Greetings and welcome to the StepStone Fiscal Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Seth Weiss, Head of Investor Relations. Thank you, sir. You may begin.

Thank you and good afternoon, everyone. Joining me on the call today are Scott Hart, Chief Executive Officer; Jason Ment, President and Co-Chief Operating Officer; Mike McCabe, Head of Strategy; and Johnny Randel, 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'd 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 a number of risks, or other factors that are described in the risk factors section of Stepstone’s most recent 10-K. 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. In addition, 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 fourth quarter of fiscal 2022. We reported GAAP net income of $103.6 million. GAAP net income attributable to Stepstone Group Inc. was $41.8 million. We generated fee-related earnings of $35.9 million, adjusted net income of $43.7 million, and adjusted net income per share of $0.38. The quarter reflected retroactive fees resulting from an interim closing of Stepstone’s private equity co-investment fund that contributed $3.4 million to revenue and $3.0 million to fee-related earnings and pre-tax adjusted net income. This compares to retroactive fees in the fourth quarter of fiscal 2021 that contributed $0.8 million to revenue, fee-related earnings, and pre-tax adjusted net income. I would now like to turn the call over to StepStone’s Chief Executive Officer, Scott Hart.

Thank you, Seth, and good afternoon, everyone. Fiscal 2022 was a record year for StepStone. We generated our strongest year ever for fee-related revenue, total adjusted revenue, fee-related earnings, and adjusted net income per share. Our results were driven by record contributions of fee-earning assets, robust investment performance, and expanding operating margins. For the year ending March 31, we increased fee-earning assets by over $23 billion, $12 billion of which we generated, excluding the acquisition of Greenspring, ending the year with $75 billion of fee-earning AUM. We are encouraged by both the level of growth and the balance of contributions between asset classes, with over 60% of the year's organic growth coming from a combination of infrastructure, real estate, and private debt, and 40% coming from private equity, including venture capital. Over the last six months, a confluence of factors, including increasing inflation, rising interest rates, and geopolitical uncertainty created a challenging market backdrop. However, our confidence in our ability to grow fee-earning assets and fee-related earnings remains strong. StepStone's ability to perform through market cycles is a reflection of a platform diversified by geography, asset class, and strategy, all supported by the highest caliber professionals in the industry. While private market valuations are not immune to market pressures, the long-term nature of our investments and our clients' capital commitments allows StepStone to invest through economic cycles and take advantage of dislocations to deliver long-term outperformance. Importantly, StepStone is experienced in operating and investing through turbulent markets. Our firm was founded in 2007, just prior to the onset of the global financial crisis, and we have managed through previous periods of market volatility, including the beginning of COVID. It is during periods of market turbulence that our clients rely on us most. We are in a unique position to construct diversified private market portfolios that can weather a wide range of macro conditions, given the breadth of our strategies, expansive geographic reach, and depth of expertise across asset classes. This power of our platform was on full display over the last quarter. In infrastructure, we generated our strongest quarter ever of fee-earning asset growth. We have seen significant interest in inflation-linked investments such as regulated utilities and certain transportation assets. Furthermore, the rise in energy costs has accelerated trends related to energy transition and created compelling opportunities for investment. While infrastructure was clearly a standout this quarter, we are seeing positive trends across all four asset classes. Private debt has been our fastest-growing asset class over the last three years, with fee-earning assets growing at a nearly 40% annualized pace. The characteristics that have made private debt desirable, such as resilient yields, low volatility, and strong credit performance, remain true today. We are also seeing increasing demand for floating rate debt securities, the centerpiece of our private debt strategy, given the rising rate environment. Subsequent to quarter end, we completed the final close on our second Senior Corporate Lending Fund, or SCL II, which raised a total of $1.3 billion. We also held a final close on our first credit opportunities fund, or SCOF I, raising over $600 million. These two fund closings showcased the spectrum of our private debt offerings, with SCL II targeting consistent returns through senior secured first lien debt and SCOF I targeting higher returning opportunistic and distressed assets. Both funds were met with strong demand and both secured commitments above our targets. Moving to real estate, fundamental demand across most sectors remains strong. The downward pressure on asset prices from rising interest rates