StepStone Group Inc. Annual Report: A Simple Guide

I’ve put together this guide to help you understand how StepStone Group performed this year. Think of this as a "cheat sheet" to help you decide if they are a company you want to watch or invest in.

1. What does this company do?

StepStone is a global investment firm that manages and advises on private market investments for large institutions and wealthy individuals. They focus on private equity, real estate, infrastructure, and private debt. They earn money through two main services:

• Advisory Services: They provide investment advice, build portfolios, and monitor performance.
• Investment Management: They manage pooled funds and custom portfolios, making investment decisions on behalf of their clients.

2. Financial performance: The "Big Picture"

As of the fiscal year ending March 31, 2026, StepStone remains a major player in the financial world.

• Market Value: As of September 30, 2025, the company’s Class A stock held by the public was worth about $5.11 billion, based on a share price of $65.31.
• Share Structure: The company uses a dual-class structure. As of May 20, 2026, there were 80.7 million Class A shares and 38.6 million Class B shares. Class B shares hold more voting power, keeping strategic control with the founders while allowing the public to share in the company’s growth.

3. How they make money

StepStone has three main ways to earn revenue:

• Management & Advisory Fees: These are steady, recurring fees based on the amount of capital clients invest.
• Performance Fees: These are "bonus" fees earned when investments beat specific return targets. They are "realized" when cash is returned to investors and "unrealized" when asset values rise on paper.
• Other Income: This includes specialized service fees and interest income.

The company is successfully diversifying. By offering custom accounts, they have created a "sticky" business model where clients rely on them for long-term strategy, which helps smooth out the ups and downs of performance-based pay.

4. Financial health and shareholder returns

StepStone’s balance sheet includes many of the funds they manage. When checking their health, focus on the figures "excluding consolidated funds," as these show the firm's actual operating cash and debt.

• Dividends: The company consistently paid dividends to shareholders throughout 2024, 2025, and 2026. This reflects a commitment to returning cash to investors, though payments remain subject to board approval and available cash flow.

5. Major wins and challenges

• Wins: Their move into "Private Wealth" is a major success. By creating products for wealthy individuals, they are tapping into a massive pool of capital that is less crowded than traditional pension funds.
• Challenges: Because some income is "unrealized" (paper gains), reported profit can swing based on quarterly valuations. These assets are hard to sell quickly, so paper profits do not always translate into immediate cash.

6. Risks to watch

• Market Volatility: If the economy slows, it becomes harder to sell companies at a profit, which directly reduces the performance fees StepStone collects.
• Regulatory Oversight: As a registered adviser, they face strict rules. Changes in tax laws or new SEC disclosure requirements could increase costs or impact the attractiveness of their products.
• Key Person Risk: Success depends on the reputation of senior professionals. Losing key staff could hurt client relationships and make it harder to raise new capital.

7. Future outlook

StepStone aims to be the leading manager for private equity "democratization." By growing their private wealth business, they expect to earn more stable, recurring fees, making them less reliant on the "boom or bust" nature of performance fees. They are building a network and data expertise that creates a competitive advantage, making it difficult for new rivals to replicate their scale and access to deals.

Investor Tip: When evaluating StepStone, look closely at the growth of their "Private Wealth" assets. If this segment continues to expand, it suggests the company is successfully building a more predictable, long-term revenue stream that is less dependent on short-term market swings.