Morningstar, Inc. Reports Second-Quarter 2024 Financial Results
“Led by Morningstar Credit's strength across regions and asset classes, we finished the first half of 2024 on a high note,” said Kunal Kapoor, Morningstar's chief executive officer. “We remain focused on durable growth in adjusted operating income. Our teams are delivering product enhancements to customers, including the addition of collateralized loan obligation data to PitchBook, and the integration of our Intelligence Engine into Advisor Workstation, which will allow advisors to further automate client workflows."
The Company's quarterly shareholder letter provides more context on its quarterly results and business and can be found at shareholders.morningstar.com.
Second-Quarter 2024 Financial Highlights
-
Reported revenue increased
13.3% to$571.9 million 13.6% .
-
Reported operating income increased
160.2% to$108.5 million 87.9% .
-
Diluted net income per share increased
90.5% to$1.60 54.6% to$2.01
-
Cash provided by operating activities increased to
$152.7 million $24.5 million $120.8 million $5.8 million $63.1 million 74.3% and110.8% , respectively.
Year-To-Date Financial Highlights
-
Reported revenue increased
13.2% to$1.1 billion 13.3% .
-
Reported operating income increased
203.8% to$201.1 million 99.0% .
-
Diluted net income per share increased
361.2% to$3.09 101.1% to$3.74
-
Cash provided by operating activities increased
414.2% to$246.3 million $180.3 million $11.9 million $74.5 million 101.2% and188.0% , respectively.
Second-Quarter 2024 Results
Revenue increased
Operating expense was relatively flat at
Second-quarter operating income increased
Net income in the second quarter of 2024 was
The Company's effective tax rate was
Segment Highlights
Morningstar Data and Analytics
Morningstar Data and Analytics contributed
Morningstar Data and Analytics adjusted operating income increased
PitchBook
PitchBook contributed
PitchBook segment adjusted operating income increased
Morningstar Wealth
Morningstar Wealth contributed
Reported assets under management and advisement (AUMA) increased
Morningstar Wealth adjusted operating loss was
Morningstar Credit
Morningstar Credit contributed
Morningstar Credit adjusted operating income was
Morningstar Retirement
Morningstar Retirement contributed
Morningstar Retirement adjusted operating income increased
Corporate and All Other
Revenue attributable to Corporate and All Other contributed
The increase in Morningstar Indexes revenue was primarily driven by higher investable product revenue as market performance and net inflows over the trailing 12 months increased asset value linked to Morningstar Indexes by
Morningstar Sustainalytics revenues were relatively flat compared to the prior-year period for both license- and transaction-based products. In
The impact of Corporate and All Other on consolidated adjusted operating income was negative
Balance Sheet and Capital Allocation
As of June 30, 2024, the Company had cash, cash equivalents, and investments totaling
Cash provided by operating activities increased to
Use of Non-GAAP Financial Measures
The tables at the end of this press release include a reconciliation of the non-GAAP financial measures used by the Company to comparable GAAP measures and an explanation of why the Company uses them.
Investor Communication
Morningstar encourages all interested parties — including securities analysts, current shareholders, potential shareholders, and others — to submit questions in writing. Investors and others may send questions about Morningstar’s business to investors@morningstar.com. Morningstar will make written responses to selected inquiries available to all investors at the same time in Form 8-Ks furnished to the SEC, periodically.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment insights in
