What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-05-24 compared with 2023-05-26 · 294 added, 263 removed, 1251 unchanged (31% of the section changed)

9 unchanged sentences

Report of Independent Registered Public Accounting Firm

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

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

Opinion on the Financial Statements

35 unchanged sentences

Report of Independent Registered Public Accounting Firm

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

To the Stockholders and the 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, 2024, based on the COSO criteria.

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.

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, 2024 and 2023, 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, 2024, and the related notes and our report dated May 24, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

38 unchanged sentences

131,858 30,595

$ 3,788,807 $ 3,497,403

Liabilities and stockholders’ equity

12 unchanged sentences

Redeemable non-controlling interests in Consolidated Funds 102,623 24,530

Redeemable non-controlling interests in subsidiaries 115,920 —

Stockholders’ equity:

61 unchanged sentences

( 75,157 ) ( 452,163 ) 187,106

Total performance fees 126,491 ( 564,753 ) 985,268

Total revenues 711,631 ( 67,574 ) 1,365,525

28 unchanged sentences

Net income attributable to redeemable non-controlling interests in Consolidated Funds 15,838 1,776 —

Net income attributable to redeemable non-controlling interests in subsidiaries 5,782 — —

Net income (loss) attributable to StepStone Group Inc.

25 unchanged sentences

Comprehensive income attributable to redeemable non-controlling interests in Consolidated Funds 15,838 1,776 —

Comprehensive income attributable to redeemable non-controlling interests in subsidiaries 5,782 — —

Comprehensive income (loss) attributable to StepStone Group Inc.

4 unchanged sentences

(in thousands)

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

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

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

Other comprehensive income prior to Reorganization and IPO — — — — — 335 350 — 685

Contributed capital prior to Reorganization and IPO 27 — — — — — — — 27

Equity-based compensation prior to Reorganization and IPO 723 — — — — — 2 — 725

Sale of non-controlling interests prior to Reorganization and IPO — — — — — — 3,308 — 3,308

Purchase of non-controlling interests prior to Reorganization and IPO — — — — — — ( 3,308 ) — ( 3,308 )

Distributions prior to Reorganization and IPO ( 50,424 ) — — — — — ( 13,161 ) — ( 63,585 )

Equity reallocation between controlling and non-controlling interests prior to Reorganization and IPO 252 — — — — — ( 252 ) — —

Effect of Reorganization and purchase of units in the Partnership ( 211,894 ) 9 73 23,432 — ( 513 ) — 188,893 —

Issuance of Class A common stock sold in IPO, net of underwriting discounts — 20 — 337,778 — — — — 337,798

Purchase of partnership interests with IPO net proceeds — — ( 7 ) ( 127,979 ) — — — — ( 127,986 )

Net income subsequent to Reorganization and IPO — — — — 62,634 — 10,748 183,518 256,900

Other comprehensive income subsequent to Reorganization and IPO — — — — — 118 351 221 690

Contributed capital subsequent to Reorganization and IPO — — — — — — 2,709 40 2,749

Equity-based compensation subsequent to Reorganization and IPO — — — 2,239 — — 12 4,923 7,174

Distributions subsequent to Reorganization and IPO — — — — — — ( 8,040 ) ( 26,051 ) ( 34,091 )

Dividends declared subsequent to Reorganization and IPO — — — — ( 2,227 ) — — — ( 2,227 )

Exchange of Class B units for Class A common stock and redemption of corresponding Class B common shares in connection with registered offering subsequent to Reorganization and IPO — 9 ( 9 ) ( 9 ) — — — — ( 9 )

Deferred offering costs — — — ( 3,611 ) — — — ( 7,610 ) ( 11,221 )

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

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

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

See accompanying notes to consolidated financial statements.

StepStone Group Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

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

14 unchanged sentences

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

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

Deferred tax effect resulting from equity transactions affecting ownership in the Partnership (1)

— — ( 55,293 ) — — — — — ( 55,293 )

9 unchanged sentences

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)

Deferred tax effect resulting from equity transactions affecting ownership in the Partnership (1)

— — ( 3,586 ) — — — — — ( 3,586 )

3 unchanged sentences

StepStone Group Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

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

Net income (loss) — — — 58,091 — 37,240 ( 9,087 ) 59,956 146,200

Other comprehensive loss — — — — ( 196 ) ( 328 ) — ( 151 ) ( 675 )

Contributed capital — — — — — — 12,460 43 12,503

Equity-based compensation — — 10,771 — — 674 — 8,236 19,681

Distributions — — — — — ( 39,573 ) ( 8,989 ) ( 57,768 ) ( 106,330 )

Dividends declared — — — ( 70,346 ) — — — — ( 70,346 )

Vesting of RSUs, net of shares withheld for employee taxes 1 — ( 392 ) — — — — ( 304 ) ( 695 )

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

Sale of non-controlling interests — — 851 — — 1,553 — 641 3,045

Equity reallocation between controlling and non-controlling interests — — 21,277 — 39 ( 2,881 ) — ( 18,435 ) —

Deferred tax effect resulting from equity transactions affecting ownership in the Partnership (1)

— — 132,560 — — — — — 132,560

Reclassification and adjustment of non-controlling interests in subsidiaries to redeemable equity at redemption value — — ( 465,339 ) ( 134,407 ) — ( 34,860 ) — ( 451,886 ) ( 1,086,492 )

Reclassification of non-controlling interests in subsidiaries from redeemable equity — — — — — 976,354 — — 976,354

Balance at March 31, 2024 $ 66 $ 45 $ 310,293 $ 13,768 $ 304 $ 974,559 $ 147,042 $ 208,514 $ 1,654,591

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

See accompanying notes to consolidated financial statements.

