What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-05-31 compared with 2021-06-23 · 673 added, 286 removed, 807 unchanged (54% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firm

Report s of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of March 31, 202 2 and 202 1

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 31, 2022 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2022 due to the adoption of ASU No.

2016-02, Leases (Topic 842).

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of acquired intangible assets for the acquisition of Greenspring Associates, Inc.

Description of the Matter As disclosed in Notes 2 and 15 to the consolidated financial statements, on September 20, 2021 the Company acquired Greenspring Associates, Inc.

and certain of its affiliates (collectively, “Greenspring”) for total consideration of $898.2 million.

The transaction was accounted for as a business combination.

Identifiable intangible assets acquired through this business combination primarily consisted of management contracts and client relationships with acquisition-date fair values of $310.9 million and $96.7 million, respectively.

Auditing the Company’s accounting for its acquisition of Greenspring Associates Inc.

was complex due to the significant estimation uncertainty in determining the fair value of identified intangible assets, which primarily consisted of management contracts and client relationships.

The significant estimation uncertainty was primarily due to sensitivity of the fair value to underlying assumptions about future performance of the acquired business in the Company’s model used to measure the management contracts and client relationships intangible assets.

These significant assumptions included future fundraising and expected cash inflows and outflows that form the basis of the forecasted results, and the discount rates.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s business combination process.

This included management’s review controls over the fair valuation methodology and significant assumptions used to estimate the fair value of the management contracts and client relationships intangible assets and management’s review of the completeness and accuracy of the data used in the management contracts and client relationships valuation model.

To test the fair value of the management contracts and customer relationships intangible assets, our procedures included, among others, involving internal valuation specialists to assist in our evaluation of the Company’s valuation methodology and certain assumptions included in the fair value estimate, including the discount rates used in the Company’s valuation model.

We tested the expected cash inflows and outflows assumed in the forecasted results, future fundraising assumptions, and the mathematical accuracy of the Company’s valuation model.

For example, we performed sensitivity analyses for significant assumptions, compared significant assumptions to current industry, market, and economic trends, the historical results of the acquired business and to the Company’s forecasts.

We agreed certain inputs used in developing certain significant assumptions to limited partnership agreements and audited financial statements.

We involved more senior, more experienced audit team members to perform audit procedures.

Valuation of underlying investments of equity method investments

Description of the Matter The Company has investments in funds of $107.0 million and accrued carried interest allocations of $1,480.5 million as of March 31, 2022.

As discussed in Notes 2 and 5 to the consolidated financial statements, a significant input to the measurement of the Company’s investments in funds and accrued carried interest allocations is management’s estimate of the fair value of the underlying investments held by the StepStone Funds, specifically co-investment funds which invest in portfolio companies that are valued using significant unobservable inputs.

Auditing management’s determination of the fair value of the co-investment fund investments that are valued using significant unobservable inputs was complex and involved a high degree of auditor subjectivity because these investments exhibit higher estimation uncertainty.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s investment valuation process for the co-investment fund investments.

This included management’s review controls over the assessment of the valuation techniques and significant unobservable inputs used to estimate the fair value of the co-investment fund investments and management’s review of the completeness and accuracy of the data used in these estimates.

Our audit procedures included, among others, evaluating, on a sample basis, the valuation techniques and significant unobservable inputs used by the Company in valuing the co-investment fund investments and testing, on a sample basis, the mathematical accuracy of the related valuation models.

For example, for a sample of co-investment fund investments, we performed procedures to evaluate the significant unobservable inputs such as the selected earnings before interest, taxes, depreciation and amortization multiples or revenue multiples that were derived from comparable companies.

These procedures included assessing management’s determination of the comparable companies, and, where applicable, comparing the selected multiples to market observed transactions of such companies.

In some instances, with the involvement of our valuation specialists, we independently developed fair value estimates using investee specific and market information and compared our estimates to the fair value of the investment.

We searched for and evaluated information that corroborated or contradicted the significant unobservable inputs.

We also evaluated subsequent events and transactions and considered whether they corroborated or contradicted the year-end valuations.

In addition, we involved more senior, more experienced audit team members to perform audit procedures.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2009.

New York, New York

June 23, 2021

Los Angeles, CA

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of StepStone Group Inc.

Opinion on Internal Control over Financial Reporting

We have audited StepStone Group Inc.’s internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, StepStone Group Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on the COSO criteria.

As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Greenspring Associates Inc.

and certain of its affiliates (“Greenspring”), which is included in the 2022 consolidated financial statements of the Company and constituted approximately 32% of total consolidated assets as of March 31, 2022 and approximately 11% of total consolidated net income for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Greenspring.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2022, and the related notes and our report dated May 31, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Los Angeles, CA

StepStone Group Inc.

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1,480,515 896,523

Legacy Greenspring investments in funds and accrued carried interest allocations (1)

Deferred income tax assets 27,866 89,439

Lease right-of-use assets, net 61,065 —

Other assets and receivables 27,426 24,715

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$ 4,188,125 $ 1,320,772

Liabilities and stockholders’ equity / partners’ capital

Liabilities and stockholders’ equity

Accounts payable, accrued expenses and other liabilities $ 80,541 $ 47,723

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Accrued carried interest-related compensation 769,988 465,610

Legacy Greenspring accrued carried interest-related compensation (1)

Due to affiliates 199,355 113,522

Lease liabilities 70,965 —

Debt obligations 62,879 —

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Commitments and contingencies (Note 16)

Partners’ capital — 216,051

Class A common stock, $ 0.001 par value, 650,000,000 authorized;

38,437,500 issued and outstanding as of March 31, 2021

61,141,306 and 38,437,500 issued and outstanding as of March 31, 2022 and 2021, respectively

Class B common stock, $ 0.001 par value, 125,000,000 authorized;

56,378,831 issued and outstanding as of March 31, 2021

47,149,673 and 56,378,831 issued and outstanding as of March 31, 2022 and 2021, respectively

Additional paid-in capital 587,243 188,751

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Total StepStone Group Inc.

stockholders’ equity / partners’ capital 249,408 216,229

stockholders’ equity 817,625 249,408

Non-controlling interests in subsidiaries 32,063 25,885

Non-controlling interests in legacy Greenspring entities (1)

Non-controlling interests in the Partnership 780,162 384,400

Total stockholders’ equity / partners’ capital 659,693 236,967

Total liabilities and stockholders’ equity / partners’ capital $ 1,320,772 $ 680,829

Total stockholders’ equity 1,824,330 659,693

Total liabilities and stockholders’ equity $ 4,188,125 $ 1,320,772

(1) Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.

See notes 5 and 15 for more information.

See accompanying notes to consolidated financial statements.

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22,808 13,658

Legacy Greenspring investments in funds and accrued carried interest allocations 1,334,581 —

Deferred income tax assets 301 671

Lease right-of-use assets, net 17,206 —

Other assets and receivables 5,588 4,340

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Accrued compensation and benefits 14,806 14,705

Legacy Greenspring accrued carried interest-related compensation 1,140,101 —

Due to affiliates 190 1,854

Lease liabilities 17,593 —

Total liabilities

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Incentive fees 11,593 5,474 3,410

Carried interest allocation:

Realized allocation 62,953 46,177 36,648

Unrealized allocation 433,827 161,819 27,254

Total carried interest allocation 496,780 207,996 63,902

Carried interest allocations:

Realized 200,718 62,953 46,177

Unrealized 585,851 433,827 161,819

Total carried interest allocations 786,569 496,780 207,996

Legacy Greenspring carried interest allocations (1)

Total revenues 1,365,525 787,716 446,611

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Total performance fee-related compensation 404,111 246,040 109,659

Legacy Greenspring performance fee-related compensation (1)

Total compensation and benefits 802,695 411,062 242,304

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Investment income 26,160 16,407 6,926

Legacy Greenspring investment income (1)

Interest income 337 413 1,436

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Net income attributable to non-controlling interests in subsidiaries 26,608 23,176 12,869

Net income attributable to non-controlling interests in legacy Greenspring entities (1)

Net income attributable to non-controlling interests in the Partnership 231,202 228,783 131,916

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Earnings per share of Class A common stock:

Basic $ 3.89 $ 2.11

Diluted $ 3.84 $ 2.06

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Diluted 53,600,250 33,274,804

Dividends declared per share of Class A common stock $ 0.44 $ 0.07

(1) Reflects amounts attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.

See notes 3, 5 and 15 for more information.

See accompanying notes to consolidated financial statements.

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Foreign currency translation adjustment 329 1,619 145

Unrealized loss on defined benefit plan, net ( 244 ) ( 356 ) ( 1,078 )

Unrealized gain (loss) on defined benefit plan, net 1,365 ( 244 ) ( 356 )

Total other comprehensive income (loss) 1,694 1,375 ( 211 )

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Comprehensive income attributable to non-controlling interests in subsidiaries 27,446 23,877 12,763

Comprehensive income attributable to non-controlling interests in legacy Greenspring entities 32,586 — —

Comprehensive income attributable to non-controlling interests in the Partnership 231,609 229,339 131,811

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(in thousands)

Partners’ Capital Class A Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interests in Subsidiaries Non-Controlling Interests in the Partnership Total Stockholders’ Equity / Partners’ Capital

Balance at March 31, 2018 $ 121,171 $ — $ — $ — $ — $ 898 $ 15,576 $ — $ 137,645

Net income 54,196 — — — — — 5,763 — 59,959

Other comprehensive loss — — — — — ( 615 ) ( 642 ) — ( 1,257 )

Contributed capital 157 — — — — — — — 157

Equity-based compensation 1,725 — — — — — — — 1,725

Distributions ( 48,823 ) — — — — — ( 3,744 ) — ( 52,567 )

Partners’ Capital Class A Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Non-Controlling Interests in Subsidiaries Non-Controlling Interests in the Partnership Total Stockholders’ Equity / Partners’ Capital

Balance at March 31, 2019 $ 128,426 $ — $ — $ — $ — $ 283 $ 16,953 $ — $ 145,662

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Equity reallocation between controlling and non-controlling interests subsequent to Reorganization and IPO — — — ( 40,503 ) — 37 — 40,466 —

Deferred tax effect resulting from exchange of Class B units, net of amounts payable under TRA — — — ( 2,596 ) — — — — ( 2,596 )

Deferred tax effect resulting from transactions affecting ownership in the Partnership, including net amounts payable under Tax Receivable Agreements — — — ( 2,596 ) — — — — ( 2,596 )

Balance at March 31, 2021 $ — $ 38 $ 57 $ 188,751 $ 60,407 $ 155 $ 25,885 $ 384,400 $ 659,693

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StepStone Group Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

Class A Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Non-Controlling Interests in Subsidiaries Non-Controlling Interests in Legacy Greenspring Entities Non-Controlling Interests in the Partnership Total Stockholders’ Equity

Balance at March 31, 2021 $ 38 $ 57 $ 188,751 $ 60,407 $ 155 $ 25,885 $ — $ 384,400 $ 659,693

Net income — — — 193,885 — 26,608 32,586 231,202 484,281

Other comprehensive income — — — — 449 838 — 407 1,694

Contributed capital — — — — — — 15,078 83 15,161

Equity-based compensation — — 6,686 — — 12 — 7,298 13,996

Distributions — — — — — ( 20,692 ) ( 11,326 ) ( 86,778 ) ( 118,796 )

Purchase of non-controlling interests — — ( 657 ) — — ( 1,502 ) — ( 887 ) ( 3,046 )

Dividends declared — — — ( 24,677 ) — — — — ( 24,677 )

Vesting of RSUs 1 — ( 1 ) — — — — — —

Class A common stock issued for Greenspring acquisition 13 — 267,842 — — — — 290,743 558,598

Class C Partnership units issued for Greenspring acquisition — — 64,847 — — — — 70,392 135,239

Exchange of Class B units for Class A common stock and redemption of corresponding Class B common shares 9 ( 9 ) ( 9 ) — — — — — ( 9 )

Initial consolidation of legacy Greenspring general partner entities — — — — — — 158,142 — 158,142

Deferred offering costs — — ( 357 ) — — — — ( 296 ) ( 653 )

Equity reallocation between controlling and non-controlling interests — — 115,434 — 54 914 — ( 116,402 ) —

Deferred tax effect resulting from transactions affecting ownership in the Partnership, including net amounts payable under Tax Receivable Agreements (1)

— — ( 55,293 ) — — — — — ( 55,293 )

Balance at March 31, 2022 $ 61 $ 48 $ 587,243 $ 229,615 $ 658 $ 32,063 $ 194,480 $ 780,162 $ 1,824,330

(1) See notes 11, 14 and 15 for more information.

See accompanying notes to consolidated financial statements.

