Morningstar, Inc. - Quarter Report: 2025 March (Form 10-Q)

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See notes to unaudited consolidated financial statements.

Morningstar, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows



	Three months ended March 31,
(in millions)	2025	2024
Operating activities
Consolidated net income	$	$
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization
Deferred income taxes	()	()
Stock-based compensation expense
Provision for bad debt
Equity in investments of unconsolidated entities
Other, net	()	()
Changes in operating assets and liabilities:
Accounts receivable
Accounts payable and accrued liabilities		()
Accrued compensation and deferred commissions	()	()
Income taxes, current
Deferred revenue
Other assets and liabilities	()	()
Cash provided by operating activities

Investing activities
Purchases of investment securities	()	()
Proceeds from maturities and sales of investment securities
Capital expenditures	()	()
Acquisitions, net of cash acquired	()
Purchases of investments in unconsolidated entities	()	()
Cash used for investing activities	()	()

Financing activities
Common shares repurchased	()
Dividends paid	()	()
Proceeds from revolving credit facility
Repayment of revolving credit facility	()	()
Repayment of term facility		()
Employee taxes withheld for stock awards		()
Other, net
Cash used for financing activities	()	()

Effect of exchange rate changes on cash and cash equivalents		()
Net increase in cash and cash equivalents
Cash and cash equivalents—beginning of period
Cash and cash equivalents—end of period	$	$

Supplemental disclosure of cash flow information
Cash paid for income taxes	$	$
Cash paid for interest	$	$

See notes to unaudited consolidated financial statements.

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MORNINGSTAR, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

$ Amended 2022 Revolving Credit Facility

% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.1 million and $1.2 million, respectively

Total debt$ $

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multi-currency credit facility with an initial borrowing capacity of up to $ billion, including a $ million term loan and a $ million revolving credit facility. The 2022 Credit Agreement also provided for the issuance of letters of credit and a swingline facility. The 2022 Credit Agreement was amended twice in September 2022 and again most recently in June 2024 (Amended 2022 Credit Agreement) to, among other items, eliminate the options for a second term loan draw and increase both the term loan and revolving credit facility to $ million each, raising the total borrowing capacity to $ billion (Amended 2022 Term Facility and Amended 2022 Revolving Credit Facility, respectively), and to update the reference rate for credit extensions in Canadian dollars. Aside from the increased borrowing capacity, the Amended 2022 Credit Agreement left the 2022 Credit Agreement terms largely unchanged. As of March 31, 2025, our total outstanding debt under the Amended 2022 Credit Agreement was $ million, net of debt issuance costs, with borrowing availability of $ million under the Amended 2022 Revolving Credit Facility.

The interest rate applicable to any loan under the Amended 2022 Credit Agreement is, at the company's option, either: (i) the applicable Secured Overnight Financing Rate plus an applicable margin for such loans, which ranges between % and %, based on the company's consolidated leverage ratio or (ii) the lender's base rate plus the applicable margin for such loans, which ranges between % and %, based on the company's consolidated leverage ratio.

The portions of deferred debt issuance costs related to the Amended 2022 Revolving Credit Facility are included in other current and non-current assets, and the portion of deferred debt issuance costs related to the Amended 2022 Term Facility is reported as a reduction to the carrying amount of the Amended 2022 Term Facility. Debt issuance costs related to the Amended 2022 Revolving Credit Facility are amortized on a straight-line basis to interest expense over the term of the Amended 2022 Credit Agreement. Debt issuance costs related to the Amended 2022 Term Facility are amortized to interest expense using the effective interest method over the term of the Amended 2022 Credit Agreement.

Private Placement Debt Offering

On October 26, 2020, we completed the issuance and sale of $ million aggregate principal amount of % senior notes due October 26, 2030 (the 2030 Notes), in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. Proceeds were primarily used to repay a portion of the company's outstanding debt under the company's prior credit facility. Interest on the 2030 Notes is paid semi-annually on each October 30 and April 30 during the term of the 2030 Notes and at maturity, with the first interest payment date having occurred on April 30, 2021. As of March 31, 2025, our total outstanding debt, net of issuance costs, under the 2030 Notes was $ million.

Compliance with Covenants

Each of the Amended 2022 Credit Agreement and the 2030 Notes include customary representations, warranties, and covenants, including financial covenants, that require us to maintain specified ratios of consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) to consolidated interest charges and consolidated funded indebtedness to consolidated EBITDA, which are evaluated on a quarterly basis. We were in compliance with these financial covenants as of March 31, 2025.

