion of gross inflows split between managed accounts and commingled funds.

Speaker #3: Our private wealth platform generated another record quarter with $2.8 billion of subscriptions while total private wealth assets surpassed $21 billion. More than doubling the net asset value over the last year.

Scott Hart: Our Private Wealth platform generated another record quarter with $2.8 billion of subscriptions, while total Private Wealth assets surpassed $21 billion, more than doubling the net asset value over the last year. We continue to see a high persistency of investors within our funds, with total platform redemptions under 2% for the quarter. SPRING, our venture and growth equity fund, continues to be a standout. SPRING has tapped into the excitement of the innovation economy, investing in native artificial intelligence companies, AI infrastructure, cybersecurity, energy, aerospace and defense, and yes, even space exploration. We believe the $1.7 billion of SPRING subscriptions this quarter included an elevated level of inflows.

Speaker #3: We continue to see a high persistency of investors within our funds, with total platform retentions under 2% for the quarter. Spring our venture and growth equity fund continues to be a standout.

Speaker #3: Spring has tapped into the excitement of the innovation economy investing in native artificial intelligence companies, AI infrastructure, cybersecurity, energy, aerospace and defense, and yes, even space exploration.

Speaker #3: We believe the $1.7 billion of Spring subscriptions this quarter included an elevated level of inflows. While the pace of subscriptions may normalize, we expect Spring will continue to generate a healthy rate of ongoing subscriptions, and that our overall private wealth platform will generate a strong level of annual inflows consistent with the pace we highlighted at the beginning of this year.

Scott Hart: While the pace of subscriptions may normalize, we expect SPRING will continue to generate a healthy rate of ongoing subscriptions, and that our overall Private Wealth platform will generate a strong level of annual inflows consistent with the pace we highlighted at the beginning of this year. I'll now turn the call over to Mike to speak about fundraising, asset growth, and shareholder distributions.

Speaker #3: I'll now turn the call over to Mike to speak about fundraising, asset growth, and shareholder distributions.

Speaker #4: Thanks, Scott. Turning to slide 8, we generated nearly $40 billion of gross AUM additions over the last year. Our best 12-month period ever. This fundraising was split evenly, with approximately $20 billion coming from each of managed accounts and commingled funds, including private wealth.

Michael McCabe: Thanks, Scott. Turning to slide eight, we generated nearly $40 billion of gross AUM additions over the last year, our best 12-month period ever. This fundraising was split evenly with approximately $20 billion coming from each of managed accounts and commingled funds, including Private Wealth. Of the managed account additions, $9 billion, or 45%, came from a combination of new accounts or the expansion of existing accounts into new asset classes or strategies. During the quarter, we generated over $10 billion in gross additions, including approximately $4.5 billion of managed account additions and $5.5 billion of commingled fund inflows. Notable additions to our drawdown commingled funds included a billion-dollar first close in our newest venture capital secondaries fund, $500 million of closes in our infrastructure co-investment fund, $300 million of closes in our private equity secondaries funds, and $200 million of closes in our private equity co-investment fund.

Mike McCabe: Thanks, Scott. Turning to slide eight, we generated nearly $40 billion of gross AUM additions over the last year, our best 12-month period ever. This fundraising was split evenly with approximately $20 billion coming from each of managed accounts and commingled funds, including Private Wealth. Of the managed account additions, $9 billion, or 45%, came from a combination of new accounts or the expansion of existing accounts into new asset classes or strategies. During the quarter, we generated over $10 billion in gross additions, including approximately $4.5 billion of managed account additions and $5.5 billion of commingled fund inflows. Notable additions to our drawdown commingled funds included a billion-dollar first close in our newest venture capital secondaries fund, $500 million of closes in our infrastructure co-investment fund, $300 million of closes in our private equity secondaries funds, and $200 million of closes in our private equity co-investment fund.

Speaker #4: Of the managed account additions, $9 billion or 45% came from a combination of new accounts or the expansion of existing accounts into new asset classes or strategies.

Speaker #4: During the quarter, we generated over $10 billion in gross additions, including approximately $4.5 billion of managed account additions and $5.5 billion of commingled fund inflows.

Speaker #4: Notable additions to our drawdown commingled funds included a billion-dollar first close and our newest venture capital secondaries fund. $500 million of closes in our infrastructure co-investment fund, $300 million of closes in our private equity secondaries funds, and $200 million of closes in our private equity co-investment fund.

Speaker #4: We have also launched the next vintages of our special situations real estate secondaries fund and our multi-strategy growth equity fund. With first closes expected in the coming quarters and activations to follow.

Michael McCabe: We have also launched the next vintages of our Special Situations Real Estate Secondaries fund and our Multi-Strategy Growth Equity fund, with first closes expected in the coming quarters and activations to follow. Turning to our evergreen funds, we generated $2.8 billion of subscriptions in our StepStone Private Wealth suite of offerings, growing the platform to over $21 billion as of the end of the quarter. As Scott mentioned, SPRING drove nearly $1.7 billion of these inflows in the quarter. S Prime, our all private markets fund, generated over $400 million of subscriptions, while the remaining inflows were split between our private equity, credit, and infrastructure evergreen funds. Additionally, we generated over $500 million of subscriptions in our evergreen non-traded BDC, S Cred, growing the fund to $2.8 billion. We continue to make progress on expanding our syndicate with over 800 partners selling StepStone Private Wealth funds.

Mike McCabe: We have also launched the next vintages of our Special Situations Real Estate Secondaries fund and our Multi-Strategy Growth Equity fund, with first closes expected in the coming quarters and activations to follow. Turning to our evergreen funds, we generated $2.8 billion of subscriptions in our StepStone Private Wealth suite of offerings, growing the platform to over $21 billion as of the end of the quarter. As Scott mentioned, SPRING drove nearly $1.7 billion of these inflows in the quarter. S Prime, our all private markets fund, generated over $400 million of subscriptions, while the remaining inflows were split between our private equity, credit, and infrastructure evergreen funds. Additionally, we generated over $500 million of subscriptions in our evergreen non-traded BDC, S Cred, growing the fund to $2.8 billion. We continue to make progress on expanding our syndicate with over 800 partners selling StepStone Private Wealth funds.

Speaker #4: Turning to our evergreen funds, we generated $2.8 billion of subscriptions in our private wealth suite of offerings, growing the platform to over $21 billion as of the end of the quarter.

Speaker #4: As Scott mentioned, spring drove nearly $1.7 billion of these inflows in the quarter. S Prime, our all-private markets fund, generated over $400 million of subscriptions while the remaining inflows were split between our private equity, credit, and infrastructure evergreen funds.

Speaker #4: Additionally, we generated over $500 million of subscriptions in our evergreen non-traded ed BDC, SCRED, growing the fund to $2.8 billion. We continue to make progress on expanding our syndicate with over 800 partners selling StepStone private wealth funds.

Speaker #4: Among the platforms that have been selling StepStone funds for at least a year, those distributing partners sell an average of two funds, a figure that has steadily increased over time.

Michael McCabe: Among the platforms that have been selling StepStone funds for at least a year, those distributing partners sell an average of two funds, a figure that has steadily increased over time. We view growth in the syndicate and increase in multi-fund adoption as key indicators for the health of our StepStone Private Wealth distribution and of the strength of our deep relationships with our partners in the wealth channel. Slide nine shows our fee-earning assets by structure and asset class. For the quarter, we increased fee-earning assets by nearly $10 billion. The drivers of our growth in fee-earning AUM included record subscriptions in StepStone Private Wealth, activations of commingled funds, new commitments to our drawdown funds, and healthy deployment by our managed accounts.

Mike McCabe: Among the platforms that have been selling StepStone funds for at least a year, those distributing partners sell an average of two funds, a figure that has steadily increased over time. We view growth in the syndicate and increase in multi-fund adoption as key indicators for the health of our StepStone Private Wealth distribution and of the strength of our deep relationships with our partners in the wealth channel. Slide nine shows our fee-earning assets by structure and asset class. For the quarter, we increased fee-earning assets by nearly $10 billion. The drivers of our growth in fee-earning AUM included record subscriptions in StepStone Private Wealth, activations of commingled funds, new commitments to our drawdown funds, and healthy deployment by our managed accounts.

Speaker #4: We view growth in the syndicate and increase in multi-fund adoption as key indicators for the health of our private wealth distribution and of the strength of our deep relationships with our partners in the wealth channel.

Speaker #4: Slide 9 shows our fee-earning assets by structure and asset class. For the quarter, we increased fee-earning assets by nearly $10 billion. The drivers of our growth in fee-earning AUM included record subscriptions in private wealth, activations of commingled funds, new commitments to our drawdown funds, and healthy deployment by our managed accounts.

Speaker #4: We activated our two PE secondaries funds in June, which was on the early side of our expected range, resulting in nearly $3 billion of additions to our fee-earning assets.

Michael McCabe: We activated our two PE secondaries funds in June, which was on the early side of our expected range, resulting in nearly $3 billion of additions to our fee-earning assets. Even with these large activations and steady managed account deployment, we maintain a healthy balance in our undeployed fee-earning capital, or UFEC, of over $39 billion, as strong fundraising in managed accounts and the first close of our venture capital secondaries fund helped to replenish the UFEC balance. The combination of fee-earning assets plus UFEC grew to approximately $193 billion, which is up $9 billion sequentially and is up $37 billion from a year ago. This translates to a 19% annual organic growth rate since fiscal 2022. Consistent with our commitment to communicate forthcoming distributions out of fee-earning AUM, we anticipate an expiration of a managed account of roughly $1.5 billion next quarter.

