StepStone Group Inc. (STEP) Q1 2027 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter Fiscal Year 2027 StepStone Group Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Seth Weiss, Head of Investor Relations. Please go ahead.

Thank you. Joining me on today's call are Scott Hart, Chief Executive Officer; Jason Ment, President and Co-Chief Operating Officer; Mike McCabe, Head of Strategy; and David Park, Chief Financial Officer. During our prepared remarks, we will be referring to a presentation, which is available on our Investor Relations website at shareholders.stepstonegroup.com. Before we begin, I would like to remind everyone that this conference call as well as the presentation, contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods. Forward-looking statements reflect management's current plans, estimates and expectations and are inherently uncertain and are subject to various risks, uncertainties and assumptions. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to changes in circumstances or a number of risks or other factors that are described in the Risk Factors section of StepStone's periodic filings. These forward-looking statements are made only as of today, and except as required, we undertake no obligation to update or revise any of them. Today's presentation contains references to non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our earnings release, our presentation, and our filings with the SEC. Turning to our financial results for the first quarter of fiscal 2027. Beginning with Slide 3, we reported a GAAP net loss attributable to StepStone Group, Inc. of $116 million or $1.41 per share. As a reminder, GAAP accounting requires us to factor the change in fair value of the buy-in of the StepStone Private Wealth profits interest through our income statement, which drove the negative GAAP earnings result this quarter. We have a put-call option agreement in place with an entity composed of members of the Private Wealth team that enables StepStone's buy-in of these profits interests. The Private Wealth team entered the put period in the June quarter and StepStone will enter into the call period in the third quarter of calendar 2027. Moving to Slide 5. We generated fee-related earnings of $106 million, up 30% from the prior year quarter, and we generated an FRE margin of 39%. The quarter reflected retroactive fees primarily from our infrastructure secondaries fund. Retroactive fees contributed $1.1 million to revenue, which compares to retroactive fees of $2.9 million in the first quarter of the prior fiscal year. When excluding the impact of retroactive fees, core fee-related earnings were $105 million, up 33% relative to the prior year quarter, and our core FRE margin remains at 39%. We earned $60 million in adjusted net income for the quarter or $0.48 per share. This is up from $49 million or $0.40 per share in the first quarter of the last fiscal year, driven primarily by higher fee-related earnings. I'll now hand the call over to Scott.

Thank you, Seth, and good evening. We kicked off our fiscal 2027 year with outstanding financial results, robust and balanced fundraising, and a healthy pipeline that gives us visibility for continued earnings growth. Beginning with results, we are comfortably generating run rate management and advisory fees of over $1 billion per year and generating run rate fee-related earnings of well over $400 million per year. These are numbers that we frankly could not have imagined just 6 short years ago as we were preparing for our IPO. As I reflect on our progress, I am proud of both the magnitude of our results and the path we took to get here, driven by an unwavering commitment to investing for the long term in solutions that will best serve our clients and provide value for our shareholders, balanced growth across asset classes and geographies, and by pursuing selective, synergistic, and highly strategic M&A. Looking forward, we continue to follow this playbook. First, we are generating consistent growth from our existing business. Our client-centric mission leads to enviable client retention as well as extension and expansion opportunities across our advisory, managed account, and commingled fund investors. Second, we are investing in long-term growth initiatives, including data and technology and solutions for the U.S. defined contribution retirement market, where we see potential to replicate the success we are achieving in Private Wealth. And third, we may continue to pursue opportunistic M&A with our current focus on acquiring our noncontrolling interest at a material discount to our public valuation. We now own 65% of our infrastructure, private debt, and real estate asset classes, and we plan to buy in the Private Wealth profits interest as soon as we are contractually able. The Private Wealth buy-in will materially increase adjusted net income by enabling StepStone to capture the full economics of one of our highest growth businesses at a significant discount to our prevailing multiple. We expect this will provide material earnings per share accretion that should only compound into the future. Shifting to fundraising. We generated another double-digit quarter with $10 billion of gross inflows split between managed accounts and commingled funds. Our Private Wealth platform generated another record quarter with $2.8 billion of subscriptions, while total Private Wealth assets surpassed $21 billion, more than doubling the net asset value over the last year. We continue to see a high persistency of investors within our funds with total platform redemptions under 2% for the quarter. SPRING, our venture and growth equity fund, continues to be a standout. SPRING has tapped into the excitement of the innovation economy, investing in native artificial intelligence companies, AI infrastructure, cybersecurity, energy, aerospace and defense, and yes, even space exploration. We believe the $1.7 billion of SPRING subscriptions this quarter include an elevated level of inflows. While the pace of subscriptions may normalize, we expect SPRING will continue to generate a healthy rate of ongoing subscriptions and that our overall Private Wealth platform will generate a strong level of annual inflows, consistent with the pace we highlighted at the beginning of this year. I'll now turn the call over to Mike, to speak about fundraising, asset growth, and shareholder distributions.

