UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
(Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(212 ) 351-6100
Registrant's telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 24, 2023, StepStone Group Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full fiscal year ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.02 as if fully set forth herein.
The information included in, or furnished with, this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
Press Release of StepStone Group Inc. dated May 24, 2023 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STEPSTONE GROUP INC. | ||||||||
| Date: May 24, 2023 | By: | /s/ Johnny D. Randel | ||||||
| Johnny D. Randel | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Authorized Signatory) | ||||||||
STEPSTONE GROUP REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS
NEW YORK, May 24, 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 fourth quarter and full fiscal year ended March 31, 2023. The Board of Directors of the Company has declared a quarterly cash dividend of $0.20 per share of Class A common stock, and a supplemental dividend of $0.25 per share of Class A common stock, both payable on June 30, 2023, to the holders of record as of the close of business on June 15, 2023.
StepStone issued a full detailed presentation of its fourth quarter and full fiscal year ended March 31, 2023 results, which can be accessed by visiting the Company’s website at https://shareholders.stepstonegroup.com or by clicking here.
Webcast and Earnings Conference Call
Management will host a webcast and conference call on Wednesday, May 24, 2023 at 5:00 pm ET to discuss the Company’s results for the fourth quarter and full fiscal year ended March 31, 2023. 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 in order to register.
The conference call can be accessed by dialing 1-877-407-0784 (United States) or 1-201-689-8560 (international).
A replay of the call will also be available approximately two hours after the live event through June 7, 2023. To access the replay, dial 1-844-512-2921 (United States) or 1-412-317-6671 (international). The replay PIN is 13737647. 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 March 31, 2023, StepStone was responsible for approximately $621 billion of total capital, including $138 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 representation that the future plans, estimates or expectations contemplated will be achieved. Forward-
1
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 31, 2022, and in our annual report on Form 10-K to be filed with the SEC for the fiscal year ended March 31, 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.”
2
Financial Highlights and Key Business Drivers/Operating Metrics
| Three Months Ended | Year Ended March 31, | Percentage Change | |||||||||||||||||||||||||||||||||
| (in thousands, except share and per share amounts and where noted) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | vs. FQ4'22 | vs. FY'22 | ||||||||||||||||||||||||||
| Financial Highlights | |||||||||||||||||||||||||||||||||||
| GAAP Results | |||||||||||||||||||||||||||||||||||
| Management and advisory fees, net | $ | 112,229 | $ | 116,732 | $ | 119,121 | $ | 128,753 | $ | 132,573 | $ | 380,257 | $ | 497,179 | 18 | % | 31 | % | |||||||||||||||||
| Total revenues | 364,690 | (77,218) | (158,495) | (4,235) | 172,374 | 1,365,525 | (67,574) | (53) | % | na | |||||||||||||||||||||||||
| Net income (loss) | 103,607 | (21,471) | (67,065) | (13,555) | 56,816 | 484,281 | (45,275) | (45) | % | na | |||||||||||||||||||||||||
| Net income (loss) per share of Class A common stock: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.69 | $ | (0.18) | $ | (0.48) | $ | (0.11) | $ | 0.46 | $ | 3.89 | $ | (0.30) | (33) | % | na | ||||||||||||||||||
| Diluted | $ | 0.69 | $ | (0.18) | $ | (0.48) | $ | (0.11) | $ | 0.46 | $ | 3.84 | $ | (0.30) | (33) | % | na | ||||||||||||||||||
Weighted-average shares of Class A common stock – Basic | 60,792,227 | 61,144,139 | 61,407,834 | 62,192,899 | 62,805,788 | 49,833,760 | 61,884,671 | ||||||||||||||||||||||||||||
Weighted-average shares of Class A common stock – Diluted | 64,238,991 | 61,144,139 | 61,407,834 | 62,192,899 | 65,831,409 | 53,600,250 | 61,884,671 | ||||||||||||||||||||||||||||
Quarterly dividend per share of Class A common stock(1) | $ | 0.15 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.44 | $ | 0.80 | 33 | % | 82 | % | |||||||||||||||||
Supplemental dividend per share of Class A common stock(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | na | na | |||||||||||||||||||
| Accrued carried interest allocations | $ | 1,480,515 | $ | 1,366,314 | $ | 1,189,323 | $ | 1,126,386 | $ | 1,227,173 | (17) | % | |||||||||||||||||||||||
Non-GAAP Results(2) | |||||||||||||||||||||||||||||||||||
Management and advisory fees, net(3) | $ | 112,229 | $ | 116,732 | $ | 119,121 | $ | 128,753 | $ | 132,720 | $ | 380,257 | $ | 497,326 | 18 | % | 31 | % | |||||||||||||||||
| Adjusted revenues | 145,109 | 190,339 | 150,638 | 148,053 | 152,940 | 594,006 | 641,970 | 5 | % | 8 | % | ||||||||||||||||||||||||
| Fee-related earnings (“FRE”) | 35,882 | 36,617 | 39,044 | 42,701 | 37,796 | 122,242 | 156,158 | 5 | % | 28 | % | ||||||||||||||||||||||||
Fee-related earnings margin(4) | 32 | % | 31 | % | 33 | % | 33 | % | 28 | % | 32 | % | 31 | % | |||||||||||||||||||||
| Gross realized performance fees | 32,880 | 73,607 | 31,517 | 19,300 | 20,220 | 213,749 | 144,644 | (39) | % | (32) | % | ||||||||||||||||||||||||
| Adjusted net income (“ANI”) | 43,714 | 47,134 | 37,261 | 31,153 | 27,115 | 172,943 | 142,663 | (38) | % | (18) | % | ||||||||||||||||||||||||
Adjusted weighted-average shares | 114,663,599 | 114,466,962 | 114,606,326 | 114,651,163 | 114,765,635 | 107,191,661 | 114,618,105 | ||||||||||||||||||||||||||||
| ANI per share | $ | 0.38 | $ | 0.41 | $ | 0.33 | $ | 0.27 | $ | 0.24 | $ | 1.61 | $ | 1.24 | (37) | % | (23) | % | |||||||||||||||||
Key Business Drivers/Operating Metrics (in billions) | |||||||||||||||||||||||||||||||||||
Assets under management (“AUM”)(5) | $ | 134.5 | $ | 136.5 | $ | 135.0 | $ | 134.0 | $ | 138.4 | 3 | % | |||||||||||||||||||||||
Assets under advisement (“AUA”)(5) | 435.9 | 451.9 | 466.7 | 468.0 | 482.2 | 11 | % | ||||||||||||||||||||||||||||
| Fee-earning AUM (“FEAUM”) | 75.2 | 78.6 | 80.1 | 83.0 | 85.4 | 14 | % | ||||||||||||||||||||||||||||
Undeployed fee-earning capital (“UFEC”) | 17.0 | 17.1 | 16.5 | 14.0 | 15.7 | (8) | % | ||||||||||||||||||||||||||||
_______________________________
(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-related earnings 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 114 days at the fiscal year-end, following the prior period end. When NAV data is not available 100 days, or 114 days at the fiscal year-end, following the prior period end, such NAVs are adjusted for cash activity following the last available reported NAV.