StepStone Group Inc.

Consolidated Statements of Cash Flows

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Depreciation and amortization 26,977 5,495 7,078

Unrealized carried interest allocation and investment income ( 444,893 ) ( 164,691 ) ( 27,932 )

Unrealized carried interest allocations and investment income ( 603,513 ) ( 444,893 ) ( 164,691 )

Unrealized legacy Greenspring carried interest allocations and investment income ( 119,698 ) — —

Unrealized performance fee-related compensation 312,903 215,508 82,701

Unrealized legacy Greenspring performance fee-related compensation 94,944 — —

Unrealized gains on marketable securities — — ( 298 )

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Change in deferred income taxes 6,216 15,913 —

Fair value adjustment for acquisition-related contingent consideration 9,600 1,608 ( 2 )

Other non-cash activities ( 3,034 ) 70 —

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Due to affiliates ( 2,259 ) 872 ( 1,511 )

Lease right-of-use assets, net and lease liabilities ( 413 ) — —

Net cash provided by operating activities 214,281 149,299 65,930

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Distributions received from investments 9,510 4,132 5,500

Cash paid for Courtland acquisition, net of cash acquired — — ( 8,956 )

Contributions to investments in legacy Greenspring entities ( 15,078 ) — —

Distributions received from investments in legacy Greenspring entities 3,495 — —

Cash paid for Greenspring acquisition, net of cash acquired ( 181,529 ) — —

Purchases of property and equipment ( 2,103 ) ( 1,258 ) ( 837 )

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Proceeds from IPO, net of underwriting discount — 337,798 —

Proceeds from revolving credit facility 185,000 — —

Deferred financing costs ( 2,356 ) — —

Purchase of non-controlling interests ( 3,046 ) ( 131,294 ) ( 107,188 )

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Principal payments on term loan — ( 147,000 ) ( 1,500 )

Payments on revolving credit facility ( 120,000 ) — —

Distributions to non-controlling interests ( 107,470 ) ( 97,676 ) ( 52,913 )

Proceeds from capital contributions to legacy Greenspring entities 15,078 — —

Distributions to non-controlling interests in legacy Greenspring entities ( 11,326 ) — —

Dividends paid to common stockholders ( 23,874 ) ( 2,047 ) —

Payments to related parties under Tax Receivable Agreements ( 787 ) — —

Other financing activities ( 9 ) ( 1,029 ) ( 1,350 )

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Non-cash operating, investing, and financing activities:

Net change in acquisition-related contingent consideration $ 1,608 $ ( 2 ) $ 3,527

Purchase of partnership interests payable $ — $ — $ 5,864

Deferred tax effect resulting from exchange of Class B units, net of amounts payable under TRA

( 2,596 ) — —

Accrued dividends 803 180 —

Deferred tax effect resulting from transactions affecting ownership in the Partnership, including net amounts payable under Tax Receivable Agreements ( 55,293 ) ( 2,596 ) —

Accrued deferred offering costs — 1,079 —

Accrued dividend equivalents on unvested RSUs 180 — —

Establishment of lease liabilities in exchange for lease right-of-use assets 79,688 — —

Class A common stock issued for Greenspring acquisition 558,598 — —

Class C Partnership units issued for Greenspring acquisition 135,239 — —

Reconciliation of cash, cash equivalents and restricted cash:

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See accompanying notes to consolidated financial statements.

Table of Cont ents

StepStone Group Inc.

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Unless otherwise specified, “StepStone” or the “Company” refers to SSG and its consolidated subsidiaries, including the Partnership, following the Reorganization and IPO, and to the Partnership and its consolidated subsidiaries prior to the Reorganization and IPO, throughout the remainder of these notes to the consolidated financial statements.

The Company is a global private markets investment firm focused on providing customized investment solutions and advisory and data services to its clients.

The Company is a global private markets investment firm focused on providing customized investment solutions and advisory, data and administrative services to its clients.

The Company’s clients include some of the world’s largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, including high-net-worth and mass affluent individuals.

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These portfolios utilize several types of synergistic investment strategies with third-party fund managers, including commitments to funds (“primaries”), acquiring stakes in existing funds on the secondary market (“secondaries”) and investing directly into companies (“co-investments”).

The Company, through its subsidiaries, acts as the investment advisor and general partner or managing member to separately managed accounts (“SMAs”) and focused commingled funds (collectively, the “StepStone Funds”).

Reorganization

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• The Partnership classified the partnership units acquired by SSG as Class A units and reclassified the partnership units held by the continuing limited partners of the Partnership as Class B units.

• SSG issued to the remaining Class B unitholders one share of Class B common stock for each Class B unit that they owned in exchange for their interests in the General Partner.

• Certain of the Class B stockholders entered into a stockholders agreement pursuant to which they agreed to vote all their shares of voting stock, including Class A common stock and Class B common stock, together and in accordance with the instructions of the Class B Committee, which comprises of certain members of senior management.

Table of Cont ents

StepStone Group Inc.

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(in thousands, except share and per share amounts and where noted)

Initial Public Offering

• SSG issued to the remaining Class B unitholders one share of Class B common stock for each Class B unit that they owned in exchange for their interests in the General Partner.

Initial Public Offering and Greenspring Acquisition

On September 18, 2020, SSG issued 20,125,000 shares of Class A common stock in the IPO at a price of $ 18.00 per share.

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SSG used approximately $ 209.8 million of the net proceeds from the offering to acquire 12,500,000 newly issued Class A units of the Partnership and approximately $ 128.0 million to purchase 7,625,000 Class B units from certain of the Partnership’s existing unitholders, including certain members of senior management.

Following the Reorganization and IPO, SSG became a holding company whose principal asset is a controlling financial interest in the Partnership through its ownership of all of the Partnership’s Class A units and a 100 % membership interest in the General Partner of the Partnership.

While this interest represents a minority of economic interests in the Partnership, SSG acts as the sole managing member of the General Partner of the Partnership and, as a result, indirectly operates and controls all of the Partnership’s business and affairs.

As a result, SSG consolidates the financial results of the Partnership and reports non-controlling interests related to the Class B units of the Partnership which are not owned by SSG.

In connection with the Greenspring acquisition (see note 15), the Company issued 12,686,756 shares of its Class A common stock and the Partnership issued 3,071,519 newly created Class C units of the Partnership, each of which is exchangeable into one share of Class A common stock, in each case subject to certain adjustments and restrictions (see note 14).

Following the Reorganization and IPO, SSG became a holding company whose principal asset is a controlling financial interest in the Partnership through its ownership of all of the Partnership’s Class A units and 100 % of the membership interests in the General Partner of the Partnership.

SSG acts as the sole managing member of the General Partner of the Partnership and, as a result, indirectly operates and controls all of the Partnership’s business and affairs.

As a result, SSG consolidates the financial results of the Partnership and reports non-controlling interests related to the Class B and Class C units of the Partnership which are not owned by SSG.

The assets and liabilities of the Partnership represent substantially all of SSG’s consolidated assets and liabilities, with the exception of certain deferred income taxes and payables due to affiliates pursuant to tax receivable agreements (see note 11).

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As of March 31, 2022, SSG held approximately 55.0 % of the economic interest in the Partnership.

As the Partnership’s limited partners exchange their Class B units into SSG’s Class A common stock in the future, SSG’s economic interest in the Partnership will increase.

As the Partnership’s limited partners exchange their Class B and Class C units into SSG’s Class A common stock in the future, SSG’s economic interest in the Partnership will increase relative to that of the Class B and Class C unitholders.

The Reorganization was considered a transaction between entities under common control.

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All intercompany balances and transactions have been eliminated in consolidation.

Certain of the StepStone Funds are investment companies that follow specialized accounting under GAAP and reflect their investments at estimated fair value.

Accordingly, the carrying value of the Company’s equity method investments in such entities retains the specialized accounting.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Certain of the StepStone Funds are investment companies that follow specialized accounting under GAAP and reflect their investments at estimated fair value.

Accordingly, the carrying value of the Company’s equity method investments in such entities retains the specialized accounting.

Use of Estimates

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Actual results could differ from these estimates and those differences may be material.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation.

Amounts relating to deferred tax assets that were previously reported within other assets and receivables have been presented separately in the consolidated balance sheets as of March 31, 2020.

Amounts relating to foreign currency transaction gains and losses that were previously reported within general, administrative and other expenses have been presented within other income (loss) in the consolidated statements of income.

Consolidation

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This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties.

Table of Cont ents

StepStone Group Inc.

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These funds are investment companies and are typically organized as limited partnerships or limited liability companies for which the Company, through its operating subsidiaries, acts as the general partner or managing member.

A limited partnership or similar entity is a VIE if the unaffiliated limited partners or members do not have substantive rights to terminate or remove the general partner or substantive rights to participate.

Certain StepStone Funds are VIEs because they have not granted unaffiliated limited partners or members substantive rights to terminate or remove the general partner or substantive rights to participate.

A limited partnership or similar entity is a VIE if the unaffiliated limited partners or members do not have substantive rights to terminate or liquidate the fund or remove the general partner or substantive rights to participate.

Certain StepStone Funds are VIEs because they have not granted unaffiliated limited partners or members substantive rights to terminate the fund or remove the general partner or substantive rights to participate.

The Company does not consolidate these StepStone Funds because it is not the primary beneficiary of those funds, primarily because its fee arrangements are considered customary and commensurate and thus not deemed to be variable interests, and it does not hold any other interests in those funds that are considered more than insignificant.

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See note 4 for more information on both consolidated and unconsolidated VIEs.

In connection with the Greenspring acquisition, the Company, indirectly through its subsidiaries, became the sole and/or managing member of certain entities, each of which is the general partner of an investment fund (“legacy Greenspring general partner entities”).

The Company did not acquire any direct economic interests attributable to the legacy Greenspring general partner entities, including legacy Greenspring investments in funds and carried interest allocations.

However, certain arrangements negotiated as part of the acquisition represent variable interests that could be significant.

The Company determined that the legacy Greenspring general partner entities are VIEs and it is the primary beneficiary of each such entity because it has a controlling financial interest in each entity.

As a result, the Company consolidates these entities.

Non-Controlling Interests

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Non-controlling interests in subsidiaries are allocated a share of income or loss in the respective consolidated subsidiary in proportion to their relative ownership interests, after consideration of contractual arrangements that govern allocations of income or loss.

Non-controlling interests in the Partnership represent the economic interests related to the Class B units of the Partnership which are not owned by SSG.

Non-controlling interests in the Partnership are allocated a share of income or loss in the Partnership in proportion to their relative ownership interests, after consideration of contractual arrangements that govern allocations of income or loss.

Prior to the Reorganization and IPO, all of the Company’s net income related to the Partnership and therefore has been presented as non-controlling interests in the Partnership.

Non-controlling interests in legacy Greenspring entities represent the economic interests in the legacy Greenspring general partner entities.

The Company did not acquire any direct economic interests in the legacy Greenspring general partner entities.

As a result, all of the net income or loss related to the legacy Greenspring general partner entities is allocated to non-controlling interests in legacy Greenspring entities.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Non-controlling interests in the Partnership represent the economic interests related to the Class B and Class C units of the Partnership which are not owned by SSG.

Prior to the Reorganization and IPO, all of the Company’s net income related to the Partnership and therefore has been presented as non-controlling interests in the Partnership.

Accounting for Differing Fiscal Periods

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To the extent that management becomes aware of any material events that affect the StepStone Funds during the three-month lag period, the effect of the events would be disclosed in the notes to the consolidated financial statements.

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a global pandemic.

The spread of COVID-19 throughout the world has led many countries to institute a variety of measures in an effort to contain viral spread, which has led to significant disruption and uncertainty in the global financial markets.

While some of the initial restrictions have been relaxed or lifted in an effort to generate more economic activity, the risk of future COVID-19 outbreaks remains and restrictions have been and may continue to be reimposed to mitigate risks to public health in jurisdictions where additional outbreaks have been detected.

Moreover, even where restrictions are and remain lifted, and as vaccination treatment options become available and more accessible, certain groups of people may continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time, potentially further delaying global economic recovery.

The Company is closely monitoring developments related to COVID-19 and assessing any negative impacts to the Company.

The COVID-19 pandemic has affected, and may further affect, the Company in various ways.

In particular, it is possible that future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed or decreased management fees, or if fund managers are unable or less able to profitably exit existing investments, which could result in delayed or decreased performance fee revenues.

The underlying investments in the StepStone Funds reflect valuations on a three-month lag, or as of December 31, 2020, adjusted for capital contributions and distributions during the three-month lag period ended March 31, 2021.