is accompanied by improving rents and increased occupancy rates, which serve as positive offsets. The combination of dislocations from the pandemic, along with capital markets volatility, has introduced unique opportunities across special situations, recapitalizations, and secondaries, all areas where we are especially strong. Deployment of real estate funds has picked up significantly in the last year, has continued into our fiscal 2023, and should spur near-term re-up and fundraising activity. And finally, momentum in private equity remains strong. We generated more than $4 billion of organic fee-earning asset growth for the full year, and we've been quite active to start the new fiscal year with several final and interim fund closings in the first two months of the quarter alone. Since the end of the fiscal year, we held a final closing on our venture capital secondaries fund, which closed with total commitments of $2.6 billion. We believe this is currently the largest dedicated venture capital secondaries fund in the market. We also executed our first close of over $1 billion on our private equity secondaries fund. We expect our private equity secondaries fund to become active and fee-paying later in the fiscal year. We believe these two secondary funds position us extremely well for the current environment. Many LPs are taking a more active approach to portfolio management as market volatility has shifted portfolio weightings, while fund distributions have slowed. We believe this will create significant volume in the secondaries market as LPs seek liquidity. We are also nearing final closings for our flagship co-invest fund, which has closed on over $2.3 billion to date, our venture capital opportunities fund, which has closed on over $800 million, and our venture capital micro fund. In total, we have closed on more than $2.5 billion of commingled funds since March 31, which you will see in our next fiscal quarter's results split between our fee-earning and undeployed fee-earning asset balances. I would like to quickly touch on the Greenspring acquisition, which closed in September of 2021. The integration of Greenspring is progressing well, and as expected, we are seeing a number of benefits as a result of the combined platform. Our access to deal flow and differentiated due diligence insights has never been stronger. As you just heard, fundraising across our venture capital and growth equity commingled funds continues to be very successful. And we are also having multiple discussions with clients regarding venture capital dedicated separate accounts, combining the investment prowess of the Greenspring team with the emphasis on customization for which StepStone has developed a reputation. As we head into fiscal 2023, the demand for private markets remains strong as cycle-tested investors understand that some of the best private market investments are made during periods of dislocation. However, the current fundraising environment can be challenging as some LPs find themselves at or above their target allocations, and many managers have returned to the market with larger funds than before and faster than expected. In StepStone's view, this is likely to result in a fundraising market that is bifurcated between the haves and the have-nots. It will favor managers that have been disciplined in their deployment, have differentiated strategies, and have generated strong returns across market cycles. Manager selection is particularly important in this environment, and StepStone is uniquely qualified to help our clients navigate an increasingly crowded field. Furthermore, our ability to invest and underwrite alongside the best GPs in the world allows us to access attractive co-investment and secondary investment opportunities. Turning to our results on Slide 5. We generated $43.7 million in adjusted net income for the quarter, or $0.38 per share, up 52% from the prior fiscal year's fourth quarter on a per share basis. We generated fee-related earnings of $35.9 million, up 71% from the prior year quarter as we produced strong organic growth and benefited from the Greenspring acquisition. Accounting for the increase in our shares outstanding, we grew fee-related earnings per share by 47%. We declared a dividend of $0.20 per share, a 33% increase over our prior dividend. Mike will speak to our capital management priorities in more detail. Before turning the call over to Mike, I want to highlight our annual ESG report, which we issued earlier this month. We believe conducting our business with consideration of ESG topics is key. We are proud to be a carbon-neutral company and are committed to advancing diversity, equity, and inclusion through our hiring, promotion, talent development, and partnership with outside organizations and nonprofits. On the investment and client side, 100% of our investments are diligence with consideration of ESG matters, a practice we are very proud to have implemented across all our asset classes and global offices. We are working to cascade these practices to our growing global community of GPs. ESG is clearly an evolving and growing topic within the private markets. We believe we are well-positioned to provide solutions for our LPs' needs and look forward to expanding our engagement with our clients, general partners, portfolio companies, shareholders, and other stakeholders. I will now turn the call over to Mike McCabe.

