StepStone : Reports First Quarter 2024 Results

STEPSTONE GROUP REPORTS FIRST QUARTER FISCAL YEAR 2024 RESULTS

NEW YORK, August 3, 2023 - StepStone Group Inc. (Nasdaq: STEP), a global private markets investment firm focused on providing customized investment solutions and advisory and data services, today reported results for the quarter ended June 30, 2023. This represents results for the first quarter of the fiscal year ending March 31, 2024. The Board of Directors of the Company has declared a quarterly cash dividend of $0.21 per share of Class A common stock, payable on September 15, 2023, to the holders of record as of the close of business on August 31, 2023.

StepStone issued a full detailed presentation of its first quarter fiscal 2024 results, which can be accessed by visiting the Company's website at https://shareholders.stepstonegroup.comor by clicking here.

Webcast and Earnings Conference Call

Management will host a webcast and conference call on Thursday, August 3, 2023 at 5:00 pm ET to discuss the Company's results for the first quarter of the fiscal year ending March 31, 2024. The conference call will also be made available on the Shareholders section of the Company's website at https://shareholders.stepstonegroup.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register.

The conference call can be accessed by dialing 1-888-886-7786 (United States) or 1-416-764-8658 (international).

Replay

A replay of the call will be available approximately two hours after the live event. To access the replay, dial 1-844-512-2921 (United States) or 1-412-317-6671 (international) and use the PIN 16493363. This replay option will be available through August 17, 2023. The replay can also be accessed on the Shareholders section of the Company's website at https://shareholders.stepstonegroup.com.

About StepStone

StepStone Group Inc. (Nasdaq: STEP) is a global private markets investment firm focused on providing customized investment solutions and advisory, data and administrative services to its clients. As of June 30, 2023, StepStone was responsible for approximately $640 billion of total capital, including $143 billion of assets under management. StepStone's clients include some of the world's largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals. StepStone partners with its clients to develop and build private markets portfolios designed to meet their specific objectives across the private equity, infrastructure, private debt and real estate asset classes.

Forward-Looking Statements

Some of the statements in this release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. Words such as "anticipate," "believe," "continue," "estimate," "expect," "future," "intend," "may," "plan" and "will" and similar expressions identify forward-looking statements. Forward- looking statements reflect management's current plans, estimates and expectations and are inherently uncertain. The inclusion of any forward-looking information in this release should not be regarded as a

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representation that the future plans, estimates or expectations contemplated will be achieved. Forward- looking statements are subject to various risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, global and domestic market and business conditions, successful execution of business and growth strategies and regulatory factors relevant to our business, as well as assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity and the risks and uncertainties described in greater detail under the "Risk Factors" section of our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on May 26, 2023, as such factors may be updated from time to time. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we use the following non- GAAP financial measures: adjusted revenues, adjusted net income (on both a pre-tax and after-tax basis), adjusted net income per share, fee-related earnings and fee-related earnings margin. We have provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non- recurring items. In addition, the non-GAAP financial measures in this earnings release may not be comparable to similarly titled measures used by other companies in our industry or across different industries. For definitions of these non-GAAP measures and reconciliations to applicable GAAP measures, please see the section titled "Non-GAAP Financial Measures: Definitions and Reconciliations."

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Financial Highlights and Key Business Drivers/Operating Metrics