3
StepStone Group Inc.
GAAP Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| As of March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 102,565 | $ | 116,386 | |||||||
| Restricted cash | 955 | 1,063 | |||||||||
| Fees and accounts receivable | 44,450 | 34,141 | |||||||||
| Due from affiliates | 54,322 | 19,369 | |||||||||
Investments: | |||||||||||
| Investments in funds | 115,187 | 107,045 | |||||||||
| Accrued carried interest allocations | 1,227,173 | 1,480,515 | |||||||||
Legacy Greenspring investments in funds and accrued carried interest allocations(1) | 770,652 | 1,334,581 | |||||||||
| Deferred income tax assets | 44,358 | 27,866 | |||||||||
| Lease right-of-use assets, net | 101,130 | 61,065 | |||||||||
| Other assets and receivables | 44,060 | 27,426 | |||||||||
| Intangibles, net | 354,645 | 398,126 | |||||||||
| Goodwill | 580,542 | 580,542 | |||||||||
Assets of Consolidated Funds: | |||||||||||
| Cash and cash equivalents | 25,997 | — | |||||||||
| Investments, at fair value | 30,595 | — | |||||||||
| Other assets | 772 | — | |||||||||
Total assets | $ | 3,497,403 | $ | 4,188,125 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Accounts payable, accrued expenses and other liabilities | $ | 89,396 | $ | 80,541 | |||||||
| Accrued compensation and benefits | 66,614 | 46,397 | |||||||||
| Accrued carried interest-related compensation | 644,517 | 763,557 | |||||||||
Legacy Greenspring accrued carried interest-related compensation(1) | 617,994 | 1,140,101 | |||||||||
| Due to affiliates | 205,424 | 199,355 | |||||||||
| Lease liabilities | 121,224 | 70,965 | |||||||||
| Debt obligations | 98,351 | 62,879 | |||||||||
Liabilities of Consolidated Funds: | |||||||||||
| Other liabilities | 566 | — | |||||||||
| Total liabilities | 1,844,086 | 2,363,795 | |||||||||
| Redeemable non-controlling interests in Consolidated Funds | 24,530 | — | |||||||||
| Stockholders’ equity: | |||||||||||
Class A common stock, $0.001 par value, 650,000,000 authorized; 62,834,791 and 61,141,306 issued and outstanding as of March 31, 2023 and 2022, respectively | 63 | 61 | |||||||||
Class B common stock, $0.001 par value, 125,000,000 authorized; 46,420,141 and 47,149,673 issued and outstanding as of March 31, 2023 and 2022, respectively | 46 | 48 | |||||||||
| Additional paid-in capital | 610,567 | 587,243 | |||||||||
| Retained earnings | 160,430 | 229,615 | |||||||||
| Accumulated other comprehensive income | 461 | 658 | |||||||||
| Total StepStone Group Inc. stockholders’ equity | 771,567 | 817,625 | |||||||||
| Non-controlling interests in subsidiaries | 36,380 | 32,063 | |||||||||
Non-controlling interests in legacy Greenspring entities(1) | 152,658 | 194,480 | |||||||||
| Non-controlling interests in the Partnership | 668,182 | 780,162 | |||||||||
| Total stockholders’ equity | 1,628,787 | 1,824,330 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,497,403 | $ | 4,188,125 | |||||||
(1)Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.
4
StepStone Group Inc.
GAAP Consolidated Statements of Income (Loss)
(in thousands, except share and per share amounts)
| Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Management and advisory fees, net | $ | 132,573 | $ | 112,229 | $ | 497,179 | $ | 380,257 | |||||||||||||||
| Performance fees: | |||||||||||||||||||||||
| Incentive fees | 1,318 | 5,588 | 9,663 | 11,593 | |||||||||||||||||||
| Carried interest allocations: | |||||||||||||||||||||||
| Realized | 18,693 | 31,665 | 131,089 | 200,718 | |||||||||||||||||||
| Unrealized | 100,753 | 133,062 | (253,342) | 585,851 | |||||||||||||||||||
| Total carried interest allocations | 119,446 | 164,727 | (122,253) | 786,569 | |||||||||||||||||||
Legacy Greenspring carried interest allocations(1) | (80,963) | 82,146 | (452,163) | 187,106 | |||||||||||||||||||
| Total revenues | 172,374 | 364,690 | (67,574) | 1,365,525 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Compensation and benefits: | |||||||||||||||||||||||
| Cash-based compensation | 69,990 | 59,265 | 252,180 | 197,482 | |||||||||||||||||||
| Equity-based compensation | 9,335 | 3,633 | 24,940 | 13,996 | |||||||||||||||||||
| Performance fee-related compensation: | |||||||||||||||||||||||
| Realized | 12,755 | 5,086 | 79,846 | 91,208 | |||||||||||||||||||
| Unrealized | 53,515 | 84,757 | (119,039) | 312,903 | |||||||||||||||||||
| Total performance fee-related compensation | 66,270 | 89,843 | (39,193) | 404,111 | |||||||||||||||||||
Legacy Greenspring performance fee-related compensation(1) | (80,963) | 82,146 | (452,163) | 187,106 | |||||||||||||||||||
| Total compensation and benefits | 64,632 | 234,887 | (214,236) | 802,695 | |||||||||||||||||||
