StepStone Group Inc.

Good afternoon, ladies and gentlemen, and welcome to StepStone's fiscal 2022 first quarter earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Seth Weiss, Stepstone's Head of Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Joining me on the call today are Scott Hart, Co-Chief Executive Officer, Jason Ment, President and Co-Chief Operating Officer, Mike McCabe, Head of Strategy, and Johnny Randall, Chief Financial Officer. During our prepared remarks, we will be referring to a presentation which is available on our Investor Relations website, at shareholders.stepstonegroup.com. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation, contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods. Forward-looking statements reflect management's current plans, estimates, and expectations and are inherently uncertain and are subject to various risks, uncertainties, and assumptions. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors that are described in the risk factor section of Stepstone's most recent 10-K. Turning to our financial results on slide three for the first quarter of fiscal 2022. We reported Gap Net income of $126.5 million for the quarter ended June 30th, 2021. GAAP net income attributable to Stepstone Group was $41.7 million. Fee-related earnings for the quarter was $23.1 million, an increase of 27% as compared to the first fiscal quarter of the previous year. Adjusted net income for the quarter was $40.5 million, up 162% from the first quarter of fiscal 2021. Finally, we reported adjusted net income per share of 41 cents. The quarter reflected retroactive fees resulting from additional closes of Stepstone's growth equity fund that contributed $0.9 million to revenue and $0.8 million to fee-related earnings and pre-tax adjusted net income. In comparison, there were no retroactive fees reflected in the first quarter of fiscal 2021. I now like to turn the call over to Stepstone's Co-Chief Executive Officer, Scott Hart.

Thank you, Seth, and good afternoon, everyone. In the first fiscal quarter of 2022, we posted our strongest quarter ever for fee-related revenues and adjusted net income. We continue to grow assets under management at a robust pace, which helps drive a predictable and recurring stream of fee-related revenue. Additionally, our strong investment performance, coupled with a very healthy realization environment, led to exceptional realized performance fees and investment income. Moving to slide four, we manage $90 billion of investments and advise on an additional $375 billion of assets with a leading market presence in private equity, real estate, infrastructure, and private debt. We have a wide global reach with offices in 19 cities across 13 countries. This global and local approach is a deliberate strategy. Our global scale creates a substantial competitive advantage as it yields unparalleled data, insights, and deal flow. while our localized presence allows us to provide the personalized attention needed to deliver customized solutions designed specifically for each client's needs. We are very excited to enhance our capabilities with the acquisition of Greenspring Associates, which we announced last month and which we expect to close by the end of this calendar year. We believe the combination of StepStone and Greenspring will create the clear market leader in venture and growth equity, which will be a sector focus within our private equity asset class. Mike McCabe will speak about Greenspring in more detail in a few minutes. Moving to slide five, as Seth mentioned, we generated $40.5 million in adjusted net income for the quarter, or 41 cents per share, up 162% from the prior year's first quarter. We generated fee-related earnings of $23.1 million, representing 27% year-over-year growth, as our fee-earning AUM grew to approximately $53 billion, up 27% from a year ago. We also expanded FRE margins by 100 basis points year-over-year and by 200 basis points from the fourth quarter of fiscal 2021, which positively contributed to the growth in fee-related earnings. Net realized performance-related fees, which include incentive fees, rate combined $33 million in the quarter, our highest ever, up more than fourfold versus the first quarter of fiscal 2021, and double the previous peak of $16 million in the third quarter of fiscal 2021. We also benefited from strong realized investment income of over $2 million. While these sources of income tend to be less predictable than fee-related earnings, our performance fees have trended steadily up over the last two years, and our accrued carry balance of $1.1 billion is more than three times the size it was a year ago, a positive signal for future performance fees. Johnny Randall will discuss the financials in more detail. As we mentioned last quarter, we have reopened our offices on a voluntary basis and resumed in-person business development and due diligence in a measured way. We are eager to see our existing clients face-to-face and to resume travel to foster new relationships. We recognize the return to normalcy will not be a straight line, and we are closely monitoring the evolution of travel restrictions and how COVID variants may impact the health and safety of our employees and clients. We remain optimistic about the future and our ability to adapt to changing circumstances. With that, I will turn the call over to Mike McCabe, our head of strategy.