Thanks, Scott. Turning to Slide 7, we generated approximately $21 billion of gross AUM inflows in the last 12 months, with $5 billion coming from our commingled funds and $16 billion from separately managed accounts. Slide 8 shows our fee-earning AUM by structure and asset class. For the quarter, fee-earning assets grew organically by $4 billion. In separately managed accounts, we added $3.7 billion to our fee-earning asset balance driven by several significant re-ups and expansions in infrastructure. In commingled funds, we generated over $1 billion in gross additions. However, we also returned capital to our limited partners as we executed on opportunistic sales of secondary funds that were near the tail end of their lives. These sales make up the majority of the $800 million of fee-earning asset distributions you see on the fee-earning AUM walk on Page 18 of the earnings presentation. As a result, commingled funds netted approximately $300 million in fee-earning asset growth. And as Scott mentioned, we've already enjoyed sizable commingled fund closings in the first fiscal quarter of 2023. We continue to grow our evergreen product called CPRIM, our private markets fund for accredited investors. We crossed $550 million of assets and have delivered a 77% total return since inception. We continue to make progress across all distribution channels. Looking over the last 12 months, and excluding the impact from acquisitions, we have organically grown fee-earning assets by approximately $12 billion, our largest year ever of net fee-earning asset growth. As we've highlighted in the past, this growth is predominantly fueled by markets outside of North America. This growth also comes on top of a very strong year of realizations, which enabled us to return over $7 billion of capital to our limited partners, which is by far our largest 12-month period of capital distributions on record. Now given the market backdrop, we could not be more thrilled with our level of undeployed fee-earning capital, which stands at $17 billion, near our highest balance. Dry powder is more valuable than ever, and we intend to utilize the full breadth and depth of our platform to take advantage of our rapidly changing investment environment. Slide 9 shows the evolution of our management and advisory fees, where we are generating $3.55 per share in revenues over the last 12 months, representing a 25% annual growth rate since fiscal year 2018. We generated a blended management fee rate of 52 basis points, which remains stable compared to the last three years. Now before transitioning to Johnny, I would like to spend a minute on capital management. Our business model is highly capital efficient and generates significant cash flow. Our top priorities for cash are to drive continued growth and long-term profitability while supporting the common dividend. As Scott mentioned, the Board has declared a dividend of $0.20 per share for the quarter, up nearly 200% from our initial $0.07 dividend in February of 2021. We can comfortably support this higher dividend given the consistency of our cash flow and strong growth in operating results. Since going public less than two years ago, we’ve grown trailing 12-month fee-related earnings per share by 66%, while nearly tripling our net accrued carry and investments. We will continue to invest in organic growth, which includes development of our proprietary and differentiated technology, build-out of our retail team, and investment in a broad geographic footprint that can best serve developed and growing markets. And we are being thoughtful about other opportunistic uses of funds, including potential M&A. Since founding the firm in 2007, we’ve complemented organic growth with highly synergistic and accretive acquisitions. Our experience positions us incredibly well to take advantage of compelling opportunities as we enter a new market cycle. And with that, I'd like to turn the call over to Johnny Randel to discuss our financial results in more detail.

