StepStone Group Inc.

$2.2 billion of subscriptions in our private wealth suite of offerings, growing the platform to nearly $10 billion as of the end of June. We are thrilled to have officially crossed the $10 billion threshold in July. Additionally, we have grown our evergreen non-traded BDC, S-CRED, to greater than $1 billion in net assets. We have expanded our private wealth platform to over 550 individual distribution partners. And among our partners that have been with us on the platform for at least a year, 50% are selling more than one evergreen product. Slide 9 shows our free-earning AUM by structure and asset class. For the quarter, we increased free-earning assets by $6 billion. Our undeployed fee-earning capital, or UFEC, grew by over $4 billion from the last quarter to nearly $29 billion, driven primarily by strong managed account fundraising. The combination of fee-earning assets plus UFEC grew to $156 billion, which is up $10 billion sequentially and is up $28 billion from a year ago. This translates to a healthy 20% annual organic growth rate since fiscal 2021. Slide 10 shows our evolution of fee revenues. We generated a blended management fee rate of 64 basis points over the last 12 months, down slightly from the 65 basis points in fiscal 2025, driven by the moderation in retroactive fees. Finally, I am pleased to announce that we are raising our quarterly dividend by 17% from $0.24 per share to $0.28 per share, reflecting strong and sustainable growth in our fee-related earnings. I'll now turn the call over to David to speak to our financial highlights.

Thanks, Mike. Turn to slide 12, we earned fee revenues of $213 million, up 19% from the prior year quarter. We achieved this increase despite significantly lower retroactive fees in the current year period of $3 million versus $19 million in the prior year quarter. Excluding retroactive fees, fee revenues grew 32% year over year. The increase was driven by growth in fee-earning AUM across commercial structures, a higher blended average fee rate, and strong advisory fees. Fee-related earnings were $81 million, up 13% from a year ago. FRE margin was 38% for the quarter. Normalizing for retroactive fees, FRE was up 45% year over year, and core FRE margin was 37%, expanding by more than 300 basis points from a year ago. Shifting to expenses, adjusted cash-based compensation was $96 million. This is up from last quarter's $86 million. The increase reflected the impact of our annual merit increase, which took effect on April 1st, headcount growth, and unfavorable effects due to the weakening of the U.S. dollar. As we mentioned on the last call, the prior quarter's compensation expense included a favorable adjustment to the bonus accrual. The cash compensation ratio adjusted for retroactive fees was 46%, consistent with the expectations we set out on our last earnings call. This is a fair cash compensation ratio to model going forward, understanding that there may be variability quarter to quarter. Adjusted equity-based compensation was $4 million, up $1 million relative to the prior quarter. The increase primarily reflects the layering of a full four-year cycle of RSU investing from when we first started to issue annual equity incentive awards in 2021. General and administrative expenses were $31 million, up $5 million from the prior year quarter, but down slightly sequentially. Gross realized performance fees were $25 million for the quarter, and $13 million net of related compensation expense. This included realizations from the pipeline of deals announced in late 2024 and early 2025, which we had mentioned on the last call. Several of those transactions also closed in July, which generated nearly $35 million of gross realized performance fees since the end of the quarter. While the timing of performance fees is difficult to predict, the pipeline of transactions that will generate future performance fees continues to grow, and the market environment for dealmaking has appeared to recover from the tariff-related pause in April. Adjusted net income per share was $0.40, down from last quarter and last year, as higher core FRE was offset by lower retroactive fees and lower performance-related earnings. Moving to key items on the balance sheet on slide 13, net accrued carry finished the quarter at $783 million, up 6% from last quarter. Our net accrued carry is relatively mature. Approximately 75% are tied to programs that are older than five years, which means that these programs are ready to harvest. Our own investment portfolio ended the quarter at $300 million. This concludes our prepared remarks. I'll now turn it back over to the operator to open the line for any questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by. Our first question comes from Ben Budish from Barclays. Please go ahead.