Thanks, Scott. Turning to Slide 8. We generated nearly $40 billion of gross AUM additions over the last year, our best 12-month period ever. This fundraising was split evenly with approximately $20 billion coming from each of managed accounts and commingled funds, including Private Wealth. Of the managed account additions, $9 billion or 45% came from a combination of new accounts or the expansion of existing accounts into new asset classes or strategies. During the quarter, we generated over $10 billion in gross additions, including approximately $4.5 billion of managed account additions and $5.5 billion of commingled fund inflows. Notable additions to our drawdown commingled funds included $1 billion first close in our newest venture capital secondaries fund, $500 million of closes in our infrastructure co-investment fund, $300 million of closes in our private equity secondaries funds, and $200 million of closes in our private equity co-investment fund. We have also launched the next vintages of our special situations real estate secondaries fund and our multi-strategy growth equity fund, with first closes expected in the coming quarters and activations to follow. Turning to our evergreen funds. We generated $2.8 billion of subscriptions in our Private Wealth suite of offerings, growing the platform to over $21 billion as of the end of the quarter. As Scott mentioned, SPRING drove nearly $1.7 billion of these inflows in the quarter. SPRIM, our all private markets fund, generated over $400 million of subscriptions, while the remaining inflows were split between our private equity, credit and infrastructure evergreen funds. Additionally, we generated over $500 million of subscriptions in our evergreen non-traded BDC, SCRED, growing the fund to $2.8 billion. We continue to make progress on expanding our syndicate with over 800 partners selling StepStone Private Wealth funds. Among the platforms that have been selling StepStone funds for at least a year, those distributing partners sell an average of 2 funds, a figure that has steadily increased over time. We view growth in the syndicate and increase in multi-fund adoption as key indicators for the health of our Private Wealth distribution and of the strength of our deep relationships with our partners in the wealth channel. Slide 9 shows our fee-earning assets by structure and asset class. For the quarter, we increased fee-earning assets by nearly $10 billion. The drivers of our growth in fee-earning AUM included record subscriptions in Private Wealth, activations of commingled funds, new commitments to our drawdown funds and healthy deployment by our managed accounts. We activated our 2 PE secondaries funds in June, which was on the early side of our expected range, resulting in nearly $3 billion of additions to our fee-earning assets. Even with these large activations and steady managed account deployment, we maintained a healthy balance in our undeployed fee-earning capital, or UFEC, of over $39 billion as strong fundraising in managed accounts and the first close of our venture capital secondaries fund helped to replenish the UFEC balance. The combination of fee-earning assets plus UFEC grew to approximately $193 billion, which is up $9 billion sequentially and is up $37 billion from a year ago. This translates to a 19% annual organic growth rate since fiscal 2022. Consistent with our commitment to communicate forthcoming distributions out of fee-earning AUM, we anticipate an expiration of a managed account of roughly $1.5 billion next quarter. The mandate carries a fee rate in line with the average of our SMA fee rate, but there will be a partial offset to adjusted net income from noncontrolling interest. Slide 10 shows the evolution in our fee revenues. We generated a blended management fee rate of 65 basis points over the last 12 months, consistent with the fee rate from fiscal 2025, as favorable mix shift to our evergreen funds offset a moderation in retroactive fees. And finally, I am pleased to announce that we are raising our quarterly dividend by 18% from $0.28 per share to $0.33 per share, reflecting strong, consistent and sustainable growth of our fee-related earnings. Furthermore, we have repurchased an additional $21 million of shares since the end of fiscal 2026. In total, we have executed $30 million of our $100 million repurchase authorization, buying over 710,000 shares at an average price of $41.87 since announcing the authorization in March. I'll now turn the call over to David, to speak to our financial highlights.

