What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-05-26 compared with 2022-05-31 · 358 added, 324 removed, 1156 unchanged (37% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements Page

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

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of March 31, 2023 and 2022

Consolidated Statements of Income for the Years Ended March 31, 202 2 , 202 1 and 20 2 0

Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2022, 2021 and 2020

Consolidated Statements of Income (Loss) for the Years Ended March 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended March 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2023, 2022 and 2021

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Report of Independent Registered Public Accounting Firm

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

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of StepStone Group Inc.

(successor to StepStone Group LP, as described in Note 1, the “Company”) as of March 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of March 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with U.S.

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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, 2023, 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 26, 2023 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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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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

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

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of underlying investments of equity method investments

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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.

Auditing management’s determination of the fair value of the co-investment fund investments that are valued using significant unobservable inputs 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.

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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.

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Report of Independent Registered Public Accounting Firm

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

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

Opinion on Internal Control over Financial Reporting

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, 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.

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, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2023, and the related notes and our report dated May 26, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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

770,652 1,334,581

Deferred income tax assets 44,358 27,866

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Goodwill 580,542 580,542

Assets of Consolidated Funds:

Cash and cash equivalents 25,997 —

Investments, at fair value

$ 3,497,403 $ 4,188,125

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Legacy Greenspring accrued carried interest-related compensation (1)

617,994 1,140,101

Due to affiliates 205,424 199,355

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Debt obligations 98,351 62,879

Liabilities of Consolidated Funds:

Other liabilities 566 —

Total liabilities 1,844,086 2,363,795

Commitments and contingencies (Note 16)

Redeemable non-controlling interests in Consolidated Funds 24,530 —

Stockholders’ equity:

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

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Non-controlling interests in legacy Greenspring entities (1)

152,658 194,480

Non-controlling interests in the Partnership 668,182 780,162

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Other assets and receivables 8,101 5,588

Assets of Consolidated Funds:

Cash and cash equivalents 25,997 —

Investments, at fair value 30,595 —

Other assets 772 —

$ 964,192 $ 1,435,245

4 unchanged sentences

Lease liabilities 15,883 17,593

Liabilities of Consolidated Funds:

Other liabilities 566 —

Total liabilities

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StepStone Group Inc.

Consolidated Statements of Income

Consolidated Statements of Income (Loss)

(in thousands, except share and per share amounts)

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Legacy Greenspring carried interest allocations (1)

( 452,163 ) 187,106 —

Total revenues ( 67,574 ) 1,365,525 787,716

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Legacy Greenspring performance fee-related compensation (1)

( 452,163 ) 187,106 —

Total compensation and benefits ( 214,236 ) 802,695 411,062

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Other income (expense)

Investment income 26,160 16,407 6,926

Legacy Greenspring investment income (1)

Investment income (loss) ( 2,509 ) 26,160 16,407

Legacy Greenspring investment income (loss) (1)

( 44,075 ) 32,586 —

Investment income of Consolidated Funds 9,315 — —

Interest income 1,921 337 413

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Total other income (expense) ( 40,957 ) 60,219 9,680

Income before income tax 512,581 337,849 148,740

Income (loss) before income tax ( 41,454 ) 512,581 337,849

Income tax expense 3,821 28,300 23,256

Net income 484,281 314,593 144,785

Net income (loss) ( 45,275 ) 484,281 314,593

Net income attributable to non-controlling interests in subsidiaries 35,194 26,608 23,176

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

Net income attributable to StepStone Group Inc.

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

( 44,075 ) 32,586 —

Earnings per share of Class A common stock:

Net income (loss) attributable to non-controlling interests in the Partnership ( 19,772 ) 231,202 228,783

Net income attributable to redeemable non-controlling interests in Consolidated Funds 1,776 — —

Net income (loss) attributable to StepStone Group Inc.

$ ( 18,398 ) $ 193,885 $ 62,634

Net income (loss) per share of Class A common stock:

Basic $ ( 0.30 ) $ 3.89 $ 2.11

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StepStone Group Inc.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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2023 2022 2021

Net income $ 484,281 $ 314,593 $ 144,785

Net income (loss) $ ( 45,275 ) $ 484,281 $ 314,593

Other comprehensive income (loss):

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Total other comprehensive income (loss) ( 687 ) 1,694 1,375

Comprehensive income before non-controlling interests 485,975 315,968 144,574

Comprehensive income (loss) before non-controlling interests ( 45,962 ) 485,975 315,968

Comprehensive income attributable to non-controlling interests in subsidiaries 34,856 27,446 23,877

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

Comprehensive income attributable to StepStone Group Inc.

Comprehensive income (loss) attributable to non-controlling interests in legacy Greenspring entities ( 44,075 ) 32,586 —

Comprehensive income (loss) attributable to non-controlling interests in the Partnership ( 19,925 ) 231,609 229,339

Comprehensive income attributable to redeemable non-controlling interests in Consolidated Funds 1,776 — —

Comprehensive income (loss) attributable to StepStone Group Inc.