% equity interest in DealX, a provider of standardized US commercial mortgage-backed security (CMBS) and global collateralized loan obligation (CLO) data. We began consolidating the financial results of DealX in our consolidated financial statements as of March 1, 2025. DealX is included in the Morningstar Credit segment.

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million of goodwill, which is not deductible for income tax purposes, and $ million of acquired intangible assets, as follows:

(in millions)

Weighted average useful life (years)

Customer-related assets

Technology-based assets

Total intangible assets

Lumonic Inc. (Lumonic)

On March 3, 2025, we acquired Lumonic, a private credit portfolio monitoring and management platform. We began consolidating the financial results of Lumonic in our consolidated financial statements as of March 3, 2025. Lumonic is included in the PitchBook segment.

The acquisition was accounted for as a business combination under the acquisition method of accounting pursuant to FASB ASC 805, which requires that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. As of March 31, 2025, we completed our initial determination of the fair values of the acquired identifiable assets and liabilities based on the financial data available. Based on the timing of the close of this transaction, certain valuation calculations are considered preliminary due to information that may subsequently become available, and values assigned to various assets and liabilities could change.

The acquisition date fair value of certain assets and liabilities, including intangible assets acquired and related weighted average expected life calculations, are provisional and subject to revision within one year of the acquisition date. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

million of goodwill, which is not deductible for income tax purposes, and $ million of acquired intangible assets, as follows:

(in millions)

Weighted average useful life (years)

Customer-related assets

Technology-based assets

Intellectual property

Total intangible assets

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operating segments, which are presented as the following reportable segments: Morningstar Direct Platform, PitchBook, Morningstar Credit, Morningstar Wealth, and Morningstar Retirement. Beginning with the first quarter of 2025 reporting, the company changed the name of the Morningstar Data and Analytics reportable segment to the Morningstar Direct Platform.

The company's operating segments also represent the company's reporting units to which goodwill is assigned. The company allocated goodwill by reporting unit in accordance with FASB ASC 350 Intangibles—Goodwill and Other (FASB ASC 350). Under this reporting unit structure, the consolidated goodwill balance was allocated based on each reporting unit's relative fair value at January 1, 2021. The company used a market approach and assigned goodwill to the reporting units. The following table shows the changes in our goodwill balances from December 31, 2024 to March 31, 2025:

$ $ $ $ $ $ $ Acquisition of DealX Acquisition of Lumonic Foreign currency translation Balance as of March 31, 2025$ $ $ $ $ $ $ $

We perform our annual impairment reviews in the fourth quarter or when impairment indicators and triggering events are identified. The company did not record any goodwill impairment in the first three months of 2025. Refer to Note 7 for detailed segment information.

Intangible Assets

$()$ $ $()$ Technology-based assets () () Intellectual property & other () () $

$ $ $ 2024

)))() )) $ ___________________________________________________________________________________________

(3) 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 $ million and $ million for the three months ended March 31, 2025 and 2024, respectively. Revenue from Morningstar Indexes was $ million and $ million for the three months ended March 31, 2025 and 2024, respectively.

(4) Corporate and All Other includes unallocated corporate expenses of $ million and $ million during the first quarter of 2025 and 2024, respectively, as well as adjusted operating income/loss from Morningstar Sustainalytics and Morningstar Indexes. Unallocated corporate expenses include finance, human resources, legal, and other management-related costs that are not considered when segment performance is evaluated.

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$ PitchBook Morningstar Credit Morningstar Wealth Morningstar Retirement Total Reportable Segments

Corporate and All Other (5)

Total$ $ $ $

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$ Asia Australia Canada Continental Europe United Kingdom Other Total International Consolidated property, equipment, and capitalized software, net$ $

Operating lease assets by geographical area

(in millions)

As of March 31, 2025

As of December 31, 2024

United States

Asia

Australia

Canada

Continental Europe

United Kingdom

Other

Total International

Consolidated operating lease assets

$ $ $ Investments:Marketable equity investments, exchange-traded funds, and mutual funds Marketable debt securities Investments in unconsolidated entities:Non-current investment in Wealth Advisors Total$ $ $ $

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$ $ $ Investments:Marketable equity investments, exchange-traded funds, and mutual funds Marketable debt securities Investments in unconsolidated entities:Investment in SmartX Advisory Solutions Non-current investment in Wealth Advisors )() %8.7 %(0.6)pp0.5 NMF%0.1 %1.1 pp2024Change199.2 $196.7 1.3 %2024Change163.7 $147.6 10.9 %2024Change73.0 $60.3 21.1 %2024Change61.3 $59.0 3.9 %%(9.5)%8.2 pp