Thanks, Mike. Turning to Slide 12. We earned fee revenue of $271 million, up 27% from the prior year quarter. The increase was driven by growth in fee-earning AUM across the platform with particularly strong growth in commingled funds across both drawdown and evergreen funds. Fee-related earnings were $106 million, up 30% from a year ago. FRE margin was 39% for the quarter, both on a reported and adjusted basis after normalizing for retroactive fees. Shifting to expenses. Adjusted cash-based compensation was $117 million. This is up from last quarter's $111 million. The increase reflected the impact of our annual merit increase, which took effect April 1, as well as headcount growth. The cash compensation ratio adjusted for retroactive fees was 43%. Adjusted equity-based compensation was $7 million. Both the cash compensation ratio and adjusted equity-based compensation are in line with the expectations we set out on our year-end earnings call and are good run rates to use for the remainder of the fiscal year, understanding there could be some variability quarter-to-quarter. General and administrative expenses were $42 million, up $10 million from the prior year quarter. About $3 million of the increase reflects platform distribution fees related to our Private Wealth funds, which are running at roughly $5 million per quarter. These expenses are charged on a trailing basis of Private Wealth NAV at certain distribution partners. We expect this expense to generally grow in line with Private Wealth assets. Gross realized performance fees were $30 million for the quarter and $16 million net of related compensation expense. As a reminder, performance fees can be episodic quarter-to-quarter, and we generally do not control the pace of realizations. Our investment performance continues to be strong, supporting our growing backlog of future carry. Sticking with performance fees, we are on pace for another strong year of Private Wealth incentive fees driven by SPRING returns. These incentive fees will be recognized in our fiscal third quarter, consistent with SPRING's annual crystallization at the end of December. SPRING has delivered extraordinary results over the first half of the calendar year, generating 23% net returns, supported by several significant value creation events. While we do not view these exceptionally strong returns as typical, we believe SPRING is a durable fund that benefits from our robust sourcing efforts and broader StepStone flywheel to generate attractive performance over time. As we track SPRING's results, we may see more near-term volatility than usual from public market valuation movements. As private markets investors, we actively and prudently manage the exit of public positions in the ordinary course, subject to contractual lockups and market conditions. Importantly, because SPRING'S performance fees crystallize annually at the end of December, investors in the fund are not charged performance fees based on intra-period movements in underlying valuations. Taken together, adjusted net income per share was $0.48, up from $0.40 in the prior year quarter, driven by growth in fee-related earnings. Moving to key items on the balance sheet on Slide 13. Net accrued carry finished the quarter at $935 million, up 19% from a year ago. Our net accrued carry is relatively mature. Over 70% are tied to programs that are older than 5 years, which means that these programs are ready to harvest. Our own investment portfolio ended the quarter at $363 million. This concludes our prepared remarks. I'll now turn it back over to the operator to open the line for any questions.

[Operator Instructions] And the first question will come from Brennan Hawken with BMO.

So Mike, you spoke to a bunch of the moving pieces in UFEC and some -- but my question is, when we think about some of those moving pieces and some of those adjustments, could you walk us through what the impact would be on the fee rate here in the quarter? Given how much fundraising and how much AUM grew, the translation into base fees wasn't quite as I would expect, and I thought maybe timing might be part of it.