												Percentage
				Three Months Ended				Change
(in thousands, except share and per share amounts and where noted)		June 30,	September		December		March 31,		June 30,
	2022		30, 2022		31, 2022		2023		2023		vs. FQ1'23
Financial Highlights
GAAP Results
Management and advisory fees, net	$ 116,732	$ 119,121	$ 128,753	$ 132,573	$ 138,115	18 %
Total revenues		(77,218)	(158,495)		(4,235)		172,374		178,011		na
Net income (loss)		(21,471)		(67,065)		(13,555)		56,816		49,446		na
Net income (loss) per share of Class A common stock:
Basic	$	(0.18)	$	(0.48)	$	(0.11)	$	0.46	$	0.34		na
Diluted	$	(0.18)	$	(0.48)	$	(0.11)	$	0.46	$	0.34		na
Weighted-average shares of Class A common stock:
Basic	61,144,139	61,407,834	62,192,899	62,805,788	62,834,818	3 %
Diluted	61,144,139	61,407,834	62,192,899	65,831,409	65,739,470	8 %
Quarterly dividend per share of Class A common stock(1)	$	0.20	$	0.20	$	0.20	$	0.20	$	0.20		- %
Supplemental dividend per share of Class A common stock(1)	$	-	$	-	$	-	$	-	$	0.25		na
Accrued carried interest allocations	1,366,314	1,189,323	1,126,386	1,227,173	1,277,783	(6)%
Non-GAAP Results(2)
Management and advisory fees, net(3)	$ 116,732	$ 119,121	$ 128,753	$ 132,720	$ 138,301	18 %
Adjusted revenues		190,339		150,638		148,053		152,940		152,780	(20)%
Fee-related earnings ("FRE")		36,617		39,044		42,701		37,796		44,402	21 %
Fee-related earnings margin(4)		31 %		33 %		33 %		28 %		32 %
Gross realized performance fees		73,607		31,517		19,300		20,220		14,479	(80)%
Adjusted net income ("ANI")		47,134		37,261		31,153		27,115		29,388	(38)%
Adjusted weighted-average shares	114,466,962	114,606,326	114,651,163	114,765,635	114,673,696		- %
ANI per share	$	0.41	$	0.33	$	0.27	$	0.24	$	0.26	(37)%
Key Business Drivers/Operating Metrics (in billions)
Assets under management ("AUM")(5)	$	136.5	$	135.0	$	134.0	$	138.4	$	142.6	4 %
Assets under advisement ("AUA")(5)		451.9		466.7		468.0		482.2		497.0	10 %
Fee-earning AUM ("FEAUM")		78.6		80.1		83.0		85.4		87.4	11 %
Undeployed fee-earning capital ("UFEC")		17.1		16.5		14.0		15.7		16.9	(1)%

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1. Dividends paid, as reported in this table, relate to the preceding quarterly period in which they were earned.
2. Adjusted revenues, fee-related earnings, fee-related earnings margin, adjusted net income, adjusted weighted-average shares and ANI per share are non-GAAP measures. See the definitions of these measures and reconciliations to the respective, most comparable GAAP measures under "Non-GAAP Financial Measures: Definitions and Reconciliations."
3. Excludes the impact of consolidating the Consolidated Funds. See reconciliation of GAAP measures to adjusted measures that follows.
4. Fee-relatedearnings margin is calculated by dividing fee-related earnings by management and advisory fees, net.
5. AUM/AUA reflects final data for the prior period, adjusted for net new client account activity through the period presented. Does not include post-period investment valuation or cash activity. Net asset value ("NAV") data for underlying investments is as of the prior period, as reported by underlying managers up to 100 days, or 115 days at the fiscal year-end, following the prior period end. When NAV data is not available 100 days, or 115 days at the fiscal year-end, following the prior period end, such NAVs are adjusted for cash activity following the last available reported NAV.

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StepStone Group Inc.

GAAP Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share amounts)