StepStone Group Inc.

Consolidated Statements of Cash Flows

15 unchanged sentences

Gain on remeasurement of lease liabilities ( 106 ) ( 2,709 ) —

Loss on sale of subsidiary 812 — —

Other non-cash activities 579 40 ( 3,034 )

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Cash flows from financing activities

Sale of non-controlling interests $ — $ — $ 3,308

Proceeds from capital contributions from non-controlling interests $ 43 $ 179 $ 83

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

Proceeds from sale of non-controlling interests 3,045 $ — —

Proceeds from revolving credit facility 50,000 35,000 185,000

2 unchanged sentences

Payment of deferred offering costs — — ( 1,732 )

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

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

19 unchanged sentences

Deferred tax effect resulting from transactions affecting ownership in the Partnership, including net amounts payable under Tax Receivable Agreements 132,560 ( 3,586 ) ( 55,293 )

Accrued deferred offering costs — — 1,079

Establishment of lease liabilities in exchange for lease right-of-use assets 5,501 77,347 79,688

Remeasurement of lease liabilities — ( 18,166 ) —

Issuance of note related to sale of subsidiary 8,436 — —

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

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

Reclassification and adjustment of non-controlling interests in subsidiaries to redeemable equity at redemption value 1,086,492 — —

Reconciliation of cash, cash equivalents and restricted cash:

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(“SSG”) was incorporated in the state of Delaware on November 20, 2019.

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.

The company was formed for the purpose of conducting the business of StepStone Group LP (the “Partnership”) as a publicly-traded entity.

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.

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

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

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

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

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

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

Reorganization

In connection with the IPO, the Company completed certain transactions as part of a corporate reorganization (the “Reorganization”), which are described below:

• SSG amended and restated its certificate of incorporation to, among other things, provide for Class A common stock and Class B common stock.

• The Partnership amended its limited partnership agreement to, among other things, provide for Class A units and Class B units.

• The General Partner amended and restated its limited liability company agreement to, among other things, appoint SSG as the sole managing member of the General Partner.

• SSG redeemed its 100 shares of common stock outstanding.

• The Partnership effectuated a series of transactions such that certain blocker entities in which certain pre-IPO institutional investors that held partnership units in the Partnership merged with and into SSG, with SSG surviving.

As a result of the mergers, the 100 % owners of the blocker entities acquired 9,112,500 shares of newly issued Class A common stock of SSG.

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

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

• 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.

Initial Public Offering and Greenspring Acquisition

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

The net proceeds from the offering totaled $ 337.8 million, net of underwriting discounts of $ 24.5 million and before offering costs of $ 9.7 million that were incurred by the Partnership.

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

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

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

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

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

4 unchanged sentences

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

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

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

5 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Use of Estimates

4 unchanged sentences

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

12 unchanged sentences

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.

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.

3 unchanged sentences

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;

The Company has determined that certain of its operating subsidiaries, StepStone Group Real Assets LP (“SRA”), StepStone Group Real Estate LP (“SRE”), StepStone Private Debt AG (former ly Swiss Capital Alternative Investments AG) (“SPD”), 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.

2 unchanged sentences

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”).

In connection with the acquisition of Greenspring Associates Inc.

and certain of its affiliates (“Greenspring”) that was completed on September 20, 2021 (“Greenspring Acquisition”), the Company, indirectly through its subsidiaries, became the sole and/or managing member of certain entities, each of which is the general partner of an investment fund (“legacy Greenspring general partner entities”).

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

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See note 14 for more information on ownership interests in the Company.

Non-controlling interests in subsidiaries represent the economic interests in SRA, SRE, and Swiss Capital (the variable interest entities included in the Company’s consolidated financial statements) held by third parties and employees in those entities.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Non-controlling interests in subsidiaries represent the economic interests in SRA, SRE, and SPD (the variable interest entities included in the Company’s consolidated financial statements) held by third parties and employees in those entities.

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

1 unchanged sentence

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

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

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

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.

3 unchanged sentences

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.

Notes to Consolidated Financial Statements

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

Redeemable non-controlling interests in subsidiaries represent the redeemable economic interests in SRA, SRE, and SPD held by third parties and employees in those entities that were established in connection with the Transaction Agreements as described in note 14.

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

Accounting for Differing Fiscal Periods

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Current Events

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.

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

In calendar 2023 and through the first quarter of 2024, most financial markets posted positive returns, despite inflation remaining elevated and ongoing concerns of a sustained period of higher interest rates, slowing economic growth and moderated job gains.