Mike McCabe: We activated our two PE secondaries funds in June, which was on the early side of our expected range, resulting in nearly $3 billion of additions to our fee-earning assets. Even with these large activations and steady managed account deployment, we maintain a healthy balance in our undeployed fee-earning capital, or UFEC, of over $39 billion, as strong fundraising in managed accounts and the first close of our venture capital secondaries fund helped to replenish the UFEC balance. The combination of fee-earning assets plus UFEC grew to approximately $193 billion, which is up $9 billion sequentially and is up $37 billion from a year ago. This translates to a 19% annual organic growth rate since fiscal 2022. Consistent with our commitment to communicate forthcoming distributions out of fee-earning AUM, we anticipate an expiration of a managed account of roughly $1.5 billion next quarter.

Speaker #4: Even with these large activations, and steady managed account deployment, we maintain a healthy balance in our undeployed fee-earning capital or UFEC of over $39 billion.

Speaker #4: Strong fundraising and managed accounts, along with the first close of our venture capital secondaries fund, helped to replenish the UFEC balance. The combination of fee-earning assets plus UFEC grew to approximately $193 billion.

Speaker #4: Which is up $9 billion sequentially and is up 37 billion from a year ago. This translates to a 19% annual organic growth rate since fiscal 2022.

Speaker #4: Consistent with our commitment to communicate forthcoming distributions out of fee-earning AUM, we anticipate an expiration of a managed account of roughly $1.5 billion next.

Speaker #1: Quarter . The mandate carries a fee rate in line with the average of our SMA fee rate , but there will be a partial offset to adjusted net income from noncontrolling interest .

Michael McCabe: The mandate carries a fee rate in line with the average of our SMA fee rate, but there will be a partial offset to Adjusted Net Income from non-controlling interest. Slide 10 shows the evolution in our fee revenues. We generated a blended management fee rate of 65 basis points over the last 12 months, consistent with the fee rate from fiscal 2025 as favorable mix shift to our evergreen funds offset a moderation in retroactive fees. Finally, I am pleased to announce that we are raising our quarterly dividend by 18% from $0.28 per share to $0.33 per share, reflecting strong, consistent, and sustainable growth of our Fee Related Earnings. Furthermore, we have repurchased an additional $21 million of shares since the end of fiscal 2026.

Mike McCabe: The mandate carries a fee rate in line with the average of our SMA fee rate, but there will be a partial offset to Adjusted Net Income from non-controlling interest. Slide 10 shows the evolution in our fee revenues. We generated a blended management fee rate of 65 basis points over the last 12 months, consistent with the fee rate from fiscal 2025 as favorable mix shift to our evergreen funds offset a moderation in retroactive fees. Finally, I am pleased to announce that we are raising our quarterly dividend by 18% from $0.28 per share to $0.33 per share, reflecting strong, consistent, and sustainable growth of our Fee Related Earnings. Furthermore, we have repurchased an additional $21 million of shares since the end of fiscal 2026.

Speaker #1: Slide ten shows the evolution in our fee revenues . We generated a blended management fee rate of 65 basis points over the last 12 months , consistent with the fee rate from fiscal 2025 as favorable mix shift to our evergreen funds offset a moderation in retroactive fees .

Speaker #1: And finally , I am pleased to announce that we are raising our quarterly dividend by 18% from $0.28 per share to $0.33 per share , reflecting strong , consistent and sustainable growth of our fee related earnings Furthermore , we have repurchased an additional $21 million of shares since the end of fiscal 2026 .

Speaker #1: In total , we have executed $30 million of our $100 million repurchase authorization . Buying over 710,000 shares at an average price of $41.87 .

Michael McCabe: In total, we have executed $30 million of our $100 million repurchase authorization, buying over 710,000 shares at an average price of $41.87 since announcing the authorization in March. I'll now turn the call over to David to speak to our financial highlights.

Mike McCabe: In total, we have executed $30 million of our $100 million repurchase authorization, buying over 710,000 shares at an average price of $41.87 since announcing the authorization in March. I'll now turn the call over to David to speak to our financial highlights.

Speaker #1: Since announcing the authorization in March , I'll now turn the call over to David to speak to our financial highlights

Speaker #2: Thanks , Mike . Turning to slide 12 . We earned fee revenue of $271 million , up 27% from the prior year quarter .

David Park: Thanks, Mike. Turning to slide 12, we earned fee revenue of $271 million, up 27% from the prior year quarter. The increase was driven by growth in fee-earning AUM across the platform, with particularly strong growth in commingled funds across both drawdown and evergreen funds. Fee Related Earnings were $106 million, up 30% from a year ago. FRE margin was 39% for the quarter, both on a reported and adjusted basis after normalizing for retroactive fees. Shifting to expenses, adjusted cash-based compensation was $117 million. This is up from last quarter's $111 million. The increase reflected the impact of our annual merit increase, which took effect 1 April, as well as headcount growth. The cash compensation ratio, adjusted for retroactive fees, was 43%. Adjusted equity-based compensation was $7 million.

Speaker #2: The increase was driven by growth in fee earning AUM across the platform , with particularly strong growth in commingled funds across both Drawdown and evergreen funds .

Speaker #2: We related earnings were $106 million , up 30% from a year ago Free margin was 39% for the quarter , both on a reported and adjusted basis .

Speaker #2: After normalizing for retroactive fees , shifting to expenses , adjusted cash based compensation was $117 million . This is up from last quarter's $111 million .

Speaker #2: The increase reflected the impact of our annual merit increase , which took effect April 1st , as well as headcount growth . The cash compensation ratio , adjusted for retroactive fees , was 43% .

Speaker #2: Adjusted equity based compensation was $7 million . Both the cash compensation ratio and adjusted equity based compensation are in line with the expectations we set out on our year end earnings call and our good run rates to use for the remainder of the fiscal year Understanding there could be some variability quarter to quarter General and administrative expenses were $42 million , up $10 million from the prior year quarter .

David Park: Both the cash compensation ratio and adjusted equity-based compensation are in line with the expectations we set out on our year-end earnings call and our good run rates to use for the remainder of the fiscal year, understanding there could be some variability quarter to quarter. General and administrative expenses were $42 million, up $10 million from the prior year quarter. About $3 million of the increase reflects platform distribution fees related to our private wealth funds, which are running at roughly $5 million per quarter. These expenses are charged on a trailing basis of private wealth NAV at certain distribution partners. We expect this expense to generally grow in line with private wealth assets. Gross realized performance fees were at $30 million for the quarter, and $16 million net of related compensation expense.

Speaker #2: About $3 million of the increase reflects platform distribution fees related to our private wealth funds , which are running at roughly $5 million per quarter .

Speaker #2: These expenses are charged on a trailing basis of private wealth , Nav at certain distribution partners . We expect this expense to generally grow in line with private wealth assets Gross realized performance fees were $30 million for the quarter and $16 million net of related compensation expense .

Speaker #2: As a reminder , performance fees can be episodic quarter to quarter , and we generally do not control the pace of . Our investment performance continues to be strong , supporting our growing backlog of future carry Sticking with performance fees , we are on pace for another strong year of private wealth incentive fees driven by spring returns .

David Park: As a reminder, performance fees can be episodic quarter to quarter, and we generally do not control the pace of realizations. Our investment performance continues to be strong, supporting our growing backlog of future carry. Sticking with performance fees, we are on pace for another strong year of private wealth incentive fees driven by SPRING returns. These incentive fees will be recognized in our fiscal Q3, consistent with SPRING's annual crystallization at the end of December. SPRING has delivered extraordinary results over the H1 of the calendar year, generating 23% net returns, supported by several significant value creation events. While we do not view these exceptionally strong returns as typical, we believe SPRING is a durable fund that benefits from our robust sourcing efforts and broader StepStone flywheel to generate attractive performance over time.

Speaker #2: These incentive fees will be recognized in our fiscal third quarter . Consistent with spring's annual crystallization at the end of December Spring has delivered extraordinary results over the first half of the calendar year , generating 23% net returns supported by several significant value creation events .

Speaker #2: While we do not view these exceptionally strong returns as typical , we believe spring is a durable fund that benefits from our robust sourcing efforts and broader stepstone flywheel to generate attractive performance over time .

Speaker #2: As we track spring's results , we may see more near-term volatility than usual from public market valuation movements . As private markets investors , we actively and prudently manage the exit of public positions in the ordinary course , subject to contractual lock ups and market conditions Importantly , because springs performance fees crystallize annually at the end of December , investors in the fund are not charged for fees based on intra period movements in underlying valuations Taken together , adjusted net income per share was $0.48 , up from $0.40 in the prior year quarter , driven by growth in fee related earnings .

David Park: As we track SPRING's results, we may see more near-term volatility than usual from public market valuation movements. As private markets investors, we actively and prudently manage the exit of public positions in the ordinary course, subject to contractual lockups and market conditions. Importantly, because SPRING's performance fees crystallize annually at the end of December, investors in the fund are not charged performance fees based on intra-period movements and underlying valuations. Taken together, Adjusted Net Income per share was $0.48, up from $0.40 in the prior year quarter, driven by growth in Fee Related Earnings. Moving to key items on the balance sheet on slide 13, net accrued carry finished the quarter at $935 million, up 19% from a year ago. Our net accrued carry is relatively mature. Over 70% are tied to programs that are older than 5 years, which means that these programs are ready to harvest.

Speaker #2: Moving to key items on the balance sheet on slide 13 . Net accrued carry finished the quarter at $935 million , up 19% from a year ago .