$ ( 18,594 ) $ 194,334 $ 62,752

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Balance at March 31, 2020 $ 216,051 $ — $ — $ — $ — $ 178 $ 20,738 $ — $ 236,967

Net income 131,916 — — — — — 12,869 — 144,785

Other comprehensive loss — — — — — ( 105 ) ( 106 ) — ( 211 )

Contributed capital 28 — — — — — — — 28

Equity-based compensation 1,915 — — — — — — — 1,915

Sale of non-controlling interests 110,753 — — — — — — — 110,753

Purchase of non-controlling interests ( 113,052 ) — — — — — — — ( 113,052 )

Distributions ( 43,935 ) — — — — — ( 8,978 ) — ( 52,913 )

Balance at March 31, 2020 216,051 — — — — 178 20,738 — 236,967

Net income prior to Reorganization and IPO 45,265 — — — — — 12,428 — 57,693

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

Net income (loss) — — — ( 18,398 ) — 35,194 ( 44,075 ) ( 19,772 ) ( 47,051 )

Other comprehensive loss — — — — ( 196 ) ( 338 ) — ( 153 ) ( 687 )

Contributed capital — — — — — 142 13,387 37 13,566

Equity-based compensation — — 8,889 — — 388 — 7,112 16,389

Distributions — — — — — ( 31,070 ) ( 11,134 ) ( 78,439 ) ( 120,643 )

Dividends declared — — — ( 50,787 ) — — — — ( 50,787 )

Vesting of RSUs, net of shares withheld for employee taxes — — ( 1,524 ) — — — — ( 1,219 ) ( 2,743 )

Exchange of Class B and Class C units for Class A common stock and redemption of corresponding Class B common shares 2 ( 2 ) ( 1 ) — — — — — ( 1 )

Equity reallocation between controlling and non-controlling interests — — 19,546 — ( 1 ) 1 — ( 19,546 ) —

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

— — ( 3,586 ) — — — — — ( 3,586 )

Balance at March 31, 2023 $ 63 $ 46 $ 610,567 $ 160,430 $ 461 $ 36,380 $ 152,658 $ 668,182 $ 1,628,787

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

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Cash flows from operating activities

Net income $ 484,281 $ 314,593 $ 144,785

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ ( 45,275 ) $ 484,281 $ 314,593

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 47,443 26,977 5,495

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 carried interest allocations and investment (income) loss 261,354 ( 603,513 ) ( 444,893 )

Unrealized legacy Greenspring carried interest allocations and investment (income) loss 577,484 ( 119,698 ) —

Unrealized performance fee-related compensation ( 119,039 ) 312,903 215,508

Unrealized legacy Greenspring performance fee-related compensation ( 526,837 ) 94,944 —

Unrealized gains on marketable securities — — ( 298 )

Write-off / amortization of deferred financing costs 236 3,856 796

Amortization of deferred financing costs 472 236 3,856

Equity-based compensation 24,940 13,996 7,899

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Fair value adjustment for acquisition-related contingent consideration 9,361 9,600 1,608

Gain on remeasurement of lease liabilities ( 2,709 ) — —

Other non-cash activities 40 ( 3,034 ) 70

Adjustments to reconcile net income (loss) to net cash provided by operating activities of Consolidated Funds:

Unrealized investment income of Consolidated Funds ( 9,312 ) — —

Purchases of investments of Consolidated Funds ( 21,287 ) — —

Proceeds from sale of investments of Consolidated Funds 4 — —

Changes in operating assets and liabilities:

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Accrued compensation and benefits 11,160 ( 1,445 ) 23,439

Accrued carried interest-related compensation ( 8,525 ) 12,365 1,974

Due to affiliates ( 765 ) ( 2,259 ) 872

Lease right-of-use assets, net and lease liabilities 2,006 ( 413 ) —

Changes in operating assets and liabilities of Consolidated Funds:

Other assets and receivables ( 772 ) — —

Other liabilities and payables 566 — —

Net cash provided by operating activities 151,183 214,281 149,299

Cash flows from investing activities

Purchases of marketable securities — — ( 27,694 )

Proceeds from sales and maturities of marketable securities — — 71,345

Contributions to investments ( 21,637 ) ( 24,571 ) ( 14,047 )

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Other investing activities 1 35 7

Net cash provided by (used in) investing activities ( 210,241 ) ( 11,166 ) 35,809

Net cash used in investing activities ( 30,807 ) ( 210,241 ) ( 11,166 )

See accompanying notes to consolidated financial statements.

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Dividends paid to common stockholders ( 49,973 ) ( 23,874 ) ( 2,047 )

Payments for employee taxes related to net settlement of RSUs ( 2,743 ) — —

Payments to related parties under Tax Receivable Agreements ( 5,981 ) ( 787 ) —

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

Cash flows from financing activities of Consolidated Funds:

Contributions from redeemable non-controlling interests in Consolidated Funds 22,754 — —

Net cash used in financing activities ( 108,021 ) ( 70,439 ) ( 45,306 )

7 unchanged sentences

Non-cash operating, investing, and financing activities:

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

Accrued dividends $ 814 $ 803 $ 180

2 unchanged sentences

Establishment of lease liabilities in exchange for lease right-of-use assets 77,347 79,688 —

Remeasurement of lease liabilities ( 18,166 ) — —

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

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Restricted cash 955 1,063 3,977

Cash and cash equivalents of Consolidated Funds 25,997 — —

Total cash, cash equivalents and restricted cash $ 129,517 $ 117,449 $ 183,863

See accompanying notes to consolidated financial statements.

Table of Cont ents

StepStone Group Inc.

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The company was formed for the purpose of completing an initial public offering (“IPO”) in order to conduct the business of StepStone Group LP (the “Partnership”) as a publicly-traded entity.

As of September 18, 2020, in connection with the Reorganization discussed below, SSG became the sole managing member of StepStone Group Holdings LLC (the “General Partner”), the general partner of the Partnership.