So maybe a few different comments there. Thanks, Brennan, for the question. I'll start just kind of generally talking about UFEC, how we see that converting into fee-earning AUM and the likely fee rates there. Maybe then David can kind of comment specifically on what you saw in the quarter and maybe if you're doing sort of a point-to-point estimate there, why it may not have looked exactly as expected. But look, as we think about UFEC, that will continue to be a pipeline of future fee-earning AUM growth for us, still stands at $39 billion. We mentioned there was about $3 billion of activations during the quarter with some of the additional fundraising right back up to $39 billion, and there's probably still about $3 billion that needs to be activated. The remaining $36 billion will be subject to deployment. And if we look at the average fee rate across that UFEC number today, it is generally in line with our overall fee rate. So as that's deployed, I wouldn't expect a major change there. But again, maybe over to David to comment on the specific quarter and the timing of some of the commingled fund activations.

Yes. I think if you look back over the last year or so, you've seen a steady, progressive increase in the average fee rate, right? And that was largely due to the mix shift from SMA to commingled funds driven by not only the fundraising for commingled funds, but the growth in Private Wealth assets. Last quarter, we had mentioned in our prepared remarks that we did have a change in the fee structure for our PE secondaries and GP-led secondaries funds and that the impact would result in a relatively muted growth in the average fee rate. That's exactly what you're seeing right now as we raise capital and we activated the secondaries funds in June, you're going to see a little bit of fee pressure just from the lower fee rate, offset by growth in Private Wealth assets. So I think what we had mentioned was you should expect to see the commingled fund fee rate stay relatively flattish over the next few quarters to a year as the secondaries funds continue to fundraise. And once that is fully raised, then you should see the resumption of the progress in fee rates as Private Wealth assets grow and as the fee rate steps up for the secondaries funds.

Got it. Okay. And then you touched on this a bit in your prepared remarks. The strength in SPRING is really remarkable. And you touched on some of the excitement it's tapping into, including space exploration. Now that there's a decent sized position that is public in that fund, can you walk through what we should expect as far as tracking of performance of that public equity and translation into SPRING'S performance and how maybe a little bit of extra texture around the management of that position that you touched on briefly in your prepared remarks?

Yes. Thanks. I'll start and Jason may jump in here as well. But I think the first one I'd make is, look, I think this fund SPRING is not about any one company or a small group of companies. There's over 2,000 positions in the fund. There's about 75 or so that drive 75% of the net asset value. And I think interestingly, while it was an incredibly strong year of performance in the year to June 30, even if you stripped out the performance of SpaceX was still a fund that was up in the sort of mid- to high-20s or double what we target for this fund and well above even some of the public benchmarks. So strong performance really across the board here. With the recent trading down in that position as well as continued fundraising and markups across the portfolio, that position is now more of a mid-teens-ish position down from sort of its peak there. But to your point, as it begins to come off lockup, look, our view is as a private market investor, we are -- it's not our job to be long-term holders of public positions. And so we will look to exit in an orderly way, but trying to manage that on behalf of the investors in the fund. And so stay tuned in future quarters here, but certainly will introduce some level of volatility into the performance as a result of the public positions, but something that can be managed going forward.

And the next question is going to come from Ken Worthington with JPMorgan.

Maybe first, talk about the buyout of the profit interest in the Private Wealth business. There were a couple of short reports this quarter expressing concern about, one, the amount of stock likely to be issued to the management team; and two, the cash portion of the raise. So how do you think about the -- about managing the lockup expirations sort of in the following 3 years post the buyout? Anything you're thinking about to just make sure the stock price is sort of stable if and as those shares come to market? And then on the cash side, clearly, you're not concerned given the special dividend, the buyback and the increase in the regular dividend. But can you talk about what you've put into place thus far, what you're thinking about in terms of managing that cash portion? Are you going to increase the size of the revolver? Are there any things that you've done in preparation that you could share with us?

