Commitment and Contingencies

6 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Litigation

In the ordinary course of business, and from time to time, the Company may be subject to various legal, regulatory and/or administrative proceedings. The Company accrues a liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Although there can be no assurance of the outcome of such proceedings, based on information known by management, the Company does not expect a potential liability related to any current legal proceedings or claims that would individually or in the aggregate materially affect its condensed consolidated financial statements as of September 30, 2021.

Lease Commitments

The Company leases offices in 21 cities in the United States, Canada, South America, Europe, Asia and Australia, and certain equipment subject to operating lease agreements expiring through 2031, some of which may include options to extend or terminate the lease. As of September 30, 2021, there were no finance leases outstanding.

In June 2021, the Company executed an agreement to lease additional office space for its La Jolla office. The lessor is currently undergoing the build out for the additional office space and the Company expects to gain access to the additional space in January 2022. At that time, the Company will establish a ROU asset and lease liability for the new lease. Upon lease commencement, total future lease payments are expected to be approximately $3.5 million over approximately 9 years.

The components of lease expense included in general, administrative and other expenses in the condensed consolidated statements of income were as follows:


	Three Months Ended September 30, 2021		Six Months Ended September 30, 2021

Operating lease cost(1)	$	2,686		$	5,360
Variable lease cost	210			469
Sublease income	(426)			(856)
Total lease cost	$	2,470		$	4,973

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

Occupancy expense related to office facility operating leases totaled $2.3 million and $4.6 million for the three and six months ended September 30, 2020.

Supplemental cash flow information related to leases was as follows:


	Six Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	4,342
Weighted-average remaining lease term for operating leases (in years)	8.0
Weighted-average discount rate for operating leases	2.7		%

As of September 30, 2021, maturities of operating lease liabilities were as follows:



Remainder of FY2022	$	5,943
FY2023	10,577
FY2024	11,136
FY2025	10,172
FY2026	9,857
Thereafter	36,546
Total lease liabilities	84,231
Less: Imputed interest	(8,425)
Total operating lease liabilities	$	75,806

Unfunded Capital Commitments

As of September 30, 2021 and March 31, 2021, the Company, generally in its capacity as general partner or managing member of the StepStone Funds, had unfunded commitments totaling $72.3 million and $60.5 million, respectively. The $72.3 million of unfunded commitments as of September 30, 2021 excludes $39.2 million related to commitments held by the legacy Greenspring general partner entities in legacy Greenspring funds for which the Company does not hold an economic interest.

Carried Interest Allocations

Carried interest allocations are subject to reversal in the event of future losses, to the extent of the cumulative revenues recognized by the Company in income to date. Additionally, if the Company has received net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company may be obligated to repay previously distributed carried interest that exceeds the amounts to which the Company is ultimately entitled. In these situations, a liability is accrued for the potential clawback obligation if amounts previously distributed to the Company would require repayment to a fund if such fund were to be liquidated based on the current fair value of their underlying investments as of the reporting date. Actual repayment obligations generally do not become realized until the end of a fund’s life. As of September 30, 2021 and March 31, 2021, no material amounts for potential clawback obligations had been accrued. This contingent obligation is normally reduced by income taxes that the Company has paid related to the carried interest allocations. As of September 30, 2021, the maximum amount of carried interest allocations (excluding legacy Greenspring carried interest allocations) attributable to the Company subject to contingent repayment was an estimated $156.0 million, net of tax, assuming the fair value of all investments was zero, a possibility that the Company views as remote.

Indemnification Arrangements

In the normal course of business and consistent with standard business practices, the Company has provided general indemnifications to its limited partners, officers and directors when they act in good faith in the performance of their duties for the Company. The terms of these indemnities vary from contract to contract. The Company’s maximum exposure under these arrangements cannot be determined as these indemnities relate to future claims that may be made against the Company or related parties, but which have not yet occurred. No liability related to these indemnities has been recorded in the condensed consolidated balance sheets as of September 30, 2021 and March 31, 2021. Based on past experience, management believes that the risk of loss related to these indemnities is remote.