SSG is the sole managing member of StepStone Group Holdings LLC (the “General Partner”), the general partner of the Partnership.

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.

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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.

Table of Cont ents

• 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.

StepStone Group Inc.

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

• 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 certain members of senior management.

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As a result, the consolidated financial statements for periods prior to the Reorganization and IPO are the consolidated financial statements of the Partnership as the predecessor to SSG for accounting and reporting purposes.

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”).

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

In connection with the Greenspring acquisition, 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, with each such unit exchangeable into one share of Class A common stock, subject to certain adjustments and restrictions.

See notes 14 and 15 for more information.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

(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.

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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 unpaid realized carried interest-related compensation that were previously reported within accrued carried interest-related compensation have been presented within accrued compensation and benefits in the consolidated balance sheets.

In addition, payments to related parties under Tax Receivable Agreements has been presented separately within cash flows from financing activities in the consolidated statements of cash flows, and was previously included within due to affiliates within cash flows from operating activities.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

Notes to Consolidated Financial Statements

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

The Company provides investment advisory services to the StepStone Funds, which have third-party clients.

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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.

The Company has determined that certain of its operating subsidiaries, StepStone Group Real Assets LP (“SRA”), StepStone Group Real Estate LP (“SRE”) and Swiss Capital Alternative Investments AG (“Swiss Capital”), are VIEs, and that the Company is the primary beneficiary of each entity because it has a controlling financial interest in each entity;

The Company does not consolidate these StepStone Funds because it is not the primary beneficiary of those funds, primarily because it does not hold an interest in those funds that is considered more than insignificant and its fee arrangements are considered customary and commensurate.

The Company has determined that certain of its operating subsidiaries, StepStone Group Real Assets LP (“SRA”), StepStone Group Real Estate LP (“SRE”), Swiss Capital Alternative Investments AG (“Swiss Capital”), and StepStone Group Private Wealth LLC (“SPW”) and certain StepStone Funds are VIEs, and that the Company is the primary beneficiary of each entity because it has a controlling financial interest in each entity;

accordingly, the Company consolidates these entities.

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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”).

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As a result, the Company consolidates these entities.

The Company and its subsidiaries manages or controls certain entities that constitute client investment funds that have been consolidated in the accompanying consolidated financial statements (“Consolidated Funds”).

Including the results of the Consolidated Funds increases the reported amounts of the assets, liabilities, expenses and cash flows in the accompanying consolidated financial statements, and amounts related to economic interests held by third-party investors are reflected as redeemable non-controlling interests in Consolidated Funds.

The revenues earned by the Company as investment manager of the Consolidated Funds are eliminated in consolidation and generally have no direct effect on the net income attributable to SSG or to Stockholders' Equity.

Non-Controlling Interests

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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

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.

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.

Redeemable non-controlling interests in Consolidated Funds represent the economic interests in the Consolidated Funds which are not held by SSG, but are held by the client investors in the funds.

These interests are presented as redeemable non-controlling interests in Consolidated Funds within the consolidated balance sheets, outside of permanent capital as the investors in these funds generally have the right to withdraw their capital, subject to the terms of the respective contractual agreements.

Redeemable non-controlling interests in Consolidated Funds are allocated a share of income or loss in the respective fund in proportion to their relative ownership interests, after consideration of contractual arrangements that govern allocations of income or loss.

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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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.

In 2022, financial markets experienced increased volatility amid rising interest rates, slowing economic growth, persistently high inflation and the ongoing Russia-Ukraine conflict.

Central banks around the world pursued monetary policy tightening in an effort to bring down inflation to target rates, stoking recession fears.

In the first quarter of 2023, signs of slowing inflation coupled with a strong labor market contributed to a rebound in financial markets despite the banking system volatility as recession fears receded in anticipation that interest rates may not rise as much as previously expected.

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

The Company’s results and the overall industry results have been and may continue to be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which have resulted in, and may continue to result in, delayed or decreased management fees.

Further, fund managers have been unable or less able to profitably exit existing investments, such conditions have resulted in, and may continue to 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.

7 unchanged sentences

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.

2 unchanged sentences

Due from Affiliates

Due from affiliates primarily relates to 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.

See note 13 for further disclosure of related party transactions.

16 unchanged sentences

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

Table of Cont ents

StepStone Group Inc.

1 unchanged sentence

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

See note 6 for additional details regarding the fair value of the Company’s contingent consideration obligations balance and note 9 for additional details regarding the fair value of the Company’s revolving credit facility balance.

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

7 unchanged sentences

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

Investments of Consolidated Funds

The Company’s Consolidated Funds are investment companies under GAAP and reflect their investments at estimated fair value.

The Company has retained the specialized investment company accounting for the Consolidated Funds under GAAP.

Investments of the Consolidated Funds are recorded at fair value and the unrealized appreciation (depreciation) in fair value is recognized in the consolidated statements of income.

In addition, the Consolidated Funds do not consolidate their majority-owned and controlled investments in underlying portfolio companies.

StepStone Group Inc.

7 unchanged sentences

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 right-of-use (“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.

19 unchanged sentences

These transaction gains and (losses) totaled $( 1.6 ) million, $( 1.1 ) million and $ 0.6 million for the years ended March 31, 2023, 2022 and 2021, respectively.

Table of Cont ents

StepStone Group Inc.

27 unchanged sentences

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.

24 unchanged sentences

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.

9 unchanged sentences

incentive fees and carried interest allocations, as described below.