| General, administrative and other | 35,612 | 38,419 | 147,159 | 110,468 | |||||||||||||||||||
| Total expenses | 100,244 | 273,306 | (67,077) | 913,163 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Investment income (loss) | 2,964 | 5,319 | (2,509) | 26,160 | |||||||||||||||||||
Legacy Greenspring investment income (loss)(1) | (11,148) | 14,696 | (44,075) | 32,586 | |||||||||||||||||||
| Investment income of Consolidated Funds | 4,420 | — | 9,315 | — | |||||||||||||||||||
| Interest income | 853 | 8 | 1,921 | 337 | |||||||||||||||||||
| Interest expense | (1,674) | (476) | (4,189) | (1,113) | |||||||||||||||||||
| Other income (loss) | (40) | 4,911 | (1,420) | 2,249 | |||||||||||||||||||
| Total other income (expense) | (4,625) | 24,458 | (40,957) | 60,219 | |||||||||||||||||||
| Income (loss) before income tax | 67,505 | 115,842 | (41,454) | 512,581 | |||||||||||||||||||
| Income tax expense | 10,689 | 12,235 | 3,821 | 28,300 | |||||||||||||||||||
| Net income (loss) | 56,816 | 103,607 | (45,275) | 484,281 | |||||||||||||||||||
| Less: Net income attributable to non-controlling interests in subsidiaries | 9,358 | 7,871 | 35,194 | 26,608 | |||||||||||||||||||
Less: Net income (loss) attributable to non-controlling interests in legacy Greenspring entities(1) | (11,148) | 14,696 | (44,075) | 32,586 | |||||||||||||||||||
| Less: Net income (loss) attributable to non-controlling interests in the Partnership | 28,420 | 39,225 | (19,772) | 231,202 | |||||||||||||||||||
| Less: Net income attributable to redeemable non-controlling interests in Consolidated Funds | 1,385 | — | 1,776 | — | |||||||||||||||||||
| Net income (loss) attributable to StepStone Group Inc. | $ | 28,801 | $ | 41,815 | $ | (18,398) | $ | 193,885 | |||||||||||||||
Net income (loss) per share of Class A common stock: | |||||||||||||||||||||||
| Basic | $ | 0.46 | $ | 0.69 | $ | (0.30) | $ | 3.89 | |||||||||||||||
| Diluted | $ | 0.46 | $ | 0.69 | $ | (0.30) | $ | 3.84 | |||||||||||||||
Weighted-average shares of Class A common stock: | |||||||||||||||||||||||
| Basic | 62,805,788 | 60,792,227 | 61,884,671 | 49,833,760 | |||||||||||||||||||
| Diluted | 65,831,409 | 64,238,991 | 61,884,671 | 53,600,250 | |||||||||||||||||||
(1)Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.
5
Non-GAAP Financial Measures: Definitions and Reconciliations
Management and Advisory Fees, Net
The following table presents the components of adjusted management and advisory fees, net.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
Focused commingled funds(1) | $ | 49,552 | $ | 52,742 | $ | 51,553 | $ | 60,680 | $ | 62,093 | $ | 148,725 | $ | 227,068 | ||||||||||||
| Separately managed accounts | 47,181 | 50,460 | 52,179 | 53,515 | 54,033 | 174,318 | 210,187 | |||||||||||||||||||
| Advisory and other services | 14,860 | 12,984 | 13,788 | 13,926 | 15,546 | 55,523 | 56,244 | |||||||||||||||||||
Fund reimbursement revenues(1) | 636 | 546 | 1,601 | 632 | 1,048 | 1,691 | 3,827 | |||||||||||||||||||
Management and advisory fees, net | $ | 112,229 | $ | 116,732 | $ | 119,121 | $ | 128,753 | $ | 132,720 | $ | 380,257 | $ | 497,326 | ||||||||||||
_______________________________
(1)Reflects the add-back of management and advisory fee revenues for the Consolidated Funds, which have been eliminated in consolidation.
Adjusted Revenues
Adjusted revenues represents the components of revenues used in the determination of ANI and comprise net management and advisory fees, incentive fees (including the deferred portion) and realized carried interest allocations. We believe adjusted revenues is useful to investors because it presents a measure of realized revenues.
The table below shows a reconciliation of revenues to adjusted revenues.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| Total revenues | $ | 364,690 | $ | (77,218) | $ | (158,495) | $ | (4,235) | $ | 172,374 | $ | 1,365,525 | $ | (67,574) | ||||||||||||
| Unrealized carried interest allocations | (133,062) | 113,950 | 176,778 | 63,367 | (100,753) | (585,851) | 253,342 | |||||||||||||||||||
| Deferred incentive fees | (4,373) | — | 3,683 | — | 209 | 1,438 | 3,892 | |||||||||||||||||||
Legacy Greenspring carried interest allocations | (82,146) | 153,607 | 128,672 | 88,921 | 80,963 | (187,106) | 452,163 | |||||||||||||||||||
Management and advisory fee revenues for the Consolidated Funds(1) | — | — | — | — | 147 | — | 147 | |||||||||||||||||||
| Adjusted revenues | $ | 145,109 | $ | 190,339 | $ | 150,638 | $ | 148,053 | $ | 152,940 | $ | 594,006 | $ | 641,970 | ||||||||||||
(1)Reflects the add-back of management and advisory fee revenues for the Consolidated Funds, which have been eliminated in consolidation.
