StepStone Group (STEP) Q1 2027 earnings summary

Executive summary

• Achieved record financial results in Q1 FY2027, with fee revenues up 27% year-over-year to $270.9 million, driven by strong fundraising, robust FEAUM growth, and higher average fee rates in evergreen products.

• Adjusted net income per share rose 20% year-over-year to $0.48, with adjusted net income at $60.3 million.

• Assets under management (AUM) reached $245.4 billion, up 23% year-over-year, and fee-earning AUM (FEAUM) grew 21% to $153.6 billion.

• Declared a quarterly cash dividend of $0.33 per share, payable September 15, 2026, and repurchased $21 million in shares post-fiscal year-end.

• Strategic focus on client retention, expansion, long-term growth initiatives, and selective M&A, including plans to buy in private wealth profits interest.

Financial highlights

• Reported GAAP net loss of $115.8 million ($1.41 per share) for the quarter, primarily due to fair value changes related to private wealth profits interests.

• Fee-related earnings (FRE) reached $105.6 million, up 30% year-over-year, with a 39% FRE margin.

• Fee revenue totaled $271 million, up 27% year-over-year, driven by growth in fee-earning AUM.

• Gross realized performance fees were $29.7 million, up 20% year-over-year.

• Total revenues increased 4% year-over-year to $378.9 million, with management and advisory fees, net, rising 27% to $269.2 million.

Outlook and guidance

• Management expects continued growth in FEAUM and fee revenues, supported by robust fundraising and deployment activity.

• Expect continued strong annual inflows in private wealth, with SPRING fund subscriptions likely to normalize but remain healthy.

• Anticipate a $1.5 billion managed account expiration next quarter, partially offsetting adjusted net income.

• Commingled fund fee rates expected to remain flat in the near term, with potential for future increases as fundraising progresses.

• Forward-looking statements caution about risks from market conditions, fundraising environment, and regulatory factors.