During the year ended March 31, 2021, the Company’s investments in StepStone Funds and accrued carried interest allocations initially experienced significant declines during the first three months, primarily reflecting the unrealized depreciation in the fair value of certain underlying fund investments driven by the impact of COVID-19, and has subsequently seen significant increases, primarily reflecting the unrealized appreciation in the fair value of certain underlying fund investments driven by the general recovery in the financial markets.

As the global response and ongoing nature of COVID-19 evolves, it is currently not possible to predict the potential scale and scope of the outbreak and its ultimate effects on the financial markets, overall economy and the Company’s consolidated financial statements.

Current Events

The Company is continuing to closely monitor developments related to COVID-19, inflation, rising interest rates and the ongoing Russia-Ukraine conflict, and assess the impact on financial markets and the Company’s business.

The Company’s future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed or decreased management fees.

Further, if fund managers are unable or less able to profitably exit existing investments, such conditions could result in delayed or decreased performance fee revenues.

It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy and the Company’s consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash held in banks, money market funds and highly-liquid investments with original maturities of three months or less at the time of purchase.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Restricted cash consists of cash that the Company is contractually obligated to maintain to secure its letters of credit used primarily related to its office facilities and other obligations.

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If any accounts or portion thereof are deemed uncollectible, such amounts are expensed when that determination is made.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Due from Affiliates

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the financial instrument.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions.

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The variability and availability of the observable inputs affected by the factors described above may result in transfers between Levels I, II, and III.

The Company considers its cash, cash equivalents, restricted cash, fees and accounts receivable, accounts payable, investments and contingent consideration balances to be financial instruments.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company considers its cash, cash equivalents, restricted cash, fees and accounts receivable, accounts payable, investments, revolving credit facility and contingent consideration balances to be financial instruments.

The carrying amounts of cash, cash equivalents, restricted cash, fees and accounts receivable and accounts payable equal or approximate their fair values due to their nature and/or the relatively short period over which they are held.

See note 6 for additional details regarding the fair value of the Company’s contingent consideration balances.

See notes 6 and 9 for additional details regarding the fair value of the Company’s contingent consideration and revolving credit facility balances, respectively.

Investments primarily include the Company’s ownership interests in the StepStone Funds, as general partner or managing member of such funds.

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Investments include the Company’s cumulative accrued carried interest allocations from the StepStone Funds, which primarily represent performance-based capital allocations, assuming the StepStone Funds were liquidated as of each reporting date in accordance with the funds’ governing documents.

Legacy Greenspring investments in funds and accrued carried interest allocations represent the economic interests held by the legacy Greenspring general partner entities in certain funds for which the Company does not have any direct economic interests.

All of the economics in respect of such interests are payable to employees and are therefore reflected as non-controlling interests in legacy Greenspring entities and legacy Greenspring performance fee-related compensation.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

Management's determination of fair value for investments in the underlying funds includes various valuation techniques.

These techniques may include a market approach, recent transaction price, net asset value approach, or discounted cash flows, and may use one or more significant unobservable inputs such as EBITDA, revenue multiples, discount rates, weighted average cost of capital, exit multiples, or terminal growth rates.

On April 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) on a prospective basis.

As a result, prior period amounts were not adjusted to reflect the impact of the standard.

The standard established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheets for all leases with terms longer than 12 months.

Under the previous guidance, operating leases were not recognized by the Company in the consolidated balance sheets as a lessee.

The guidance did not significantly change the recognition, measurement and presentation of expenses in the consolidated statements of income or cash flows arising from a lease by a lessee.

The adoption of this standard did not have a material impact on the consolidated statements of income as substantially all of the Company’s leases remained classified as operating leases and recognized as expense on a straight-line basis.

However, the adoption resulted in a significant gross-up in total assets and total liabilities on the Company’s consolidated balance sheets.

The Company recognized right-of-use assets of approximately $ 66.7 million and liabilities of approximately $ 76.9 million related to its operating leases which represented the aggregate discounted amount of the Company’s minimum lease obligations as of the adoption date.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company determines whether an arrangement contains a lease at inception of the arrangement.

A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration.

For identified leases, the Company determines the classification as either an operating or finance lease.

The Company’s identified leases primarily consist of operating lease agreements for office space and certain equipment, as the lessee.

Operating leases are included in lease right-of-use-assets, net and lease liabilities in the consolidated balance sheets.

Certain leases include lease and non-lease components, which the Company accounts for as a single lease component.

Lease ROU assets and lease liabilities are measured based on the present value of future minimum lease payments over the lease term at the commencement date.

Lease ROU assets include initial direct costs incurred by the Company and are presented net of deferred rent and lease incentives.

The Company uses its incremental borrowing rate in determining the present value of future minimum lease payments.

The Company’s lease terms may include options to extend or terminate the lease, which are included in the measurement of ROU assets and lease liabilities when it is reasonably certain that the Company will exercise those options.

Operating lease expense associated with minimum lease payments is recognized on a straight-line basis over the lease term in general, administrative and other expenses in the consolidated statements of income.

Minimum lease payments for leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets.

See note 16 for more information.

Property and Equipment

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Property and equipment are depreciated over their estimated useful lives using the straight-line method, and the corresponding depreciation expense is included in general, administrative and other expenses in the consolidated statements of income.

Property and equipment are depreciated over a period of three to seven years .

Property and equipment are depreciated over a period of five to seven years .

Leasehold improvements are amortized over the shorter of their useful lives or remaining lease terms.

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The Company did not recognize any impairment charges related to property and equipment during each of the fiscal years ended March 31, 2022, 2021 and 2020.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Foreign Currency

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These transaction gains and (losses) totaled $( 1.1 ) million, $ 0.6 million and $( 1.0 ) million for the years ended March 31, 2022, 2021 and 2020, respectively.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Business Combinations

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Contingent consideration arrangements are revalued to fair value each reporting period.

Examples of critical estimates in valuing certain of the intangible assets acquired include, but are not limited to, future expected cash inflows and outflows, future fundraising assumptions, expected useful life, discount rates and income tax rates.

Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general, administrative and other expenses in the consolidated statements of income.

Intangibles and Goodwill

The Company’s finite-lived intangible assets primarily consist of acquired contractual rights to earn future management and advisory fee income.

Finite-lived intangible assets are amortized over their estimated useful lives, which ranged from 6 to 9 years as of March 31, 2021.

The Company’s finite-lived intangible assets consist of acquired contractual rights to earn future management and advisory fee income and client relationships.

Finite-lived intangible assets are amortized over their estimated useful lives, which range from 8 to 10 years.

The Company did not have any intangible assets that were deemed to have an indefinite life as of March 31, 2022.

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The quantitative assessment includes comparing the fair value of a reporting unit with its carrying amount, including goodwill.

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the lessor of (a) the difference between the carrying amount of the reporting unit and its fair value and (b) the total carrying amount of the reporting unit’s goodwill.

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the lesser of (a) the difference between the carrying amount of the reporting unit and its fair value and (b) the total carrying amount of the reporting unit’s goodwill.

The Company performed annual goodwill impairment assessments as of January 1, 2022 and 2021 and determined that there was no impairment of goodwill as of either date.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers .

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The Company has elected to apply the variable consideration allocation exception for its fee arrangements with its customers.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Management and Advisory Fees, Net

The Company earns management fees for services provided to its SMAs, focused commingled funds and distribution management clients.

The Company earns management fees for services provided to its SMAs and focused commingled funds.

The Company earns advisory fees for services provided to advisory clients where the Company does not have discretion over investment decisions.

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Advisory fees from contracts where the Company does not have discretion over investment decisions are generally based on fixed amounts and typically billed quarterly.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Management fees generally exclude reimbursements for expenses paid by the Company on behalf of its customers, including amounts related to certain professional fees and other fund administrative expenses pursuant to the fund’s governing documents.

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Therefore, the Company is acting as an agent, and the management fees are recorded net of these service fees.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company may incur certain costs in connection with satisfying its performance obligations for investment management services – primarily employee travel costs and certain professional fees – for which it receives reimbursements from its customers.

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Moreover, incentive fees that are received prior to the end of the defined performance period are typically subject to clawback, net of tax.

The Company recognizes incentive fee revenue only when these amounts are realized and no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period (i.e., crystallization).

The Company recognizes incentive fee revenue only when these amounts are realized and no longer subject to significant risk of reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period (i.e., crystallization).

However, clawback terms for incentive fees received prior to crystallization only require the return of amounts on a net of tax basis.

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Incentive fees received in advance of crystallization that remain subject to clawback are recorded as deferred incentive fee revenue and included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Carried interest allocations include the allocation of performance-based fees, commonly referred to as carried interest, to the Company from unaffiliated limited partners in the StepStone Funds in which the Company holds an equity interest.

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Accordingly, carried interest allocations are not deemed to be within the scope of ASC 606.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Legacy Greenspring carried interest allocations reflect the allocation of carried interest to legacy Greenspring general partner entities from limited partners in certain legacy Greenspring funds in which the legacy Greenspring general partner entities hold an equity interest.

The legacy Greenspring general partner entities are entitled to a carried interest allocation (typically 5 % to 20 %) based on cumulative fund or account performance to date, irrespective of whether such amounts have been realized.

The Company accounts for the investment balances in the legacy Greenspring funds, including carried interest allocations, under the equity method of accounting because it is presumed to have significant influence as the general partner or managing member.

Accordingly, legacy Greenspring carried interest allocations are not deemed to be within the scope of ASC 606.

The Company does not hold any direct economic interests in the legacy Greenspring general partner entities and thus is not entitled to any carried interest allocation from the legacy funds.

All of the carried interest allocations in respect of the legacy Greenspring funds are payable to employees who are considered affiliates of the Company and are therefore reflected as legacy Greenspring performance fee-related compensation in the consolidated statements of income.

The Company recognizes revenue attributable to carried interest allocations from a fund based on the amount that would be due to the Company pursuant to the fund’s governing documents, assuming the fund was liquidated based on the current fair value of its underlying investments as of that date.

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The Company records the amount of carried interest allocated to the Company as of each period end as accrued carried interest allocations receivable, which is included as a component of investments in the consolidated balance sheets.

Management's determination of fair value for investments in the underlying funds includes various valuation techniques.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates, as defined in the applicable governing documents.

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Compensation and Benefits

Cash-Based Compensation

Cash-based compensation expense primarily includes salaries, bonuses, employee benefits and employer-related payroll taxes.

Bonuses are accrued over the service period in which they are earned.

Equity-Based Compensation

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Equity-based compensation represents grants of equity-based awards or arrangements to certain employees and directors.

The Company accounts for grants of equity-based awards, including restricted stock units (“RSUs”), to certain employees and directors at fair value as of the grant date.

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See note 10 for additional information regarding the Company’s accounting for equity-based awards.

Performance fee-related compensation represents the portion of carried interest allocation revenue and incentive fees that have been awarded to employees as a form of long-term incentive compensation.

Performance fee-related compensation is generally tied to the investment performance of the StepStone Funds.

Approximately 50% of carried interest allocation revenue is awarded to employees as part of the Company’s long-term incentive compensation plan.

Carried interest-related compensation is accounted for as compensation expense in conjunction with the related carried interest allocation revenue and, until paid, is recorded as a component of accrued carried interest-related compensation in the consolidated balance sheets.

Carried interest-related compensation expense also includes the portion of net carried interest allocation revenue attributable to equity holders of the Company’s consolidated subsidiaries that are not 100% owned.

Amounts presented as realized indicate the amounts paid or payable to employees based on the receipt of carried interest allocation revenue from realized investment activity.

Carried interest-related compensation expense may be subject to reversal to the extent that the related carried interest allocation revenue is reversed.

Carried interest-related compensation paid to employees may be subject to clawback on an after-tax basis under certain scenarios.

To date, no material amounts of realized carried interest-related compensation have been reversed.

Incentive fee-related compensation is accrued as compensation expense when it is probable and estimable that payment will be made in accordance with the applicable governing agreement.

Legacy Greenspring performance fee-related compensation represents the legacy Greenspring carried interest allocations, which is entirely payable to certain employees.

Legacy Greenspring carried interest-related compensation is accounted for as compensation expense in conjunction with the related legacy Greenspring carried interest allocation revenue and, until paid, is recorded as a component of legacy Greenspring accrued carried interest-related compensation in the consolidated balance sheets.

Legacy Greenspring carried interest-related compensation expense may be subject to reversal to the extent that the related legacy Greenspring carried interest allocation revenue is reversed.

However, none of the legacy Greenspring carried interest allocation revenue is attributable to the Company.

General, Administrative and Other

General, administrative and other includes occupancy, travel and related costs, insurance, legal and other professional fees, depreciation, amortization of intangible assets, system-related costs, and other general costs associated with operating the Company’s business.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Performance Fee-Related Compensation

A portion of the carried interest allocations earned by the Company is awarded to employees and other carry participants in the form of award letters (“carry awards”).

