StepStone Group Inc. (STEP) Earnings Call Transcript & Summary

Hi. I'm Matt Kesselhaut. I'm Jason Goldberg's team here at Barclays covering financials. Next, we are happy to welcome StepStone. After IPO-ing almost exactly a year ago, timing wouldn't be more perfect for a fireside chat. From the company, we have Co-CEO, Scott Hart, and Head of Strategy, Michael McCabe. Just a reminder to the audience, there's a question box on the upper right-hand side of your screen. If you'd like to ask a question, please put your question in the box and I'll try to ask it or the end of the session. With that, let's get into Q&A.

Why don't we first start with a little bit of background? StepStone stock has been a tremendous run since your IPO just under a year ago. But for those newer to the story, can you share a little bit of a -- a little bit on what you do and some of the drivers of the strong performance over the last year.

Sure. Well, first of all, thanks, Matt, for having us today. Great to be here with you. And Mike and I always enjoy telling the StepStone story, and as you pointed out, almost exactly 1 year anniversary of our IPO. But look, I think your question is probably a good place to start. And I think for those who are newer to the StepStone story, we tend to think of ourselves or talk about ourselves as a private market solutions provider. But what does that really mean? We at StepStone tend to sit in between our clients, the limited partners who are looking to access the private markets and the fund managers or GPs who are looking to raise capital to allow them to invest directly into private companies, properties or other private markets asset classes. And so essentially, the role that we play is to enable or facilitate access to the private markets on behalf of our clients. Yes, I think from our standpoint, the reason this is an important place to sit within the private markets ecosystem is that there have clearly been a number of tailwinds or other reasons that the private markets are currently in high demand and then many of the investors you talk to they are looking to increase their allocations to private markets as driven by the strong performance of the asset class, the ability to generate portfolio diversification, for certain of our strategies, the ability to generate income or yield in a world where that has been increasingly challenging. But on the other hand, you've got a number of barriers for investors, whether they be big or small in accessing the private markets, they really center around a few key points. One is resource constraints. As we think about many of our clients, they tend to have small teams oftentimes sitting in a single office in a single location, yet are being asked to cover an increasingly complex global private markets landscape. It is becoming increasingly global. We've seen a proliferation of the number of managers, strategies, sub strategies. We've seen access to those managers become increasingly difficult to achieve. And frankly, many of our clients are looking for a customized solution, something that is really tailored to their specific needs as a one-size-fits-all approach. And so the platform that we built at StepStone is a comprehensive one that really looks to address each of these challenges, looks to create a situation where it's effectively more efficient for our clients and more practical for our clients to partner with StepStone than to try to replicate the capabilities that we've built up over the last 14 years. And the reason for that, again, are that we really got access to a full array of private markets, investments across multiple asset classes, strategies and geographies. We've got access to a comprehensive toolbox that really allows us to build those customized portfolios, taking into account the client-specific risk, return, liquidity, cash flow needs. And we're able to do this in a relatively cost-effective way. And so I think when we really step back and you kind of talked about the strong run that we've been on, I think that success that we've had is really evidence of the fact that we're providing a service that is valued by our clients. We've really taken a client-centric mindset as we think about some of the strategic decisions we've made over time. And that's really been part of what has driven the strong 30% growth in fee-earning AUM, mid-20s percent growth in management advisory fees and over 50% growth in fee-related earnings over the last 3-year period here.

Got it. And I guess, can you talk about the solutions you're providing and who exactly is your target base?