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as “consider,” “future,” “maintain,” “may,” “expect,” “potential,” “anticipate,” “believe,” “continue,” “will,” or the negative thereof, and similar expressions. These statements involve known and unknown risks and uncertainties that may cause the events we discuss not to occur or to differ significantly from what we expect. For us, these risks and uncertainties include, among others, failing to maintain and protect our brand, independence, and reputation; failure to prevent and/or mitigate cybersecurity events and the failure to protect confidential information, including personal information about individuals; compliance failures, regulatory action, or changes in laws applicable to our credit ratings operations, investment advisory, environmental, social, and governance, and index businesses; failing to innovate our product and service offerings, or anticipate our clients’ changing needs; the impact of artificial intelligence and related technologies on our business, legal, and regulatory exposure profile and reputation; failing to detect errors in our products or the failure of our products to perform properly due to defects, malfunctions, or similar problems; failing to recruit, develop, and retain qualified employees; prolonged volatility or downturns affecting the financial sector, global financial markets, and the global economy and its effect on our revenue from asset-based fees and our credit ratings business; failing to scale our operations and increase productivity in order to implement our business plans and strategies; liability for any losses that result from errors in our automated advisory tools or errors in the use of the information and data we collect; inadequacy of our operational risk management, business continuity programs and insurance coverage in the event of a material disruptive event; failing to close, or achieve the anticipated economic or other benefits of, a strategic transaction on a timely basis or at all; failing to efficiently integrate and leverage acquisitions and other investments, which may not realize the expected business or financial benefits, to produce the results we anticipate; failing to maintain growth across our businesses in today's fragmented geopolitical, regulatory, and cultural world; liability relating to the information and data we collect, store, use, create, and distribute or the reports that we publish or are produced by our software products; the potential adverse effect of our indebtedness on our cash flows and financial and operational flexibility; challenges in accounting for tax complexities in the global jurisdictions which we operate in and their effect on our tax obligations and tax rates; and failing to protect our intellectual property rights or claims of intellectual property infringement against us. A more complete description of these risks and uncertainties, among others, can be found in our filings with the Securities and Exchange Commission (SEC), including our most recent Reports on Forms 10-K and 10-Q. If any of these risks and uncertainties materialize, our actual future results and other future events may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information, future events or otherwise, except as may be required by law. You are, however, advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties, and assumptions in our filings with the SEC on Forms 10-K, 10-Q and 8-K.
©2024 Morningstar, Inc. All Rights Reserved.
MORN-E
Morningstar, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Income |
||||||||||||||||||||||
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||||||