Thanks, Ken. It's Mike here. Maybe I'll start with the cash portion and maybe ask Scott to talk a little bit about your first part of the question with respect to the potential overhang as the lockups expire on the equity portion of the buy-in. But in terms of capital management priorities, clearly, our near-term focus is preparing for the buy-in of the profits interest associated with the Private Wealth platform. And as a reminder, the structure provides a lot of flexibility, including the ability to fund up to 75% of the consideration in StepStone equity with the balance, as you point out, Ken, being funded in cash. I think also it's worth revisiting more broadly that from a philosophical standpoint, our capital management approach remains unchanged. And we operate a capital-light business and our first priority is to invest in growth. Beyond that, we look to returning capital to shareholders while maintaining flexibility for strategic initiatives like this one. I think given the upcoming cash requirement associated with the buy-in, we have a couple of options available to us, beginning with cash on hand and cash generating from the business. And as part of that, we will certainly continue to evaluate what the appropriate level is and timing of discretionary choices like the capital return and including future share repurchases. We did certainly signal strength in the prepared remarks here with the buybacks that we have completed so far. But we're going to certainly revisit that as we prepare for the buy-in of the Private Wealth platform as well as we'll revisit all options are on the table here with respect to discretionary spend, including the annual supplemental dividend, as you know, is tied to performance fees. And lastly, I think we also have a very strong track record in the capital markets and currently maintain an investment-grade rating from Kroll, which is supported by the debt private placement and revolver we put in place a couple of years ago. And you can expect that we will certainly reaccess the capital markets to fund the additional cash portion that is required above and beyond what we have on hand and what we can extract from our operating cash flows. And then I would just say, historically, we've taken a pretty conservative approach to leverage, and you can expect that to continue. The incremental earnings associated with the Private Wealth buy-in should provide meaningful capacity for us to fund a decent portion of the cash consideration with debt while maintaining conservative leverage ratios. But with that, I'll maybe ask Scott to touch on how the lockups will expire and some of the thoughts around there.

Yes. No, Ken, as you mentioned, we have the ability to fund up to 75% of the purchase price in the form of stock or units there, 30% of which are tradable immediately, the remainder of which is locked up over a 3-year period. Look, in a lot of ways, it resembles the same types of lockups that the management team had at the time of the IPO, resembles the types of lockups that the management team had post the Greenspring acquisition, similar to some of the lockups that our asset class teams have as we continue the buy-in of the asset class interest. So something that has been part of our playbook, both in terms of making sure to generate alignment of incentives, but also to help in terms of the orderly potential sell-down of those interests over time. And obviously, this one has the potential to be sizable. But I think that past experience gives you a sense for the orderly fashion in which we will look to manage it going forward.

Great. And maybe just as a follow-up, Mike, you mentioned a couple of times wanting to maintain sort of a conservative leverage position. What does that mean? Like how conservative? Clearly, the more debt you use to finance this, the more accretive the buyback -- the buy-in becomes. What's your comfort zone in terms of what is a conservative leverage position?

I think the bellwether that we're looking to inform that decision really revolves around the rating that we receive. We're currently, as I mentioned, enjoying an investment-grade rating A+. And I think we're going to start that as our opening position and see how far we can go in the debt capital markets while maintaining that strong investment-grade rating. And I think that's really our starting point, Ken.

And the next question will come from Ben Budish with Barclays.

Maybe, David, in your prepared remarks, you talked a bit about distribution fees coming in from the wealth channel. As I recall in the past, when this sort of became a bigger narrative for some of the bigger public peers, you were sort of -- it didn't impact you guys as much, I think, for a variety of reasons. So I'm curious, it doesn't sound like it's anything that's accelerating, but just curious if anything has changed recently, if the mix of distribution between RIAs and Wires, or U.S. versus international has changed? And are there any other implications we should think about as we think about your longer-term margin profile? Again, it sounds like you've indicated that you kind of -- that $5 million should grow with the wealth platform, but any other things we should be thinking about from that perspective?

Yes. Happy to answer that. Look, like we said, these trail fees are largely tied to private wealth assets. We're not concentrated in any single channel. We're nicely distributed between Wires, RIAs and IBDs. So again, it's going to depend on any given period on which channel raises the assets. Some have -- carry a higher fee than others, some carry no fee. So it's really going to depend. But generally speaking, I think it's fully baked into our run rate at that $5 million we had disclosed in the prepared remarks. And so I think the best assumption is as the wealth assets grow, you can assume that, that $5 million will continue to grow along with it.

All right. Helpful. And then maybe just curious if we could check in on some of the newer kind of tech and index initiatives, the partnership with FTSE Russell, Kroll, and PitchBook. I think some of this you started monetizing around the end of last year. But just curious if you could give us an update, receptivity and uptake from clients, anything like that.