Yes. So thanks, Matt. I think why don't we talk maybe for a minute about who our clients are, what they look like, what their needs are, and maybe I can spend a minute about what the solutions are that we're creating for them. I think we have purpose-built StepStone's platform, specifically to navigate the complexity of the private markets for our clients and they include institutional investors, largely, at the moment, but also as well as individual investors, and we'll talk about that a bit later on, I suspect. But when we think about the institutional footprint that StepStone serves, it's pension funds, insurance companies, private wealth, defined contribution plans, sovereign wealth funds, corporations, family offices, endowments and foundations. And any one of these organizations is looking for something a little bit different. And why? Well, the reason is because they're either coming into the asset class private equity or other asset classes, real estate, infrastructure or credit for the first time. I mean they're just building a portfolio from scratch. And StepStone is there to help build those portfolios with them or they might be 20-, 30-year investors in the asset classes and given how you've had this 10- to 15-year procyclical expansionary period, their denominators are growing, and so they're allocating to private markets just to simply keep up with the growing denominator. And then, of course, they're always looking to try to figure out how can we leverage our relationship with StepStone to invest in 1, 2, 3 or all 4 asset classes. And so it's really a very customer-centric and customer-driven discussion. And then I would say the other sort of key priorities our clients are looking for in this complicated asset class is transparency and data and technology. How do they navigate the private markets with the efficiency and transparency that they have with the public markets. And so StepStone is creating data and technology tools to help better navigate the private markets with the transparency, risk management and liquidity. The solutions that we're creating for them really fall into 2 kinds of commercial structures, if you will, one, our managed accounts where we'll create a customized portfolio, based on strategy, based on geography, based on duration, based on risk return, whatever it might be. Everyone's bespoke and everyone is unique. And those tend to cater to sort of the mid- to large-sized investors. And then for the smaller and midsized investors, we've created a suite of commingled products, which are quite specialized. They specialize in any 1 of the 3 strategies that we work on: Fund investments, co-investments and secondary investments across all 4 asset classes. And so we've created commingled bonds that provide access to co-investment commingled funds that provide access to secondary investments or multi-strategy vehicles. And so those are the sort of solutions that we create across the client base, and we do so in a very global way.

Got it. Can you give us an idea of how many clients are utilizing your suite of offerings and how much white space, do you think there is a deep [ influence ] to your current clients?

Yes. In terms of the numbers, I mean, you can imagine it's a very large number of clients, but if we break down and see what they look like, it's about 40% of our assets go to -- come from pension funds and then about 17% come from insurance companies, defined contribution plans around the same size, 16%, 17%. It's really -- it's a broad number, it's a broad range, but you can think of pension funds, insurance companies sovereign wealth and defined contribution plans, being the propensity of where our client capital is coming from.

If I maybe just pick up, though, with how many of them are utilizing the full suite of offerings. Look, I think what I would say is that whether a -- when I start by saying whether a client is utilizing the full suite of offerings or a single offering, those clients can still be very meaningful clients to StepStone. And so for example, we have certain clients that will outsource the entirety of their private markets or private equity portfolio to StepStone. We have others that may make a single commitment to one of our commingled funds, but again, both of those can be meaningful client relationships for StepStone and what we've probably been more focused on is whether we can address the full range of challenges that our clients face as opposed to whether clients are fully utilizing the broader StepStone platform. But I think just to help you think about it what I would also say is, if you rewind 7 or 8 years ago, we were a business that was 100% focused on private equity. And therefore, I essentially had no clients that were working with us across multiple asset classes as we have built out our capabilities in real estate, infrastructure and private debt, many of those decisions were made in a client-centric way really with guidance from our clients and the result of which is today, about 35% of our clients work with us across more than one asset class. If we think about the different types of relationships we have, today, just under 40% of our advisory clients also have an asset management relationship with StepStone. And so I think that's in recognition of the fact that we've done a good job of increasing wallet share, of further educating our clients on the full suite of offerings that StepStone has. But the other thing we've done a good job of is continuing to add new capabilities over time to better serve and better address the needs of our clients. The acquisition of Greenspring that we think will really help creating the leading venture capital and growth equity platform and the solutions space is a good example of that. But it means that the idea of fully utilizing our suite of offerings has been a bit of a moving target as we have been able to, again, add or accelerate the build-out of certain capabilities that we offer to our clients over time.

Got it. And then you've spoken a good deal about increased retail investor [ participation ] in the private markets and how CPRIM is addressing that. Can you share a bit about how that product will be and where do you see it going?

Sure. I mean, historically, as I talked through, some of client profiles that we currently serve, private market investments have typically only been accessible by the large institutional investors and ultra-wealthy individuals. That leaves a huge part of the population available for consideration here. And so what we've done is we've designed a product to meet the widest portion of the pyramid, if that's a way to think about it, feedback has been fantastic. What we've done is, product called CPRIM is a very unique product, and it's marketed to accredited investors, right? So while also diversifying their portfolios, what we're able to access, these accredited investors, which is the largest population, if you will, of the qualified market that you often see pure funds targeting. It requires a very low minimum investment. It's an affordable fee structure. There's no carry. There's no capital calls, right? So it's very convenient and operates under a 1099 tax reporting, doesn't have K-1. There are a lot of features that we have created here with CPRIM that are uniquely geared toward that accredited investor. That includes quarterly redemptions. So there's a liquidity profile that is a lot less restrictive than what institutional investors are facing when they commit to some of these private market funds. We launched it not too long ago, and we're out of the gates, feeling pretty good about this progress. We've had fantastic returns. I think we're sitting a little bit north of 50% net IRR. We're sitting at a little bit over, I think, $190 million as we turn into September here. We have 50-plus wealth management platforms that have the product on it. And so the uptake is going well, and progress is going well and most importantly, the returns are strong. So we feel very good about our initial launch into the retail space here, and we're excited about its prospects.