Thank you, Mike. I'd like to turn your attention to Slide 11 to touch on a few of our financial highlights. For the quarter, we earned record management and advisory fees of $112 million, driven primarily by continued growth in fee-earning assets. Our FRE margin for the quarter was 32%, up more than 400 basis points year-over-year. We benefited from retroactive fees in the quarter, which contributed 180 basis points to the FRE margin. Sequentially, our FRE margin was down 260 basis points from the fiscal third quarter, driven by higher expenses. Compensation was up due to higher headcount, bonus accruals, and the timing of payroll taxes and benefits, which are seasonally highest in our fiscal fourth quarter. Also, recall that we benefited from bonus accrual adjustments in the fiscal third quarter, making the sequential comparison a bit more difficult. Gross realized performance and incentive fees were $32.9 million for the quarter, which were up 31% year-over-year, but are down 51% sequentially from the record performance fees in our fiscal third quarter. For the full year, we generated over $120 million of net realized performance and incentive fees, which is our highest year ever, driven by strong underlying investment performance and a very supportive environment for exits and realizations through most of the fiscal year. Monetization activity has slowed since the start of this calendar year, as IPO activity and broader transaction volume have moderated. Net realized performance fees were strong at $28 million, as a portion of the realized performance came from investment programs that did not have associated performance fee compensation. A quick note on a few other P&L items, which you can find on our non-GAAP financial results on Page 17 of the presentation. Income attributable to non-controlling interest was approximately $9 million, which is up nearly 90% year-over-year. As a reminder, we own 100% of our private equity businesses, but roughly half of the other asset classes. The increase in NCI is evidence of the strong growth we are generating in infrastructure, private debt, and real estate. Most of the earnings in these asset classes will be fee-related, but we did generate a small amount of performance fees this quarter. We are now showing a breakout of fee-related and non-fee-related earnings within the non-controlling interest line to assist you with modeling. Non-core expenses were up in the quarter, which related to the accrual of potential Greenspring acquisition earn-outs, which we outlined when we announced the deal. The growth in the venture business is progressing well, so we currently anticipate that this earn-out will continue to accrue periodically over the next three years as revenue for Greenspring approaches levels needed to achieve that earn-out payment. As a reminder, non-core expenses do not impact fee-related earnings or adjusted net income. Finally, our tax rate reflected in ANI was 22.3% for the quarter and 22.5% for the full year. We anticipate reflecting a 22.3% tax rate related to ANI in fiscal 2023 based on the blended statutory tax rate derived from our expected state apportionment of income. Moving to Slide 12. We grew overall adjusted revenue per share by 52% in the fiscal year and by a 33% compounded annual growth rate over the longer term. The revenue growth is driven by consistent growth in fee-earning assets and has been bolstered by the recent period of very strong realized performance fees. Shifting to our profitability on Slide 13, we grew fee-related earnings per share by 25% for the full year. As a reminder, we earned a high level of retroactive fees in fiscal 2021, so our fiscal 2022 year-to-date growth comes against a high comparison. Excluding the impact of retro fees, FRE per share would have grown by 32% for the full year. Looking over the longer term, we have achieved a CAGR of 48% in fee-related earnings per share since fiscal 2018. Turning to ANI, we grew our adjusted net income per share by 85% for the full year and by 45% over the longer term, reflecting both continued increases in FRE and strong realized net performance fees. Moving to the balance sheet on Slide 14. Gross accrued carry continues to increase, driven by strong underlying investment performance, ending the quarter at $1.5 billion. This is up 10% from the prior quarter and up 65% over the last 12 months. Our own investment portfolio ended the quarter at $107 million, up 8% from the prior quarter and up 44% over the same quarter in the prior year, reflecting both market appreciation and net contribution. Unfunded commitments to these programs were $68 million as of quarter end. As a reminder, accrued carry and our investment portfolio are reported on a one-quarter lag; the balances reflect performance through December 31. We manage a large pool of over $55 billion of performance fee eligible capital. This capital is widely diversified across multiple vintage years and over 150 programs as of March 31. 69% of our unrealized carry was tied to programs with vintages of 2017 or earlier, which means that these programs are largely out of their investment periods and have entered harvest mode. 62% of this unrealized carry is sourced from vehicles with deal-by-deal waterfalls, meaning realized carry may be payable at the time of investment exit. This concludes our prepared remarks. I will now turn it back over to the operator to open the line for any questions.

Our first question comes from Ken Worthington with JPMorgan. Please state your question.

Hi. Good afternoon. Thanks for taking my questions. Maybe first to dig into Greenspring; emerging growth appears to have changed in the opinion of many investors, and maybe some more concerns have grown around the prospects for emerging growth investments. Maybe can you start by talking about the interest level that you're seeing in venture capital and to any extent that the dialogue you're having with Greenspring investors has or has not changed in recent months? And then along those lines, what are the conviction levels that you have and your ability to raise bigger funds for the Greenspring products that you guys have in the market currently?