(in millions, except per share amounts) |
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue |
|
$ |
571.9 |
|
|
$ |
504.7 |
|
|
13.3 |
% |
|
$ |
1,114.7 |
|
|
$ |
984.4 |
|
|
13.2 |
% |
Operating expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue |
|
|
222.7 |
|
|
|
216.4 |
|
|
2.9 |
% |
|
|
440.8 |
|
|
|
435.2 |
|
|
1.3 |
% |
Sales and marketing |
|
|
111.3 |
|
|
|
109.5 |
|
|
1.6 |
% |
|
|
215.9 |
|
|
|
217.1 |
|
|
(0.6 |
)% |
General and administrative |
|
|
80.3 |
|
|
|
90.1 |
|
|
(10.9 |
)% |
|
|
160.6 |
|
|
|
174.1 |
|
|
(7.8 |
)% |
Depreciation and amortization |
|
|
49.1 |
|
|
|
47.0 |
|
|
4.5 |
% |
|
|
96.3 |
|
|
|
91.8 |
|
|
4.9 |
% |
Total operating expense |
|
|
463.4 |
|
|
|
463.0 |
|
|
0.1 |
% |
|
|
913.6 |
|
|
|
918.2 |
|
|
(0.5 |
)% |
Operating income |
|
|
108.5 |
|
|
|
41.7 |
|
|
160.2 |
% |
|
|
201.1 |
|
|
|
66.2 |
|
|
203.8 |
% |
Operating margin |
|
|
19.0 |
% |
|
|
8.3 |
% |
|
10.7 pp |
|
|
18.0 |
% |
|
|
6.7 |
% |
|
11.3 pp |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-operating expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net |
|
|
(10.3 |
) |
|
|
(14.1 |
) |
|
(27.0 |
)% |
|
|
(21.8 |
) |
|
|
(27.4 |
) |
|
(20.4 |
)% |
Expense from equity method transaction, net |
|
|
— |
|
|
|
— |
|
|
— |
% |
|
|
— |
|
|
|
(11.8 |
) |
|
NMF |
|
Other income (expense), net |
|
|
(8.7 |
) |
|
|
4.1 |
|
|
NMF |
|
|
(2.8 |
) |
|
|
6.8 |
|
|
NMF |
||
Non-operating expense, net |
|
|
(19.0 |
) |
|
|
(10.0 |
) |
|
90.0 |
% |
|
|
(24.6 |
) |
|
|
(32.4 |
) |
|
(24.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes and equity in investments of unconsolidated entities |
|
|
89.5 |
|
|
|
31.7 |
|
|
182.3 |
% |
|
|
176.5 |
|
|
|
33.8 |
|
|
422.2 |
% |
Equity in investments of unconsolidated entities |
|
|
(1.2 |
) |
|
|
(1.8 |
) |
|
(33.3 |
)% |
|
|
(2.7 |
) |
|
|
(3.1 |
) |
|
(12.9 |
)% |
Income tax expense (benefit) |
|
|
19.2 |
|
|
|
(6.2 |
) |
|
NMF |
|
|
40.5 |
|
|
|
2.2 |
|
|
NMF |
||
Consolidated net income |
|
$ |
69.1 |
|
|
$ |
36.1 |
|
|
91.4 |
% |
|
$ |
133.3 |
|
|
$ |
28.5 |
|
|
367.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
$ |
1.61 |
|
|
$ |
0.85 |
|
|
89.4 |
% |
|
$ |
3.11 |
|
|
$ |
0.67 |
|
|
364.2 |
% |
Diluted |
|
$ |
1.60 |
|
|
$ |
0.84 |
|
|
90.5 |
% |
|
$ |
3.09 |
|
|
$ |
0.67 |
|
|
361.2 |
% |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
|
42.8 |
|
|
|
42.6 |
|
|
|
|
|
42.8 |
|
|
|
42.6 |
|
|
|
||
Diluted |
|
|
43.1 |
|
|
|
42.8 |
|
|
|
|
|
43.1 |
|
|
|
42.8 |
|
|
|
||
_________________________________________________________________ |
||||||||||||||||||||||
NMF - Not meaningful, pp - percentage points |
||||||||||||||||||||||
Morningstar, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets |
||||||||
(in millions) |
|
As of
|
|
As of
|
||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
391.2 |
|
$ |
337.9 |
||
Investments |
|
|
48.0 |
|
|
|
51.1 |
|
Accounts receivable, net |
|
|
336.4 |
|
|
|
343.9 |
|
Income tax receivable, net |
|
|
— |
|
|
|
0.6 |
|
Other current assets |
|
|
100.2 |
|
|
|
82.2 |
|
Total current assets |
|
|
875.8 |
|
|
|
815.7 |
|
|
|
|
|
|
||||
Goodwill |
|
|
1,569.5 |
|
|
|
1,578.8 |
|
Intangible assets, net |
|
|
443.1 |
|
|
|
484.4 |
|
Property, equipment, and capitalized software, net |
|
|
210.3 |
|
|
|
207.7 |
|
Operating lease assets |
|
|
148.1 |
|
|
|
163.9 |
|
Investments in unconsolidated entities |
|
|
97.3 |
|
|
|
100.2 |
|
Deferred tax assets, net |
|
|
24.2 |
|
|
|
14.6 |
|
Other assets |
|
|
35.2 |
|
|
|
38.1 |
|
Total assets |
|
$ |
3,403.5 |
|
|
$ |
3,403.4 |
|
|
|
|
|
|
||||
Liabilities and equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Deferred revenue |
|
$ |
548.2 |
|
|
$ |
517.7 |
|
Accrued compensation |
|
|
166.2 |
|
|
|
214.4 |
|