		As of
	June 30, 2023		March 31, 2023
Assets
Cash and cash equivalents	$	91,733	$	102,565
Restricted cash		699			955
Fees and accounts receivable		46,091			44,450
Due from affiliates		62,365			54,322
Investments:
Investments in funds		122,149			115,187
Accrued carried interest allocations		1,277,783			1,227,173
Legacy Greenspring investments in funds and accrued carried interest allocations(1)		745,586			770,652
Deferred income tax assets		38,910			44,358
Lease right-of-use assets, net		100,531			101,130
Other assets and receivables		44,889			44,060
Intangibles, net		343,983			354,645
Goodwill		580,542			580,542
Assets of Consolidated Funds:
Cash and cash equivalents		35,497			25,997
Investments, at fair value		39,188			30,595
Other assets		836			772
Total assets	$	3,530,782		$	3,497,403
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	$	91,322	$	89,396
Accrued compensation and benefits		92,521			66,614
Accrued carried interest-related compensation		668,704			644,517
Legacy Greenspring accrued carried interest-related compensation(1)		593,670			617,994
Due to affiliates		199,407			205,424
Lease liabilities		116,175			121,224
Debt obligations		98,468			98,351
Liabilities of Consolidated Funds:
Other liabilities		354			566
Total liabilities		1,860,621			1,844,086
Redeemable non-controlling interests in Consolidated Funds		41,618			24,530
Stockholders' equity:
Class A common stock, $0.001 par value, 650,000,000 authorized; 62,834,871 and 62,834,791 issued
and outstanding as of June 30, 2023 and March 31, 2023, respectively		63			63
Class B common stock, $0.001 par value, 125,000,000 authorized; 46,420,141 and 46,420,141 issued
and outstanding as of June 30, 2023 and March 31, 2023, respectively		46			46
Additional paid-in capital		612,799			610,567
Retained earnings		152,612			160,430
Accumulated other comprehensive income		439			461
Total StepStone Group Inc. stockholders' equity		765,959			771,567
Non-controlling interests in subsidiaries		37,678			36,380
Non-controlling interests in legacy Greenspring entities(1)		151,916			152,658
Non-controlling interests in the Partnership		672,990			668,182
Total stockholders' equity		1,628,543			1,628,787
Total liabilities and stockholders' equity	$	3,530,782		$	3,497,403

1. Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.

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StepStone Group Inc.

GAAP Condensed Consolidated Statements of Income (Loss) (Unaudited)

(in thousands, except share and per share amounts)

		Three Months Ended June 30,
		2023			2022
Revenues
Management and advisory fees, net	$	138,115	$	116,732
Performance fees:
Incentive fees		6			-
Carried interest allocations:
Realized		14,473			73,607
Unrealized		49,364			(113,950)
Total carried interest allocations		63,837			(40,343)
Legacy Greenspring carried interest allocations(1)		(23,947)			(153,607)
Total revenues		178,011			(77,218)
Expenses
Compensation and benefits:
Cash-based compensation		70,081			60,061
Equity-based compensation		8,472			3,714
Performance fee-related compensation:
Realized		9,102			41,735
Unrealized		24,211			(54,553)
Total performance fee-related compensation		33,313			(12,818)
Legacy Greenspring performance fee-related compensation(1)		(23,947)			(153,607)
Total compensation and benefits		87,919			(102,650)
General, administrative and other		33,277			34,232
Total expenses		121,196			(68,418)
Other income (expense)
Investment income (loss)		3,086			(1,101)
Legacy Greenspring investment loss(1)		(2,866)			(8,604)
Investment income of Consolidated Funds		2,362			-
Interest income		431			11
Interest expense		(2,012)			(587)
Other income (loss)		227			(1,104)
Total other income (expense)		1,228			(11,385)
Income (loss) before income tax		58,043			(20,185)
Income tax expense		8,597			1,286
Net income (loss)		49,446			(21,471)
Less: Net income attributable to non-controlling interests in subsidiaries		9,630			7,571
Less: Net loss attributable to non-controlling interests in legacy Greenspring entities(1)		(2,866)			(8,604)
Less: Net income (loss) attributable to non-controlling interests in the Partnership		19,860			(9,398)
Less: Net income attributable to redeemable non-controlling interests in Consolidated Funds		1,553			-
Net income (loss) attributable to StepStone Group Inc.	$	21,269	$	(11,040)
Net income (loss) per share of Class A common stock:
Basic	$	0.34	$	(0.18)
Diluted	$	0.34	$	(0.18)
Weighted-average shares of Class A common stock:
Basic		62,834,818			61,144,139
Diluted		65,739,470			61,144,139

1. Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.

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