Incentive fees are generally calculated as a percentage of the profits (up to 10 %) earned in respect of certain accounts for which the Company is the investment adviser, subject to the achievement of minimum return levels or performance benchmarks.

Incentive fees are generally calculated as a percentage of the profits (up to 15 %) earned in respect of certain accounts, including certain permanent capital vehicles, for which the Company is the investment adviser, subject to the achievement of minimum return levels or performance benchmarks.

Incentive fees are a form of variable consideration and represent contractual fee arrangements in the Company’s contracts with its customers.

10 unchanged sentences

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

Table of Cont ents

StepStone Group Inc.

20 unchanged sentences

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

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.

4 unchanged sentences

Forfeitures of equity-based awards are recognized as they occur.

Awards classified as liabilities are remeasured at the end of each reporting period until settlement.

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

14 unchanged sentences

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.

Notes to Consolidated Financial Statements

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

Other Income (Expense)

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

Investment income (loss) primarily represents the share of earnings (losses) 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.

4 unchanged sentences

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

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Legacy Greenspring investment income (loss) represents the share of earnings (losses) 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.

2 unchanged sentences

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

Beginning in the quarter ended December 31, 2022, interest income includes amounts associated with the Consolidated Funds.

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.

1 unchanged sentence

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

Beginning in the quarter ended December 31, 2022, other income (loss) includes amounts associated with the Consolidated Funds.

SSG is a corporation for U.S.

12 unchanged sentences

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.

8 unchanged sentences

This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

The Company is subject to the provisions of ASC Subtopic 740-10, Accounting for Uncertainty in Income Taxes .

4 unchanged sentences

See note 11 for more information.

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

Tax Receivable Agreements

4 unchanged sentences

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

3 unchanged sentences

Foreign currency translation adjustments $ 280 $ 331

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

Unrealized gain on defined benefit plan, net 181 327

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, 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.

The Company’s chief operating decision maker, who is the Company’s chief executive officer, 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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Concentrations of Risk

1 unchanged sentence

The majority of the Company’s cash, cash equivalents and restricted cash is held in large, high credit quality financial institutions.

Substantially all cash amounts on deposit with these large financial institutions exceed federally insured limits;

however, based upon an assessment of the financial condition and the reputations of these financial institutions, management believes that the Company’s exposure to credit risk is remote.

Substantially all cash amounts on deposit with these large financial institutions exceeded federally insured limits at March 31, 2023 and 2022.

The Company actively monitors its banking relationships and periodically performs an assessment of the financial condition and the reputations of these financial institutions.

Based on these results, management believes that the Company’s exposure to credit risk is remote.

The concentration of credit risk related to fees receivable is generally reduced by the relatively short payment terms extended to the Company’s clients.

3 unchanged sentences

Recent Accounting Pronouncements

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

The Company considers the applicability and impact of all Accounting Standards Updates (“ASU”) 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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which amends current guidance to provide optional practical expedients and exceptions, if certain criteria are met, for applying GAAP to contracts, hedging relationships and other transactions that are affected by the reference rate reform.

The expedients and exceptions in this update apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”).

Initially the update did not apply to contract modifications or hedging relationships entered into after December 31, 2022, but in December 2022, the FASB issued ASU 2022-06, which defers the sunset date for applying reference rate reform relief in ASC 848 to December 31, 2024.

This guidance is effective for adoption anytime after March 12, 2020, but must be adopted prior to December 31, 2024.

The Company is currently evaluating the impact on the consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The Company adopted this guidance on April 1, 2022 under the modified retrospective approach.

The Company has changed its accounting policy to reflect the updated equity classification of contracts in an entity’s own equity, and has accounted for freestanding instruments that are indexed to and settled in the Company’s own equity at fair value with changes in fair value recognized in earnings.

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

StepStone Group Inc.

1 unchanged sentence

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

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

Simplifying the Accounting for Income Taxes , which modifies ASC 740 to simplify the accounting for income taxes.

The guidance, among other changes, (i) provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and (ii) provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction.

This guidance is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted.

The Company adopted this guidance on April 1, 2021.

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

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

2 unchanged sentences

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.

The Company adopted this guidance on April 1, 2022.

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

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

4 unchanged sentences

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 guidance had no 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 $ 9,663 $ 11,593 $ 5,474

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,

3 unchanged sentences

Total carried interest allocations $ ( 122,253 ) $ 786,569 $ 496,780

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Year Ended March 31,

2 unchanged sentences

Focused commingled funds (1)

( 452,163 ) 187,106 —

Total legacy Greenspring carried interest allocations $ ( 452,163 ) $ 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.

(1) The years ended March 31, 2023 and 2022 reflect the net effect of gross realized carried interest allocations of $ 74.7 million and $ 92.2 million, respectively, and the reversal of such amounts in unrealized carried interest allocations for the period.

The decrease in carried interest allocations and legacy Greenspring carried interest allocations for the year ended March 31, 2023 as compared to the year ended March 31, 2022 was primarily attributable to net unrealized depreciation in the fair value of certain underlying fund investments.

The increase in carried interest allocations for the year ended March 31, 2022 as compared to the year ended March 31, 2021 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.

10 unchanged sentences

During the year ended March 31, 2023, the Company had recognized $ 4.9 million as revenue from amounts included in the deferred revenue balance as of March 31, 2022.

Table of Cont ents

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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 (e.g., Swiss Capital, SRA and SRE) and legacy Greenspring general partner entities.

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

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

3 unchanged sentences

In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities, except for certain entities in which there could be a clawback of previously distributed carried interest.