Thanks, Ben. There's no material update across the partnerships, although I'm pleased to report that we are starting to see adoption rates starting to tick up across the 3 partnerships we have in place with FTSE Russell, PitchBook, and Kroll. We're not at a certain scale yet where you'll start seeing a specific line item flow through the P&L under advisory revenue, but we're pleased with the way the outreach is going, the way the education is going in the market and the way the adoption rates are starting to tick up with subscriptions starting to flow in. We'll certainly keep you posted in the future quarters. And I think certainly by the end of this fiscal year, you might start seeing that line item in the P&L starting to reflect some of the activity in these partnerships.

And our next question will come from Mike Brown with UBS.

You guys recently adjusted the fee structure on the flagship PE secondaries fund, as you mentioned earlier. Just curious a little bit about what you're seeing in terms of feedback from LPs as you've kind of gone out there with the newer terms. Have you noticed any maybe broadening in terms of participation levels in this first close relative to prior vintages when you've been out fundraising that fund?

Yes. No, thanks for the question. This is Scott. So look, it's hard to point to any one thing in terms of what is driving the activity and the fundraise, but I would say that we are off to a very strong start there, probably ahead of expectations, certainly ahead of where we were last time around with this commingled fund. So again, whether you point to the fee rate, whether you point to the performance, the quality of the platform or the overall market opportunity, and there does continue to be significant interest in the secondaries market more broadly, hard to point to any one thing, but it is resulting in a successful fundraise for us here. You heard Mike talk during the prepared remarks about the fact that we had activated the fund ahead of schedule, and that's across both of the flagship private equity secondaries fund as well as our GP-led secondaries fund as well here. So again, good receptivity, continued good interest. You've seen some of the first half statistics come out about the secondaries market. The first half was another sort of record first half and on pace for what very much looks to be another record year. Yet at the same time, there's not a tremendous amount of dry powder, only about a year's worth of dry powder that's available in the market there. And so we think very well positioned there. Just to put a couple of additional numbers on it with some smaller closings that we had during the quarter, that took the private equity secondaries fund to somewhere in the $2.5 billion range, the GP-led fund around $300 million based on what have been raised to-date and with incremental closings post quarter end, continued progress there. So making very good progress.

Okay. Great. I wanted to ask a little bit about the accrued carry here. So it's reached roughly $935 million. And I know that nobody has kind of crystal ball in the near term, but over 70% tied to programs older than 5 years. So any color about maybe how investors should think about the pace of how that will convert into realized performance revenue near term would be very helpful, but maybe just over the next couple of years would also be helpful?

Yes. So look, maybe I'll step back and just spend a few seconds on the broader realization activity that we're seeing across the market, which obviously then plays into the performance-related earnings and realized carry over time here. I think in a lot of ways, the first half of this year kind of reminded us of the first half of last year where people came into the year with high expectations. Those expectations were probably not quite met as a result of some of the macro activity that took place in the first half of the year last year with tariffs this year with AI disruption, and war in the Middle East. But there have been some positive signs of life there. Certainly, GPs are looking to generate liquidity on behalf of their LPs, but are also trying to optimize their exits. And so one of the comments you've heard me make really probably over the last couple of years at this point is that a lot of the realization activity that you do see results in partial realizations as opposed to full realizations. And so whether that's through a continuation vehicle, a minority sale, the divestiture of a division, selling to a strategic but receiving stock in return that needs to be exited over time. There have been a number of different forms of partial realizations that we've seen. And what that can mean in some cases that it may not always translate into carry or performance fees if those funds that have a European waterfall have not returned cost plus preferred return or those vehicles with an American waterfall have not returned cost plus preferred return on that individual company. So I think we're seeing a little bit of a disconnect right now between some of the improving realization activity that hasn't yet flowed through in terms of carry. We do think that is starting to improve. We've seen a number of announced full exits, some of which will come through in the coming quarters. I think there's a strong pipeline of that activity as well. But as you say, difficult to predict. We don't have a crystal ball, and we don't control the exits in a lot of cases. I think as you move forward a couple of years and certain vehicles that have a European waterfall move into carry-paying mode, that's when you may see a more sort of consistent flow of realized performance earnings over time.

