Moody's Ratings affirmed The Stepstone Group Midco 1 GmbH's B2 Corporate Family Rating and B2-PD Probability of Default Rating on Wednesday, while changing the outlook on those ratings to negative from stable. In the same action, Moody's also confirmed B2 ratings on multiple secured debt instruments tied to the business.
The rating agency left in place the B2 rating on a €1,350 million backed senior secured term loan B1, the $600 million backed senior secured term loan B due in 2032, and the €300 million backed senior secured revolving credit facility due in 2031.
Stepstone operates a digital recruiting platform across Germany and other EMEA markets and supplies programmatic recruitment services in North America through Appcast.
Moody's rationale and financial outlook
Moody's said the change to a negative outlook reflects a slower-than-expected recovery in recruitment markets amid challenging macroeconomic conditions. The agency expects credit metrics to remain weak for the rating category over the next 12 months.
"The rating action reflects slower-than-expected recovery prospects amid challenging macroeconomic conditions, with credit metrics expected to remain weak for the rating category over the next 12 months," said Agustin Alberti, a Moody's Ratings Vice President-Senior Analyst and lead analyst for Stepstone.
Moody's projects Stepstone's revenues will decline slightly to around €735 million in 2026 from €760 million in 2025, reflecting continued softness in hiring demand in Germany and a more gradual normalization in recruitment activity across key European markets. The agency expects a delayed recovery in 2027, with revenues growing at a mid-single digit rate to around €765 million.
On leverage, Moody's anticipates the company's adjusted gross debt to EBITDA will remain elevated at 7.3x in 2026, up from 6.9x in 2025, remaining outside the boundaries consistent with the current rating. The agency projects gross leverage to improve to around 6.5x by year-end 2027 as the recovery takes hold.
Moody's expects Stepstone's EBITDA margins to hold at roughly 35% in 2026, with Moody's-adjusted EBITDA near €255 million. Free cash flow is forecast to be approximately break-even in 2026 before improving to about €25-30 million in 2027.
Business mix and liquidity
Stepstone is moving its German business - which represents 60% of group revenue - toward a subscription-based model, shifting away from primarily transactional job listings to recurring subscription contracts. This strategic transition is a factor in Moody's assessment of revenue and cash flow trajectories.
At the end of December 2025, Stepstone held a cash balance of €68 million and retained access to a €300 million undrawn revolving credit facility, according to Moody's.
Implications for the rating and downside scenarios
The negative outlook signals that Moody's sees risk that operating performance and deleveraging could remain weaker than expected if recruitment market recovery is delayed or uneven. Moody's said the rating could be downgraded if the company's Moody's-adjusted debt/EBITDA ratio remains above 6.5x or if it fails to generate sustained positive free cash flow.
For now, the affirmed B2 ratings on Stepstone's corporate family and secured facilities remain in place, but the changed outlook highlights the agency's concern over near-term credit metrics and the pace of recovery in the company's end markets.
What this means for markets
Investors and counterparties will likely watch Stepstone's revenue trajectory, margin stability, and cash generation as the company implements its subscription shift in Germany and as recruitment demand evolves across Europe and North America.