6
The table below shows a reconciliation of GAAP measures to additional non-GAAP measures. We use the non-GAAP measures presented below as components when calculating ANI and FRE.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| GAAP management and advisory fees, net | $ | 112,229 | $ | 116,732 | $ | 119,121 | $ | 128,753 | $ | 132,573 | $ | 380,257 | $ | 497,179 | ||||||||||||
Management and advisory fee revenues for the Consolidated Funds(1) | — | — | — | — | 147 | — | 147 | |||||||||||||||||||
| Management and advisory fees, net | $ | 112,229 | $ | 116,732 | $ | 119,121 | $ | 128,753 | $ | 132,720 | $ | 380,257 | $ | 497,326 | ||||||||||||
| GAAP cash-based compensation | $ | 59,265 | $ | 60,061 | $ | 59,501 | $ | 62,628 | $ | 69,990 | $ | 197,482 | $ | 252,180 | ||||||||||||
Adjustments(2) | (2,306) | (691) | (740) | (520) | (653) | (2,413) | (2,604) | |||||||||||||||||||
| Adjusted cash-based compensation | $ | 56,959 | $ | 59,370 | $ | 58,761 | $ | 62,108 | $ | 69,337 | $ | 195,069 | $ | 249,576 | ||||||||||||
| GAAP equity-based compensation | $ | 3,633 | $ | 3,714 | $ | 3,783 | $ | 8,108 | $ | 9,335 | $ | 13,996 | $ | 24,940 | ||||||||||||
Adjustments(3) | (3,212) | (3,071) | (3,125) | (7,444) | (8,274) | (13,174) | (21,914) | |||||||||||||||||||
| Adjusted equity-based compensation | $ | 421 | $ | 643 | $ | 658 | $ | 664 | $ | 1,061 | $ | 822 | $ | 3,026 | ||||||||||||
| GAAP general, administrative and other | $ | 38,419 | $ | 34,232 | $ | 33,733 | $ | 43,582 | $ | 35,612 | $ | 110,468 | $ | 147,159 | ||||||||||||
Adjustments(4) | (19,452) | (14,130) | (13,075) | (20,302) | (11,086) | (48,344) | (58,593) | |||||||||||||||||||
| Adjusted general, administrative and other | $ | 18,967 | $ | 20,102 | $ | 20,658 | $ | 23,280 | $ | 24,526 | $ | 62,124 | $ | 88,566 | ||||||||||||
| GAAP interest income | $ | 8 | $ | 11 | $ | 356 | $ | 701 | $ | 853 | $ | 337 | $ | 1,921 | ||||||||||||
Interest income earned by the Consolidated Funds(5) | — | — | — | — | (195) | — | (195) | |||||||||||||||||||
| Non-GAAP interest income | $ | 8 | $ | 11 | $ | 356 | $ | 701 | $ | 658 | $ | 337 | $ | 1,726 | ||||||||||||
| GAAP other income (loss) | $ | 4,911 | $ | (1,104) | $ | (634) | $ | 358 | $ | (40) | $ | 2,249 | $ | (1,420) | ||||||||||||
Adjustments(6) | (4,951) | — | — | — | 86 | (3,560) | 86 | |||||||||||||||||||
| Adjusted other income (loss) | $ | (40) | $ | (1,104) | $ | (634) | $ | 358 | $ | 46 | $ | (1,311) | $ | (1,334) | ||||||||||||
(1)Reflects the add-back of management and advisory fee revenues for the Consolidated Funds, which have been eliminated in consolidation.
(2)Reflects the removal of severance and compensation paid to certain employees as part of an acquisition earn-out.
(3)Reflects the removal of equity-based compensation for awards granted prior to and in connection with the IPO, profits interests issued by our non-wholly owned subsidiaries, and unrealized mark-to-market changes in the fair value of the profits interests issued in connection with the Private Wealth Transaction.
(4)Reflects the removal of lease remeasurement adjustments, accelerated depreciation of leasehold improvements for changes in lease terms, amortization of intangibles, transaction-related costs and other non-core operating income and expenses.
(5)Reflects the removal of interest income earned by the Consolidated Funds.
(6)Reflects the removal of amounts for Tax Receivable Agreements adjustments recognized as other income (loss) and the removal of the impact of consolidation of the Consolidated Funds.
7
Adjusted Net Income
Adjusted net income, or “ANI”, is a non-GAAP performance measure that we present on a pre-tax and after-tax basis used to evaluate profitability. ANI represents the after-tax net realized income attributable to us. The components of revenues used in the determination of ANI (“adjusted revenues”) comprise net management and advisory fees, incentive fees (including the deferred portion) and realized carried interest allocations. In addition, ANI excludes: (a) unrealized carried interest allocation revenues and related compensation, (b) unrealized investment income, (c) equity-based compensation for awards granted prior to and in connection with our IPO, profits interests issued by our non-wholly owned subsidiaries, and unrealized mark-to-market changes in the fair value of the profits interests issued in connection with the Private Wealth Transaction, (d) amortization of intangibles and (e) certain other items that we believe are not indicative of our core operating performance, including charges associated with acquisitions and corporate transactions, contract terminations and employee severance. ANI does not reflect legacy Greenspring carried interest allocation revenues, legacy Greenspring carried interest-related compensation and legacy Greenspring investment income as none of the economics are attributable to us. ANI is income before taxes fully taxed at our blended statutory rate. We believe ANI and adjusted revenues are useful to investors because they enable investors to evaluate the performance of our business across reporting periods.
Fee-Related Earnings
Fee-related earnings, or “FRE”, is a non-GAAP performance measure used to monitor our baseline earnings from recurring management and advisory fees. FRE is a component of ANI and comprises net adjusted management and advisory fees, less adjusted expenses which are operating expenses other than (a) performance fee-related compensation, (b) equity-based compensation for awards granted prior to and in connection with our IPO, profits interests issued by our non-wholly owned subsidiaries, and unrealized mark-to-market changes in the fair value of the profits interests issued in connection with the Private Wealth Transaction, (c) amortization of intangibles, and (d) certain other items that we believe are not indicative of our core operating performance, including charges associated with acquisitions and corporate transactions, contract terminations and employee severance. FRE is presented before income taxes. We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business and our ability to cover direct base compensation and operating expenses from total fee revenue.
Fee-Related Earnings Margin
Fee-related earnings margin is a non-GAAP performance measure which is calculated by dividing fee-related earnings by management and advisory fees, net. We believe fee-related earnings margin is an important measure of profitability on revenues that are largely recurring by nature. We believe fee-related earnings margin is useful to investors because it enables them to better evaluate the operating profitability of our business across periods.
The table below shows a reconciliation of fee-related earnings to fee-related earnings margin.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| Fee-related earnings | $ | 35,882 | $ | 36,617 | $ | 39,044 | $ | 42,701 | $ | 37,796 | $ | 122,242 | $ | 156,158 | ||||||||||||
| Management and advisory fees, net | 112,229 | 116,732 | 119,121 | 128,753 | 132,720 | 380,257 | 497,326 | |||||||||||||||||||
| Fee-related earnings margin | 32 | % | 31 | % | 33 | % | 33 | % | 28 | % | 32 | % | 31 | % | ||||||||||||
8
Gross Realized Performance Fees
Gross realized performance fees represents realized carried interest allocations and incentive fees, including the deferred portion and excluding legacy Greenspring entities. We believe gross realized performance fees is useful to investors because it presents the total performance fees realized by us.
