Commitment and Contingencies

3 Months Ended

Jun. 30, 2024

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 June 30, 2024.

Lease Commitments

The Company leases offices in 27 cities in North America, South America, Europe, Asia and Australia, and certain equipment subject to operating lease agreements expiring through 2039, some of which may include options to extend or terminate the lease. As of June 30, 2024, there were no finance leases outstanding.

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 June 30,
	2024		2023
Operating lease cost(1)	$	4,001	$	3,837
Variable lease cost	334		154
Sublease income	(458)		(374)
Total lease cost	$	3,877	$	3,617

_______________________________

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

Supplemental cash flow information related to leases was as follows:


	Three Months Ended June 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	2,985		$	3,182
Weighted-average remaining lease term for operating leases (in years)	11.2			12.0
Weighted-average discount rate for operating leases	4.7		%	4.6		%

As of June 30, 2024, maturities of operating lease liabilities were as follows:



Remainder of FY2025	$	12,394
FY2026	16,529
FY2027	15,221
FY2028	13,139
FY2029	15,099
Thereafter	84,804
Total lease liabilities	157,186
Less: Imputed interest	(39,118)
Total operating lease liabilities	$	118,068

Unfunded Capital Commitments

As of June 30, 2024 and March 31, 2024, the Company, generally in its capacity as general partner or managing member of the StepStone Funds, had unfunded commitments totaling $109.2 million and $115.7 million, respectively. The $109.2 million and $115.7 million of unfunded commitments as of June 30, 2024 and March 31, 2024, respectively, exclude $70.7 million and $67.8 million, respectively, related to commitments held by general partner entities for certain funds in which the Company does not hold any direct economic interests, including the legacy Greenspring funds.

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 June 30, 2024 and March 31, 2024, 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 June 30, 2024, the maximum amount of carried interest allocations (excluding legacy Greenspring carried interest allocations) attributable to the Company subject to contingent repayment was an estimated $297.0 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 June 30, 2024 and March 31, 2024. Based on past experience, management believes that the risk of loss related to these indemnities is remote.