Got it. And your quarterly fundraising continues to increase. Would you say most of your commitments are coming from existing clients or you find that new clients continue to make a large portion of the commitments?

Yes. So again, it's a good question. I think you're right that our fundraising has increased. I would probably just make the point that we try not to think about it purely in quarterly terms. And I think when we think about the cadence of our fundraising, whether it is a separately managed account, where oftentimes, we are having a multi-quarter, if not multiyear conversations with a client or prospective client as we develop a strategy formulate a plan before that account may be up and running or even on the commingled fund side, where we tend to raise funds every, say, 3 years. I think we have just found that thinking about this on a quarterly basis can be challenging and really try to think about it more on a rolling 12 months or slightly longer-term basis. But with that being said, I think it's a good observation as it relates to how much of the fundraising is coming from existing versus new clients. if you do focus initially on our separate account business, which today is about 80% of our fee-earning assets, we generally see that 80% to 90% of the gross flows are coming from existing clients. That's probably a bit higher during this COVID and post-COVID period that it had been historically. I think that, that's been a nice to have this ability to grow with our clients during a period of time where we were otherwise limited in terms of our ability to travel, develop new relationships. We've seen this sort of flight to the familiar during COVID. But I think it's also recognition of the fact that there are multiple ways for us to grow with our existing clients and whether that is deploying capital that's already been committed to us but converts into fee-earning assets as it's invested, whether it is through re-ups where we've had a very good reupgrade and tend to have very sticky relationships with our clients. Or as we've grown geographically and across multiple asset classes, this ability to expand relationships and work with clients in a number of different ways. So again, I think part of the reason that we've seen such a high percentage of our new business coming from existing clients is because there are multiple different ways for us to grow or to win with those clients. But at the same time, look, clearly, some of our growth will rely on adding new client relationships. I think during COVID, we have found that through our commingled funds has been an effective entry point for new relationships, new clients looking to gain access to the StepStone platform. We clearly have a very active business development team that is really operating across the globe. And even if we're in a scenario where international travel has been somewhat limited. The fact that we've got 19 ops around the world means that we can travel and meet with investors domestically in each of those markets. And so I think we are finding that new relations are continuing to develop, maybe have taken a bit longer during this last 18-month period but will certainly be an important part of the growth of the StepStone platform going forward.

Got it. Just a reminder to the audience, if there's a question there's a box on the upper right-hand side of your screen if you want to ask a question to the management team here. I guess moving on, secondary funds on co-investments are being increasingly popular for private asset investors. Can you touch a bit on why you think that is and what sets StepStone apart from the competitors?

Look, I think secondary and co-investments have been an important part of what we've done since inception. And as Mike talked earlier about some of the solutions that we provide to our clients, we have tended to build portfolios, utilizing a combination of primary funds, secondaries and co-investments, really with the belief that there are synergies associated with operating across each of these strategies, whether they be sourcing benefits, whether it's the due diligence or data advantages that we have because we operate across each of these strategies. There are also portfolio construction benefits. And so as a result, I have always felt that having co-investments and secondary is an important part of any private market's portfolio was important. But I think you're right to point out that there has been -- they have been particularly popular, of late. I think some of that is driven by these same long-standing trends or reasons that I just mentioned. But I think that there are a few additional factors driving the interest in secondaries and co-investments today. if we start with secondaries, I think we tend to see over time that secondaries activity tends to follow the fundraising cycle, as certain percentage of private market's NAV tends to trade on the secondaries market over time. And so as we have seen very strong fundraising activity over the last several years, not only in private equity, but across the private markets, that is certainly one driver of secondaries activity. But I think we've also seen a number of trends that have expanded the definition of what secondaries may mean. And a good example of that is the GP-led or single-asset secondaries market, which -- it has represented something like 60% of transaction volumes in private equity alone, but is also, I think, a growing trend across infrastructure, private debt and has been an active area of the real estate market for a number of years now. So again, I think there are a number of factors that are driving the growth in secondaries. I think if we think about the co-investment market, in our view, we've really seen co-investments emerge as one of the keyways that investors can build a very high-quality private market exposure, but in a cost-effective way. And if you step back and just think about the fees that we've seen charge in private markets over time, it has tended to be a 2 and 20 business for a long period of time. Part of that is because the returns that have justified that. But what you've really seen emerge is a couple of keyways for investors to lower their overall fee burden or scale-driven discounts or the ability to execute on no-fee-no-carry or reduced-fee-reduced-carry co-investment opportunities. I think that's been one of the big drivers resulting in added interest in the co-investment strategy. But to the final part of your question, what sets StepStone apart there, look, I think it's the power of the broader platform and some of the flywheel effects that we often talk about. When you think about the $50 billion of capital that we and our clients are allocating across the private markets on an annual basis, that means that we have a tremendous number of GP relationships. It also means that we and our clients are important limited partners for those GPs and that has real benefits when it comes to sourcing opportunities. It has benefits as it relates to the data or due diligence benefits that we can bring to the table as we evaluate new co-investment or secondary opportunities. And finally, our team that is quite experienced and has the ability to execute a variety of different types and a variety of different stages, transactions across both co-investments and secondaries.