Accounts payable and accrued liabilities |
|
|
77.1 |
|
|
|
78.4 |
|
Operating lease liabilities |
|
|
32.0 |
|
|
|
36.4 |
|
Current portion of long-term debt |
|
|
— |
|
|
|
32.1 |
|
Other current liabilities |
|
|
13.9 |
|
|
|
1.8 |
|
Total current liabilities |
|
|
837.4 |
|
|
|
880.8 |
|
|
|
|
|
|
||||
Operating lease liabilities |
|
|
136.6 |
|
|
|
151.4 |
|
Accrued compensation |
|
|
23.4 |
|
|
|
23.7 |
|
Deferred tax liabilities, net |
|
|
30.4 |
|
|
|
35.6 |
|
Long-term debt |
|
|
899.6 |
|
|
|
940.3 |
|
Other long-term liabilities |
|
|
42.4 |
|
|
|
43.8 |
|
Total liabilities |
|
|
1,969.8 |
|
|
|
2,075.6 |
|
Total equity |
|
|
1,433.7 |
|
|
|
1,327.8 |
|
Total liabilities and equity |
|
$ |
3,403.5 |
|
|
$ |
3,403.4 |
|
Morningstar, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows |
||||||||||||||||
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
(in millions) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Operating activities |
|
|
|
|
|
|
|
|
||||||||
Consolidated net income |
|
$ |
69.1 |
|
|
$ |
36.1 |
|
|
$ |
133.3 |
|
|
$ |
28.5 |
|
Adjustments to reconcile consolidated net income to net cash flows from operating activities |
|
|
73.7 |
|
|
|
52.4 |
|
|
|
116.7 |
|
|
|
61.4 |
|
Changes in operating assets and liabilities, net |
|
|
9.9 |
|
|
|
(64.0 |
) |
|
|
(3.7 |
) |
|
|
(42.0 |
) |
Cash provided by operating activities |
|
|
152.7 |
|
|
|
24.5 |
|
|
|
246.3 |
|
|
|
47.9 |
|
Investing activities |
|
|
|
|
|
|
|
|
||||||||
Capital expenditures |
|
|
(31.9 |
) |
|
|
(30.3 |
) |
|
|
(66.0 |
) |
|
|
(59.8 |
) |
Purchases of investments in unconsolidated entities |
|
|
(0.8 |
) |
|
|
(0.8 |
) |
|
|
(3.6 |
) |
|
|
(0.9 |
) |
Other, net |
|
|
(0.1 |
) |
|
|
4.0 |
|
|
|
10.1 |
|
|
|
32.9 |
|
Cash used for investing activities |
|
|
(32.8 |
) |
|
|
(27.1 |
) |
|
|
(59.5 |
) |
|
|
(27.8 |
) |
Financing activities |
|
|
|
|
|
|
|
|
||||||||
Common shares repurchased |
|
|
— |
|
|
|
(1.4 |
) |
|
|
— |
|
|
|
(1.4 |
) |
Dividends paid |
|
|
(17.3 |
) |
|
|
(16.0 |
) |
|
|
(34.6 |
) |
|
|
(31.9 |
) |
Repayments of debt |
|
|
(50.0 |
) |
|
|
(113.2 |
) |
|
|
(163.1 |
) |
|
|
(186.3 |
) |
Proceeds from debt |
|
|
— |
|
|
|
135.0 |
|
|
|
90.0 |
|
|
|
230.0 |
|
Payment of acquisition-related earn-outs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(45.5 |
) |
Other, net |
|
|
(14.3 |
) |
|
|
(10.5 |
) |
|
|
(17.4 |
) |
|
|
(19.8 |
) |
Cash used for financing activities |
|
|
(81.6 |
) |
|
|
(6.1 |
) |
|
|
(125.1 |
) |
|
|
(54.9 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.8 |
) |
|
|
(0.2 |
) |
|
|
(8.4 |
) |
|
|
1.5 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
37.5 |
|
|
|
(8.9 |
) |
|
|
53.3 |
|
|
|
(33.3 |
) |
Cash and cash equivalents-beginning of period |
|
|
353.7 |
|
|
|
352.2 |
|
|
|
337.9 |
|
|
|
376.6 |
|
Cash and cash equivalents-end of period |
|
$ |
391.2 |
|
|
$ |
343.3 |
|
|
$ |
391.2 |
|
|
$ |
343.3 |
|
Morningstar, Inc. and Subsidiaries Supplemental Data (Unaudited) |
||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||||||||||||
(in millions) |
|
2024 |
|
2023 |
|
Change |
|
Organic (1) |
|
2024 |
|
2023 |
|
Change |
|
Organic (1) |
||||||||||||
Morningstar Data and Analytics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
|
$ |
196.9 |
|
|
$ |
186.0 |
|
|
5.9 |
% |
|
6.2 |
% |
|
$ |
393.6 |
|
|
$ |
365.8 |
|
|
7.6 |
% |
|
7.5 |
% |
Adjusted Operating Income |
|
|
87.3 |
|
|
|
80.1 |
|
|
9.0 |
% |
|
|
|
|
178.5 |
|
|
|
161.0 |
|
|
10.9 |
% |
|
|
||
Adjusted Operating Margin |
|
|
44.3 |
% |
|
|
43.1 |
% |
|
1.2 pp |
|
|
|
|
45.4 |
% |
|
|
44.0 |
% |
|
1.4 pp |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PitchBook |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
|
$ |
151.7 |
|
|
$ |
136.8 |
|
|
10.9 |