Net Realized Performance Fees
Net realized performance fees represents gross realized performance fees, less realized performance fee-related compensation and excluding legacy Greenspring entities. We believe net realized performance fees is useful to investors because it presents the performance fees attributable to us, net of amounts paid to employees as performance fee-related compensation.
The table below shows a reconciliation of realized performance fees to gross and net realized performance fees.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
Realized carried interest allocations(1) | $ | 31,665 | $ | 73,607 | $ | 22,469 | $ | 16,320 | $ | 18,693 | $ | 200,718 | $ | 131,089 | ||||||||||||
| Incentive fees | 5,588 | — | 5,365 | 2,980 | 1,318 | 11,593 | 9,663 | |||||||||||||||||||
| Deferred incentive fees | (4,373) | — | 3,683 | — | 209 | 1,438 | 3,892 | |||||||||||||||||||
| Gross realized performance fees | 32,880 | 73,607 | 31,517 | 19,300 | 20,220 | 213,749 | 144,644 | |||||||||||||||||||
Realized performance fee-related compensation(1) | (5,086) | (41,735) | (13,630) | (11,726) | (12,755) | (91,208) | (79,846) | |||||||||||||||||||
| Net realized performance fees | $ | 27,794 | $ | 31,872 | $ | 17,887 | $ | 7,574 | $ | 7,465 | $ | 122,541 | $ | 64,798 | ||||||||||||
(1)Excludes legacy Greenspring entities.
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The table below shows a reconciliation of income (loss) before income tax to ANI and FRE.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| Income (loss) before income tax | $ | 115,842 | (20,185) | $ | (74,487) | $ | (14,287) | $ | 67,505 | $ | 512,581 | $ | (41,454) | |||||||||||||
Net income attributable to non-controlling interests in subsidiaries(1) | (8,759) | (8,116) | (9,985) | (10,802) | (10,151) | (28,100) | (39,054) | |||||||||||||||||||
| Net (income) loss attributable to non-controlling interests in legacy Greenspring entities | (14,696) | 8,604 | 15,357 | 8,966 | 11,148 | (32,586) | 44,075 | |||||||||||||||||||
| Unrealized carried interest allocations | (133,062) | 113,950 | 176,778 | 63,367 | (100,753) | (585,851) | 253,342 | |||||||||||||||||||
| Unrealized performance fee-related compensation | 84,757 | (54,553) | (86,126) | (31,875) | 53,515 | 312,903 | (119,039) | |||||||||||||||||||
| Unrealized investment (income) loss | (3,488) | 3,070 | 5,795 | 1,354 | (2,207) | (17,661) | 8,012 | |||||||||||||||||||
| Impact of Consolidated Funds | — | — | — | (4,895) | (4,002) | — | (8,897) | |||||||||||||||||||
| Deferred incentive fees | (4,373) | — | 3,683 | — | 209 | 1,438 | 3,892 | |||||||||||||||||||
Equity-based compensation(2) | 3,212 | 3,071 | 3,125 | 7,444 | 8,274 | 13,174 | 21,914 | |||||||||||||||||||
| Amortization of intangibles | 11,049 | 10,871 | 10,870 | 10,870 | 10,870 | 24,497 | 43,481 | |||||||||||||||||||
| Tax Receivable Agreements adjustments through earnings | (4,951) | — | — | — | (244) | (3,560) | (244) | |||||||||||||||||||
Non-core items(3) | 10,709 | 3,950 | 2,945 | 9,952 | 733 | 26,260 | 17,580 | |||||||||||||||||||
| Pre-tax adjusted net income | 56,240 | 60,662 | 47,955 | 40,094 | 34,897 | 223,095 | 183,608 | |||||||||||||||||||
Income taxes(4) | (12,526) | (13,528) | (10,694) | (8,941) | (7,782) | (50,152) | (40,945) | |||||||||||||||||||
| Adjusted net income | 43,714 | 47,134 | 37,261 | 31,153 | 27,115 | 172,943 | 142,663 | |||||||||||||||||||
Income taxes(4) | 12,526 | 13,528 | 10,694 | 8,941 | 7,782 | 50,152 | 40,945 | |||||||||||||||||||
| Realized carried interest allocations | (31,665) | (73,607) | (22,469) | (16,320) | (18,693) | (200,718) | (131,089) | |||||||||||||||||||
Realized performance fee-related compensation(5) | 5,086 | 41,735 | 13,630 | 11,726 | 12,755 | 91,208 | 79,846 | |||||||||||||||||||
| Realized investment income | (1,831) | (1,969) | (2,104) | (673) | (757) | (8,499) | (5,503) | |||||||||||||||||||
| Incentive fees | (5,588) | — | (5,365) | (2,980) | (1,318) | (11,593) | (9,663) | |||||||||||||||||||
| Deferred incentive fees | 4,373 | — | (3,683) | — | (209) | (1,438) | (3,892) | |||||||||||||||||||
Non-GAAP interest income(6) | (8) | (11) | (356) | (701) | (658) | (337) | (1,726) | |||||||||||||||||||
| Interest expense | 476 | 587 | 817 | 1,111 | 1,674 | 1,113 | 4,189 | |||||||||||||||||||
Adjusted other (income) loss(6)(7) | 40 | 1,104 | 634 | (358) | (46) | 1,311 | 1,334 | |||||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries(1) | 8,759 | 8,116 | 9,985 | 10,802 | 10,151 | 28,100 | 39,054 | |||||||||||||||||||
| Fee-related earnings | $ | 35,882 | $ | 36,617 | $ | 39,044 | $ | 42,701 | $ | 37,796 | $ | 122,242 | $ | 156,158 | ||||||||||||
(1)Reflects the portion of pre-tax adjusted net income of our subsidiaries attributable to non-controlling interests:
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
Fee-related earnings attributable to non-controlling interests in subsidiaries | $ | 8,458 | $ | 8,514 | $ | 10,149 | $ | 10,167 | $ | 9,843 | $ | 27,583 | $ | 38,673 | ||||||||||||
Non fee-related earnings (losses) attributable to non-controlling interests in subsidiaries | 301 | (398) | (164) | 635 | 308 | 517 | 381 | |||||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries | $ | 8,759 | $ | 8,116 | $ | 9,985 | $ | 10,802 | $ | 10,151 | $ | 28,100 | $ | 39,054 | ||||||||||||
(2)Reflects equity-based compensation for awards granted prior to and in connection with the IPO, profits interests issued by our non-wholly owned subsidiaries, and unrealized mark-to-market changes in the fair value of the profits interests issued in connection with the Private Wealth Transaction.