Got it. Very helpful. And diversification of asset classes and geographies have proven to be very beneficial to winning new clients. Let's talk first about asset class. Relative to competitors, you move your footprint in real estate infrastructure, what strategies in infrastructures do you find to be [ a bug ] at the moment?

Well, so in infrastructure, I think we can talk both about the strategies in terms of how we access the infrastructure market. We can also talk about the sectors or the underlying assets that are of particular interest today. And so maybe starting with the latter. I think look, I think we're seeing a tremendous amount of interest in the infrastructure asset class, one, because certain types of underlying infrastructure assets have the ability to act as a natural hedge for inflation. So it certainly has been topical. And one of the reasons we're seeing increased interest in infrastructure today. I also think there are a number of different themes that really play in the favor of infrastructure when you think about renewables and clean energy, when you think about ESG more and more generally and sort of the drive for more ESG focused strategies. And then finally, if we think about different sectors, clearly, areas like telecom have been of increasing interest or activity amongst infrastructure investors but that's just more of the underlying assets that are being invested in. I think we think about the strategies to access the infrastructure market. I think in certain ways, we've seen the market start to evolve in a way that is similar to what we've seen in private equities. And so over time, we're starting to see more specialized infrastructure strategies, whether those are infrastructure debt, whether those are sector specific strategies, whether they're energy transition strategies where you really start to see a proliferation of the different underlying strategies being raised by GPs. Which I think in StepStone's case plays in our favor because it creates a more complex market environment and one that's harder to cover for an individual LLP. I think the other thing that we are seeing play out in some similar ways to private equity is the same secondary opportunity that we just talked about, a bit more nascent than that of private equity. But if we think about some of the recent accounts that we've won, specifically focused in and around structure secondaries, and I think that's a market that we expect to see develop over time. Initially, more of the activity concentrated amongst the GP-led transactions, but we expect to see a more developed secondary opportunity over time.

The following concerns in the 2020 around commercial real estate and urban apartments, are you starting to see the return strategies that may have fallen out of favor during the pandemic?

Look, we've certainly talked a lot about the fact that the pandemic has resulted in real bifurcation across different asset classes and real estate is probably one of the best examples of that where -- yes, we've seen certain sectors whether office, malls, high street, retail that were particularly hard hit and remain challenged today. The other end of the spectrum is you've seen certain sectors like logistics, life sciences and data centers that have actually been maybe the beneficiaries of the pandemic in some ways. But the valuations for those assets have created, in some cases, challenges identifying new investment opportunities. And so I think as we work through the recovery of what we are seeing today after a bit of a slowdown in real estate investment activity for us over the last in 12 to 18 months is that certain sectors are becoming more investable again. right? And so we think about areas like hospitality, senior housing, multifamily opportunities where there was a level of operational stress initially, there now appears to be an opportunity to invest into and ongoing recovery, while we continue to be selective about certain other of the hard-hit parts of the real estate market.

And StepStone's private credit offering also helped you standout in the period. Are you starting to see strategies that have gone out of favor in 2020 come back or [indiscernible] yourself?