The Company is continuing to closely monitor developments related to inflation, rising interest rates, the ongoing Russia-Ukraine conflict, banking system volatility, Middle East conflicts and the geopolitical responses thereto, 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.

Further, fund managers have been unable or less able to exit existing investments profitably.

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.

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

Cash and Cash Equivalents of Consolidated Funds

Cash and cash equivalents held at the Consolidated Funds consist of cash and cash equivalents held by the Consolidated Funds, which, although not legally restricted, is not available to fund the general liquidity needs of the Company.

Fees and Accounts Receivable

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Due from Affiliates

1 unchanged sentence

See note 13 for further disclosure of related party transactions.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Fair Value Measurements

15 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.

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

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

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

StepStone Group Inc.

1 unchanged sentence

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

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.

12 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

9 unchanged sentences

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

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

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

See note 16 for more information.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Property and Equipment

12 unchanged sentences

Gains and losses resulting from foreign-currency transactions denominated in a currency other than an entity’s functional currency are reported in other income (loss) in the consolidated statements of income.

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

These transaction gains (losses) totaled $( 1.4 ) million, $( 1.6 ) million and $( 1.1 ) million for the years ended March 31, 2024, 2023 and 2022, respectively.

Business Combinations

10 unchanged sentences

There were no impairment charges related to the Company’s finite-lived intangible assets during the years ended March 31, 2024, 2023 and 2022.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Goodwill represents the excess amount of consideration transferred in a business combination above the fair value of the identifiable net assets.

12 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Management and Advisory Fees, Net

3 unchanged sentences

asset management services, advisory services and/or the arrangement of administrative services.

Management fees include income-based incentive fees, which are based on net investment income of certain funds that are regulated as a business development company (“BDC”).

Capital gains-based incentive fees from BDC funds are recognized as performance fees.

There have been no capital-gains based incentive fees recognized to date.

The Company recognizes revenues from asset management services and advisory services when control of the promised services is transferred to customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those services.

1 unchanged sentence

Focused commingled funds are structured as limited partnerships or limited liability companies with multiple clients, for which a subsidiary of the Company serves as the general partner or managing member.

The Company determined that the individual client or single limited partner or member is the customer with respect to SMAs and advisory clients, while the investment fund is generally considered to be the customer for arrangements with focused commingled funds.

The Company determined that the individual client or single limited partner or member is the customer with respect to SMAs and advisory clients.

Based on certain facts and circumstances specific to each individual fund structure, the Company has determined that for accounting purposes, either the StepStone Fund or the individual investors in the fund may be considered to be the customer for arrangements with focused commingled funds.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

When asset management services and the arrangement of administrative services are the performance obligations promised in a contract, the Company satisfies these performance obligations over time because the customer simultaneously receives and consumes the benefits of the services as they are performed.

12 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

For reimbursable employee travel costs and certain professional fees, the Company concluded it controls the services provided by its employees and other parties and, therefore, is acting as principal.

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

For reimbursable employee travel costs, the Company concluded it controls the services provided by its employees and, therefore, is acting as principal.

Accordingly, the Company records the reimbursement for these costs incurred on a gross basis – that is, as revenue in management and advisory fees, net and expense in general, administrative and other expenses in the consolidated statements of income.

For reimbursable costs incurred in connection with satisfying its performance obligations for administration services, the Company concluded it does not control the services provided by its employees and other parties and, therefore, is acting as agent.

For reimbursable costs incurred in connection with satisfying its performance obligations for administration services, the Company concluded it does not control the services provided by other third parties and, therefore, is acting as agent.

Accordingly, the Company records the reimbursement for these costs incurred on a net basis.

2 unchanged sentences

incentive fees and carried interest allocations, as described below.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

11 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

4 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

32 unchanged sentences

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

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

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

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

3 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.

Beginning in the quarter ended December 31, 2022, general, administrative and other includes costs associated with the Consolidated Funds.

Expenses of the Consolidated Funds have no impact on net income or loss attributable to the Company to the extent such expenses are borne by third-party investors.

Other Income (Expense)

13 unchanged sentences

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

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

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.

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

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

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

Investment income (loss) of Consolidated Funds represents gains (losses) from the investments held by the Consolidated Funds.

Interest income consists of income earned on cash, cash equivalents, restricted cash, and amounts associated with the Consolidated Funds.

Interest expense primarily consists of the interest expense on the Revolver, as well as the related amortization of deferred financing costs.

Other income (loss) includes foreign currency transaction gains and losses, non-operating activities, and amounts associated with the Consolidated Funds.

SSG is a corporation for U.S.

32 unchanged sentences

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 laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities.

Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP.

The Company reviews its tax positions quarterly and adjusts its tax balances as new information becomes available.

Tax Receivable Agreements

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

SSG has entered into an Exchanges Tax Receivable Agreement (the “Exchanges Tax Receivable Agreement”) with the Class B limited partners and Class C limited partners, and a Reorganization Tax Receivable Agreement with certain pre-IPO institutional investors (collectively, the “Tax Receivable Agreements”).

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

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

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

See notes 14 and 15 for more information.

7 unchanged sentences

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

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.

The Company’s chief operating decision maker (“CODM”), 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.