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(3)Includes (income) expense related to the following non-core operating income and expenses:
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| Transaction costs | $ | 427 | $ | 3 | $ | — | $ | 6,812 | $ | 38 | $ | 14,247 | $ | 6,853 | ||||||||||||
| Lease remeasurement adjustments | — | — | (2,709) | — | — | — | (2,709) | |||||||||||||||||||
| Accelerated depreciation of leasehold improvements for changes in lease terms | — | — | 210 | 631 | 631 | — | 1,472 | |||||||||||||||||||
| Severance costs | 1,518 | 44 | 134 | 42 | 73 | 1,625 | 293 | |||||||||||||||||||
| (Gain) loss on change in fair value for contingent consideration obligation | 7,976 | 3,256 | 4,704 | 1,989 | (588) | 9,600 | 9,361 | |||||||||||||||||||
| Compensation paid to certain employees as part of an acquisition earn-out | 788 | 647 | 606 | 478 | 579 | 788 | 2,310 | |||||||||||||||||||
| Total non-core operating income and expenses | $ | 10,709 | $ | 3,950 | $ | 2,945 | $ | 9,952 | $ | 733 | $ | 26,260 | $ | 17,580 | ||||||||||||
(4)Represents corporate income taxes at a blended statutory rate applied to pre-tax adjusted net income:
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | ||||||||||||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||
| Combined state, local and foreign rate | 1.3 | % | 1.3 | % | 1.3 | % | 1.3 | % | 1.3 | % | 1.5 | % | 1.3 | % | ||||||||||||
| Blended statutory rate | 22.3 | % | 22.3 | % | 22.3 | % | 22.3 | % | 22.3 | % | 22.5 | % | 22.3 | % | ||||||||||||
The decrease in the blended statutory rate for fiscal 2023 compared to fiscal 2022 was due to updates in our state apportionment. The three months ended March 31, 2022 reflect a true-up to adjust fiscal 2022 to a blended statutory rate of 22.5%.
(5)Includes carried interest-related compensation expense related to the portion of net carried interest allocation revenue attributable to equity holders of the Company’s consolidated subsidiaries that are not 100% owned:
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | |||||||||||||||||||
| Realized carried interest-related compensation | $ | 1,307 | $ | 4,397 | $ | 2,412 | $ | 2,208 | $ | 2,358 | $ | 1,804 | $ | 11,375 | ||||||||||||
(6)Excludes the impact of consolidating the Consolidated Funds.
(7)Excludes amounts for Tax Receivable Agreements adjustments recognized as other income (loss) ($244 thousand and $4,951 thousand for the three months ended March 31, 2023 and 2022, respectively, and $244 thousand and $3,560 thousand in fiscal 2023 and fiscal 2022, respectively).
11
Adjusted Net Income Per Share
ANI per share measures our per-share earnings assuming all Class B units and Class C units in the Partnership were exchanged for Class A common stock in SSG, including the dilutive impact of outstanding equity-based awards. ANI per share is calculated as ANI divided by adjusted shares outstanding. We believe ANI per share is useful to investors because it enables them to better evaluate per-share operating performance across reporting periods.
The following table shows a reconciliation of diluted weighted-average shares of Class A common stock outstanding to adjusted shares outstanding used in the computation of ANI per share.
| Three Months Ended | Year Ended March 31, | |||||||||||||||||||||||||
| March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | ||||||||||||||||||||
| Adjusted net income | $ | 43,714 | $ | 47,134 | $ | 37,261 | $ | 31,153 | $ | 27,115 | $ | 172,943 | $ | 142,663 | ||||||||||||
| Weighted-average shares of Class A common stock outstanding – Basic | 60,792,227 | 61,144,139 | 61,407,834 | 62,192,899 | 62,805,788 | 49,833,760 | 61,884,671 | |||||||||||||||||||
| Assumed vesting of RSUs | 982,028 | 798,326 | 913,479 | 457,818 | 524,576 | 1,289,809 | 669,966 | |||||||||||||||||||
| Assumed vesting and exchange of Class B2 units | 2,464,736 | 2,448,833 | 2,466,194 | 2,486,197 | 2,501,045 | 2,476,681 | 2,475,501 | |||||||||||||||||||
Exchange of Class B units in the Partnership(1) | 47,495,784 | 47,146,840 | 46,889,995 | 46,662,062 | 46,420,141 | 52,028,095 | 46,780,724 | |||||||||||||||||||
Exchange of Class C units in the Partnership(2) | 2,928,824 | 2,928,824 | 2,928,824 | 2,852,187 | 2,514,085 | 1,563,316 | 2,807,243 | |||||||||||||||||||
| Adjusted shares | 114,663,599 | 114,466,962 | 114,606,326 | 114,651,163 | 114,765,635 | 107,191,661 | 114,618,105 | |||||||||||||||||||
| Adjusted net income per share | $ | 0.38 | $ | 0.41 | $ | 0.33 | $ | 0.27 | $ | 0.24 | $ | 1.61 | $ | 1.24 | ||||||||||||
(1)Assumes the full exchange of Class B units in the Partnership for Class A common stock of SSG pursuant to the Class B Exchange Agreement.
(2)Assumes the full exchange of Class C units in the Partnership for Class A common stock of SSG pursuant to the Class C Exchange Agreement.
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Key Operating Metrics
We monitor certain operating metrics that are either common to the asset management industry or that we believe provide important data regarding our business.