And the next question will come from Alexander Blostein with Goldman Sachs.

This is Anthony on for Alex. Maybe just on SPRING, just given the high concentration of SpaceX, how is this kind of affecting how clients and advisers are thinking about the product today? And what are your expectations on gross flows and redemptions over the next few months?

Yes. Thanks, Anthony. Jason here. So as Scott noted earlier, concentration in SpaceX actually has muted a bit over the last quarter or so down to a mid-teens position. So clearly demonstrating our confidence in the power law where venture-backed companies select few drive the majority of the returns, but no longer what we would think of as an outsized position by any stretch. In terms of the go-to-market, as we talk about SPRING, whether that's 2 quarters ago, a quarter ago, a year ago or tomorrow, we've never sold it as access to a single company or even a select group of companies. It's designed to be access to a diversified portfolio of venture assets, obviously, with, again, a focus on the power law and as Scott mentioned earlier, 75 companies driving 75% of the NAV. In terms of the redemption activity, obviously, heretofore, it's been very low. And as we talk to the channel partners that are actively allocating to SPRING, have allocated in the past or contemplating onboarding it now, we continue to hear a lot of excitement, not about the names everybody knows, but really about the names that are going to be the companies of tomorrow that people are talking about. And that's consistent with the venture and growth sector for as long as we've been active in it. It's always about the companies of tomorrow, not the companies of today. In terms of the -- so in terms of future redemption activity, we're not hearing any pent-up demand for redemption. We always, with all of the evergreen funds, plan for and manage the portfolio in anticipation of maximum redemption per quarter or biannually, depending on which fund we're talking about, so that we're prepared from a liquidity perspective. And in terms of future flows, we continue to see high activity at the top of the funnel and SPRING, in particular, adoption into additional model portfolios. So continue to be very bullish on what we'll see going forward. Again, as we mentioned in the prepared remarks, last couple of quarters were definitely outsized. Again, we weren't marketing it as access to one or even a handful of specific companies, but you can't control activity out in the market, but interest continues to be quite strong.

Got it. That's helpful. Maybe staying on the evergreen topic. I believe the international exposure in your evergreen funds is fairly low. So how are you thinking about expanding distribution overseas?

Yes. So we have added dedicated personnel within territories that are fully focused on the wealth channel, and we've built that out over half a dozen-plus territories internationally today. The vast majority of their activity is around getting on platform as opposed to calling on advisers, right? And so as that kind of activity level balances out toward calling on advisers, rather than calling to get on platforms, we'll start to see a much more material uptake in terms of the funds. The second point that I'd make is we have really focused on enhancing brand awareness in different markets internationally through targeted outreach, not just calling campaigns but advertising and the like.

[Operator Instructions] The next question comes from Michael Cyprys with Morgan Stanley.

Maybe just staying with private wealth. Clearly, this has become arguably one of the biggest growth engines for StepStone. So as you think out 3 to 5 years, curious what becomes the limiting factor in your view to sustaining this multibillion-dollar quarterly inflows that you've been putting up?

We don't see a limiting factor to being able to keep that multibillion pace up into the future. The TAM is quite high, penetration is very low. And these funds, in addition to being well tuned for the high net worth and mass affluent markets are also very likely going to be component parts of our solution for 401(k), which represents an equally large and less tapped market today.

Great. And then just as a follow-up question. Historically, you've monetized your investment expertise through management fees and carry. But as you broaden the business with data analytics, technology through some of the various partnerships with FTSE, Kroll, PitchBook you mentioned earlier, I guess, to what extent do you envision those becoming more meaningful business lines? Maybe you can help frame what success looks like for these data businesses? And maybe you could speak to some of your initiatives and steps you're looking to take there to help drive an inflection over the next 12 to 24 months.