Morningstar Wealth total revenue increased $2.3 million, or 3.9%, for the three months ended March 31, 2025. Revenue grew 7.9% on an organic basis, primarily driven by growth in Investment Management, supported by higher revenue for Morningstar Model Portfolios offered on third-party platforms, and an increase in advertising sales. Organic revenue growth excludes platform revenue associated with US TAMP assets sold to AssetMark from the prior-year period, interim service fees received from AssetMark in the current period, and foreign currency impact.

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Asset-based revenue is based on quarter-end, prior quarter-end, or average asset levels during each quarter, which are often reported on a one-quarter lag for certain Investment Management products including Morningstar Managed Portfolios. The timing of client asset reporting and the structure of our contracts often results in a lag between market movements and the impact on revenue. The following table summarizes our approximate Morningstar Wealth AUMA:


	As of March 31,
(in billions)	2025		2024		Change







Morningstar Model Portfolios	$	44.5	$	40.6	9.6	%
Institutional Asset Management	6.9		7.3		(5.5)	%
Asset Allocation Services	12.4		9.7		27.8	%
Investment Management (total)	$	63.8	$	57.6	10.8	%

2024Change32.9 $28.4 15.8 %%50.0 %(5.6) pp

Morningstar Retirement total revenue increased $4.5 million, or 15.8% on a reported and organic basis for the three months ended March 31, 2025. AUMA, calculated using the most recently available average quarterly or monthly data, increased 17.7% to $277.6 billion compared with the prior-year period, due to positive net flows and market gains, supported by strong growth in traditional and Advisor Managed Accounts and custom models.

Asset-based revenue is based on quarter-end, prior quarter-end, or average asset levels during each quarter, which are often reported on a one-quarter lag. The timing of client asset reporting and the structure of our contracts often results in a lag between market movements and the impact on revenue. The following table summarizes our approximate Morningstar Retirement AUMA:


	As of March 31,
(in billions)	2025		2024		Change


Managed Accounts	$	162.8	$	136.1	19.6	%
Fiduciary Services	65.6		57.8		13.5	%
Custom Models/CIT	49.2		42.0		17.1	%
Morningstar Retirement (total)	$	277.6	$	235.9	17.7	%

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Morningstar Retirement adjusted operating income increased $0.4 million, or 2.8%, and adjusted operating margin decreased 5.6 percentage points for the three months ended March 31, 2025. The decline in margin was primarily driven by a non-recurring expense related to a correction of client accounts as well as higher compensation costs, reflecting increased headcount and merit increases.

Morningstar Retirement depreciation expense was $2.6 million and $2.8 million for the three months ended March 31, 2025 and 2024, respectively.

Corporate and All Other

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.

Corporate and All Other revenue increased $1.0 million, or 2.0% on a reported basis for the three months ended March 31, 2025.

Morningstar Indexes revenue increased $3.0 million or 15.0%. Organic revenue increased 15.7% primarily driven by higher investable product and licensed data revenue as market performance and net inflows over the trailing 12 months increased asset value linked to Morningstar Indexes by 9.7% to $208.7 billion.

Morningstar Sustainalytics revenue decreased $2.0 million or 6.5%. Organic revenue decreased 4.9%, which was primarily driven by the ongoing streamlining of the licensed-ratings offering; lower revenues for ESG Risk Ratings, due in part to vendor consolidation; and softness in second-party opinions.

Non-operating expense, net, Equity in investments of unconsolidated entities, and Effective tax rate and income tax expense

Non-Operating Expense, Net


	2024
3.5			$	2.5
		(14.0)
		2.6




		3.3
(5.6)			$	(5.6)

(1.5)58.8 $59.5 (1.2)%

We generated free cash flow of $58.8 million in the first quarter of 2025 compared with $59.5 million in the first quarter of 2024. The change reflects a $2.6 million decrease in cash provided by operating activities and a $1.9 million decrease in capital expenditures compared to the prior-year period. The decline in cash provided by operating activities and free cash flow was primarily driven by higher bonus payments in 2025 related to 2024 performance offset by higher cash earnings and improvements in working capital. Capital expenditures slightly decreased compared to the prior-year period, though we continue to invest in our product development efforts across our key product areas.