% |
|
10.9 |
% |
|
$ |
299.3 |
|
|
$ |
267.9 |
|
|
11.7 |
% |
|
11.7 |
% |
Adjusted Operating Income |
|
|
47.3 |
|
|
|
37.2 |
|
|
27.2 |
% |
|
|
|
|
87.3 |
|
|
|
67.6 |
|
|
29.1 |
% |
|
|
||
Adjusted Operating Margin |
|
|
31.2 |
% |
|
|
27.2 |
% |
|
4.0 pp |
|
|
|
|
29.2 |
% |
|
|
25.2 |
% |
|
4.0 pp |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Morningstar Wealth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
|
$ |
62.6 |
|
|
$ |
55.8 |
|
|
12.2 |
% |
|
12.4 |
% |
|
$ |
121.6 |
|
|
$ |
110.7 |
|
|
9.8 |
% |
|
10.1 |
% |
Adjusted Operating Income (Loss) |
|
|
(2.2 |
) |
|
|
(12.3 |
) |
|
(82.1 |
)% |
|
|
|
|
(7.8 |
) |
|
|
(26.9 |
) |
|
(71.0 |
)% |
|
|
||
Adjusted Operating Margin |
|
|
(3.5 |
)% |
|
|
(22.0 |
)% |
|
18.5 pp |
|
|
|
|
(6.4 |
)% |
|
|
(24.3 |
)% |
|
17.9 pp |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Morningstar Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
|
$ |
77.6 |
|
|
$ |
54.2 |
|
|
43.2 |
% |
|
44.2 |
% |
|
$ |
137.9 |
|
|
$ |
101.0 |
|
|
36.5 |
% |
|
36.6 |
% |
Adjusted Operating Income |
|
|
27.9 |
|
|
|
5.0 |
|
|
458.0 |
% |
|
|
|
|
40.2 |
|
|
|
1.0 |
|
|
NMF |
|
|
|||
Adjusted Operating Margin |
|
|
36.0 |
% |
|
|
9.2 |
% |
|
26.8 pp |
|
|
|
|
29.2 |
% |
|
|
1.0 |
% |
|
28.2 pp |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Morningstar Retirement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
|
$ |
33.3 |
|
|
$ |
27.4 |
|
|
21.5 |
% |
|
21.5 |
% |
|
$ |
61.7 |
|
|
$ |
52.6 |
|
|
17.3 |
% |
|
17.3 |
% |
Adjusted Operating Income |
|
|
17.3 |
|
|
|
13.4 |
|
|
29.1 |
% |
|
|
|
|
31.5 |
|
|
|
24.6 |
|
|
28.0 |
% |
|
|
||
Adjusted Operating Margin |
|
|
52.0 |
% |
|
|
48.9 |
% |
|
3.1 pp |
|
|
|
|
51.1 |
% |
|
|
46.8 |
% |
|
4.3 pp |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Reportable Segments |
|
$ |
522.1 |
|
|
$ |
460.2 |
|
|
13.5 |
% |
|
|
|
$ |
1,014.1 |
|
|
$ |
898.0 |
|
|
12.9 |
% |
|
|
||
Corporate and All Other (2) |
|
|
49.8 |
|
|
|
44.5 |
|
|
11.9 |
% |
|
|
|
|
100.6 |
|
|
|
86.4 |
|
|
16.4 |
% |
|
|
||
Total Revenue |
|
$ |
571.9 |
|
|
$ |
504.7 |
|
|
13.3 |
% |
|
13.6 |
% |
|
$ |
1,114.7 |
|
|
$ |
984.4 |
|
|
13.2 |
% |
|
13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated Adjusted Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Reportable Segments |
|
$ |
177.6 |
|
|
$ |
123.4 |
|
|
43.9 |
% |
|
|
|
$ |
329.7 |
|
|
$ |
227.3 |
|
|
45.1 |
% |
|
|
||
Less: Corporate and All Other (3) |
|
|
(46.6 |
) |
|
|
(53.7 |
) |
|
(13.2 |
)% |
|
|
|
|
(87.9 |
) |
|
|
(105.8 |
) |
|
(16.9 |
)% |
|
|
||
Adjusted Operating Income |
|
$ |
131.0 |
|
|
$ |
69.7 |
|
|
87.9 |
% |
|
|
|
$ |
241.8 |
|
|
$ |
121.5 |
|
|
99.0 |
% |
|
|
||
Adjusted Operating Margin |
|
|
22.9 |
% |
|
|
13.8 |
% |
|
9.1 pp |
|
|
|
|
21.7 |
% |
|
|
12.3 |
% |
|
9.4 pp |
|
|
||||
____________________________________________________________________________________________ |
||||||||||||||||||||||||||||
(1) Organic revenue is a non-GAAP measure that excludes acquisitions, divestitures, the impacts of the adoption of new accounting standards or revisions to accounting practices, and the effect of foreign currency translations. In addition, the calculation of organic revenue growth by product revenue type compares the three and six months ended June 30, 2024 revenue to the prior periods on the basis of the updated classifications. |
||||||||||||||||||||||||||||
(2) Corporate and All Other provides a reconciliation between revenue from our Total Reportable Segments and consolidated revenue amounts. Corporate and All Other includes Morningstar Sustainalytics and Morningstar Indexes as sources of revenues. Revenue from Morningstar Sustainalytics was |
||||||||||||||||||||||||||||