Thanks, Mike. This is certainly playing a long game in many ways. But the data that StepStone is sitting on is probably the deepest, broadest and largest data set in the industry across all the asset classes and strategies. The partnerships that we put in place have really been done so with a very long-term view, starting with FTSE Russell. In many ways, to Jason's point, as we start migrating into defined contribution, whether it's 401(k) or Scott pointed out model portfolios as another channel for us, we think benchmarking tools and analytical tools are going to be table stakes for accessing some of these markets. And we believe the FTSE Step suite of indices will become into focus and a priority for asset allocators, particularly in that segment of the market as they think about how to figure out transparency and governance and benchmarking returns, particularly in the retirement market. The industry has relied heavily over the years on this quarterly lagged benchmarking tools that I just -- we don't think are sustainable over the long term. So I think what we're creating with FTSE Russell is very long term. But I think the big economic model that I think we're all curious to see whether or not we can unlock is if some of these indices that we're creating with FTSE Russell could have an asset management solution wrapper attached to it. So stay tuned for more thoughts there. Certainly, the PitchBook partnership is an exciting one for us that will enable general partners and other members of the asset class to analyze performance at the deal level, not just at the fund level. So how managers can start benchmarking their returns by portfolio company in a specific GICS code or sector or geography, enterprise value or entry multiple, all of those deal level data points are now going to be available to the general partner community and other service providers to really assess how performance can be measured with transparency in the marketplace. And last but not least, given all of the attention that private credit has received over the last year or so, the partnership that we've created with Kroll, provides a variety of users in the industry how to better understand measuring risk at the loan level, not at the fund level data points. So all 3, we think, sets StepStone up to be the leading source of truth when it comes to data and technology in the private markets.

And the next question will come from John Dunn with Evercore.

Maybe just thinking about some of the newer strategies you guys have in private wealth. Maybe can you talk about like how your early experiences are tracking towards your prior experiences and maybe kind of openness to acceptance and potential for platform expansion domestically?

Sure. Thanks, John. I think that if you look at the adoption curve, we kind of call it the day 0 asset raise curve with SPRIM going first, if I look at each of the successive funds, every single one of them is at or above the SPRIM adoption curve today and really has been from inception of each of those funds. So there is no doubt that there is a benefit in this channel of having built the brand and the trust relationship starting with SPRIM that has helped us with each of the successive funds. If I look at our lived experience from a cross-sell perspective, multifund adoption perspective, Mike touched on it in the prepared remarks that we now average 2 funds per platform if the platform has been with us for at least a year. That number has definitely crept up over the last number of quarters. So we're very happy with the evidence of the relationship that we've built, that trust relationship we've built with each of our partners as evidenced by that. And if we look at the number of platforms, again, looking at that seasoned universe of they've been with us for more than a year, we're now over 50% of those platforms have adopted at least 2 funds with a growing number of platforms adopting 3, 4 and even 5 funds with us.

Got it. And then maybe on the institutional side, any geographies you kind of point to as seeing accelerating demand or any shifts in strategy preference?

Thanks, John. Yes. So I think if you look at it over either the last quarter or the last 12 months, a couple of things. One, U.S. stands out as an area of strength, but some of that is driven by private wealth, which we've touched on. So if I exclude private wealth and focus on what you asked about institutional, the 3 broad geographies that stand out over both the last quarter and the last 12 months are U.S., Europe and then Asia plus Australia. And those things are driven by different things. I would say in the U.S., it's been the strong initial closings we've had on our venture secondaries and private equity secondaries funds. In Europe, it's been driven by, I'd say, mainly private credit and infrastructure, both some very strong separate account re-ups, but also strong fundraising across certain of our commingled vehicles there, things like infrastructure co-investments, things like our SCRED fund. And then if I think about Asia and Australia, there has probably been a bit more of a mix. Some of it is commingled fundraising, particularly in private equity across both co-investments and secondaries. And then in Australia, in particular, continued growth in separate accounts in areas like infrastructure. So again, no one geography driving anything, different drivers that are resulting in those 3 broad geographic regions standing out over the last 12 months. But hopefully, some of that color is helpful there.

I am showing no further questions at this time. I would now like to turn the call back over to Scott for closing remarks.

Well, great. Well, thank you for your time today. I hope everyone enjoys the rest of their summer, and we look forward to updating you again next quarter. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.