As of March 31, 2022, no material amounts previously distributed have been accrued for clawback liabilities.

As of March 31, 2023 and 2022, no material amounts previously distributed have been accrued for clawback liabilities.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Unconsolidated VIEs

9 unchanged sentences

Maximum exposure to loss $ 124,772 $ 112,043

The Company’s investments consist of equity method investments primarily related to investments in the StepStone Funds for which it serves as general partner or managing member but does not have a controlling financial interest.

The Company’s equity interest typically does not exceed 1% in each fund.

The Company’s investments consist of equity method investments primarily related to (i) investments in the StepStone Funds for which it serves as general partner or managing member but does not have a controlling financial interest and (ii) investments of Consolidated Funds.

The Company’s equity interest in its equity method investments in the StepStone Funds typically does not exceed 1% in each fund.

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 the Consolidated Funds is recorded in investment income of Consolidated Funds.

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.

Notes to Consolidated Financial Statements

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

The Company’s equity method investments consist of the following:

1 unchanged sentence

Investments in funds (1)

115,187 107,045

Accrued carried interest allocations 1,227,173 1,480,515

Legacy Greenspring investments in funds and accrued carried interest allocations (2)

770,652 1,334,581

Total equity method investments 2,113,012 2,922,141

Total investments $ 2,143,607 $ 2,922,141

_______________________________

(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:

(1) The Company’s investments in funds was $ 147.5 million as of March 31, 2023.

The consolidation of the Consolidated Funds results in the elimination of the Company’s investments in such funds.

No funds were consolidated as of March 31, 2022.

(2) Reflects investments in funds of $ 152.7 million and $ 194.5 million and carried interest allocations of $ 618.0 million and $ 1,140.1 million as of March 31, 2023 and 2022, respectively.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Equity Method Investments

The Company recognized equity method income (loss) of the following:

Year Ended March 31,

1 unchanged sentence

Carried interest allocations $ ( 122,253 ) $ 786,569 $ 496,780

Investment income 26,160 16,407 6,926

Investment income (loss) ( 2,509 ) 26,160 16,407

Legacy Greenspring carried interest allocations ( 452,163 ) 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.

Legacy Greenspring investment income (loss) ( 44,075 ) 32,586 —

Total equity method income (loss) $ ( 621,000 ) $ 1,032,421 $ 513,187

The decrease in carried interest allocations for the year ended March 31, 2023 as compared to the prior year periods was primarily attributable to unrealized depreciation 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.

As of March 31, 2023 and 2022, 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 24 % and 25 %, respectively, of the total accrued carried interest allocations balance as of those dates.

As of March 31, 2023 and 2022, the Company’s investments in two and three, respectively, commingled funds each individually represented 10% or more of the total legacy Greenspring accrued carried interest allocations balance, and in the aggregate represented approximately 24 % and 39 %, respectively, of the total legacy Greenspring accrued carried interest allocations balances as of those dates.

Of the total accrued carried interest allocations balance as of March 31, 2023 and 2022, $ 644.5 million and $ 763.6 million, respectively, 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, 2023 and 2022, $ 618.0 million and $ 1,140.1 million, respectively, were 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 $ 152.7 million and $ 194.5 million, respectively, are 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.

11 unchanged sentences

Expenses ( 446,413 ) ( 382,704 ) ( 224,611 )

Net realized and unrealized gain on investments 16,868,454 6,369,649 2,572,750

Net realized and unrealized gain (loss) on investments ( 4,966,901 ) 16,868,454 6,369,649

Income tax expense ( 12,261 ) ( 10,875 ) ( 5,994 )

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

Net income (loss) $ ( 5,310,483 ) $ 16,559,154 $ 6,185,933

Investments of Consolidated Funds

The Company consolidates funds and entities when it is deemed to hold a controlling financial interest.

Beginning in the quarter ended December 31, 2022, the Company consolidated one investment fund for which it is deemed to have a controlling financial interest.

The activity of the Consolidated Funds is reflected within the consolidated financial statements.

Investments held by the Consolidated Funds are summarized below:

Fair Value as of March 31, Percentage of Total Investments as of March 31,

2023 2022 2023 2022

Investments of Consolidated Funds:

Partnership and LLC interests (cost of $ 21.3 million and $ — million as of March 31, 2023 and 2022, respectively)

$ 30,595 $ — 100 % — %

Total investments of Consolidated Funds $ 30,595 $ — 100 % — %

As of March 31, 2023 and 2022, no individual investment had a fair value greater than 5% of the Company’s total assets.

The following table summarizes net gains from investment activities of the Consolidated Funds:

Year Ended March 31, 2023

Net Realized Gains on Investments Net Unrealized Gains on Investments

Investments of Consolidated Funds:

Partnership and LLC interests

Total investments of Consolidated Funds $ 3 $ 9,312

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Fair Value Measurements

The Company measures certain liabilities at fair value on a recurring basis.

The following tables provide details regarding the classification of these liabilities within the fair value hierarchy as of the dates presented:

The Company measures certain assets and liabilities at fair value on a recurring basis.

The following tables provide details regarding the classification of these assets and liabilities within the fair value hierarchy as of the dates presented:

Financial Instruments of the Company

As of March 31, 2023

9 unchanged sentences

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the years ended March 31, 2023 and 2022.