Speaker #2: Our net accrued carry is relatively mature , over 70% are tied to programs that are older than five years , which means that these programs are ready to harvest our own investment portfolio ended the quarter at $363 million .

David Park: Our own investment portfolio ended the quarter at $363 million. This concludes our prepared remarks. I'll now turn it back over to the operator to open the line for any questions.

Speaker #2: This concludes our prepared remarks . I'll now turn it back over to the operator to open the line for any questions

Speaker #3: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced and to withdraw your question , please press star one .

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question will come from Brennan Hawken with BMO. Your line is open.

Speaker #3: One again , in the first question will come from Brennan Hawken with BMO . Your line is open

Brennan Hawken: Hi. Thanks for taking my question. Sorry, I couldn't find the mute button. Mike, you spoke to a bunch of the moving pieces in UFEC, but my question is, when we think about some of those moving pieces and some of those adjustments, could you walk us through what the impact would be on the fee rate here in the quarter? Given how much fundraising and how much AUM grew, the translation into base fees wasn't quite as I would expect, and I thought maybe timing might be a part of it. Thanks.

Speaker #4: Hi . Thanks for taking my question . Sorry I couldn't find the mute button So , Mike , you spoke to a bunch of the moving pieces in UFC and some , but my question is , when we when we think about some of those moving pieces and some of those adjustments , could you walk us through what the impact would be on the fee rate here in the quarter ?

Speaker #4: You know , given how much fundraising and how much AUM grew , the translation into base fees wasn't quite as , as I would expect .

Speaker #4: And I thought maybe timing might be part of it. Thanks.

Speaker #5: So maybe , maybe a few different comments there . Thanks for the question . I'll start , you know , just kind of generally talking about you , how we see that converting into fear and AUM and the likely fee rates there .

Scott Hart: Maybe a few different comments there. Thanks, Brennan, for the question. I will start just kind of generally talking about UFEC, how we see that converting into fee-earning AUM and the likely fee rates there. Maybe David can comment specifically on what you saw in the quarter, and maybe if you are doing sort of a point-to-point estimate there, why it may not have looked exactly as expected. Look, as we think about UFEC, that will continue to be a pipeline of future fee-earning AUM growth for us. Still stands at $39 billion. We mentioned there was about $3 billion of activations during the quarter with some of the additional fundraising, right back up to $39 billion. There is probably still about $3 billion that needs to be activated. The remaining 36 will be subject to deployment.

Speaker #5: Maybe then David can kind of comment specifically on what you saw in the quarter . And maybe if you're doing sort of a point to point , you know , estimate there , you know , why , why may not have looked exactly as , as expected .

Speaker #5: But look , as we think about , you know , effect that will continue to be a pipeline of future fearing AUM growth for us .

Speaker #5: Still stands at $39 billion . We mentioned there was about $3 billion of activations during the quarter with some of the additional fund .

Speaker #5: You know right back up to $39 billion . And there's probably still about $3 billion . That needs to be activated . The remaining 36 will be subject to deployment .

Speaker #5: And if we look at the average fee rate across that you know that that that you number today . It is generally in line with , you know , our overall fee rate .

Scott Hart: If we look at the average fee rate across that UFEC number today, it is generally in line with our overall fee rate. As that is deployed, would not expect a major change there. Again, maybe over to David to comment on the specific quarter and the timing of some of the commingled fund activations.

Speaker #5: So as that's deployed , wouldn't expect , you know , a major change there . But again , maybe over to David to comment on the specific quarter and the timing of some of the commingled fund activations .

Speaker #2: Yeah , I think if you look back , you know , over the last year or so , you've seen a steady progress increase in the average fee rate , right ?

David Park: Yeah, I think if you look back over the last year or so, you have seen a steady progress increase in the average fee rate, right? That was largely due to the mix shift from SMA to commingled funds driven by not only the fundraising for commingled funds, but the growth in StepStone Private Wealth assets. Last quarter, we had mentioned in our prepared remarks that we did have a change in the fee structure for our PE secondaries and GP-led secondaries funds, and that the impact would result in a relatively muted growth in the average fee rate. That is exactly what you are seeing right now. As we raise capital and we activated the secondaries funds in June, you are going to see a little bit of fee pressure just from the lower fee rate offset by growth in StepStone Private Wealth assets.

Speaker #2: And that was largely due to the mix shift from SMA to commingled funds driven by not only the fundraising for commingled funds , but the growth in private wealth assets .

Speaker #2: Last quarter , we had mentioned , you know , in our prepared remarks that we did have a change in the fee structure for our PE secondaries and GP led secondaries funds , and that the impact would result in a relatively muted growth in the the average fee rate .

Speaker #2: That's exactly what you're seeing right now . You know , as the as we raise capital and we activated the secondaries funds in June , you're going to see a little bit of fee pressure just from the lower fee rate , offset by growth in private wealth assets .

Speaker #2: So, I think what we had mentioned was you should expect to see the commingled fund fee rate stay relatively flattish over the next few quarters to a year, as the secondaries funds continue to fund.

David Park: I think what we had mentioned was you should expect to see the commingled fund fee rate stay relatively flat-ish over the next few quarters to a year as the secondaries funds continue to fundraise. Once that is fully raised, you should see the resumption of the progress in fee rates as StepStone Private Wealth assets grow and as the fee rate steps up for the secondaries funds.

Speaker #2: And once that is fully raised, then you should see the resumption of the progress in fee rates as private wealth assets grow and as the fee rate steps up for the secondaries funds.

Speaker #4: Got it . Okay . Thanks for writing me through that . And then you touched on this a bit in your prepared remarks .

Brennan Hawken: Got it. Okay. Thanks for running me through that. You touched on this a bit in your prepared remarks, the strength in SPRING is really remarkable, and you touched on some of the excitement it's tapping into, including space exploration. Now that there's a decent-sized position that is public in that fund, can you walk through what we should expect as far as tracking of performance of that public equity and translation into SPRING's performance and how maybe a little bit of extra texture around the management of that position that you touched on briefly in your prepared remarks? Thanks.

Speaker #4: The strength in spring , you know , is really remarkable . And you touched on some of the excitement that's tapping into including space exploration .

Speaker #4: Now that there's a decent size position that is public in that fund , walk through what we should expect as far as tracking of performance of that public equity and translation into spring's performance and how maybe a little bit of extra texture around the management of that position that you touched on briefly in your prepared remarks ?

Speaker #4: Thanks .

Speaker #5: Yeah , thanks . I'll start . And Jason May may jump in here as well , but I think the first thing I'd make is , look , I think this fund spring is , is not about , you know , any , any one company or small group of companies , over 2000 positions in the fund .

Scott Hart: Yeah. Thanks, Brennan. I'll start, Jason may jump in here as well. I think the first point I'd make is, look, I think this fund, SPRING, is not about any one company or small group of companies. There's over 2,000 positions in the fund. There's about 75 or so that drive 75% of the net asset value. I think interestingly, while it was an incredibly strong year of performance in the year to 30 June, even if you stripped out the performance of SpaceX, was still a fund that was up in the mid to high 20s or double what we target for this fund, and well above even some of the public benchmarks. Strong performance really across the board here.

Speaker #5: There's about 75 or so that drive , you know , 75% of the of the net asset value . And I think interestingly , you know , while it was an incredibly strong year of performance in the year to June 30th , even if you stripped out the performance , the the performance of space , X , you know , was still a fund that was up in the sort of , you know , mid to high 20s or double , you know , what we what we target for this for this fund and well above even some of the public benchmarks so strong performance really across the board here , you know , with the recent , you know , trading down in that position as well as continued fund raising and markups across the portfolio , that position is now more of a , you know , mid , mid teens ish position down from sort of its peak there .

Scott Hart: With the recent trading down in that position, as well as continued fundraising and markups across the portfolio, that position is now more of a mid-teens-ish position down from its peak there. To your point, as it begins to come off lockup, look, our view is, as a private markets investor, it is not our job to be long-term holders of public positions. We will look to exit in an orderly way, but trying to manage that on behalf of the investors in the fund. Stay tuned in future quarters here. Certainly will introduce some level of volatility into the performance as a result of the public positions, but something that can be managed going forward.

Speaker #5: But to your point , as , as it begins to come off lockup , look , our view is as a private markets investor , we are it is not our job to be long term .

Speaker #5: Holders of public positions . And so we will look to we will look to exit in an orderly way . But trying to manage that on behalf of the investors in the fund .

Speaker #5: And so stay stay tuned in future quarters here . But , you know , certainly will introduce , you know , some level of volatility into the performance as a result of the public positions .

Speaker #5: But but something that can be can be managed going forward

Speaker #4: Thanks for that color .

Brennan Hawken: Thanks for that color.

Speaker #3: Thank you . And the next question is going to come from Ken Worthington with JP Morgan . Your line is open .

Operator: Thank you. The next question is going to come from Ken Worthington with JPMorgan. Your line's open.

Speaker #6: Hi . Good afternoon and thanks for taking the question . Maybe first talk about the buyout of the profit interest in the private wealth business .

Ken Worthington: Hi, good afternoon, thanks for taking the question. Maybe first, talk about the buyout of the profit interest in the private wealth business. There were a couple of short reports this quarter expressing concern about, one, the amount of stock likely to be issued to the management team, and two, the cash portion of the raise. How do you think about managing the lockup expirations sort of in the following three years post the buyout? Anything you're thinking about to just make sure the stock price is sort of stable if and as those shares come to market? On the cash side, clearly you're not concerned given the special dividend, the buyback, and the increase in the regular dividend. Can you talk about what you've put into place thus far, what you're thinking about in terms of managing that cash portion?

