StepStone Group (STEP -0.85%), a global private markets investment manager, reported results for its fiscal first quarter of 2026 on August 7, 2025. StepStone missed key analyst expectations, posting adjusted net income per share (non-GAAP) of $0.40, below the $0.52 consensus estimate. Even with strong gains in recurring fee revenue and continued growth in assets under management, both non-GAAP earnings and revenues fell short of market expectations. Performance fee revenue (non-GAAP) saw notable declines, reflecting a less favorable environment for one-time income streams after record levels in the prior quarter. Overall, the quarter highlighted continued long-term expansion but also revealed near-term margin pressures and volatility in realized performance fees.
| Metric | Q1 FY2026(Ended June 30, 2025) | Q1 Estimate | Q1 FY2025(Ended June 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| Adjusted Net Income per Share (Non-GAAP) | $0.40 | $0.52 | $0.48 | (17)% |
| Fee Revenues (Non-GAAP) | $212.7 million | $178.5 million | 19% | |
| Total Revenues (GAAP) | $364.3 million | $186.4 million | 95.5% | |
| Fee-Related Earnings (FRE) (Non-GAAP) | N/A | $71.7 million | N/A | |
| Assets Under Management (AUM) | $199.3 billion | $169.3 billion | 18% | |
| Fee-Earning AUM (FEAUM) | $127.2 billion | $100.4 billion | 27% |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Strategic Priorities
StepStone Group specializes in managing investments across private equity, infrastructure, private credit, and real estate. Its clients include pension funds, wealth managers, insurance companies, and other institutional investors seeking access to global private markets. The business operates globally, with about 45 % of investment professionals based outside the United States. This structure allows the company to combine international market reach with local investment expertise.
Recent strategic priorities have focused on growing assets under management, expanding client relationships, and further investing in proprietary data technology platforms. The company also emphasizes responsible investment and sustainability, integrating environmental, social, and governance principles into its process. Key factors for ongoing success include expanding its global client footprint, maintaining high investment performance, and leveraging its data analytics to improve asset selection and efficiency.
Quarter Highlights: Growth, Revenue Mix, and Key Developments
StepStone Group reported assets under management of $199.3 billion, up 18% from the same period last year. Fee-earning assets under management—a measure of assets that generate recurring management fees—rose 27% year over year to $127.2 billion. Private equity fee-earning assets stood at $66.4 billion, an increase of 21%. Infrastructure reached $26.1 billion, up 28%.
Private debt fee-earning AUM climbed to $21.4 billion, up 33% compared to Q1 FY2025, and real estate fee-earning AUM surged 48% to $13.3 billion.
Recurring fee revenues, the backbone of the company's earnings, grew 19% to $212.7 million (non-GAAP). These revenues come mainly from management and advisory fees paid by clients for ongoing investment oversight. However, fee-related earnings (non-GAAP) rose just 13% compared to the prior year, and the FRE margin (non-GAAP) fell to 38%, down from 44% in Q4 FY2025.
Client retention remained strong at about 95% since inception, and the company's undeployed fee-earning capital rose by 4%, giving it further runway for future management fee growth once this capital is put to work. On the technology front, StepStone Group continued to promote its SPI platform, which collects data on thousands of private fund managers and investments to help drive more informed decisions for clients.
Product Development and Segment Performance
The company continued to roll out new private wealth products. Examples include S Prime, a multi-asset private markets fund; CreditX, focused on private credit; and Instruqt, covering infrastructure. These offerings aim to make private markets more accessible for private wealth clients, expanding the customer base beyond institutional investors. Close to 80 % of eligible platform sales occurred via ticker-based solutions, providing ease of access for wealth managers.
Fee-earning asset growth was broad-based across all core asset classes year over year. Real estate led with a 48% increase in fee-earning assets under management (FEAUM), driven by continued demand for its evergreen products and specialized funds. Private credit and infrastructure followed with growth of 33% and 28%, respectively, in fee-earning AUM (non-GAAP). The increase in undeployed fee-earning capital, now at $28.7 billion, supports future management fee growth as capital is gradually invested.
A new supplemental dividend was declared alongside the recurring distribution. The base dividend rose to $0.24 per share, up 14% from the prior year, and a one-time supplemental dividend of $0.40 per share was declared, an increase of 167%.
This supplemental payout was tied to performance-related earnings for FY2025.
But maintained its status as a signatory to the United Nations Principles for Responsible Investment—these efforts underscore StepStone Group's ongoing focus on responsible stewardship and long-term sustainability themes.
Outlook and Considerations for Investors
Management indicated that a 37% fee-related earnings margin (non-GAAP) is a fair expectation as a starting point, with variability expected quarter to quarter, cautioning that quarter-to-quarter results could fluctuate given compensation resets and variability in fundraising. The company confirmed that there was no explicit revenue or earnings per share guidance for either the next quarter or the full fiscal year. Executives described the fundraising pipeline as healthy but acknowledged that FY2025 set a high baseline for growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