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:

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

Year Ended March 31,

Contingent Consideration Liabilities 2022 2021

Contingent consideration obligations 2023 2022

Balance, beginning of year:

$ 28,025 $ 1,541

(Gain) loss on change in fair value

Change in fair value

( 641 ) ( 885 )

1 unchanged sentence

$ 36,745 $ 28,025

Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date

Changes in unrealized losses included in earnings related to financial liabilities still held at the reporting date

$ 9,361 $ 9,600

Contingent Consideration

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

5 unchanged sentences

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.

As a result, the contingent consideration liability is recorded net of the fair value of amounts payable to certain employees.

Financial Instruments of Consolidated Funds

As of March 31, 2023

Level I Level II Level III Total

Partnership and LLC interests

$ — $ — $ 6,901 $ 6,901

Total assets $ — $ — $ 6,901 $ 6,901

Investment Funds

The Company generally values its investment funds, which are organized as partnership and LLC interests, using the NAV per share equivalent calculated by the investment manager as a practical expedient in determining an independent fair value.

The Company does not categorize within the fair value hierarchy investments where fair value is measured using the net asset value per share practical expedient.

As of March 31, 2023, investments with a combined fair value of $ 23.7 million are excluded from presentation in the fair value hierarchy as the fair value of these investments were measured at net asset value.

As of March 31, 2023, investments with a combined fair value of $ 6.9 million were classified as level III investments that were purchased during fiscal 2023.

There were no unrealized gains or losses related to these investments as of March 31, 2023.

The significant unobservable input used to value these investments are the discounts to recent transaction prices.

For these investments, there were no changes in fair value hierarchy levels during the year ended March 31, 2023.

There were no financial instruments held by Consolidated Funds as of March 31, 2022.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Property and Equipment

9 unchanged sentences

Depreciation expense related to property and equipment totaled $ 4.0 million, $ 2.5 million and $ 2.2 million for the years ended March 31, 2023, 2022 and 2021, 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

9 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:

3 unchanged sentences

Total $ 354,645

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.

1 unchanged sentence

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

The carrying value of goodwill was $ 580.5 million as of March 31, 2023 and 2022.

The Company determined there was no indication of goodwill impairment as of March 31, 2023 and 2022.

Debt Obligations

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.

The Company is party to a credit agreement with various lenders (the “Credit Agreement”) that 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, 2023, the Company had $ 98.4 million outstanding on the Revolver, net of debt issuance costs.

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

The Company’s debt obligations consist of the following:

13 unchanged sentences

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.

11 unchanged sentences

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.

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.

As of March 31, 2023, the Company was in compliance with the total net leverage ratio and minimum fee-earning assets under management covenants.

2 unchanged sentences

As of March 31, 2023, the Company had outstanding letters of credit totaling $ 7.8 million.

In April 2023, the Company amended the Credit Agreement such that any request for borrowing of, continuation of, or conversion to a Eurocurrency Loan, as applicable, shall be deemed to be a request for borrowing of, continuation of, or conversion to, as applicable, a loan bearing interest at the adjusted term Secured Overnight Financing Rate (“SOFR”).

All Eurocurrency Loans outstanding as of March 31, 2023 shall continue to bear interest at the adjusted LIBOR Rate (as defined in the Credit Agreement) and remain outstanding as Eurocurrency Loans until the expiration of the current interest period (as defined in the Credit Agreement).

Equity-Based Compensation

2020 Long-Term Incentive Plan

In connection with the IPO, the Company adopted the 2020 Long-Term Incentive Plan (“LTIP”), which allows for the granting of stock options, stock appreciation rights, restricted stock awards, RSUs and performance stock awards to employees, directors and consultants.

The Company has adopted its 2020 Long-Term Incentive Plan (“LTIP”), which allows for the granting of stock options, stock appreciation rights, restricted stock awards, RSUs and performance stock awards to employees, directors and consultants.

As of March 31, 2023, there were 17,644,444 shares of Class A common stock available to grant under the LTIP.

11 unchanged sentences

Balance as of March 31, 2023 1,775,732 $ 22.46

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 weighted-average grant-date fair value of RSUs granted during the years ended March 31, 2023, 2022, and 2021 was $ 28.97 , $ 35.18 , and $ 18.53 , respectively.

The total fair value as of the respective vesting dates of RSUs vested during the years ended March 31, 2023 and 2022 was $ 16.5 million and $ 27.5 million.

No RSUs vested during the year ended March 31, 2021.

In November 2022, one the Company’s non-wholly owned subsidiaries issued new partnership interests to certain employees with a grant date fair value of $ 6.1 million, vesting over six years .

The issuance did not impact the Company’s fully diluted interest in the subsidiary.

Unvested Partnership Units

6 unchanged sentences

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.

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.

The Class B2 Interests are classified as equity-based 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 in the Company’s consolidated balance sheets.

As of March 31, 2023, there were 2,566,566 Class B2 units outstanding.

1 unchanged sentence

As of March 31, 2023, 748,582 Class B2 units were unvested and 1,817,984 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.

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:

Year Ended March 31,

2022 2021 2020

Domestic income before income tax $ 471,247 $ 307,396 $ 130,380

Foreign income before income tax 41,334 30,453 18,360

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

Table of Cont ents

As of March 31, 2023, $ 41.1 million of unrecognized non-cash compensation expense in respect of equity-based awards remained to be recognized over a weighted-average period of approximately 3.8 years.

The Company recognized tax benefits related to equity-based awards of $ 1.8 million and $ 7.4 million for the years ended March 31, 2023 and 2022, respectively.

No tax benefits were recognized for the year ended March 31, 2021.

