StepStone Group Inc (STEP) Q2 2026 Earnings Call Highlights: Record Growth and Strategic ...

This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

StepStone Group Inc (NASDAQ:STEP) reported a 34% year-over-year growth in core fee-related earnings, reaching $78 million. The company achieved a record quarter of subscriptions within its private wealth platform, generating $2.4 billion in new subscriptions. StepStone Group Inc (NASDAQ:STEP) successfully launched StepX, a pure play private equity interval fund, which saw over $700 million in gross subscriptions in the first 30 days. The company expanded its international presence by opening new offices in the Netherlands, Spain, South Korea, and Saudi Arabia. StepStone Group Inc (NASDAQ:STEP) announced a partnership with Aviva, becoming one of five specialist managers in its UK trust-based pension scheme, enhancing its reputation in private markets for retirement savings.

Negative Points

StepStone Group Inc (NASDAQ:STEP) reported a GAAP net loss of $366 million, or $4.66 per share, for the quarter. The company's GAAP loss was significantly larger than prior periods due to the progress of its private wealth platform. Fee-related earnings declined slightly sequentially, primarily due to lower retroactive fees and lower advisory fees. General and administrative expenses increased by $2 million from the previous quarter, driven by higher travel, IT, and other general operating expenses. The company anticipates a pullback in quarterly subscriptions following the initial surge from the launch of StepX.

Q & A Highlights

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Q: Can you elaborate on the strong demand for the newly launched P/E product StepX and any potential cannibalization risk with existing products? A: Jason Ment, President and co-Chief Operating Officer, explained that StepX was developed in response to demand from channel partners seeking P/E exclusive exposure and a ticker available on all custodians. The initial uptake was driven by these factors. While there was some rotation from existing products to StepX, it was anticipated, and most of the rotation has already occurred.

Q: With five flagship products in the wealth channel, what are the next steps to broaden and deepen distribution? A: Jason Ment noted that 50% of distribution partners with a product on platform for over a year are selling more than one product. There is still room to grow, especially with larger partners who currently focus on 2-3 funds. The goal is to meet each partner's needs, acknowledging that not all will sell all five products.

Story Continues

Q: Regarding the partnership with Aviva, what is the potential opportunity, and how do you see opportunities in the retirement channel outside the US? A: Jason Ment highlighted that the UK defined contribution market is significant, with Aviva being a top player. Material flows are expected to begin in calendar 2026. Conversations are ongoing in other geographies conducive to private markets in defined contribution spaces, including a focus on the US.

Q: How are you expanding deal sourcing capabilities to manage the capital influx without compromising returns? A: Scott Hart, CEO, emphasized the importance of maintaining a balanced approach across primary fund commitments, co-investments, and secondaries. The firm allocates about $70 billion annually into private markets, ensuring a balanced deal flow. They monitor approval rates to maintain selectivity and ensure sufficient deal flow.

Q: What are the future plans for product evolution in the private wealth channel over the next 12-24 months? A: Jason Ment stated that the current core products will remain the focus, with an emphasis on expanding distribution. There is ongoing dialogue about inclusion in model programs, with some technology innovators working on operational solutions to integrate private markets into models effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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