(3) Corporate and All Other includes unallocated corporate expenses as well as adjusted operating income (loss) from Morningstar Sustainalytics and Morningstar Indexes. During the second quarter of 2024 and 2023, unallocated corporate expenses were |
||||||||||||||||||||||||||||
Morningstar, Inc. and Subsidiaries Supplemental Data (Unaudited) |
||||||||||||||||||||||
|
As of June 30, |
|
|
|
||||||||||||||||||
AUMA (approximate) ($bil) |
2024 |
|
2023 |
|
Change |
|
|
|
||||||||||||||
Morningstar Retirement |
|
|
|
|
|
|
||||||||||||||||
Managed Accounts |
$ |
149.9 |
$ |
118.1 |
26.9 |
% |
|
|
|
|||||||||||||
Fiduciary Services |
|
62.6 |
|
|
55.4 |
|
13.0 |
% |
|
|
|
|||||||||||
Custom Models/CIT |
|
44.7 |
|
|
36.9 |
|
21.1 |
% |
|
|
|
|||||||||||
Morningstar Retirement (total) |
$ |
257.2 |
|
$ |
210.4 |
|
22.2 |
% |
|
|
|
|||||||||||
Investment Management |
|
|
|
|
|
|
||||||||||||||||
Morningstar Managed Portfolios |
$ |
41.8 |
|
$ |
35.1 |
|
19.1 |
% |
|
|
|
|||||||||||
Institutional Asset Management |
|
7.3 |
|
|
10.2 |
|
(28.4 |
)% |
|
|
|
|||||||||||
Asset Allocation Services |
|
10.0 |
|
|
7.8 |
|
28.2 |
% |
|
|
|
|||||||||||
Investment Management (total) |
$ |
59.1 |
|
$ |
53.1 |
|
11.3 |
% |
|
|
|
|||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Asset value linked to Morningstar Indexes ($bil) |
$ |
207.6 |
|
$ |
169.8 |
|
22.3 |
% |
|
|
|
|||||||||||
|
|
|
|
|
|
|
||||||||||||||||
|
Three months ended June 30, |
|
Six months ended June 30, |
|||||||||||||||||||
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|||||||||||
Average AUMA ($bil) |
$ |
304.9 |
|
$ |
258.0 |
|
18.2 |
% |
$ |
298.6 |
$ |
253.9 |
17.6 |
% |
||||||||
Morningstar, Inc. and Subsidiaries
Reconciliations of Non-GAAP Measures with the Nearest Comparable GAAP Measures (Unaudited)
To supplement Morningstar’s condensed consolidated financial statements presented in accordance with
- consolidated revenue, excluding acquisitions, divestitures, adoption of new accounting standards or revisions to accounting practices (accounting changes), and the effect of foreign currency translations (organic revenue);
-
consolidated operating income, excluding intangible amortization expense, all merger and acquisition (M&A)-related expenses (related to merger, acquisition, and divestiture activity, including severance and earn-outs), and expenses related to the significant reduction and shift of the Company's operations in
China (adjusted operating income);
-
consolidated operating margin, excluding intangible amortization expense, all M&A-related expenses, and expenses related to the significant reduction and shift of the Company's operations in
China (adjusted operating margin);
-
consolidated diluted net income (loss) per share, excluding intangible amortization expense, all M&A-related expenses, items related to the significant reduction and shift of the Company's operations in
China , and certain non-operating gains/losses (adjusted diluted net income per share); and
- cash provided by or used for operating activities less capital expenditures (free cash flow).
These non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should not be considered an alternative to any measure or performance as promulgated under GAAP.
Morningstar presents organic revenue because the Company believes this non-GAAP measure helps investors better compare period-over-period results, and Morningstar’s management team uses this measure to evaluate the performance of the business. Morningstar excludes revenue from acquired businesses from its organic revenue growth calculation for a period of 12 months after it completes the acquisition. For divestitures, Morningstar excludes revenue in the prior-year period for which there is no comparable revenue in the current period.
