StepStone Group Inc: Q3 2025 Earnings Call - A Deep Dive into Fee-Related Earnings and Asset Growth

StepStone Group Inc. (NASDAQ: STEP) recently reported its Q3 2025 earnings, highlighting significant growth in fee-related earnings and fee-earning assets under management (AUM). The company's strong performance was driven by strategic deployment of capital, organic growth, and a diversified investment approach. This article will delve into the key takeaways from the earnings call and provide insights into StepStone Group's growth trajectory.

Fee-Related Earnings and AUM Growth

StepStone Group reported fee-related earnings (FRE) of $74.1 million, up 46% from the prior year quarter, and an FRE margin of 39%. The company's AUM grew by nearly $10 billion, reaching over $114 billion, up 28% from a year ago. This impressive growth was driven by strong fundraising, attractive investment opportunities, and organic growth strategies.

Diversified Investment Approach

StepStone Group's diversified investment approach, spanning private equity, infrastructure, private debt, and real estate asset classes, has contributed to its resilience and growth. By investing in a broad range of asset classes and maintaining strong relationships with various GPs, the company has been able to navigate challenging market conditions and capitalize on attractive investment opportunities.

During the earnings call, Scott Hart, CEO of StepStone Group, highlighted the company's diversified sourcing channels and relationships with various GPs, which have contributed to a strong pipeline for future deployment. The company deployed over $2 billion of capital and activated over $6.5 billion of capital this quarter, marking the most active quarter in two years.

Sustainable Growth Trajectory

StepStone Group's significant increase in fee-earning AUM can be attributed to strong fundraising, attractive investment opportunities, organic growth, and diversified sourcing channels. This growth trajectory is sustainable, as evidenced by the company's consistent AUM growth, diversified pipeline, strategic capital deployment, and organic growth strategy.

Since the fall of 2021, StepStone Group has increased its fee-earning AUM by 70% at a compounded annual rate of 18%. This consistent growth, coupled with the company's diversified investment approach and strong relationships with GPs, indicates that StepStone Group is well-positioned to continue growing its AUM and maintaining its resilience in the face of market volatility.

In conclusion, StepStone Group's Q3 2025 earnings call highlighted the company's strong performance, driven by significant growth in fee-related earnings and fee-earning AUM. The company's diversified investment approach, strategic deployment of capital, and sustainable growth trajectory position it well for continued success in the private markets ecosystem. As StepStone Group continues to grow and diversify its investment strategies, it is well-positioned to capitalize on attractive investment opportunities and maintain its resilience in the face of market volatility.