Carry awards to employees and other participants are accounted for as a component of compensation and benefits expense contemporaneously with the Company’s recognition of the related realized and unrealized carried interest allocation revenue and is included in accrued carried interest related compensation in the consolidated balance sheets until the amounts recognized as compensation and benefits expense are paid.

Carried interest-related compensation expense also includes the portion of net carried interest allocation revenue attributable to equity holders of our consolidated subsidiaries that are not 100% owned by us.

Upon a reversal of carried interest allocation revenue, the related compensation expense, if any, is also reversed.

Furthermore, liabilities recognized for carried interest amounts due to affiliates are not paid until the related carried interest allocation revenue is realized.

The Company records incentive fee compensation when it is probable that a liability has been incurred.

The incentive fee compensation accrual is based on a number of factors, including the cumulative activity for the period and the distribution of the net proceeds in accordance with the applicable governing agreement.

General, Administrative and Other

Other Income (Expense)

Investment Income

Investment income primarily represents our share of earnings from the investments we make in our SMAs and focused commingled funds.

We, either directly or through our subsidiaries, generally have a general partner interest in the StepStone Funds, which invest in primary funds, secondary funds and co-investment funds, or a combination thereof.

Investment income primarily represents the share of earnings from the investments the Company makes in its SMAs and focused commingled funds.

The Company, either directly or through its subsidiaries, generally has a general partner interest in the StepStone Funds, which invest in primary funds, secondary funds and co-investment funds, or a combination thereof.

Investment income will increase or decrease based on the earnings of the StepStone Funds, which are primarily driven by net realized and unrealized gains (losses) on the underlying investments held by the funds.

Our co-investment funds invest in underlying portfolio companies and therefore their valuation changes from period to period are more influenced by individual companies than our primary and secondary funds, which have exposures across multiple portfolio companies in underlying private markets funds.

Our SMAs and focused commingled funds invest across various industries, strategies and geographies.

Consequently, our general partner investments do not include any significant concentrations in a specific sector or geography outside the United States.

The Company’s co-investment funds invest in underlying portfolio companies and therefore their valuation changes from period to period are more influenced by individual companies than the Company’s primary and secondary funds, which have exposures across multiple portfolio companies in underlying private markets funds.

The Company’s SMAs and focused commingled funds invest across various industries, strategies and geographies.

Consequently, the Company’s general partner investments do not include any significant concentrations in a specific sector or geography outside the United States.

Investment income excludes carried interest allocations, which are presented as revenues as described above.

Interest Income

Interest income consists of income earned on cash, cash equivalents, marketable securities and certificates of deposit.

Interest Expense

Interest expense primarily consisted of the interest expense on our previously outstanding debt and related amortization of deferred financing costs and amortization of original issue discount.

The year ended March 31, 2021 includes a $ 3.5 million charge related to the write-off of unamortized debt issuance costs and discount in connection with the full repayment of our outstanding debt balance.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Other Income (Loss)

Other income (loss) includes foreign currency translation gains and losses and non-operating activities.

Legacy Greenspring investment income represents the share of earnings from the investments the Company makes in certain legacy Greenspring funds through the legacy Greenspring general partner entities.

The Company has no direct economic interests in the legacy Greenspring general partner entities.

As a result, all such income is reflected as non-controlling interests in legacy Greenspring entities.

Legacy Greenspring investment income will increase or decrease based on the earnings of such legacy Greenspring funds, which are primarily driven by net realized and unrealized gains (losses) on the underlying investments held by the funds.

Interest income consists of income earned on cash, cash equivalents, restricted cash and certificates of deposit.

Interest expense primarily consists of the interest expense on the Revolver and the Company’s previously outstanding term loan, as well as the related amortization of deferred financing costs and amortization of original issue discount.

The year ended March 31, 2021 includes a $ 3.5 million charge related to the write-off of unamortized debt issuance costs and discount in connection with the full repayment of the Company’s outstanding term loan in connection with the IPO in September 2020.

Other income (loss) includes foreign currency transaction gains and losses and non-operating activities.

SSG is a corporation for U.S.

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federal and state income taxes on income in the Partnership or its subsidiaries, except for certain local and foreign income taxes discussed above.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Taxes are accounted for using the asset and liability method of accounting.

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The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period when the change is enacted.

Deferred tax liabilities are included within accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

The principal items giving rise to temporary differences are certain basis differences resulting from exchanges of Partnership units.

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This standard establishes consistent thresholds as it relates to accounting for income taxes.

It defines the threshold for recognizing the benefits of tax return positions in the financial statements as more-likely-than-not to be sustained by the relevant taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50 percent likely to be realized.

If upon performance of an assessment pursuant to this subtopic, management determines that uncertainties in tax positions exist that do not meet the minimum threshold for recognition of the related tax benefit, a liability is recorded in the consolidated financial statements.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as general, administrative and other expenses in the consolidated statements of income.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as interest expense and general, administrative and other expenses, respectively, in the consolidated statements of income.

See note 11 for more information.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Tax Receivable Agreements

SSG has entered into an Exchanges Tax Receivable Agreement with the partners of the Partnership as of the date of the IPO and a Reorganization Tax Receivable Agreement with certain pre-IPO institutional investors (collectively, the “Tax Receivable Agreements”).

SSG has entered into an Exchanges Tax Receivable Agreement (the “Exchanges Tax Receivable Agreement”) with the partners of the Partnership as of the date of the IPO and a Reorganization Tax Receivable Agreement with certain pre-IPO institutional investors (together, with the Exchanges Tax Receivable Agreement, the “Tax Receivable Agreements”).

The Tax Receivable Agreements provide for payment by SSG to such partners and pre-IPO institutional investors of the Partnership of 85% of the amount of the net cash tax savings, if any, that SSG realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and utilization of certain other tax benefits) resulting from (i) SSG’s acquisition of such partners’ and institutional investors’ Partnership units and (ii) in the case of the Exchanges Tax Receivable Agreement, any payments SSG makes under the Exchanges Tax Receivable Agreement (including tax benefits related to imputed interest).

SSG will retain the benefit of the remaining 15% of these net cash tax savings under both Tax Receivable Agreements.

In connection with the Greenspring acquisition, the sellers receiving Class C units of the Partnership became parties to the Exchanges Tax Receivable Agreement.

See notes 14 and 15 for more information.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Accumulated Other Comprehensive Income

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Foreign currency translation adjustments $ 331 $ 208

Unrealized loss on defined benefit plan, net ( 53 ) ( 324 )

Unrealized gain (loss) on defined benefit plan, net 327 ( 53 )

Accumulated other comprehensive income

The Company operates as one business, a fully-integrated private markets solution provider.

The Company’s chief operating decision maker, which consists of the Company’s co-chief executive officers together, utilizes a consolidated approach to assess the performance of and allocate resources to the business.

The Company’s chief operating decision maker, which consists of the Company’s co-chief executive officers together, through December 31, 2021, and the chief executive officer beginning January 1, 2022, utilizes a consolidated approach to assess the performance of and allocate resources to the business.

Accordingly, management has concluded that the Company consists of a single operating segment and single reportable segment for accounting and financial reporting purposes.

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Amounts due to the Company in the form of carried interest allocations, which are reported as a component of investments in the consolidated balance sheets, remain subject to investment performance risk.

In certain cases, carried interest allocations that have been distributed to the Company may remain subject to clawback, pursuant to the terms of governing documents of the related funds.

Refer to the discussion of carried interest above in this note 2 for additional details regarding the investment performance and clawback risk associated with carried interest allocations that have been recognized in income by the Company and/or recorded as accrued carried interest allocation in the consolidated balance sheets.

In certain cases, carried interest allocations that have been distributed to the Company may remain subject to clawback, pursuant to the terms of the governing documents of the related funds.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASU updates issued by the Financial Accounting Standards Board (“FASB”).

ASUs issued during the current period not listed below were assessed and determined to either be not applicable to the Company, or not expected to have a material impact on the consolidated financial statements.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).

ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet for all leases and to disclose certain information about leasing arrangements.

Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

For public business entities, ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018.

On June 3, 2020, the FASB extended the adoption date for all other entities, including emerging growth companies (“EGCs”), as defined by the SEC, that have elected to defer adoption until the standard is effective for non-public business entities, to annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, with early adoption permitted.

The Company adopted this guidance on April 1, 2021.

The Company does not expect the adoption of this guidance to materially impact its consolidated statements of income because substantially all of its leases are classified as operating leases, which will continue to be recognized as expense on a straight-line basis under the new guidance.

However, the adoption will result in a significant gross-up in total assets and total liabilities on the Company’s consolidated balance sheets due to the requirement to record right-of-use assets and liabilities related to leases that are currently reported as operating leases.

As of March 31, 2021, the Company currently expects to recognize right-of-use assets of approximately $ 67 million and liabilities of approximately $ 77 million related to its operating leases.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses , which changes the accounting for recognizing impairments of financial assets.

Under this guidance, credit losses for certain types of financial instruments will be estimated based on expected losses.

The guidance also modifies the impairment models for available-for-sale debt securities and purchased financial assets with credit deterioration since their origination.

This guidance is effective for annual and interim periods beginning after December 15, 2019 for SEC filers, December 15, 2020 for public business entities that are not SEC filers, and December 15, 2021 for all other entities, including EGCs that have elected to defer adoption until the guidance becomes effective for non-public entities, with early adoption permitted.

The Company adopted this guidance on April 1, 2020.

Adoption of this guidance did not have a material effect on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

4 unchanged sentences

Adoption of this guidance did not have a material effect on the consolidated financial statements.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments , which modifies ASC 842 to amend the lease classification requirements for lessors to align with practice under ASC Topic 840.

Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease under ASC 842, and the lessor would have otherwise recognized a day-one loss on the investment in the lease.

This guidance is effective for annual periods beginning after December 15, 2021 and interim periods within those annual periods.

The Company plans to adopt this guidance on April 1, 2022, and does not expect the adoption of this guidance to have a material effect on the consolidated financial statements.

In November 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which modifies ASC 805 to require an acquiring entity in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date.

This guidance is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted.

The Company adopted this guidance on April 1, 2022, and will apply the guidance prospectively to business combinations that occur after this date.

The Company does not expect the adoption of this guidance to have a material effect on the consolidated financial statements.

The following presents revenues disaggregated by product offering, which aligns with the Company’s performance obligations and the basis for calculating each amount:

11 unchanged sentences

Total incentive fees $ 11,593 $ 5,474 $ 3,410

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Year Ended March 31,

Carried Interest Allocation 2021 2020 2019

Carried Interest Allocations 2022 2021 2020

SMAs $ 555,449 $ 359,703 $ 150,848

Focused commingled funds 231,120 137,077 57,148

Total carried interest allocation $ 496,780 $ 207,996 $ 63,902

The increase or decrease in carried interest allocation for the year ended March 31, 2021 as compared to the prior year periods are primarily attributable to net unrealized appreciation or depreciation in the fair value of certain underlying fund investments.

Total carried interest allocations $ 786,569 $ 496,780 $ 207,996

Year Ended March 31,

Legacy Greenspring Carried Interest Allocations 2022 2021 2020

SMAs $ — $ — $ —

Focused commingled funds (1)

Total legacy Greenspring carried interest allocations $ 187,106 $ — $ —

_______________________________

(1) The year ended March 31, 2022 reflects the net effect of gross realized carried interest allocations of $ 92.2 million, and the reversal of such amounts in unrealized carried interest allocations for the period.

The increase in carried interest allocations for the year ended March 31, 2022 as compared to the prior year periods was primarily attributable to net unrealized appreciation in the fair value of certain underlying fund investments.

See note 2 for a discussion of the Company’s accounting policy for investments on a three-month lag.

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(1) Revenues are attributed to countries based on client location for SMAs and advisory and other services, or location of investment vehicle for focused commingled funds.

For the years ended March 31, 2021, 2020 and 2019, no individual client represented 10% or more of the Company’s management and advisory fees.

For the years ended March 31, 2022, 2021 and 2020, no individual client represented 10% or more of the Company’s net management and advisory fees.

As of March 31, 2022 and 2021, the Company had $ 19.0 million and $ 13.9 million, respectively, of deferred revenues, which is included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

During the year ended March 31, 2022, the Company had recognized $ 4.6 million as revenue from amounts included in the deferred revenue balance as of March 31, 2021.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

As of March 31, 2021 and 2020, the Company had $ 13.9 million and $ 8.5 million, respectively, of deferred revenues, which is included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

During the year ended March 31, 2021, the Company had recognized $ 0.5 million as revenue from amounts included in the deferred revenue balance as of March 31, 2020.