I don't know so much that we're seeing strategies that were out of favor comeback. If anything, there are certain cases where the opposite has been true where maybe we expected that there would be a meaningful opportunity in the distressed space, for example, and instead, the distressed opportunity for some obvious reasons, that's been slow to materialize. I think instead, the way we would describe it is that we've seen continued interest in the private debt asset class more generally. I think there's probably a few reasons for that. I think, one, as we think about some of the investor types that have been most active in private debt, a number of insurance companies, pension plans, the funding gap that exists and makes the private debt an interesting strategy continues to be prevalent. I think the private debt asset class, which maybe until COVID had not been as battle-tested as strategies or asset classes like private equity is now being viewed as more battle-tested and resilient coming out of the COVID crisis. And so certainly a willingness and an interest to continue to invest in private debt. And then I think we're seeing a few trends that maybe play in the favor of StepStone, given the platform that we've developed which is that we are increasingly seeing some of those clients or LPs looking to integrate private debt strategies into their broader fixed income portfolios or are really looking to build multi credit private debt portfolio consisting not only of corporate credit but also real estate and infrastructure debt and again given the multi-asset class capabilities that we built out over time, position us pretty well to capitalize on that opportunity.

Got it. And we miss not to talk about your most recent acquisition, Greenspring Associates is a venture capital and growth equity platform. How do you see the company within the 2 year for a private equity offering? And what does it bring to the table that you think you're missing?

So if we go back to some of Scott's opening remarks, and he made it clear that we, as a company, are constantly on the lookout for some ways to grow our business. And I would say, when we look back at our private equity platform, we have a fantastic venture capital and growth equity team already in place. Earlier this year, we received a phone call somewhat of a proprietary nature from the founders of Greenspring Associates. And for those who are unaware, Greenspring Associates in our view, is the undisputed market leader when it comes to venture capital and growth equity. And we just could not be more excited about this deal. And what it does is it provides StepStone, that opportunity to really become the market leader, to be the preeminent venture capital and growth equity platform in the world. And so this is a really big, big transformative yield for StepStone and, frankly, for the industry. And just to kind of give you a sense of scale, this is an organization that is 20 years in the making. And they've been able to do something that very few other firms have been able to do, and that scale up in what has been somewhat of a cottage industry. And what I mean by scale, Greenspring manages $17 billion of AUM, $9 billion of fee-earning AUM as of March 31 of this year. And with that scale, they've been able to continue to do what StepStone has been able to do, and that's grow north of 20%. They've enjoyed, call it, 30%, 34% year-over-year growth for the last 3 years. While it meant gaining, something that also is very hard to do, and that is a fantastic track record. Greenspring has been able to generate net returns 21% plus since its inception in 2000. That kind of persistency of returns in this asset class through cycle at scale, again, is a very unique feature of Greenspring. So we could not be more thrilled to have the team fully integrated with StepStone. We share the same language. We share similar strategies, think fund investments, think co-investments and secondary investments, as Scott mentioned, we do the same thing across our platform that Greenspring does across their platform. It really is a bit of a plug-and-play fit between StepStone and Greenspring. So we're super excited. Our clients are excited because now they have access to this asset class that we already had access to, but on a much larger scale in a much more diversified way. It just creates a lot of industrial logic for us. And I have to say, credit just to Mr. Ashton and Jim Lim, founders and leaders of the organization. They were looking for, what do the next 20 years look like? And they saw StepStone and its growth and its culture and its platform. And they saw us as a very logical and natural partner for them as well. And so we're thrilled to invite Jim and Ashton and the entire Greenspring team to StepStone. Stay tuned as we move towards closing, but we couldn't be more thrilled to have the Greenspring team and all of their LPs and clients fully integrated with StepStone.

Got it. Very helpful. Geography footprint is perhaps as important as your asset class diversification. Can you speak about your geographic strategy, what specific regions/geographies are more -- are the most important. And where do you see the best opportunities?

I mean this is one of the reasons why the Greenspring transaction made sense as well because they were predominantly a North American central company. StepStone from the very beginning of its inception, saw growth of large pools of capital coming online for the first time outside of North America. While North America continues to enjoy growth and access to the private markets, it's really -- it's the global markets that are coming online for the first time. And so from the very beginning of the organization, we had our high set on a global footprint and making sure we had the geographies covered. And so I would say, if you look at the last sort of 12 months, we've had -- we've enjoyed a great growth period of $13 million of gross AUM additions, 90% of those additions came from outside of North America. And that's because we've installed teams throughout the world, and offices in Asia, Latin America, Europe, and Middle East, and we're going to continue to see growth in those areas. If we were to highlight any 1, 2 or 3 specific geographies, I would say, certainly, the Middle East is a large and growing portion of our client base. Asia Pacific, we have large offices in Beijing and spread out throughout the Asia Pacific area. And more recently, we've had enormous success in Latin America, particularly in the Andean region. And we continue to see growth throughout those 3 regions well in excess of the growth we're seeing here in North America. We have now 21 offices, 21 cities covered, 13 countries. We're going to continue to see our footprint geographically becoming a competitive advantage, a moat for us and really how we intend to grow the business going forward.

