StepStone Group Inc.

For the first quarter of fiscal 2027, StepStone reported fee revenue of $271 million, up 27% year over year. Fee-related earnings were $106 million, up 30% year over year, and FRE margin was 39% on both a reported and adjusted basis after normalizing for retroactive fees. Adjusted net income was $60 million, or $0.48 per share, versus $49 million, or $0.40 per share, a year ago. GAAP net loss attributable to StepStone was $116 million, or $1.41 per share, driven by the fair value change tied to the Private Wealth profits interest buy-in. For guidance and forward commentary, management said it expects the commingled fund fee rate to stay relatively flat over the next few quarters to a year as the secondaries funds continue fundraising, with fee-rate progress resuming after those funds are fully raised. Management also said it anticipates a roughly $1.5 billion managed account expiration next quarter, expects Private Wealth incentive fees from SPRING to be recognized in fiscal third quarter, and reiterated that the Private Wealth buy-in should add material EPS accretion over time.

Scott Hart framed the quarter as a strong start to fiscal 2027, emphasizing robust fundraising, a healthy pipeline, and visibility for continued earnings growth. He highlighted StepStone’s long-term playbook: grow the core business, invest in data/technology and retirement-market solutions, and pursue selective M&A, including buying in noncontrolling interests at a discount to public valuation. His tone was constructive and confident, especially around Private Wealth, where he said the buy-in should let StepStone capture the full economics of one of its fastest-growing businesses.

David Park focused on the financial drivers behind the quarter: fee revenue of $271 million, FRE of $106 million, and FRE margin of 39%. He said adjusted cash-based compensation was $117 million, adjusted equity comp was $7 million, and G&A was $42 million, with about $3 million of the increase in G&A coming from Private Wealth distribution fees that are running at roughly $5 million per quarter. He also noted gross realized performance fees of $30 million and net realized carry of $16 million, plus net accrued carry of $935 million, up 19% year over year, and said the company’s leverage posture remains conservative as it prepares for the Private Wealth buy-in.

Analysts focused heavily on three issues: whether UFEC was translating into fee-rate growth as expected, whether SPRING’s strong performance is too dependent on SpaceX, and how StepStone plans to fund and manage the Private Wealth buy-in. Management said UFEC remains a $39 billion pipeline, with roughly $3 billion still needing activation and the rest subject to deployment, and that the average fee rate across UFEC is broadly in line with the company’s overall fee rate. On SPRING, management said the fund has over 2,000 positions, SpaceX is now only a mid-teens position, and the fund is not marketed as access to any single company; they also said they will manage public holdings in an orderly way as lockups expire. On the buy-in, management said up to 75% of consideration can be paid in StepStone equity, 30% of which is tradable immediately and the rest over three years, while the cash piece will likely be financed with cash on hand, operating cash flow, and additional debt while preserving an investment-grade profile.