Variable Interest Entities

1 unchanged sentence

The Company consolidates certain VIEs for which it is the primary beneficiary.

VIEs consist of certain operating entities not wholly-owned by the Company and include Swiss Capital, SRA and SRE.

VIEs consist of certain operating entities not wholly-owned by the Company (e.g., Swiss Capital, SRA and SRE) and legacy Greenspring general partner entities.

See note 2 for more information on the Company’s accounting policies related to the consolidation of VIEs.

10 unchanged sentences

Investments in funds $ 107,045 $ 74,379

Legacy Greenspring investments in funds 194,480 —

Due from affiliates, net 18,830 4,218

Amounts attributable to non-controlling interests in subsidiaries 13,832 7,488

Amounts attributable to non-controlling interests in legacy Greenspring entities 194,480 —

Maximum exposure to loss $ 112,043 $ 71,109

2 unchanged sentences

The Company’s share of the underlying net income or loss attributable to its equity interest in the funds is recorded in investment income in the consolidated statements of income.

Investment income attributable to investments in certain legacy Greenspring funds for which the Company has no direct economic interests are recorded in legacy Greenspring investment income in the consolidated statements of income.

Table of Cont ents

StepStone Group Inc.

5 unchanged sentences

Accrued carried interest allocations 1,480,515 896,523

Legacy Greenspring investments in funds and accrued carried interest allocations (1)

Total investments $ 2,922,141 $ 970,902

The Company recognized equity method income of $ 513.2 million, $ 214.9 million and $ 68.0 million for the years ended March 31, 2021, 2020 and 2019, respectively, of which $ 496.8 million, $ 208.0 million and $ 63.9 million, respectively, related to carried interest allocations.

As of March 31, 2021 and 2020, the Company’s investments in two SMAs and investments in three SMAs, respectively, each individually represented 10% or more of the total accrued carried interest allocations balance, and in the aggregate represented approximately 26 % and 37 %, respectively, of the total accrued carried interest allocations balances as of those dates.

_______________________________

(1) Reflects investments in funds of $ 194.5 million and carried interest allocations of $ 1,140.1 million as of March 31, 2022.

The Company recognized equity method income of the following:

Year Ended March 31,

2022 2021 2020

Carried interest allocations $ 786,569 $ 496,780 $ 207,996

Investment income 26,160 16,407 6,926

Legacy Greenspring carried interest allocations 187,106 — —

Legacy Greenspring investment income 32,586 — —

Total equity method income $ 1,032,421 $ 513,187 $ 214,922

The increase in carried interest allocations for the year ended March 31, 2022 as compared to the prior periods was primarily attributable to unrealized appreciation in the fair value of the underlying investments in the Company’s private equity funds.

See note 2 for a discussion of the Company’s accounting policy for investments on a three-month lag.

As of March 31, 2022 and 2021, the Company’s investments in two SMAs, each individually represented 10% or more of the total accrued carried interest allocations balance, and in the aggregate represented approximately 25 % and 26 %, respectively, of the total accrued carried interest allocations balances as of those dates.

As of March 31, 2022, the Company’s investments in three commingled funds individually represented 10% or more of the total legacy Greenspring investments in funds and accrued carried interest allocations balance, and in the aggregate represented approximately 39 % of the total legacy Greenspring investments in funds and accrued carried interest allocations balance as of that date.

Of the total accrued carried interest allocations balance as of March 31, 2022 and 2021, respectively, $ 770.0 million and $ 465.6 million were payable to affiliates and is included in accrued carried interest-related compensation in the consolidated balance sheets.

Of the total legacy Greenspring investments in funds and accrued carried interest allocations balance as of March 31, 2022, $ 1,140.1 million was payable to employees who are considered affiliates of the Company and is included in legacy Greenspring accrued carried interest-related compensation in the consolidated balance sheets and $ 194.5 million is reflected as non-controlling interests in legacy Greenspring entities in the consolidated balance sheets.

The Company evaluates each of its equity method investments to determine if any are considered significant as defined by the SEC.

1 unchanged sentence

As a result, the Company is not required to provide separate financial statements for any of its equity method investments.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Summarized financial information for the Company’s equity method investments reflected below represents the financial position as of March 31, 2022 and 2021, and the results of operations for the years ended March 31, 2022, 2021 and 2020, which are reported on a three-month lag.

11 unchanged sentences

Net income $ 16,559,154 $ 6,185,933 $ 2,478,870

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Fair Value Measurements

3 unchanged sentences

Level I Level II Level III Total

Contingent consideration obligation

Contingent consideration obligations

$ — $ — $ 28,025 $ 28,025

2 unchanged sentences

Level I Level II Level III Total

Contingent consideration obligation

Contingent consideration obligations

$ — $ — $ 1,541 $ 1,541

1 unchanged sentence

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the years ended March 31, 2022 and 2021.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The changes in the fair value of Level III financial instruments are set forth below:

Year Ended March 31,

Contingent Consideration Liability 2021 2020

Contingent Consideration Liabilities 2022 2021

Balance, beginning of year:

6 unchanged sentences

$ 9,600 $ 1,608

The fair value of the contingent consideration liability is based on a discounted cash flow analysis using a probability-weighted average estimate of certain performance targets, including revenue levels.

In connection with the Greenspring acquisition, the Company recorded a contingent consideration liability of $ 17.8 million during the three months ended September 30, 2021.

See note 15 for more information.

The fair value of the contingent consideration liabilities are based on a discounted cash flow analysis using a probability-weighted average estimate of certain performance targets, including revenue levels.

The assumptions used in the analysis are inherently subjective;

therefore, the ultimate amount of the contingent consideration liability may differ materially from the current estimate.

The significant unobservable inputs required to value the contingent consideration liability primarily relate to the discount rates applied to the expected future payments of obligations, which ranged from 8.0 % to 10.4 % as of March 31, 2021.

The contingent consideration liability is included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

Changes in the fair value of the liability are included in general, administrative and other expenses in the consolidated statements of income.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The significant unobservable inputs required to value the contingent consideration liabilities primarily relate to the future expected revenues and the discount rates applied to the expected future revenues and payments of obligations, which ranged from 7 % to 10 % as of March 31, 2022.

The contingent consideration liabilities are included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

Changes in the fair value of the liabilities are included in general, administrative and other expenses in the consolidated statements of income.

In February 2022, the Company amended the contingent consideration arrangement in respect of the Greenspring acquisition whereby a portion of the contingent consideration liability otherwise payable to the sellers will be used to fund compensation arrangements with certain employees of the Company, which will be payable following the end of the earn-out period.

As a result, the contingent consideration liability has been reduced by the fair value of amounts payable to certain employees.

Property and Equipment

9 unchanged sentences

Depreciation expense related to property and equipment totaled $ 2.5 million, $ 2.2 million and $ 2.0 million for the years ended March 31, 2022, 2021 and 2020, respectively, and is included in general, administrative and other expenses in the consolidated statements of income.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Intangibles and Goodwill

Intangible assets primarily consist of certain management contracts providing economic rights to management and advisory fees, as obtained through the Company’s acquisitions of other businesses.

See note 15 for more information on business combinations.

Intangible assets consist of management contracts providing economic rights to management and advisory fees and client relationships related to future fundraising, as obtained through the Company’s acquisitions of other businesses.

Intangible assets, net consists of the following:

1 unchanged sentence

Management contracts $ 352,002 $ 41,058

Client relationships 96,650 —

Service agreements 9,537 —

Accumulated amortization ( 60,064 ) ( 35,567 )

2 unchanged sentences

These amounts are included in general, administrative and other expenses in the consolidated statements of income.

In connection with the Greenspring acquisition, the Company added approximately $ 310.9 million of management contract intangible assets, $ 96.7 million of client relationship intangible assets and $ 9.5 million of service agreement intangible assets.

See note 15 for more information.

The expected future amortization of finite-lived intangible assets is as follows:

Fiscal year ending March 31,

2023 $ 43,481

Thereafter 186,550

Total $ 398,125

The carrying value of goodwill was $ 6.8 million as of March 31, 2021 and 2020.

The carrying value of goodwill was $ 580.5 million as of March 31, 2022 and $ 6.8 million as of March 31, 2021.

The increase in the carrying value of goodwill is attributable to the Greenspring acquisition, which added approximately $ 573.8 million in goodwill.

See note 15 for more information.

The Company determined there was no indication of goodwill impairment as of March 31, 2022 and 2021.

Table of Cont ents

StepStone Group Inc.

2 unchanged sentences

Debt Obligations

On September 18, 2020, the Company repaid in full the indebtedness outstanding on a senior secured term loan (“Term Loan B”) in the amount of $ 146.6 million and effectively terminated the facility, including the senior secured revolving facility.

In connection with the repayment, the Company wrote-off the unamortized debt issuance costs and discount of $ 3.5 million, which is included in interest expense in the consolidated statements of income for the year ended March 31, 2021.

In September 2021, the Company entered into a credit agreement with various lenders (the “Credit Agreement”) in connection with the Greenspring acquisition.

The Credit Agreement was arranged by JPMorgan Chase Bank, N.A., as the administrative agent, and provides for a $ 225.0 million multicurrency revolving credit facility (the “Revolver”) with a five-year maturity.

As of March 31, 2022, the Company had $ 62.9 million outstanding on the Revolver, net of debt issuance costs.

As of March 31, 2021, the Company had no debt obligations outstanding.

As of March 31, 2020, the Company had $ 143.1 million of debt obligations outstanding.

The Company’s debt obligations consist of the following:

As of March 31,

Revolver $ 65,000 $ —

Debt issuance costs ( 2,121 ) —

Total debt obligations $ 62,879 $ —

Borrowings under the Revolver bear interest at a variable rate per annum.

The Company may designate each borrowing as (i) in the case of any borrowing in U.S.

dollars, a base rate loan or a LIBOR rate loan, (ii) in the case of any borrowing denominated in Euros, a EURIBOR rate loan, (iii) in the case of any borrowing denominated in British Pounds Sterling, a Sterling Overnight Index Average (“SONIA”) loan, (iv) in the case of any borrowing denominated in Swiss Francs, a Swiss Average Rate Overnight (“SARON”) loan, and (v) in the case of any borrowing denominated in Australian dollars, an AUD rate loan.

Borrowings bear interest equal to (i) in the case of base rate loans, 1.00 % plus the greatest of (a) the Prime Rate, (b) the New York Federal Reserve Bank Rate plus 0.50 % and (c) the 1 month LIBOR, multiplied by the Statutory Reserve Rate (as defined in the Credit Agreement), plus 1.00 %, (ii) in the case of a LIBOR rate loan, the LIBOR rate multiplied by the Statutory Reserve Rate plus 2.00 %, (iii) in the case of a EURIBOR rate loan, the EURIBOR rate multiplied by the Statutory Reserve Rate plus 2.00 %, (iv) in the case of a SONIA loan, the Sterling Overnight Index Average plus 2.03 %, (v) in the case of a SARON loan, the Swiss Average Rate Overnight plus 2.00 %, and (vi) in the case of an AUD rate loan, the AUD Screen Rate (as defined in the Credit Agreement) multiplied by the Statutory Reserve Rate plus 2.20 %.

The weighted-average interest rate in effect for the Revolver as of March 31, 2022 was 2.50 %.

Borrowings under the Revolver may be repaid at any time during the term of the Credit Agreement and, subject to certain terms and conditions, may be reborrowed prior to the maturity date.

Any outstanding principal amounts, together with any accrued interest thereon, shall be due and payable on the maturity date.

The maturity date for the Revolver is September 20, 2026.

The Revolver bears a fee on undrawn commitments equal to 0.25 % per annum if total utilization of revolving commitments is equal to or greater than 50% and 0.35 % per annum if total utilization of revolving commitments is less than 50%.

The carrying value of the Revolver approximates fair value, as the loan is subject to variable interest rates that adjust with changes in market rates and market conditions and the current interest rate approximates that which would be available under similar financial arrangements.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Under the terms of the Credit Agreement, certain of the Company’s assets serve as pledged collateral.

In addition, the Credit Agreement contains covenants that, among other things:

limit the Company’s ability to incur indebtedness;

create, incur or allow liens;

transfer or dispose of assets;

merge with other companies;

make certain investments;

pay dividends or make distributions;

engage in new or different lines of business;

and engage in transactions with affiliates.

The Credit Agreement also contains financial covenants requiring the Company to maintain a total net leverage ratio and a minimum total of fee-earning assets under management beginning with the quarter ending December 31, 2021.

