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01/11 04:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights record high fee-related earnings, strong dividend growth, and a robust share buyback program, indicating positive financial health and shareholder returns. Despite some operational risks and competition, the growth in AUM and positive pipeline outlook suggest optimism. The Q&A section revealed confidence in future margins and business opportunities, with no major concerns from analysts. The market cap suggests moderate sensitivity, leading to a prediction of a positive stock price movement.
EPS $0.68, up 106% from $0.33 in Q4 2024, driven by higher fee-related earnings and performance-related earnings.
GAAP Net Loss $18.5 million or $0.24 per share, no year-over-year comparison provided.
Fee-Related Earnings (FRE) $94.1 million, up 85% from the prior year quarter, driven by retroactive fees from special situations real estate secondaries fund and multi-strategy growth equity fund.
FRE Margin 44%, up more than 1,000 basis points year-over-year; excluding retroactive fees, the margin was 40%.
Adjusted Net Income $80.6 million, up from $37.7 million in Q4 2024, driven by higher fee-related earnings and performance-related earnings.
Dividends Declared a base quarterly dividend of $0.24 and a supplemental dividend of $0.40, totaling $1.36 for the fiscal year, up from $0.99 last year.
Fee Revenues $215 million, up 40% from the prior year quarter, driven by growth in fee-earning AUM and a higher blended average fee rate.
Gross Realized Performance Fees $81 million for the quarter, the best quarter ever, reflecting realizations from previously announced deals.
Net Accrued Carry $738 million, down 1% from last quarter but up 16% over the last twelve months.
Cash Compensation Ratio 46% of fee-related revenues for the full year, expected to remain around this level for fiscal 2026.
Undeployed Fee-Earning Capital (UFEC) Grew from about $22 billion last quarter to approximately $25 billion this quarter.
Total Fee-Earning AUM Over $121 billion, up $7.2 billion over last quarter.
Assets Under Management (AUM) Inflows Generated over $31 billion of gross AUM inflows during the fiscal year, with $21 billion from separately managed accounts and over $10 billion from commingled funds.
Private Wealth Platform Assets Increased from $3.4 billion at the end of fiscal 2024 to over $8 billion as of the end of fiscal 2025.
New Products: Added CredX to private wealth suite, offering evergreen funds across credit, infrastructure, venture, and growth equity.
Market Expansion: Private wealth platform grew from $3.4 billion to over $8 billion in assets, with distribution partners increasing from 300 to almost 500.
Commingled Funds Growth: Closed three commingled funds over $3 billion, with the largest real estate secondary fund ever raised at $3.75 billion.
Operational Efficiencies: Fee-related earnings increased by 85% year-over-year, with an FRE margin of 44%, the highest ever recorded.
Asset Management Growth: Raised over $31 billion in assets under management, with a 29% organic growth rate.
Strategic Shifts: Focus on scenario planning to assess impacts by asset class, strategy, region, and sector due to market volatility.
Market Volatility: The company noted a shift in the capital market backdrop in April, leading to volatility in public markets and widening bid-ask spreads in private markets. This uncertainty requires ongoing scenario planning to assess impacts across various asset classes and regions.
Macroeconomic Downturns: StepStone Group acknowledged that while they are not immune to macroeconomic downturns, they have historically proven their resilience during periods of uncertainty, which can widen the gap from peers.
Regulatory Risks: The company mentioned that forward-looking statements are subject to various risks and uncertainties, including regulatory issues, which could impact future performance.
Investment Risks: The management emphasized the importance of a long-term disciplined investment approach to avoid poor investments, which is critical for capitalizing on private market opportunities.
Competition: The company highlighted competitive pressures in the private market asset management space, necessitating a focus on maintaining an information advantage and insight into market dislocations.
Operational Risks: The need for ongoing investments in human capital and technology was noted, indicating potential operational risks if these investments do not yield expected growth.
Record Earnings: Generated record earnings this quarter, marking a capstone for a record fiscal year.
Assets Under Management: Raised over $31 billion of assets under management, with a fee-earning AUM growth of over 29%.
Managed Account Expansion: Achieved over $8.5 billion of SME inflows, with over 40% sourced from new accounts or expanded relationships.
Commingled Funds Growth: Closed on three commingled funds of over $3 billion, contributing to significant growth.
Private Wealth Platform Growth: Increased private wealth platform assets from $3.4 billion to over $8 billion.
New Product Offerings: Added CredX to the private wealth suite, expanding offerings across various asset classes.
Distribution Expansion: Expanded distribution partners from 300 to almost 500 platforms.
Infrastructure Co-Investment Fund: Closed on debut infrastructure co-investment fund of over $1 billion.
Future Revenue Expectations: Expect to remain active in fiscal 2026 with multiple funds in the market.
Fee-Related Earnings Growth: Achieved a 30% annual organic growth in fee-related earnings over the last three years.
Cash Distribution to Shareholders: Declared a total of $1.36 per share in dividends for the fiscal year, up 37% from last year.
Capital Deployment Strategy: Expect to deploy capital effectively, leveraging $25 billion in undeployed fee-earning capital.
Long-Term Margin Trajectory: Expect long-term margin trajectory to move higher as operating leverage is generated.
Base Quarterly Dividend: $0.24 per share, payable on June 30, 2025.
Supplemental Dividend: $0.40 per share, payable on June 30, 2025.
Total Dividend for Fiscal Year: $1.36 per share, up from $0.99 last year.
Share Buyback Program: Second tranche of buy-in expected in Q1 FY 2026, utilizing $10 million cash and $161 million equity, translating to 3.2 million shares at a discount of over 15% to the public PE multiple.
The earnings call highlights strong financial performance, with significant growth in adjusted net income and fee revenues. The introduction of STPEX and expansion in institutional fundraising are positive indicators. Despite concerns about increased G&A expenses, the partnership with Aviva and international expansion present growth opportunities. The Q&A reveals some uncertainties, but overall sentiment remains positive. Given the company's market cap, the stock price is likely to experience a moderate positive movement.
The earnings call highlights record high fee-related earnings, strong dividend growth, and a robust share buyback program, indicating positive financial health and shareholder returns. Despite some operational risks and competition, the growth in AUM and positive pipeline outlook suggest optimism. The Q&A section revealed confidence in future margins and business opportunities, with no major concerns from analysts. The market cap suggests moderate sensitivity, leading to a prediction of a positive stock price movement.
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