Sure. Thanks, Ken, for the question. This is Scott. So look, clearly, one of the most significant things we've seen happen over the last several months, driven by inflation and rising rates has been the repricing of long-dated cash-burning growth in technology companies. It's really caused a shift in mentality from the sort of growth-at-all-cost mentality to a focus on more sustainable growth and finding a clear path to profitability. But as we think about how this impacts our business, I think we really break it down into the fundraising impact, deployment, as well as current performance. On the fundraising side, you heard from us that during this past quarter, as well as in the quarter-to-date period here at the start of the new fiscal year, we have continued to see quite a bit of momentum in fundraising with the final close on our venture secondaries fund, as well as the interim closings on our direct opportunities and micro funds. Clearly, we expect the year ahead to be a more challenging fundraising environment than the year before. But as we think about the conversations we are having with clients today, we’ve been pleasantly surprised that there are actually quite a few investors that are just now looking to get access to the venture capital market. If anything, during those conversations, what we hear is that the one thing holding them back over the last year or couple of years had been the valuation environment. So they view this as a more appropriate entry point. We certainly think that fundraising will be more challenging, maybe slowed down, but we are encouraged by the level of interest that we see. As we think about the deployment environment, again, we expect that not unlike the broader private equity market, we will see things moderate in the near term here, given bid-ask spreads, and given that most companies that don't have to fundraise today will not. But again, we will be selective in our deployment and actually feel pretty good about having a couple of fresh pools of capital to invest into the environment here. So we will have to be patient, but feel good about the fundraising that we completed lately here.

Awesome. Thank you. And then just maybe on carry, the performance fee compensation payout ratio seemed unusually low this quarter? And then, I guess, separately, the ratio of carry to distributions also fell. And I think, Mike, you had some comments here. Johnny, you had some comments here. But help me just tie these together; how did the nature of carry this quarter sort of impact or result from these other items that I highlighted?

Hi, Ken. Sure. This is Johnny. Thanks for the question. I will start, and the others can add. I guess just in terms of the compensation question, I know we've mentioned it at various times before. We do have some relationships that have carry tied to those programs that do not have an associated compensation. This just happened to be the quarter where some of those had realized carry that came through. So it is a nuance; on a normal quarter, you will see what you've seen before, which had run somewhere in the 50-ish percent range. So just an unusual quarter based on timing. As far as the impact of realizations on fee-earning assets, it's sort of a quarter lag in terms of the fee-earnings basis that we report as paid fees in the quarter. Realized carry happens during the quarter. There are so many fees associated with that. But we have a lot of carry that comes from vehicles that have paid on committed, so we see a correlation or correlating drop in fee-earning assets.

Yes, great. Thanks very much.

Our next question comes from Michael Cyprys with Morgan Stanley. Please state your question.

Great. Thanks so much. Good afternoon. I wanted to ask about the retail Evergreen product, the Conversus strategy. I was hoping you could give us an update on the distribution build-out there? How many platforms are you guys on today and where would you like that to be 12 months from now? Maybe you could talk about some of the action items that you guys are looking to implement there on building that out over the next 12 months or so?

Thanks, Mike. Jason here. So in terms of the build-out of the distribution platform, think about the same four pillars that we've talked about historically: that's international; that’s RIA here in the U.S.; that's IBD here in the U.S.; and that's the wires. Progress has been strong across all four of those pillars, and they're all important. As it relates to just the sheer number, we're up around 110 platforms today here in the U.S. across RIA and IBD. We had our very first allocations from a wire here in the U.S. this quarter as well. So excited there. The international build-out continues; we've added staff in Europe to continue our international push, and conversations continue in the rest of the world as well. Going forward, we will see more investment in the team—it's up around 40 folks now today—and we will see more investment in the non-U.S. team as well as here in the U.S. as we continue to penetrate the various of those four pillars. The syndicate build that we'd like to see, I think we'd like to see continued progress across all four of those pillars averaging about $45 million a month over the last five or six months here, and we would expect that to grow over the next bit.

Great. And just a follow-up question. Just thinking about product, I'd be curious to kind of hear your latest perspective on how you're thinking about expanding the product portfolio, both on the retail side but also more broadly, including institutional. I heard you mention perhaps a venture SMA leveraging the Greenspring investment team there. But just broadly, how are you thinking about expanding the product portfolio over the next year or two?