Application of Critical Accounting Policies and Estimates

We discuss our critical accounting policies and estimates in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report. We also discuss our significant accounting policies in Note 2 of the Notes to our Audited Consolidated Financial Statements included in our Annual Report and in Note 2 of the Notes to our Unaudited Consolidated Financial Statements contained in Part 1, Item 1 of this Quarterly Report. There have not been any material changes during the three months ended March 31, 2025 to the methodologies applied by management for critical accounting policies previously disclosed in our Annual Report.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

Our investment portfolio is actively managed and may suffer losses from fluctuating interest rates, market prices, or adverse security selection. These accounts may consist of stocks, bonds, options, mutual funds, money market funds, or exchange-traded products that replicate the model portfolios and strategies created by Morningstar. These investment accounts may also include exchange-traded products where Morningstar is an index provider. As of March 31, 2025, our cash, cash equivalents, and investments balance was $559.2 million. Based on our estimates, a 100 basis-point change in interest rates would not have a material effect on the fair value of our investment portfolio.

We are subject to risk from fluctuations in the interest rates related to a portion of our long-term debt. The interest rates are based upon the applicable Secured Overnight Financing Rate (SOFR) rate plus an applicable margin for such loans or the lender's base rate plus an applicable margin for such loans. On an annualized basis, we estimate a 100 basis-point change in the SOFR rate would have a $4.6 million impact on our interest expense based on our outstanding principal balance and SOFR rates at March 31, 2025.

We are subject to risk from fluctuations in foreign currencies from our operations outside of the United States. We do not currently have any positions in derivative instruments to hedge our foreign currency risk.

The table below shows our exposure to foreign currency denominated revenue and operating income for the three months ended March 31, 2025:


	Three months ended March 31, 2025
(in millions, except foreign currency rates)	Australian Dollar			British Pound			Canadian Dollar			Euro			Other Foreign Currencies
Currency rate in US dollars as of March 31, 2025	0.6259			1.2937			0.6967			1.0822			n/a

Percentage of revenue	2.5		%	7.5		%	5.7		%	6.2		%	5.2		%
Percentage of operating income (loss)	4.8		%	(4.5)		%	4.2		%	7.9		%	(12.2)		%

Estimated effect of a 10% adverse currency fluctuation on revenue	$	(1.5)		$	(4.5)		$	(3.3)		$	(3.7)		$	(3.1)
Estimated effect of a 10% adverse currency fluctuation on operating income (loss)	$	(0.5)		$	0.5		$	(0.5)		$	(0.9)		$	1.4

The table below shows our net investment exposure to foreign currencies as of March 31, 2025:


	As of March 31, 2025
(in millions)	Australian Dollar		British Pound		Canadian Dollar		Euro		Other Foreign Currencies
Assets, net of unconsolidated entities	$	66.6	$	328.3	$	229.2	$	272.6	$	254.0
Less: liabilities	(33.9)		(97.8)		(100.8)		(113.0)		(82.7)
Net currency position	$	32.7	$	230.5	$	128.4	$	159.6	$	171.3

Estimated effect of a 10% adverse currency fluctuation on equity	$	(3.3)	$	(23.0)	$	(12.8)	$	(16.0)	$	(17.1)

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Item 4.Controls and Procedures

(a)Evaluation and Disclosure Controls and Procedures

Disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to reasonably assure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of March 31, 2025. Based on that evaluation, our chief executive officer and chief financial officer concluded that as of March 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms and to provide reasonable assurance that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b)Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our chief executive officer and chief financial officer, believe that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been or would be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART 2.OTHER INFORMATION

Item 1.Legal Proceedings

We incorporate by reference the information regarding legal proceedings set forth in Note 13 of the Notes to our Unaudited Consolidated Financial Statements contained in Part 1, Item 1 of this Quarterly Report.

Item 1A.Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors in Part I, “Item 1A. Risk Factors” in our Annual Report, as updated in this Quarterly Report, when deciding whether to invest in our common stock or otherwise evaluating our business. If any of those risks or uncertainties materialize, our business, financial condition, and/or operating results could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Our operations could also be affected by other risks and uncertainties that are not presently known to us or that we currently consider immaterial to our operations.

Failing to maintain and protect our brand, independence, and reputation may harm our business. Our reputation and business may also be negatively impacted by allegations made about possible conflicts of interest, or by other negative publicity or media reports.