21 unchanged sentences

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.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which amends current guidance for reportable segment disclosure requirements.

The updated disclosure requirements include:

(1) reporting of segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (2) reporting of an amount for other segment items by reportable segment and a description of its composition, (3) reporting in interim periods of all annual disclosures about a reportable segment’s profit or loss and assets as currently required by Topic 280, (4) reporting of one or more additional measures of segment profit or loss if used by the CODM in assessing segment performance and determining allocation of resources, (5) reporting of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss, and (6) the requirement for single reportable segment entities to provide all required disclosures in Topic 280 for annual and interim periods.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact to its financial statements and related disclosures.

StepStone Group Inc.

1 unchanged sentence

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

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

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

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

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

The Company 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):

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

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

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

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

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

The guidance had no effect on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which amends current guidance to provide expanded disclosure for the rate reconciliation with information about specific categories and reconciling items that meet a specific threshold, and to provide additional information about income taxes paid disaggregated by jurisdiction.

The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact to its financial statements and related disclosures.

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

2 unchanged sentences

Focused commingled funds (1)

$ 295,927 $ 227,003 $ 148,725

SMAs 223,958 210,187 174,318

2 unchanged sentences

Total management and advisory fees, net $ 585,140 $ 497,179 $ 380,257

_______________________________

(1) Includes BDC income-based incentive fees of $ 1.4 million, $ 0 million and $ 0 million for the years ended March 31, 2024, 2023 and 2022, respectively.

Year Ended March 31,

8 unchanged sentences

Total carried interest allocations $ 176,309 $ ( 122,253 ) $ 786,569

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 ( 76,186 ) ( 452,163 ) 187,106

( 452,163 ) 187,106 —

Total legacy Greenspring carried interest allocations (1)

$ ( 75,157 ) $ ( 452,163 ) $ 187,106

(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.

_______________________________

(1) The years ended March 31, 2024, 2023, and 2022 reflect the net effect of gross realized carried interest allocations of $ 59.7 million, $ 74.7 million, and $ 92.2 million, respectively, and the reversal of such amounts in unrealized carried interest allocations for such periods.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

The increase in carried interest allocations for the year ended March 31, 2024 as compared to the year ended March 31, 2023 was primarily attributable to net unrealized appreciation in the fair value of certain underlying fund investments in the Company’s private equity funds.

The increase in legacy Greenspring carried interest allocations for the year ended March 31, 2024 as compared to the year ended March 31, 2023 was primarily attributable to net unrealized appreciation in the fair value of certain underlying fund investments.

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.

8 unchanged sentences

For the years ended March 31, 2024, 2023 and 2022, no individual client represented 10% or more of the Company’s net management and advisory fees.

For the year ended March 31, 2024, the Company had revenues attributable to the United States and Cayman Islands that represented 10% or more of the Company’s net management and advisory fees.

For the years ended March 31, 2023 and 2022, the Company had revenues attributable to the United States that represented 10% or more of the Company’s net management and advisory fees.

As of March 31, 2024 and 2023, the Company had $ 31.0 million and $ 21.6 million, respectively, of deferred revenues, which is included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

3 unchanged sentences

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

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.

Such VIEs consist of certain operating entities not wholly-owned by the Company (e.g., SPD, 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.

22 unchanged sentences

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.

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

Equity Method Investments

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

6 unchanged sentences

Total equity method investments 2,120,291 2,113,012

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

_______________________________

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

(1) The Company’s investments in funds were $ 204.8 million and $ 147.5 million as of March 31, 2024 and 2023, respectively.

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 $ 147.0 million and $ 152.7 million and carried interest allocations of $ 484.2 million and $ 618.0 million as of March 31, 2024 and 2023, respectively.

2 unchanged sentences

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

Equity Method Investments

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

6 unchanged sentences

Total equity method income (loss) $ 99,517 $ ( 621,000 ) $ 1,032,421

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.

The increase in carried interest allocations for the year ended March 31, 2024 as compared to the prior year period was primarily attributable to unrealized appreciation in the fair value of the underlying investments in the Company’s private equity funds.

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

The decrease in carried interest allocations for the year ended March 31, 2023 as compared to the prior year period 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, 2024 and 2023, 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 26 % and 24 %, 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.

As of March 31, 2024 and 2023, the Company’s investments in three and two, 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 36 % and 24 %, 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, 2024 and 2023, $ 719.5 million and $ 644.5 million, respectively, were payable to affiliates and are 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, 2024 and 2023, $ 484.2 million and $ 618.0 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 $ 147.0 million and $ 152.7 million, respectively, are reflected as non-controlling interests in legacy Greenspring entities in the consolidated balance sheets.

6 unchanged sentences

Summarized financial information for the Company’s equity method investments reflected below represents the financial position as of March 31, 2024 and 2023, and the results of operations for the years ended March 31, 2024, 2023 and 2022, which are reported on a three-month lag.

Assets are primarily comprised of the investments held by the StepStone Funds.

Assets are primarily composed of the investments held by the StepStone Funds.

As of March 31,

11 unchanged sentences

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.