As of March 31, 2022, the Company was in compliance with the total net leverage ratio and minimum fee-earning assets under management covenants.

The Company can use available funding capacity under the Revolver to satisfy letters of credit in amounts up to $ 10.0 million.

Amounts used to satisfy the letters of credit reduce the available capacity under the Revolver.

As of March 31, 2022, the Company had outstanding letters of credit totaling $ 2.9 million.

Equity-Based Compensation

3 unchanged sentences

Restricted Stock Units

During the year ended March 31, 2021, the Company granted 2,583,241 RSUs to certain employees and directors with an aggregate grant date fair value of $ 47.9 million.

RSUs represent the right to receive payment on the date of vesting in the form of one share of Class A common stock for each RSU.

1 unchanged sentence

The RSUs granted generally vest over four years in equal annual installments.

Upon vesting, the Company will typically withhold the number of shares to satisfy the statutory withholding tax obligation and deliver the net number of resulting shares vested.

Upon vesting, the Company will typically withhold or cause the participant to sell the number of shares to satisfy the statutory withholding tax obligation and deliver the net number of resulting shares vested.

The change in unvested RSUs is as follows:

2 unchanged sentences

Granted 244,452 $ 35.18

Vested ( 645,197 ) $ 18.86

Forfeited ( 61,792 ) $ 18.23

Balance as of March 31, 2022 2,087,324 $ 20.40

Unvested Partnership Units

In June 2018, the Company issued an aggregate of 5.2 % of profits interests (the “Class A2 Interests”) in the Company to certain key employees.

These Class A2 Interests provide the recipients with an opportunity to participate in the profits of the Company and proceeds of certain capital events.

The Class A2 Interests vest over a period of six years from the grant date, subject to an employee’s continuous service with the Company through the applicable vesting date.

Under the terms of the Fifth Amended and Restated Limited Partnership Agreement dated March 8, 2018, the vesting of the awards will occur as follows:

(i) 0 % during the first three years from the date of issuance, (ii) 30.0 % on the third anniversary of the date of issuance, (iii) plus 5.8 % for each fiscal quarter after the third anniversary of the date of issuance (fully vested on the sixth anniversary of the date of issuance).

The weighted-average grant-date fair value of RSUs granted during the years ended March 31, 2022 and 2021 was $ 35.18 and $ 18.53 , respectively.

No RSUs were granted prior to the IPO.

The total fair value as of the respective vesting dates of RSUs vested during the year ended March 31, 2022 was $ 27.5 million.

No RSUs vested during the years ended March 31, 2021 or 2020.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

The grant date fair value of the Class A2 Interests was $ 11.4 million, as determined by a third-party valuation firm using an option pricing model.

The significant inputs to the option pricing model included (a) an estimated term of 4.5 years, which considered the expected average vesting period of the Class A2 Interests, (b) a risk-free rate of 2.5 %, which was determined based upon U.S.

Treasury Strips and (c) an expected volatility of 40.0 %, which considered the equity volatilities for a peer group consisting of publicly-traded companies.

The valuation of the Class A2 Interests also gives effect to a 20 % discount for lack of marketability, as there is no active public market upon which the Class A2 Interests trade or can be sold.

The discount for lack of marketability was estimated based upon existing studies commonly referenced in connection with the valuation of closely held common equity.

The Class A2 Interests are classified as equity awards, and the associated equity-based compensation expense is recognized on a straight-line basis over the vesting period, with a corresponding increase to partners’ capital in the Company’s consolidated balance sheets and consolidated statements of stockholders’ equity.

In August 2019, certain changes were made to the Class A2 Interests to, among other things, eliminate certain thresholds and reduce the percentage interest to an amount implied by the value established in connection with the sale of equity to institutional investors as part of the 2019 Transaction, as further described in note 14.

The changes to the Class A2 units were accounted for as a modification of equity awards to employees.

The modification did not have a material effect on the consolidated financial statements.

As part of the Reorganization, previously granted awards of Class A2 unvested partnership units were reclassified as Class B2 units, which will vest periodically through 2024.

Unvested Partnership Units

In June 2018, the Company issued an aggregate of 5.2 % of profits interests (the “Class B2 Interests”) in the Company to certain key employees.

These Class B2 Interests provide the recipients with an opportunity to participate in the profits of the Company and proceeds of certain capital events.

The Class B2 Interests vest over a period of six years from the grant date, subject to an employee’s continuous service with the Company through the applicable vesting date.

Under the terms of the Fifth Amended and Restated Limited Partnership Agreement dated March 8, 2018, the vesting of the awards will occur as follows:

(i) 0 % during the first three years from the date of issuance, (ii) 30.0 % on the third anniversary of the date of issuance, and (iii) 5.8 % for each fiscal quarter after the third anniversary of the date of issuance (fully vested on the sixth anniversary of the date of issuance, or June 2024).

Upon the final vesting date, all of the Class B2 units will automatically convert into Class B units and unitholders will be entitled to purchase from the Company one share of Class B common stock for each Class B unit at its par value.

Prior to vesting, holders of Class B2 units do not have the right to receive any distributions from the Partnership, other than tax-related distributions.

In October 2019, one of the Company’s subsidiaries issued a 4.2 % award of profits interests, with a grant date fair value of $ 0.2 million, to a certain key employee.

The grant date fair value of the profits interests was determined by a third-party valuation firm using an option pricing model.

The significant inputs to the option pricing model included (a) an estimated term of 2.0 years, which considered the expected average vesting period of the profits interests, (b) a risk-free rate of 1.64 %, which was determined based upon U.S.

Treasury Strips, and (c) an expected volatility of 30.0 %, which considered the equity volatilities for a peer group consisting of publicly-traded companies.

The valuation of the profits interests also gives effect to a 10.0 % discount for lack of marketability, as there is no active public market upon which the profits interests trade or can be sold.

The discount for lack of marketability was estimated based upon existing studies commonly referenced in connection with the valuation of closely held common equity.

As of March 31, 2021, there were 2,566,566 unvested Class B2 units outstanding.

During the year ended March 31, 2021, 24,786 of the outstanding Class B2 units were forfeited.

As of March 31, 2021, none of the outstanding Class B2 units were vested.

The Class B2 Interests are classified as equity awards, and the associated equity-based compensation expense is recognized on a straight-line basis over the vesting period, with a corresponding increase to stockholders’ equity or, for the period prior to the IPO, partners’ capital in the Company’s consolidated balance sheets.

In August 2019, certain changes were made to the Class B2 Interests to, among other things, eliminate certain thresholds and reduce the percentage interest to an amount implied by the value established in connection with the sale of equity to institutional investors as part of the 2019 Transaction, as further described in note 14.

The changes to the Class B2 units were accounted for as a modification of equity awards to employees.

The modification did not have a material effect on the consolidated financial statements.

As of March 31, 2022, there were 2,566,566 Class B2 units outstanding.

During the year ended March 31, 2022, none of the outstanding Class B2 units were forfeited.

As of March 31, 2022, 1,347,447 Class B2 units were unvested and 1,219,119 Class B2 units were vested.

As of March 31, 2022, $ 41.0 million of unrecognized non-cash compensation expense in respect of RSUs and Class B2 units remained to be recognized over a weighted-average period of approximately 3.5 years.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company recognized tax benefits related to equity-based awards of $ 7.4 million for the year ended March 31, 2022.

No tax benefits were recognized for the years ended March 31, 2021 and 2020.

The Company’s income before income tax consisted of the following:

4 unchanged sentences

Total income before income tax $ 512,581 $ 337,849 $ 148,740

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The following table presents the components of the Company’s provision for income taxes:

18 unchanged sentences

Foreign income tax 1.2 1.0 1.9

Valuation allowance ( 5.3 ) 0.0 0.0

Other ( 0.1 ) 0.0 0.0

Effective tax rate 5.5 % 6.9 % 2.6 %

Prior to the Reorganization and IPO, the Company operated as a partnership for U.S.

federal income tax purposes and therefore was not subject to U.S.

federal and state income taxes.

Subsequent to the Reorganization and IPO, all income attributable to SSG is subject to U.S.

corporate income taxes.

The Company’s effective tax rate is dependent on many factors, including the estimated amount of income subject to tax.

1 unchanged sentence

The Company’s overall effective tax rate in each of the periods above is less than the statutory rate primarily because (a) the Company was not subject to U.S.

federal taxes prior to the Reorganization and IPO and (b) a portion of income is allocated to non-controlling interests, as the tax liability on such income is borne by the holders of such non-controlling interests.

federal and state income taxes prior to the Reorganization and IPO and (b) a portion of income is allocated to non-controlling interests, as the tax liability on such income is borne by the holders of such non-controlling interests.

The Company has elected to account for global intangible low-taxed income (“GILTI”) earned by foreign subsidiaries in the period the tax is incurred.

Table of Cont ents

StepStone Group Inc.

12 unchanged sentences

Net deferred tax assets $ 26,337 $ 89,439

The Reorganization and IPO that occurred in September 2020 and the March 2021 Offering resulted in a step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized.

In connection with such transactions, the Company recognized a combined total deferred tax asset in the amount of $ 135.1 million associated with the increase in tax basis from the Reorganization, IPO and March 2021 Offering as well as the basis difference in SSG’s investment in the Partnership.

A portion of the total basis difference will only reverse upon a sale of SSG’s interest in the Partnership, which is not expected to occur in the foreseeable future.

Therefore, the Company also recognized a valuation allowance in the amount of $ 30.5 million against the deferred tax asset (resulting in a net deferred tax asset of $ 104.6 million) which is considered capital in nature as it was not more-likely-than-not that this portion of deferred tax assets would be realized.

Concurrently with the Reorganization, IPO, March 2021 Offering and recording of the deferred tax asset, the Company recorded a payable pursuant to the Tax Receivable Agreements within due to affiliates in the consolidated balance sheets of $ 107.2 million.

See note 14 for more information on the March 2021 Offering.

In connection with the exchanges of Class B units and Class C units of the Partnership for Class A common stock by certain limited partners of the Partnership during fiscal 2022 which increased the Company’s ownership in the Partnership, the Company recorded an overall increase to deferred tax assets as of March 31, 2022.

As of September 30, 2021, primarily due to the Greenspring acquisition, the Company recorded a decrease to deferred tax assets of $ 137.4 million, and a net decrease in the valuation allowance of $ 32.4 million, of which $ 5.0 million was recognized through equity and $ 27.4 million was recognized as an income tax benefit.

Additionally, in connection with the exchange transactions, the Company recorded a corresponding Tax Receivable Agreements liability of $ 93.0 million, representing 85% of the incremental net cash tax savings for the Company due to the exchanging limited partners.

As of March 31, 2022, the Company’s total Tax Receivable Agreements liability was $ 197.2 million.

See notes 13 and 14 for more information.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax assets may not be realized.

1 unchanged sentence

Apart from the valuation allowance, the Company believes that the remaining deferred tax assets will be realized in full.

A summary of the change in valuation allowance by year is as follows:

Valuation Allowance

Balance at March 31, 2020 $ —

Equity increase 30,537

Balance at March 31, 2021 30,537

Income tax decrease ( 27,413 )

Equity decrease ( 5,006 )

Equity increase 15,304

Balance at March 31, 2022 $ 13,422

As of March 31, 2022, the Company has no t recorded any unrecognized tax benefits and does no t expect there to be any material changes to uncertain tax positions within the next 12 months.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The Company files income tax returns as required by the tax laws of the jurisdictions in which it operates.

6 unchanged sentences

There are currently no material examinations being conducted of the Company by tax authorities.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Earnings Per Share

Basic and diluted earnings per share of Class A common stock is presented from September 16, 2020 through March 31, 2021, the period following the Reorganization and IPO.

Basic and diluted earnings per share of Class A common stock are presented for the year ended March 31, 2022 and from September 16, 2020 through March 31, 2021, the period following the Reorganization and IPO.

There were no shares of Class A common stock outstanding prior to September 16, 2020, therefore no earnings per share information has been presented for any period prior to that date.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

Period from IPO date to March 31, 2021

Year Ended March 31, 2022 Period from IPO date to March 31, 2021

(in thousands, except share and per share amounts)

Net income attributable to StepStone Group Inc.

$ 193,885 $ 62,634

Incremental income from assumed vesting of RSUs 4,043 1,854

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Net income attributable to StepStone Group Inc.

$ 205,617 $ 68,411

Weighted-average shares of Class A common stock outstanding – Basic

49,833,760 29,657,805

Assumed vesting of RSUs 1,289,809 1,151,579

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Weighted-average shares of Class A common stock outstanding – Diluted

53,600,250 33,274,804

Earnings per share of Class A common stock

$ 3.89 $ 2.11

Diluted $ 3.84 $ 2.06

Diluted earnings per share of Class A common stock is computed by dividing net income (loss) attributable to SSG, giving consideration to the reallocation of net income between holders of Class A common stock and non-controlling interests, by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities, if any.

Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to SSG and therefore are not participating securities.

As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included.

The calculation of diluted earnings per share excludes 56,378,831 shares of Class B units of the Partnership, which are exchangeable into Class A common stock under the if-converted method, as the inclusion of such shares would be anti-dilutive.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to SSG and therefore are not participating securities.

As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included.

The calculation of diluted earnings per share excludes 47,149,673 Class B units and 2,928,824 Class C units of the Partnership outstanding as of March 31, 2022, and 56,378,831 shares of Class B units of the Partnership outstanding as of March 31, 2021, which are exchangeable into Class A common stock under the if-converted method, as the inclusion of such shares would be anti-dilutive.

Related Party Transactions

3 unchanged sentences

Carried intere st allocation revenues earned from the StepStone Funds totaled $ 786.6 million, $ 496.8 million and $ 208.0 million for the years ended March 31, 2022, 2021 and 2020, respectively.

Due from affiliates in the consolidated balance sheets consists primarily of fees and accounts receivable from the StepStone Funds, advances made on behalf of the StepStone Funds for the payment of certain organization and operating costs and expenses for which the Company is subsequently reimbursed, and amounts due from employees.

Legacy Greenspring carried intere st allocation revenues earned from certain legacy Greenspring funds for which the Company has no direct economic interests totaled $ 187.1 million for the year ended March 31, 2022.

As of March 31,

Amounts receivable from StepStone Funds $ 19,027 $ 6,958

Amounts receivable from employees 342 516

Total due from affiliates $ 19,369 $ 7,474

Due to affiliates in the consolidated balance sheets consists primarily of amounts payable to certain non-controlling interest holders in connection with the Tax Receivable Agreements, amounts payable to StepStone Funds and distributions payable to certain employee equity holders of consolidated subsidiaries, as set forth below.

4 unchanged sentences

Total due to affiliates $ 199,355 $ 113,522

The Company did not make any payments under the Tax Receivable Agreements during the year ended March 31, 2021.

The Company made payments of $ 0.8 million during the year ended March 31, 2022 under the Tax Receivable Agreements.

No payments were made under the Tax Receivable Agreements during the year ended March 31, 2021.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Stockholders’ Equity

3 unchanged sentences

Holders of the Class B common stock are not entitled to dividends in respect of their shares of Class B common stock.

In connection with the Greenspring acquisition, the limited partnership agreement of the Partnership was amended to create new Class C limited partnership interests and to admit the new limited partners that received Class C units as consideration for the Greenspring acquisition.

The Class C limited partnership interests of the Partnership have substantially the same rights and obligations as are applicable to the existing holders of Class B units of the Partnership.

The Company has no ownership interest in the Class C units, which are held by certain employees of the Company.

The Company has also entered into an agreement with the Class C limited partners of the Partnership to allow for the exchange of Class C units to shares of Class A common stock of the Company on a one-for-one basis, subject to certain restrictions.

The following table shows a rollforward of the Company’s shares of common stock outstanding since March 31, 2021:

Class A Common Stock Class B Common Stock

March 31, 2021 38,437,500 56,378,831

Class A common stock issued for Greenspring acquisition 12,686,756 —

Class A common stock issued in exchange for Class B Partnership units 9,229,158 ( 9,229,158 )

Class A common stock issued in exchange for Class C Partnership units 142,695 —

Class A common stock issued for vesting of RSUs 645,197 —

March 31, 2022 61,141,306 47,149,673

The Company has 25,000,000 authorized shares of preferred stock, par value of $ 0.001 per share, and as of March 31, 2022, no shares of preferred stock were issued or outstanding.

The Company records a reallocation adjustment between SSG stockholders’ equity, non-controlling interests in the Partnership and non-controlling interests in subsidiaries to reflect the impact of changes in economic ownership percentages during the period and adjust previously recorded equity transactions to the economic ownership percentage as of the end of each reporting period.

Equity Transactions Subsequent to the IPO

In March 2022, the Company issued 350,000 shares of Class A common stock to a limited partner of the Partnership in exchange for 350,000 Class B units in accordance with the elective exchange notices submitted pursuant to an agreement with the Class B limited partners (the “Class B Exchange Agreement”) to allow for exchange of Class B units of the Partnership to shares of Class A common stock of the Company on a one-for-one basis, subject to certain restrictions.

A corresponding number of shares of Class B common stock were automatically redeemed at par value and canceled in connection with such exchange and a corresponding number of Class A units of the Partnership were issued to the Company.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

The following table shows a rollforward of the Company’s shares of common stock outstanding since the IPO:

Class A Common Stock Class B Common Stock

September 15, 2020 — —

Issued to public holders in the IPO 20,125,000 —

Issued to Class B unitholders in the Reorganization — 65,578,831

Class A partnership units exchanged in the Reorganization 9,112,500 —

Class A common stock issued in exchange for Class B partnership units in connection with registered offering 9,200,000 ( 9,200,000 )

March 31, 2021 38,437,500 56,378,831

The Company has 25,000,000 authorized shares of preferred stock, par value of $ 0.001 per share, and as of March 31, 2021, no shares of preferred stock were issued and outstanding.

In connection with the consummation of the IPO, the Partnership issued new partnership interests to certain StepStone professionals in the Infrastructure subsidiary in exchange for their partnership interests in the Infrastructure subsidiary, which increased the Partnership’s interest in the Infrastructure subsidiary to approximately 49 % and decreased the StepStone professionals’ interest in the Infrastructure subsidiary to approximately 51 %.

In March 2021, the Company conducted an underwritten public offering of 9,200,000 shares of Class A common stock, including 1,200,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, (the “March 2021 Offering”) sold by selling stockholders at a public offering price of $ 29.50 per share.

In February 2022, the Partnership completed a transaction to repurchase partnership interests in SRA from a former partner for approximately $ 0.3 million, and subsequently sold an equal number of partnership interests to certain employees of SRA for approximately $ 0.3 million, resulting in no net proceeds to the Partnership.

In December 2021, the Company issued 935,235 shares of Class A common stock to certain limited partners of the Partnership in exchange for 935,235 Class B units in accordance with the elective exchange notices submitted pursuant to the Class B Exchange Agreement.

In November 2021, the Company conducted an underwritten public offering of 4,500,000 shares of Class A common stock sold by selling stockholders at a public offering price of $ 51.83 per share.

In connection with the offering, the Company issued 3,958,204 shares of Class A common stock to certain selling stockholders in exchange for 3,958,204 Class B units.

The Company also issued 142,695 shares of Class A common stock to certain selling stockholders in exchange for 142,695 Class C units and a corresponding number of Class A units of the Partnership were issued to the Company.

The Company did not receive any proceeds from the sale of shares by the selling stockholders.

In September 2021, the Company issued 2,087,281 shares of Class A common stock to certain limited partners of the Partnership in exchange for 2,087,281 Class B units in accordance with the elective exchange notices submitted pursuant to the Class B Exchange Agreement.

Earlier in September 2021, the Company issued 12,686,756 shares of Class A common stock and 3,071,519 Class C units of the Partnership as partial consideration for the Greenspring acquisition.

See note 15 for more information.

In June 2021, the Company issued 1,898,438 shares of Class A common stock to certain limited partners of the Partnership in exchange for 1,898,438 Class B units in accordance with elective exchange notices submitted pursuant to the Class B Exchange Agreement.

In March 2021, the Company conducted an underwritten public offering of 9,200,000 shares of Class A common stock, including 1,200,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, sold by selling stockholders at a public offering price of $ 29.50 per share.

In connection with the offering, the Company issued 9,200,000 shares of Class A common stock to the selling stockholders in exchange for 9,200,000 Class B units.

A corresponding number of shares of Class B common stock were automatically redeemed at par value and canceled in connection with such exchange.

The Company did not receive any proceeds from the sale of shares by the selling stockholders.

The reallocation adjustment between SSG stockholders’ equity, non-controlling interests in the Partnership and non-controlling interests in subsidiaries relates to the impact of changes in economic ownership percentages during the period and adjusting previously recorded equity transactions to the economic ownership percentage as of the end of each reporting period.

In June 2020, one of the Company’s consolidated subsidiaries completed a transaction to repurchase partnership interests in the subsidiary from a former partner for approximately $ 3.3 million, and subsequently sold an equal number of partnership interests to certain employees of the subsidiary for approximately $ 3.3 million, resulting in no net proceeds to the subsidiary.

Equity Transactions in Connection with and Prior to the Reorganization and IPO

In connection with the consummation of the IPO, the Partnership issued new partnership interests to certain StepStone professionals at SRA in exchange for their partnership interests in SRA, which increased the Partnership’s interest in SRA to approximately 49 % and decreased the StepStone professionals’ interest in SRA to approximately 51 %.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

In June 2020, SRA completed a transaction to repurchase partnership interests in SRA from a former partner for approximately $ 3.3 million, and subsequently sold an equal number of partnership interests to certain employees of SRA for approximately $ 3.3 million, resulting in no net proceeds to SRA.

In August 2019, the Company completed a series of transactions resulting in the unitization of its equity and the combination of certain classes of the Company’s equity to facilitate the sale of newly issued equity interests in the Company to certain institutional investors (the “2019 Transaction”).

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In connection with the 2019 Transaction, the previously existing Class A1, Class B, Class C and Class D partnership interests were canceled and combined with and into the existing Class A partnership interests of the Company as a single class with equal value (without substantive changes to economic rights associated therewith), with each partner participating ratably in all distributions, including carried interest.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

In addition, certain changes were made to the Class A2 partnership interests to, among other things, eliminate certain thresholds and reduce the percentage interest to an amount implied by the value established in connection with the sale of equity to institutional investors as part of the 2019 Transaction.

See note 10 for more information.

Prior to the 2019 Transaction, the Company had several classes of partnership interests outstanding:

1 unchanged sentence

Holders of Class A1, Class B and Class C partnership interests generally had similar rights, including the sharing of economics, with certain exceptions.

Class A2 partnership interests were issued as “profits interests,” pursuant to partnership admission agreements entered into with certain employees during the year ended March 31, 2019 (as further discussed in note 10).

At the time of issuance, the Class A2 partnership interests had a capital account interest of zero percent.

This percentage interest increases up to the percentage stipulated in the employees’ partnership admission agreements over a vesting period of six years from the date of issuance of the Class A2 awards.

Prior to full vesting, the holders of Class A2 partnership interests shall not be entitled to any distributions, except for the distribution of any proceeds of capital transactions undertaken by the Company, for which the holders of Class A2 partnership interests are entitled to their vested interests.

All distributions to Class A2 partnership interest holders, whether attributable to capital transactions undertaken by the Company or in the event of a liquidation of the Company, are subject to a threshold amount stipulated in the interest holders’ admission agreements.

Holders of the Class A2 partnership interests are not eligible to receive distributions until aggregate distributions to the other limited partners meet a threshold amount of $ 600 million.

Prior to full vesting, the holders of Class A2 interests do not hold voting rights related to their vested interests.

Class D partnership interests provided holders with the right to participate in carried interest allocations from the StepStone Funds and do not provide for any voting rights.

New limited partners can be added to the Company with the approval of the Company’s board of directors and are bound by the terms of their admission agreement.

All Company decisions upon which limited partners shall vote, consent or give approval shall be in proportion to each limited partner’s percentage interest, subject to full vesting requirements, as applicable.

Net profits and any other items of income shall be allocated to limited partners’ capital accounts in a manner that is consistent with their respective ownership percentages.

Distributions to limited partners will generally be in a manner consistent with their respective ownership percentages at the time the profits were generated and are subject to approval of the Company’s board of directors.

Limited partners’ capital interests are transferable;

however, transfers are subject to obtaining the prior written consent of the Company’s general partner, with certain exceptions for transfers to affiliated parties.

In the event of an approved transfer, the Company has a right of first refusal to purchase any interests to be transferred.

As part of the Reorganization, the previously existing Class A partnership interests of the Company were reclassified as Class B units and previously granted awards of Class A2 unvested partnership units were reclassified as Class B2 units.

Dividends and Distributions

Dividends and distributions are reflected in the consolidated statements of stockholders’ equity when declared by the board of directors.

Dividends are made to Class A common stockholders and distributions are made to limited partners of the Partnership and holders of non-controlling interests in subsidiaries.

