Private markets investment firm StepStone Group (NASDAQ:STEP) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 103% year on year to $494.5 million. Its non-GAAP profit of $0.65 per share was 4.7% above analysts’ consensus estimates.
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StepStone Group (STEP) Q4 CY2025 Highlights:
- Revenue: $494.5 million vs analyst estimates of $418.3 million (103% year-on-year growth, 18.2% beat)
- Adjusted EPS: $0.65 vs analyst estimates of $0.62 (4.7% beat)
- Adjusted Operating Income: $220.4 million vs analyst estimates of $174.9 million (44.6% margin, 26% beat)
- Operating Margin: -44.7%, up from -147% in the same quarter last year
- Market Capitalization: $4.68 billion
StockStory’s Take
StepStone Group’s fourth quarter results for 2025 exceeded Wall Street’s revenue and profit expectations, with management attributing the outperformance to continued momentum across its private wealth platform and a diversified approach to private markets investing. CEO Scott Hart highlighted the company’s best quarter ever in core fee-related earnings, driven by sustained demand for its evergreen funds and a record year for fundraising. Hart noted that “momentum also continues to grow in Structs and Credex, where we continue to build our syndicated partners,” reflecting the broad-based nature of StepStone’s growth across products and geographies.
Looking ahead, StepStone’s management expects to build on its strong foundation by focusing on expanding its product offerings and geographic reach, particularly through its evergreen and private wealth funds. The company plans to leverage its diversified investment approach to navigate both opportunities and risks associated with artificial intelligence disruption. CEO Scott Hart stated, “given our highly diversified approach to private markets investing, our track record of partnering with top managers, and our data-driven insights, we expect to be well-positioned on both a relative and absolute basis.” Management also indicated that new fundraising efforts and product launches will be key areas of focus in the coming quarters.
Key Insights from Management’s Remarks
Management attributed the quarter’s growth to record fundraising, strong performance in venture and evergreen funds, and disciplined diversification across asset classes and geographies.
- Record fundraising momentum: The company achieved its best twelve-month fundraising period, adding over $34 billion in new assets, with inflows balanced across fund structures, regions, and strategies. International fundraising was particularly strong, representing two-thirds of inflows and driven by demand in Asia, Europe, and the Middle East.
- Private wealth platform expansion: StepStone’s private wealth business grew to $15 billion in assets, with over $2.2 billion in new subscriptions in the quarter. Evergreen funds, including S Prime and STEPEX, continued to attract high demand, contributing to consistent private wealth inflows each quarter.
- Venture fund performance: The Spring venture fund delivered 39% performance for the year, with most gains coming from direct secondaries and specialized AI investments rather than traditional secondary discounts. This performance was largely attributed to careful portfolio construction and direct access to high-growth companies.
- Diversification strategy: Management highlighted that only 11% of total assets are exposed to software, and the firm’s multi-manager, multi-asset class approach reduces risk from sector-specific disruptions such as those posed by AI. Exposure to software is even lower in non-venture strategies, providing a buffer against concentrated risk.
- International and product diversification: The company’s strategy has been to expand both geographically and by product, with new fund vintages targeting modest growth and a focus on re-ups and new client relationships to support future fundraising cycles.
Drivers of Future Performance
StepStone’s outlook is shaped by continued product and market expansion, disciplined fundraising amidst competitive conditions, and careful management of AI-related risks.
- Continued evergreen and private wealth focus: Management sees ongoing growth from evergreen funds and private wealth channels, emphasizing expansion into new geographies and syndicate partners as key levers for future asset and fee growth.
- AI disruption and opportunity management: The company is actively managing its portfolio construction to mitigate risks from AI disruption, especially in software, while seeking opportunities in AI infrastructure and AI-native investments. Management expects that diversification will help protect returns as technology evolves.
- Competitive fundraising environment: While StepStone anticipates further inflows from both re-upping existing clients and new relationships, management remains cautious about fund size growth in upcoming vintages, citing a highly competitive market and a focus on matching fundraising efforts to actual investment opportunities rather than simply increasing fund size.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of fundraising in new and existing evergreen and private wealth funds, (2) StepStone’s ability to expand syndicate partnerships and distribution in international markets, and (3) how the firm manages both risk and opportunity from AI-driven changes in portfolio companies. Progress on these fronts will indicate the company’s ability to sustain growth and adapt to a changing investment landscape.
StepStone Group currently trades at $59.42, in line with $59.17 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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