3 unchanged sentences

Investments of Consolidated Funds:

Equity securities (cost of $ 15.6 million and $ — million as of March 31, 2024 and 2023, respectively)

$ 17,028 $ — 13 % — %

Partnership and LLC interests (cost of $ 76.0 million and $ 21.3 million as of March 31, 2024 and 2023, respectively)

2 unchanged sentences

As of March 31, 2024 and 2023, 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:

The following table summarizes the net realized and unrealized gains (losses) from investment activities of the Consolidated Funds:

Year Ended March 31,

Net Realized Gains on Investments Net Unrealized Gains on Investments

2024 2023 2022

Investments of Consolidated Funds:

Partnership and LLC interests

Total investments of Consolidated Funds $ 3 $ 9,312

Net realized gains on investments $ 2,325 $ 3 $ —

Net unrealized gains on investments

26,147 9,312 —

StepStone Group Inc.

15 unchanged sentences

Total liabilities $ — $ — $ 36,745 $ 36,745

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.

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

For the financial instruments presented in the tables above, there were no changes in fair value hierarchy levels during the years ended March 31, 2024 and 2023.

A reconciliation from the beginning balance to the closing balance of Level III financial instruments of the Company are set forth below:

Year Ended March 31,

9 unchanged sentences

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.

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

The assumptions used in the analysis are inherently subjective;

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

The significant unobservable inputs required to value the contingent consideration obligations primarily relate to the future expected revenues and the discount rate applied to the expected future revenues and payments of obligations, which was 7 % as of March 31, 2024.

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

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

StepStone Group Inc.

1 unchanged sentence

(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.

The assumptions used in the analysis are inherently subjective;

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

The significant unobservable inputs required to value the contingent consideration liabilities primarily relate to the future expected revenues and the discount rates applied to the expected future revenues and payments of obligations, which ranged from 8 % to 10 % as of March 31, 2023.

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

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

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

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

Financial Instruments of Consolidated Funds

1 unchanged sentence

Level I Level II Level III Total

Equity securities $ — $ — $ 12,421 $ 12,421

Partnership and LLC interests

1 unchanged sentence

Total assets $ — $ — $ 13,694 $ 13,694

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.

As of March 31, 2023

Level I Level II Level III Total

Equity securities $ — $ — $ — $ —

Partnership and LLC interests

— — 6,901 6,901

Total assets $ — $ — $ 6,901 $ 6,901

For the financial instruments presented in the tables above, there were no changes in fair value hierarchy levels during the years ended March 31, 2024 and 2023.

The Company generally values its investment funds, which are generally 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.

As of March 31, 2024 and 2023, investments with a combined fair value of $ 118.2 million and $ 23.7 million, respectively, 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, 2024 and 2023, investments with a combined fair value of $ 13.7 million and $ 6.9 million , respectively, were classified as Level III investments.

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

A reconciliation from the beginning balance to the closing balance of Level III financial instruments of Consolidated Funds are set forth below:

As of March 31,

Partnership and LLC interests

Balance, beginning of period:

Transfers into Level III 1,593 —

Transfers out of Level III ( 5,067 ) —

Change in fair value

Balance, end of period:

$ 13,694 $ 6,901

Changes in unrealized gains included in earnings related to financial assets still held at the reporting date

StepStone Group Inc.

23 unchanged sentences

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

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

On December 31, 2023, the Company completed the sale of 100 % of the equity interests in Greenspring Back Office Solutions, LLC (“GBOS”) in exchange for a secured promissory note in the amount of $ 8.4 million to be received by the Company over approximately six years .

GBOS was acquired by the Company as part of the Greenspring Acquisition and was primarily engaged in the business of providing fund administration services for a select number of third-party managed venture capital funds as well as the Company’s venture capital focused commingled funds and separately managed accounts (together, the “venture funds”).

The GBOS team comprised 42 employees as of December 31, 2023.

GBOS was sold to a newly formed, independent entity owned by a number of former employees of GBOS, and renamed Viridis Fund Solutions, LLC (“Viridis”).

Viridis is expected to continue to perform fund administration services for the Company’s venture funds as well as for its own current and future third-party clients.

The results of GBOS’s operations have been included in the consolidated financial statements through December 31, 2023.

In the year ended March 31, 2024, the Company recorded a net charge in the amount of $ 0.8 million related to the sale of GBOS, including service agreements intangibles related to GBOS of $ 7.4 million, which is included in other income (loss) in the consolidated statements of income.

At March 31, 2024, the expected future amortization of finite-lived intangible assets is as follows:

Fiscal year ending March 31,

2 unchanged sentences

Total $ 304,873

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

The carrying value of goodwill was $ 580.5 million as of March 31, 2024 and 2023.

1 unchanged sentence

Debt Obligations

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.

The Company is party to a credit agreement, as amended in April 2023, 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, 2024, the Company had $ 148.8 million outstanding on the Revolver, net of debt issuance costs.

