Business Context and Reporting Period
Company: Morningstar, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Morningstar is a global provider of independent investment insights, data, research, and tools. The company operates through five reportable segments: Morningstar Direct Platform, PitchBook, Morningstar Credit, Morningstar Wealth, and Morningstar Retirement. The company's mission is to empower investor success through connected data and independent research.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | $2,445.5 million | $2,275.1 million | +7.5% |
| Operating Income | $526.6 million | $484.8 million | +8.6% |
| Operating Margin | 21.5% | 21.3% | +0.2 pp |
| Net Income | $374.2 million | $369.9 million | +1.2% |
| Diluted EPS | $8.87 | $8.58 | +3.4% |
| Free Cash Flow | $442.6 million | $448.9 million | -1.4% |
| Long-Term Debt | $1,072.6 million | $698.6 million | +53.5% |
| Cash & Investments | $528.7 million | $551.0 million | -4.1% |
Assets Under Management and Advisement (AUMA): Total AUMA was approximately $378.0 billion as of December 31, 2025, comprising $72.8 billion in Morningstar Wealth and $305.2 billion in Morningstar Retirement.
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 7.5% year-over-year. Organic revenue grew 8.0%, driven by strong performance in Morningstar Credit (+21.7%), PitchBook (+8.6%), and Morningstar Direct Platform (+5.4%).
- Segment Performance: Morningstar Credit saw the highest growth, with adjusted operating income rising 51.9% to $114.8 million. Morningstar Wealth returned to profitability with adjusted operating income of $9.6 million, compared to a loss of $9.3 million in 2024.
- Debt Structure: Long-term debt increased significantly due to the refinancing of the 2022 Credit Agreement with a new 2025 Credit Agreement (total capacity $1.5 billion) and the drawdown of term facilities. Total outstanding debt under the new agreement was $723.5 million as of year-end.
- Acquisitions: The company completed the acquisition of Dealview Technologies Limited (DealX) and Lumonic Inc. in 2025. Additionally, the acquisition of the Center for Research in Security Prices (CRSP) was completed in February 2026 for approximately $365.0 million.
- Divestitures: The company received $22.7 million in contingent consideration related to the 2024 sale of US TAMP assets to AssetMark.
Guidance, Outlook, and Risks
Guidance: Morningstar does not provide earnings guidance or financial forecasts. Management focuses on increasing intrinsic value over time rather than meeting short-term targets.
Management Commentary:
- AI Strategy: The company is prioritizing becoming "AI-native," integrating AI into workflows and products (e.g., AI Insights API, PitchBook Navigator) to improve speed and quality of insights.
- Capital Allocation: The company authorized a new $1.0 billion share repurchase program in October 2025. In 2025, it repurchased approximately $787.0 million in shares. The quarterly dividend was increased to $0.50 per share.
- Regulatory Environment: The company is monitoring evolving regulations regarding ESG ratings (EU ESG Rating Provider Regulation), AI (EU AI Act), and data privacy (GDPR, DORA).
Risks and Contingencies:
- Regulatory Compliance: Significant exposure to changing regulations in credit ratings, investment management, and ESG data across US, EU, and UK jurisdictions.
- Cybersecurity: Risks related to data breaches, ransomware, and the protection of confidential information remain a key concern.
- Market Conditions: Asset-based revenue is sensitive to market performance and asset values. Economic downturns or reduced credit issuance could negatively impact the Credit segment.
- AI Risks: Potential for AI-generated errors, intellectual property disputes, and evolving regulatory compliance costs.
Key Facts for Investor Verification
- Debt Covenants: Verify compliance with the new 2025 Credit Agreement covenants, specifically the consolidated funded indebtedness to consolidated EBITDA ratio (reported at approximately 1.3x).
- CRSP Integration: Monitor the financial impact and integration progress of the CRSP acquisition ($365 million) completed in February 2026.
- Renewal Rates: Review segment-specific renewal rates, which were revised in 2025. PitchBook renewal rate declined to 103% (from 108% in 2024) due to softness in the corporate client segment.
- Share Repurchases: Confirm the remaining capacity under the new $1.0 billion repurchase program ($700.0 million available as of Dec 31, 2025).
- Tax Rate: Note the increase in the effective tax rate to 24.5% in 2025 from 21.9% in 2024, driven by the loss of favorable tax impacts from prior divestitures and changes in foreign earnings.