Speaker #6: There were a couple of short reports this quarter expressing concern about , one , the amount of stock likely to be issued to the management team .

Speaker #6: And two , the cash portion of the raise . So how do you think about the about managing the lockup expirations ? Sort of in the following three years , post the buyout , anything you're thinking about to just make sure the stock price is sort of stable if and as those shares come to market and then on the cash side , clearly you're not concerned , given the special dividend , the buyback and the increase in the regular dividend .

Speaker #6: But can you talk about , you know , what what you put into place thus far , what you're thinking about in terms of managing that cash portion ?

Speaker #6: You know , are you going to increase the size of the revolver ? Are there any things that you've , you know , done in preparation that you could share with us ?

Ken Worthington: Are you going to increase the size of the revolver? Are there any things that you've done in preparation that you could share with us?

Speaker #1: Yeah . Thanks , Ken . It's Mike here . Maybe I'll start with the cash portion and maybe ask Scott to talk a little bit about your first part of the question with respect to the potential overhang , as the lockups expire on the equity portion of the buy in .

Michael McCabe: Yeah. Thanks, Ken. It's Mike here. Maybe I'll start with the cash portion and maybe ask Scott to talk a little bit about your first part of the question with respect to the potential overhang as the lockups expire on the equity portion of the buy-in. In terms of capital management priorities, clearly our near-term focus is preparing for the buy-in of the profits interest associated with the private wealth platform. As a reminder, the structure provides a lot of flexibility, including the ability to fund up to 75% of the consideration in StepStone equity with the balance, as you point out, Ken, being funded in cash. I think also it's worth revisiting more broadly that from a philosophical standpoint, our capital management approach remains unchanged. Yet we operate a capital light business, and our first priority is to invest in growth.

Mike McCabe: Yeah. Thanks, Ken. It's Mike here. Maybe I'll start with the cash portion and maybe ask Scott to talk a little bit about your first part of the question with respect to the potential overhang as the lockups expire on the equity portion of the buy-in. In terms of capital management priorities, clearly our near-term focus is preparing for the buy-in of the profits interest associated with the private wealth platform. As a reminder, the structure provides a lot of flexibility, including the ability to fund up to 75% of the consideration in StepStone equity with the balance, as you point out, Ken, being funded in cash. I think also it's worth revisiting more broadly that from a philosophical standpoint, our capital management approach remains unchanged. Yet we operate a capital light business, and our first priority is to invest in growth.

Speaker #1: But , you know , in terms of capital management priorities , clearly our near-term focus is preparing for the buy in of the profits interest associated with the private wealth platform .

Speaker #1: And as a reminder , the structure provides a lot of flexibility , including the ability to fund up to 75% of the consideration in Stepstone equity , with a balance .

Speaker #1: As you point out , Ken , being funded in cash , you know , I think also it's worth revisiting more broadly that from a philosophical , philosophical standpoint , you know , our capital management approach remains unchanged .

Speaker #1: And we operate a capital light business . And our first priority is to invest , invest in growth . You know , beyond that , we look to returning capital to shareholders while maintaining flexibility for strategic initiatives like this one .

Michael McCabe: Beyond that, we look to returning capital to shareholders while maintaining flexibility for strategic initiatives like this one. I think given the upcoming cash requirement associated with the buy-in, we have a couple of options available to us beginning with cash on hand and cash generating from the business. As part of that, we will certainly continue to evaluate what the appropriate level is and timing of discretionary choices like the capital return and including future share repurchases. We did certainly signal strength in the prepared remarks here with the buybacks that we have completed so far. We're going to certainly revisit that as we prepare for the buy-in of the Private Wealth platform as well as we'll revisit all options are on the table here with respect to discretionary spend, including the annual supplemental dividend, as you know, is tied to performance fees.

Mike McCabe: Beyond that, we look to returning capital to shareholders while maintaining flexibility for strategic initiatives like this one. I think given the upcoming cash requirement associated with the buy-in, we have a couple of options available to us beginning with cash on hand and cash generating from the business. As part of that, we will certainly continue to evaluate what the appropriate level is and timing of discretionary choices like the capital return and including future share repurchases. We did certainly signal strength in the prepared remarks here with the buybacks that we have completed so far. We're going to certainly revisit that as we prepare for the buy-in of the Private Wealth platform as well as we'll revisit all options are on the table here with respect to discretionary spend, including the annual supplemental dividend, as you know, is tied to performance fees.

Speaker #1: I think given the upcoming cash requirement associated with the buy in , we have a couple of options available to us . You know , beginning , beginning with cash on hand and cash generating from the business .

Speaker #1: And as part of that , we will certainly continue to evaluate what the appropriate level is . And timing of discretionary choices like like the capital return and including future share repurchases .

Speaker #1: We did certainly signal strength in in the prepared remarks here with the buybacks that we have completed so far . But we're going to certainly revisit that as we prepare for the buy in of the private wealth platform , as well as we'll revisit , you know , all options are on the table here with respect to discretionary spend , including the annual supplemental dividend .

Speaker #1: As you know , is tied to performance fees . And lastly , I think we also have a very strong track record in the capital markets .

Michael McCabe: Lastly, I think we also have a very strong track record in the capital markets and currently maintain an investment grade rating from Kroll, which is supported by the debt private placement and revolver we put in place a couple of years ago. You can expect that we will certainly reaccess the capital markets to fund the additional cash portion that is required above and beyond what we have on hand and what we can extract from our operating cash flows. Then I would just say, historically, we've taken a pretty conservative approach to leverage, and you can expect that to continue. The incremental earnings associated with the Private Wealth buy-in should provide meaningful capacity for us to fund a decent portion of the cash consideration with debt while maintaining conservative leverage ratios.

Mike McCabe: Lastly, I think we also have a very strong track record in the capital markets and currently maintain an investment grade rating from Kroll, which is supported by the debt private placement and revolver we put in place a couple of years ago. You can expect that we will certainly reaccess the capital markets to fund the additional cash portion that is required above and beyond what we have on hand and what we can extract from our operating cash flows. Then I would just say, historically, we've taken a pretty conservative approach to leverage, and you can expect that to continue. The incremental earnings associated with the Private Wealth buy-in should provide meaningful capacity for us to fund a decent portion of the cash consideration with debt while maintaining conservative leverage ratios.

Speaker #1: And currently maintain an investment-grade rating from Kroll, which is supported by the debt private placement and revolver we put in place a couple of years ago.

Speaker #1: And you can expect that we will certainly reassess the capital markets to fund the additional cash portion that is required above and beyond what we have on hand and what we can extract from our operating cash flows.

Speaker #1: And then I would just say , you know , historically , we've taken a pretty conservative approach to leverage can expect that to continue the incremental earnings associated with the private wealth buy in should provide meaningful capacity for us to fund , you know , a decent portion of the cash consideration with debt .

Speaker #1: While maintaining , you know , conservative leverage ratios . But with that , I'll maybe ask Scott to touch on how the lockups will expire and some of the thoughts around there .

Michael McCabe: With that, I'll maybe ask Scott to touch on how the lockups will expire and some of the thoughts around there.

Mike McCabe: With that, I'll maybe ask Scott to touch on how the lockups will expire and some of the thoughts around there.

Speaker #5: Yeah , no , Ken , as you mentioned , we have the ability to fund up to 75% of the purchase price in the form of , of step stock or units .

Scott Hart: Yeah, I know, Ken, as you mentioned, we have the ability to fund up to 75% of the purchase price in the form of Step stock or units there, 30% of which are tradable immediately. The remainder of which is locked up over a three-year period. Look, in a lot of ways, it resembles the same types of lockups that the management team had at the time of the IPO, resembles the types of lockups that the management team had post the Greenspring Associates acquisition, similar to some of the lockups that our asset class teams have as we continue the buy-in of the asset class interest. Something that has been part of our playbook, both in terms of making sure to generate alignment of incentives, but also to help in terms of the orderly potential sell down of those interests over time.

Speaker #5: There , 30% of which are tradeable immediately . The remainder of which is locked up over over a three year , over a three year period , looking a lot of ways .

Speaker #5: It's it's same types of lockups that the management team had at the time of the IPO , resembles the types of lockups that the management team had posed .

Speaker #5: The Greenspring acquisition is similar to some of the lockups that our asset class teams have, as we continue the buy-in of the asset class interest.

Speaker #5: So something that has been part of our playbook , both in terms of making sure to generate , you know , alignment of incentives , but also to help in terms of the orderly , you know , potential sell down of those of those interests over time .

Speaker #5: And obviously , this one has the potential to be sizable . But I think that past that past experience gives you a sense for the orderly fashion in which we will look to , to manage it going forward .

Scott Hart: Obviously, this one has the potential to be sizable, but I think that past.

Scott Hart: That past experience gives you a sense for the orderly fashion in which we will look to manage it going forward.

Speaker #6: Great . And maybe just as a follow up , Mike , you mentioned a couple of times wanting to maintain sort of a conservative leverage position .

Ken Worthington: Great. Maybe just as a follow-up, Mike, you mentioned a couple of times wanting to maintain sort of a conservative leverage position. What does that mean? How conservative? Clearly, the more debt you use to finance this, the more accretive the buy-in becomes. What's your comfort zone in terms of what is a conservative leverage position?

Speaker #6: What does that mean ? Like how how conservative ? Clearly , the more debt you use to finance this , the more creative the buyback or the buy in becomes .

Speaker #6: What's the what's your comfort zone in terms of what is the conservative leverage position ?