We believe that the reputation of our company and our brand generally, as well as the perception of our research and ratings products and services, is based on the trust that users of our products and services have in our commitment to our mission to empower investor success underscored by principles of independence, transparency, and long-term focus. Any failures by us to instill in our employees the expectation of independence and integrity may devalue our reputation over time and negatively affect both hiring and retention efforts. Any failure to uphold these standards, and any real or perceived failure of our customers to have consistently positive experiences with us could damage our reputation. Our reputation may also be harmed if any errors are found in our products or services.

As our business has evolved, we have entered, and may in the future enter into, lines of business and business arrangements that may give rise to allegations of conflicts of interest or perceived failures of our independence and objectivity. For example, we provide ratings, analyst research, and investment recommendations on mutual funds, ETFs, and other investment products offered by our institutional clients. While we don’t charge asset management firms for their products to be rated, we do charge licensing fees for the use of our ratings. We also provide investment advisory and investment management services, including through our own series of mutual funds, which expose us to the claim that we are acting as both a referee and a player in the investment management industry. In our credit ratings business and Morningstar Sustainalytics’ Sustainable Finance Solutions products, we are participants in an issuer-pay business model under which we receive payments from issuers for our ratings rather than from the investors who consume such ratings. These payments may create the perception that our ratings and research in these areas are not independently determined.

Certain of our product offerings, such as those offered by Morningstar Sustainalytics and certain of our methodologies have, and may in the future, put us at the center of public debate over a variety of issues surrounding sustainability, social concerns, and corporate governance. This scrutiny may impact the demand for our products, lead to negative media coverage, reputational harm or increased government or regulatory scrutiny. Failure to successfully navigate these issues as they arise may have an adverse effect on our reputation and our business.

Our reputation may also be harmed by factors outside of our control, such as news reports about our clients, consultants, or suppliers, regulatory scrutiny, and adverse publicity about certain types of investment and ratings products generally. Scrutiny of our competitors could damage the reputation of the industries that we operate in, which could harm the reputation of the company or certain of our products and services. We may also suffer brand dilution as our brand becomes associated with an increasingly broad array of products and services that may align less directly with our corporate mission.

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Changing economic conditions, including prolonged volatility, recessions, or downturns affecting the financial sector and global financial markets, and impacts of global trade policies may negatively impact our financial results.

Our business results are partly driven by factors outside of our control including, but not limited to, general economic and financial market trends which may be impacted by availability of credit, changes in laws, trade policies and barriers, currency exchange rates and controls, and national and international geopolitical circumstances and uncertainties. Prolonged economic and financial downturns, recessions, sustained volatility in the financial markets, interest and inflation rate fluctuations and periods of stagflation, among other conditions impacting investor sentiment can reduce investor interest and investment activity and have, and may in the future, decrease demand for our software, data, analyst ratings, research products, and decrease net flows of funds into our investment management products. Recent market conditions impacted by potential imposition of tariffs and retaliatory trade measures, among other factors, have and may continue to decrease the value of assets under management. We cannot predict the occurrence, timing or duration of any economic cycle generally or in the markets in which our businesses operate, nor can we predict the extent to which trade policies, including tariffs, will, directly or indirectly, impact our business, operating results, and financial condition.

The amount of asset-based revenue we earn primarily depends on the value of assets on which we provide advisory services, and the size of our asset base can increase or decrease based on market performance. Our revenue from asset-based fees has been, and may in the future be, adversely affected by market declines. Asset levels can also be affected if inflows into the portfolios for which we provide investment advisory services drop or if these portfolios experience redemptions. A drop in inflows or an increase in redemptions can result from a variety of factors, including overall market conditions or uncompetitive investment performance. If the level of assets on which we provide investment advisory or investment management services declines, we would expect our fee-based revenue to experience a corresponding decline. The industrywide trend toward lower asset-based fees may also impact our fee-based revenue. A shift by investors to non-traditional asset classes such as cryptocurrencies, private debt, real estate, structured products, and collectibles may affect our assets under management if we are unable to incorporate them into our investment strategies or if they fail to perform in the manner that our research anticipates.

For our license-based businesses, many of our customers are asset management and financial advisory firms and other financial-services companies, who are also subject to global market trends. The ascendance of passive investment strategies may affect both the profitability of asset managers that focus on actively managed strategies, on whose success we in part depend, and the perceived value of our research regarding such actively managed strategies. A sustained global recession or other financial downturn or crisis would likely lead to material spending cutbacks among certain of our clients, and create longer sales cycles. Consolidation in the financial services sector reduces the number of potential clients for our products and services. Further, clients may discontinue their use of our products and services should they fail and/or merge with or become acquired by other entities that are not our clients or that use fewer of our products and services. These trends could impact demand for our products and services or change the financial services landscape in which we operate, resulting in lower revenue and operating income.