4 unchanged sentences

Total debt obligations $ 148,822 $ 98,351

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

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

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

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

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

Borrowings bear interest equal to (i) in the case of base rate loans, 1.00 % plus the greatest of (a) the Prime Rate, (b) the New York Federal Reserve Bank Rate plus 0.50 % and (c) the 1 month Term SOFR, plus 1.10 %, (ii) in the case of a Term SOFR rate loan, the Term SOFR rate plus 2.10 %, (iii) in the case of a EURIBOR rate loan, the EURIBOR rate multiplied by the Statutory Reserve Rate (as defined in the Credit Agreement) plus 2.00 %, (iv) in the case of a SONIA loan, the Sterling Overnight Index Average plus 2.03 %, (v) in the case of a SARON loan, the Swiss Average Rate Overnight plus 2.00 %, and (vi) in the case of an AUD rate loan, the AUD Screen Rate (as defined in the Credit Agreement) multiplied by the Statutory Reserve Rate plus 2.20 %, in certain cases subject to applicable interest rate floors.

The weighted-average interest rate in effect for the Revolver as of March 31, 2024 was 7.42 %.

4 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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

13 unchanged sentences

As of March 31, 2024, the Company had outstanding letters of credit totaling $ 6.5 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

2 unchanged sentences

As of March 31, 2024, there were 22,787,636 shares of Class A common stock available to grant under the LTIP.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Restricted Stock Units

10 unchanged sentences

Balance as of March 31, 2024 1,422,658 $ 27.12

StepStone Group Inc.

Notes to Consolidated Financial Statements

(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, 2024, 2023, and 2022 was $ 35.07 , $ 28.97 , and $ 35.18 , 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.

The total fair value as of the respective vesting dates of RSUs vested during the years ended March 31, 2024, 2023 and 2022 was $ 24.3 million, $ 16.5 million and $ 27.5 million, respectively.

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 .

12 unchanged sentences

As of March 31, 2024, 149,717 Class B2 units were unvested and 2,416,849 Class B2 units were vested.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

As of March 31, 2024, $ 40.9 million of unrecognized non-cash compensation expense in respect of equity-based awards remained to be recognized over a weighted-average period of approximately 4.3 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.

The Company recognized tax benefits related to equity-based awards of $ 4.5 million, $ 1.8 million and $ 7.4 million for the years ended March 31, 2024, 2023 and 2022, respectively.

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.

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, 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.

Notes to Consolidated Financial Statements

(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, 2024 and 2023, the Company recognized $ 19.8 million and $ 8.6 million, respectively, 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 year ended March 31, 2024, the Company paid $ 3.1 million related to settlement for liability classified awards.

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

5 unchanged sentences

Total income (loss) before income tax $ 195,396 $ ( 41,454 ) $ 512,581

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

10 unchanged sentences

Total income tax expense $ 27,576 $ 3,821 $ 28,300

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.

13 unchanged sentences

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

The following table presents the components of the Company’s deferred income tax assets and liabilities:

9 unchanged sentences

Net deferred tax assets $ 184,354 $ 44,005

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.

In accordance with the Transaction Agreements outlined in note 14, the Company remeasured non-controlling interests in subsidiaries to the redemption value.

This adjustment had a significant impact on the Company’s share of the Partnership’s book equity, resulting in an increase in deferred tax assets of $ 133.7 million, recorded through equity for the year ended March 31, 2024.

Each contemplated exchange is expected have a corresponding decrease in deferred tax assets, recorded through equity.

Additionally, there was an increase in deferred tax assets due to exchanges of Class B and Class C units that occurred during the year ended March 31, 2024, detailed further below.

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 2024, the Company recorded an overall increase to deferred tax assets as of March 31, 2024 of $ 15.2 million, and a net increase in the valuation allowance of $ 1.3 million.

Additionally, in connection with the exchange transactions, the Company recorded a corresponding Tax Receivable Agreements liability of $ 17.4 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.

The Company made payments of $ 10.3 million, $ 6.0 million and $ 0.8 million during the years ended March 31, 2024, 2023 and 2022 , respectively, under the Tax Receivable Agreements.

As of March 31, 2024, the Company’s total Tax Receivable Agreements liability was $ 206.8 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.

1 unchanged sentence

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

2 unchanged sentences

Income tax decrease ( 1,975 )

Equity decrease ( 5,006 )

Equity increase 905

1 unchanged sentence

Income tax decrease ( 1,210 )

Equity decrease —

Equity increase 2,454

Balance at March 31, 2024 $ 13,596

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.

As of March 31, 2024, the Company has not recorded any unrecognized tax benefits and does not expect there to be any material changes to uncertain tax positions within the next 12 months.

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

6 unchanged sentences

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

Earnings Per Share

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.

1 unchanged sentence

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

Earnings Per Share

Basic and diluted earnings per share of Class A common stock are presented for the years ended March 31, 2024, 2023 and 2022.

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, 2023 Year Ended March 31, 2022 Period from IPO date to March 31, 2021

Year Ended March 31,

2024 2023 2022

(in thousands, except share and per share amounts)

17 unchanged sentences

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.

The calculation of diluted earnings per share excludes 45,030,959 Class B units and 1,852,212 Class C units of the Partnership outstanding as of March 31, 2024, 46,420,141 Class B units and 2,514,085 Class C units of the Partnership outstanding as of March 31, 2023, and 47,149,673 Class B units and 2,928,824 Class C units of the Partnership outstanding as of March 31, 2022, 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.