Speaker #1: I think the bellwether that we're looking to inform that decision really revolves around the rating that we receive . You know , we're currently , as I mentioned , enjoying an investment grade rating , a plus , and I think we're going to start that as our , as our opening position and see how far we can go in the debt capital markets while maintaining that that strong investment grade rating .

Michael McCabe: I think the bellwether that we're looking to inform that decision really revolves around the rating that we receive. We're currently, as I mentioned, enjoying an investment grade rating A-plus. I think we're going to start that as our opening position and see how far we can go in the debt capital markets while maintaining that strong investment-grade rating. I think that's really our starting point, Ken.

Mike McCabe: I think the bellwether that we're looking to inform that decision really revolves around the rating that we receive. We're currently, as I mentioned, enjoying an investment grade rating A-plus. I think we're going to start that as our opening position and see how far we can go in the debt capital markets while maintaining that strong investment-grade rating. I think that's really our starting point, Ken.

Speaker #1: And I think that's really our starting point. Ken.

Speaker #6: Okay, perfect. Thank you.

Ken Worthington: Okay, perfect. Thank you.

Speaker #3: Thank you . And the next question will come from Ben Budish with Barclays . Your line is open .

Operator: Thank you. The next question will come from Ben Budish with Barclays. Your line is open.

Speaker #7: Hi . Good evening and thanks for taking my question . Maybe , David , in your prepared remarks , you talked a bit about distribution fees coming in from the wealth channel .

Ben Budish: Hi, good evening, and thanks for taking my question. Maybe, David, in your prepared remarks, you talked a bit about distribution fees coming in from the wealth channel. As I recall, in the past, when this sort of became a bigger narrative for some of the bigger public peers, it didn't impact you guys as much, I think for a variety of reasons. I'm curious. It doesn't sound like it's anything that's accelerating, but just curious if anything has changed recently, if the mix of distribution between RIAs and wires or US versus international has changed. Are there any other implications we should think about as we think about your longer-term margin profile? Again, sounds like you've indicated that that $5 million should grow with the wealth platform, but any other things we should be thinking about from that perspective?

Speaker #7: As I recall , in the past , when this sort of became a bigger narrative for some of the bigger public peers , you were sort of it didn't impact you guys as much .

Speaker #7: I think for a variety of reasons. So, I'm curious—it doesn't sound like it's anything that's accelerating, but I'm just curious if anything has changed recently.

Speaker #7: If the mix of distribution between RIAs and wires or US versus international has changed , and are there any other implications we should think about as we think about your longer term margin profile ?

Speaker #7: Again , sounds like you've indicated it should kind of that 5 million should grow with the wealth platform , but any other things we should be thinking about from that perspective ?

Speaker #2: Yeah . Happy to answer that . Look , like we said , these fees are largely tied to private wealth assets . We're not concentrated in any , you know , single channel .

David Park: Yeah. Happy to answer that. Look, like we said, these trail fees are largely tied to private wealth assets. We're not concentrated in any single channel. We're nicely distributed between wires, RIAs, and IBDs. Again, it's going to depend on any given period on which channel raises the assets. Some carry a higher fee than others. Some carry no fees. It's really going to depend, but generally speaking, I think it's fully baked into our run rate, that $5 million we had disclosed in the prepared remarks. I think the best assumption is as the wealth assets grow, you can assume that that $5 million will continue to grow along with it.

Speaker #2: We're nicely distributed between wires RA and Ibds . So , so again , you know , it's going to depend on any given period on which , you know , channel raises the , the assets .

Speaker #2: Some have carry a higher fee than others , some carry no fees . So it's really going to depend . But generally speaking , I think it's fully baked into our run rate .

Speaker #2: That $5 million we had . You know , disclosed in the prepared remarks . And so I think the best assumption is , as the wealth assets grow , you can assume that , you know , that $5 million will continue to grow along with it .

Speaker #7: All right . Helpful . And then maybe just curious if we could check in on some of the newer kind of tech and index initiatives to partnership with FTSE Russell and Kroll and PitchBook , I think some of this you started monetizing around the end of last year , but just curious if you could give us an update , you know .

Ben Budish: All right. Helpful. Maybe just curious if we could check in on some of the newer kind of tech and index initiatives, the partnership with FTSE Russell, Kroll, and PitchBook. I think some of this you started monetizing around the end of last year, but just curious if you could give us an update, receptivity and update from clients, anything like that. Thank you.

Speaker #7: Receptivity and uptake from clients, anything like that. Thank you.

Speaker #1: Thanks , Ben . There's no material update across the partnerships , although pleased to report that we are starting to see adoption rates starting to tick up across the three partnerships we have in place with FTSE Russell , PitchBook and Kroll .

Michael McCabe: Thanks, Ben. There's no material update across the partnerships, although pleased to report that we are starting to see adoption rates starting to tick up across the three partnerships we have in place with FTSE Russell, PitchBook, and Kroll. We're not at a certain scale yet where you'll start seeing a specific line item flow through the P&L under advisory revenue, but we're pleased with the way the outreach is going, the way the education's going in the market, and the way the adoption rates are starting to tick up with subscriptions starting to flow in. We'll certainly keep you posted in the future quarters. I think certainly by the end of this fiscal year, you might start seeing that line item in the P&L starting to reflect some of the activity in these partnerships.

Mike McCabe: Thanks, Ben. There's no material update across the partnerships, although pleased to report that we are starting to see adoption rates starting to tick up across the three partnerships we have in place with FTSE Russell, PitchBook, and Kroll. We're not at a certain scale yet where you'll start seeing a specific line item flow through the P&L under advisory revenue, but we're pleased with the way the outreach is going, the way the education's going in the market, and the way the adoption rates are starting to tick up with subscriptions starting to flow in. We'll certainly keep you posted in the future quarters. I think certainly by the end of this fiscal year, you might start seeing that line item in the P&L starting to reflect some of the activity in these partnerships.

Speaker #1: We're not at a certain scale yet where we will start seeing, you know, a specific line item flow through the P&L under advisory revenue.

Speaker #1: But we're pleased with the way the the outreach is going , the way the education is going in the market and the way the adoption rates are starting to tick up with subscriptions starting to , to flow in , we'll certainly keep you posted in the future quarters .

Speaker #1: And I think certainly by the end of this fiscal year , you might start seeing , you know , that line item in the PNL starting to reflect some of the activity in these partnerships .

Speaker #8: Okay , great . Thank you . Mike

Ben Budish: Okay, great. Thank you, Mike.

Speaker #3: Thank you . And our next question will come from Mike Brown with UBS . Your line is open .

Operator: Thank you. Our next question will come from Michael Brown with UBS. Your line is open.

Operator: Thank you. Our next question will come from Mike Brown with UBS. Your line is open.

Michael Brown: Okay, great. Good afternoon. You guys recently adjusted the fee structure on the flagship PE Secondaries fund, as you mentioned earlier. Just curious a little bit about what you're seeing in terms of feedback from LPs as you've kind of gone out there with the newer terms. Have you noticed any maybe broadening in terms of participation levels in this first close relative to prior vintages when you've been out fundraising on that fund?

Mike Brown: Okay, great. Good afternoon. You guys recently adjusted the fee structure on the flagship PE Secondaries fund, as you mentioned earlier. Just curious a little bit about what you're seeing in terms of feedback from LPs as you've kind of gone out there with the newer terms. Have you noticed any maybe broadening in terms of participation levels in this first close relative to prior vintages when you've been out fundraising on that fund?

Speaker #9: Correct . Okay , great . Good afternoon , you guys . Recently adjusted the the fee structure on the flagship PE secondaries fund .

Speaker #9: As you mentioned earlier . Just curious a little bit about what you're seeing in terms of feedback from LPs as you've kind of gone out there with the newer terms , have you noticed any maybe broadening in terms of participation levels and in this first close relative to prior vintages , when you when you've been out fundraising on that fund ?

Speaker #5: Yeah , no , thanks for the question . This is Scott . So look , it's hard to point to any one thing in terms of what is driving the activity and the fundraise , but I would say that we are off to a very strong start .

Michael McCabe: Yeah, no, thanks for the question. This is Scott. Look, it's hard to point to any one thing in terms of what is driving the activity and the fundraise, but would say that we are off to a very strong start there, probably ahead of expectations, certainly ahead of where we were last time around with this commingled fund. Again, whether you point to the fee rate, whether you point to the performance, the quality of the platform, or the overall market opportunity, there does continue to be significant interest in the secondaries market more broadly. Hard to point to any one thing, but it is resulting in a successful fundraise for us here.

Scott Hart: Yeah, no, thanks for the question. This is Scott. Look, it's hard to point to any one thing in terms of what is driving the activity and the fundraise, but would say that we are off to a very strong start there, probably ahead of expectations, certainly ahead of where we were last time around with this commingled fund. Again, whether you point to the fee rate, whether you point to the performance, the quality of the platform, or the overall market opportunity, there does continue to be significant interest in the secondaries market more broadly. Hard to point to any one thing, but it is resulting in a successful fundraise for us here.

Speaker #5: There , probably ahead of expectations , certainly ahead of , you know , where we were , you know , last time around with with this commingled fund .

Speaker #5: So again , whether you point to the fee rate , whether you point to the performance , the , you know , the quality of the platform or the overall market opportunity , and there does continue to be significant interest in the secondaries market , more , more broadly , you know , hard to hard to point to any one thing , but it is resulting in a , in a successful fundraise .

Speaker #5: You know, for us here, you heard Mike talk during the prepared remarks about the fact that we had activated the fund ahead of schedule, and that's across both of them.