Fluctuations in interest rates and rate uncertainty brought on by central bank decisions have reduced credit issuance in prior periods and may reduce credit issuance in future periods, which has in the past and may in the future put negative pressure on our credit ratings business. Our credit ratings business, as well as our second-party opinions (SPO) business, have also been, and may again be, impacted by volatility in US and international financial markets due to their dependence on the number and dollar volume of debt securities issued in the capital markets. Market disruptions, rising interest rates, widening credit spreads, and economic slowdowns historically have impacted and may in the future impact the volume of debt securities issued in global capital markets and the demand for credit ratings. Demand for credit ratings can also be adversely affected by negative publicity about the credit ratings business, regulatory and political developments, growth in the use of alternative sources of credit, and defaults by significant issuers. Our ability to reduce costs in the event of such adverse developments may be negatively impacted by, among other things, our obligations to monitor and maintain outstanding ratings. Declines or other changes in the markets for debt securities may materially and adversely affect our business, operating results, and financial condition.

Our PitchBook business is also subject to cyclical trends specific to the private capital markets. Many of PitchBook’s clients are investment banks and other participants in the capital and M&A markets, which are subject to periodic business downturns driven by changes in such markets. During these downturns, they often seek to reduce spending on third-party services, as well as the number of employees, which would directly and adversely affect the number of prospective users for the PitchBook platform.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below presents month-to-month information related to repurchases of common stock we made during the three months ended March 31, 2025. Refer to Note 14 of the Notes to our Unaudited Consolidated Financial Statements for more information regarding our share repurchase program:


Period:	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced programs (a)	Approximate dollar value of shares that may yet be purchased under the programs (a)
January 1, 2025 - January 31, 2025	18,000	$	327.77	18,000	$	481,078,300
February 1, 2025 - February 28, 2025	20,698	321.45		20,698	$	474,424,915
March 1, 2025 - March 31, 2025	329,501	294.55		329,501	$	377,371,725
Total	368,199	$	297.68	368,199

_______________________________________

(a) Repurchases will only be effected pursuant to the $500.0 million share repurchase program authorized by our board of directors and announced publicly on December 6, 2022, which commenced on January 1, 2023 and which will expire on December 31, 2025.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Insider Trading Arrangements

During the three months ended March 31, 2025, the company’s officers (as defined in Section 16 of the Exchange Act) and directors or contracts, instructions, or written plans for the purchase or sale of the company’s securities as noted below:

Name and Title

Action

Date of Adoption of Trading Plan (2)

Scheduled Expiration Date of Trading Plan

Aggregate Number of Securities to Be Purchased or Sold

12/18/2024

12/31/2025

Sale of up to 648 shares of common stock

________________________________________

(1) Michael Holt, our Chief Financial Officer, entered into a Rule 10b5-1 Plan on December 18, 2024, with the plan providing for the potential sale of up to 648 shares of the Company’s common stock. The plan was set to expire December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. Michael Holt terminated the plan on .

(2) Each plan listed below is intended to satisfy the affirmative defense of Rule 10b5-1(c).

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Item 6.Exhibits


Exhibit No						Description of Exhibit
3.1						Amended and Restated Articles of Incorporation of Morningstar are incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-1, as amended, Registration No. 333-115209.

3.2						By-laws of Morningstar, as in effect on February 27, 2018, are incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K that we filed with the SEC on February 28, 2018.

31.1†						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2†						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1†*						Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†*						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101†						The following financial information from Morningstar, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 1, 2025 formatted in Inline XBRL: (i) Cover Page, (ii) Unaudited Consolidated Statements of Income, (iii) Unaudited Consolidated Statements of Comprehensive Income (iv) Unaudited Consolidated Balance Sheets, (v) Unaudited Consolidated Statement of Equity, (vi) Unaudited Consolidated Statements of Cash Flows and (vii) the Notes to Unaudited Consolidated Financial Statements

104†						Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)

† Filed herewith.

* The certificates furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		MORNINGSTAR, INC.

Date: May 1, 2025	By:	/s/ Michael Holt
		Michael Holt
		Chief Financial Officer (principal financial officer)

Morningstar, Inc. - Quarter Report: 2025 March (Form 10-Q)

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