7 unchanged sentences

Carried intere st allocation revenues earned from the StepStone Funds totaled $ 176.3 million, $( 122.3 ) million and $ 786.6 million for the years ended March 31, 2024, 2023 and 2022, respectively.

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.

Legacy Greenspring carried intere st allocation revenues earned from certain legacy Greenspring funds for which the Company has no direct economic interests totaled $( 75.2 ) million, $( 452.2 ) million, and $ 187.1 million for the years ended March 31, 2024, 2023 and 2022, respectively.

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

10 unchanged sentences

Total due to affiliates $ 212,918 $ 205,424

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.

The Company made payments of $ 10.3 million, $ 6.0 million, and $ 0.8 million during the years ended March 31, 2024, 2023 and 2022, respectively, under the Tax Receivable Agreements.

StepStone Group Inc.

10 unchanged sentences

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

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 Company also entered into an agreement with the Class C limited partners of the Partnership (the “Class C Exchange Agreement”) 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, 2023:

7 unchanged sentences

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.

In March 2024, the Company issued 1,283,584 shares of Class A common stock to certain limited partners of the Partnership in exchange for 1,283,584 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.

On the same date, the Company also issued 109,919 shares of Class A common stock to certain limited partners of the Partnership in exchange for 109,919 Class C units in accordance with the elective exchange notices submitted pursuant to the Class C Exchange Agreement and a corresponding number of Class A units of the Partnership were issued to the Company.

StepStone Group Inc.

1 unchanged sentence

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

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.

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 2023, the Company issued 105,598 shares of Class A common stock to certain limited partners of the Partnership in exchange for 105,598 Class B units in accordance with the elective exchange notices submitted pursuant to the Class B Exchange Agreement.

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.

On the same date, the Company also issued 551,954 shares of Class A common stock to certain limited partners of the Partnership in exchange for 551,954 Class C units in accordance with the elective exchange notices submitted pursuant to the Class C Exchange Agreement and a corresponding number of Class A units of the Partnership were issued to the Company.

On February 7, 2024, SSG (or its subsidiary, in the case of the agreement with SPD) entered into agreements (the “Transaction Agreements”) with SRA, SRE and SPD (the “Asset Class Entities”), their respective asset class heads as seller representatives, and the seller parties signatory thereto.

The Transaction Agreements provide a path to the Company owning all of the outstanding equity interests of the Asset Class Entities over a defined period of time.

The Transaction Agreements provide for, among other things and subject to the terms and conditions therein, the exchange of the sellers’ equity interests in the Asset Class Entities, as applicable, for a combination of (i) newly-created Class D equity interests in the Partnership with terms substantially similar to the Partnership’s existing Class C Units, in the case of SRE and SRA, or shares of the Company’s Class A common stock, in the case of SPD and (ii) cash (at the discretion of the Company for all exchanges except the initial exchange), in up to ten annual exchanges (increased to up to fifteen annual exchanges in certain circumstances in case of the sellers of SRA equity interests).

The Transaction Agreements allow for issuance of up to 75 million shares as consideration for settlement of the transaction.

The portion of the equity interests to be acquired in each annual exchange is set forth in an exchange schedule attached to each Transaction Agreement and is approximately 5 % of each Asset Class Entity on each contemplated annual exchange date.

The amount of consideration to be delivered will be calculated using exchange ratios determined each year based on a formula establishing an assumed value of each Asset Class Entity based on its estimated adjusted net income, relative to an adjusted trading multiple for the Company’s Class A common stock relative to the Company’s estimated adjusted net income.

The Transaction Agreement specifies a minimum adjusted trading multiple for the exchange to take place, in which case if not met the exchange would be skipped and combined in a subsequent year if and when the minimum adjusted trading multiple was met.

Therefore, the non-controlling interests subject to the Transaction Agreements are not mandatorily redeemable as of March 31, 2024.

Pursuant to each Transaction Agreement, and subject to receipt of required regulatory and other approvals, the consideration for the first exchange will be calculated using a reference date of April 1, 2024 (the “Initial Reference Date”) and the first exchange will be consummated promptly following the Initial Reference Date upon the satisfaction or waiver of the conditions set forth in such Transaction Agreement applicable to the first exchange, including publication of the Company’s audited financial statements for the fiscal year ending March 31, 2024.

The Transaction Agreements also provide for up to nine subsequent annual exchanges (or up to 14 subsequent exchanges in certain circumstances in the case of SRA), in each case with a calculation reference date of April 1 and consummation promptly following satisfaction or waiver of the conditions set forth in such Transaction Agreement, including delivery of audited financial statements of the Company.

Each Transaction Agreement provides that beginning after the fifth annual exchange, future exchanges may be accelerated into one final exchange in certain circumstances.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

On the effective date of the Transaction Agreements, the Company reclassified the carrying value of the non-controlling interests in the Asset Class Entities from permanent equity to redeemable equity and remeasured the non-controlling interests at their redemption value as potential cash settlement could not be attributable to any individual non-controlling interest unit and the Company determined that redemption of the equity instruments was probable.