Michael McCabe: You heard Mike talk during the prepared remarks about the fact that we had activated the fund ahead of schedule, and that's across both of the flagship Private Equity Secondaries fund as well as our GP-led Secondaries fund as well here. Again, good receptivity, continued good interest. If you've seen some of the H1 statistics come out about the secondaries market, the H1 was another sort of record H1 and on pace for what very much looks to be another record year. Yet at the same time, there's not a tremendous amount of dry powder, only about a year's worth of dry powder that's available in the market there. We think very well positioned there. Just to put a couple of additional numbers on it, with some smaller closings that we had during the quarter that took

Scott Hart: You heard Mike talk during the prepared remarks about the fact that we had activated the fund ahead of schedule, and that's across both of the flagship Private Equity Secondaries fund as well as our GP-led Secondaries fund as well here. Again, good receptivity, continued good interest. If you've seen some of the H1 statistics come out about the secondaries market, the H1 was another sort of record H1 and on pace for what very much looks to be another record year. Yet at the same time, there's not a tremendous amount of dry powder, only about a year's worth of dry powder that's available in the market there. We think very well positioned there. Just to put a couple of additional numbers on it, with some smaller closings that we had during the quarter that took

Speaker #5: The flagship private equity secondaries fund , as well as as our GP led secondaries fund , as well here . So again , good receptivity , continued good interest .

Speaker #5: If you've seen some of the first half statistics come out about the secondary market , you know , the first half was another sort of , you know , record first half .

Speaker #5: And on pace for , you know , what very much , you know , looks to be another record year . Yet at the same time there's not a tremendous amount of dry powder only about a year's worth of dry powder that's available in in the market .

Speaker #5: There . And so , you know , we think you know very well positioned there just to put a , you know , a couple of additional , you know , numbers on it , you know , with some smaller closings that we had during the quarter that took the private equity secondaries fund to somewhere in the , you know , $2.5 billion range .

Scott Hart: The Private Equity Secondaries fund to somewhere in the $2.5 billion range. The GP-led fund around $300, based on what had been raised to date, and with incremental closings post quarter end, continued progress there. Making very good progress.

Speaker #5: The GP led fund , you know , around 300 based on what had been raised to date and with incremental closings , you know , post , post quarter end , you know , continued progress there .

Speaker #5: So, making very good—very good—progress.

Speaker #9: Okay , great . Thanks for the color on that . I want to ask a little bit about the accrued carry here . So it's it's reached roughly 935 million .

Michael Brown: Okay, great. Thanks for all the color on that. Want to ask a little bit about the accrued carry here. It's reached roughly $935 million. I know that nobody has a crystal ball in the near term, but over 70% tied to programs older than five years. Any color about maybe how investors should think about the pace of how that will convert into realized performance revenue near term would be very helpful, but maybe just over the next couple of years would also be helpful. Thank you.

Mike Brown: Okay, great. Thanks for all the color on that. Want to ask a little bit about the accrued carry here. It's reached roughly $935 million. I know that nobody has a crystal ball in the near term, but over 70% tied to programs older than five years. Any color about maybe how investors should think about the pace of how that will convert into realized performance revenue near term would be very helpful, but maybe just over the next couple of years would also be helpful. Thank you.

Speaker #9: And I know that nobody has a crystal ball in the near term, but over 70% is tied to programs older than five years.

Speaker #9: So any color about maybe how investors should think about the pace of how that will convert into , into realized performance revenue near term would be very helpful .

Speaker #9: But , you know , maybe just over the next couple of years would also be helpful . Thank you .

Speaker #5: Yeah . So look , maybe I'll step back and just spend , you know , a few seconds on the broader realization , you know , activity that we're seeing across across the market , which obviously then plays into the , the , the performance related earnings and realized carry over over time here , I think a lot of , in a lot of ways , the first half of this year kind of reminded us of the first half of last year , where , you know , people came into the year with high expectations .

Scott Hart: Yeah. Look, maybe I'll step back and just spend a few seconds on the broader realization activity that we're seeing across the market, which obviously then plays into the performance-related earnings and realized carry over time here. I think in a lot of ways, the H1 of 2024 kind of reminded us of the H1 of 2023 where people came into the year with high expectations. Those expectations were probably not quite met as a result of some of the macro activity that took place in the H1 of 2023 with tariffs, 2024 with AI disruption and war in the Middle East. There have been some positive signs of life there. Certainly, GPs are looking to generate liquidity on behalf of their LPs, but are also trying to optimize their exits.

Speaker #5: You know , those expectations were probably not quite met as a result of some of the , you know , the macro activity that took place in the first half of the year last year with with tariffs this year with AI disruption and a war in the Middle East .

Speaker #5: But there have been some positive signs of life . There . Certainly GPS are looking to generate liquidity on behalf of their their LPs , but are also trying to optimize their exits .

Speaker #5: And so one of the comments you've heard me make really , probably over the last couple of years at this point , is that a lot of the realization activity that you do see that results in partial realizations as opposed to full realizations .

Scott Hart: One of the comments you've heard me make, really probably over the last couple of years at this point, is that a lot of the realization activity that you do see results in partial realizations as opposed to full realizations. Whether that's through a continuation vehicle, a minority sale, the divestiture of a division selling to a strategic but receiving stock in return that needs to be exited over time. There have been a number of different forms of partial realizations that we've seen, and what that can mean in some cases, that it may not always translate into carry performance fees if those funds that have European waterfall have not returned cost plus preferred return, or if those vehicles with an American waterfall have not returned cost plus preferred return on that individual company.

Speaker #5: And so whether that's through a continuation vehicle , a minority sale , the divestiture of A , of a , of a division selling to a strategic but receiving stock in return , that needs to be exited over time .

Speaker #5: There have been a number of different forms of, of partial realizations that we've seen. And you know what that can mean in some cases is that it may not always translate into carry or performance fees.

Speaker #5: If those funds that have European , you know , waterfall have not returned , you know , plus preferred return , or if those those vehicles with an American waterfall , you know , have not returned , you know , cost plus preferred return on that individual company .

Speaker #5: So I think we're seeing a little bit of a disconnect right now between some of the improving realization activity that hasn't yet flowed through in terms of carry.

Scott Hart: I think we're seeing a little bit of a disconnect right now between some of the improving realization activity that hasn't yet flown through in terms of carry. We do think that is starting to improve. We've seen a number of announced full exits, some of which will come through in the coming quarters. I think there's a strong pipeline of that activity as well. As you say, difficult to predict. We don't have a crystal ball, and we don't control the exits in a lot of cases. I think as you move forward a couple of years and certain vehicles that have a European waterfall move into carry paying mode, that's when you may see a more sort of consistent flow of realized performance earnings over time.

Speaker #5: We do think that is starting to improve . You know , we've seen a number of announced full exits , some of which will come through in the coming quarters .

Speaker #5: I think there's a strong pipeline of that activity as well . But as you say , difficult to predict . We don't have a crystal ball and we don't control the exits in a lot of in a lot of cases .

Speaker #5: I think as you move forward , a couple of years and in certain vehicles that have a European waterfall , you know , move into carry paying mode , that's when you may see a more sort of consistent flow of , of realized performance earnings over , over time

Speaker #9: Okay, got it. Thank you so much for the call.

Michael Brown: Okay. Got it. Thank you so much for the color.

Mike Brown: Okay. Got it. Thank you so much for the color.

Speaker #3: Thank you . And the next question will come from Alexander Blostein with Goldman Sachs . Your line is open .

Operator: Thank you. The next question will come from Alexander Blostein with Goldman Sachs. Your line's open.

Speaker #10: Hey good afternoon . This is Anthony on for Alex . Maybe just on on spring . Just just given the high concentration of of space , how is this kind of affecting how clients and advisors are thinking about the product today and what are your expectations on gross flows and redemptions over the next few months ?

[Analyst] (Goldman Sachs): Hey, good afternoon. This is Anthony on for Alex. Maybe just on SPRING, just given the high concentration of SpaceX, how is this kind of affecting how clients and advisors are thinking about the product today? What are your expectations on gross flows and redemptions over the next few months?

Anthony Corbin: Hey, good afternoon. This is Anthony on for Alex. Maybe just on SPRING, just given the high concentration of SpaceX, how is this kind of affecting how clients and advisors are thinking about the product today? What are your expectations on gross flows and redemptions over the next few months?

Speaker #11: Yeah . Thanks , Anthony . Jason here . So as Scott noted earlier , concentration space actually is muted a bit over the last quarter or so down to a mid-teens position .

Jason Ment: Yeah. Thanks, Anthony. Jason here. As Scott noted earlier, concentration in SpaceX actually has muted a bit over the last quarter or so down to a mid-teens position. Clearly demonstrating our confidence in the power law where venture-backed companies, a select few drive the majority of the returns, but no longer what we would think of as an outsized position by any stretch. In terms of the go to market, as we talk about SPRING, whether that's two quarters ago, a quarter ago, a year ago, or tomorrow, we've never sold it as access to a single company or even a select group of companies. It's designed to be access to a diversified portfolio of venture assets, obviously with, again, a focus on the power law, and as Scott mentioned earlier, 75 companies driving 75% of the NAV.

Speaker #11: So clearly demonstrating our confidence in the power law , where venture backed companies , you know , a select few drive the majority of the returns .

Speaker #11: But but no longer what we would think of , as , you know , an outsized position by any , by any stretch in terms of the go to market .

Speaker #11: As we talk about spring , whether that's two quarters ago , a quarter ago , a year ago , or tomorrow , we've never sold it as access to a single company or even a select group of companies .