Liability Classified Awards

In November 2022, the Company issued a profits interest in SPW to certain employees of the SPW team and concurrently entered into an option agreement which provides that, (i) StepStone has the right to acquire the profits interest at the end of any fiscal quarter after June 30, 2027, in exchange for payment of a call price and (ii) the SPW management team, through an entity named CH Equity Partners, LLC (formerly known as Conversus Holdings LLC), has the right to put the profits interest to StepStone on June 30, 2026 or at the end of any fiscal quarter thereafter, in exchange for payment of a put price.

The applicable call or put price is, in certain circumstances, subject to an earn-out or earn-down.

The call or put price will be payable in cash unless the Company elects to pay a portion of the consideration in units of the Partnership, each to be exchangeable into shares of the Company’s Class A common stock, and, in either case, rights under one or more tax receivable agreements.

StepStone Group Inc.

1 unchanged sentence

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

The Company accounted for the profits interest and option agreement as a single unit of account as a liability classified equity-based award.

There are no vesting provisions or service requirements related to the award.

For the year ended March 31, 2023, the Company recognized $ 8.6 million of expense related to the fair value of the liability classified awards within equity-based compensation expense in the consolidated statements of income.

For the years ended March 31, 2023, 2022 and 2021, no amounts were paid related to settlement for liability classified awards.

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

Year Ended March 31,

2023 2022 2021

Domestic income (loss) before income tax $ ( 102,560 ) $ 471,247 $ 307,396

Foreign income before income tax 61,106 41,334 30,453

Total income (loss) before income tax $ ( 41,454 ) $ 512,581 $ 337,849

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

10 unchanged sentences

Total income tax expense $ 3,821 $ 28,300 $ 23,256

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

A reconciliation of the U.S.

3 unchanged sentences

Federal tax at statutory rate 21.0 % 21.0 % 21.0 %

State and local income tax (net of federal tax benefit) 0.6 0.6 0.7

State and local income tax 0.8 0.8 0.6

Income passed through to limited partners ( 13.6 ) ( 11.9 ) ( 15.7 )

1 unchanged sentence

Valuation allowance 4.7 ( 5.3 ) 0.0

Return to provision ( 3.7 ) ( 0.1 ) 0.0

Other 0.1 ( 0.2 ) 0.0

Effective tax rate ( 9.2 ) % 5.5 % 6.9 %

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.

Consequently, the effective tax rate can vary from period to period.

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 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.

Notes to Consolidated Financial Statements

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

The Company’s overall effective tax rate in each of the periods above is less than the statutory rate primarily because 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 following table presents the components of the Company’s deferred income tax assets and liabilities:

9 unchanged sentences

Net deferred tax assets $ 44,005 $ 26,337

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.

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 2023, the Company recorded an overall increase to deferred tax assets as of March 31, 2023 of $ 6.5 million, and a net decrease in the valuation allowance of $ 0.2 million.

Additionally, in connection with the exchange transactions, the Company recorded a corresponding Tax Receivable Agreements liability of $ 8.5 million, representing 85% of the incremental net cash tax savings for the Company due to the exchanging limited partners.

The Company made payments of $ 6.0 million and $ 0.8 million during the years ended March 31, 2023 and 2022, respectively, under the Tax Receivable Agreements.

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

As of March 31, 2023, the Company’s total Tax Receivable Agreements liability was $ 199.3 million.

See notes 13 and 14 for more information.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

4 unchanged sentences

Balance at March 31, 2021 $ 30,537

Income tax decrease ( 27,413 )

Equity decrease ( 5,006 )

Equity increase 15,304

1 unchanged sentence

Income tax decrease ( 1,975 )

Equity decrease ( 5,006 )

Equity increase 905

1 unchanged sentence

As of March 31, 2023, 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.

7 unchanged sentences

Earnings Per Share

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.

Basic and diluted earnings per share of Class A common stock are presented for the years ended March 31, 2023 and 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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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:

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

Year Ended March 31, 2023 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.

Net income (loss) attributable to StepStone Group Inc.

$ ( 18,398 ) $ 193,885 $ 62,634

1 unchanged sentence

Incremental income from assumed vesting and exchange of Class B2 units — 7,689 3,923

Net income attributable to StepStone Group Inc.

Net income (loss) attributable to StepStone Group Inc.

$ ( 18,398 ) $ 205,617 $ 68,411

5 unchanged sentences

61,884,671 53,600,250 33,274,804

Earnings per share of Class A common stock

Net income (loss) per share of Class A common stock:

$ ( 0.30 ) $ 3.89 $ 2.11

1 unchanged sentence

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.

Table of Cont ents

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 46,420,141 Class B units and 2,514,085 Class C units of the Partnership outstanding as of March 31, 2023, 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.

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.

As the Company was in a net loss position for the year ended March 31, 2023, the calculation of diluted earnings per share excludes potential shares of Class A common stock for 1,775,732 outstanding RSUs, 2,566,566 Class B2 units and 23,418 Class B units issuable pursuant to anti-dilution rights in connection with the vesting of Class B2 units that are convertible 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 $( 122.3 ) million, $ 786.6 million and $ 496.8 million for the years ended March 31, 2023, 2022 and 2021, respectively.

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.

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, as set forth below.

Legacy Greenspring carried intere st allocation revenues earned from certain legacy Greenspring funds for which the Company has no direct economic interests totaled $( 452.2 ) million and $ 187.1 million for the years ended March 31, 2023 and 2022, respectively.

There were no legacy Greenspring carried interest allocation revenues for the year ended March 31, 2021, which was prior to the date of the Greenspring acquisition.