Okay. Maybe I'll start on the retail specifically and then kick it over to Scott. On the retail, look, CPRIM is the first, not the last fund that we're going to be raising that's purpose-built for the retail channel, and we've said that before. We've got a couple of products in development now, and we should have something to talk about in the near future on that front. As the Conversus team builds out, we are starting to utilize their services to think about retail distribution of our institutional funds as well. They're providing a lot of operating leverage to our regular business development sales motion. I'll kick it over to Scott now for the latter part of your question.

Sure. I think on the institutional side, the venture capital, separate accounts that I was referencing, look, it's been a normal course part of our business. The good news is that we now have examples post the Greenspring acquisition of both StepStone legacy clients that have made new venture capital commitments and legacy Greenspring clients that have now made commitments to StepStone products. So not only thinking about new strategies, but also executing on some of the cross-selling opportunities that exist there. As we think about other strategies, we've referenced this in the past, but we continue to build out across certain other asset classes as we think about the evolving, for example, co-investment in secondaries markets in areas like infrastructure, and our private debt business continually looking to expand their deal flow and really either diversify that deal flow or offer clients the ability to generate different risk-return. So I think those are some of the key things that we are thinking about. These may be in the form of separate accounts, and these may be in the form of commingled funds depending on the appetite from clients and the targeted investors.

Great. Thank you.

Thanks. Our next question comes from Adam Beatty with UBS. Please state your question.

Thank you, and good afternoon. I wanted to follow up on the wealth management channel, specifically the wirehouse segment. You mentioned getting some allocations from a certain partner there. So if you could talk a little bit about the dynamics of winning that business, getting that approval, and then what you're going to be doing to ramp up the volume there. What do you think are the critical success factors in that area? Thanks.

Adam, it's going to vary platform to platform and whether that's one of the roll-up RIAs, one of the IBDs or the wires. The approval process varies pretty dramatically platform to platform. But ...

Yes, I was curious about the wirehouse example specifically?

Yes. So without calling out which wire and how different bank platforms work, there's an education process around the product. There's a diligence process. There's an operational due diligence process. And then it's a matter of finding the slot on the calendar of when they're ready to launch with you. This has been a multi-month, in fact, probably more like a 12-month courtship with this particular platform. We're doing the same thing with all the wires kind of concurrently. In terms of the ramp, then it's an education process with the FAs. There's a kickoff call. You start sending out kits to the various FAs as they request them, and that can include education with the individual clients or just with the FAs, which kind of varies a bit as well. As FAs work through the book, you'll see a pickup in monthly flows.

Thank you, Jason, for your patience with a detailed question. Regarding the phrase Scott used about the divide between the haves and have-nots in the GP universe you deal with, I'm curious about your observations on the current situation. Are you seeing any signs of a split developing, or is this an expectation based on your previous experiences? Thanks.

I think at this stage, it's something that we expect based on past experience. I think you've heard from us over the last few quarters, and you've heard from others as well, what a crowded fundraising environment it is today. When you combine that with the denominator effect, which is not necessarily impacting all LPs but certainly impacting some, what you find is that some LPs will need to be more selective as they continue to allocate to the private markets. The different options available are one can cut back their allocations, they can be more selective about what groups to back, or maybe they can pursue secondary sales as well. In that type of environment, and combined with the crowded fundraising market that we see today, we would expect to see groups very selective and again, focused on not only GPs who have been disciplined and generated strong returns through cycles but have been disciplined from a pacing standpoint and who have strategies that are well-suited for the current environment. That's really what I was referring to there, Adam.

Perfect. That makes sense. Thank you, Scott.

Our next question comes from Ken Worthington with JPMorgan. Please state your question.

Hi. Thanks for taking the follow-up. On G&A, it rose decently from the December quarter to the March quarter. I believe in the prepared remarks, you talked about earnouts. The increase in G&A, is that a result of sort of one-time items reflecting Greenspring? Or is it—should we use this as the run rate to build the model going forward?

Hi, Ken. It's Johnny again. I guess if you're looking at Page 17 where we provide the walk of GAAP to non-GAAP and kind of break out FRE, G&A was up sequentially. There was—we do back out the earnout piece when we get to FRE. You'll see a $10 million add back of non-core items, and then we footnoted kind of what's included in there. I just want to make sure I address what you're talking about. Sequentially, it was up, I want to say, $1.5 million to $2 million on, I'll call it a real G&A perspective, and that's kind of just a reflection in staffing and travel picking back up and things like that. I just want to make sure I'm addressing what your question is.