Speaker #11: It's designed to be access to a diversified portfolio of venture assets . Obviously , with , again , a focus on the power law .

Speaker #11: And as Scott mentioned earlier , 75 companies driving 75% of the Nav in terms of the redemption activity , obviously , here , two , four .

Jason Ment: In terms of the redemption activity, obviously heretofore, it's been very low. As we talk to the channel partners that are actively allocating to SPRING, have allocated in the past or are contemplating onboarding it now, we continue to hear a lot of excitement, not about the names everybody knows, but really about the names that are going to be the companies of tomorrow that people are talking about. That's consistent with the venture and growth sector for as long as we've been active in it. It's always about the companies of tomorrow, not the companies of today. In terms of future redemption activity, we're not hearing any pent-up demand for redemption.

Speaker #11: It's been very , very low . And as we talk to the channel partners that are actively allocating to spring , have Act have allocated in the past or contemplating onboarding it now , we continue to hear a lot of excitement , not about the names .

Speaker #11: Everybody knows, but really it’s about the names that are going to be the companies of tomorrow that people are talking about. And that's consistent with the venture and growth sector.

Speaker #11: For as long as we've been active in it , it's always about the companies of tomorrow , not the companies of today . In terms of the so in terms of future redemption activity , we we're not hearing any pent up demand for redemption .

Speaker #11: We always , with all of the evergreen funds , plan for and manage the portfolio in anticipation of maximum redemption per quarter or bi annually , depending on which fund we're talking about .

Jason Ment: We always, with all of the evergreen funds, plan for and manage the portfolio in anticipation of maximum redemption per quarter or biannually, depending on which fund we're talking about, so that we're prepared from a liquidity perspective. In terms of future flows, we continue to see high activity at the top of the funnel, and SPRING, in particular, adoption into additional model portfolios. Continue to be very bullish on what we'll see going forward. Again, as we mentioned in the prepared remarks, last couple of quarters were definitely outsized. Again, we weren't marketing it as access to one or even a handful of specific companies, you can't control activity out in the market. Interest continues to be quite strong.

Speaker #11: So that we're prepared from a liquidity perspective and in terms of future flows , we continue to see high activity at the top of the funnel and spring in particular , adoption .

Speaker #11: Into additional model portfolios . So continue to be very bullish on what we'll see going forward . Again , as as we mentioned in the prepared remarks last couple of quarters , we're we're definitely outsized .

Speaker #11: Again, we weren't marketing it as access to one or even a handful of specific companies. But you can't control activity out in the market.

Speaker #11: But but interest continues to be quite strong

Speaker #10: Got it . That's that's helpful . Maybe staying on the the evergreen topic . I believe the international exposure in your evergreen funds is fairly low .

[Analyst] (Goldman Sachs): Got it. That's helpful. Maybe staying on the evergreen topic, I believe the international exposure in your evergreen funds is fairly low. How are you thinking about expanding distribution overseas?

Anthony Corbin: Got it. That's helpful. Maybe staying on the evergreen topic, I believe the international exposure in your evergreen funds is fairly low. How are you thinking about expanding distribution overseas?

Speaker #10: So , so how are you thinking about expanding distribution overseas ?

Speaker #11: Yeah . So we have added dedicated personnel within territories that are fully focused on the wealth channel . And we've built that out over a half a dozen plus territories internationally today , the the vast majority of their activity is around getting on platform as opposed to calling on advisors , right .

Jason Ment: Yeah. We have added dedicated personnel within territories that are fully focused on the wealth channel, and we've built that out over a half a dozen plus territories internationally today. The vast majority of their activity is around getting on platform as opposed to calling on advisors, right? As that kind of activity level balances out toward calling on advisors, rather than calling to get on platforms, we'll start to see a much more material uptake in terms of the funds. The second point that I'd make is we have really focused on enhancing brand awareness in different markets internationally through targeted outreach. Not just calling campaigns, but advertising and the like.

Speaker #11: And so as that kind of activity level bounces out toward calling on advisors rather than calling to get on platforms , we'll start to see a much more material uptake in terms of the funds , the the second point that I'd make is we have really focused on enhancing brand awareness in different markets internationally through through targeted outreach , not just calling campaigns , but , you know , advertising and the like

Speaker #10: Got it. Thanks, guys.

[Analyst] (Goldman Sachs): Got it. Thanks, guys.

Anthony Corbin: Got it. Thanks, guys.

Speaker #3: Thank you . And as a reminder to ask a question , please press star one one on your telephone . The next question comes from Michael Cyprus with Morgan Stanley .

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. The next question comes from Michael Cyprys with Morgan Stanley. Your line is now open.

Speaker #3: Your line is now open.

Speaker #12: Great . Thank you . Good afternoon . Thanks for taking the question . Maybe just staying with private wealth . Clearly this has become .

Michael Cyprys: Great. Thank you. Good afternoon. Thanks for taking the question. Maybe just staying with private wealth. Clearly, this has become arguably one of the biggest growth engines for StepStone. As you think out three to five years, curious what becomes the limiting factor in your view to sustaining this multi-billion dollar quarterly inflows that you've been putting up?

Speaker #12: Arguably, one of the biggest growth engines for StepStone. So, as you think out three to five years, I'm curious—what becomes the limiting factor, in your view, to sustaining these multibillion-dollar quarterly inflows that you've been putting up?

Speaker #11: We don't see a limiting factor to being able to keep that multi-billion pace up into the future . The Tam is quite high .

Jason Ment: We don't see a limiting factor to being able to keep that multi-billion pace up into the future. The TAM is quite high, penetration is very low. These funds, in addition to being well-tuned for the high net worth and mass affluent markets, are also very likely going to be component parts of our solution for 401, which represents an equally large and less tapped market today.

Speaker #11: Penetration is very low , and these funds , in addition to being well tuned for the high net worth and mass affluent markets , are also very likely going to be component parts of our solution for 401 k , which represents , you know , an equally large and less tapped market today

Speaker #12: Great . And then just as a follow up question , historically , you've monetized your investment expertise through management fees and carry . But as you broaden the business with data analytics technology through some of the various partnerships , FTSE Kroll , PitchBook , you mentioned earlier , I guess to what extent do you envision those becoming more meaningful business lines ?

Michael Cyprys: Great. Just as a follow-up question, historically, you've monetized your investment expertise through management fees and carry. As you broaden the business with data analytics technology through some of the various partnerships, with FTSE, Kroll, PitchBook that you mentioned earlier, I guess to what extent do you envision those becoming more meaningful business lines? Maybe you can help frame what success looks like for these data businesses, and maybe you could speak to some of your initiatives and steps you're looking to take there to help drive an inflection over the next 12 to 24 months.

Speaker #12: Maybe you can help frame what success looks like for these data businesses , and maybe you could speak to some of your initiatives and steps you're looking to take there to help drive an inflection over the next 12 to 24 months ?

Speaker #1: Yeah . Thanks , Mike . This is certainly playing the long game in many ways , but the data that Stepstone is sitting on is probably the deepest , broadest , and largest data set in the industry across all the asset classes and strategies .

Michael McCabe: Thanks, Mike. This is certainly playing the long game in many ways. The data that StepStone is sitting on is probably the deepest, broadest, and largest data set in the industry across all the asset classes and strategies. The partnerships that we've put in place have really been done so with a very long-term view, starting with FTSE Russell. In many ways, to Jason's point, as we start migrating into defined contribution, whether it's 401 or Scott pointed out model portfolios as another channel for us. We think benchmarking tools and analytical tools are going to be table stakes for accessing some of these markets.

Mike McCabe: Thanks, Mike. This is certainly playing the long game in many ways. The data that StepStone is sitting on is probably the deepest, broadest, and largest data set in the industry across all the asset classes and strategies. The partnerships that we've put in place have really been done so with a very long-term view, starting with FTSE Russell. In many ways, to Jason's point, as we start migrating into defined contribution, whether it's 401 or Scott pointed out model portfolios as another channel for us. We think benchmarking tools and analytical tools are going to be table stakes for accessing some of these markets.

Speaker #1: The partnerships that we've put in place have really been done . So with , with a very long term view , you're starting with FTSE Russell , you know , in many ways to to Jason's point , as we start , you know , migrating into defined contribution , whether it's 401 K or Scott pointed out model portfolios as another channel for us .

Speaker #1: You know, we think benchmarking tools and analytical tools are going to be table stakes for accessing some of these markets.

Speaker #1: And we believe the FTSE step suite of indices will become into focus . And a priority for asset allocators , particularly in that segment of the market , as they think about how to , you know , how to figure out transparency and governance and benchmarking returns , particularly in the in the retirement market , you know , the industry has relied heavily over the years on this quarterly , lagged benchmarking tools that that I just we don't think , you know , our sustainable over the over the long term .

Michael McCabe: We believe the FTSE StepStone suite of indices will become into focus and a priority for asset allocators, particularly in that segment of the market, as they think about how to figure out transparency and governance and benchmarking returns, particularly in the retirement market. The industry has relied heavily over the years on this quarterly lagged benchmarking tools that we don't think are sustainable over the long term. I think what we're creating with FTSE Russell is very long-term. I think the big economic model that I think we're all curious to see whether or not we can unlock is if some of these indices that we're creating with FTSE Russell could have an asset management solution wrapped or attached to it. Stay tuned for more thoughts there.