Morningstar presents adjusted operating income, adjusted operating margin, and adjusted diluted net income per share to show the effect of significant acquisition and divestiture activity, better compare period-over-period results, and improve overall understanding of the underlying performance of the business absent the impact of M&A and the shift of Morningstar's operations in
In addition, Morningstar presents free cash flow solely as supplemental disclosure to help investors better understand how much cash is available after making capital expenditures. Morningstar's management team uses free cash flow to evaluate the health of its business. Free cash flow should not be considered an alternative to any measure required to be reported under GAAP (such as cash provided by (used for) operating, investing, and financing activities).
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||||||
(in millions) |
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
||||||||||
Reconciliation from consolidated revenue to organic revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated revenue |
|
$ |
571.9 |
|
|
$ |
504.7 |
|
|
13.3 |
% |
|
$ |
1,114.7 |
|
|
$ |
984.4 |
|
|
13.2 |
% |
Less: acquisitions |
|
|
— |
|
|
|
— |
|
|
— |
% |
|
|
— |
|
|
|
— |
|
|
— |
% |
Less: accounting changes |
|
|
— |
|
|
|
— |
|
|
— |
% |
|
|
— |
|
|
|
— |
|
|
— |
% |
Effect of foreign currency translations |
|
|
1.4 |
|
|
|
— |
|
|
NMF |
|
|
0.2 |
|
|
|
— |
|
|
NMF |
||
Organic revenue |
|
$ |
573.3 |
|
|
$ |
504.7 |
|
|
13.6 |
% |
|
$ |
1,114.9 |
|
|
$ |
984.4 |
|
|
13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from consolidated operating income to adjusted operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated operating income |
|
$ |
108.5 |
|
|
$ |
41.7 |
|
|
160.2 |
% |
|
$ |
201.1 |
|
|
$ |
66.2 |
|
|
203.8 |
% |
Add: Intangible amortization expense (1) |
|
|
17.5 |
|
|
|
17.7 |
|
|
(1.1 |
)% |
|
|
35.2 |
|
|
|
35.2 |
|
|
— |
% |
Add: M&A-related expenses (2) |
|
|
5.0 |
|
|
|
3.0 |
|
|
66.7 |
% |
|
|
5.5 |
|
|
|
7.2 |
|
|
(23.6 |
)% |
Add: Severance and personnel expenses (3) |
|
|
— |
|
|
|
2.9 |
|
|
NMF |
|
|
— |
|
|
|
4.1 |
|
|
NMF |
||
Add: Transformation costs (3) |
|
|
— |
|
|
|
2.2 |
|
|
NMF |
|
|
— |
|
|
|
6.4 |
|
|
NMF |
||
Add: Asset impairment costs (3) |
|
|
— |
|
|
|
2.2 |
|
|
NMF |
|
|
— |
|
|
|
2.4 |
|
|
NMF |
||
Adjusted operating income |
|
$ |
131.0 |
|
|
$ |
69.7 |
|
|
87.9 |
% |
|
$ |
241.8 |
|
|
$ |
121.5 |
|
|
99.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from consolidated operating margin to adjusted operating margin: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated operating margin |
|
|
19.0 |
% |
|
|
8.3 |
% |
|
10.7 pp |
|
|
18.0 |
% |
|
|
6.7 |
% |
|
11.3 pp |
||
Add: Intangible amortization expense (1) |
|
|
3.0 |
% |
|
|
3.5 |
% |
|
(0.5) pp |
|
|
3.2 |
% |
|
|
3.6 |
% |
|
(0.4) pp |
||
Add: M&A-related expenses (2) |
|
|
0.9 |
% |
|
|
0.6 |
% |
|
0.3 pp |
|
|
0.5 |
% |
|
|
0.7 |
% |
|
(0.2) pp |
||
Add: Severance and personnel expenses (3) |
|
|
— |
% |
|
|
0.6 |
% |
|
(0.6) pp |
|
|
— |
% |
|
|
0.4 |
% |
|
(0.4) pp |
||
Add: Transformation costs (3) |
|
|
— |
% |
|
|
0.4 |
% |
|
(0.4) pp |
|
|
— |
% |
|
|
0.7 |
% |
|
(0.7) pp |
||
Add: Asset impairment costs (3) |
|
|
— |
% |
|
|
0.4 |
% |
|
(0.4) pp |
|
|
— |
% |
|
|
0.2 |
% |
|
(0.2) pp |
||
Adjusted operating margin |
|
|
22.9 |
% |
|
|
13.8 |
% |
|
9.1 pp |
|
|
21.7 |
% |
|
|
12.3 |
% |
