StepStone Group (STEP) Is Up 6.9% After Revenue Doubles but Profit Turns to Loss – Has the Bull Case Changed?

• StepStone Group Inc. reported first quarter 2025 earnings, showing revenue of US$364.29 million, up from US$186.4 million a year ago, but swung to a net loss of US$38.42 million compared to net income in the prior year.
• The company's significant revenue growth was offset by deteriorating profitability, and it announced a quarterly cash dividend of US$0.28 per share.
• We'll explore how the shift from profit to loss, despite higher revenue, shapes StepStone Group's current investment narrative.

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What Is StepStone Group's Investment Narrative?

To be a shareholder in StepStone Group right now, you have to believe in the company’s long-term potential to scale its private markets platform, expand internationally, and eventually convert rapid revenue growth into bottom-line profits. The latest earnings report adds a layer of complexity: StepStone nearly doubled its revenue year-on-year but posted a significant net loss, a sharp flip from last year’s modest profit. This financial mismatch could shift the focus away from previously anticipated catalysts, such as new client onboarding in Europe and product innovation, toward an urgent need for clear profitability or sustainable dividend coverage. Risks tied to persistent losses and limited board renewal suddenly feel more pronounced, especially in light of the dividend lift and recent index removals. How management reacts to this swing in financial results may redefine the stock’s near-term story.

But look closer, dividend sustainability may be a bigger issue than you realize. StepStone Group's shares are on the way up, but could they be overextended? Uncover how much higher they are than fair value.

Exploring Other Perspectives

Among the Simply Wall St Community, only one retail investor places StepStone’s fair value at US$9.54 per share, far below recent trading levels. With StepStone’s revenue surging but profits lagging, these kinds of gaps in outlook highlight why it pays to explore more than one viewpoint when judging a company’s prospects.

Explore another fair value estimate on StepStone Group - why the stock might be worth as much as $9.54!

Build Your Own StepStone Group Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your StepStone Group research is our analysis highlighting 3 important warning signs that could impact your investment decision.
• Our free StepStone Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate StepStone Group's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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