Mike McCabe: We believe the FTSE StepStone suite of indices will become into focus and a priority for asset allocators, particularly in that segment of the market, as they think about how to figure out transparency and governance and benchmarking returns, particularly in the retirement market. The industry has relied heavily over the years on this quarterly lagged benchmarking tools that we don't think are sustainable over the long term. I think what we're creating with FTSE Russell is very long-term. I think the big economic model that I think we're all curious to see whether or not we can unlock is if some of these indices that we're creating with FTSE Russell could have an asset management solution wrapped or attached to it. Stay tuned for more thoughts there.

Speaker #1: So I think what , what we're creating with Russell is very long term , but I think the big economic model that I think we're all curious to see whether or not we can unlock is if , if some of these indices that we're creating with FTSE Russell could have an asset management solution wrapped or attached to it .

Speaker #1: So stay tuned for more thoughts there . Certainly the PitchBook partnership is an exciting one for us that will enable general partners and other members of the asset class to , you know , analyze performance at the deal level , not just at the fund level .

Michael McCabe: Certainly, the PitchBook partnership is an exciting one for us that will enable general partners and other members of the asset class to analyze performance at the deal level, not just at the fund level. How managers can start benchmarking their returns by portfolio company in a specific GICS code or sector or geography, enterprise value or entry multiple. All of those deal level data points are now going to be available to the general partner community and other service providers to really assess how performance can be measured with transparency in the marketplace. Last but not least, given all of the attention that private credit has received over the last year or so, the partnership that we've created with Kroll provides a variety of users in the industry how to better understand measuring risk at the loan level, not at the fund level data points.

Mike McCabe: Certainly, the PitchBook partnership is an exciting one for us that will enable general partners and other members of the asset class to analyze performance at the deal level, not just at the fund level. How managers can start benchmarking their returns by portfolio company in a specific GICS code or sector or geography, enterprise value or entry multiple. All of those deal level data points are now going to be available to the general partner community and other service providers to really assess how performance can be measured with transparency in the marketplace. Last but not least, given all of the attention that private credit has received over the last year or so, the partnership that we've created with Kroll provides a variety of users in the industry how to better understand measuring risk at the loan level, not at the fund level data points.

Speaker #1: So , you know , how managers can start benchmarking their returns by portfolio company in a specific code or sector or geography , enterprise value or entry , multiple , all of those deal level data points are now going to be available to the general partner community and other service providers to , to really assess how performance can be measured with transparency in the marketplace .

Speaker #1: And last but not least, given all of the attention that private credit has received over the last year or so, the partnership that we've created with Kroll provides a variety of users in the industry more ways to better understand and measure risk.

Speaker #1: You know , at the at the loan level , not at the fund level data points . So , you know , all three , we think set Stepstone up to be the leading source of truth when it comes to data and technology in the private markets

Michael McCabe: all three, we think, set StepStone up to be the leading source of truth when it comes to data and technology in the private markets.

Mike McCabe: all three, we think, set StepStone up to be the leading source of truth when it comes to data and technology in the private markets.

Speaker #12: Great . Thank you .

Scott Hart: Great. Thank you.

Speaker #3: Thank you . And the next question will come from John Dunn with Evercore . Your line is open .

Operator: Thank you. The next question will come from John Dunn with Evercore. Your line is open.

Speaker #13: Thank you . Maybe just thinking about some of the newer strategies you guys have in private wealth , maybe could you talk about like how , you know , your early experiences are tracking towards your prior experiences and maybe kind of openness to acceptance and potential for platform expansion domestically ?

John Dunn: Thank you. Maybe just thinking about some of the newer strategies you guys have in private wealth. Maybe could you talk about how your early experiences are tracking towards your prior experiences and maybe openness to acceptance and potential for platform expansion domestically?

Speaker #11: Sure . Thanks , . I think that if you look at the adoption curve , we kind of call it the day zero asset raise curve with S prime going first .

Michael McCabe: Sure. Thanks, John. I think that if you look at the adoption curve, we call it the day zero asset raise curve, with S Prime going first. If I look at each of the successive funds, every single one of them is at or above the S Prime adoption curve today, and really has been from inception of each of those funds. There is no doubt that there is a benefit in this channel of having built the brand and the trust relationship starting with S Prime that has helped us with each of the successive funds. If I look at our lived experience from a cross-sell perspective, multi-fund adoption perspective, Mike touched on it in the prepared remarks that we now average two funds per platform if the platform's been with us for at least a year.

Mike McCabe: Sure. Thanks, John. I think that if you look at the adoption curve, we call it the day zero asset raise curve, with S Prime going first. If I look at each of the successive funds, every single one of them is at or above the S Prime adoption curve today, and really has been from inception of each of those funds. There is no doubt that there is a benefit in this channel of having built the brand and the trust relationship starting with S Prime that has helped us with each of the successive funds. If I look at our lived experience from a cross-sell perspective, multi-fund adoption perspective, Mike touched on it in the prepared remarks that we now average two funds per platform if the platform's been with us for at least a year.

Speaker #11: If I look at each of the successive funds, every single one of them is at or above the S-prime adoption curve.

Speaker #11: Today . And , and really has been from inception of each of those funds . So there is no doubt that there is a benefit in this channel of having built the the brand and the trust relationship , starting with s Prime , that has helped us with , with each of the successive funds .

Speaker #11: If I look at our lived experience from a a . Cross-Sell perspective , multi multi fund adoption perspective , Mike touched on it in the prepared remarks that we now average two funds per platform .

Speaker #11: If the platform has been with us for , for at least a year , that number has has definitely crept up over the last number of quarters .

Michael McCabe: That number has definitely crept up over the last number of quarters. We're very happy with the evidence of the relationship that we've built, that trust relationship we've built with each of our partners, as evidenced by that. If we look at the number of platforms, again, looking at that seasoned universe of they've been with us for more than a year, we're now over 50% of those platforms have adopted at least two funds with a growing number of platforms adopting three, four, and even five funds with us.

Mike McCabe: That number has definitely crept up over the last number of quarters. We're very happy with the evidence of the relationship that we've built, that trust relationship we've built with each of our partners, as evidenced by that. If we look at the number of platforms, again, looking at that seasoned universe of they've been with us for more than a year, we're now over 50% of those platforms have adopted at least two funds with a growing number of platforms adopting three, four, and even five funds with us.

Speaker #11: So we're very happy with the evidence of the relationship that we've built , that trust relationship we've built with each of our partners , as evidenced by that .

Speaker #11: And if we look at the number of platforms , again , looking at that seasoned universe of they've been with us for more than a year , we're now over 50% of those platforms have adopted at least two funds , with a growing number of platforms adopting three , four , and even five funds with us

Speaker #13: Got it. And then maybe on the institutional side, are there any geographies you can point to as seeing accelerating demand, or any shifts in strategy or preference?

John Dunn: Got it. Maybe on the institutional side, any geographies you point to as seeing accelerating demand or any shifts in strategy preference?

Speaker #5: Thanks , John . Yeah . So I think if you look at it over either the last quarter or the last 12 months , a couple of things .

Scott Hart: Thanks, John. I think if you look at it over either the last quarter or the last 12 months, a couple of things. One, US stands out as an area of strength, but some of that is driven by private wealth, which we've touched on. If I exclude private wealth and focus on what you asked about institutional, the three broad geographies that stand out over both the last quarter and the last 12 months are the US, Europe, and then Asia plus Australia. Those things are driven by different things. I would say in the US, it's been the strong initial closings we've had on our venture secondaries and private equity secondaries funds. In Europe, it's been driven by, I'd say namely private credit and infrastructure, both some very strong separate account re-ups, but also strong fundraising across certain of our commingled vehicles there.

Speaker #5: One , US stands out as an area of strength , but some of that is driven by private , private wealth , which we've touched on .

Speaker #5: So if I exclude private wealth and focus on what you asked about institutional , the three broad geographies that stand out over both the last quarter and the last 12 months are the U.S.

Speaker #5: , Europe and then Asia , plus Australia . And , you know , those things are driven by different things . I would say , in the U.S.

Speaker #5: it's been the strong initial closings . We've had on our venture secondaries and private equity secondaries , funds in Europe . It's been driven by , say , namely private credit and infrastructure , both some very strong separate account re ups , but also strong fundraising across certain of our commingled vehicles .

Speaker #5: There are things like infrastructure, co-investments, things like our S Fund. And then if I think about Asia and Australia, there's probably been a bit more of a mix.

Scott Hart: Things like infrastructure co-investments, things like our CRDEX fund. If I think about Asia and Australia, there it's probably been a bit more of a mix. Some of it is commingled fundraising, particularly in private equity across both co-investments and secondaries. In Australia in particular, continued growth in separate accounts in areas like infrastructure. Again, no one geography driving anything. Different drivers that are resulting in those three broad geographic regions standing out over the last 12 months. Hopefully some of that color is helpful there.

Speaker #5: Some of it is commingled fundraising, particularly in private equity across both co-investments and secondaries. And then in Australia in particular, continued growth in separate accounts in areas like infrastructure.

Speaker #5: So again , no one geography driving anything different drivers that that are resulting in those three broad geographic regions standing out over the last 12 months .

Speaker #5: But hopefully some of that color is helpful there.

Speaker #13: Thank you .

John Dunn: Thank you.

Speaker #3: Thank you. I have no further questions at this time. I would now like to turn the call back over to Scott for closing remarks.

Operator: Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Scott for closing remarks.

Speaker #5: Well , great . Well , thank you for your time today . I hope everyone enjoys the rest of their of their summer , and we'll look forward to updating you again next next quarter .

Scott Hart: Well, great. Well, thank you for your time today. Hope everyone enjoys the rest of their summer, we'll look forward to updating you again next quarter. Thank you.

Speaker #5: Thank you .

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

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