Fee-Earning AUM
| Three Months Ended | Year Ended March 31, | Percentage Change | ||||||||||||||||||||||||||||||
| (in millions) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | 2022 | 2023 | vs. FQ4'22 | ||||||||||||||||||||||||
| Separately Managed Accounts | ||||||||||||||||||||||||||||||||
| Beginning balance | $ | 45,899 | $ | 49,586 | $ | 52,198 | $ | 52,881 | $ | 53,420 | $ | 40,561 | $ | 49,586 | 16 | % | ||||||||||||||||
Contributions(1) | 5,150 | 3,371 | 1,760 | 2,149 | 2,378 | 11,839 | 9,658 | (54) | % | |||||||||||||||||||||||
Distributions(2) | (1,398) | (445) | (588) | (2,178) | (997) | (3,235) | (4,208) | (29) | % | |||||||||||||||||||||||
Market value, FX and other(4) | (65) | (314) | (489) | 568 | 544 | 421 | 309 | na | ||||||||||||||||||||||||
| Ending balance | $ | 49,586 | $ | 52,198 | $ | 52,881 | $ | 53,420 | $ | 55,345 | $ | 49,586 | $ | 55,345 | 12 | % | ||||||||||||||||
| Focused Commingled Funds | ||||||||||||||||||||||||||||||||
| Beginning balance | $ | 25,333 | $ | 25,587 | $ | 26,352 | $ | 27,236 | $ | 29,565 | $ | 11,447 | $ | 25,587 | 17 | % | ||||||||||||||||
Contributions(1) | 1,088 | 1,160 | 1,139 | 2,497 | 713 | 4,364 | 5,509 | (34) | % | |||||||||||||||||||||||
Distributions(2) | (814) | (382) | (304) | (168) | (308) | (1,564) | (1,162) | (62) | % | |||||||||||||||||||||||
Acquisitions(3) | — | — | — | — | — | 11,407 | — | na | ||||||||||||||||||||||||
Market value, FX and other(4) | (20) | (13) | 49 | — | 116 | (67) | 152 | na | ||||||||||||||||||||||||
| Ending balance | $ | 25,587 | $ | 26,352 | $ | 27,236 | $ | 29,565 | $ | 30,086 | $ | 25,587 | $ | 30,086 | 18 | % | ||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
| Beginning balance | $ | 71,232 | $ | 75,173 | $ | 78,550 | $ | 80,117 | $ | 82,985 | $ | 52,008 | $ | 75,173 | 16 | % | ||||||||||||||||
Contributions(1) | 6,238 | 4,531 | 2,899 | 4,646 | 3,091 | 16,203 | 15,167 | (50) | % | |||||||||||||||||||||||
Distributions(2) | (2,212) | (827) | (892) | (2,346) | (1,305) | (4,799) | (5,370) | (41) | % | |||||||||||||||||||||||
Acquisitions(3) | — | — | — | — | — | 11,407 | — | na | ||||||||||||||||||||||||
Market value, FX and other(4) | (85) | (327) | (440) | 568 | 660 | 354 | 461 | na | ||||||||||||||||||||||||
| Ending balance | $ | 75,173 | $ | 78,550 | $ | 80,117 | $ | 82,985 | $ | 85,431 | $ | 75,173 | $ | 85,431 | 14 | % | ||||||||||||||||
(1)Contributions consist of new capital commitments that earn fees on committed capital and capital contributions to funds and accounts that earn fees on net invested capital or NAV.
(2)Distributions consist of returns of capital from funds and accounts that pay fees on net invested capital or NAV and reductions in fee-earning AUM from funds that moved from a committed capital to net invested capital fee basis or from funds and accounts that no longer pay fees.
(3)Fiscal 2022 includes $11.4 billion of focused commingled funds added as a result of the Greenspring acquisition.
(4)Market value, FX and other primarily consist of changes in market value appreciation (depreciation) for funds that pay on NAV and the effect of foreign exchange rate changes on non-U.S. dollar denominated commitments.
13
Asset Class Summary
| Three Months Ended | Percentage Change | ||||||||||||||||||||||
| (in millions) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | vs. FQ4'22 | |||||||||||||||||
| FEAUM | |||||||||||||||||||||||
| Private equity | $ | 40,396 | $ | 41,944 | $ | 42,781 | $ | 45,048 | $ | 45,766 | 13% | ||||||||||||
| Real estate | 4,824 | 5,417 | 5,367 | 5,541 | 6,030 | 25% | |||||||||||||||||
| Infrastructure | 17,737 | 18,395 | 18,592 | 18,314 | 19,274 | 9% | |||||||||||||||||
| Private debt | 12,216 | 12,794 | 13,377 | 14,082 | 14,361 | 18% | |||||||||||||||||
| Total | $ | 75,173 | $ | 78,550 | $ | 80,117 | $ | 82,985 | $ | 85,431 | 14% | ||||||||||||
| Separately managed accounts | $ | 49,586 | $ | 52,198 | $ | 52,881 | $ | 53,420 | $ | 55,345 | 12% | ||||||||||||
| Focused commingled funds | 25,587 | 26,352 | 27,236 | 29,565 | 30,086 | 18% | |||||||||||||||||
| Total | $ | 75,173 | $ | 78,550 | $ | 80,117 | $ | 82,985 | $ | 85,431 | 14% | ||||||||||||
AUM(1) | |||||||||||||||||||||||
| Private equity | $ | 75,593 | $ | 75,683 | $ | 72,169 | $ | 70,868 | $ | 71,611 | (5)% | ||||||||||||
| Real estate | 10,546 | 10,938 | 11,516 | 11,372 | 12,891 | 22% | |||||||||||||||||
| Infrastructure | 26,027 | 26,285 | 27,749 | 27,324 | 27,285 | 5% | |||||||||||||||||
| Private debt | 22,326 | 23,631 | 23,583 | 24,437 | 26,592 | 19% | |||||||||||||||||
| Total | $ | 134,492 | $ | 136,537 | $ | 135,017 | $ | 134,001 | $ | 138,379 | 3% | ||||||||||||
| Separately managed accounts | $ | 78,615 | $ | 79,504 | $ | 78,625 | $ | 77,797 | $ | 82,243 | 5% | ||||||||||||
| Focused commingled funds | 43,866 | 44,658 | 43,928 | 43,289 | 43,062 | (2)% | |||||||||||||||||
| Advisory AUM | 12,011 | 12,375 | 12,464 | 12,915 | 13,074 | 9% | |||||||||||||||||
| Total | $ | 134,492 | $ | 136,537 | $ | 135,017 | $ | 134,001 | $ | 138,379 | 3% | ||||||||||||
| Advisory AUA | |||||||||||||||||||||||
| Private equity | $ | 227,593 | $ | 234,368 | $ | 239,640 | $ | 239,270 | $ | 242,461 | 7% | ||||||||||||
| Real estate | 149,492 | 156,851 | 162,691 | 164,072 | 171,668 | 15% | |||||||||||||||||
| Infrastructure | 43,633 | 45,000 | 47,538 | 47,833 | 50,700 | 16% | |||||||||||||||||
| Private debt | 15,177 | 15,661 | 16,831 | 16,823 | 17,362 | 14% | |||||||||||||||||
| Total | $ | 435,895 | $ | 451,880 | $ | 466,700 | $ | 467,998 | $ | 482,191 | 11% | ||||||||||||
Total capital responsibility(2) | $ | 570,387 | $ | 588,417 | $ | 601,717 | $ | 601,999 | $ | 620,570 | 9% | ||||||||||||
Note: Amounts may not sum to total due to rounding. 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 114 days at the fiscal year-end, following the prior period end. When NAV data is not available 100 days, or 114 days at the fiscal year-end, following the prior period end, such NAVs are adjusted for cash activity following the last available reported NAV.