Perfect. You just did. So thank you very much.

The next question comes from Michael Cyprys with Morgan Stanley. Please go ahead.

Great. Thanks for taking the follow-up. I just wanted to come back, Scott, to your commentary around expectations for a more challenging fundraising environment looking ahead. I take the commentary for the industry, but also would be curious around your perspective there around how you see that impacting StepStone in particular? And then the second part to the question is, when I hear the more challenging fundraising environment, can you just maybe expand upon from a geographic and a product-level standpoint? I’ve heard commentary around overallocation by the U.S. pension fund community and so more of a U.S. pension fund concern. Are you seeing that as well? And are you seeing this in other asset owners in other parts of the world? And then at the product level, we're hearing it more with respect to private equity, venture, and growth, and not hearing it on the real asset side. So just curious how you're hearing that as well?

Yes. No, it's a good question, Michael. I think, yes, there certainly are differences geographically; the denominator effect does not only impact U.S. pension funds—that's certainly the case. For every conversation, we seem to be having about the denominator effect, we are also having conversations with clients who have had significant inflows or are under allocated to the asset class or have been waiting for an opportunity to begin to build a certain exposure. Many of those conversations are taking place outside of the U.S. today. When you think about the mix of our business, with 70% of our management advisory fees coming from outside of the U.S., and a diverse mix of different types of clients, we feel very good about the diversification from both a geographic and a client standpoint. We also feel very good about the mix by asset class. When you think about certain infrastructure and private debt asset classes, I think you've got a few things going on: one, you continue to have certain clients or LPs that are under allocated to those asset classes; and two, you've seen some renewed interest either because you're looking for inflation protection in the infrastructure asset class or floating rate debt securities in private debt. Certain of those trends are working in our favor. Finally, I would say that—we talked during the prepared remarks about the secondaries market; that's a topic we've spent quite a bit of time talking about over the last year or so. However, much of that conversation has been around GP-led secondaries that have really driven a lot of the growth over the last two or three years. I wouldn't be surprised to see some level of LP secondaries come back. We're already starting to see this in the first part of the calendar year here today. When I talk about those things, I think about how it impacts StepStone. I think that the pace of fundraising will take slightly longer to raise, and I think deployment, as we've talked about in the past, is sometimes difficult to forecast from quarter to quarter. We certainly feel very good about our ability to deploy the $17 billion of undeployed fee-earning capital over a three to four year time period, but from quarter to quarter, it is difficult to predict.

Great. Thank you. Appreciate it.

Thank you. And there are no further questions at this time. I'll turn the floor back to Scott Hart for closing remarks. Actually, I'm sorry, one just popped in now. One moment. This question comes from John Dunn with Evercore. Please go ahead.

Hi. I was just wondering, maybe with what Mark has done so far this year, any thoughts about how M&A sellers stand on joining bigger institutions may have changed one way or the other?

Hi. Thanks. This is Mike McCabe. Look, as you know, we've enjoyed a lot of success here at StepStone in acquiring senior talented teams to build out the platform as well as augmenting things that we're currently doing. Greenspring was a good example of how this works on the venture capital front. There continues to be quite a bit of M&A activity in our industry. As we've discussed in the past, we will remain opportunistic as we have the expertise, experience, and the currency; our capital structure to be flexible and nimble when opportunities arise. As we move into this next cycle, some things may fade away from groups chasing the market and trying to get a maximum price based on where valuations were. However, there appears to be a large intergenerational transition going on with firms that were set up 15 to 25 years ago, trying to manage through that transition by combining with a larger organization and looking for ways to distribute their products and services through different channels. We will continue to see a pretty active M&A market for the coming future. As a firm, we will continue to be strategic and thoughtful on that front.

Thanks very much.

Thank you. And with that, that concludes our Q&A session. I will hand the floor back to Scott Hart for closing remarks.

Great. Well, thanks, everyone for participating in today's call. We certainly appreciate your time and continued interest in StepStone, and we look forward to providing another update next quarter. Thank you.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.