On February 9, 2021, the Company announced a dividend of $ 0.07 per share of Class A common stock.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

The following table presents information regarding quarterly dividends on Class A common shares for the periods indicated:

Quarterly Fiscal Period 1

Dividend Payment Date Dividend Per Share of Class A Common Stock

First quarter N/A

Second quarter N/A

Third quarter N/A

Fourth quarter March 12, 2021 $ 0.07

Total dividends paid in FY2021 $ 0.07

First quarter July 15, 2021 $ 0.07

Second quarter September 15, 2021 0.07

Third quarter December 15, 2021 0.15

Fourth quarter March 15, 2022 0.15

Total dividends paid in FY2022 $ 0.44

_______________________________

(1) Prior to the Company’s IPO on September 16, 2020, it was a wholly-owned subsidiary of the Partnership, had a single class of common stock and did not pay dividends.

As such, there is no quarterly dividend information reported for the quarter ended September 30, 2020 or any periods prior.

Dividends paid, as reported in this table, relate to the preceding quarterly period in which they were earned.

Business Combinations

Courtland Transaction

On April 1, 2018, the Company closed a transaction to acquire 100 % of Courtland Partners, Ltd.

(“Courtland”) in exchange for (i) cash consideration of $ 9.0 million, net of an agreed upon adjustment based upon Courtland’s net working capital balance at the closing date, and (ii) contingent consideration totaling $ 3.6 million.

Courtland is an institutional real estate investment adviser to pension funds, endowments, foundations, insurance companies, funds-of-funds and banks located in the United States, Europe and Asia.

The aggregate purchase price for the acquisition of Courtland, and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:

Greenspring Acquisition

On September 20, 2021, the Company completed the acquisition of 100 % of the equity of Greenspring Associates, Inc.

and certain of its affiliates (collectively, “Greenspring”) in exchange for (i) cash consideration of approximately $ 185 million, net of an agreed upon adjustment based upon Greenspring’s net working capital balance at the closing date, (ii) 12,686,756 shares of Class A common stock and (iii) 3,071,519 newly issued Class C units of the Partnership (the “Greenspring acquisition”).

The transaction agreement also included an earn-out of payment up to $ 75 million that is payable in 2025 subject to the achievement of certain management fee revenue targets for calendar year 2024.

The results of Greenspring’s operations have been included in the consolidated financial statements effective September 20, 2021.

The acquisition of Greenspring is expected to expand the Company’s continued growth of its private markets capabilities across asset classes, geographies and sectors.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The aggregate purchase price for the acquisition of Greenspring and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date were as follows:

Acquisition date fair value of consideration transferred:

Cash consideration $ 186,577

Class A common stock 558,598

Class C units of the Partnership 135,239

Contingent consideration 17,769

2 unchanged sentences

Cash and short-term receivables $ 5,725

Legacy Greenspring investments in funds and accrued carried interest allocations (1)

Lease right-of-use assets, net 2,585

Other assets and receivables 2,146

Finite-lived intangible assets—contractual rights:

management contracts 310,944

Finite-lived intangible assets—client relationships 96,650

Finite-lived intangible assets—contractual rights:

service agreements 9,537

Goodwill 573,750

Deferred income taxes ( 95,884 )

Accrued expenses and other liabilities ( 4,685 )

Legacy Greenspring accrued carried interest-related compensation (1)

( 1,045,157 )

Lease liabilities ( 2,585 )

Non-controlling interests in legacy Greenspring entities (1)

Total $ 898,183

The fair values of finite-lived intangible assets were determined using a discounted cash flow model, which assumes contract renewals as deemed appropriate, and are amortized over a period ranging from 1 to 6 years.

The $ 1.0 million of goodwill primarily related to Courtland’s assumed workforce, as well as certain business synergies expected to be realized from the transaction.

In connection with this transaction, the Company incurred acquisition costs that were expensed as incurred.

The results of Courtland’s operations have been included in the consolidated financial statements effective April 1, 2018.

_______________________________

(1) Represents investments in funds and carried interest allocations attributable to consolidated VIEs for which the Company did not acquire any direct economic interests.

Such amounts are attributable to employees and therefore have been reflected as non-controlling interests in legacy Greenspring entities and legacy Greenspring accrued carried interest-related compensation, respectively.

For the year ended March 31, 2022, the Company incurred $ 13.8 million of acquisition-related costs that were expensed as incurred and included in general, administrative and other expenses in the consolidated statements of income.

The Company allocated $ 320.5 million and $ 96.7 million of the purchase price to the fair value of contractual rights and client relationships, respectively, which will be amortized over a weighted-average amortization period of 10.0 years.

The $ 573.8 million of goodwill primarily related to Greenspring’s assembled workforce and business synergies expected to be realized from the transaction.

This goodwill is not expected to be deductible for tax purposes.

The amount of revenues and net income of Greenspring (including amounts attributable to legacy Greenspring entities) since the acquisition date were approximately $ 230 million and $ 54 million, respectively.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The following supplemental unaudited pro forma information assumes the Greenspring acquisition, as well as the Reorganization and IPO, had been consummated as of April 1, 2020:

Year Ended March 31,

Revenues $ 1,866,986 $ 1,362,067

Net income attributable to StepStone Group Inc.

168,653 80,743

The Company’s fiscal year ends on March 31, and prior to the transaction, Greenspring’s fiscal year ended on December 31.

To comply with SEC rules and regulations for companies with different fiscal year ends, the pro forma combined financial information has been prepared utilizing periods that differ by less than 93 days.

The unaudited pro forma information for the year ended March 31, 2022 combines the Company’s historical audited consolidated statement of income for the year ended March 31, 2022 and Greenspring’s historical unaudited combined statement of income for the 12 months ended March 31, 2022.

The unaudited pro forma information for the year ended March 31, 2021 combines the Company’s historical audited consolidated statement of income for the year ended March 31, 2021 and Greenspring’s historical audited combined statement of income for the fiscal year ended December 31, 2020.

The supplemental unaudited pro forma information is based on estimates and assumptions believed reasonable and are not necessarily indicative of the Company’s consolidated results in future periods or the results that actually would have been realized had the Greenspring acquisition been a combined entity during the periods presented.

The pro forma amounts have been calculated after reflecting the following adjustments that were directly attributable to the Reorganization, IPO, Greenspring acquisition and the related debt issuance used to fund a portion of the cash consideration, as if the transactions were consummated on April 1, 2020:

Reorganization and IPO

• adjustments to include compensation expense associated with the 2.5 million RSUs issued in connection with the IPO;

• adjustments on interest expense to reflect the repayment of outstanding debt using a portion of the IPO proceeds;

• adjustments to include federal and state income taxes for the Company’s share of taxable income generated by the Partnership;

• adjustments to reflect the pro-rata economic ownership attributable to the Company.

Debt Financing

• adjustments to include interest expense related to the Revolver used to fund a portion of the cash consideration.

Greenspring Acquisition

• adjustments to include the impact of additional amortization of acquired intangible assets that would have been charged;

• adjustments to include the issuance of Class A common stock of the Company and Class C units of the Partnership as consideration for the transaction;

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

• adjustments to reflect the pro-rata economic ownership attributable to the Company;

• adjustments to reflect the tax effects of the Greenspring acquisition and including Greenspring in the Company’s results;

• adjustments to include acquisition-related transaction costs in earnings for the year ended March 31, 2021.

Commitments and Contingencies

2 unchanged sentences

In such cases, there may be an exposure to loss in excess of any amounts accrued.

Although there can be no assurance of the outcome of such proceedings, based on information known by management, the Company does not have a potential liability related to any current legal proceedings or claims that would individually or in the aggregate materially affect its consolidated financial statements as of March 31, 2021.

Although there can be no assurance of the outcome of such proceedings, based on information known by management, the Company does not expect a potential liability related to any current legal proceedings or claims that would individually or in the aggregate materially affect its consolidated financial statements as of March 31, 2022.

Lease Commitments

The Company leases offices in 23 cities in the United States, Canada, South America, Europe, Asia and Australia, and certain equipment subject to operating lease agreements expiring through 2031, some of which may include options to extend or terminate the lease.

As of March 31, 2022, there were no finance leases outstanding.

In June 2021, the Company executed an agreement to lease additional office space for its La Jolla office.

The Company gained access to the additional space in April 2022 following the completion of the build out by the lessor.

The Company established a ROU asset and lease liability for the new lease upon lease commencement in April 2022, with the total future lease payments expected to be approximately $ 3.3 million over approximately 9 years.

In February 2022, the Company executed an agreement to lease additional office space for its U.K.

The lessor is currently undergoing the build out for the additional office space and the Company expects to gain access to the additional space in June 2022.

At that time, the Company will establish a ROU asset and lease liability for the new lease.

Upon lease commencement, total future lease payments are expected to be approximately $ 21.7 million over approximately 10 years.

The components of lease expense included in general, administrative and other expenses in the consolidated statements of income were as follows:

Year Ended March 31,

Operating lease cost (1)

Variable lease cost 957

Sublease income ( 1,679 )

Total lease cost $ 10,376

_______________________________

(1) Operating lease cost includes an immaterial amount of short-term leases.

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

(in thousands, except share and per share amounts and where noted)

Lease Commitments

The Company leases offices in 19 cities in the United States, Canada, South America, Europe, Asia and Australia, subject to operating lease agreements expiring through 2031.

The Company accounts for its operating leases on a straight-line basis and includes the related expense in general, administrative and other expenses in the consolidated statements of income.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options.

Occupancy expense related to office facility operating leases totaled $ 9.3 million, $ 8.7 million and $ 7.0 million for the years ended March 31, 2021, 2020 and 2019, respectively.

The Company leases office equipment subject to operating lease agreements expiring through 2024.

As of March 31, 2020, the Company had outstanding capital leases related to office equipment with an aggregate carrying value of $ 0.2 million, which is included as a component of property and equipment as disclosed in note 7.

There were no outstanding capital leases as of March 31, 2021.

Future minimum annual lease payments related to the Company’s operating leases that have initial or remaining noncancelable lease terms in excess of one year are as follows:

Fiscal year ending March 31,

2022 $ 10,090

Occupancy expense related to office facility operating leases totaled $ 9.3 million and $ 8.7 million for the years ended March 31, 2021 and 2020, respectively.

Supplemental cash flow information related to leases was as follows:

Year Ended March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used for operating leases $ 10,319

Weighted-average remaining lease term for operating leases (in years) 7.7

Weighted-average discount rate for operating leases 2.7 %

As of March 31, 2022, maturities of operating lease liabilities were as follows:

FY2023 $ 10,861

FY2024 11,582

FY2025 10,545

FY2026 10,227

Thereafter 29,602

Total $ 86,811

The Company has entered into non-cancelable sublease arrangements with terms extending through 2026, pursuant to which the Company expects to receive total minimum rental payments of $ 7.8 million.

Minimum operating lease payments presented in the table above have not been reduced by these minimum sublease rental payments.

Total lease liabilities 82,069

Imputed interest ( 11,104 )

Total operating lease liabilities $ 70,965

Unfunded Capital Commitments

As of March 31, 2022 and 2021, the Company, generally in its capacity as general partner or managing member of the StepStone Funds, had unfunded commitments totaling $ 68.2 million and $ 60.5 million, respectively.

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

The $ 68.2 million of unfunded commitments as of March 31, 2022 excludes $ 40.5 million related to commitments held by the legacy Greenspring general partner entities in legacy Greenspring funds for which the Company does not hold any direct economic interests.

Carried Interest Allocations

5 unchanged sentences

This contingent obligation is normally reduced by income taxes that the Company has paid related to the carried interest allocations.

As of March 31, 2021, the maximum amount of carried interest allocation subject to contingent repayment was an estimated $ 105.1 million, net of tax, assuming the fair value of all investments was zero, a possibility that the Company views as remote.

As of March 31, 2022, the maximum amount of carried interest allocations (excluding legacy Greenspring carried interest allocations) attributable to the Company subject to contingent repayment was an estimated $ 204.8 million, net of tax, assuming the fair value of all investments was zero, a possibility that the Company views as remote.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts and where noted)

Indemnification Arrangements

In the normal course of business and consistent with standard business practices, the Company has provided general indemnifications to its limited partners and officers when they act in good faith in the performance of their duties for the Company.

In the normal course of business and consistent with standard business practices, the Company has provided general indemnifications to its limited partners, officers and directors when they act in good faith in the performance of their duties for the Company.

The terms of these indemnities vary from contract to contract.

14 unchanged sentences

Subsequent Events

In June 2021, the Company announced a quarterly cash dividend of $ 0.07 per share of Class A common stock, payable on July 15, 2021 to holders of record as of the close of business on June 30, 2021.

On May 26, 2022, the Company announced a quarterly cash dividend of $ 0.20 per share of Class A common stock, payable on June 30, 2022 to holders of record as of the close of business on June 15, 2022.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data