|
9.4 pp |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from consolidated diluted net income per share to adjusted diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated diluted net income per share |
|
$ |
1.60 |
|
|
$ |
0.84 |
|
|
90.5 |
% |
|
$ |
3.09 |
|
|
$ |
0.67 |
|
|
361.2 |
% |
Add: Intangible amortization expense (1) |
|
|
0.30 |
|
|
|
0.31 |
|
|
(3.2 |
)% |
|
|
0.61 |
|
|
|
0.61 |
|
|
— |
% |
Add: M&A-related expenses (2) |
|
|
0.09 |
|
|
|
0.05 |
|
|
80.0 |
% |
|
|
0.09 |
|
|
|
0.12 |
|
|
(25.0 |
)% |
Add: Severance and personnel expenses (3) |
|
|
— |
|
|
|
0.05 |
|
|
NMF |
|
|
— |
|
|
|
0.07 |
|
|
NMF |
||
Add: Transformation costs (3) |
|
|
— |
|
|
|
0.04 |
|
|
NMF |
|
|
— |
|
|
|
0.11 |
|
|
NMF |
||
Add: Asset impairment costs (3) |
|
|
— |
|
|
|
0.04 |
|
|
NMF |
|
|
— |
|
|
|
0.04 |
|
|
NMF |
||
Less: Non-operating (gains) losses (4) |
|
|
0.02 |
|
|
|
(0.03 |
) |
|
NMF |
|
|
(0.05 |
) |
|
|
0.24 |
|
|
NMF |
||
Adjusted diluted net income per share |
|
$ |
2.01 |
|
|
$ |
1.30 |
|
|
54.6 |
% |
|
$ |
3.74 |
|
|
$ |
1.86 |
|
|
101.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from cash provided by operating activities to free cash flow: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by operating activities |
|
$ |
152.7 |
|
|
$ |
24.5 |
|
|
NMF |
|
$ |
246.3 |
|
|
$ |
47.9 |
|
|
414.2 |
% |
|
Capital expenditures |
|
|
(31.9 |
) |
|
|
(30.3 |
) |
|
5.3 |
% |
|
|
(66.0 |
) |
|
|
(59.8 |
) |
|
10.4 |
% |
Free cash flow |
|
$ |
120.8 |
|
|
$ |
(5.8 |
) |
|
NMF |
|
$ |
180.3 |
|
|
$ |
(11.9 |
) |
|
NMF |
||
______________________________________________________________________ |
||||||||||||||||||||||
NMF - Not meaningful, pp - percentage points |
||||||||||||||||||||||
(1) Excludes finance lease amortization expense of |
||||||||||||||||||||||
(2) Reflects non-recurring expenses related to merger, acquisition, and divestiture activity including pre-deal due diligence, transaction costs, severance, and post-close integration costs. |
||||||||||||||||||||||
(3) Reflects costs associated with the significant reduction of the Company's operations in |
||||||||||||||||||||||
Severance and personnel expenses include severance charges, incentive payments related to early signing of severance agreements, transition bonuses, and stock-based compensation related to the accelerated vesting of restricted stock unit and market stock unit awards. In addition, the reversal of accrued sabbatical liabilities is included in this category. |
||||||||||||||||||||||
Transformation costs include professional fees and the temporary duplication of headcount. As the Company hired replacement roles in other markets and shifted capabilities, it employed certain |
||||||||||||||||||||||
Asset impairment costs include the write-off or accelerated depreciation of fixed assets in the |
||||||||||||||||||||||
(4) Non-operating (gains) losses in the three and six months ended June 30, 2024 and June 30, 2023, related to realized and unrealized gains and losses on investments. In addition, non-operating (gains) losses for the six months ended June 30, 2023 also include expense from an equity method transaction, net. |
||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240723546453/en/
Media Relations Contact:
Stephanie Lerdall, +1 312-244-7805, stephanie.lerdall@morningstar.com
Investor Relations Contact:
Sarah Bush, +1 312-384-3754, sarah.bush@morningstar.com
Source: Morningstar, Inc.