As of March 31,

1 unchanged sentence

Amounts receivable from employees 7,016 342

Amounts receivable from loans 13,493 —

Total due from affiliates $ 54,322 $ 19,369

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.

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 the StepStone Funds and distributions payable to certain employee equity holders of consolidated subsidiaries, as set forth below.

As of March 31,

3 unchanged sentences

Total due to affiliates $ 205,424 $ 199,355

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

The Company made payments of $ 6.0 million and $ 0.8 million during the years ended March 31, 2023 and 2022, respectively, 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.

1 unchanged sentence

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

Stockholders’ Equity and Redeemable Interests

Stockholders’ Equity

6 unchanged sentences

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 Company 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, 2022:

1 unchanged sentence

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

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

Class A common stock issued in exchange for Class B Partnership units 729,532 ( 729,532 )

Class A common stock issued in exchange for Class C Partnership units 414,739 —

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

Class A common stock issued for vesting of RSUs, net of shares withheld for employee taxes 549,214 —

March 31, 2023 62,834,791 46,420,141

1 unchanged sentence

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)

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.

In December 2022, the Company issued 296,756 shares of Class A common stock to certain limited partners of the Partnership in exchange for 296,756 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.

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.

On the same date, the Company also issued 414,739 shares of Class A common stock to certain limited partners of the Partnership in exchange for 414,739 Class C units in accordance with the elective exchange notices submitted pursuant to an agreement with the Class C limited partners (the “Class C Exchange Agreement”) to allow for exchange of Class C units of the Partnership to shares of Class A common stock of the Company on a one-for-one basis, subject to certain restrictions.

In September 2022, the Company issued 175,000 shares of Class A common stock to certain limited partners of the Partnership in exchange for 175,000 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.

In June 2022, the Company issued 257,776 shares of Class A common stock to certain limited partners of the Partnership in exchange for 257,776 Class B units in accordance with the elective exchange notices submitted pursuant to the Class B Exchange Agreement.

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

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”).

The Company received approximately $ 110.8 million in net proceeds from the sale of equity to institutional investors and used all of the proceeds to repurchase an equal number of equity interests from certain existing partners of the Company.

In addition, the Company repurchased additional Class D partnership interests from a former employee for $ 2.3 million, which will be paid to the former employee at such time carried interest allocations are realized by the Company.

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.

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

Class A, Class A1, Class A2, Class B, Class C and Class D.

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

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

1 unchanged sentence

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.

Table of Cont ents

StepStone Group Inc.

14 unchanged sentences

Total dividends paid in FY2022 $ 0.44

First quarter June 30, 2022 $ 0.20

Second quarter September 15, 2022 0.20

Third quarter December 15, 2022 0.20

Fourth quarter March 15, 2023 0.20

Total dividends paid in FY2023 $ 0.80

_______________________________

2 unchanged sentences

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

Redeemable Non-Controlling Interests

The following table summarizes the activities associated with the redeemable non-controlling interests in Consolidated Funds:

Year Ended March 31, 2023

Beginning balance $ —

Contributions 22,754

Net income 1,776

Ending balance $ 24,530

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Business Combinations

2 unchanged sentences

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 transaction agreement also provides for the payment of an earn-out of 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 acquisition of Greenspring expanded the Company’s leadership in private markets solutions, providing added scale in venture capital and growth equity, and offering clients expanded access to the global innovation economy.

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:

26 unchanged sentences

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.

1 unchanged sentence

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

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 is being 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 deductible for tax purposes.

The amount of revenues and net income of Greenspring (including amounts attributable to legacy Greenspring entities) from the acquisition date of September 20, 2021 to March 31, 2022 were approximately $ 230 million and $ 54 million, respectively.

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:

7 unchanged sentences

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:

3 unchanged sentences

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

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.

4 unchanged sentences

• 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;

7 unchanged sentences

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.

The Company leases offices in 25 cities in North America, South America, Europe, Asia and Australia, and certain equipment subject to operating lease agreements expiring through 2039, some of which may include options to extend or terminate the lease.

As of March 31, 2023, 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:

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Operating lease cost (1)(2)

$ 10,983 $ 11,098

Variable lease cost 1,375 957

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

Table of Cont ents

StepStone Group Inc.

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

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.

(2) The year ended March 31, 2023 includes a gain of $ 2.7 million related to lease remeasurement adjustments due to a reduction in lease terms.

Occupancy expense related to office facility operating leases totaled $ 9.3 million for the year ended March 31, 2021.

Supplemental cash flow information related to leases was as follows:

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FY2027 14,362

FY2028 12,474

Thereafter 96,504

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As of March 31, 2023 and 2022, the Company, generally in its capacity as general partner or managing member of the StepStone Funds, had unfunded commitments totaling $ 88.7 million and $ 68.2 million, respectively.

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.

The $ 88.7 million and $ 68.2 million of unfunded commitments as of March 31, 2023 and 2022, respectively, excludes $ 50.6 million and $ 40.5 million, respectively, 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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Carried Interest Allocations

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As of March 31, 2023, the maximum amount of carried interest allocations (excluding legacy Greenspring carried interest allocations) attributable to the Company subject to contingent repayment was an estimated $ 264.1 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

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Subsequent Events

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.

On May 24, 2023, the Company announced a quarterly cash dividend of $ 0.20 per share of Class A common stock and a supplemental cash dividend of $ 0.25 per share of Class A common stock, both payable on June 30, 2023 to holders of record as of the close of business on June 15, 2023.

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