(1)Allocation of AUM by asset class is presented by underlying investment asset classification.
(2)Total capital responsibility equals assets under management (AUM) plus assets under advisement (AUA).
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Contacts
Shareholder Relations:
Seth Weiss
shareholders@stepstonegroup.com
1-212-351-6106
Media:
Brian Ruby / Chris Gillick, ICR
StepStonePR@icrinc.com
1-203-682-8268
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Glossary
Assets under management, or “AUM”, primarily reflects the assets associated with our SMAs and focused commingled funds. We classify assets as AUM if we have full discretion over the investment decisions in an account or have responsibility or custody of assets. Although management fees are based on a variety of factors and are not linearly correlated with AUM, we believe AUM is a useful metric for assessing the relative size and scope of our asset management business.
Our AUM is calculated as the sum of (i) the net asset value (“NAV”) of client portfolio assets, including the StepStone Funds and (ii) the unfunded commitments of clients to the underlying investments and the StepStone Funds. Our AUM reflects the investment valuations in respect of the underlying investments of our funds and accounts on a three-month lag, adjusted for new client account activity through the period end. Our AUM does not include post-period investment valuation or cash activity. AUM as of March 31, 2023 reflects final data for the prior period (December 31, 2022), adjusted for net new client account activity through March 31, 2023. NAV data for underlying investments is as of December 31, 2022, as reported by underlying managers up to 114 days following December 31, 2022. When NAV data is not available 114 days following December 31, 2022, such NAVs are adjusted for cash activity following the last available reported NAV.
Assets under advisement, or “AUA”, consists of client assets for which we do not have full discretion to make investment decisions but play a role in advising the client or monitoring their investments. We generally earn revenue for advisory-related services on a contractual fixed fee basis. Advisory-related services include asset allocation, strategic planning, development of investment policies and guidelines, screening and recommending investments, legal negotiations, monitoring and reporting on investments, and investment manager review and due diligence. Advisory fees vary by client based on the scope of services, investment activity and other factors. Most of our advisory fees are fixed, and therefore, increases or decreases in AUA do not necessarily lead to proportionate changes in revenue.
Our AUA is calculated as the sum of (i) the NAV of client portfolio assets for which we do not have full discretion and (ii) the unfunded commitments of clients to the underlying investments. Our AUA reflects the investment valuations in respect of the underlying investments of our client accounts on a three-month lag, adjusted for new client account activity through the period end. Our AUA does not include post-period investment valuation or cash activity. AUA as of March 31, 2023 reflects final data for the prior period (December 31, 2022), adjusted for net new client account activity through March 31, 2023. NAV data for underlying investments is as of December 31, 2022, as reported by underlying managers up to 114 days following December 31, 2022. When NAV data is not available 114 days following December 31, 2022, such NAVs are adjusted for cash activity following the last available reported NAV.
Total capital responsibility equals AUM plus AUA. AUM includes any accounts for which StepStone Group has full discretion over the investment decisions, has responsibility to arrange or effectuate transactions, or has custody of assets. AUA refers to accounts for which StepStone Group provides advice or consultation but for which the firm does not have discretionary authority, responsibility to arrange or effectuate transactions, or custody of assets.
Fee-earning AUM, or “FEAUM”, reflects the assets from which we earn management fee revenue (i.e., fee basis) and includes assets in our SMAs, focused commingled funds and assets held directly by our clients for which we have fiduciary oversight and are paid fees as the manager of the assets. Our SMAs and focused commingled funds typically pay management fees based on capital commitments, net invested capital and, in certain cases, NAV, depending on the fee terms. Management fees are only marginally affected by market appreciation or depreciation because substantially all of the StepStone Funds pay management fees based on capital commitments or net invested capital. As a result, management fees and FEAUM are not materially affected by changes in market value.
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Undeployed fee-earning capital represents the amount of capital commitments to StepStone Funds that has not yet been invested or considered active but will generate management fee revenue once this capital is invested or activated.
Legacy Greenspring entities refers to certain entities for which the Company, indirectly through its subsidiaries, became the sole and/or managing member in connection with the Greenspring acquisition.
StepStone Funds refer to focused commingled funds and separately managed accounts of the Company, including acquired Greenspring funds, for which the Partnership or one of its subsidiaries acts as both investment adviser and general partner or managing member.
Consolidated Funds refer to the StepStone Funds that we are required to consolidate as of the applicable reporting period. We consolidate funds and other entities in which we hold a controlling financial interest.
Private Wealth Transaction refers to new arrangements entered into by which certain members of the StepStone Group Private Wealth LLC (“SPW”) team received a profits interest in SPW and concurrently entered into an option agreement which provides that, (i) we have the right to acquire the profits interest at the end of any fiscal quarter after June 30, 2027, in exchange for payment of a call price and (ii) the SPW management team, through an entity named CH Equity Partners, LLC (formerly known as Conversus Holdings LLC), has the right to put the profits interest to us on June 30, 2026 or at the end of any fiscal quarter thereafter, in exchange for payment of a put price.
SSG refers solely to StepStone Group Inc., a Delaware corporation, and not to any of its subsidiaries.
The Partnership refers solely to StepStone Group LP, a Delaware limited partnership, and not to any of its subsidiaries.
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