After the notification period 10-days prior to the Initial Reference Date, the individual units subject to the first exchange became irrevocable and the Company separated the carrying value for all of the equity instruments related to the subsequent exchanges to occur after the initial exchange and reclassified these interests into permanent equity at their then carrying value given that settlement of subsequent exchanges is within the Company’s control.

The Company accounts for adjustments to the redemption value of a redeemable equity instrument that is currently redeemable by adjusting the carrying value of the equity instrument to the maximum redemption value at each reporting period based on conditions that exist as of the reporting date.

If the redeemable equity instrument is probable of becoming redeemable in the near future, the carrying value of a redeemable equity instrument is adjusted to the redemption value immediately as changes occur based on conditions that exist at that date or at each reporting date.

For redeemable equity instruments either not redeemable or probable of becoming redeemable in the near future, no adjustment to the carrying value is made until it is probable that the equity instrument will become redeemable.

The Company recognizes adjustments to the carrying value of redeemable equity instruments with charges against retained earnings, or to additional paid-in-capital in the absence of retained earnings.

As of March 31, 2024, the Company determined that redemption of the redeemable non-controlling interests in subsidiaries was probable and presented the carrying value at the redemption amount based on the conditions that existed as of that date of $ 115.9 million in the consolidated balance sheets within redeemable non-controlling interests in subsidiaries

Dividends and Distributions

7 unchanged sentences

Dividend Payment Date Dividend Per Share of Class A Common Stock

First quarter N/A

Second quarter N/A

Third quarter N/A

First quarter July 15, 2021 $ 0.07

Second quarter September 15, 2021 0.07

Third quarter December 15, 2021 0.15

Fourth quarter March 15, 2022 0.15

Total dividends paid in FY2022 $ 0.44

First quarter July 15, 2021 $ 0.07

First quarter June 30, 2022 $ 0.20

Second quarter September 15, 2022 0.20

3 unchanged sentences

First quarter June 30, 2023 $ 0.20

Supplemental 2

June 30, 2023 0.25

Second quarter September 15, 2023 0.21

3 unchanged sentences

_______________________________

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

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

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

(2) The supplemental cash dividend relates to earnings in respect of our full fiscal year 2023.

Redeemable Non-Controlling Interests

8 unchanged sentences

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

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

Year Ended March 31,

Beginning balance $ — $ —

Reclassification from permanent equity at redemption value 1,086,492 —

Net income 5,782 —

Reclassification to permanent equity ( 976,354 ) —

Ending balance $ 115,920 $ —

Business Combinations

5 unchanged sentences

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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.

3 unchanged sentences

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.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

2 unchanged sentences

Net income attributable to StepStone Group Inc.

168,653 80,743

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

1 unchanged sentence

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

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

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

4 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.

5 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

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

10 unchanged sentences

Year Ended March 31,

2024 2023 2022

Operating lease cost (1)(2)

5 unchanged sentences

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

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

(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.

(2) Includes a gain of $ 0.1 million and $ 2.7 million for the years ended March 31, 2024 and 2023, respectively, related to lease remeasurement adjustments due to a reduction in lease terms.

Supplemental cash flow information related to leases was as follows:

Year Ended March 31,

2024 2023 2022

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Weighted-average discount rate for operating leases 4.7 % 4.6 % 2.7 %

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

As of March 31, 2024, maturities of operating lease liabilities were as follows:

10 unchanged sentences

As of March 31, 2024 and 2023, the Company, generally in its capacity as general partner or managing member of the StepStone Funds, had unfunded commitments totaling $ 115.7 million and $ 88.7 million, respectively.

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)

The $ 115.7 million and $ 88.7 million of unfunded commitments as of March 31, 2024 and 2023, respectively, exclude $ 67.8 million and $ 50.6 million, respectively, related to commitments held by general partner entities for certain funds in which the Company does not hold any direct economic interests, including the legacy Greenspring funds.

Carried Interest Allocations

12 unchanged sentences

Based on past experience, management believes that the risk of loss related to these indemnities is remote.

StepStone Group Inc.

Notes to Consolidated Financial Statements

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

Employee Benefits

10 unchanged sentences

Subsequent Events

On May 16, 2024, the Partnership (the “Borrower”), a subsidiary of the Company, entered into an amended and restated credit agreement, among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and certain other lenders party thereto (the “A&R Credit Agreement”).

The A&R Credit Agreement amends and restates the certain Credit Agreement, dated as of September 20, 2021, by and among the Company, as initial borrower, the Borrower, as subsequent borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and certain other lenders party thereto, as amended by Amendment No.

1 to the credit agreement, dated as of April 17, 2023.

The A&R Credit Agreement provides for certain modifications to the Credit Agreement, including increasing the aggregate principal amount of the commitments thereunder to $ 300 million (as such amount may be later increased from time to time in accordance with the terms of the A&R Credit Agreement), extending the maturity date of the revolving facility to 2029, and certain other changes as set forth therein.

On May 23, 2024, the Company announced a quarterly cash dividend of $ 0.21 per share of Class A common stock and a supplemental cash dividend of $ 0.15 per share of Class A common stock, both payable on June 28, 2024 to holders of record as of the close of business on June 14, 2024.

1 unchanged sentence

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