Do you've tech or key core competence. Can you tell us a little bit about what data services you provide to clients. How you think about those offerings? And what competitive edge that provide StepStone?

Sure. For those who've been in the industry for the last, say, 20 years, they will have seen the private markets data and technology being really difficult to get your arms around. It's all sort of spreadsheets and general ledgers and lagged data. And how do you figure it out? StepStone, again, much the way we thought about our geographic footprint also had a view -- a very strong view of data and technology. And so from the very beginning, we set out to create a technology that would help do a couple of things. First, how do we compile all of the information that's coming into StepStone from GPs in the forms of PPMs, in the forms of offer memorandums, in forms of manager meetings and how do we keep our investment teams working seamlessly around the clock, around the world with all of this information coming in. And so what we did was, from the very beginning, we invested in a technology called SPI, and SPI is this front-end technology that's basically capturing and managing the entire investment funnel. So think about all of the opportunities across all the asset classes, all the managers and all the geographies coming in through this wide funnel, and it's basically a technology backbone that our investment teams use. We are increasingly allowing and making it available to our clients as well as it becomes more and more refined. But once a commitment is made, to a general partner, to a fund, that creates a whole new universe of data, reporting on the performance of the underlying assets, and that data is captured by a back-end technology that we've called OMNI. And OMNI, you can think about is a highly sophisticated 24/7 app that our clients use to understand what's in their portfolio. What does the risk profile look like? What does the return profile look like? How do they think about what their next investment will look like from the front-end SPI before it gets into the back-end OMNI. And so it is a fully integrated data and technology platform that is unlike anything else in the world. And it's unique and is proprietary to StepStone. We use it internally as our own investment decisioning tool, and we use it externally for our clients to help manage their portfolios and make investment decisions as well. Really, really powerful. And we're in the early days, I believe, of what this might look like in 5, 10, 20 years from now as something really exciting and almost providing full transparency, full access to diligence and full access to performance, much the way the public markets have been able to do it for client portfolios.

In addition to SPI and OMNI, you've also developed an investment Pacing tool and a daily valuation engine. Can you talk about how you use this tool in differentiating and how it's been received so far?

Sure. One of the challenges clients and investors have in these asset classes is how do we pace the rate at which we make commitments to funds that have drawdown schedules that could be 3 and 4 years and 5 years out, and then a harvesting period of 3, 4 and 5 years. So the timing of cash flows is really tricky, and it's very elusive. What we've been able to do with our technology from both OMNI and SPI as well as other data sources is create a Pacing tool that helps our clients optimize the rate at which they ramp up their portfolios or pair back their portfolios with reverse [indiscernible] portfolios from a liquidity perspective, from an asset allocation perspective. What is the net asset value of the portfolio today as a percentage of the total? And then what might that look like 3 years, 5 years and 7 years from now, our Pacing tool, which is an online app that we and our clients use to optimize the rate at which commitments are made, the size of these commitments, the rate at which cash goes out of the door, the rate at which cash comes back and the net asset value. Which is a nice segue into the second part of your question, which is how do we think about the daily valuation engine, I mean, 5 years ago, 3 years ago, the idea of having a daily mark on a private market's holding, I just don't think that was in the forefront of anyone's mind. But StepStone has been out in front trying to figure out ways to answer that question, what is my portfolio worth today? Do I have to wait until September 30th, to find out what it was worth 60 days ago. There's always been this lag between when a value comes in from a general partner, when the LP receives it. And by then, it's 30, 45, 60 days late. What we've created is a daily valuation engine that provides our clients with real-time estimates of what their private markets portfolios looks like. And so really, when you think about whole data and technology, construct you have StepStone, you have SPI, you have OMNI, you have the Pacing, daily valuation, all of it really creating what we think, pretty strong competitive advantages and modes for our company.

Thank you very helpful. And with that, we're out of time. Dave, Mike and Scott, we really appreciate you guys coming. And hopefully, next year, we can meet in person.

Thanks, Matt. Appreciate having us.

Yes. Thank you. Have a good one.